Running an affiliate marketing program is an effective way to grow your business and increase revenue. Unfortunately, there is also a risk of malicious activities, such as affiliate fraud, that can hurt your earnings and undermine your advertising initiatives.
The issue of affiliate fraud is a serious one, and it's on the rise. However, identifying the various methods used by bad actors and illegitimate affiliates can help safeguard you against it.
In this post, we'll explain what affiliate fraud is and discuss some of the most common types. Then we'll provide you with three key methods you can use to prevent it. Let's get started!
An Introduction to Affiliate Marketing Fraud
Affiliate marketing uses a performance-based approach to online advertising. A company enlists affiliate partners to promote its products or services through unique links and referral codes. When sales or conversions are made through those promotions, the affiliates are paid a commission.
Participating in these marketing programs provides a lucrative and convenient way for affiliates to earn a passive income. What's more, it's a cost-effective marketing technique for brands that want to drive conversions and boost revenue.
Unfortunately, the digital tracking and attribution model behind affiliate marketing is not foolproof. In fact, research shows that over 35 percent of digital ad traffic is fraudulent. Problems arise when fraudsters exploit or abuse the affiliate marketing system to falsely or unfairly claim commissions.
Put simply, affiliate fraud is when bad actors participate in or execute illegal activities in order to scam affiliate marketers or merchants. These scammers can implement a variety of methods to trick companies into paying them affiliate commissions that aren't actually valid.
Common Types of Affiliate Fraud
Affiliate fraud comes in many different forms. Some of the most common types include:
- Click fraud. With click fraud, scammers can flood Pay Per Click (PPC) campaigns with fraudulent or invalid clicks, often through bots or artificial activity that uses software to simulate real users.
- Typosquatting. This refers to hijacking a URL that's similar to a company's name, in order to collect the referrals from redirects.
- Traffic diverting. Fraudsters can use what's known as ‘parasite sites' to steal the traffic from a legitimate affiliate site.
- Cookie stuffing. Browser cookies enable tracking of affiliate referrals. So fraudulent affiliates can place a variety of cookies on a visitor's browser to earn the commission if and when that customer does end up making a purchase.
- App installs. Also known as attribution fraud, this is when thieves steal credit card information to install apps, in order to manipulate app tracking attribution platforms.
If you participate in affiliate marketing, these types of fraud can have devastating effects. As a merchant, you might end up paying for clicks that don't actually increase sales, or face unnecessary expenses that threaten your bottom line. Additionally, affiliate partners could be unjustly blamed or penalized for the black hat behavior of scammers.
Affiliate Fraud: 3 Ways to Prevent It
Now that we have a better understanding of exactly what affiliate fraud is and the various forms it can take, it's time to learn how to avoid it. Let's take a look at three effective methods you can use to prevent affiliate fraud.
1. Carefully Screen and Communicate With Affiliates
Adopting a strategic vetting process to make sure affiliates are legitimate from the start can go a long way towards preventing fraud. For example, you might consider implementing a multi-stage application process and configuring it so that you have to manually approve new affiliates:
When screening a potential affiliate, you'll want to verify that they have an active, legitimate website and that their content aligns with your products or services. This can reduce the risk of a bad actor making their way in undetected.
Even once you approve of an affiliate, it's important to clearly communicate your terms and conditions. Having a lawyer look over your policies can help you ensure that there's no room for error, or potential loopholes that could lead to affiliate fraud or abuse.
2. Closely Monitor Traffic and Program Analytics
It's hard to spot illegal or suspicious activity happening with your affiliate program if you don't have a way of actively monitoring it. By regularly and closely tracking your affiliate marketing analytics, you're better positioned to identify a sudden surge in traffic, a concerning influx of redirect pages, or a questionable number of transactions attributed to a single IP address.
Fortunately, there are affiliate program tools and plugins you can use to make doing this easier. For example, our Affiliate Royale plugin provides a robust admin dashboard with link tracking as well as analytics and reporting features, so you can easily uncover anomalies:
Also, because this solution integrates seamlessly with WordPress, you won't have to worry about juggling multiple platforms and tools. All the insight you'll need will be accessible from within your dashboard.
3. Block Suspicious IP Addresses and Remove Unethical Affiliates
Mistakes happen, and not all odd behavior or abnormalities that occur within your affiliate program necessarily mean that you have a cybercriminal on your hands. However, it's best to err on the safe side.
If the same user repeatedly demonstrates suspicious behavior or violates your terms and conditions, it's likely best to remove them. You don't want to risk compromising your entire affiliate program, or lose out on profits due to one careless, malicious, or greedy participant.
If you're an Affiliate Royale user, you'll have the convenience of doing this directly through the plugin. There's a dedicated section for your list of affiliates, and removing one is as simple as deleting a plugin from your site.
You'll also be able to use the plugin's settings to leverage a variety of other key features:
For example, you can disable the option to automatically add users, and turn on a setting to display your affiliate agreement. There's even a feature for modifying the number of days before an affiliate cookie expires. This can help prevent the fraudulent technique we discussed earlier that's known as ‘cookie stuffing'.
Affiliate marketing is a popular, powerful, and effective way to grow your business, promote products, and increase revenue. However, it's important to take careful and proactive measures to protect your program and campaigns from scammers.
In this post, we discussed three ways to prevent affiliate fraud:
- Carefully screen and communicate with your affiliates.
- Closely monitor your affiliate program analytics and user behavior.
- Block suspicious IP addresses and remove unethical affiliates.
Do you have any questions about preventing fraud in affiliate marketing? Let us know in the comments section below!