Many consumer-facing businesses are diversifying their sales channels to keep up with the market demands for digitalization. Retail companies, in particular, must look beyond brick-and-mortar stores by expanding into multiple channels.
Affiliate marketing is becoming a growing part of this digital diversification.
The strategy enables brands to partner with social influencers to reach large audiences with minimal resources and generate fast results. However, affiliate marketing strategies are a target for fraudulent activity.
Although businesses think they are paying the correct affiliate partners, there is huge risk that they’re pumping money into misattributed sources.
It’s imperative that, in this current climate of digital growth, they nurture their genuine affiliates by tackling ad fraud.
Understanding the threat
Affiliate marketing fraud can occur when websites or individuals, who are paid a commission for the promotion of a product or service, use fraudulent tactics to generate revenue for personal gain. In most cases, affiliates are aware of fraudulent activity, yet turn a blind eye or even perpetuate fraud, as they’re not well-equipped to overcome it.
The ecommerce sector is one of the most vulnerable targets for affiliate fraud. With retail ecommerce sales forecasted to reach around $8.1 trillion by 2026, targeting mobile and online users to increase sales is highly valuable for businesses. Many retail companies partner with a range of social media influencers that offer affiliate links.
Unfortunately, the growth opportunity is not only attractive to the industry itself, but also to bad actors who set out to steal millions every year.
To break it down, common fraudulent tactics include:
Cookie stuffing: This involves fraudulent affiliates tricking websites into thinking they have sent them traffic by dropping third-party cookies onto a visitor’s web browser without the user knowing. The cookie contains false information and leads to deceived businesses misattributing an engagement that hasn’t been sent by a valid partner.
Keyword bidding: Affiliates use their own funds to create and display ads in front of consumers so they receive a commission. This leads to affiliate partners taking up the original brand’s space. The brand must then still pay the affiliate out for the purchase while losing engagement on its own site.
Extension threats: Fraudsters are growing ever more sophisticated and disguising themselves as legitimate browser extensions, injecting an influx of clicks seconds before a purchase to be fraudulently rewarded for referrals.
Putting a stop to poor campaign performance
Fraud can render campaigns unreliable, inefficient and costly for businesses. With threats rising and budgets on the line, advertisers may find themselves out of control when it comes to managing affiliates. Understanding these methods behind fraudulent activity boosts businesses one step closer to uncovering fraud and unlocking potential.
Putting a more comprehensive vetting process for potential affiliate partners is a good way for advertisers to start protecting themselves. For example, ensuring the partner’s email address matches their website’s URL is a basic and vital way to verify their identity and gain transparency.
Outlining a zero-tolerance policy for fraudulent practices in terms and conditions will also help offer some protection. Finally, simple tactics like shorting the URLs of affiliate links can make tracking more manageable and conceal the unique ID that each affiliate uses to help protect them from lost commissions.
Affiliate programs are critical for advertisers’ growth. Yet with the global affiliate marketing platform market likely to reach $36.9 million by 2030, fraud is an issue that must not be overlooked.
Fraudsters won’t win if advertisers deploy the right tools to protect their advertising efforts. With the right defense, affiliates will be awarded accurate commission, advertisers will sell more products, and consumers can easily purchase the goods they want.
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