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I have been running a PPC ad campaign on Overture, Google and LookSmart for several years. My product is in a specialty area (our market is hospitals) so my traffic has always been relatively small: $200 or $300 a month across all 3 campaigns.
For LookSmart, I am running both an "inclusion" campaign, which compares search terms to the content of my web site, as well as a keyword campaign. (The "inclusion" model is descended from the traditional LookSmart model, from way back before they were a PPC engine at all.)
Within the last couple months, my LookSmart inclusion traffic shot through the roof. I was running through my entire LookSmart budget within a few hours of the beginning of each billing period. On looking at my web server logs, all of the traffic was coming from searches on the keyword "software". This does not make any sense. It makes sense for somebody to click on our ad if they're searching for "hospital software" or "health care software" or various other relevant terms, but if somebody searches on the single word "software" I would think that they're looking for consumer retail, and our ad clearly is not what they are looking for.
The only explanation that makes sense to me is that somebody who wants to "own" the ad space for "software" has launched a clickbot campaign to drive up the price of entry for anybody else associated with that keyword. I don't know much about LookSmart's "click fraud" features, but it looks like it was not doing me any good in this case.
I spoke with LookSmart customer support and they reconfigured my inclusion campaign so that I will no longer match on the single word "software". (I do still have "hospital software" set up as one of the keywords in my keyword campaign.) I'm waiting for the start of my next billing period, which is this week, to see what happens then.
I have never had any similar problem with my campaign on either Overture or Google; in neither of those cases would a search on the single word "software" match with my keywords anyway.
The problem with LookSmart had nothing to do with the particular search term. I have discarded my "clickbot" theory.
My replacement theory is that LookSmart has completely gone to the dogs as a result of "pay to surf" programs: LookSmart is paying its "partner sites" for traffic, some of those partner sites are paying individual users to generate search traffic, and consequently the amount of totally worthless traffic currently passing through LookSmart is such that LookSmart has become useless.
If the same thing happens at Overture and Google, it seems to me that it will be the end of PPC.
