My blog readers will be interested in your post so added a trackback to it on CatholicTide…

Affiliate fraud is costing advertisers upwards of $1B annually. Fortunately, affiliate programs can be a great source of new clients and therefore the cost of fraud just averaged into the Cost Per Client Acquisition. Are there people working to stop the fraud – the answer is yes. But unfortunately they aren’t working with tools that are advanced enough to stop today’s sophisticated fraudulent affiliate.

CPA WatchDog and the CCFA (Cyber Crimes Field Agency) were created to help clean up the fraud in the affiliate marketing space, giving the industry greater credibility as a marketing outlet for large and small companies alike. We think that the absence of fraud will increase the amount of money spent on affiliate marketing, increase payouts to affiliates, and decrease the cost per client acquisition to the advertiser. This increased efficiency will help everyone in the industry – affiliates, advertisers, and networks. Bottom line – less fraud, more for everyone else (affiliates, advertisers, and networks).

The top Affiliate Networks have been known to stop basic fraud and original fraud tactics; however the majority of the affiliate fraud occurring today can be attributed to sophisticated, low profile affiliates that spread out only a small amount of fraudulent transactions to each advertiser and on each network, across numerous advertisers and networks. These affiliates are left to continue defrauding advertisers with at low personal risk and are ultimately written off as a cost of doing business. The Advertiser Fraud Protection program tips advertisers off to fraudulent behavior ahead of time.
CPA WatchDog™ is the first and only third-party affiliate fraud protection company that identifies, tracks, and allows for the prosecution of commission-based affiliate fraud. The purpose and mission of the company is to take the risk of affiliate fraud out of the affiliate marketing industry, making the playing field safer for advertisers and networks. CPA WatchDog™ offers fraud prevention solutions to three different groups to include advertisers, networks, and affiliates (publishers).

CPA WatchDog’s™ Advertiser Fraud Protection product [www.cpawatchdog.com/advertisers], showcases CPA Watch dog’s proprietary fraud profiling/tracking technology and monitoring system, allows advertisers consistently maximize ROI by reducing fraud. This service allows advertisers to efficiently identify fraudulent affiliates quickly and easily.

Affiliate Network Fraud Protection [www.cpawatchdog.com/networks] is CPA WatchDog’s fraud monitoring service that protects the advertiser and boosts credibility of member affiliate networks. This service reassures advertisers that they are receiving valid transactions from their affiliate network and allows the highest quality affiliate networks a way to distinguish themselves from the rest of the pack.

VERIFIED AFFILIATE™ [www.cpawatchdog.com/affiliates], is CPA WatchDog’s newest Affiliate Verification Program, it allows affiliates to verify their identity and establish a professional history that can be viewed by affiliate networks and affiliate managers. This also allows affiliates the opportunity to distinguish themselves from less credible affiliates and earn higher payouts due to the instant trust a CPA WatchDog™ Verified Affiliate™ status garners with top affiliate managers.
CPA WatchDog’s incentivized, three-tier verification program is the first such comprehensive solution to address the issues of affiliate fraud, and includes all three players (the advertiser, the network, and the affiliate) in an integrated solution. CPA WatchDog™ is now accepting applications from new advertisers and networks interested in eliminating the spectra of fraud from affiliate marketing. For more information, contact CPA WatchDog™ 1-800-272-0052 or visit http://www.cpawatchdog.com.

Thanks,
CPA WatchDog™ Web Team

I agree it’s not a realistic way to handle the fraud. In many cases advertisers can curtain all of this through pro-active measures, but the vast majority still do not.

Your totally right, no affiliate will front the money for two months…that just wont happen.

I read your post and you have some great points.

Thanks for you comments.

In affiliate marketing is the risk already shifted from the advertiser side to the publishers. Publishers (affiliates) also have costs and it would increase their business risk significantly, if they would have to front money for two to four months in the hope that the advertiser will pay them eventually.

It also creates problems for the affiliates to determine their actual ROI in a timely manner. An earnings report is only doing the trick partially, if earnings can be deducted until the date when actual payments are being initiated by the advertiser.

I talked a bit more about those things at a blog post at Search Engine Journal last year

http://www.searchenginejournal.com/google-adwords-and-paid-search-cpa-vs-existing-cpc-model/5499/