Click fraud is a serious problem on PPC campaigns. Google Adwords is not immune from this problem. Researchers estimate $1.6 billion were lost to click fraud as of 2008. Click Fraud happens when competitors click on your ads to crack your ad budget or when web robots are setup to generate false clicks on your ads.

PPC networks, including Google Adwords, confirm the existence of click fraud and are working hard to solve it. All we can do as PPC advertisers is to tweak our campaigns to reduce the risk of click fraud. Here are some tips for safeguarding your campaigns:

1. Constantly monitor click-through rates. Google allows you to easily review your conversions and click-through rates. It is a good idea to print out a daily or weekly report and check for any strange activity. Check your actual web site traffic report as well and investigate IP addresses and websites that habitually access your site.

2. Set-up a daily budget. Limit your advertising costs on Adwords by setting up a budget. Your budget should be at a reasonable level allowing you to maintain it for several months. If you are a target of click fraud, your losses will only be limited to your specified budget.

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.