Adam Penenberg:
Click fraud — the practice of skewing pay-per-click advertising data by generating illegitimate hits — has become an epidemic, something that Google, in its pre-public offering documents, identified as a notable risk.

In the world of publishing, we are often confronted with guesswork passed off as fact. Then we operate under the assumption that the data is correct when we know it’s not. How many people actually see an ad in a magazine? What measurable impact does it have on a consumer? How many people visit a given website? How do we tell if pay-per-click information is accurate when legions of typists in India may be collecting commissions based on the number of times they hit a targeted ad?

There is often no way to tell. Yet we pretend there is. When we find solutions ­– for example, using automated software to detect click fraud –­ new technological innovation quickly passes them by.

Where Forbes went wrong was in calculating regional advertising inserts from Media Networks, Inc., which, like Fortune, is owned by Time, Inc., and sells packages of ads tailored to specific markets. Advertisers run demographically targeted ads, often based on ZIP code, and MNI prints the inserts, which can vary from two to eight pages and run in 20 markets at a time, in Forbes, Fortune, BusinessWeek and Money.

It’s a good deal for magazines, which make money on them, but they aren’t calculated as full ad pages. Instead, they are usually a fraction of that because they don’t run nationally. But Forbes categorized regional insert pages as national in its monthly report to TNS Media Intelligence, which compiles the data for Publishers Information Bureau, or PIB. The net result was that Forbes claimed 88 more ad pages over 13 issues than it actually published, which averages out to about six added pages per issue.

More here.