It cost Harrison as much as $20 for each click, but the potential new business seemed to justify the expense. Harrison's delight dimmed, though, when she realized the people clicking on her ads weren't really interested in her products.

She was being victimized by “click fraud,” a scam that threatens to squelch the online advertising boom that has been enriching Google Inc., Yahoo Inc., and their many business partners, the Times says.

The ruse has different twists, but the end result is usually the same: Merchants are billed for fruitless traffic generated by someone who repeatedly clicks on an advertiser's Web link with no intention of ever buying anything, the Times reports.

Harrison figures she has spent about 200 hours documenting the mischief that drained her budget and diverted customers to a competitor, costing her an estimated $100,000 in sales, the Times says.

“Click fraud has gotten out of control,” Harrison, who sells computer software to doctors, told the Times. “It's stealing money from my pocket. It's just as bad as someone walking into a store and taking a television.”

Estimates vary widely on how much click fraud is going on in the $3.8 billion search engine advertising market, the Times says.

“Click fraud exists, but it's mostly a big paranoia,” Chris Churchill, chief executive of Fathom Online, a San Francisco firm that studies the spending patterns on search engine ads, told the Times. Others believe anywhere from 10 percent to 20 percent of the clicks are made under false pretenses.

“Click fraud is like a big elephant standing in the middle of the living room,” Lisa Wehr, president of Oneupweb, a search engine advertising consultant, told the Times. “Everyone sees it and knows it's there, but no one is quite sure what to do about it.”

Both Google and Yahoo acknowledge the perils of click fraud, but believe improved internal controls and the increased vigilance of advertisers will prevent the problem from escalating, the Times reports.

:We are always worried about it, but it hasn't been a material issue so far,” Google chief executive Eric Schmidt told the Times.

After recently expanding its staff to patrol click fraud, Google broke up a scheme that had generated several thousand bogus transactions, chief financial officer George Reyes told analysts earlier this week, the Times says.

Yahoo also has been shoring up click fraud protections, Patrick Giordiani, a senior manager for the company's advertising subsidiary, Overture Services, told the Times.

For the full New York Times article, click to http://www.nytimes.com/aponline/technology/AP-Click-Fraud.html

February 14, 2005
http://www.the-dma.org/cgi/dispnewsstand?article=3367