How affiliate marketing trends are changing the digital marketing landscape, and how organizations can deal with affiliate fraud in a fast-evolving landscape.
Digital advertising has evolved from a buzzword to being both a creative and technology-driven marketing tool for almost every business worldwide with mobile marketing, affiliate marketing, social media marketing, etc. becoming ubiquitous.
Like any other business space, the evolution of digital advertising is also plagued with its own set of challenges – one of them being fraud and scams. Digital advertising fraud is expected to increase from 88 billion USD in 2023 to 172 billion USD in 2028 (Source: Statista – Estimated cost of digital advertising fraud worldwide in 2023 and 2028). Ad frauds can consume a larger chunk of the marketing budget as well as impact business ROI, incurring substantial opportunity loss along the way.
Since its emergence in the mid-1990s, affiliate marketing has snowballed and is currently worth more than USD $17 billion (Source: Proficient Marketing Insights: Global Affiliate Marketing Platform Industry Research Report 2023”). But long gone are the days of traditional affiliate marketing that revolves around coupons and cashback. The rise of influencer marketing and social networks presents a new world of opportunities for affiliate marketers and brands, valued at US$13.8 billion in 2022 (Source: Influencer marketing and the growth of affiliates: The effects of language features on engagement behavior). A study in 2021 found 59% of brands and marketing agencies using influencer affiliate marketing with 90% of the respondents citing influencer marketing to be effective (Source: Influencer Marketing Benchmark Report 2021 ).
A change in tide
Emerging technologies like Artificial Intelligence (AI) and Machine Learning (ML) are helping brands effectively adapt to changing trends. Moreover, consumers are becoming more selective and tech-savvy, demanding personalization. Personalization thrives on data, but consumers are also concerned about how their data is collected and used. With the introduction of the DPDP (DigitalPersonal Data Protection) Act 2023 in India, data privacy regulations have become stricter, and affiliate markets should ensure compliance and transparency. Nevertheless, new trends will shape affiliate marketing in 2024 with higher chances of overlap with other marketing channels.
Affiliate marketing trends will change the digital marketing landscape
We will witness advanced AI integration become more of a necessity than an option, personalizing experiences and optimizing campaigns. Predictive AI helps understand consumer behavior and target customers effectively. Companies will also integrate tracking and analytical solutions to measure the effectiveness of campaigns (including those that are influencer-driven) and their impact on the bottom line. It will further help them optimize marketing budget allocation, zeroing down on tangible sales figures.
Partnership marketing is one of the remarkable affiliate marketing trends that will further grow in significance. According to a survey by DemandGen, companies can expect a 96% annual revenue increase through partnership marketing (Source: DemandGen-2022 Channel/Partner Marketing Benchmark Survey). More and more B2B companies will enter into strategic partnerships to target new audiences, grow revenue, and build business relationships. Affiliate marketing channels help them create a lot of buzz around brand-to-brand partnerships, optimize cross-brand campaigns ROI, and transition to a results-driven approach.
While companies leverage the power of affiliate programs to grow sales, they’ll still have to deal with fraud and scams. In 2020, around 10% of affiliate traffic was reported fake, which resulted in a $1.4 billion loss (Source: The Economic Cost Of Bad Actors On The Internet 2020). Outdated defenses cannot help businesses fight against modern-day criminals as they can commit organized fraud easily. As companies leverage AI to scale business, cybercriminals also use artificial intelligence to commit fraud smartly and quickly. They can manipulate AI algorithms to create fake identities, send phishing emails, or generate fake item listings, accessing sensitive data and harming organizations.
Affiliate marketers will have to take strategic steps to prevent fraud
To begin with, affiliate marketers must stay one step ahead of cybercriminals and deploy sophisticated fraud prevention solutions that provide layers of protection. Fraud detection systems leverage machine learning to analyse vast amounts of data, learn, and demonstrate potential patterns of fraudulent activities. It reduces the time affiliate marketers spend investigating false positives. Further, it fosters real-time monitoring of affiliate behavior and traffic quality and provides an accurate picture of users across all touchpoints, enabling faster fraud detection.
Additionally, marketers should shift to performance-based metrics and outcomes as they demonstrate actual conversions rather than just the number of clicks. For example, an unexpected traffic spike can indicate fraudulent activity like click farms. It becomes challenging for fraudsters to create fake impressions, and marketers can protect their campaigns.
Simultaneously, marketers should comply with data privacy regulations like GDPR, as these technologies can often gather too much user data in due diligence. Lawfulness, fairness, and transparency–one of the principles of GDPR help with a better understanding of data and foster ethical data management practices. A high level of data protection curbs the effectiveness of fraudulent tactics.
Also, anti-fraud education and awareness among marketers can help the affiliate marketing community fight against fraudulent shenanigans. Marketers can be updated on the latest crime tactics and be alert to potential suspicious activities.
Nevertheless, fraud prevention is not a static process but rather an ongoing process that will introduce new changes and shape the future of digital marketing.
Game-changer: automation and tracking + AI and ML
Along with AI and ML, automation and tracking can help marketers save time and resources. With automation, marketers can deliver personalized experiences to customers across all touchpoints. Marketing automation tools collect customer data and help create consistent and targeted campaigns, improving customer interactions and conversions. With data, automation can precisely segment audiences, tailor campaigns per specific needs, and deliver a personalized experience at the right time using the right channel.
Alongside automation, advanced tracking solutions help marketers better understand customer behavior across the buying journey. Real-time analytics and sophisticated attribution models provide data to improve products and services, tailor marketing endeavors, and maximize sales.
AI-powered analytical tools analyze massive data sets in real time, identify hidden patterns, and make predictive recommendations. Through unified marketing measurement, predictive analytics can help forecast future trends, determine ad spend, and precisely qualify and prioritize leads. AI-powered tools help marketers understand what customers prefer, shedding light on upsell and cross-sell opportunities.
However, businesses should also provide adequate training to marketing teams to implement and use AI tools effectively and maximize their potential for various marketing strategies.
Nevertheless, the equilibrium between customer data for personalized marketing and data privacy is delicate. Brands must adopt ethical analytical practices to safeguard consumer privacy and ensure transparency, enhancing their brand image of responsible practices.
So what’s the best bet for 2024?
In 2024, businesses must ensure compliance with data protection regulations to align their marketing strategies with the complex legal landscape of data privacy. It not only mitigates financial and legal consequences but also boosts customer trust and long-term success. Investing in scalable marketing technology will ensure that they can respond quickly to future market trends, overcome potential threats, and drive long-term success in a customer-centric business landscape.
