Click fraud is a phenomenon whereby third parties willfully click on Pay Per Click model (PPC) text or banner ads on the Internet. This type of fraud is particularly associated with Googles Adsense / Adwords system.
Pay per click
The pay per click model was first used in 1997 by the website goto.com (now overture.com). It is a method of advertising where webmasters provide space on their websites for relevant text or banner ads with clickable links.
The webmasters receive a fee every time visitors click on one of these ads. This is one of the aspects of this system that it is susceptible to fraud. Click fraud also comes in another form known as bluffclicking. This name was first used in correspondence with Google on May 30, 2007 by an affected site owner.
Bluffclicking: the aimless clicking on AdSense ads by bored and anonymous site visitors. By clicking in this manner, the site visitor ensures that the owner of the site will be banned from Google Adsense program for suspicious activity, thus losing their current earnings balance.
Click fraud involves placing ads on your website and then clicking on the links in order to generate income. Often this results in only a limited profit and fraud will not be noticed. Although fraud on a much larger scale occurs.
Scripts (small computer utilities) can be used in order to simulate the clicks. If this type of fraud is done from a single or limited number of computers (or IP addresses) within a given region, this will trigger a suspicious activity alert and so the chances are that they will be caught.
There is organized crime syndicates involved in click fraud. They use a large number of computers spread over a large geographical area in an effort to commit fraud.
This is sometimes done using computers of innocent and ignorant users, where a Trojan is installed. These zombie computers are used in this way once you click on an advertisement to simulate in order to generate income for syndicate that placed the ads.
Even a company like Google unintentionally benefits from click fraud because they also have their share of advertising revenues in their pocket. This activity compromises Adwords advertisers whose return on investment (ROI) is depleted.
There are estimates that 14 to 25 percent of all clicks on online ads are fraudulent, but Google itself claims that these figures are greatly exaggerated because they are based on faulty research.