It is a terrible fact, but affiliate marketing fraud costs businesses quite a bit of money. 

But why is affiliate marketing fraud so popular with criminals? For one, digital ad spending is up. As marketers allocate more of their budget to affiliate marketing and other digital streams, criminals follow. According to eMarketer, digital ad spend will comprise nearly 60 percent of ad spending in 2020 and will reach 66.8 percent by the year 2023. Many of these dollars will go towards affiliate programs specifically. According to Digita Global, 90 percent of marketing professionals view affiliate programs as an important part of their strategy Affiliate marketing as an industry generates over $12 billion dollars.a year.

Since criminals tend to follow the money, it is safe to assume that the more money spent on digital advertising means it is targeted more often. Each time you are subject to affiliate marketing fraud, you are losing money. In order to make the most of your budget, you need to protect your ads against fraud.

Another reason why digital marketing is so frequently targeted by affiliate marketing fraud is the love of metrics. The marketing and advertising industry is all about measuring effectiveness. Campaign success is tied to metrics, and so are budgets and bonuses. If you start looking at the validity of vanity metrics and those inflated by fraud, it may turn out that things are going as well as you planned. If, however, you look at metrics that are revenue driven such as ROI and conversions, you are going to want to do everything you can to stop fraud from taking anything away from your efforts.

Why Does Affiliate Marketing Fraud Keep Working?

Innovation

Businesses innovate in order to stay open. Criminals innovate as well, their tactics evolving to bypass the techniques used to stop them. Take the Live Fraud Paper Threat, where apps that appeared in the Google Play store were used to carry out fraud that resulted in close to $300 million per month. Once it was found that fraudulent click attempts were coming from live wallpaper apps like the Lovely Rose and Oriental Beauty, the obvious choice was to remove the apps. Not wanting to miss out on the money they were making, the bad guys pivoted by pushing our new apps from newly created developer accounts. This simple innovation not only kept their criminal acts going, but increased the cost to advertisers to anywhere between $100,000-$500,000 per month in just a few short weeks.

Affordability

Innovation isn’t the only reason affiliate marketing fraud keeps working. To carry out this type of fraud, criminals don’t need to invest much money. Phishing kits with the right malware can be bought rather cheap on the web or even as a service as shown in a recent report by Cyren. Combine that with a botnet that you can rent for very little money, even by the hour, and you can see how just a small investment can reap the fraudster some pretty big rewards. 

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Think all security technology can stop that type of fraud? Well, the Live Fraud Paper threat proved such hopeful thinking wrong. Even if every ad fraud solution could stop clicks from botnets, clicks from human fraud farms are easy to rack up. The industry surrounding human click fraud is so big that it is even possible for criminals to crowdsource this type of activity. Only sophisticated ad fraud solutions are sensitive enough to pick up that type of activity.

Denial

Finally, we know that not all companies want to address the threat. In one ad fraud scheme, Google claims fraudsters stole nearly $10 million from its ad networks and partners. A critic of the ad industry told Buzzfeed News, “Nobody knows how bad it is and nobody wants to know.” When businesses are forced to confront the problem, they fear two things: 

  • If they see how much fraud exists in their campaigns, they will be forced to do something about it. 
  • If they don’t do anything about it, they could wind up losing a large chunk of their budget.

Any one of these sets the stage for affiliate marketing fraud. Unfortunately, all three are often combined to provide a triple threat against legitimate advertising efforts. As companies address their denial surrounding ad fraud, they can start looking to take on how the fraudsters operate to stop the criminals from sifting money out of your budgets.

Protect Those Pennies with the Right Ad Fraud Solution

Successful advertisers know that success comes from making every penny work for your business. Wasted money only results in wasted opportunities to grow. That is why it is so important to invest in an ad fraud solution that is capable of stopping even the most sophisticated and innovative affiliate marketing fraud techniques.

As an advertiser, you live by data and metrics; it's how everything is measured. The best-in-class ad fraud solutions use data differently. By looking at hundreds of data points surrounding the activity on the campaigns it is protecting, these solutions are able to stop ad fraud in real time. Many solutions that appear to appeal to budget-conscious organizations may warn you that something looks suspicious, but that is all they can do. It is now up to you to decide what the best course of action is to determine if the activity is fraudulent and stop it.

The smart investment is a solution that knows when activity is fraudulent and helps you block it for you. That allows you and your team to focus on what they do best instead of scrambling every time an alert goes off.

Of course, blocking bad activity will supposedly stop fraud from happening. However, what if something only looks like fraud? Do you really want your ad fraud solution to stop legitimate traffic? Think of all the sales you would lose if an ad fraud solution shut down traffic from a mistaken impression that affiliate marketing fraud was happening on your network. Sales lost due to false negatives is not a good scenario. A real ad fraud solution will know the difference between illegitimate and legitimate activity. It will stop the bad clicks and let the good clicks keep happening.

Affiliate marketing fraud will continue to be a problem for advertisers as long as there is money to be made and the criminals are allowed to operate. Don’t make it easy for them to steal your hard-earned pennies. Talk to us today to see how Anura’s best-in-class ad fraud solution can help you stop even the most innovative fraudsters from wasting your precious advertising budget.

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