As PPC (Pay Per Click) advertising becomes more prevalent in the online business world, so do related legal issues. While bidding on keywords, affiliates can hijack trademarked phrases that can result in a loss of revenue for the owner of the trademarked product. In addition, Adsense users may be clicking on ads on their own sites. Worse, your competitors may be clicking your ads. Software could periodically click your paid ad, and quietly drain your account of funds. In some countries, people are paid to click your links.
The list goes on and on. Click Fraud is a growing concern among online advertisers. The worst part about click fraud is that most advertisers don’t realize it is happening to them. The advertiser is the only loser in click fraud. The advertising network gets paid per every click whether or not it was a fraudulent click or a legitimate one.
As long as the advertising networks don’t lose revenue as a result of click fraud they are not motivated to provide a real solution. Although advertising networks claim to fight click fraud, proactive advertisers often turn to third party monitoring systems. The pay per click industry is in disagreement regarding click fraud rates. It is estimated that the number could be as low as .02 percent and as high as 30 percent or above. It is no wonder that advertisers would like to get a more accurate picture. The severity of click fraud depends on a variety of factors, such as ad position, bid price and industry type. It appears, that the more competitive the industry and the higher the bid price, the more incentive there is for others to try to defraud you. Pay Per Click Arbitrage is another common practice defrauding advertisers. Simply put, PPC arbitrage is the practice of bidding on inexpensive keywords, purchasing clicks from Google, Yahoo and other advertising networks and then redirecting the visitors to websites built exclusively for the purpose of hosting expensive AdSense ads.
So, the offender pays fifty cents for a click while earning five dollars for another. PPC arbitrage inflates keyword prices while making crooks rich.