How to identify Cookie Stuffing in Performance Marketing?

Did you know Cookies are not only edible snacks but hold a significant role in digital marketing? Internet cookies are small blocks of data created by web servers and placed on a user’s device while browsing the internet. These are used to store stateful information or track users browsing activity.

In the digital world, this information is used to serve ads based on user activity, read user buying behavior and make marketing decisions based on the collected data. Affiliate marketers rely on cookies to attribute customers or sales with a particular affiliate to compensate the right affiliate partner for driving user traffic. These are often also referred to as Third Party Cookies.

In 2021, Statista surveyed senior marketers from the United States. The results had 51 percent of respondents stating that third-party cookies were essential for their current marketing strategy as they made up most of the data their company used. On the other hand, 10 percent stated they never used third-party cookie data, and these cookies were not important to them at all.

Affiliate marketing provides a passive income stream for affiliates, but fraudsters constantly disrupt the ecosystem by finding ways to exploit marketing efforts. Playing with legitimate cookies and forcefully injecting cookies to extract commissions is one of the biggest threats the affiliate marketing industry encounters.

What is Cookie Stuffing and how does it work?

Affiliate networks operate on the model of paying publishers commissions to drive user traffic to the advertiser's website. And marketers use cookies to track how a user arrives at an advertiser’s website.

Affiliates have platforms like a content website, social media handles, browser extensions, downloadable tools, coupon websites, and more with user traffic. They use these mediums to promote the advertiser's products or services. When a user clicks on one of the affiliate links and then purchases from the advertiser’s website, the affiliate gets paid by the advertiser. The malicious affiliates drop multiple third-party cookies on the advertiser’s website to monetize sales by converting via legitimate affiliate links.

Cookie stuffing is the malicious act of dropping multiple third-party cookies on the advertiser’s website to earn commissions. Want to know how this works? Although there are multiple ways of stuffing cookies in the user browser, let’s look at one of the use cases.

Use Case: Cookie Stuffing Fraud via Adware

Adware is software that is designed to throw unwanted advertisements on a user’s system in the form of pop-ups. It uses an underhanded method to either disguise itself as legitimate or piggyback on another program to trick users into installing it on their system.

The threat actors bundle up adware with mac or windows apps, web extensions, or downloadable tools. When the user downloads any of these, the adware also gets installed on the user system. Malicious affiliates can then access the user’s system and browser to inject their affiliate cookies.

When users visit a publisher's website, they see ads and links to the advertiser's products. Upon clicking on these links, they get diverted to the advertiser’s website. An affiliate cookie is dropped at the backend once the user clicks on one of the affiliate links. But the pre-installed adware overwrites the legitimate cookies by hijacking the user’s browser. If the user gets converted and purchases the product, the malicious affiliate earns the commission as marketers pay the last active cookie owners. This is a cookie-stuffing fraud in affiliate marketing.

What are the red flags to identify cookie stuffing fraud?

Almost 83% of marketers use affiliate marketing to boost their brand reach and sales, while the global cost of advertising fraud was $65 Bn in 2021. These stats are enough to estimate the reach of fraudsters in this industry. Digital marketing heads must be aware of the threats and deploy measures to protect their brand image. Over the years, the team of fraud analysts at Virus Positive Technologies has identified several matrices to flag affiliate frauds well in advance. 2 major ones are listed below:

1. Diminishing ROI

The marketing performance is calculated by the revenue generated through each channel. Close monitoring of the ROI trends can give an idea to the marketing leaders if any unethical activities are happening. If you notice a sudden decline in the ROI, which means an increase in commission payouts but a negligible increase in sales, look for affiliate fraud detection solutions to monitor your affiliates and their promotional channels.

2. Affiliate complaints of lesser payout

If you notice a sudden increase in the number of affiliates leaving your network or complaining of lesser payouts, it is a potential warning sign of cookie-stuffing fraud. The fraudulent affiliates steal the credit for referrals from their honest counterparts. The legitimate affiliates end up getting paid less because of the misattribution of leads to cookie stuffers.

How to combat Affiliate Fraud?

To stop malicious affiliates from ruining your brand’s image and marketing efforts, companies need to hire specialized vendors to help them monitor, track and analyze their affiliate networks.

Virus Positive Technologies fraud detection and prevention solutions can help to monitor your network at various stages to ensure compliance. Their expert tools can flag violations, send out a warning to defaulters, help affiliates adhere to guidelines, save money lost to fraud, and more. Connect with us at sales@viruspositive.com to know more.