Publisher Network Fraud: A Plague on Our Industry
ADOTAS – Simply stated, publisher fraud occurs when phony leads are generated by a publisher to generate illegitimate revenue. For some of us, fraud keeps us up at night, causes us to lose advertisers, and creates multiple headaches for publishers looking for stable campaigns to promote and profit with.
For others, it is an opportunity to potentially steal hundreds of thousands, or even millions a year and never get caught.
How is this possible, you ask? Most of the fraud rings that perpetuate publisher fraud exist in countries such as India, Africa, China, and countries that were once a part of the former Soviet Union –- areas beyond the long arm of U.S. law enforcement. The U.S. enforcement can only reach so far and the individuals defrauding networks and advertisers know it.
Here is how it works: Fraud rings open up numerous publisher accounts at various different performance marketing networks then use individuals from several locations to purchase products via their publisher links to generate a commission.
Pretty simple so far. For those networks that push a substantial amount of volume, these fraudulent leads or sales can get lost in the sea of transactions already generated by that campaign, especially if the fraud volume is kept low.
Multiply these fraudulent transactions on tens of accounts on any one network (x) multiple campaigns per network (x) multiple networks and this becomes a pretty lucrative business in a very short period of time. The power in this network effect is the reason why there is a strong motivation for these fraud rings to continue to infiltrate as many networks as possible.
Accordingly, as one account gets shut down, they simply jump to another (that they either had setup but was dormant) — or worse yet — activate an account they purchased from an existing publisher on the network they are looking to defraud.
How does this affect us?
Plain and simple: publisher fraud costs everyone in our ecosystem a lot of money.
- Advertisers and networks need additional resources to combat fraud
- Networks lose high-value advertisers due to fraud generated by a network or publisher -– often amounting to several millions in lost annual revenue
- Good publishers lose money when they have to shift their resources from one campaign to the next as these campaigns get shut down due to fraud
The result of publisher fraud hurts the good publishers in several ways. First, publishers trying to apply as a new or relatively unknown publisher to any of the top networks in the industry are met with great hurdles by the networks weeding out the bad publishers. Getting approved is close to impossible if you and/or your traffic sources cannot be verified.
Many networks — such as the one I founded, MediaTrust — are moving to an invite-only model where publishers need to essentially be invited or provide references from publishers that have already been working with us for quite some time in order to be approved on the network.
While this stance is a little tough, measures such as these need to be taken to protect the integrity of our networks and our advertisers. Publisher fraud leaves us no choice but to be much more selective as to whom we work with, on both the advertising and publishing side. The other cost to publishers is the difficulty they face in finding a consistent campaign they can invest time and resources into.
When fraud hits, campaigns go down and with that comes a loss of a valuable publisher revenue stream. Publishers are forced to start over with different campaigns, costing them time and opportunity costs.
The biggest loss of all
Perhaps the most costly result of this type of fraud is the damage it does to performance marketing by giving it a bad name — thus preventing top-tier brands from leveraging the power of our channel. With all the other hurdles that top brands already cite against performance marketing, (lack of transparency, black hat techniques, brand risks, etc.), fraud is yet another reason to continue to avoid our space.
These top advertisers have deeper pockets and thus their absence in performance marketing severely limits our industry’s growth. The long-term stability and evolution of performance marketing is dependent on larger brands entering our space.
These advertisers will not only help our industry grow financially, but also force the type of change and innovation required to make performance marketing a legitimate part of the marketing mix for every large corporation.
As an industry, we need to figure out a way to work together to help combat the growth of these aggressive publisher fraud rings. It’s not an easy task in an industry where there is little trust amongst networks.
To solve the problem, we need the support of an organization such as the Performance Marketing Alliance (PMA), which is setup specifically to deal with the challenges our industry faces. The PMA can help lead the charge in the standardization of many rules and regulations for performance marketing and, in this particular instance, publisher fraud.
Some suggestions lobbied at various conferences have been black lists and white lists of publishers, publisher certification by trusted sources and fraud investigation task forces. None of the above will be easy to implement nor have they been fully thought out yet.
There needs to be a well thought out plan with the buy-in of the networks, advertisers and publishers that seek to advance our industry. And there needs to be rigid enforcement of the rules and resulting consequences for any violators. These changes will be difficult to implement, but with some thought and industry support, a plan can be created by working together and executing.
In the meantime, networks such as ours will implement our own technologies, processes, and acceptance guidelines that will allow us to move forward without this threat. While this is great for us and the other networks doing the same, without the industry moving together to solve the problem systemically, fraud will persist and hurt the industry in the long run.
What do you think? Please comment below to create further dialogue about this important subject.
Reader Comments.
You can access a list of affiliates and networks which have delivered high levels of fraud at http://www.fraudaffiliate.com. Membership is free if you get approved.
This has been an issue since day 1 in affiliate marketing. Something typically swept under the rug by the networks. “It’s not our fault” affiliates produced fraud is usually the stance. Some have technology in place, but it’s not good enough at all. Part of the problem is letting too many affiliates in the networks without rigorous screening procedures. And then monitoring new affiliate traffic and sales quality should be a constant effort. Also, the actual merchants/offer-owners should be implementing “new order calls” to verify the purchase or lead authenticity on every affiliate generated order, this ferrets out fraud instantly and the violating affiliate can be terminated. Also, when affiliate payments are processed, merchants can look for new affiliates producing commissions and further investigate each one and their lead/sale quality before checks are mailed. These are but a few suggestions to prevent and manage affiliate fraud. I have been managing affiliates for 8+ years so my comments are based on experience.
The fraud also hurts good publishers because it’s being used as an excuse by advertisers to over scrub traffic. Advertisers play games too. They take down successful offers and come back a month later with a rebrand on the same offer at a lower payout and higher scrub rate
Networks don’t care about fraud. End of day they take a whopping 30% or more on each offer in their network.
In the old days we had server side pixels which basically allowed to fraud scrub. These days you will not get decent exposure without live pixel tracking.
The live pixel tracking is where one of the problems lies.
We have offers in with probably 10 networks and see affiliate fraud up to 90%, be it on invite only or public networks.
Core causes fraud:
-networks demand fast payment, often impossible to track fraud within 15 days window. Stolen credit cards often not reported within this time frame.
-networks don’t pass on parent referral, creating a system where it’s hard to determine if traffic is actually coming from a legit site.
-Live pixel tracking invites fraud
-Industry demands high CPA. Allowing ‘down payment’ and e.g. additional payout 30 days later would eliminate a lot of fraud.
90% fraud? That sounds way excessive. 10% is more likely. Networks aggressively scrub traffic these days. Either you’re working with the wrong networks or your math is off. It’s also possible that your product attracts a high rate of fraud attempts or chargebacks and returns. In any case 90% fraud is the exception and not the rule. I think it has to do with what you’re promoting because those numbers are very off. Networks are very aggressive about scrubbing traffic and won’t keep bad publishers around if the traffic is shady.
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