Last year, Internet advertisers lost $800 million to bogus clicks on their marketing messages on sites like Google and Yahoo, according to new research from Outsell, a market research firm. That would
make click fraud a huge problem--perhaps the most immediate problem facing the online advertising industry. Advertisers have complained that the search engines they pay to advertise with don't do
enough to combat the problem--or at least, disclose the extent of it. Click fraud occurs when companies deploy software programs to perform repeated searches that click on competitor's ads with the
intent of depleting their budgets. The report, released today, says that 14.6 percent of all clicks are bogus, and that three-quarters of advertisers have been victims of click fraud at least once.
The study also finds that 27 percent of advertisers have either reduced or stopped spending on pay-per-click ads altogether. Outsell Vice President Chuck Richard adds that click fraud is easy to get
away with, and that Web sites have done little to stop it. Yahoo representatives insist that the portal rigorously polices the problem, and that it declines to bill advertisers when it discovers click
fraud--which has amounted to billions of dollars throughout the years. Google did not respond to a call seeking comment. Meanwhile, just 7 percent of click fraud victims seek a refund, which on
average amounts to $9,500. Outsell's survey was based on 407 online advertisers spending between $1,000 and $10 million annually on PPC advertising.
Read the whole story at San Francisco Chronicle »