Over the past holiday season online ads were everywhere, promoting everything from low-priced flat screen TVs to digital cameras. Many of these advertisers are still analyzing the ROI delivered by these campaigns. One of the areas advertisers are starting to monitor more closely is just how much of their pay-per-click (PPC) or search-marketing budgets were lost to click fraud. Retailers spent more money than ever before on online advertising, including media buying into the popular search marketing–or PPC advertising–medium. PPC advertising is one of the fastest growing segments of the online advertising market. It works by allowing the advertiser to buy the rights, for a period of time, to search terms or words that a consumer might type into a search engine. When a consumer uses that word or term in a search, the advertiser’s ads are displayed in the context of the search results.

The market for search or PPC advertising has grown considerably (to $4.8 billion in 2006), representing more than 42 percent of the total online ad spending. But as advertisers continue to embrace this popular medium, they are doing so more carefully because of the growing problem of click fraud.

Click fraud occurs when someone clicks on an ad without any intention to purchase or register. The person or “bot” (a computer-generated user) has no intention of taking the action the advertiser is paying to get. The perpetrator could be a company trying to eat up its competitor’s media buying or advertising budget, a dissatisfied consumer or a ring of people working together to make money off the advertising campaign.

electronic retailer magazine