Click fraud rate lower than expected, says report

The rate of click fraud--fraudulent clicks on pay-per-click-based online ads--is less than 14 percent rather than 20 to 30 percent or higher, as some companies have said, according to a new report from a service that monitors click fraud for advertisers.

The Click Fraud Index shows that the overall, industry-wide average click fraud rate is 13.7 percent. The click fraud rate at top-tier search engines such as Google and Yahoo is even less, at 12.1 percent, the data show. The rate rises to 21.3 percent at so-called Tier 2 search providers and 29.8 percent at Tier 3 search companies, according to the Index.

The Click Fraud Index monitors and reports on data collected by the Click Fraud Network, a free service advertisers can use to track their online ad campaigns. Click Forensics, which hosts the service, also sells pay-per-click validation services and licenses technology to advertisers.

Click fraud can occur when a Web site publisher clicks on ads on its site to drive up its revenue or when an advertiser clicks on a rival's ads to deplete its ad budget, either manually or through the use of software bots in click farms. There is disagreement and uncertainty in the industry as to how big a problem it really is.

Search engines say they catch most click fraud and compensate customers for any that slips through the cracks. They don't divulge statistics but have complained that high click fraud statistics provided by companies that sell pay-per-click ad services are questionable and possibly inflated.

Advertisers and independent analysts say creating an independent third-party organization to gather data from advertisers and search engines is the best way to really assess and reduce click fraud.

In the meantime, Google has proposed a $90 million settlement to a class-action click fraud lawsuit that has yet to be approved by the court.