MikaelTC - 12:36 am on Apr 1, 2006 (gmt 0)

Click fraud is an interesting problem, but it is already calculated into the cost of advertising. I do not buy ads on Yahoo!'s contextual listing mechanism because they do not, for whatever reason, allow advertisers to filter ads by site. As an advertiser I consider that I would by paying for converting clicks, for non-converting clicks from interested customers and for fraudulent clicks from webmasters' tricks to get more 'free money.' I don't specifically care what percentage of the clicks are fraudulent, I only care that the benefit (sales) of the ad buy justify the cost. A profitable campaign with high click fraud is still profitable, and an unprofitable campaign with no fraud at all is still unprofitable.

The way I see it, the problem is not with the payment model, but with the distribution network. I'm comfortable paying CPM, CPC, CPA, Flat Rate Sponsorship or whatever the publisher can dream up. It's all the same to me; the market will eventually determine the value of a placement and that's that. The real problem comes when I don't know where my ads are displaying because then I can't pre-value the placement or prevent bad ones.

I don't think that PPC is doomed because it's quick, calculable and easy. I do think that the present incarnation of contextual advertising is doomed because it's bulky, inaccurate and opaque.