Affiliate fraud is the most harmful and damaging activity that occurs in the affiliate marketing industry.
In 2020, it’s the top goal of marketers and industry leaders to put an end to affiliate fraud for good.
However, as the affiliate marketing industry gets even larger, the affiliate fraud industry increases as well.
Just so you understand the scale of how incredibly large this growing fraud industry is, here’s a few statistics:
- Marketers lost over $23 Billion due to ad fraud in 2019
- 1 in 5 Ad Serving Websites are Visited Exclusively By Bots
Due to the immense scale, it’s unlikely that we’ll be able to put a complete stop to affiliate fraud for the whole industry any time soon.
But, it’s crucial that affiliate marketers especially, learn how they can identify this type of fraud when they see it, and learn the steps to prevent it from happening to their sites and advertisements.
What Is Affiliate Fraud?
Affiliate fraud, in broad terms, is the non-compliance to the rules of affiliate marketing. It contains not only what you do with your traffic, but the strategies used to generate your traffic, and the ads and creatives that you set for your affiliate marketing campaigns.
So… What does this all mean?
Affiliate fraud is every action performed which breaks any of the advertising policies and rules set by advertising platforms. It is quite simply, any type of illegal activity with the intention to cheat customers, visitors, or advertising companies.
Affiliate fraud is a virus. It’s contagious, and it’s only getting worse. It’s not only affecting customers and ad buyers, but everyone in the industry.
What Actually Happens During a Fraud Attack?
There are loads of information out there describing affiliate fraud, and the steps to prevent it.
But few articles and sources touch on the subject of what actually happens when affiliate fraud occurs.
This information is completely necessary to be able to not only identify the fraud when it’s being taken place, but how to stop it as well.
When a marketer commits affiliate fraud, whether it’s through fake leads, automated softwares to generate clicks, or forcing users to make desired actions, they’re automatically labeled as a fraudster within the industry.
What does this mean?
They’ll get blacklisted in the industry, rendering them unable to buy or sell traffic any longer.
Remember, affiliate networks share knowledge about their affiliates. This means that having a bad reputation in the industry will get you rejected globally.
Fraud is also a bad practice for all the other law-abiding affiliates. This business is the daily income for marketers all over the world. Is it really worth jeopardizing your reputation and income for short term illegal profits?
Absolutely not.
Even so, this is only the tip of the iceberg. There’s a chain reaction when an affiliate commits fraud.
It’s important for merchants, marketers, and advertisers to understand that intentional affiliate fraud is now part of the e-commerce sales channel and a threat to merchants revenues. Here’s the chain that gets affected:
- Competitors: A competitor will pay people to click on a merchants advertisements. The affected merchant pays for this click without earning a a single real sale from the fake click. Why? Because the clicks are fake! These fake clicks can and will quickly drain advertising budgets.
- Affiliates: Affiliate marketers will host advertisements for merchants and earn money when the advertisement is clicked. Affiliate fraud occurs when these affiliate marketers use people or automated “click bots” to repeatedly click these advertisements.
- Paid employees: Employees are hired by fraudulent ad networks, marketers, and advertisers that are paid to click competitor advertisements. The victims of this click fraud see their advertising budget drained and no conversion to sales.
What You Need To Know As A Marketer
As you can tell from this article, affiliate fraud is the biggest threat to this industry, and it happens every, single, day.
So how can you, as a marketer, lower the risks of click fraud, identify this type of fraud, and eventually prevent it?
Step 1: Don’t Charge For Impressions
A very common method of tracking digital advertising, is through CPI or Cost Per Impression.
However, this can be dangerous when you take into account that a big portion of those impressions, aren’t even human.
For example, If you are paying $0.0050 per impression, and your clients marketing budget allows for $100,000, expecting that you’ll get, and paying for 20 million impressions will actually result in only 1.6 million human impressions.
So… you are actually paying $0.0625 per human impression.
Instead, if you change your measure to charge for action (CPA), instead of impressions, you’ll have a much better chance of actually receiving the results that you paid for, not the ones fraudsters want you to see.
Step 2: Block Countries with High Rates of Bot Traffic
What’s one of the top ways to prevent bot traffic from accessing your advertising campaigns?
Block them at the source! Typically, fraudsters will reroute their bots and poor traffic through other countries using a VPN, where they are less likely to be detected.
According to Ad Week, the rate of low quality and fraudulent traffic from countries such as China, Venezuela, Ukraine, and Singapore can be up to 92%!
For reference, the rate of poor quality traffic in the US is much lower at 43%.
While it’s not necessary to completely block these countries from accessing your websites, it’s a good idea to block low quality sources from accessing your advertisers campaigns.
You can do this through simply excluding where you don’t want traffic to come from, and focus on targeted areas with high quality traffic instead.
Step 3: Filter Traffic in Real Time
In order to successfully monitor your campaigns and ensure the best results for advertisers, it’s crucial to monitor and filter your traffic in real time.
The main benefit from using real time filtering, is that fraudulent clicks won’t touch your budget, and won’t lower your CPC rates.
When analyzing your campaign while it’s running, there’s a few key metrics to keep your eye out for:
- Source of Traffic
- Engagement with the Ad
- CPC/CPA
As described earlier, the source of your traffic can tell you a lot while assessing for poor quality traffic. By focusing on traffic from high quality locations, and excluding those with high rates of suspicious traffic, you’ll immediately be doing yourself, and your advertisers a favor.
Another key metric to track when looking for bots and fraudulent traffic, is how they’re actually engaging with your ad. Low engagement and high bounce rates are red flags for botted traffic.
Conclusion
Affiliate fraud is seriously damaging the industry every day that it continues to occur.
How can we put an end to it?
It will be up to not only marketers to be more honest with their business, but the entire network that makes up the affiliate marketing industry.
Rome wasn’t built in a day, and affiliate fraud won’t stop in a day either. However, by following the steps listed in this article, and paying closer attention to your partnerships and your traffic, you’ll see a decreased fraud rate in no time
