Click Fraud Cost $666 Million in 2006?

Think tank Incremental Advantage estimates that click fraud cost advertisers some $666 million during 2006, much of it due to organized crime.

Think tank IncreMental Advantage, which publishes research on topics ranging from public utilities and overseas investing to intellectual property and advertising, announced today it believes Internet advertisers lost as much as $666 million to online click fraud during 2006, much of that due to the activities of organized crime. In its new report, Combating Click Fraud, the firm argues the practice has become so pervasive that it’s stunting the growth of online advertising—an assertion that may make ad-dependent Internet businesses like Google, Yahoo, and AOL take notice.

Click fraud is the practice of generating fraudulent clicks on Web banners and other advertising for the purposes of jacking up the number of clicks an advertiser believes an ad received from real Internet users. Since many ad programs pay ad hosts on the basis of click-throughs, the false clicks are a way for advertisers to generate revenue for themselves, even though the clicks don’t translate to real users expressing interest in an advertised service or product. The practice has been around as long as Internet advertising networks, but has become an international phenomena in recent years.

According to IncreMental Advantage, a great deal of click fraud comes from clickbots and click farms (automated networks of scripts and zombie machines designed to generate fraudulent clicks on advertisements); the report also finds that businesses will sometimes commit click fraud to make their advertisements look more appealing—and this more valuable to publishers—than those of their competition.

But $666 million dollars lost to click fraud last year? Doesn’t that number seem a little precise—and a little symbolic—for a global estimate?