Background for people who are new to pay-per-click marketing.

The concept is that a user searching for a given phrase is going to be receptive to ads related to that phrase. So, for every phrase one can think of, there is a price that merchants are willing to pay Google (or other "pay-per-click provider") if their ad is displayed(*) on a search page responding to that phrase. Just before the page is displayed, Google retrieves a list of all the merchants who are willing to pay(*) on that phrase, chooses the top 5-10 offers, and displays those ads ranked by the prices the merchants are willing to pay as well as other factors such as the quality score of the merchants' web sites. The asterisk(*) means that the merchant pays only if the user clicks on an ad. So if no one clicks, a merchant has his or her ad shown lots of times at no charge.
Industries that use this feature a lot include insurance, where the price per click is $40 to $50. Also, air conditioning, locksmith, and car repair shops seem to find great benefit from these ads but pay about $5 to $10 per click, depending on the phrase.
Is this big business? Yes. Google's main source of revenue is pay-per-click text advertising. The concept is very simple but obviously is worth a lot of money to enough people to make Google rich. Other vendors like Bing offer similar services but Google is the biggest for now.

How does this affect your marketing? How can you get started?

There are industries in which new customers are likely to find merchants through a search engine.
For these industries, pay-per-click advertising may provide most or all of their new customers.
Examples include locksmiths, heat/air-conditioning technicians, towing companies, insurance agencies, and health clubs.
Note that Google allows ads to be targeted to specific geographic areas (such as a single zip code or a single city) and specific devices (mobile versus not mobile).

What is click fraud abuse?

Unfortunately, not all paid clicks in your campaign may be legitimate. Some may come from competitors who wish to prevent your ads from showing by clicking on them until your daily budget is exhausted. Others may come from automated robots that cause paid clicks to be charged to your account. Either way, fraudulent clicks cost you money and reduce your return on investment in your ad spending. One clue that you may be paying for fraudulent clicks is if your spending is the same or increasing but the number of new customers is falling. Some of our customers find a definite improvement in conversion rate when they block fraudulent clicks. Other customers find that they have been targets of massive abuse, up to dozens of clicks from the same source (IP address) over a 10-20 minute period. Either way, you will want to know and respond to this expensive problem.