Affiliate Marketing & Programs
 

Affiliate Fraud: Why You Should Care

 

Fraud hurts everyone, particularly affiliates.  It may not be obvious to all affiliates, but when a fraudulent affiliate hits a network with fraudulent leads or sales, it affects all affiliates in the network.


Affiliate fraud, regardless of whether it is stuffing lead gen campaigns with lists of overused data or sales made with fraudulent credit card data, can take as many forms as there are affiliates.  Regardless of how it happens, its effects can be felt throughout the network in a myriad of ways.


Types of Fraud


The most direct if for affiliates who have been running the particular campaign(s) that were receiving the bogus sales or leads.  These affiliates are at the greatest risk of not being compensated by the network.  Most top tier CPA networks, and by that I qualify these as those networks who work directly with advertisers or their agencies, will do their best to separate out the rogue affiliate’s traffic and secure payment for the “good” traffic that was generated.  In some cases, the advertiser is out so much because of the fraud that they throw out the baby with the bathwater.


In other cases, networks have a sequential liability clause, which gives them the right to not pay an affiliate if the advertiser legitimately does not pay them.  This is an acceptable business practice, as it is how most large media agencies structure their agreements.  It stings no less to not get paid when you have basically agreed to it when you became an affiliate.  This is why it pays to check out who you are working with in terms of networks, and their terms.


CPA Network Fraud


The second tier of cpa networks, and by this I qualify them as those who rarely work direct with advertiser and mostly stock their campaign shelves with cross-published offers from other cpa networks, are also vulnerable to affiliate fraud.  In fact, they are more exposed to the fraud risk than those cpa networks that work direct.  There will always be some cross-pubbing in performance marketing, and when it is managed well, these networks can provide niche based offers for particular publishers who promote a specific vertical and prefer to have their affiliate manager run around and find them offers.


But, because they are not direct, they are at the mercy of the network they got the offer from to get paid.  And if the originating network doesn’t get paid, well, most of the time the affiliate is so to speak, $%(# out of luck.


Affiliate fraud is detected at the advertiser level.  How quickly that fraud is communicated to the network is crucial to stopping fraud from destroying the advertiser’s confidence in the network’s ability to deliver quality leads and sales.  In a typical network, the advertiser is auditing the leads and/or sales on a daily or at the very least, weekly basis. Here’s just a few of the factors they are looking for in the data:


-          An unusually large amount of traffic from one singular IP address


-          An unusually high amount of affiliate based stolen credit card transactions


-          No attached Sub ID’s


-          Poor lead quality results from call centers where the leads are being sent to


-          Unusual grouping of leads or sales based on time of day or specific geographic areas


-          Incentivized traffic detected for an non-incetivizable offer


 


This is a very short list of the checks that normal leads and sales are subjected to.  If anything trips an alarm, the network normally notifies the affiliate that something is amiss and asks that they pause the campaign until they can determine what the impact is.  The affiliate is also notified that their commissions may not be forthcoming, pending a review.


This is the ideal situation.  Most top tier networks working direct have the access to the right marketing people to get these answers quickly and head off any affiliate fraud before it becomes a systemic issue.  Many of these CPA Networks are adopting services such as AdSafe, FaudLogix, Brand VerityScrubKit and CPADetective.  In addition, some network management software, such as LinkTurst provides affiliate scoring.  All of these services work in the background for networks and put all of their network traffic through a litany of tests and determines if there is a need to be suspicious.  They are all very powerful and their adoption is becoming more widespread.


How Auditing Can Help


All this auditing is an effort to increase the transparency for cpa network/agency advertiser clients, which increases the trust in the leads and sales made through the performance marketing channel.  This then spurs additional big brand advertisers to enter the performance marketing arena, which drives better payouts and better brand recognition for affiliate’s audiences.  In short, reducing fraud is good for every member of the CPA food chain.


Unfortunately, too many networks that seem to spring up overnight, have no way of getting the immediate feedback that top tier networks receive.  Thus, when it comes to paying out legitimate affiliates, they can’t, because these networks haven’t been paid.  Many of these flash in the pan networks do not screen their affiliates, or actually look for and recruit shady practice affiliates in hopes of making short term cash from another network or an unsuspecting newbie advertiser to the space.  I am sure there are plenty of well intentioned new network owners, but as an affiliate, you should be wary and ask a good number of questions about how they vet their affiliates and their track record.


If a network accepts every rogue affiliate clown that applies, then you really want to ask yourself if this is a network you can trust to only run quality traffic for the campaigns you may want to run.  If no one calls you and they just accept you based on your application, then beware.  It may be the case that they will allow just anyone one in.  If on the other hand, you receive an email back asking for more information, and once you respond, they contact you over the phone or conduct even further checks, this should give you at least some idea that they are working to improve the quality of their publisher base.


If you apply to a major network and don’t receive either, then you can always call them to speak with their affiliate manager and discuss how YOU will benefit them with quality, non-fraudulent traffic.  Make sure to have links to yourself in social media, as well as be able to show them exactly how you will be running your traffic.  Transparency is the most important factor for all networks who work direct with advertisers, and even to those who only cross-publish.  You want them to be on the lookout for fraud. Making it easier for them to determine who you are will greatly increase your chances of getting accepted and getting attention when it comes to special requests and payout bumps.


Fraud is the one area that can stop performance marketing in its tracks.  As an affiliate, you should always be aware of the factors that make our industry attractive to advertisers.  Advertisers pay the bills, and the bigger the advertisers who are attracted to performance marketing translates directly into a better future for you as an affiliate.



About The Author


Jim Lillig is currently the EVP for Wheaten & Wheaten (www.wheatenworldwide.com), a digital ad agency in Chicago.  Wheaten owns two CPA networks, adfoundry.com and safetynetmedia.com.  He has been involved in digital media since 1996, and has been at the forefront of performance marketing.  Prior to Wheaten, Jim served as the VP of Business Development for both Offervault and Offermobi concurrently, where he honed his mobile marketing strategies by working with mobile advertisers to attract affiliates to their offers.  You can learn more about Jim at www.jimlillig.com or look him up on LinkedIn.


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4 Responses to Affiliate Fraud: Why You Should Care

  1. Samantha Murphy March 5, 2012 at 6:18 am

    Fantastic piece, Jim. As a long-time member of this awesome industry, I have just recently opened up a small network focusing on direct offers and we have a bunch of AOR offers already and many more in the works. We also share the same outlook about not accepting random signups. Everyone in our network is hand selected at this point. We are so strict, that once the apps start coming in, we’ll be probably denying 80% or more. Every sign-up will be fully vetted (and exposed to 100000 questions by yours truly).

    Unfortunately, what you describe….It was like that at my previous 2 companies…too many that should have never been approved, were. And in turn, caused problems left and right. Thanks for the read!

    Sami

  2. Susan March 7, 2012 at 9:34 am

    and there it is in a nutshell. The things I never knew before about aff’s and their networks. I always shied away from becoming an affiliate to anyone except the truly established companies. Now I know why. I guess there’ll always be a rotten apple in a barrel somewhere infecting the rest of us. After roughly 3 years of receiving emails from all and sundry within the IM scene, there are only a handful that I have grown to trust. Maybe when I feel ready, I will contact them. This also underlines why I don’t want to have any affiliates of my own; there are way too many problems

  3. Samantha Murphy March 7, 2012 at 10:38 am

    Susan, that’s not fair. Truly established companies? While I’ve been in the biz 12 years, we are a brand new company. I know a lot of those “truly established companies” who have sent the majority of the fraud I’ve encountered in my experience.

  4. Jim March 7, 2012 at 11:28 am

    Susan, I agree with Samantha. It is not so much the length of time (although that can be an indication) that a network has been around, but the people and the processes that they have in place to screen out rogue affiliates. I think the question you should ask any network is, who runs the place? And can I see a bio or LinkedIn resume about them. If they are a truly transparent network, they will be happy to supply you with all the information you need to make a decision as to whether or not you want to work with them. This is a business and as in all business transactions, you should know who you are dealing with. The networks want to know YOU are legit. You need to know if THEY are legit. One simple check is to put their company name in Google or Bing with the word “fraud”, “scam”, or “spam” next to it and see what comes up. If you really want to go further, put in the name(s) of their owners or top brass with the same keywords and see what you get back. You might just be surprised at what gets returned.

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