Affiliate marketing campaigns can be an incredibly powerful tool for attracting business. With the average daily time spent consuming online content soaring to six hours and 59 minutes (Source: Forbes), online marketing campaigns have more opportunities than ever to convert people into leads.
Furthermore, as noted by Statista, in “2020, the average daily social media usage of internet users worldwide amounted to 145 minutes per day.” So, a significant amount of time is spent on social media channels where influencers have a chance to guide their fans and followers to specific products.
Many companies partner with affiliates (including social media personalities, other companies with related products/services, or massive networks of advertisers) to increase their reach online. However, with affiliate marketing spend projected to reach $8.2 billion by 2022 (Source: Statista), it was almost inevitable that fraudsters would start trying to cash in on the phenomenon.
Knowing how to avoid lead generation fraud in affiliate marketing has become a crucial skill for marketers that want to maximize the ROI from their campaigns while minimizing risks.
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The Problem with Lead Generation Fraud in Affiliate Marketing
What if someone told you that half of your money (possibly more) was going to fraudsters? This has become the reality for many companies in recent years. Not even major companies with hundreds of millions of dollars to spend on marketing are immune to fraud.
For example, Uber, the transportation services app company, discovered that nearly two-thirds of its online marketing spend was either ineffective or fraudulent. They cut their marketing budget from $150 million to just $50 million and didn’t see any appreciable drop in lead generation or conversions.
In other words, lead generation fraud in their online marketing campaigns was costing Uber nearly $100 million a year. The question is: if a big company like Uber can be taken for that much, how much is fraud costing you?
Aside from being a waste of money for all of the advertising budget that gets spent on fake leads, lead gen fraud in affiliate marketing campaigns can be a problem because of the time it wastes. Instead of being able to directly target high-quality leads, sales reps in the company waste time following up with non-existent or extremely low-quality leads. This delays their response to the high quality leads, which may open the door for competitors to step in.
Additionally, if the fraudsters use the actual contact data of real people in their fake lead information, the company could risk Telephone Consumer Protection Act (TCPA) violations. At a cost of $500 to $1,500 per incident, this can quickly become an enormous expense.
6 Tips for Making a Fraud-Proof Affiliate Marketing Campaign
When it comes to fighting fraud in your affiliate marketing campaigns, the old saying holds true: an ounce of prevention can be worth a pound of cure. It’s important to set the right groundwork in the creation of an affiliate marketing campaign to minimize risk and maximize campaign ROI.
Here are a few tips for creating an affiliate marketing campaign or program that will minimize the risk of fraud:
1. Choosing the Right Revenue Model
When creating an affiliate marketing campaign, there are many different revenue models that can be used with affiliates. This includes:
- Cost Per Impression (CPM)Affiliates are paid based on the number of impressions or “views” they generate.
- Cost Per Click (CPC)Affiliates are paid for generating clicks on an ad.
- Cost Per Lead (CPL)Affiliates are paid whenever someone they referred becomes a lead on the marketing partner’s website.
- Cost Per Sale (CPS)A revenue-sharing model where affiliates earn money when prospects complete a purchase.
- Cost Per Action/Acquisition (CPA) Affiliates are paid when leads they generate take a specific action on the marketing partner’s website. This can include making purchases, filling out specific forms, or other activities.
However, some of these revenue models are easier to defraud than others. For example, simple bots can endlessly refresh a website page to artificially inflate impressions on an ad. Or, bots and human fraud farms can click on ads to eat up CPC budgets.
Lead generation fraud often employs more sophisticated bots and human fraud farms to fill out forms and make fake leads.
Sales-based revenue sharing models can fall victim to online shopping fraud—though it is more difficult to conduct than lead gen fraud, impression fraud, or click fraud.
Choosing the right revenue model can help to limit fraud risk by restricting how fraudsters can attack the marketing campaign. However, while some models are more resilient than others, none are totally immune.
2. Vetting Your Affiliates
Before adding new affiliates to your marketing campaigns, it’s important to thoroughly vet them to determine their reliability. Checking the history of an affiliate and measuring their audience’s engagement with their content on social media can be crucial for spotting and stopping fraudsters.
For example, does the affiliate have an unusually large audience despite only having been on social media for a very short time? Do their posts have a million views, but no comments (or comments that are limited to “great job!” or “cool video”)? These could be warning signs that the affiliate has bought followers to fluff up their online presence and make themselves look more valuable than they really are.
Having a formal process for analyzing potential affiliates can mean the difference between falling for fraud and stopping it before it happens.
3. Researching Affiliate Networks
There are numerous affiliate marketing networks and other online advertisers that will happily sell you on the sheer number of affiliates they have, the wide range of websites they appear on, or the specific metrics that they track.
However, these selling points aren’t always an indication of quality. An affiliate network can be clogged with fraudsters who won’t produce real results; the websites they use might not be suitable for your brand; and not every metric is useful (especially on its own).
It’s important to do a deep dive into an affiliate network before partnering with it. Check for historical data on the clients they’ve served in the past to see what their results were. Analyze who is in the network and look for any known fraudsters. Examine the metrics they track and verify that they really demonstrate ROI for the ad campaigns—things like click-through rate, validated conversions, and cost per validated lead.
4. Checking Marketing Analytics Before, During, and After Campaigns
Analyzing key performance data can help companies detect fraud and make more informed decisions about how to manage their online marketing campaigns. So, it’s important to have a solution in place for collecting marketing performance data.
Many customer relationship management (CRM) tools have built-in solutions for collecting data about leads from various sources and organizing that data into an easy-to-read dashboard. Some analytics tools can help assign each lead to a source automatically—making it easier to associate specific leads with the affiliates who brought them in.
Before, during, and after any major marketing campaign, it’s important to review the marketing data to try and identify any anomalies.
For example, as noted by Which-50, Uber became aware of millions of dollars of fraud when they analyzed the purported sources of their new leads and found, in Kevin Frisch’s (Uber’s Head of Performance Marketing and CRM) words: “this app that has kind of 1000 monthly active users (MAU), and in theory, we got 350,000 installs from them.”
This was a strong indication of misattribution fraud where the affiliates in question were taking credit for organic conversions (or the conversions of other affiliates)—possibly through cookie stuffing techniques.
By checking analytics before a new marketing campaign launches, you can establish the baseline for your conversions and other performance metrics. Then, during the ad campaign, it will be easier to identify any anomalies and their source. Post-campaign checks can help to identify trends in online marketing efforts, reveal fraud after the fact, and set up benchmarks for the next affiliate marketing campaign.
5. Creating a Policy for Dealing with Fraudsters
When establishing a new affiliate marketing campaign, is there a set policy for what to do when fraud is found? Who should fraud be reported to? Who checks for fraud in the first place? How is fraudulent activity detected and documented? Which law enforcement agencies should be contacted? Are there lawyers who need to be contacted to pursue a lawsuit against the fraudsters?
These are a lot of questions, but having the answers to them can be vital for ensuring the fast and efficient elimination of fraud.
So, it’s necessary to establish a fraud incident response document that details key roles and responsibilities for checking for, reporting, and remediating fraud. Anyone who interacts with the marketing campaign or marketing analytics should have a clear idea of what they need to do if they find fraud so they can respond quickly.
6. Using an Ad Fraud Solution
Although manually vetting affiliates and networks while carefully analyzing marketing metrics can help to proactively curtail some fraud, these aren’t perfect solutions. Especially for larger affiliate marketing campaigns where a manual vetting process would take too long or there is a virtual mountain of data to sift through for marketing performance metrics.
This is where an ad fraud solution can help.
Having a way to automatically detect fraud as it happens in real time and get the data needed to identify the source of that fraud can be a game-changer for preventing ad fraud. Instead of having to wait for a manual review of countless fraud signals, ad fraud solutions make the process near-instantaneous so fraud can be caught as it happens—not several hours or days after it happens.
This creates an automated fraud firewall on your company website that weeds out the fake visitors so you don’t have to worry about them.
Of course, this means finding the right ad fraud solution, as not all such solutions are created equally.
For example, Anura’s ad fraud solution verifies hundreds of data points to evaluate ad fraud in real time. By comparing this data to real fraud, Anura can verify fake visitors immediately while eliminating the risk of false positives.
This, in turn, leads to a greater marketing ROI for affiliate and online marketing campaigns since you aren’t paying for fake visitors!
Are you ready to transform your digital marketing success? Reach out to Anura today!