The most basic form of click fraud involves a website owner signing up with Google to host AdSense ads on their site, with the site owner getting a commission from Google whenever a visitor clicks on the ads. That’s perfectly legitimate, the fraud, at its simplest, comes in when the site owner clicks the ads themselves, to gain click through fees the advertiser (via Google) for a click that was of zero value to the advertiser.

Recent estimates suggest click fraud is extremely widespread, for example Wired says

The amount of click fraud is difficult to quantify; estimates of the proportion of fake clicks run from as low as 1 in 10 to as high as 1 in 2. In a widely cited recent study, MarketingExperiments.com, an online marketing research outfit, reported that “as much as 29.5 percent” of the clicks in three experimental PPC campaigns on Google were fraudulent.

This is obviously going to be a big concern to Google, after all that same Wired article quotes Goldman Sachs analyst Anthony Noto ‘keyword advertising accounted for about half of [Google’s] estimated $3.7 billion in revenue for 2005.’ That, we can assume, is not a revenue that Google likes to see threatened by increasing concern that fraud makes adwords a bad bet for advertisers.

In part two of this piece I write about what Google might be doing to fight click fraud