Click fraud refers to generating clicks with malicious or fraudulent intent, for example artificial clicks on advertising banners with no purchase intention. The aim is either to increase your own income through advertising banners or to push your competitors' budgets to the point where their banners are no longer displayed.
Click fraud costs Google over a billion dollars a year. The fraud lowers the quality of the advertising network. If the total number of clicks is related to the number of clicks that actually lead to the purchase, the worthless multiple clicks damage the value of the ad. Search engines then earn less on the ad, with the loss of value doing the most damage to the market leader Google. Trust in this form of advertising is also affected.
The advertising company is also financially damaged. Especially with small companies that have limited advertising budgets, click fraud can cause a lot of damage. Here the damage is caused by the fact that the advertisement disappears early because the maximum amount was artificially reached. The advertisement therefore cost the company money, without generating and new customers.
Google has developed methods to detect click fraud and does not charge for detected fraudulent clicks. According to Google, a three-step system is used to detect click fraud.
Step 1: Every click is automatically checked by filters. Certain constellations of time, date and IP address are indications of fraudulent clicks.
Step 2: Conspicuous clicks from Step 1 are examined more closely in a similar analysis by computer, but also manually, whether they could have been "real".
Step 3: This step is used when an advertiser has concerns that clicks on their banner ads may not be indicating real interest. If such complaints are found to be correct by Google, the person concerned will be compensated.
Click fraud can be very obvious if, for example, the Google Adwords invoice in one month was significantly above the average of the last months.
There are special companies that have dedicated themselves to finding out click fraud. They can track the ads and examine the clicks more closely.