An unfortunate byproduct of pay per click advertising business is click fraud. Many people with an online business spend large amounts of money on pay per click advertising only to discover that many of people clicking on their ads weren't really interested in their products or services.
Bogus "visitors" to a pay per click ad represent click fraud. This is a serious scam that threatens viability of pay per click advertising business which has become enormously profitable for all of major search engine operators, namely Google, Yahoo/Overture, and MSN.
Click fraud has different twists, but end result is generally same. Advertisers are billed for fruitless traffic generated by someone who repeatedly clicks on an advertiser's ad without any intention of ever buying anything.
The search engine advertising market is currently about $3.8 billion per year and estimates vary widely on how much click fraud is actually going on. Clearly, search engine operators would like to downplay extent of this problem. Some industry experts claim that a little click fraud exists but that it is overblown by advertiser paranoia, while others estimate that ten to twenty percent of all clicks are false (made by someone with no legitimate interest in ad itself).
Virtually everyone involved with pay per click advertising sees click fraud and knows it's there, but no one is quite sure what to do about it.
Both Google and Yahoo/Overture acknowledge that click fraud problem exists, but claim improved internal controls will prevent problem from escalating. Their stated position seems to be that they are concerned about click fraud, but that it is not a material issue so far. Both of them are touting their increasing internal actions aimed at detecting and combating click fraud.
Such reassurances from search engine companies certainly aren't surprising, given how much they stand to lose if advertisers cut back on advertising spending. The stakes are huge and search engine companies are actively involved in public relations campaigns. Industry research firm eMarketer expects $7.4 billion to be spent on search engine advertising by 2008, up from only $108.5 million back in 2000.