Home  › Marketing › Strategies

Fraud Protection: A Must for Performance Marketing

  |  May 22, 2012   |  Comments

Companies that fail to protect against fraud can end up destroying business relationships.

Fraud has been an issue since online performance marketing's inception. When I first started in the industry in 1997, it wasn't always called fraud, rather "innovative business practices." From banner farms to click fraud, the industry has been rife with serious issues of fraud. The performance marketing and affiliate industry has always stood up during these instances, saying: "That's why you must do a pay-per-performance model." However, in the last few years, as the performance marketing industry has grown by leaps and bounds, our industry has become the target of sophisticated fraudsters.

Brian McLevis, CEO of ScrubKit, one of the main fraud protection systems used by affiliate networks, says fraud comes in all forms and from all factions within the industry. "There are dozens of different fraudulent tactics currently running rampant within the industry and fraudsters continue to try and push the envelope by innovating new ways to defraud companies," he says. "There are actually many different types of fraudsters, from the flying-under-the-radar-guy that defrauds by trickling in a couple fraudulent conversions per day, to sophisticated fraud rings that utilize constantly evolving techniques ranging from stolen credit card or identity information acquired from hacked servers."

Businesses that do not invest in a fraud protection system for use in conjunction with their online performance marketing efforts are easy targets, McLevis says. It is a requirement for almost all marketing companies to have a cutting-edge, legitimate system in place, whether in-house or third-party, that partners can rely upon. "Companies are no longer looking at a fraud management system as an additional monthly cost," he explains, "but instead as something that will ultimately save them countless amounts of time and money while ensuring strong, long-term relationships with their business partners."

Companies that don't engage in fraud protection are now seen as rogues in the industry and often destroy relationships. They change their names frequently and are seen as confederates of the fraudsters. While they are not always actively engaged in the fraud themselves, their unwillingness to prevent fraud is seen as a huge detriment to advertisers and the industry in general.

Richard B. Newman, a well-known New York Internet marketing law attorney agrees, and says that "the consequences are many, both as it pertains to disputes amongst advertisers and publishers, to consumer-based fraud. With regard to the former, failing to deal with professional colleagues in an equitable fashion, despite shared business interests, undermines long-term viability and growth."

The impact to the industry is clearly far reaching. "Consumer-based fraud devastates the industry due to increased regulatory scrutiny that ultimately chases off big advertising dollars," says Newman, who represents numerous interactive advertising companies. "A proactive, self-regulatory culture that implements best practices and aggressive fraud prevention solutions, while dealing with associates at arm's-length, is essential for the long-term survival of the industry."

It's obvious that companies like ScrubKit and CPADetective, another fraud protection company, are going to be gaining more and more clients as time goes by. However, for whatever reasons, there are companies in the industry that still feel that they can "get by" by not making an investment in fraud protection. Those companies that continue to operate in his manner are going to find they are being perceived as pariahs due to their lack of proactive attention and aggressive fraud prevention.

ClickZ Live Chicago Join the Industry's Leading eCommerce & Direct Marketing Experts in Chicago
ClickZ Live Chicago (Nov 3-6) will deliver over 50 sessions across 4 days and 10 individual tracks, including Data-Driven Marketing, Social, Mobile, Display, Search and Email. Check out the full agenda and register by Friday, Oct 3 to take advantage of Early Bird Rates!

ABOUT THE AUTHOR

Pace Lattin

Pace Lattin has been working in interactive advertising since its inception. From being a co-owner of the company that sold advertising in ClickZ before the turn of the century to founding a major interactive advertising publication, he has been involved with all aspects of the interactive advertising industry. He is currently the executive director of the Executive Council of Performance Marketing, an industry organization that represents over 100 C-level executives. 

COMMENTSCommenting policy

comments powered by Disqus

Get the ClickZ Marketing newsletter delivered to you. Subscribe today!

COMMENTS

UPCOMING EVENTS

Featured White Papers

IBM: Social Analytics - The Science Behind Social Media Marketing

IBM Social Analytics: The Science Behind Social Media Marketing
80% of internet users say they prefer to connect with brands via Facebook. 65% of social media users say they use it to learn more about brands, products and services. Learn about how to find more about customers' attitudes, preferences and buying habits from what they say on social media channels.

Marin Software: The Multiplier Effect of Integrating Search & Social Advertising

The Multiplier Effect of Integrating Search & Social Advertising
Latest research reveals 68% higher revenue per conversion for marketers who integrate their search & social advertising. In addition to the research results, this whitepaper also outlines 5 strategies and 15 tactics you can use to better integrate your search and social campaigns.

Resources

Jobs

    • Digital Marketing Analyst
      Digital Marketing Analyst (GovLoop) - Washington D.C.Are you passionate about audience acquisition? Love effective copy and amazingly effective...
    • Product Specialist
      Product Specialist (Agora Inc. ) - BaltimoreDescription: The Product Specialist is hyper-focused on the customer experience and ensures that our...
    • Partnerships Senior Coordinator
      Partnerships Senior Coordinator (Zappos.com, Inc.) - Las VegasZappos IP, Inc. is looking for a Partnerships Senior Coordinator! Why join us? Our...