Words: Talar Malakian, CMO of Phonexa
It’s no secret that affiliate marketing is an impressively growing avenue for businesses to expand their reach and drive higher sales, all the while increasing brand awareness for companies.
But promises come with pains. (I alliterate and I’m proud of it).
In this case, I’m talking about affiliate fraud – the lurking thief ready to plunder profits for everyone.
I’m no stranger to this. As CMO of Phonexa, a performance marketing software that is made for affiliate marketers, by affiliate marketers, I see it all too often.
For information’s sake, let me cite some numbers…
About 45% of all affiliate traffic today stems from fraudulent activity. The losses amount to billions every single year.
If you’re not familiar with affiliate marketing fraud, it’s a type of online fraud that occurs when someone tries to take advantage of an affiliate marketing program by generating fake leads or claiming sales attribution they didn’t contribute toward. This can be done through a variety of methods, but the symptoms for the recipient of the traffic or leads feel like:
- Fake leads that don’t convert
- Wasted ad spend
- Reduced customer acquisition overall
- Chargebacks
- Losing really incredible affiliates
- Compliance violations
With our tech teams, the topic of conversation often revolves around building proactive measures that safeguard the integrity of the entire ecosystem.
When running an affiliate program, I can tell you that halfhearted oversight of an affiliate program won’t cut it, but you know what will? Digging into your affiliate data and operational procedures to effectively detect and address fraud in real-time.
So how do we mitigate it? How do we prevent it?
3 Ways to Avoid Affiliate Fraud
“If you’re on time, you’re late,” they say. The same concept directly applies to affiliate fraud. And despite our natural human instincts to “cross the bridge when we get there,” avoiding affiliate fraud is much easier than dealing with it when it knocks on your door.
1. Thoroughly Screen Each Affiliate
Our number one rule is always to screen affiliates before onboarding them or accepting them into our affiliate programs. But telling you to “screen” affiliates, versus actually doing it, are two different things. What should you look for when vetting potential affiliates? Always look at performance KPIs important to your organisation, check out their compliance track record, conversion rates, traffic sources, and other metrics.
But the key here is not doing it once and forgetting about it, but rather setting a structure that will help you periodically monitor these data points that can help you flag suspicious behavior or traffic that comes through the affiliate pipeline, even after signing with them.
2. Track Affiliate Activities, Especially Early On
I briefly touched on this in my previous point, but I want you to keep in mind that even after thorough screening, there’s no actual guarantee that your new affiliates will continue to operate within legal and honest boundaries.
While on the other hand, having transparency and being able to monitor affiliate activities will give you the peace of mind you need to secure an honest operation.
3. Implement Automated Fraud Prevention Software
Manual verification for fraud doesn’t make sense for high volume consumer industries, especially. And building your own Frankenstein-ed system is costly.
Sure, standalone affiliate fraud detection tools are available, but what we see working the best is when clients and partners opt-in for affiliate marketing and tracking software with built-in fraud detection capabilities.
Integrating the Phonexa suite with advanced fraud detections tools like Anura and our own built in-solution solution called iClear have been one of the best product decisions we’ve made for our clients.
With both, our clients get unparalleled defence against diverse threats, including bots, human fraud, and malware, ensuring the cleanliness, integrity, and compliance of their lead data.
With a robust system, you should be able to identify fraudulent visitors in real-time, pinpoint sources for this traffic, verify and validate real visitors, and subsequently increase each campaign’s return as a result, allowing you and your publishers more visibility across the board.
Leaning into a subscription with a reliable affiliate software is more cost effective, compliant, and manageable over building in-house solutions or using a complex suite of standalone products to do the job.
If you’re wondering about whether you even have an issue with fraud, use this free fraud calculator we put together to determine how affiliate fraud is impacting your business.
This quiz is designed to evaluate your understanding of and practices related to preventing fraudulent activity in affiliate and marketing campaigns.
To learn more about how you can fight fraud with Phonexa’s all-in-one solution, schedule a consultation, email [email protected], call (818) 800-0000, or click here to take a self-guided interactive tour.
Talar Malakian Professional Bio
As the Chief Marketing Officer at Phonexa, Talar is in charge of planning, developing, and executing marketing and advertising initiatives for the global performance marketing software company. From advising on go-to-market strategies to leading demand generation efforts, she’s helped B2B enterprise SaaS and emerging tech companies build strong brands and accelerate their pipelines both in-house and as a consultant. Prior to joining Phonexa, she was busy leading go-to-market and marketing for companies in the NFT and blockchain space. She has a Bachelor of Arts degree in English from UC Irvine, and an EMBA from Pepperdine. Her favorite pastime includes being outside with her family of four. She will take coffee at any hour. Connect with her on all things marketing via Linkedin.
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