PPC campaigns such as Google Adwords and Yahoo SM are a great addition to any online advertising campaign, so long as they are managed correctly. However advertisers always have to be a bit wary of the idea of click fraud infiltrating their campaigns, and that a fairly significant percentage of clicks to their sites are done with mal-intent.

As we’ve discussed previously, click fraud in comparison shopping is nearly non-existent. This may primarily be due to the fact that in PPC, the ones perpetrating the click fraud is also a beneficiary since they receive a portion of the advertisers spending–whereas in comparison shopping the only one monetizing on extra clicks are the shopping engines themselves–and you can imagine the PR nightmare that an engine would get if they were on the wrong side of click fraud.

A recent report by Click Forensics shows that click fraud is at an all time high:

The level of clickfraud is the highest the company has seen since it started monitoring for it in 2006, dashing our hopes that it might hold steady in 2008. The company recorded a rate of 16.3% in Q1 2008. Also alarming is the fact that over 30% of click fraud is now coming from automated bots – a 14% increase from last quarter and the highest rate Click Forensics has seen since it started collecting data.

Take it for what it’s worth, as the source of the study is a company that tries to minimize click-fraud for advertisers, but it’s worth noting that Google has had settlements of $90 million with advertisers because of click fraud in the past, indicating that is indeed a serious issue.

With the economy as it is and companies trying to cut costs as much as they can, click fraud provides yet another reason for online advertisers to worry.

When speaking with potential clients about the Comparison Shopping Engine industry, the issue of click fraud is often brought up.

After all, when hundreds to thousands of dollars are changing hands on a monthly basis, it is natural for a merchant to expect that most all of that money is spent bringing in non-fraudulent traffic.

In fact, in the PPC industry, e.g. Google Adwords, click fraud is a tremendously serious issue:

The industry-wide average click fraud rate for the entire year went up 15 percent, ending the year with 16.6 percent of all clicks on Web ads being fraudulent. The click fraud rate for search engine ad networks alone, including Google AdSense and Yahoo Publisher Network, grew even more. That was up 47 percent in the fourth quarter, ending the year with a 28.3 percent click fraud rate. According to this data, nearly one out of every three clicks on a Google or Yahoo ad is fraudulent.

However, every coin has two sides, and we wanted to share our perspective on click fraud in relation to CSEs.

Simply put, click fraud is extremely rare on the CSEs.

As a reader of our blog you probably know that our company lives and dies by the numbers–so if any sort of fraudulent activity on our clients’ accounts were to occur we would be able to immediately recognize it.

You can think of it as fraudian slip protection

In the last year, we have not had one encounter that would suggest campaign tampering or fraudulent clicking of ads. Much of the credit goes to the engines who take preventative measures to decrease the risk of click fraud. These measures include::

• Tracking IPs (internet protocols, or “addresses”) for each click and having the ability to run an IP report if they (or you) are suspicious of an unusually high volume of traffic
• Not charging for multiple clicks within a 30 second time period; e.g. if your product is clicked on 20 times in a 30 second time frame you will only be charged for one click
• Issuing refunds in cases where merchants experience an unusual high volume of clicks without any sort of sales increase

The CSEs understand that click fraud is a potential deterrent for otherwise interested merchants, so they actively take preventative measures to make it a non-issue.

Click fraud detection and prevention was actually once a major selling point of ours–however the CSEs have done a such a fine job policing it themselves that we had to cross that off our list.

Which, in the end happened for the best because our list was getting too long

We’ll see you on the engines then, safely clicking away.

-Tien