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Affiliate marketing presents a lucrative opportunity for brands and publishers alike. That’s perhaps why the industry has grown at such an incredible pace, being valued at $17 billion, according to an affiliate marketing survey.

In a survey, 20% of marketers reported sales through their affiliate programs as their biggest source of revenue. The story of publishers and content creators is a similar one, with 31% reporting affiliate income as their biggest source of income.

Considering how valuable affiliate marketing is for all involved parties, it is no surprise that the space is now infested with scammers and fraudsters. Affiliate marketing fraud is one of the most prevalent forms of ad fraud. Some experts estimate that nearly 17% of all clicks on affiliate offers are fraudulent. This number translates to billions of advertising dollars lost to affiliate marketing scams.

This also means that marketers who use affiliate programs to make sales must fend for themselves and employ affiliate monitoring methods to ensure they are not losing their marketing budget to fraud. However, before you can effectively monitor affiliates and be sure that you have prevented yourself from falling victim to fraud, you must first understand affiliate fraud in depth. That’s exactly where this article will help.

In the upcoming section, you will learn everything you need to, to protect yourself and your affiliate programs from fraud. Let’s start with the necessary basics.

What is Affiliate Fraud?

Affiliate fraud is the practice of abusing affiliate programs to earn affiliate commissions fraudulently. Fraudsters scam advertisers by generating fake leads and getting affiliate commissions for said leads. Some may even employ tactics that allow them to claim credit for sales facilitated by genuine affiliates.

This form of ad fraud hurts every genuine party involved in an affiliate marketing program. Scammers make money for sales that either never happened or those that had nothing to do with them. The genuine affiliates work hard to make sales suffer because their commissions are stolen by the scammers. Brands also suffer because they end up paying for sales that never take place. Brands also suffer when they pay the scammer instead of a genuine affiliate.

The genuine content creator, who may have the potential to drive thousands of dollars in sales, may opt out of working with a brand thinking they have been subjected to unfair behavior. In such cases, the brand’s image may also suffer, especially if the content creator calls the company out in front of their followers.

The most common reason behind the occurrence of such fraud (besides the greed of fraudsters) is a lenient evaluation process for affiliates. From the point of view of growing an affiliate program, this is a great move. However, a lenient evaluation process also unfortunately presents a great opportunity for fraudsters to sign up as an affiliate and defraud the brand.

A strict evaluation process should be a part of your brand safety advertising process. It may slow down the growth of your affiliate program, but it will go a long way in ensuring your advertising budgets are safe from fraudsters.

Despite that, you cannot expect complete protection from affiliate fraud by simply having a stringent evaluation process. This is true for two reasons. One, a strict evaluation process does not guarantee that any fraudsters will not be able to clear it. Secondly, upgrading your evaluation process does nothing about the fraudsters who may already be siphoning off funds from your affiliate program.

What can you do about them? Let us find out.

Signs to Identify Affiliate Fraud

Fraudulent affiliates work hard to cover their tracks. They employ proxies, resort to hijacking devices of genuine users, and use IP addresses to mask their locations. It is thanks to these measures that detecting fraudulent activity in your affiliate dashboard is next to impossible.

Fret not, you are not powerless against fraudulent affiliates. Look for these signs to detect fraudulent activity in your affiliate programs:

Usage Patterns Associated with In-App Activity

One of the best ways to detect fraudulent activity associated with affiliates is to check the in-app activity of their referrals. Consider it a red flag if there are set usage patterns that can be commonly observed among several users. For instance, if all the users associated with an affiliated stop using your app after a set amount of time, then there’s a good chance that these ‘users’ may be bots programmed to behave in a specific way.

Suspiciously Stellar Performance

If an affiliate consistently and continuously outperforms everyone else in your program, there’s a good chance that they are not authentic. If, for instance, your affiliates’ average conversion rate is 15%, and an affiliate consistently delivers 50%-60% conversions, they deserve to be investigated.

Disconnect Between Traffic and Purchase Numbers

This one is a no-brainer. If an affiliate is consistently sending you traffic but the traffic itself is not converting, consider it a red flag and conduct a deeper investigation. Metrics like clicks and installs can be easily faked using Bots but these bots cannot purchase anything.

Unresponsive Leads

If your affiliate campaigns are generating a high number of leads but these leads seem to be unaware of your company when you contact them, something is wrong. It is easy for fraudsters to fill out lead forms with fake or stolen contact details and get commissions.

Unusual Number of Chargebacks

Some fraudsters may even make purchases on your website using stolen card details, just to get the commissions for these sales. Once the commission has been paid, however, you may receive a chargeback request from the credit card company, since the credit card used for the transaction may have been stolen.

All Campaign Goals Are Met (Regardless of What They Are)

Fraudulent affiliates, as mentioned earlier, usually outperform genuine affiliates. This becomes clearly evident when you choose a very niche audience and repeatedly change your campaign objectives. If you do this and notice that certain affiliates are meeting all the different objectives you set, you will be right to be suspicious of them.

Ways to Prevent Affiliate Fraud

Now that we have understood how to detect fraudulent activity associated with affiliate campaigns, let’s look at methods of prevention.

Stop Auto-Approving Affiliate Applications

As mentioned above, a lenient approval process is the biggest reason behind affiliate scams. Give your program manager the time and the tools they need to thoroughly evaluate potential affiliates before they join your network.

Develop and Implement Stringent Brand Safety Guidelines

Brand safety in digital advertising is important for protecting campaigns against fraud and for protecting the image of the brand. Concerning affiliate marketing, brand safety guidelines may dictate:

  • Who can sign up to be an affiliate
  • Strict approval criteria
  • Guidelines on how affiliates can promote products/services
  • Strict definition of transactions and actions that qualify for commissions

This list is not exhaustive. Feel free to add anything else that seems relevant. However, it is important to remember that simply developing these guidelines is not enough. You also need to enforce them. To that end, make sure your team receives the necessary training to be able to implement them. It is also important to develop a process to provide your team with the oversight they may need to ensure effective implementation.

Similarly, it is also important to develop and implement a process of dealing with instances of fraud once they are detected. Define clear guidelines regarding reporting of fraud, investigation processes, and action plans.

Develop Relationships with Affiliates

One of the best ways to ensure an affiliate isn’t committing fraud is to get to know them. Any genuine affiliate that is earning commissions from your brand would be happy to connect with members of your team.

You can further incentivize such affiliates by designing programs to help them improve. Such activities will benefit your brand and the legitimate affiliates while helping you identify and eliminate fraudulent ones.

Employ An Affiliate Monitoring Tool

An affiliate monitoring tool is non-negotiable when it comes to brand safety in digital advertising. The right one will allow you to track affiliate activity in real-time. A reliable tool will come equipped with AI and ML capabilities, allowing you to track and detect even sophisticated attempts of fraud. Such tools evaluate everything including, but not limited to, in-app activity, traffic patterns, and user behaviors.

Conclusion

Affiliate fraud is a very real and growing concern. However, for many brands, affiliates form one of their most important sales channels. Considering these facts, brands must adapt and learn how to identify and fight against the plague of affiliate fraud.

We hope that the tips shared in this article will help you in your fight against affiliate fraud. If you need additional help or simply want a solution that eliminates the need to worry about fraud festering in your affiliate campaigns, get in touch with our experts.

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