FeedFront Magazine Issue 50

Page 6

@feedfront | www.feedfront.com




You need to bring in traffic to turn a profit as an online merchant. Unleashing the power of affiliate marketing can obviously be a lucrative stream of revenue. However, is a high volume of affiliate traffic all it’s cracked up to be? By Melissa Fitzsimmons

When it comes to affiliate marketing, not all traffic is created equal. It’s important to distinguish between “quantity” and “quality” in terms of the potential sales your affiliates drive to your site. Being overly-fixated on the former, while ignoring the latter, could lead to a longterm loss of revenue.

Overperforming campaigns: If your average affiliate conversion rate is 10% and you have one outlier show 50% conversion, that should register as a red flag.

Incongruity between traffic and sales: If you’re paying for traffic and are seeing impressive numbers but no one is converting, that’s a sign of bad traffic.

Chargeback and fraud patterns: You may notice a sudden spike in month-to-month chargeback or fraud instances (hence why it’s important to closely monitor these stats).

The Negative Ramifications of Bad Traffic A bad actor posing as a legitimate affiliate may use deceitful advertising, or even engage in outright fraud. The fraudster might use tactics like cookie stuffing or write scripts to spoof traffic figures, or even resort to using stolen cardholder data to complete fraudulent transactions. The goal is to claim unearned commissions, regardless of the consequences for you. It’s an all-too-common practice that threatens to undermine the effectiveness of affiliate programs writ large. When the cardholders discover the abuse, they either demand a refund from the advertiser or file chargebacks to recover their funds. In either case, the business will lose sales revenue. With chargebacks, though, you’re also likely to lose any merchandise already shipped, and will be responsible for paying additional fees to cover the chargeback administration. Chargebacks build up over time, leading to higher overhead costs. They may even come to threaten your business’s sustainability if you come close to breaching chargeback thresholds established by card networks like Visa and Mastercard. The bottom line: you end up paying higher costs for less impressive results that may cause long-term damage to your business. So, how do you spot those bad affiliates? Some common signs of affiliate fraud include:

What Can You Do? Fortunately, there are some best practices you can employ to identify and stop affiliate fraud. First, as suggested above, you should monitor your campaigns closely. Watch for signs of abuse, and be proactive if you identify potential fraud red flags. It’s important to know your affiliates; check them out on social media, and ensure they are who they claim to be. Make a point of only working with trustworthy affiliates and networks. You can also preempt some bad actors by making your returns window shorter than your affiliate payment window. This delay will give you time to identify potential abuse and stop payments before you hand out unearned commissions. Finally, it’s important to take steps to mitigate your generalized chargeback risk. Review your policies and procedures carefully to identify any practices that might result in chargebacks. Eliminating affiliate fraud is a challenge, but it’s not an unavoidable cost of operating in this space. [FF]

Melissa Fitzsimmons is Affiliate Fraud Specialist at Chargebacks911.

FeedFront | June 2020 | No. 50

Turn static files into dynamic content formats.

Create a flipbook
Issuu converts static files into: digital portfolios, online yearbooks, online catalogs, digital photo albums and more. Sign up and create your flipbook.