Google uses both machines and
humans to discover shady ads.
From Time Magazine:
The Internet is full of get-rich-quick schemers, phishing scammers and just straight-up shady dudes and they all try to get ads for their "businesses" to show up next to Google’s search results. It’s the job of hundreds of Google employees to make sure they don’t.
Virtually every minute, somebody somewhere is trying to dupe Internet users into clicking on an ad for a dubious business. Those ads show up right alongside the results of Google, Bing and other search engines, and they’re sometimes even tagged as a "sponsored ad." Click on the wrong ad and you could encounter cons including phishing (an attempt to acquire personal information that oftentimes leads to identity theft) and cloaking (a method of deceiving a search engine so it thinks it’s a legitimate website), as well as rings selling counterfeit goods, a wide range of get-rich-quick scams and just about any other disreputable practice you can think up.
Shady ads have become such a problem for search engines that hundreds of employees now work round-the-clock to protect users before they get ripped off. Google has employed "ad cops" charged with sniffing out questionable advertisers basically since the search engine began in the late 1990s. Today, Google earns about 95% of its revenue from advertising, so making sure its ad marketplace is free of illegitimate businesses is a big part of the search giant’s own business.
Read more: Policing the Web: How Google’s ‘Cops’ Track Down Bad Ads, Time>>