Over the last 20 years, affiliate marketing has matured beyond what many marketers would have imagined when it first emerged as a performance option decades ago. What could’ve been relegated to the digital Wild West, a transient experimental territory where you hoped that reward trumped risk, has ultimately matured into a channel that champions the aggregate value of relationships, analytics and outcomes. Pioneers who persevered and constantly innovated ultimately established a space that continues to evolve, even today.
Better yet, due to its economics and efficiencies, affiliate has become the smart marketer’s most coveted tactic to gain the operating leverage needed to continue to be omnipresent at all consumer touch points and to drive new customer acquisition. But being omnipresent also can present a unique set of challenges when it comes to brand safety and digital fraud, as indicated by estimates that ad fraud cost U.S.-based marketers as much as $19 billion in theft in 2018 alone.
There is an impressively high amount of fraud in display advertising. The amount of programmatic display ad spend alone that is predicted for 2019 is at a staggering $84 billion. However, the amount that is predicted to fall prey to fraud is nothing short of breathtaking at a whopping $42 billion — a number that certainly signals flags. Namely, the loss estimate is shockingly high. And with anti-fraud vendors using different ways to detect fraudulent ad impressions, standardizing a method isn’t as easy as it may seem.
display, anti-fraud vendors only know how to detect what they know or think
they should be looking for — perhaps unaware that the next tactic to game the
system is already upon them. All this is further complicated by the high cost
for brands to have every single impression verified by a fraud detection and
Unlike ad fraud stemming from display-generated online sales, affiliate fraud, while still a valid concern, occurs at a significantly lower rate. Perhaps more importantly, when it comes to fraud fears, marketers can have more faith in the affiliate channel than they do in any other digital channel—including search, social and display. In fact, a recently-commissioned survey conducted by Forrester Consulting revealed that marketers view affiliate as less likely than other paid channels to pose challenges with establishing ROI, rising costs of media or ad fraud.
While brands of all sizes have much to gain from symbiotic relationships with the right influencers and strategic partners, it’s always wise to exercise caution when choosing who you want to work with. Partners can become an indirect portrayal of brand identity. Careful consideration of potential partners doesn’t just protect you: it reassures selected partners that their legitimate efforts, traffic and vote of confidence is truly valued.
Monitoring and prevention of all digital fraud, including affiliate fraud, should be a top priority for brands that utilize partners, both for their own sake and for the trust customers place in their brand. However, monitoring isn’t fickle or a part-time effort — it should be an always-on task that employs both automated and manual action. While the brand-partner connection is often regarded as a mutually beneficial relationship, that only remains true so long as both parties are acting in good faith. If a partner doesn’t intend to genuinely promote your products and services to an interested audience, failure to properly vet those partners or source their traffic can result in long-term damage to your brand.
Why Does This Matter To Brands?
In addition to upfront costs, branded links leading out to unseemly domains can misrepresent your brand and damage your reputation in the long run. Other consequences come by way of inflated spend, due to publishers that are gaming the system, as well as potential cannibalization of your other channel efforts.
A prominent example of large-scale affiliate fraud, resulting in being court-ordered to pay almost $12 million in restitution, was LeadClick Media. The company knowingly recruited affiliates that promoted their products on “fake news sites,” declining to act on this fraudulent content and placement. Banners were used on legitimate news sites and domains, then were later flipped for placement on fake news sites filled with false claims and free offers that never materialized for users. Without proper partner oversight, even initially legitimate-appearing placements can lead to expensive lawsuits like this one.
How Can You Protect Your Brand?
There’s a lot to address — and very real protective measures at-hand.
The first layer to counter affiliate fraud lies in the strength of your affiliate provider’s safety and protective line of defense. Another layer of legal protection should be your own affiliate program’s onboarding process. Partners sign a legally binding contract when they agree to your terms and conditions. With respect to search, code, content and domain, these terms and conditions must also comply with federal and state privacy laws that are subject to frequent changes. It’s worth your while to ensure that your own company’s Terms & Conditions (T&Cs) are airtight in this regard.
As a brand running an affiliate program and onboarding partners, it’s going to be vital to check in and review partners and influencers that are running your ads. But in this era, manual checks can quickly become out of date. Therefore, it is paramount that a brand seek out providers that have automated monitoring solutions to supplement their own manual efforts. These can range from paid search monitoring tools, to tools that monitor publisher use of unapproved promotional codes, to domain tools to ensure that a brand does not fall victim or prey to publishers’ fraudulent behavior.
Your onboarding materials or splash pages should explicitly outline types of content and conduct that are considered a violation of the brand terms and conditions, and stipulations should be clearly listed for where a partner can post your links (for instance, only on verified domains that they own, or through social media). These terms and conditions are the first line of defense against affiliate fraud, as a signed agreement is enforceable in court, but there’s a good chance it won’t get that far. Swift, proactive communication regarding violations, prior to doing anything more aggressive, will generally get the point across and prompt the action you need. The T&Cs of your affiliate program should not only safeguard your affiliate link placements but your overall brand integrity.
Brand ambassadors, influencers and partners have become an integral part of the digital marketing landscape in recent years, and an important component of marketing campaigns. However, because these parties have a parasocial relationship with their followers, the FTC has subsequently subjected them to more regulation in recent years. Proper disclosures must be made concerning influencers and endorsements, and whether they are trying to directly tell users what actions to take. Affiliates utilizing content that forces behaviors can be in direct violation of FTC rules, if not your terms and conditions, simultaneously.
The transformation of affiliate marketing has been an exciting one to watch. Yes, with the multitude of vested interests — brand, affiliates, affiliate solution provider and ultimately the consumer — in the age of brand safety concerns, the stakes are high. But, with the right mix of advance strategic planning, masterful program organization, proper T&Cs and thoughtful, proactive communication, so is the upside for all involved.
Maura Smith is Chief Marketing Officer at Pepperjam, a company that creates and nurtures connections that result in transformative business results for brands, retailers and partners. Smith oversees all facets of the Pepperjam brand including digital marketing, messaging and creative development, marketing effectiveness, social responsibility and media and employee communications.