The increasing popularity of the pay per click advertising model has led to a new challenge: click fraud. Click fraud is basically a way to make money by causing others to lose money. Click fraud, in essence, is any kind of fraud involving repeatedly clicking on advertising with a malicious intention. There are different types of click fraud, but this problem has driven up advertising costs and generally cost merchants hundreds, thousands, or even hundreds of thousands of dollars more than they should be paying in click costs.

One example of click fraud is a way to cheat the competition. In this scheme, a company or individual will pay groups of people, usually foreigners, to click on certain ads all day for a set amount of money. This drives up advertising costs for the company whose ad is being clicked, thus harming their bottom line. None of the parties who are committing the click fraud intend to buy the products sold on the website whose ad they are clicking.

Another example of click fraud is dummy sites created for the sole purpose of creating phony clicks. By creating a site that posts pay per click advertising from publishers like Googles AdWords, creators of these dummy sites hope to drive up profits by increasing the number of clicks that appear on their sites. One way to do this is to click these links themselves, though most publishers have provisions in place to hopefully eliminate this kind of fraud. Another way would be to pay someone else, preferably someone overseas, to do the clicking.

There is simply not enough information to determine how common or how costly click fraud is because hard numbers are hard to obtain. Plus, determining which clicks are frauds and which are real can be a real problem for the publishers of advertising. Click fraud may constitute up to 20% of the PPC market, which drives up costs for advertisers. The problem is that PPC advertising works too well for some companies to give up on PPC as part of their marketing plan. While Google and Yahoo! both claim on to be vigilant in their search for click fraud, plenty of instances go unnoticed and slip through the cracks.

The potential for PPC fraud shouldnt be a deal breaker for most advertisers. The best way to keep from falling prey to PPC fraud is to be aware of the issue and exercise caution and vigilance. The following guidelines will help prevent PPC fraud from unnecessarily draining an advertising budget.

Use only search engine PPC providers. Search engine providers are particularly effective at identifying fraudulent activity, especially since these sites go to great lengths to monitor for and prevent click fraud.

Vigilance in tracking results can also help identify problems. Watch the numbers closely, especially at the beginning of the campaign, and notify the PPC provider immediately if the ad begins receiving an unusually high number of clicks especially clicks that do not lead to a sale.

Set a daily, weekly, or monthly ad budget with the PPC provider. When the budget is exhausted for that time period, the ad should be removed. This will prevent a websites entire operating budget from being drained by click fraud.

Aside from click fraud, other challenges to PPC advertising strategies include the cost and longevity of a PPC campaign. Some keywords are extremely popular and thus competitive. Competitive keywords tend to cost more per click and can quickly drive up advertising costs. Longevity is another issue. Unlike SEO techniques, which will improve a sites volume of traffic for years, a PPC campaign is only a viable source of traffic as long as the site continues to pay for the campaign. When a website decides to end a PPC campaign, the traffic from the campaign will stop.