In a story that appeared on Silicon Republic, Google is claiming that estimates of click fraud involving their paid search services have been overplayed. According to Google, online advertisers are apt to blame any drop in ROI on click fraud. The common held belief is that click fraud runs at betweeen 14 and 20 percent of spend. The Google representative Ghosemajumder estimated the rate to be more in the single digits, and added that Google has real time filters in place to deal with the problem.
I tend to side with the retailers, but I would go a little higher with my estimates. I believe  the real rates to be around 30%. One way to eliminate the problem entirely is to get better positioning in the natural search. The most cost effective way of doing that is with a blog and blog marketing programs. Then you don’t have to worry about your advertising dollars being wasted, as you no longer have to rely on paid search.