Over the past two years we have been trying to bring attention to the real danger of click fraud. It is a real problem that is getting worse not better. Since we began reporting our Click Fraud Index, the overall rate has climbed over 20%. This problem has been highlighted in mainstream publications including Business Week, USA Today and the Wall St. Journal. No one today denies that click fraud is a problem and that it is having a negative effect on the growth of the online industry.

What may be less obvious is that click fraud is only the tip of the iceberg. The bigger issue for our industry is the overall decline of traffic quality. Advertisers want to get what they pay for and know that the traffic they buy has value. Problems including: the growth of botnets, out of country traffic and other low quality traffic sources like made-for-ad sites and parked domains are hurting ROI. Advertisers know this and have been demanding action from ad providers. One recent example is the poor quality traffic that comes from social network sites like MySpace. Google surprised Wall St by missing Q4 earnings due, in part, to their inability to monetize MySapce traffic. Social network sites are notorious for having very low SiteScore’s.

So what is happening? Smart ad providers are taking matters into their own hands. They can’t afford to lose business and they are listening to their customers. By using real time tools to detect invalid traffic, publishers can block it, redirect it or re-price it. This is the way the industry is moving and we are working hard to lead the way. It is encouraging to see ad providers like Yahoo see the dangers ahead and help their clients steer clear. On the other hand, it is concerning others are on a collision course.