How to protect against affiliate marketing fraud
Despite the social and economic impacts of the COVID-19 pandemic, global ad spend grew by 12% in 2020. Yet during the same year, advertising fraud caused economic losses of 35 billion U.S. dollars worldwide. Marketers in the affiliate marketing space are tasked with not only hitting their goals but with protecting their campaigns from the impact of fraud.
The term “affiliate marketing fraud” is broad and covers many techniques, and part of the challenge of preventing it is knowing how to detect and block each method fraudsters enact.
The most prevalent affiliate marketing fraud techniques that bad actors use are:
Click fraud: Fraudsters spam pay-per-click (PPC) campaigns with invalid clicks, often by using bots that mimic real users to drain affiliate marketing budgets or with adware/malware installed on mobile devices.
Cookie stuffing: Cookies track affiliate referrals. Fraudsters “drop” fraudulent cookies after someone views a page or clicks on a single link. This enables them to earn a commission if a customer eventually purchases something via the affiliate link.
App installs: Fraudsters hijack app installations with malware in order to manipulate app tracking attribution platforms to take credit for the install.
Click farms: Hundreds and even thousands of real, low-paid humans work out of click farms, manually interacting with affiliate campaigns to imitate real user activity.
Although affiliate marketing fraud can take many forms, and ad fraud, in general, is a pervasive problem, organizations need to stay on top of fraud prevention. Here are three ways your organization can protect itself from the nefarious impacts of affiliate marketing fraud:
1. Ensure a strict affiliate vetting process
Many instances of affiliate marketing fraud occur due to a lack of fraud check processes in place.
When screening new affiliates, it’s vital that you confirm that not only do they have a legitimate website and audience but that their content is relevant to your products and services.
Once you’ve confirmed a new affiliate’s authenticity, you’ll also need to communicate your terms and conditions to ensure that they’re aware of the rules in place and the penalties they will face should they try to exploit or abuse your programs.
2. Monitor traffic and program data continuously
Although it can be difficult to spot, there are many indicators of affiliate marketing fraud that can signal that there is illegal or suspicious activity occurring.
For example, unexpected and sudden surges in the success of affiliate campaigns, low lifetime value (LTV) user sources, and high levels of traffic with very few conversions are just a few indicators that affiliate marketing fraud is being carried out.
Closely and consistently monitoring traffic levels for unexpected amounts of transactions from one IP address and rises in the amount of redirected pages will help organizations identify cases of affiliate marketing fraud quickly.
3. Implement an anti-fraud solution
The best form of protection is prevention. Anti-fraud solutions automate the processes of detecting and preventing affiliate marketing fraud before it has a chance to hurt your programs and campaigns.
Some anti-fraud solutions exhaustively analyze hundreds of different data points to weed out bad traffic and illegitimate actors, allow you to set your own traffic filters for different campaigns to ensure you capture high-quality traffic and generate real-time signals powered by machine learning to alert you of malicious actors. Plus, the automated processes free up marketers’ time to concentrate on the ROI of their affiliate programs.
Discover a wealth of insights on advertising fraud in Opticks’ Annual 2020 Ad Fraud Report, which explores global ad fraud findings from over 200 territories and over 466 billion analyzed visits in 2020.
Eduardo is the CEO at Opticks, a cybersecurity company providing leading anti ad fraud solutions to brands and agencies worldwide. He has years of experience in helping businesses across the globe reach their revenue goals while keeping fraud at bay. His vision is to reach an economy where fraud becomes practically harmless.