Advertising Your Home Business With Pay Per Click Can be Risk

An unfortunate byproduct of the pay per click advertising
business is click fraud. Many people with an online business
spend large amounts of money on pay per click advertising only to
discover that many of the people clicking on their ads weren't
really interested in their products or services.

Bogus "visitors" to a pay per click ad represent click fraud.
This is a serious scam that threatens the viability of the pay
per click advertising business which has become enormously
profitable for all of the major search engine operators, namely
Google, Yahoo/Overture, and MSN.

Click fraud has different twists, but the end result is generally
the same. Advertisers are billed for fruitless traffic
generated by someone who repeatedly clicks on an advertiser's ad
without any intention of ever buying anything.

The search engine advertising market is currently about $3.8
billion per year and estimates vary widely on how much click
fraud is actually going on. Clearly, the search engine operators
would like to downplay the extent of this problem. Some industry
experts claim that a little click fraud exists but that it is
overblown by advertiser paranoia, while others estimate that ten
to twenty percent of all clicks are false (made by someone with
no legitimate interest in the ad itself).

Virtually everyone involved with pay per click advertising sees
click fraud and knows it's there, but no one is quite sure what
to do about it.

Both Google and Yahoo/Overture acknowledge that the click fraud
problem exists, but claim improved internal controls will prevent
the problem from escalating. Their stated position seems to be
that they are concerned about click fraud, but that it is not a
material issue so far. Both of them are touting their increasing
internal actions aimed at detecting and combating click fraud.

Such reassurances from search engine companies certainly aren't
surprising, given how much they stand to lose if advertisers
cut back on advertising spending. The stakes are huge and the
search engine companies are actively involved in public relations
campaigns. Industry research firm eMarketer expects $7.4 billion
to be spent on search engine advertising by 2008, up from only
$108.5 million back in 2000.

The incentives for click fraud have increased along with the
money devoted to search engine advertising. Advertising on search
engines has turned into a fast-spreading craze as more and more
marketers have realized substantially higher returns on search
engine ads than on more traditional marketing campaigns conducted
through print media.

Most pay per click advertisers set a spending limit and once the
spending limit is reached, the ads cease to appear in the search
results. Click fraud is a very unethical competitive tactic
where someone repeatedly clicks on a competitor's ad until the
spending limit is reached and the ad then disappears from the
search results. It seems that it's only a matter of time before
some advertisers become so exasperated with click fraud that they
file a class-action lawsuit against a major search engine.

The success of search engine advertising has substantially
raised prices that advertisers pay for top spots. Unfortunately,
these higher prices have turned click fraud into a dark little
industry of its own. Some crooks have hired cheap overseas
contractors to just sit in front of computers and constantly
click on targeted ads and others are developing sophisticated
software to help automate and conceal click fraud.

If you use pay per click advertising it would be wise to
carefully monitor your traffic to determine if you are the victim
of click fraud. In any event, it's probably safe to say that
pay per click advertisers are going to have to accept a certain
level of click fraud as just a cost of doing business.