It is important to differentiate between click fraud and invalid clicks, which are non-billable clicks that arise from crawlers, double-clicks and other methods that are innocuous in nature. Both click fraud and invalid clicks should not be billed to advertisers. My company defines click fraud as clicks or impressions originating from the malicious intent of the clicker that have no economic value to the advertiser.
The key component of any click fraud definition is identifying the intent of the user. But how can a clicker's intent be determined with certainty? The inherent difficulty in resolving this question demonstrates that click fraud is not a black and white issue. In order to address the shades of gray, one must look at click quality to suggest a more practical definition of click fraud.
Click quality is a continuous spectrum of good and bad. Some clicks are "good" because they have a high likelihood of conversion and are thus valuable to the advertiser. For instance, if an individual purchases a lot of shoes online, any clicks he/she makes on shoe-related ads have real value to the advertiser because the individual has demonstrated his/her propensity to purchase shoes online.
Similarly, some clicks are "bad" because they have a low likelihood of conversion and provide minimal value to the advertiser. If a user has a strong aversion to making purchases online, his/her clicks are unlikely to result in a purchase, and are therefore less valuable to the advertiser.
Finally, some clicks are fraudulent because the clicker has no intention of converting, thus giving the advertiser no chance of reaping a return on their investment in that click. This can happen when an advertiser is attempting to drain the competition's advertising budget, or more likely, when a publisher is attempting to drive up the revenue its site earns through hosting ads.
Although it is nearly impossible to determine the intent of the clicker, there are several rules of thumb advertisers and ad networks can use to help recognize and identify instances of click fraud.
When publishers encourage people to click on ads that are hosted on their own Web sites, they are not necessarily perpetrating click fraud. Depending on the ad's targeting, landing page and path to conversion, it is possible that publishers who persuade users to click on the ads they're hosting may generate good quality traffic for advertisers. However, it is more likely that these publishers are promoting clicks that have little or no value to the advertiser, thereby driving down the quality of clicks from their sites.
By decreasing the returns advertisers' generate through ad networks, these publishers put themselves at risk of suspension or eviction from high quality networks, which act in the best interest of their advertisers. Publisher networks, from Google AdSense to Yahoo Publisher Network to Advertising.com, prohibit publishers from soliciting third parties to generate ad clicks on their Web sites. Therefore, regardless of how much I respect Seth Godin, publishers should be extremely wary of encouraging readers to click on ads on their own Web sites; such efforts to increase their revenues will likely cost them the option of earning any revenue, period.