A $500 million to $1 billion problem, depending on whom you ask.

In a front page article in The Washington Post, 'Click Fraud' Threatens Foundation of Web Ad, staff writer Sara Kehaulani Goo discusses the mechanics of click fraud, the new forms of click fraud — the fast growing "pay to read" and "pay to click" rings of individuals and companies around the world — and the new lawsuit against Google.

 Some figures from the article worth filing away:

  • Google and Yahoo own 70% of all web searches in the  U.S.
  • About 40 percent of all Internet ads are clickable text ads (the advertiser only pays when the ad is clicked on)
  • Thirty-nine percent, or $1.04 billion, of Google's 3rd quarter revenues derived from affliate networks, website that allow Google text ads
  • Click fraud hurts mortgage, insurance, real estate, legal and travel businesses the most

Yankee Group estimates that fraud is involved in 10% of clicks on text ads, or a $500 million problem.  Others estimate the problem is even worse, perhaps as bad as $1 billion — affecting 12 to 30 percent of all text ad clicks.  Google claims the problem is less that 10 percent.

Yankee Group argues that without more agressive measures to validate ad clicks, "fraud could undermine the the entire business model of Internet search engines by causing advertisers to lose confidence."