In a perfect world, one free of deception and greed, Internet retailers would not have to worry about fraudulent behavior on the part of their affiliates. This however is not a perfect world, so understanding what to look out for in order to protect yourself and your company's bottom line is not only smart it is increasingly necessary.
The most telling signal of abuse is most often an abnormal conversion rate. While some affiliate-publisher sites will naturally have higher quality audiences (and therefore higher conversion rates) there should still be an average conversion rate with which you can compare against should you question the validity of traffic and sales.
For example, if through testing you determine that your landing page converts 10% of its visitors and one affiliate in particular is converting 25% of the traffic sent, it will be necessary to identify both the methods being used by the affiliates as well as the quality of those transactions. If merchants are paying for both leads and sales and the number of leads being generated by affiliates is abnormally high, contacting those leads to test the quality of those leads is imperative.
Conversion rate alone however does not necessarily indicate that affiliate abuse is occurring - sometimes you'll get a master affiliate marketer in your publisher ranks who often know how to promote products better than the merchant.
Affiliates are often the cleverest of all online marketers and will use any advantage they have to generate more sales. This means you need to review your affiliate marketing policies for loopholes and make affiliates aware of the rules often. If you don't disallow trademark bidding for example, affiliates will be promoting your products and services on various CPC advertising networks - you can count on it. Since trademarked terms are known to convert better than long-tail terms, doing spot checks on individual networks will reveal if any "bad behavior" is happening
There are of course many other ways in which you can identify affiliate abuse. While traffic surges should raise a flag, it's not uncommon for that to be related to an individual promotional event, e.g. a heavily re-tweeted Twitter mention, or a weblog post or article which got picked up by a social media outlet. Knowing your affiliates and communicating with them about special events they are undertaking often will help clear up any doubts that they are not in compliance with program rules.
Transaction timing (the exact time when leads or sales were generated over a set period), specifically off-hour transactions (such as those that occur while you're not in the office), are also good indications you need to look further into the affiliates account.
Perhaps the best way of stopping cheaters (outside of having an established relationship with your affiliates) is to routinely monitor inbound referrers. While this won't prevent affiliates from engaging in unscrupulous behavior, it will give you confidence that not all is "right" in your affiliate program. Some things to look for in your analytics account include:
- Organic Search Referrers: If an affiliate is purchasing PPC ads and using an uncloaked link, often the referrer will be shown as one of the search engines. There are many tools available (check out AdGooroo for example) which can help you keep track of anyone - not just affiliates - that are engaging in PPC advertising on trademarked terms.
- Email Referrals: If you are seeing referrers from web email clients, affiliates are using email as a marketing tool. Should you notice an influx of email referreral from one affiliate in particular (and you don't prohibit email marketing in your terms and conditions), consider asking the affiliate to review any promotions they create before sending. A quick review might even help that affiliate generate a higher response.
- No Referrers: While many networks do not provide details on referrers, it is important to at least know the domain traffic originates from.
Should you suspect affiliates are engaging in fraudulent behavior, these are all good signals that you'll need to analyze their performance further. Doing so will limit your exposure to affiliate fraud.
