Identifying and tracking instances of click fraud is the first step in eliminating the problem. Click fraud is a huge expenditure on the resources of advertisers operating nationally and internationally, estimated to account for about 30% of all pay-per-click advertising spend. With so many at stake, it's no wonder search engines are putting so much time and effort into creating solutions.
One way search engines and other pay-per-click program providers have attempted to curb the growing click fraud problem is by introducing IP address repetition algorithms. These formulas are designed to pick up suspicious click patterns originating from a single IP address, which can help uncover the existence of click farms and competitor-led sabotage, as well as potential fraudsters at the source can identify.
However, this method of attempting to identify fraudsters has several problems. At first, fraudsters can almost completely bypass this check by logging in via a dial-up modem, DSL line, or cable modem, because with every new online session, a new IP address is generated. In addition, there is a wide range of software available to change IP addresses, which can again be used to 'spoof' the algorithm. Cookies and session tracking are other ways search engines can try to uncover potentially fraudulent activity, but again there are ways around these for fraudsters.
More comprehensive software is being developed that profiles and reports on the browsing habits of each click-through to enable companies to track and monitor suspicious behavior, although this is seen by many as intrusive and ineffective. Because anything on a small scale is still likely to go unnoticed based on the widespread coverage of advertisements on the Internet.
The click fraud problem recently made headlines with a class action against Google, prompting Google to offer $90 million as a possible settlement. Perhaps acknowledging their responsibilities, Google's offer goes some way to suggesting the extent of click fraud and its enormous costs to the Internet economy.
Several self-help measures can be implemented to keep the organization out of trouble. The first of these measures is to rely on search engine optimization and organic listings. If a site is well and completely optimized, it may eventually realize a ranking that the other site is willing to pay $2.50 per click. Similarly, there is no click-through rate with systematically high rankings, so the costs associated with PPC do not apply. While the process is significantly more laborious and takes significantly longer to see results, the SEO process is much cheaper in the long run, and with an estimated 25-30% of clicks being fraudulently, a systematically high listing saves money which may otherwise end up with click fraud for more profitable reinvestment.
Year after year, as the pay per click advertising market continues to grow and expand, click fraud will surely follow suit. Unless an effective means of preventing click fraud is developed and successfully implemented, shoppers will consistently lose faith in the advertising medium and turn to more effective, less wasteful marketing methods, which will seriously impact search engines and potentially can put the online economy at risk in the whole.
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