As Forbes reports, advertisers spent more than $285 billion on ads across all media platforms in 2021. It was a big news story, so some readers may have read it.
But did you know that advertisers waste a huge chunk of their budget every year on ad fraud? An average advertiser spends more than a quarter of their budget paying fraudulent criminals. Most experts expect ad fraud to reach $112.6 billion in 2026.
Ad fraud is a problem that any serious merchant cannot ignore. And yet, many continue to perform their jobs blindly, ignoring the threat and hoping it will go away on its own. A proactive approach is needed if you want to avoid losing tens of thousands of ad dollars.
To help you accomplish that, let’s talk about affiliate fraud and what you can do to prevent fraudsters from stealing your clicks and money.
What is Affiliate Fraud and How Does It Work?
It was common for brands to work one-on-one with affiliates in the past. Nowadays, affiliate marketing has grown into a multi-billion dollar industry that uses various tools and services to connect brands with potential partners.
One of the ways scammers take advantage of this system is through ad fraud. Let’s take a closer look at the different types of ad fraud.
1. Cost-per-acquisition (CPA)
CPA fraud is the most popular scheme, with affiliate fraudsters targeting advertisers who run pay-per-conversion campaigns. In other words, scammers purposefully drive traffic to brands’ websites and force them to “purchase clicks” by initiating fraudulent conversions.
2. Cost-per-lead (CPL)
CPL fraud is similar to CPA, only with slightly different mechanics. Here, scammers become affiliates directly for known brands by creating fake accounts and collecting commissions on newly-created accounts.
3. Cost-per-click (CPC)
This type of affiliate fraud is the most complicated and common among all ad fraud types. Fraudsters target affiliate brands that run pay-per-click campaigns when it comes to CPC. Their goal is to generate as many clicks as possible by creating bots and malware that imitate human behavior on the web.
4. Cost-per-impression (CPM)
While this method is not as popular as the other schemes, it can still cause serious damage to brands, especially if they run pay-per-impression campaigns. Scammers use bots and proxies to drive up costs and create fake traffic that imitates human behavior on the web.
Most Wide-Spread Affiliate Fraud Methods
Now that you understand how ad fraud works in the affiliate marketing business let’s look at the most common methods used to execute it.
1. Cookie Stuffing
Cookie stuffing is a popular ad fraud method that accounts for 60% of all CPA scams. Affiliate cookie-stuffing is an ad fraud technique where criminals force people to drop their cookies into merchant websites without the users' consent. That means users have no idea they are being tricked because advertisers keep generating bogus traffic without paying for it.
2. IP Spoofing
IP spoofing is a relatively complicated process where fraudsters use proxies that replicate real IP addresses. When it comes to ad fraud, the goal is for merchants’ servers to get tricked into thinking they are communicating with real people rather than bots.
3. Domain Hijacking
Although quite popular, this ad fraud scheme is relatively new. Fraudsters hijack affiliate domains by changing the code that links them to an advertiser’s ad server, redirecting traffic, and generating fake clicks that don’t get tracked by the merchant’s system.
4. Click Fraud
Click fraud involves creating faux accounts and using them to drive up the number of clicks businesses get on their affiliate ads. The more fraudulent accounts there are, the higher click-through rates become, affecting advertisers’ budgets and forcing them to pay for invalid traffic.
How to Detect and Prevent Affiliate Fraud
Organizations that work in affiliate marketing must be proactive in their approach to ad fraud detection. Multiple factors should be considered when dealing with fraudsters, but these are the most important ones to keep in mind:
1. Manually Approve Your Affiliates
One of the easiest ways to fight affiliate fraud is by manually approving new partners you work with. This helps you see which affiliates are running fraudulent campaigns, allowing you to stop working with them before they do significant damage.
2. Partner With Sub-Affiliate Networks
A sub-affiliate network is a third party that manages and promotes affiliate marketing campaigns. Not only do they provide marketers with reliable performance reports, but they also offer ad fraud prevention tools such as click filters and bot protection to ensure a real person performs each click.
3. Look Through Referring URLs
The approach involves manually checking the links affiliates provide you with to identify fraudulent activity. While time-consuming, manually going through URLs can be your best defense against affiliate fraud. Many of the schemes discussed above are designed to go unnoticed by merchants’ systems.
4. Analyze IP Addresses
IP addresses are an important factor when it comes to detecting fraud. For example, if you notice that you have a partner whose traffic is coming from hundreds of different IPs every day, their campaigns might be at risk. Investigating further, you will most likely find bots or other fraudulent indicators that are generating fake clicks and impressions on your website.
5. Use Ad Fraud Prevention Tools
You know the old saying: you need to spend money to make money. That's why you need to invest in a state-of-the-art fraud prevention tool. Spider AF is an ad fraud detection tool that protects affiliate websites from bot traffic, invalid clicks, and conversions. Spider AF helps advertisers make the right campaign decisions by analyzing inbound traffic, detecting browser session inconsistencies, and flagging bad actors.
Protect Yourself from Affiliate Marketing Fraud and Save Money!
In the early days of affiliate marketing, the industry lacked transparency, which has led to some questionable behavior by businesses and affiliates alike. Identity fraud, attribution fraud, and fraudulent affiliates were all huge problems.
Things are much different today, thanks to better affiliate screening, superior affiliate program management, and of course, better fraud tech solutions.
Does affiliate marketing fraud still exist? Of course, it does. It exists in affiliate marketing, influencer marketing, and performance marketing. The difference is, in affiliate marketing, specific tools give you 100% control over the screening process and allow you to stay one step ahead of the fraudsters.
Spider AF will help you discover phony clicks, find their source, and prevent them from committing affiliate fraud. Get in contact today and check out the free 14-day trial to see how you can keep your affiliate program safe.