Affiliate marketing is an all-encompassing discipline which is mainly based around one simple payment model. A publisher generates traffic for an advertiser and earns commission each time a customer complete an action on the advertiser’s website. An affiliate network bridges the gap between advertisers and publishers, helping both while remaining a neutral (in theory) third party.
The simplicity of the model is one of the reasons behind its success, as it can be rapidly adapted to different channels and promotions, inspiring constant innovation and evolution. Of all channels, affiliates seems most suited to today’s ‘agile marketing’ environment. Able to trace it’s lineage as far back as 1995, it’s also one of the oldest forms of online marketing.
Unfortunately the simplicity of the model also leaves it vulnerable to manipulation, which has often led to damming criticism in the past. There is still a misconception among some marketing managers that affiliate programmes just attract fraudulent, low quality traffic which is damaging to the brand.
Affiliate marketing is highly competitive. In the UK alone the industry is estimated to be worth approx. £9 billion annually. Advertiser spend is predicted to rise through 2013 and an annual average growth rate of 12% over the last five years indicates that the industry is in a very healthy position and providing real value to those committed to it. While there are instances of fraud, the benefits of a well-managed affiliate programme far outweigh the negatives.
There are numerous examples of affiliate companies receiving venture capital investment, launching TV ad campaigns and to quote an oft-used phrase, ‘becoming bigger than the majority of brands they promote’. The theme of affiliates building a brand, instead of just a traffic source, is becoming ubiquitous.
However, as with all fraud, the techniques used are constantly evolving and becoming more sophisticated.
The low cost of entry to affiliate marketing for publishers makes it very accessible as a business venture. This is also supported by an industry within the industry: tutorials, blogs and even training courses are available which promise to help anyone reach dizzying heights of success relatively quickly by promoting CPA campaigns. It’s an attractive proposition.
However, this inherent entrepreneurial spirit can sometimes yield to the lure of the get rich quick scheme. Networks are constantly improving their detection systems, but it does still happen and I would hazard a guess that every single programme has experienced it at some point, whether it was detected or not.
Cookie stuffing is a perennial method that has been deployed since affiliate marketing’s early days. A cookie is a small text file that sits on a user’s browser and is mainly used to track advertising success. The cookie is dropped by the affiliate site once the user clicks on an advertisement and tells the network which affiliate has generated a particular sale.
Cookie stuffing involves forcibly dropping cookies without any action from the customer. This can be a single cookie inserted at the end of the customer journey to claim the sale, or multiple cookie dumps to try and claim commission for the customer’s next online purchase, regardless of what that may be.
This is the easiest fraud technique for publishers to implement. A single pixel iframe is inserted into the publisher’s site/landing page. This iframe loads the advertiser’s website inside the publisher’s landing page, thereby triggering the cookie without the customer needing to click or without the customer’s knowledge. As it’s the most common, it’s also one of the easiest to detect. However, as with all fraud, the techniques used are constantly evolving and becoming more sophisticated.
It’s important to point out at this stage the illegality of forcing clicks. In the UK it is covered under the Fraud Act, in the EU it is covered under the Principles of European Contract Law and the Convention on Cybercrime. The US treat it as Wire Fraud and in a recent high profile case involving the eBay Partner Network, the defendants are facing the very real possibility of 20 years imprisonment.
Typosquatting is another common method. This is where the URL is a misspelling of a popular brand’s name and traffic can be redirected through an affiliate link to the genuine site without the user realising. Lego for example has spent over half a million dollars pursuing typosquatters in 309 cases through the Uniform Domain-Name Dispute-Resolution Policy (UDRP).
Fraudulent promotions damage almost everyone involved in the industry. Advertisers pay commission on sales unfairly earned, incurring higher costs. Competing publishers can have their cookies overwritten on the ‘last click wins’ basis, where commission from a legitimately generated sale is in effect stolen by the fraudulent affiliate. Even customers can be subject to malware attacks, in more sophisticated fraud attempts.
Warning signs to look for include unexpected spikes in traffic, short regular bursts of sales and significantly higher than average conversion rates. Any abnormal stats should raise questions for the programme manager. Knowing what’s considered ‘normal’ for each publisher comes from experience, consistent programme monitoring and historical data.
There are several ways that a programme manager can proactively prepare themselves for future instances of fraud.
Affiliate networks will offer a standard template of programme terms when setting up a new programme. These are the rules governing promotion methods which affiliates will agree to before applying to join the programme. Advertisers have the option to completely re-write these terms depending on their own business objectives and aims of the programme. This is an important consideration and should include detailed information of what is considered fraudulent activity by the advertiser. This is essentially a contract between both parties and should be treated with respect as such.
Another common mistake is to automatically approve all applications to the programme. While this is an understandable solution for smaller advertisers relying heavily on the channel and with limited resource or budget for promotion, it leaves the programme extremely vulnerable. All applications should be reviewed at the very least and brand conscious advertisers could even opt for an invitation-only application process to retain further control over how they are represented.
It is also important to build solid relationships with affiliates on a programme. The industry is very sociable due to its unique win/win proposition. Networking and making contacts exposes an affiliate manager to information not readily available otherwise. New affiliates on a programme who suddenly start outperforming longer established favourites should be contacted for additional promotion opportunities and also to ensure that they are promoting the brand in accordance to the programme terms.
The network can also be called upon for support when needed. While an individual programme manager has access to one advertiser’s data, the network can see the entire picture for a particular publisher and their activity across multiple programmes. Most networks have departments devoted to the task of identifying fraud and specialists familiar with the techniques and technologies commonly used.
Removing an affiliate should be the last resort, always. Trigger happy affiliate managers cause more damage to their programme’s reputation in the long run and are possibly even missing out on promotional opportunities. Overly eager removal could deny the brand a valuable new partnership. It’s also very damaging to the programme’s reputation and will deter affiliates from promoting the brand in future, thereby limiting potential growth.
An affiliate programme is not a ‘fire and forget’ channel that can be left unmonitored and expected to perform. It requires constant attention and optimisation in order to fulfil its potential. Knowing a programme inside out, along with great relationships with the affiliates who are generating consistent good quality sales is the easiest way to ensure budgets are not squandered on unfairly gained commission.
