Dave Naffziger's Blog

Click fraud is becoming increasingly sophisticated with hackers using spyware to generate spurious clicks, and spoof IP addresses (I’m not sure I believe this one). Here is the full article on wired: http://www.wired.com/news/columns/0,71370-0.html?tw=rss.index

So how real of a threat is click-fraud (I’m specifically referring to AdSense-click fraud)? Click fraud is significantly different than regular purchase fraud. The most important distinction is that anyone can defraud your online store, while only those people that are in the AdSense network can commit click fraud.
Google controls all the keys:

• who is in its network
• what it counts as a click
• how much it pays adsense publishers per click, and what proportion of the bid amount this is

What happens if click fraud increasingly becomes a problem? Bids will decrease to compensate for the size of the problem. Some advertisers might get so frustrated that they would leave (but really, no rational competitor will abandon a profitable channel). Most media outlets greatly overestimate the potential scope of the click-fraud problem. It does not signal the end of cpc advertising as we know it.