Click fraud is a big problem and one that threatens to jeopardize the state of paid search. Lawsuits such as this online retailer are being filed because of it.
Search engines like Google, Yahoo and MSN use the pay-per-click system where advertisers pay a fee based on the bid price they set for each click on their ads. As with any system this can be prone to abuse. Click fraud happens when someone or a bot repeated clicks on your ads running up the bill artificially with no intention of ever browsing or buying anything.
Enter Cost-Per-Action or CPA. The CPA model supposedly deals with this problem because advertisers only pay when an action on their website is taken (i.e. visitor buys something) and not just for browsing.
Such a problem exists largely because many people do not actually take the time to monitor their statistics and see if click fraud really is happening to them. Some don’t even know how to monitor such activity to begin with let alone track click fraud.
While the CPA model may sound like the ideal solution to the industry, it is unlikely that the status quo would be changed anytime soon with the smaller search engines as well as the big ones like Google, Yahoo, and MSN.
The real challenge involves the integration of this technology into the current search technology as Isaac Scarborough of iMediaConnection found:
The real difficulty may actually have more to do with incorporating search engines and merchants into the CPA model than avoiding click fraud once they’re there. When I asked Lance Podell, CEO of Kanoodle — a search engine mentioned explicitly by Belanger — if his company had any plans to move away from the CPC pricing model, he told me, “Kanoodle’s current pricing standard is cost-per-click, and while we are always looking for improvements to our business, we do not have plans to change this model in the foreseeable future.”