Online’s fast becoming the new Wild West of advertising initiatives.

If your company’s making its first approach to online ads, there’s something important to know: Fraud’s pretty easy in the world of online pitches.

It’s tough with online ads to know if you’ve gotten the service you contracted to get and have paid for.

Online affiliate programs are a big source of fraud because, ironically, they’re perceived to be low-fraud marketplaces. Consequently, advertisers ignore many ordinary protections they use when dealing with little-known suppliers.

The other risky ad market is pay-per-click, probably the biggest market in the online-ad industry. For example, they’re 90% of Google’s revenue.

What’s the solution to the problem of online ad fraud? One simple strategy suggested by Benjamin Edelman of Harvard Business School is to simply pay later.

By delaying payment by two to four months, Edelman estimates 70% of online ad fraud can be eliminated. Delaying payment often distinguishes the rule-breaking affiliates from the good ones. Rule breakers know that the longer they have to wait, the more likely they are to get caught.

He advises negotiating contract terms other than those typically proposed by the supplier. Instead of say, Net 30 terms, ask for two to four months with a bonus built in for the additional time. You’ll have enough savings from imposing the delay and deterring fraud to pay it.

Tags: , click-thrus, fraud, online advertising, pay-per-click