How Does Ad Fraud Silently Destroy Your Company’s Marketing ROI?

Is affiliate marketing a reliable and secure option to boost your company’s bottom line? In today’s digital age, this question is difficult to answer. If you are investing in affiliate marketing to optimize your company’s visibility, you must stay prepared to tackle fraud.

Affiliate fraud still exists today, much as it did in the yesteryears. But thanks to the advent of monitoring solutions, ad fraud is much easier to spot. Affiliate fraud is a menace in today’s context of digital advertising. It can silently destroy your organization’s hard-earned return on investment.

As of 2023, the net value of the affiliate marketing industry is $17 billion. It is a multibillion-dollar industry that attracts nefarious affiliates to exploit your legitimate affiliate marketers. Preventing affiliate fraud and the associated losses starts with understanding.

Overview of Affiliate Fraud

Affiliate fraud occurs when the threat actors leverage unfair strategies to earn payouts from your company’s affiliate programs. These unfair strategies allow threat actors to generate fake leads. They also claim sales attribution without contributing anything toward the program.

During affiliate fraud, you end up paying the nefarious affiliates instead of the legitimate affiliates who participated in the campaign. It also results in a loss of income for the actual affiliates and a poor return on investment. The image of your brand in the specific target market takes a direct hit due to affiliate fraud.

Why Does Affiliate Fraud Happen?

It is a common practice among marketing teams to design their affiliate campaign’s reward system to incentivize the best performers. This type of reward system clearly differentiates between the high and below-par affiliates.

Threat actors can manipulate this reward system. With affiliate fraud, they can manipulate this system and make it seem that they are driving conversions to your website. Affiliate fraud is also common due to inappropriate screening of new affiliates. Most marketing teams tend to recruit new affiliates without verifying their credentials. It can compromise the integrity of your affiliate campaigns.

But strict acceptance criteria aren’t enough to keep threat actors away from stealing your marketing ROI. Nefarious affiliates devise new strategies and loopholes to create fraud in your affiliate campaigns. Implementing an affiliate monitor can help in decreasing the severity of fraudulent activities.

Things to Know About Payment Models and Affiliate Fraud

Affiliate fraud is closely related to the model your marketing department follows for rewarding legitimate affiliates. Listed are the standard payment models to know.

Cost-Per-Lead (CPL)

In this payment model, you must pay the affiliate after a successful newsletter subscription or submission of precise data. The threat actors input fake customer data and use bots to fill registration forms.

Cost-Per-Impression

The malicious affiliates develop fake websites and use typosquatting to misdirect your users. The main objective is to inflate the impressions of the affiliate link.

Cost-Per-Acquisition (CPA)

It is one of the most common payout models used by marketing teams worldwide. You pay an affiliate when they complete and close a sale. The threat actors leverage the stolen IDs for fake transactions. It can make your business incur chargeback fees from credit card agencies.

How Does Affiliate Fraud Affect Your Business?

The adverse effects of affiliate fraud extend far beyond financial losses. Companies serious about protecting their advertising budget and reputation should deploy click fraud protection. Fraud in affiliate marketing can affect your business on multiple levels.

Increases Your Company’s Operational Costs

Due to affiliate fraud, your company has to invest in advanced platforms. It implies that your company’s operational cost will rise. Fraudulent activities like false clicks and impressions divert funds away from genuine marketing efforts. Your organization’s revenue from marketing decreases.

Leads to the Complete Loss of Brand Value

Affiliate fraud can tarnish your brand value in the target market. When your customers experience fraud like cookie stuffing and typosquatting, they associate your brand with deceitful practices. You start losing credibility due to threat actors.

Affects Your Growth Potential

As your market ROI is compromised, your company’s growth potential may be affected. With affiliate fraud, you can no longer access resources to expand your company. You start losing a competitive edge among other companies.

Issues with Data Security

Affiliate fraud is closely intertwined with data breaches. The unscrupulous affiliates exploit the vulnerabilities within your company’s system to access sensitive information. It might end up with potential legal complications.

Affiliate marketing is a scalable digital marketing strategy that boosts your brand’s growth. But if fraud within the system remains unchecked, it can affect your ability to scale. The inefficiencies due to fraud can restrict you from capitalizing on new target markets.

The best way to prevent affiliate fraud is by deploying monitoring solutions that can raise red flags during suspicious activities.

How can Virus Positive Technologies (VPT) Help in Recovering Your Revenue and Brand Value?

VPT is a pioneer in affiliate fraud detection and management. The brand protection solutions of VPT can recognize non-compliant behaviors. By removing these inconsistencies from your affiliate campaigns, it can recover your brand value and revenue.