Forum Moderators: skibum
For as long as I've promoted affiliate products I've suspected fraud. You can track your results, but only based on what the affiliate network reports to you. Many times I've seen leads mysteriously disappear without warning at the end of the month (what? what do mean they suddenly don't count? If someone comes through my link and fills out a lead, I should get the profit; it shouldn't matter if the merchant isn't able to convert that lead to a sale), I've seen suspiciously high rates of return on per sale sites, and often conversions rates vary beyond statistical norm. Programs like clickalyzer, which claims to be able to track affiliate links to the sale, just don't work in my experience (I really wish it did, but I'm sorry to say that despite claims it just doesn't... yet). Anyway, I've always suspected affiliates were being routinely defrauded, but I've only recently been able to prove it, with the help of my joint-venture partner. Here's how we did it:
First I should point out that this particular merchant was pay-per-sale, and we aren't run of the mill affiliates. In the 2 months we had been promoting this merchant, we had already done over 1 million in sales, and jumped to their #2 affiliate in their whole network (I think we've since moved to #1). I mention this not to brag, but to point out that because we did such a volume of sales for them, we were able to get some leeway from them. Interestingly, no matter how many sales we ever did, only the merchant would converse with us. It didn't matter to the affiliate network how many millions in sales we did - they still treated us like dirt.
Initially the problem started as one with tracking. The affiliate network we were promoting through was so delayed in its reporting (sometimes 2 weeks for sales to show up) that we felt paralyzed to make adjustments and optimize our campaigns. We wanted something closer to real-time feedback.
We contacted the merchant we were promoting (because the affiliate network wouldn't even talk to us) and requested help. Because of the volume of sales we were generating for this merchant (sometimes 40k/day) they agreed to supply us with daily reports telling us exactly what we'd sold the day prior. In this way we could make adjustments quickly and optimize our campaigns.
We immediately saw a huge discrepancy between what the merchant reported we had sold and what the affiliate network was reporting we had sold on any given date. About 43% of our sales were simply missing.
Now we knew that the merchant had the power to hold back a certain percentage of sales from being reported, based on the premise that some sales would be returned or prove to be bought with fraudulent credit cards, etc... The trouble is over time we had established our fraud/return rate at just over 3%, and this doesn't account for the other 40%. And once sales are proved to be genuine, non-returns, the commission should come through. But these sales/commissions *never* appeared in the affiliate network reporting.
The merchant blamed the affiliate network and expressed surprise, but it's difficult to tell how much of the missing sales were due to the merchant witholding them (they claim they weren't) and how much is due to the affiliate network stealing them. Either way, because the affiliate network runs the tracking mechanism, they bear the most responsibility.
But the merchant also turned out to be guilty of other fraud. After analyzing our sales (which we do to determine customer buying habits) we discovered another statistical impossibility. This merchant, like many others, operates on a cookie. The timeframe the cookie covers isn't 30 days, but for the purpose of simplicity, I'll use that timeframe as an example. What we discovered was out of millions of dollars of sales, not one single sale occured after day 15. We had strong sales right up until day 15 (in fact, 10% of our total sales occured on day 15), but nothing on day 16 or beyond. Not one single sale.
We brought this to the attention of both the network and the merchant, and pointed out it was statistically impossible. We suggested that although the merchant was purportedly operating on a 30 day cookie, they were in fact only operating on a 15 day cookie. We were told it was just a coincidence, that people just didn't buy after day 15, that there was no problem. We couldn't even get them to look at the possibility that we might be right.
So we went through our own affiliate link and made a small purchase. Then we went back to the merchant's site every day after that, not through our own links, and made a small purchase every day. Surprise, surprise, after day 15 none of our purchases were credited to us. Now armed with proof, we went back to the merchant. They grudgingly admitted there might be a problem, but it surely was restricted to just us. Well, my partner had a smaller separate account with the same affiliate network, and his numbers confirmed it was a system-wide problem.
Finally the cookie was fixed, only a few days before Christmas. In essence though, this particular merchant defrauded all of its affiliates (hundreds at least, probably thousands) for half of the cookie timeframe for all of last year at least, and possibly several years prior. This is a big merchant, who did billions in sales last year. Even if only 10% of sales occur after day 15 (which seems from our new data since the problem was fixed to be a lowball projection), 10% of a billion dollars is 100 MILLION DOLLARS in sales and commissions that affiliates were defrauded last year alone.
Now we've fixed that problem, and we've got a solution in the works to fix all our other problems so we won't have to worry about fraud, but what concerns me is that the problem exists at all, and that no other affiliate had apparently discovered this prior to us. I believe this is the tip of the iceberg, and I'm very concerned that affiliate networks seem to be accountable to no-one. I don't believe this is an isolated event... the affiliate network in question is one of the biggest on the net and the way they have dealt with this was to treat us like we were criminals for daring to bring proof of *their* fraud. I've been screamed at, lied to, and hung up on by their telemarketing division. That really frosts me - it shouldn't matter whether I've done $100 in sales or 100 million, as an affiliate I should be treated with respect. THEY WORK FOR US, NOT THE OTHER WAY AROUND. And since we have done several million in sales already in the very short time we've been promoting through their network, you would think they'd at least treat my concerns with proffesionalism. But the prevailing attitude from all the big affiliate networks, and this one in particular, is that "you'll take whatever crumbs I decide to give you, you little affiliate you, and don't you dare question me." They treat fraud like it's their god-given right to steal from affiliates, and honestly seem surprised that I would even dare to voice objection!
I believe this is common practice and a wide problem among affiliate networks, and I'm concerned that there is no-one on the side of the little affiliate. The affiliate network should serve this purpose and guard the affiliate's interests, but they simply don't. I believe something has to be done.
Anyway, I know this has been a really long drawn-out explanation of what is at heart a simple problem, but I wanted your opinions on this, because I know I can't be the only affiliate in history who's ever caught the affiliate networks with their hands in the cookie jar. Have any of you encountered fraud like this before? Have you suspected it?
Most important of all, what solutions have you found for it?
In the spirit of sharing, I'll give the only solution I've found so far, which is unworkable for most affiliates I know but is I think 100% fraud-proof. That is the 'buy it yourself' method. Instead of sending traffic to the merchant, set up a website yourself displaying the same wares. When the customer orders, he's buying from you, not the merchant. Then turn around and buy through your own links from the merchant. That way you have a record of every sale, and you know of every return and any fraud, and can prove when sales get skimmed. The upside of this approach is it works. The downside is it takes an incredible investment of time (to set up a fully functioning website that converts at least as well as the merchant's) and money (you have to be able to buy all your customer's orders before their own payments to you have cleared through). It's highly unworkable for most rank and file, but it is one solution, and theoretically it could work for pay-per-lead campaigns too (the problem is that in pay-per-lead the merchant would have to allow you to set up a special system and then trust that your leads were all good... they just aren't going to be willing to do that, and why should they when they can so easily screw over affiliates in the current system?).
This whole problem has infuriated me, and the rank unfairness of it has moved me to take some action. I've started to put together a non-commercial (meaning no sales solicitation) mailing list to connect affiliates who are concerned about this problem, because what I discovered when dealing with the affiliate networks is that one affiliate, even a super-affiliate who generates substantial sales volume, really isn't taken seriously. I think that if I can build a large enough group of concerned affiliates that the networks will have to listen, and make reasonable concessions. So far I've only talked to other ppc marketers, mostly just associates, competitors and friends I know in the business, but there has been strong interest. I'm calling the project Stop Fraud Now (yep there's a website, you can probably guess it but I'm not looking to promote here and I think it's against rules anyway).
I'm thinking there needs to be some kind of oversight agency which verifies that everything is kept on the up-and-up. At best, it would overlook the affiliate networks and keep them on the square, at the very least it could operate as some kind of 'better business bureau'. I'm just looking for ideas on how to combat this problem on a wide scale.
Anyway, I know this has been a super-long post, and I should really close. The one thing that bothers me most is that a lot of affiliates I've talked to about this have sort of shrugged their shoulders and said "well, what are you going to do? I guess there'll always be fraud; it's just the cost of doing business in this field." Well, I don't feel that way. Imagine if we used that same reasoning to justify murder: "well, there's always going to be someone committing murder. What are you going to do? You can't stop it all, so we might as well not bother trying." I feel very passionately about this and I can't understand apathy. I'm not saying that every affiliate network steals 30% of sales, but how do any of us know they don't? And ask yourselves what 30% of commissions not being reported to you equals. Is it 5 dollars a day? 10? Even if it's only 10 dollars a day that's still 300 dollars a month that's being stolen from you. Isn't that worth objecting over?
:) Now I'm straying, ranting about affiliate apathy. But I think apathy on this issue is deadly, and a big part of the reason that affiliate networks feel they can rip us off indiscriminately.
Any thoughts or opinions?
It also takes out LinkSynergy, Travelocity, and more.
I would say this a vote for using smaller affiliate networks, wouldn't you?
