A report from Click Forensics shows that while the click fraud rate is dropping slightly, it is still an area that the industry must monitor.

Click fraud occurs when a person clicks on a pay-per-click (PPC) ad either accidentally or with malicious intent. By continually clicking on an ad, the ad rate for that company may increase. Or, if a company caps off their daily PPC expenditure, a competitor could burn through their daily ads in a matter of minutes.

In the third quarter of 2008, the overall industry average click fraud rate was 16 percent, a slight decrease from the 16.2 percent during the second quarter.

Click Forensics president Tom Cuthbert says advertisers are proactively filtering out fraud, but more needs to be done.

"The growth in click fraud traffic from botnets continues to rise and it should be one of the top areas advertisers and the industry should monitor closely," he said.

Companies like Google rely on PPC advertising, making it important for them to get the problem under control. In October, Google announced it would be cooperating with Click Forensics to use their Fully Automated Click Tracking Reconciliation (FACTr) to automate and simplify the reporting of click fraud.