Fears of fraud grow on pay-per-click ads

Fears of fraud grow on pay-per-click ads: "Businesses that pay billions to Google and Overture to steer potential customers to their Web sites are increasingly questioning how much fraud lurks in the blossoming pay-per-click advertising.

There is evidence that at least some scammers are clicking away at the ads, or having programs called 'hitbots' or 'clickbots' do it for them, with the knowledge that each click costs an advertiser money. Some of the troublemakers are disgruntled employees; some are companies trying to force up competitors' ad spending; some are even Web page operators who let search engines deliver ads to their sites and then collect a cut when people click on those ads.

Ad buyers worry that 'click fraud' could become rampant, if unchecked - a development that could undermine confidence in the fastest-growing segment of Internet advertising.

In addition to monitoring and enforcement efforts under way at Google, a series of "natural" processes built into its systems limit the impact of click fraud, said Salar Kamangar, director for product management there. The Internet remains a measurable medium, he said, adding that advertisers can help prevent or detect click fraud by closely monitoring their pay-per-click campaigns.

Google said in February it collected $1 billion in revenue during the last three months of 2004, both from ads that appeared alongside Google results when people searched for specific keywords and from ads it placed on other companies' Web sites based on the context.

Executives at Speedy Registrations, a British company that sells personalized license plates, said they believed that its pay-per-click ads had been fraudulently hit last year.

The company, which has been advertising www.speedreg.co.uk on Overture since August, saw daily traffic from its keyword ads abruptly triple, from 400, for five days last October, said Des Elton, the managing director. "We averaged 1,200 clicks a day, costing us £950 on average every day," he said. "We'd been up to £450 to £500 before, but that was the extreme case."

The sudden rise in site traffic would have been welcome if it had produced increased sales, but conversions from clicks to sales plunged, Elton said. The company reported its suspicions to Overture in early November; three weeks later it collected a refund of £2,519.88, or about $4,810."