5 Types Of Performance Marketing Fraud

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bodhi-short“Data Driven Thinking” is written by members of the media community and contains fresh ideas on the digital revolution in media.

Today’s column is written by Bodhi Short, SVP of Operations & Product Development at Integrate.

It often takes only two words to pause a deal with brands and agencies: performance marketing. This effect is reinforced every time industry newcomers test a performance buy and end up in a rapid retreat to lick their wounds. So it’s worthwhile to learn how to avoid these failures.

Affiliates and lead generators fall into two groups. One consists of the most advanced marketers in the industry who are risking their own upfront capital on CPM or CPC media buys and thriving on profits generated from their customers’ larger CPA payouts. The other group focuses on the most efficient methods of producing low-quality leads or even fraudulent conversions.

To the performance marketing uninitiated, the entire performance space seems wrought with fraud, especially compared to the relatively transparent programmatic world. For this reason, I’d like to point out five common practices that contribute to the degeneration of performance marketing, and how marketers can access the tremendous scale available without putting client relationships at risk.

Publisher Fraud

1. Data Dumping

Lead generators have no shortage of data at their disposal. Bit by bit, vendors unhampered by business ethics will sneak older records in with newer leads to cushion against rejected leads and make it look like they have more good leads than they actually do.

This practice is difficult to block. Even the best data verification methods will miss these older leads, as they are technically valid data. Luckily they’re easy to spot once your sales team starts dialing. Safeguarding yourself against old data means doing your homework: Use systems that both document historical return rates by publisher and monitor leads from origin to sale.

2. Unapproved Network Syndication

This is a classic case of overselling: Offenders close a deal promising fulfillment greater than they can generate on their own and then resolve their low output by brokering the deal to other partners. If you’re a network and your client has approved network syndication, this is fine.

But when networks agree to run ads only on exclusive inventory and then broker out the deal, this becomes an issue. What starts as a $50 lead ends up watered down to a $5 lead, several networks down the chain. Lead quality suffers, and the customer loses control of their brand’s image with little to no transparency into impression-level placements.

The best way to safeguard your brand from network syndication is a two-step approach. First, consolidate your offer onto a single platform capable of monitoring brokered deals. Then, continuously scrutinize the sites that affiliates use to promote offers.

3. Incentivized Traffic

Incentivized traffic is great...if that’s what you’ve ordered. Maybe you want to build an opt-in email list, or push users through a survey. However, if your goal is branding or awareness, it’s useless. You might as well buy bot traffic.

Ensuring proper unincentivized placements and traffic is possible with constant search engine crawling designed to find specific ads. Furthermore, vetting publishers prior to pressing play is essential. The most ideal environment is one which discloses every affiliate’s historical performance.

Advertiser Fraud

4. Pixel Shaving

Let’s say you send 100 users through the advertiser’s conversion path, but the advertiser only fires your pixel part of the time. Some consider this practice tolerable, but it can be dangerous because the buyer can offer a higher payout while returning fewer conversions at the end of the month. What seems at first to be a profitable venture quickly proves disappointing when you notice the campaign’s earnings per click (EPC) is far lower than similar but not pixel-shaven offers.

Monitoring the rise and fall of your conversion rates and EPC, while conducting random checks for pixel placement, is your best bet to keep pixel shaving at bay.

5. “It’s all fraud!”

The performance-marketing space is notorious for advertisers returning far more than would otherwise be reasonable. Even conversions from high-quality, transparent traffic will be deemed as “all fraud” at times, usually at the hands of jaded marketers.

To deal with this, both advertisers and publishers must be very clear on what is allowed as a return, what consequently defines a conversion, and also what constitutes “fraud.” It helps if your tracking platform can enter with its data and work both sides toward resolving these definitions.

Conclusion

These five dubious practices create a downward spiral. Both sides try to protect themselves from the other and, ultimately, perpetuate the issues plaguing the industry. Publishers push lower quality, for example, while advertisers retaliate with higher scrubs and return rates.

The solution is to heed our parents’ advice: keep good company. Spend time researching performance partners before handing them a campaign (or running one for them). If you don’t have time to get your hands dirty, consider adopting a provider that will do it for you with additional fraud prevention and detection technologies, historical vendor performance data and in-house dispute mediation.

Follow Bodhi Short (@integratebodhi) and AdExchanger (@adexchanger) on Twitter.

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