Click Fraud Perception is the Number One Enemy

As I have read blogs around the internet, there are a number that say that Click Fraud is adversly affecting Google and Yahoo! They are saying that Google's wallet is getting fattened by click fraud, while the little guys, the advertisers, are spending more and more money on clicks depreciating in value. Or they are saying that advertisers are slowly decreasing their ad spending due to the fear of click fraud.

No one can say with absolute certainty how much click fraud is taking place on the internet. No one can say how many clicks go unfiltered and are charged to advertisers. What we see though are that according to Google <10% of clicks are invalid (only some of these clicks are considered fraudulent) and are filtered, while according to Click Forensics click fraud is in the range of 28.1%. Each of these two companies benefit from opposite perceptions about click fraud. Google would like us to think that it is for the most part under control, and rarely would one be charged for invalid clicks. Click Forensics and others like them would like to sell their services to people that believe click fraud is rampant. As a side note Google only refunds about 0.02% of clicks that go unfiltered.

I believe that the real enemy of the PPC (pay-per-click) model of advertising is the perception that click fraud is rampant as it is spread by 3rd parties and the media. I would like to know how many advertisers cut back their budgets based on fears, while not inspecting their ROI.

I do not suspect that the fear of click fraud in advertisers will bring about the ruin of Google. However, I would suspect that it is hurting Google and advertisers more than actual click fraud.