According to 99 Firms, 15% of digital media advertising revenue can be attributed to affiliate marketing. Following that, 2% of all affiliate transactions are attributed to affiliate fraud. Fraudsters are continuously finding new ways to scam the system and cheat merchants out of profits. But before we dive into the dark depths of affiliate fraud, let’s take a step back and look at where it all comes from — affiliate marketing.
What is affiliate marketing?
Affiliate marketing, or performance marketing, is the type of marketing where a publisher promotes a merchant’s products (or services), generates sales for those products, and in return receives a commission. This all comes about from companies using an affiliate program as part of their marketing strategy. Why would a company do this? Because performance marketing results in a company only paying for the marketing efforts that actually perform, i.e., generate a sale, lead, or install. The blog post linked here outlines the benefits.
What is affiliate fraud?
Affiliate fraud is a type of advertising fraud that involves any false or corrupt activity executed for the purpose of fraudulently collecting commissions from an affiliate marketing program. However, there are many different types of affiliate fraud. Publishers and affiliate managers often use strict terms and conditions to prevent affiliates from gaming the system yet it still happens. Let’s take a look at how this happens.
How do affiliates commit fraud?
Affiliates are creative when it comes to committing affiliate fraud. Below are some common methods:
- Faking a conversion
Whether it’s a click, a completed lead form, an app install, or even a sale, much of affiliate fraud revolves around affiliates faking a conversion to collect the commission. This is often done with the use of bots, but can also be done manually by humans, most often in click farms.
- Duplicating content from another affiliate
Affiliate publishers are paid for conversions that their original content produces, so nefarious affiliates may simply scrape the sites of legitimate publishers and re-publish original content in a bid to divert traffic to their sites and then take credit for any conversions.
- Click stuffing
This often happens around install fraud and involves an affiliate simulating clicks on ads (often with the use of bots) unbeknownst to a user. So, if the user then installs an app organically, the affiliate company will still get a commission even though their ‘marketing’ efforts had nothing to do with the user installing the app.
Negative effects of affiliate fraud
As an affiliate manager/publisher/merchant you need to be aware of all the different ways that affiliates can cheat the system. There is a direct cost of affiliate fraud (it eats into your profits and depletes your marketing budgets), but there are other not-so-obvious effects of affiliate fraud.
Protect yourself from affiliate fraud
Here at Fraudlogix, we specialize in affiliate fraud detection and prevention. Contact us to discuss how we can protect your affiliate marketing campaigns.