While we have mentioned methods to counter each of the specific types of affiliate abuse mentioned, there are some general steps that should be followed to prevent and remove poachers from your affiliate program. This section will cover crafting a Terms of Service agreement, approving affiliates, reviewing affiliate statistics, and continued comprehensive monitoring of affiliates.
Most importantly, a clear and thorough Terms of Service agreement is absolutely crucial. This document sets the parameters for your affiliates and serves as a legal document detailing the ways and means of marketing that you consider legitimate for your company and brand. The language of the agreement should be in plain English and describe exactly what techniques are and are not allowed in your program—should an affiliate violate the agreement, it must be clear that the terms were stated and that they knowingly disobeyed them. There are several components of affiliate agreements that we deem essential:
Of course, these terms in your agreement minimize your risk of affiliate fraud, but do not by any means prevent it. A comprehensive fraud prevention program includes in-depth affiliate application reviews, regular communication with affiliates, and abuse monitoring.
Ben Edelman, in his paper, “Deterring Online Advertising Fraud Through Optimal Payment in Arrears,”presents compelling, and much more in depth, economic evidence for the benefits of delaying payments to affiliates. His research makes clear both how payment delays punish rogue affiliates and can potentially award ethical, producing affiliates.
A strong front door can be one of the most effective ways of preventing abusive affiliates from ever entering your program. Many affiliate networks allow merchants to “auto-approve” affiliates, a tool that dramatically reduces the time a merchant needs to spend looking through hundreds of affiliate applications. But using auto-approve almost guarantees that abusive affiliates will enter your program, as networks also have “auto-apply” tools for their affiliates. Many affiliates auto-apply to all programs and are then auto-accepted into them— giving them access to affiliate links that they already know are not particularly well-monitored.
The best way to head-off abusive affiliates from the start is to interview every affiliate that applies to your program. Many affiliates who intend to defraud you will not want to respond to emails, let alone talk on the phone. The more anonymous they remain, the better chance they have of continuing their illicit activities, so demanding an interview will significantly reduce abusive affiliates from the start.
Interviewing all your applicants, however, can take a lot of time and may not seem like the best use of it, especially given that many affiliates never end up making a sale for your company. To save on time, some companies make contact with an affiliate as soon as they have made their first sale. Many send an email or give them a phone call to congratulate them on their first sale and, as they talk, get a sense of their brand presentation, how they drove the sale, and make sure they understand exactly how the affiliate is driving their business. Affiliates whom you cannot reach, avoid your calls, or don’t respond to email may very well be up to something suspicious.
Another option that some merchants choose is to send an auto-response email to all applicants asking for more information on who they are and how they intend to represent the brand and drive sales. This additional hurdle to approval will deter many abusive affiliates.
However you decide to run your approval process, you should always check to make sure that your new affiliates’ business models seem legitimate and reasonable. You should also do your best to verify that the party is real. Checking sites like Compete and Alexa can help in this process as well as Google searches to make sure that the website the affiliate claims will sell your products appears, has visitors, and seems capable of sending users who will convert.
Finally, BrandVerity’s products, the Affiliate Watchlist and the PoachMark Pool, give merchants lists of affiliates who have been abusive in the past as well as information about other merchants’ experience with specific affiliates. This kind of information can be very beneficial during the affiliate screening process.
When monitoring your affiliates statistics, there are several warning signs that indicate different types of potential fraud. The first thing to keep an eye out for is a very rapid acceleration in affiliate activity. If an affiliate suddenly jumps from no sales to a hundred in a day, it should alert you to check out their website, give them a call, and try to figure out how exactly they drove those sales. Although it may all be above board, it’s equally likely that something illicit is going on.
Another major warning sign is a conversion ratio above your program average. If most of your affiliates are converting 2% of the time but one is converting at 8%, it can be a fairly strong indicator that they are trademark bidding. Conversely, very low conversion rates are often a sign of cookie-stuffing. The affiliate is managing to make it look like they have a lot of traffic, but much of that traffic is not quality traffic. Tools like Alexa, Quantcast, and Compete show how much traffic an affiliate website receives and can help clarify if their site is legitimate.
In addition to monitoring numbers, it is helpful to have regular conversations with your top affiliates in order to keep track of how they are driving traffic. The more in-touch you are, the less likely they will be to try to circumvent your affiliate agreement or defraud you.
Most merchant affiliate programs start with a single affiliate network and spend a lot of time and effort monitoring it, eliminating abuse, and making it profitable. As soon as an affiliate program is profitable, however, other networks will come knocking, telling you that their network will provide you with many new affiliates that your current network doesn’t represent.
The problem is, however, that all your historic policing becomes irrelevant as soon as you join a second network. You will need to start over with your anti-abuse actions and, often, will end up ejecting the same bad players for a second time, as many abusive affiliates participate in multiple networks.
This is not to say that adding new networks is necessarily a bad choice, only that adding a new network has an associated set of risks. Before adding a new network, it is important to verify that you have the time and resources to apply the necessary degree of oversight to your program.
Another decision that can leave you open to affiliate fraud is the creation of an internal affiliate program. Many merchants launch a successful affiliate program using one of the major affiliate networks and soon decide that they would rather not pay the commissions a network requires. They make the decision to take their biggest affiliates with them and create an internal program that they monitor using third-party software. The company is then able to pay affiliates more as they no longer pay the network commission as well—meaning that many affiliates will encourage merchants to form in-house programs.
Although running an internal program may seem like a great and fairly easy way to cut down on commissions while maintaining your best affiliates, the move away from a network is also a move away from the protections a network offers. For example, abusive affiliates are often removed from the network; the network will eject the worst actors before they ever enter your program. Additionally, networks will typically employ tools in an attempt to prevent affiliates from obtaining multiple accounts. Without a network, you will not have that kind of high-level oversight. If you are going to run a program yourself, it becomes even more important thus to maintain a strict reporting and oversight structure for your affiliates.
Should you discover fraud in your program, the rogue affiliate should be reported to your network compliance team, their payment reversed or canceled, and they should be terminated from your program. Allowing abusive affiliates to remain in a program only sends the message that you allow these kinds of marketing techniques, making your legal position less tenable, and opening yourself up to other attacks.