Computerworld has a story on Baidu’s problem with click fraud. Essentially the claim is that up to half of the clicks are fraudulent. In our opinion this is a problem for Baidu, not the advertisers. Advertisers simply have to look at the Return on Investment (the amount of business that each advertising dollar brings in). If Google offers a better Return on Investment then allocate your budget accordingly.
If Baidu’s click fraud is really as bad as they claim then all that means is that you have to halve your allowable cost per click.
It also points to Google’s real advantage to Chinese advertisers. Google offers a better conversion rate than Baidu even if it has a far lower user base. For English speaking pay per click advertisers think of MSN, yes its got a small amount of searchers, but they really convert.