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The key point is that click fraud is already taken into effect when advertisers select highest amount they will bid. For instance, there is no difference whether an advertiser pays $0.83/click for 121 clicks with 21 being fraudulent, or $1.00/click for 100 clicks when there is absolutely no fraud. In either case, advertiser pays $100 and generates a profit of $20, and Overture and/or Google make $100. What changes is advertiser’s yield (e.g., percent of clickers who purchased book) which in turn effects their highest bid price. That is, with fraud, 30 out of 121 clickers (24.8%) purchased book, and without fraud 30 out of 100 clickers (30%) purchased it. Without fraud, bid price in an efficient market will rise from $0.83 to $1.00.
In summary, online advertisers must focus on analyzing and improving their internal metrics (e.g., conversions) and not worry about click fraud as it is already incorporated into keyword bid prices. Hopefully, frivolous lawsuits and refund requests spawned by apparent click fraud will end as those in industry recognize this undeniable fact.
Tommy Maric is the manager of TopPayingKeywords.com. TopPayingKeywords.com is designed to help webmasters maximize their profits using Google’s Adsense™ program. Through extensive research, TopPayingKeywords.com develops up-to-date databases of the most popular keywords and their accompanying bid prices. For more information, please visit http://www.toppayingkeywords.com