Not sure if you saw this, but Google recently settled a $90 million lawsuit over click fraud....

The search business of Yahoo!, Walt Disney Co., Lycos Inc., LookSmart Ltd. and Inc., which is now known as MIVA Inc. were also included in the lawsuit. As defined by Google, click fraud "implies deliberate deception. Our aim in fighting invalid clicks is broader and includes clicks that we suspect may have been deceptive or malicious, as well as clicks that we deem invalid for other reasons, such as accidental double clicking on an ad".
Some marketers claim that click fraud is a real problem and that as much as 30% of clicks are not reliable (noticed I used that term). However, that was based on a study from that examined three Google campaigns with alleged click fraud between 8% and 30%. So, should you care? Answer: it depends on how your search campaigns are evaluated.
First of all, nobody wants to pay for wasted clicks, especially ones that are fraudulent and since you pay for search on a cost per click basis, the wasted expenses add up. However, are you using post-click conversion tracking? Let's take a look at the two possible scenarios:
Just tracking clicks to your website or page - then you should care a lot because the only method for evaluating success is how many clicks did you drive to your site. However, you have much deeper marketing issues. Are you tracking email subs - add a conversion tracking to that page. Are your trying to get sales - you need a conversion tracking code in your shopping cart.
Tracking sales, enrollments, applications, etc - I wouldn't care that much because you should be worried about ROI. Is search meeting your cost per actions/sales? Yes? Go find some other problem to deal with. If not, check your creative, landing page, and bid management strategy first then look at fraud.
Look, I've been buying search since 1999 and I NEVER worried about click fraud. Sure, I might have been overpaying for clicks, but search was my best performing component of my ad campaigns. It consistently was my lowest CPA (cost per acquisition) and had my highest conversion rates from clicks. Did I have a problem? I don't know and I didn't care. Like you I had MUCH bigger problems to deal with and I had much worse performing buys that needed my attention.
Click fraud a problem? Sure, but if that's the most important problem you have to deal with, then you are a marketing genius.

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Eric Frenchman is an online marketing and advertising consultant located in the Great State of New Jersey and Chief Internet Strategist for the online political agency Connell Donatelli Inc. Since 1998, Eric has managed multi-million dollar online advertising and CRM campaigns for AT&T, DLJdirect, Harrisdirect, and BMO Investorline and is a recognized expert in online marketing and advertising techniques. In 2005, Harrisdirect was ranked as the 17th largest online advertiser in the US and in 2003 was recognized as Best Financial Advertiser. Eric Frenchman's marketing blog is located here: