• by Laurie Sullivan  @lauriesullivan, January 28, 2009

The industry click fraud rate climbed to 17.1% in the last quarter of 2008 versus 16.6% a year earlier, according to stats released by Click Forensics today. The increase represents the highest level recorded since the company began tracking rates in 2006.

Austin, Texas-based Click Forensics CEO Tom Cuthbert called the increase "significant" based on the billions spent in the quarter on pay-per-click (PPC) advertising. He said three things contributed to the increase. First, brands continue to move more dollars into PPC campaigns; second, there has been a reemergence of click firms, and third, the economic downturn has prompted a rise in cybercrime and a jump in botnet activity.

"Google, Yahoo and others are doing what they can to protect advertisers, but this is an arms race," Cuthbert said, calling for more industry cooperation to monitor activity. "We're at the early stages of identifying these issues, and unfortunately it will only get worse."

The Interactive Advertising Bureau has been making headway in defining click measurement guidelines. The Click Quality Council also continues to address the issues, but both need to work together. "It will take industry cooperation to address the issues at a better clip than what we're doing now," Cuthbert said.

The average click fraud rate for PPC advertisements on search engine content networks Google AdSense, Yahoo Publisher Network and others reached 28.2%--up from 27.1%, sequentially, and down slightly from 28.3% in the year-ago quarter.

Traffic from botnets represented 31.4% of all click fraud traffic in the December 2008 quarter--up from 27.6% reported sequentially, and 22% in the year-ago quarter.

In the December 2008, the greatest percentages of click fraud originating from countries outside North America were from Canada, 7.4%; Germany, 3%; and China 2.3%.

Cuthbert said he also has started to see click farms reemerge, and suggests advertisers pay close attention to these threats and others as online search and PPC ads continue to support companies moving marketing dollars online.