Guy Tytunovich is the founder and CEO of CHEQ, a leader in go-to-market security.
One of the key challenges of the modern-day go-to-market operation involves scaling leads, your pipeline and ultimately your revenue. Anyone can enjoy pinpointed success with a specific channel or campaign, but turning it into large-scale, predictable, reliable and consistent success over time is another thing altogether.
In fact, today, few channels can deliver predictability and consistency. PPC marketing, for example, is a staple of inbound marketing, but with wild fluctuation in costs, black-box algorithms that frequently change and constantly evolving privacy regulation, many marketers struggle to get a sense of predictability.
Event marketing, which used to be a key channel for B2B marketers, has been upended by the pandemic, and even in a post-pandemic world, the future of the physical event space isn’t clear. Virtual events and webinars, which have stepped in as a substitute, can be great channels for market education, but they aren’t the most scalable of channels either.
So, when it’s all said and done, taking a marketing program and “going big” is anything but trivial in today’s world, which is exactly why affiliate marketing is still so popular—as it is built for scale and strongly tied to bottom-of-the-funnel lead generation, conversions and purchases.
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But affiliate marketing has a massive fraud problem, and trust is eroding quickly.
Already in 2020, CHEQ data showed that affiliate marketers were losing $1.4 billion a year to fraud, amounting to roughly 10% of all affiliate marketing revenue, which, at the time, stood at $15 billion. In the meantime, affiliate marketing has surpassed $20 billion in revenue and is expected to hit $37 billion by 2030. If you consider that fraud and fake traffic rates are steadily rising to anywhere between 15% and 30%, then we could be looking at a future $5 billion to $10 billion problem.
There are, of course, many types of schemes that fall under the umbrella of affiliate fraud. One common scheme is click fraud, whereby an affiliate drives fake clicks to their partner’s site, via human click farms or botnets, with the aim of inflating their commission.
Another scheme that has become more prevalent over recent years is cookie stuffing. In this case, the affiliate will drop a third-party cookie on the visitor’s browser, without consent, allowing the affiliate to collect a commission if that visitor ends up making a purchase on another site. Many affiliates go as far as committing fraudulent transactions, claiming their commission and then submitting a chargeback.
What’s driving the rise in affiliate fraud? The fake web.
Affiliate marketing is not on its own of course. The fake web is on the rise and is making the news almost daily. Elon Musk’s bid to takeover Twitter was put on hold, pending an inspection of Twitter’s bot and fake account activity. PayPal’s stock was sent crashing following reports of 4.5 million fake accounts uncovered in their systems. CHEQ’s own recent data showed that the internet is nearing half a billion fake online shoppers.
The fake web is everywhere, and it’s affecting any and all online marketing channels, from e-commerce and paid marketing to organic and direct web traffic and, of course, affiliate marketing.
Why is this happening? Well, there are a number of reasons contributing to the rise of the fake web. First of all, automation tools are getting more and more sophisticated. Today, there are headless browsers that can convincingly perform extremely sophisticated tasks at scale, including filling out forms and completing purchases.
But it’s not just bots and automation. Click farms and other forms of human-driven fraud have become so common that they’re basically just out there in the open, and anyone can procure their services for a low price.
Another factor has been the pandemic, which has accelerated digital adoption, sending more and more businesses from brick-and-mortar to e-commerce environments. This means more money in online channels, which, in turn, attracts more bad actors and fraudulent activity.
Ultimately, it’s important for affiliate marketers to understand that they’re operating in the era of the fake web and that the number of botnets, scrapers, crawlers, automation tools and click farms is only going to continue to rise.
Organizations running an affiliate program should adopt a vigilant mindset, vet their partners often, look for suspicious activity and anomalies and deploy tools to protect themselves.