"We predict that click fraud will increase in 2009, as more ad dollars move from branding to performance-based advertising. Much like spam volume grew as email volume increased, we believe click fraud volume will grow in tandem with increases in CPC/CPA ad spend. As click fraud grows, it will reduce advertiser ROI, which will in turn lead marketers to become increasingly concerned with click fraud in 2009. If marketers begin to see drops in ROI due to click fraud, this could adversely affect online advertising growth - much the way ID theft affected online commerce in the early days of the Internet - if networks fail to take additional measures to improve their detection of click fraud, according to Ken Miller, CEO, Anchor Intelligence.

Will Ken's prediction ring true? I believe so, as tougher economic times always seem to raise criminal activity. And it will always be against the Search Engine's own interests to detect click fraud, especially now that profits are waning. So make sure you keep yourself protected by installing click fraud detection software on your site.

Read the full article HERE.

That's called click fraud and it's a major problem among all of the pay-per-click search engines.

Click fraud is a scheme that takes advantage of online advertising programs like those offered by Google, Yahoo/Overture, Findwhat and others. A fraudulent website is set up and participates in programs like Google's AdSense program. Unlike legitimate websites that attract human visitors to the site, fraudsters use software "hitbots" or employ boiler-rooms of low-wage employees from other countries to generate clicks on ads, and then collect commission from pay-per-click programs
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The company added an elaborate marketing effort on search engines that included a pay-per-click advertising campaign based on keywords and phrases. For its trouble, DiamondHarmonyDiamondHarmony became ensnared in click fraud.

Instead of actual prospects, the clicks were coming from fraudulent sources. The fraud, which cost DiamondHarmony $17,000 over seven months, was uncovered through analytical software the company installed from ClickTracks of Santa Cruz, Calif.

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I do it all the time, probably because I want to make sure that everything was working.

Are such evaluation clicks by the Google CEO registered by Google as "invalid clicks" and filtered out before advertisers are billed? Or, are Google advertisers charged for a click each time Schmidt clicks on a Google ad under the guise of making sure that "everything was working?"

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An almost endless array of clever schemes exists to separate consumers from their money. There are cross-border scams that consist of fake foreign lotteries, phony prize promotions, advance-fee loan cons and the infamous Nigerian scam. Charity scams take advantage of consumers' generosity while so-called home-opportunity scams zero in on people looking for an easy way to make a few extra bucks. Identity thieves "phish" for personal information, like account numbers and PINs, which they use to sink your good credit (while sucking every penny out of your bank account). Pop-up spammers rely on nefarious methods to secretly wrest control of your PC desktop so they can pummel you with ads. Auction fraud accounts for half of the complaints the agency receives.

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The practice, known as "click fraud," began in the early days of the Internet's mainstream popularity with programs that automatically surfed Web sites to increase traffic figures. This led companies to develop policing technologies touted as antidotes to the problem. But some marketing executives estimate that up to 20 percent of fees in certain advertising categories continue to be based on nonexistent consumers in today's search industry.

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My August article covered "just a few of the ... examples I have observed and recorded." Since then, my Yahoo-spyware collection has grown dramatically. I now have many dozens of different examples of Yahoo pay-per-click ads shown within spyware.

My August examples demonstrate what I call "syndication fraud" -- Yahoo placing advertisers' ads into spyware programs, and charging advertisers for resulting clicks. But Yahoo's spyware problems extend beyond improper syndication. In my August syndication fraud examples, an advertiser only pays Yahoo if a user clicks the advertiser's ad. Not so for three of today's examples. Here, spyware completely fakes a click -- causing Yahoo to charge an advertiser a "pay-per-click" fee, even though no user actually clicked on any pay-per-click link. This is "click fraud."

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Brian Kabateck of Kabateck Brown Kellner has not received a response to a letter he submitted to his Google counterparts about the proposed settlement in the Lane's Gifts v Google case. That settlement will come up for a final fairness hearing soon before the Arkansas judge, and right now, Kabateck doesn't think it's very fair.

The letter invited Google and their counsel to meet with Kabateck and other attorneys in the presence of a mediator to discuss "the many serious and substantive objections" they have to the $90 million settlement.

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John Thys still hasn't figured out how much his company has paid Google Inc. for bogus sales referrals caused by "click fraud"--a sham aimed at a perceived weakness in the Internet search leader's lucrative advertising network.

But Thys says he has uncovered enough of it to conclude that Google is trying to shortchange his company and thousands of other advertisers by offering refunds totaling $60 million to settle a lawsuit.

"It's almost like an insult that they expect us to take this token money," said Thys, director of Internet marketing for Radiators.com.

Google also expects to pay $30 million to the lawyers who settled the case on behalf of advertisers, raising the settlement's total value to as high as $90 million. Still, that's a fraction of the more than $10 billion in cash held by the Mountain View, Calif.-based search company.

An Arkansas judge is expected to consider the proposed class-action settlement in late July.

The refunds, which will be provided in the form of advertising credits, are meant to compensate Google's customers for undetected click fraud, which contributed to the $13.3 billion in ad revenue that has poured into the company since 2001.

Google's offer works out to a $4.50 refund on every $1,000 spent in its vast advertising network over the past 4 1/4 years.

Meanwhile, independent studies assert that anywhere from $100 to $400 of every $1,000 stems from click fraud. If those estimates prove correct, Google might be on the hook for $1 billion to $5 billion in advertising refunds.

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But while that may be good for Google, it doesn't mean the problem of bogus clicks on online ads--which advertisers have to pay for--is going to disappear anytime soon. A lack of clear standards for determining what is a fraudulent click, or some sort of third-party clearinghouse to monitor the situation, means some advertisers believe they can't do much more than head to the courts when they think there's a problem.

Certainly, Google and Yahoo, which run the two largest pay-per-click advertising networks, say they're addressing the problem. But some click auditing companies still claim that between 20 percent and 35 percent of clicks on Net advertisements are fraudulent.

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It appears that many of the clicks on the Web site's search-engine ads were made not by potential customers but instead by automated programs or people trying to drive up Radiator's advertising bill. Like other advertisers that place links on search engines, Radiator.com pays only when people click on the links.

After analyzing where and when each click came from, auditing firm ClickFacts Inc. estimated that 35 percent of the referrals that Radiator paid Google for stemmed from bogus traffic. Likewise, 17 percent of the leads that came from Yahoo search results were illegitimate.

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The problem, according to a lawsuit filed last year by Google, is that Auctions Expert began clicking on the ads itself, artificially inflating the number of clicks and driving up the bills sent to advertisers.

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