The industry click fraud rate has dropped slightly in the first three months of 2008, though click fraud is still more of a problem then this time last year, according to Click Forensics.

Click Forensics gathers data from more than 4,000 agencies and advertisers to produce its Click Fraud Index reports.

According to the figures, 16.3% of clicks on paid search ads were fraudulent, a fall from the previous quarter’s figure of 16.6%. However, year on year, the problem is getting worse; the figure for the first quarter of 2007 was 14.8%.

The problem is worse on search engine content networks such as Google AdSense and Yahoo Publisher Network, with the click fraud rate at 27.8%. This is higher than the first quarter last year, when the rate was 21.9%.

Normally, the search engines, especially Google, are dismissive of such click fraud reports, saying that Click Forensics overstates the problem. Google has previously said that the true click fraud rate is less than 2%.

According to Click Forensics’ Tom Cuthbert:

“Yahoo and Google seem to be finally filtering out more of the click fraud and non-converting traffic they used to let through. Removing some of these higher-profile abusers appears to be having an effect on lowering the click fraud rates.”

“If advertisers, publishers and ad networks continue to take proactive steps to filter out this lower quality traffic, the click fraud rate could trend downward even further, and that’s good news for the entire industry.”

Click Forensics announced this month that it would begin to work with Yahoo on the click fraud issue, sharing customer feedback and data with the search engine.