Pay-per-click advertising is the primary revenue source for Google and a big revenue contributor for Yahoo [Overture].

Two years ago, Times of India reported that a large number of Indian housewives, college graduates, and professionals across metropolitan cities in India were clicking Pay-Per-Click ads on the Internet to make a few hundred dollars per month. The newspaper dubbed these people as India's secret army of online ad 'clickers'

These Bogus "Click Fraud" schemes are now dampening the growth of web advertising - a report has suggested that advertisers spent $800 million spent on fraudulent clicks and atleast 27% advertisers say they no longer spend on pay-per-click advertising or have reduced the web advertising budget.

A new Financial Times story suggests that after North America and Canada, the majority of bogus ad clicks originated from India. And the bogus clicks business in India grew by 26 per cent in the second quarter. It more-or-less confirms that "get rich sitting at home" schemes which let you "earn rupees for clicking ads" are still a thriving business in India.

The average pay-per-click search-term cost was $4.51 across retail, financial services, health and fitness, technology and entertainment advertising and click fraud was higher for terms costing over $2 per click - at 20.2 per cent.

The worst affected would be Google since it has a large pool of India based advertiser. Other PPC programs like Chitika, MSN AdCenter or Yahoo Publisher Network won't be complaining much as they rarely pay for clicksoriginating in India.

Update: Google today published the report in public that details their efforts in Click Fraud protection. [download link]