Reports of click fraud with PPC campaigns, especially with Google Adwords, are on the rise, and researchers estimate the numbers are in excess of $1.6 billion as of 2008. Click fraud occurs when a competitor may be clicking on your ads to break your ad budget, or when someone installs a web robot or spider to generate fraudulent clicks on your ads.

Google and other PPC networks verify the existence of click frauds. They have not solved the problem as of the moment but are currently working to prevent it. As a PPC user, we can take some steps to protect our campaigns from click fraud while the networks are still finding ways to solve the problem entirely. Below are five measures you can implement in your Google Adwords campaigns:

1. Keep an eye on your click through rates. It is easy to review your click-through rates and conversions with Google. You can even print out a daily or weekly report to monitor any bizarre activity. You might also want to reconcile your click-through rates with your actual web site traffic report. Check for IP addresses and websites that access your site regularly.

2. Impose a daily ad budget. Select a sensible budget for your campaign that you can fund for at least a few months. Imposing a budget limits your exposure to click fraud and it makes it easier for you track your Adwords expenditures.

3. Lay down a daily click limit. Adwords managers would do well to setup a daily click limit, according to Bruce C. Brown, author of the book “The Complete Guide to Google Advertising”. This allows you to track the number of clicks on your ads. Once the click limit has been reached, your ad will disappear from the Adwords network.

4. Use the geographic location feature. Limiting your ad to specific markets is one of the best ways to ensure that you’re not making yourself vulnerable to fraudulent activities. Why waste your Adwords budget on countries that you never do business in? Do some research to find out where your best target market is, and focus on showing ads only in those countries or regions.

5. Be careful in singing up with PPC programs that give away free stuff. As a rule, don’t sign up with programs that are too good to be true. Most fraudsters entice people to sign up with them by offering free downloadable products and services. Look out for programs that ‘monitor’ your keyword campaign. Nevertheless, a lot of hosting companies give out legitimate Google Adwords credit when you sign up with them. Just make sure you’ll be dealing with Google directly to get these credits.

Google employs its own fraud protection team to investigate click fraud cases. Report your case to Google immediately if you think you’ve fallen prey to click fraud.