Affiliate Marketing: There's Fraud In Here Too...

Introduction

Affiliate marketing fraud is a problem in the digital marketing industry. Essentially 3rd party publishers include links or "tags" to brand offerings in exchange for a commission on their performance. Whether that be viewability based on impressions or sales based on purchases. The affiliate wants to generate as much traffic as possible to their marketing strategy so that they can earn more. It feels simple, but what happens when fraudsters pretend they're affiliates? Or worse, when affiliates become fraudsters? Of course, there are many scenarios of how this affiliate fraud is committed. The point is, businesses are unknowingly paying for intentional fraud under the guise that it's "part of the process". Some even leave it all in the affiliate's hands, either they produce through their link or they don't. No biggie, however, it is a BIG biggie (lol).

The statistic shows the affiliate marketing spending in the United States from 2010 to 2022. According to the source, the U.S. affiliate marketing spend is due to reach 8.2 billion U.S. dollars by 2022, up from 5.4 billion recorded in 2017.

Statista Research Department

Where does the affiliate fraud come in?

Affiliate fraud happens when humans, bots, or automated systems generate fake impressions, clicks, leads, and even purchases using affiliate links. The principle of affiliate marketing is built on a performance-based marketing model.

Affiliate does X, and in return gets rewarded with Y, and the brand generates Z.

With up to 45% of affiliate traffic being fraudulent,?it’s alarming to consider how much of this multi-billion-dollar industry is lost each year. (Anura)

We know that brands spend a good 7-15% of their revenue on marketing budgets in any given vertical. We also know 80% of marketers view affiliate marketing as an important revenue source, with nearly half (46%) stating it will become more important in 2023 as they allocate more budget toward the channel, thanks to Cision.

What kinds of affiliate fraud are there?

Many, and there can be combinations ????

• Click Fraud

The easiest way for an affiliate fraudster to inflate traffic is by using bots to generate fake clicks. On social media, this can be likes and comments too.

• Fake Leads/ Conversions

A fraudulent affiliate (or their bot) will create fake accounts and fill out lead forms with fake or stolen information.

• Cookie Stuffing

They will accumulate fraudulent attribution of conversions by forcefully placing affiliate tracking cookies on a user's device or browser without their knowledge or consent and take credit for their traffic.

• Domain Spoofing

This involves creating fake "look-a-like" domains or URL substitutions to make it appear as if the domain is trusted. Which can help fraudulent affiliates get accepted on an advertiser's list of trusted domains and steal traffic.

• Ad Stacking

Multiple ads on top of each other in a single ad placement. They all accumulate impressions and clicks, even though the visitor only sees the ad at the top.

• CHARGEBACKS

I see this all the time, in businesses of any size, especially in affiliate marketing. I know what you're thinking.. this is more than just affiliate fraud. Yes. Fraud is a crime, no matter how big or small. Businesses feel the effects way greater when there's a direct hit to revenue, like a chargeback. So they're more inclined to take legal action which can be expensive and time-consuming. In this scenario, not only does a business lose on paid commission, but they also have to deal with proving their case. It can be difficult to track all incoming affiliate traffic for validity because of the journey. This makes hijacking super easy for fraudsters.

Want more insights on affiliate marketing fraud? Here's a download ????

What can affiliate managers do to protect themselves from affiliate fraud?

Well to start, they can make sure they're selecting quality affiliates. According to Influencer Marketing Hub, "more than 80% of brands have affiliate programs."

In my opinion, all affiliate personas should align with the brand's target audience and business goals. Affiliates get incorporated into a brand's networks, platforms, and campaigns. Not many think about the impact an affiliate can have on a brand's reputation and reach. They become an extended part of the brand. Going viral is great, but when it's negative, it WILL cost.

Affiliate managers can take advantage of the benefits of working with quality affiliates by following effective strategies and building out criteria in a careful selection and application process. After that, it's just building trust, implementing training, and managing performance. I made that sound simple, ha. ??

An affiliate manager has many responsibilities that include:

1. Establishing clear guidelines and policies that abide by industry standards, laws, and ethics.
2. Educating about fraud prevention as well as having fraud detection and mitigation solutions internally.
3. Providing necessary marketing materials, support, collateral, and assets to help propel affiliate messaging.
4. Training affiliates on best practices and brand-specific guidelines.
5. Tracking, analyzing, reporting, and optimizing affiliate performance, commission structures, and payouts.
6. Handling affiliate disputes and conflict resolution
7. Encouraging and rewarding top-performing affiliates for creativity and innovation.

The list goes on and on...

?? Maybe we can go deeper into those points next time? Tell me in the comments if you want to learn more.

Conclusion

Affiliate marketing fraud is a problem. Affiliate managers need to know how to protect themselves and their brands, but affiliates need to know how to set themselves apart too. If they want to stand out from the crowd and have long-term relationships with brands they're going to need to stay far away from shady tactics. No matter how small it may seem. Digital marketing can be hard, but it's even harder with $100 billion worth of fraud involved. We all have to do our own part by taking the necessary steps to be accurate, thorough, and consistent. Using a fraud detection and mitigation solution can help eliminate the guesswork and give you the data you need to thrive!!

I hope this article has been informative.??

Please like, comment, and share to help me grow. ??

Questions? Dm me 'fraud' to learn more.????

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