Pay-per-click search companies difficulties’ adequately policing their affiliate distribution partners is one of the bigger challenges facing the search marketing industry, experts said. It is on these affiliate sites that 70 percent of click fraud activity takes place, according to Scott Boyenger, president and CEO of ClickDefense, one of a score of companies that has launched in the last 18 months to identify and stop click fraud. Affiliate publishers distribute pay-per-click ads and search players pay them a cut of what advertisers bid. “About 15 to 20 percent of all click activity is erroneous. Seventy percent of that is not by real people,” Boyenger said, referring to bots designed by fraudsters to click on PPC ads. “The advertiser is the loser and the companies offering PPC are winning, and so are the affiliates.” Other companies, like Fathom Online, also identify search players’ affiliates as the most widespread source of fraudulent click activity. “Without a doubt, the majority of click fraud is coming from affiliate sites,” said Matt McMahon, EVP at Fathom Online. “But advertisers will vote with their pocketbooks with regard to the offending search engines, and go for the service that offers them the best ROI.” The percentage of click activity that falls under the umbrella of affiliate fraud was a subject of hot debate at a panel discussion on click fraud held at the Search Engine Strategies (SES) conference in New York this week. However, panelists generally agreed the percentage is higher on so-called tier two services like Kanoodle, Enhance Interactive, and FindWhat.com than on Google and Overture.