Network click fraud, on the other hand, cashes in on the fact that Google isn't the only company that hosts Google advertising. Suppose someone has a blog about insurance. She can sign up as a Google advertising affiliate and have ads for insurance run on her site. If Life Insurance Company is paying Google $5 per click, Ms Insurance Blogger might pocket $1 for each click her site generates. Network click fraud is when an affiliate generates fraudulent traffic in order to boost its revenue.

Google insists it is trying to keep the problem in check. Shuman Ghosmajumder, product manager for trust and safety at Google, says the company monitors for all kinds of what it dubs "invalid clicks," and that it routinely issues refunds to advertisers and closes down fraudulent affiliates. In 2005, Google even won a lawsuit against an affiliate it charged with click fraud. But some advertisers say that Google isn't doing enough to prevent and monitor for fraud because it profits from the fraud. Google faces a class-action lawsuit led by AIT, a Web-hosting company, and is in the midst of reaching a $US90 million settlement with Lane's Gifts & Collectibles, a mail-order store. (At press time, the proposed settlement was before a judge.)

Why it matters: Click fraud is following a trajectory that will be familiar to any CSO, and it's a telling example of how sophisticated and profitable electronic crime has become. First, the good guys started looking at server logs to find IP addresses in patterns that indicated fraud. The bad guys responded by creating automated bots that simulated different IP addresses and had varying time stamps. Then, the good guys improved their click-fraud detection tools, with a cottage industry sprouting up that specializes in helping online advertisers monitor for fraud. Queue up "click farms", where the bad guys hire people in other countries to do the clicking in a way that looks more realistic. "It's a cat-and-mouse game," says Chris Sherman, executive editor of SearchEngine-Watch.com.

What to do: The first step is to put tracking measures in place. In a recent survey done by the Search Engine Marketing Professional Organization (Sempo), a trade group, 42 percent of respondents said they had been victims of click fraud, but nearly one-third of respondents said they weren't actively tracking fraud. "The way you monitor it is you look for something that doesn't make sense," explains Kevin Lee, chair of the group's research committee. "If you spent $100 every day last week, and then this week you spent $130 every day and didn't get any more conversions, or whatever your success metrics are," then you might have a problem, he says.

"Usually the engines will catch the obvious fraud, and they won't even bill you for it," Lee continues. But if you have a larger problem, you may need to gather information about why you believe some of the clicks are fraudulent and ask the company hosting the ads for a refund. Ghosmajumder says Google devotes significant resources to a team of investigators who proactively monitor for fraud and also do research about possible fraud reported by advertisers. Google also has engineers working on technical means to identify invalid clicks. According to the Sempo survey, 78 percent of advertisers that have been victims of click fraud have received credit from a paid search provider, and 40 percent of the time it was based on their request.

The question, of course, is whether to bother making a request. Who better than the CSO to help the advertising department figure out whether it would cost more for the company to tamp down on the problem or simply to pay for the fraud?

Shock waves: 2 (moderate). For companies using pay-per-click, this is one to watch. Click fraud has the potential to dramatically reduce the effectiveness of online advertising. But with more than 90 percent of Google's revenue coming from advertising, the company has a serious incentive to keep the problem in check so that advertisers don't lose faith in the pay-per-click model.

5. Google Desktop

What it is: A free tool offered by Google that allows users to quickly search the contents of their hard drives. (Similar tools are offered by MSN, Yahoo and others.) The latest version can also be used to share files between computers.

How it works: After the user downloads the tool, it works in the background to index everything on his hard drive, much like Google indexes the Web. All fixed drives are indexed by default, but the user can specify folders to exclude or extra drives to add. The software can be set to return results on text files, spreadsheets, PDFs, Web history, e-mail and more. Once the indexing is done, when the user runs a Google search, items from his own computer appear at the top of the results. Alternately, he can use the tool by itself by opening it on his desktop; he doesn't even need to be connected to the Web.

A new version also has a controversial feature that allows a user to share files between computers. With this setting enabled, Google indexes the files on one computer, pulls them up on its servers, then pushes them down onto another computer (which is similarly configured with the software). Then, a search done on one computer returns results from both.