Click Fraud Unsettles Web Advertising Market

A new study says advertisers lose up to $800 million a year to an Internet scam called "click fraud." Many advertisers pay only when someone clicks on their ads. The fraud occurs when people click with the intention of running up an advertiser's bill.

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STEVE INSKEEP, host:

Here's a growing problem in Internet advertising. It's known as click fraud. It undermines companies that rely on pay-per-click advertising. Another problem the founding fathers probably never envisioned.

NPR's Allison Keyes has more.

ALLISON KEYES reporting:

A company doesn't have to pay for a pay-per-click ad unless someone clicks on it. Click fraud occurs when someone clicks on an ad repeatedly to distort the numbers.

Outsell, an information industry research firm, has compiled some numbers that define the scope of the problem. Outsell's lead analyst, Chuck Richard, says the firm's studies showed advertisers lost $800 million to the practice last year.

Mr. CHUCK RICHARD (Lead Analyst, Outsell): On these pay-per-click ads, 14.6 percent are estimated to be fraudulent - people who are using one of these means, of either trying to waste someone else's money or earn some money for themselves.

KEYES: Richard says 27 percent of the advertisers Outsell interviewed said they had cut their pay-per-click advertising because of the problem. He says click fraud is affecting what had been the fastest growing type of online advertising and a type of ad that provides 90 percent of the revenue of companies such as Google.

Google could not be reached for comment.

Allison Keyes, NPR News, Washington.

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