Anne Golombek Feb 9, 2015 10:49:00 AM 4 min read

Attention online retailers! Affiliate Marketing – more risk than gain?

Affiliate marketing is a fixed component in the online marketing mix for many companies. However, it is also at the same time a popular target for fraud. Advertisers (advertising companies, for example online shops) and publishers (affiliate) come together through affiliate marketing: the publisher distributes the advertiser’s advertising materials (for examples, a banner) on his website, which might be a blog or a voucher portal. The advertiser then collects a commission for the provided website ́s visitors or the orders. An affiliate network works between the two parties, such as Zanox, that manages the substantive, technical and legal aspects between advertiser and publisher.

As promising as this model may seem, it does have its drawbacks: the provisions model can be manipulated. If the affiliate is aware that the advertising company has no overview of their return comparison, then the affiliate could click on the advertising materials on their own website, place an order and instantly return the materials or send them to a nonexistent address. Without a return comparison, the affiliate would then receive a commission. “Most of the online retailers don’t even notice this fraud happening because the allocation from returns to the marketing channel is missing in their system. With minubo, we can identify the clear apparent allocation as well as a noticeably high conversion rate to quickly identify scammers”, reports minubo’s senior product manager Torben Sominka.

Another possibility for fraud within affiliate marketing is the so­called “cookie-dropping”. Through this technique the user is falsely allocated to click­-cookie just by visiting the website. This way, the affiliate receives a commission in consequence of a user ́s purchase, without providing the demanded advertising service, in this instance the ‘click’.

The voucher partners can also be seen as problematic. If the buyer finds a voucher code field during the order process, but does not have a voucher, it is likely that he will look for one on Google before proceeding to checkout. Once the buyer lands on the site of the voucher partner and clicks on the advertisement there, he receives a cookie, whether or not he actually used the voucher. After the purchase, the advertising online retailer has to pay the voucher partner the outstanding commission, although the partner had no part in the outcome of the purchasing decision.

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Anne Golombek

Anne is COO and Marketing Lead at minubo. As an expert in Business Intelligence and data-driven decision-making, she is a passionate writer for minubo and their blog.