Click Fraud Snowballs

From Help Net Security comes the astonishing revelation that a botnet comprising more than 34,000 infected computers has been perputrating click fraud against pay-per-click systems like Google AdWords. Let’s do some math:

10 clicks/day X $1/click X 34,000 computers X 365 days = $124M annual fraud

100 clicks/day X $1/click X 34,000 computers X 365 days = $1.2B annual fraud

100 clicks/day X $5/click X 34,000 computers X 365 days = $6.2B annual fraud

For the first 3 months of 2006, Google reported $928 million in “network” ad revenue, on track for $4 billion in 2006. What if 5% of that is fraudulent? What if it’s 10% or 25% or 40%?

Google has made an astonishing amount of money on pay-per-click advertising. For Google investors and insiders, it’s almost too good to be true.

What if it is?