What is 'Click Fraud'

Click fraud is the act of illegally clicking on pay-per-click (PPC) ads to increase site revenue or to exhaust advertisers’ budgets. Click fraud is different from invalid clicks (those that are repeated or made by the ad's publisher) in that it is intentional, malicious and has no potential for the ad to result in a sale. Click fraud happens with pay-per-click advertising and may involve either humans, a computer program or an automated script pretending to be a legitimate user and clicking on paid search advertising with no intention of purchasing something.

BREAKING DOWN 'Click Fraud'

Click fraud is committed for two reasons, either to reduce competition among advertisers or to generate revenue by gaming the PPC advertising system. For example, Advertiser A can engage in click fraud to use up Advertiser B’s ad budget and space on irrelevant clicks, leaving Advertiser A as the sole advertiser. This is an example of non-contracting party click fraud.

Another example is maliciously attempting to make it look like a publisher is clicking on its own ads, which may cause an advertising network to end its relationship with that publisher. Since PPC advertising revenue is the primary source of income for some publishers, this practice can put a publisher out of business. Click fraud may also be committed to vandalize a publisher without a financial motive or when friends, family or fans of a publisher click on ads on a website to generate revenue. Both can be difficult to detect.

Click Fraud: Gaming Ad Revenue

Another reason would be for site owners (publishers) to commit click fraud to increase their ad revenue. This arrangement involves three parties: an advertising network, such as Google's AdWords/AdSense or Yahoo! Search Marketing, which places the ad; the publisher that publishes the ad and an advertiser that creates the ad and contracts with the advertising network to place the ad. Click fraud under this infrastructure happens as publishers click on ads that have been placed on their own website to generate revenue. 

Click Fraud in Practice

The easiest, least detectable way to commit click fraud is to create a website that hosts banner ads and click on those ads as much as possible to generate revenue. Some companies will hire low-cost employees — often located abroad — to manually click ads all day. Others will write or use scripts to automatically click on ads. Both of these methods are easily traceable unless the user or script masks the computer’s true IP address. Another popular way is by using computer viruses to surreptitiously take over a large number of computers and to have those computers click ads. 

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