Pay-per-click advertising continues to surge, despite growing concerns over click fraud. But that may be changing.

A new study finds that many advertisers are cutting back or halting their pay-per-click spending in response to the fraud and what they see as the refusal of the major search sites to clamp down on it.

Outsell, an information industry research firm, reports that 75 percent of advertisers polled in a survey believe they've been victims of click fraud. Further, these advertisers estimate that 14.6 percent of all paid-for clicks are fraudulent, or about $800 million worth of advertising last year alone.

The Outsell survey polled 406 advertisers, who together account for $1 billion in ad spending. More than a quarter, 27 percent, said they have cut back or canceled spending as a direct result of fraud. Among those who reduced spending, the cutbacks averaged 33 percent. Outsell estimates those spending cuts added up to $500 million last year, a sizeable blow to the online advertising industry.

Outsell reports that another 10 percent of those polled said they plan to trim their pay per click budgets because of fraud.

Advertisers' beef is with the big search engines, especially Google, Yahoo and MSN, which they complain are stonewalling when it comes to clamping down on fraud, according to Chuck Richards, Outsell vice president and lead analyst on the study. He notes that advertisers typically first turn to the internet because of the accountability it offers, or purports to offer.

"It betrays the promise of accountability," Richards says. "It appears to be accountability, but what they are counting is a click, and advertisers now can't count on clicks being of value to them."

Click fraud occurs when someone clicks on an ad for the purpose of driving up the advertiser's costs or profiting from extra ad sales, either manually or by using automated bots that are programmed to hit ads. Click fraud is typically perpetrated by publishers looking to scam advertisers or by competitors looking to cripple a rival by driving up the cost of generating sales.

One solution, says Richards, would be an independent audit system with access to advertiser and ad distributor information. But he says the first step is for the major search engines like Google and Yahoo—each of which has recently settled a class-action click-fraud suit—to simply reveal more about what they are doing to stop fraudsters.

"There needs to be more transparency," Richards says. "Google, Yahoo and Microsoft have been adamant about the efficacy of their efforts to stop click fraud. The best way for them to prove that is [to release] statistics on the click-fraud they are catching." Richards dismisses the search firms' claim that revealing such information would risk compromising their efforts.

For their part, the search engines say they are devoting massive efforts to ending click fraud. Their failing, judging by the Outsell survey, appears to be in how they're dealing with disgruntled advertisers.

A Google representative says the firm uses sophisticated technology to prevent billing for invalid clicks. "We take this issue very seriously. We have devoted significant resources to it, believe we manage it very well, and believe it is a small problem."

A Yahoo spokesperson says that Yahoo is looking to improve transparency on the issue. Following its recent class action settlement, Yahoo initiated a one-time extended claims period for past fraud and new internal traffic monitors and advocates.

"We are very confident in our system's ability to detect fraudulent clicks, but we also recognize that our customers--and the industry as a whole--have many questions and concerns about click fraud, especially given the litigation that Yahoo and other search engines have been engaged in over the past few years," says the spokesperson.

Among other Outsell findings: Half the advertisers polled said they felt a need to monitor their click logs for fraud, and about 21 percent said they used external monitoring firms to help guard against it.

Even so, the vast majority of those who think they've been subject to fraud don't file claims for refunds; Outsell reports that only 7 percent do so. According to Richards, advertisers perceive the burden of proof to be on them in such situations.

Outsell says that pay-per-click spending has grown by double-digit percentages this year, from $5.5 billion last year.

But as advertisers get fed up with click fraud, they may look harder for other online opportunities, from branding and display ads, to product placements and advergames.

Richards expects that many will look to cost-per-action models, in which advertisers pay only after a purchase or inquiry. That's an option that pay-per-click giant Google is looking to offer soon.