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David Naffziger On Preventing The New Affiliate Program Fraud & On Affiliate Summit

David Naffziger David Naffziger is presenting at the upcoming Affiliate Summit East in Philadelphia on scammy affiliates stealing commissions from legitimate affiliates.

In this interview we discuss his experiences at Affiliate Summit, hunting affiliate program fraud and ppc arbitrage, as well as data mining. David’s company BrandVerity deals with preventing affiliate fraud for some of the biggest affiliate networks out there. You can also check out David’s speaker preview on the ASE blog.

For those of you interested in attending, the show is August 18-20. If you can’t attend they also have virtual passes that get you access to all session videos; the option isn’t visible on the conference pricing page, but if you click the big red Register button it appears on the next page.

1) I’ve seen you present at Affiliate Summit in years past. What are some memorable things you’ve learned from Aff Summit and/or great networking stories you can share?

Affiliate Summit has really been core to our company’s development. To be honest, Affiliate Summit helped inspire our primary software.

I actually attended my first Affiliate Summit with nothing more than an idea and a few mockups for what would become BrandVerity PoachMark. I met as many
people as I could, and got excellent feedback from everyone I talked to. I left Affiliate Summit with lots of useful suggestions, a great network of talented marketers and even a few of our first alpha customers.

2) You’re talking about ensuring the affiliate channel drives incremental sales. Presumably it’s still important to prohibit affiliates from bidding on your keywords, or from publishing coupons that just steal credit for the sale when someone in the checkout googles ‘merchant coupon’… what else is there to ensuring the sales are incremental?

There’s a wide range of challenges to ensuring affiliate revenue is incremental. Some of the worst offenses include typosquatting on domains, cookie-stuffing and PPV/adware advertisements. Wesley Brandi from iPensatori has seen a host of these forms of abuse and will certainly provide a few examples.

Non-incremental revenue can extend to seemingly innocuous channels such as social media. Initially, you might think that any social media traffic would be valuable to the brand—but we’ve seen things like affiliates dropping affiliate links on the brand’s Facebook page or creating copycat Twitter accounts that do nothing other than retweet official tweets with affiliate links inserted.

Ultimately, brands need to understand the source of every affiliate’s visitors and sales. That way, they can be sure of the value they’re getting from affiliates. In my experience, if the brand can’t determine these things, it’s usually a sign that they should exercise caution.

3) Can your tools help merchants with actual recruiting of reliable affiliates, or in the recruitment process?

Yes, and some of our customers actually do use our tools to recruit affiliates. Admittedly, this isn’t our primary business focus—but our data has become a core component of some recruiting strategies.

I’ve seen advertisers apply a wide range of recruiting tactics using our technology. Some advertisers monitor generic paid search terms, looking for sites that rank highly and then reach out to them. Others monitor social media for existing brand advocates and look to convert
them into affiliates. We also provide a service known as ‘The Affiliate Watchlist’ where we collect information on brands’ experiences with certain affiliates. Our customers will check to see if their new affiliates’ IDs are on that list and then browse through comments that other PoachMark customers have left about that particular affiliate.

4) You recently wrote about ppc arbitrage – how common is this kind of marketing? It seems like a relic of days gone by where the rules and monitoring were looser.

PPC arbitrage has really evolved. Initially most arbitagers simply purchased low cost AdWords ads and sent users to landing pages with higher value AdSense ads. Although that activity has largely disappeared in its original form, PPC arbitragers continue to operate. They’re just doing it with different techniques. Some of the common techniques that we see now focus on brand terms:

– AdSense for search arbitrage. Publishers earn much more money from AdSense search ads than from standard AdSense formats. We see a wide range of sites that weren’t initially built for arbitrage, but in paid search they are doing nothing more than simple ad arbitrage. We see this with job
search sites (Indeed), search sites (ask.com in particular) and even some coupon sites.

– Comparison Shopping Engines (CSEs) and their partners arbitrage inexpensive brand terms in PPC to expensive per-click product-specific links (with AdSense prominently on the landing pages of course)

– Parked domain arbitrage. The rules of paid search programs and domain parking programs each disallow arbitrage directly to a domain parked page, but we see them finding creative ways to hide the activity.

– Software arbitrage. These advertisers will poach traffic, often targeting brand terms, in order to promote some sort of software download. Once installed, this software then conducts a host of monetizing activity from ad injection to affiliate coupon promotion to offer bundling.

5) You count some massive brands as clients, including Amazon and CJ. Can you tell us a bit about what the sale process was like in landing those accounts? How did you generate those leads and what did you do to help close the deal?

We were fortunate to be introduced to the Amazon team early in our existence, and we’ve certainly learned a lot from them since then. Interestingly, this was also one of our shortest sales cycles. It really helped that we could meet them in person since they’re also located in Seattle. After giving them a demo, they became an active subscriber days later. One thing we learned in particular was what it took to monitor a brand as well known as theirs.

We were introduced to the Commission Junction compliance team by Lisa Riolo of Impact Radius well before they became a customer. We kept in touch and eventually piqued their interest with a combination of simple and complex features, such as our ability to decrypt Commission Junction encrypted links. Early on, we formed a relationship with UK affiliate network Buy.at (and later Affiliate Window), and developed a significant portion of our offering around the needs of a network. Affiliate Window deployed our monitoring across their entire network (1500 advertisers at the time) and forced us to operate at a scale that has really benefited all of our customers, and likely helped convince Commission Junction we could meet their needs.

6) You used to work for Quova, now part of Neustar, which mines and analyzes data for companies. What lessons did you draw from that work that have helped build BrandVerity?

The core data that Quova provides to companies, IP geolocation data (the geographic location of a user of an IP address) is super relevant to our existing business and we use it in our systems. Google and Bing use the same data to geographically target paid search advertisements. Quova also operated a geographically distributed collection network, and much of what I learned about operating that network has been applied to our collection network at BrandVerity.

Second, Quova’s primary customers were the fraud departments at ebusinesses. I got to know a number of people in the anti-fraud world and learned a very healthy respect for the fraudster. They can be incredibly talented, incredibly resourced and incredibly dedicated. The black-hat affiliate is remarkably similar, and much of our system was built from the ground up with that in mind.

Finally, we blended automated technology with manual analysis at Quova to produce enterprise leading IP geolocation data. We do the same thing at BrandVerity. The vast majority of our monitoring, detection and attribution is automated. However, the dedicated black-hat affiliates are smart and they evolve their strategies and technologies. We have a team of Advertising Abuse Analysts that investigate new black-hat techniques so that we can ensure we build that logic back into our automated systems.

A big thanks to David Naffziger and to Affiliate Summit for organizing the interview! If you’re considering going to the conference, I can endorse it first hand having attended n come back with a tip that got me 40% lead conversion rates.

Posted in Business.


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