Google released a paper that attacks the way third party click fraud auditing programs, run by independent vendors, interprets click fraud; John Battelle got an advance copy of the PDF which you can download here.

"Here’s the situation: on the one hand you have your customers, insisting that there is a problem and that you do something about it. On the other hand, you have your engineers, insisting there is not a problem. Further complicating the issue is that your customers, unsatisfied with your insistence that their concerns are, in fact, not a concern, have gone and hired third party firms who then validate their concerns (and turn click fraud detection into yet another industry - see the ads on here). Then, of course, the press whips those concerns into a major frenzy, threatening your $100+billion market cap.

Here’s the major points that Google paper "How Fictitious Clicks Occur in Third-Party Click Fraud Audit Reports", published August 8th, makes about Click Fraud auditing.

"The most fundamental flaw that we have seen in these reports is the existence of fictitious clicks: events which are reported as fraudulent but do not appear within Google’s logs as AdWords clicks. This report identifies the root causes behind these fictitious clicks and illustrates the extent to which this flaw impacts click fraud estimates from these firms."

"…….As an example, a single AdWords click may appear as five events in some reports, leading to (a) the identification of these events as “click fraud”, and (b) the reporting of five fraudulent clicks."

"…We have continued to see third-party click fraud auditing firms stating that their measurements show much higher levels of click fraud than we believe could possibly be realistic (e.g. 14%), which is troubling. These estimates have also had a high variance, ranging up to 35%. Although only a very small number of AdWords advertisers use third-party click fraud auditing firms, the click fraud estimates produced by these firms have been highly publicized and caused concern for many advertisers."

"…Events identified as fraudulent in these reports, which actually match real clicks in our logs, often converted at nearly the same rate (and in some cases better) compared to other clicks. For example, in one case where 800 paid clicks were marked as “fraudulent”, the rate of conversion for these clicks was 5.1%, which compared favorably with the 5.8% overall conversion rate the advertiser achieved on approximately 24000 paid clicks."

While Google does think there’s a place for 3rd party auditing of it’s AdSense reports - it’s not happy with what has cropped up so far:

"Invest in R&D and engineering, and take quality issues seriously o We do believe that there is a place for third-party click auditing firms in the industry’s value chain, but only for those who can deliver real value to all stakeholders."

I have personally found that Click Fraud is no where near the 15% that some estimate - but admit it can be the case for some websites - mostly those who are being attacked by competitors.   When I have looked at sites with KeywordMax’s Click Auditor, in commercial segments where you’d expect a lot of click fraud, I did not find much that one could actually call click fraud.

I did see cases were people would be searching for something, like office furniture, and click on ads for items contained by the same website, over and over, within a short period of time - but when I looked closely, it was not click fraud, but poor quality on the website where the ad was pointing to - and a visitor is just looking for what they want and will quickly go to the next link if they don’t see what they are after.   But that’s not click fraud.

So I don’t think, at the end of the day, Click Fraud is as much of a problem as it’s been made out to be.  I don’t know if Google is right or not in it’s position - but I do think that third party vendors (and I won’t name there here) are taking advantage of the perception of click fraud.  Google’s position is the current crop of Click Fraud products does not add anything positive and actually are misleading.  I think they’re right - but as John Battelle points out, the motivation for the paper might be more about deflating a perception people have about AdSense Click Fraud.