Monetary loses are the number-one thing that comes to mind when thinking of affiliate fraud, after all, there’s a lot of money on the line here. A report by the IAB shows that one-third of organizations are spending 10-plus percent of their online marketing budget within the affiliate marketing channel, with 28 percent spending at least $25K a month and 11 percent spending over $100K a month. What we’ve learned in online advertising is that money tends to attract fraud, and the easier it is to commit fraud, the more there will be. With this in mind, marketers may see upwards of 20 percent in some campaigns where the signup is easy (a simple email submittal, for example) and the payout to the affiliate is high. So the monetary loses to affiliate fraud are obvious and can be significant if not checked, however, there are other loses occurring that may not be as obvious.
Related: Different types of affiliate fraud
Beyond Money – Consequences of Affiliate Fraud
Loss of confidence in affiliate marketing
Affiliate fraud wears away confidence in the performance marketing channel, which affects both publishers and advertisers. Fraud tarnishes the reputation of the entire affiliate industry, which can cause advertisers to steer clear of a potentially effective marketing channel and harms legitimate publishers who are faced with reduced revenue and a PR problem that they didn’t create.
Wasted time and loss of productivity
A sales force chasing fake leads is wasteful and can be detrimental to revenue goals. Additionally, dealing with fraudulent conversions, chargebacks, clawbacks, and discrepancies caused by affiliate fraud can be a giant time-suck for staff and managers, not to mention frustrating. It also consumes hours that could be spent in more productive areas, like coming up with strategies to drive sales.
Misguided strategies due to poor metrics and skewed data
The number of clicks, leads, and installs generated from a campaign often affects the direction a marketer takes during subsequent campaigns. But affiliate fraud can quickly add fake conversion data into a campaign analysis, resulting in skewed results. Tainted data can derail future campaigns by causing an advertiser to allocate funds and attention to the wrong area of a market.
Related: Signs of affiliate fraud
How to protect yourself from Affiliate Fraud?
Looking for protection against affiliate fraud? Contact Fraudlogix to find out how we can help you. We specialize in protecting you from click, lead, install, and sales fraud within the affiliate industry.