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Click Fraud Rate Dips, Publisher Scams Rise

There's good news and bad news for online advertisers on the click fraud front. The good news is the rate of bogus clicks continues to drop, but the bad news is publisher-backed scams are rising.

The average click fraud rate was 12.7 percent for the second quarter, down from 13.8 percent in the first quarter and down from the 16.2 percent rate reported for the second quarter of 2008, according to Click Forensics' Click Fraud Index.

The index provides pay-per-click data collected from online advertising campaigns from both large and small advertisers across all leading search engines. Traffic across more than 300 ad networks is also reflected in the data, according to the PPC tracking firm.

"The increased diligence of online ad networks to detect and block invalid traffic sources has contributed to the decline in the overall click fraud rate this quarter," Tom Cuthbert, president of Click Forensics, said in a statement.

On the other hand, the data in Q2 also showed that so-called publisher collusion fraud continues to increase. This occurs when online publishers use rotating IP-addresses or botnets to click ads on their own sites in order to generate inflated commissions from unprotected ad networks. Ad networks have difficultly differentiating such attacks from valid clicks.

The news comes at a time when advertisers are increasingly using ad networks as a more affordable alternative to online campaigns targeting high-traffic, well-known sites.

Ad networks match advertisers with Web publishers, connecting sites that sell ad space with advertisers that want to reach potential customers, often based on shared interests, for instance, sports, outdoor hobbies or travel.

The networks are generally comprised of lots of smaller, lesser-known sites and, as a result, advertisers can reach audiences as big as those at the super-sized Web sites, but at a fraction of the cost. As a result, the ad networks are grabbing more online ad dollars.

Meanwhile, the Interactive Advertising Bureau and Click Forensics, in conjunction with key industry players such as Google, recently issued guidelines aimed at reconciling what constitutes a legitimate click in terms of PPC campaigns. The goal is to combat click fraud complaints in the industry.

In the past, advertisers have claimed that they often overpay for invalid clicks, while search engines counter that they have steps in place to identify and compensate for click fraud. The fraudsters themselves, however, are rarely targeted.

In a recent case, however, Microsoft filed a lawsuit seeking damages against three fraudsters for manipulating clicks on search ads to hurt rivals and give their own ads an advantage in ranking.