Recently, Affiverse CEO Lee-Ann Johnstone sat down for a webinar with 31-year internet veteran and Ad Fraud expert, Rich Kahn, CEO and Co-founder of Anura.io
Affiliate marketing can be an incredibly cost-effective channel, but only if you’re vigilant about fraud. During the webinar, Rich shared some eye-opening insights on the pervasiveness of affiliate fraud and how to combat it.
Here are the key points that affiliate managers need to know:
The Shocking Scale of Affiliate Fraud
Rich estimates that on average, a staggering 45% of affiliate traffic is fraudulent.
This means that:
- Nearly half of affiliate marketing budgets may be wasted on fake leads, clicks, and sales.
- Across all digital marketing channels globally, fraud accounts for over $125 billion in stolen ad spend annually.
While affiliate networks promise to handle fraud detection, Rich warns that most only catch basic bot traffic. More sophisticated fraud tactics easily slip through, costing advertisers dearly.
Common Types of Affiliate Fraud
Rich outlined several of the most common fraud schemes that he sees:
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- Lead fraud: Fraudsters use overseas “click farms” to manually fill out lead forms with stolen data, making it nearly impossible to detect.
- E-commerce fraud: Criminals use stolen credit cards to make purchases, earning affiliate commissions before chargebacks occur months later.
- Cookie stuffing: Malware or browser extensions inject affiliate links, stealing credit for organic sales.
- Traffic fraud: Affiliates send low-quality bot traffic or disguise their identity to inflate numbers.
The Impact Goes Beyond Lost Revenue
While the immediate financial losses are significant, Rich emphasized that fraud has several knock-on effects across a business. These effects include:
- Wasted resources as sales teams follow up on fake leads
- Increased chargebacks threatening merchant accounts
- Poor user experiences when blocking legitimate customers
- Lost opportunity costs from investing in bad traffic sources
Steps to Combat Affiliate Fraud
So how do we go about fighting this fraud? Well, Rich recommends a multi-pronged approach:
- Thoroughly vet new affiliates:
- Check their social media presence and mutual connections
- Conduct video calls to verify identity
- Start with small traffic volumes and monitor closely
- Implement robust tracking and analytics:
- Look for anomalies in traffic patterns and conversion rates
- Cross-reference data across channels
- Use specialized fraud detection tools:
- Solutions like Anura can identify sophisticated fraud in real-time
- Look for MRC or TAG-certified providers
- Follow the money:
- Trace traffic sources back to origins
- Be wary of sub-affiliate networks with high fraud rates
- Stay vigilant as fraud tactics evolve:
- New platforms and traffic sources create new vulnerabilities
- Ongoing monitoring is crucial
The Power of Advanced Fraud Detection
While basic IP and user agent checks catch obvious bots, Rich explained that truly effective fraud prevention requires analyzing hundreds of data points about each visitor.
Anura, the solution Rich developed, examines over 800 factors to confidently identify even sophisticated human fraud farms.
This level of scrutiny allows legitimate traffic through while blocking nearly all fraud attempts.
Rich estimates that Anura clients typically reduce fraud rates from 45% down to 1-5%.
Watch the whole conversation here:
Key Takeaways
- Affiliate fraud is far more prevalent than most marketers realize, potentially accounting for 45% of traffic and billions in wasted spend.
- Basic fraud detection misses sophisticated schemes, leading to false confidence.
- Thorough vetting of affiliates is crucial, including identity verification and starting with small traffic volumes.
- Specialized fraud detection tools analyzing hundreds of data points can dramatically reduce fraud exposure.
- Ongoing vigilance is necessary as fraudsters constantly develop new tactics.
- Eliminating fraud allows reallocation of budgets to top-performing affiliates, potentially doubling program effectiveness.
The Future of Affiliate Fraud
Rich warned that emerging technologies like AI will likely spawn even more advanced fraud tactics. However, he remains optimistic that vigilant marketers armed with the right tools can stay ahead of fraudsters.
By implementing robust fraud prevention, affiliate managers can focus on scaling their programs with confidence. Redirecting budgets from fraudulent to high-quality traffic sources has the potential to supercharge growth.
Ultimately, Rich emphasized that nobody cares more about protecting your business than you do. Taking a proactive approach to fraud detection is essential for unlocking the full potential of affiliate marketing.
Coming Next…
Email Marketing Unleashed: Driving Growth with Precision & Personalization – Brought to you by Phonexa
Webinar Date: Wednesday July 24
In this session, we’ll explore the unparalleled potential of email marketing in fueling your affiliates to drive consumer growth. Join us as we dive into the strategies and tactics that elevate email marketing from a mere communication to a powerhouse of revenue generation.
From crafting compelling outreach content to harnessing the latest automation technologies, we’ll dissect the elements of what a successful email funnel and outreach campaign can do to captivate and convert.
