24 Comments

Affiliate Marketing & The FTC – Calling ALL ReveNews Bloggers

Dec 12, 2006
by

Alright, this meme is spreading like wildwire, and well, we’re the affiliate marketing source in this here playground, and that means we need to do what good bloggers do… control the story.

In case you haven’t heard it, the world is about to explode, no wait, that’s not it, it’s about the FTC and some Washington Post story that has people thinking that affiliate marketing as we know it is about to hit the iceberg.

So here’s what we’re going to do. I am requesting that every ReveNews blogger or person in this industry start this investigation right now, either by writing a blog about the situation and your “take” on the interpretation, or by leaving a comment here.

I’ll spare my opinion for now until I can hear from more people in this industry. So, what does everyone think?

More stories here, and here, and here.

About Jim Kukral

You can find Jim on Twitter: @JimKukral.

Filed under: Affiliate Marketing
  • Jonathan (Trust)

    "Despite what we think, there are memes beginning to sprout that call this the end of affiliate marketing."

    Enough with the dramatics. Who cares about some memes. I'll file in the Affiliate Marketing Dead/Is Dying folder. Every month for years, it's always something.

  • http://www.affiliates-world.com Adrian Bold

    It certainly does seem relevant to affiliate marketing. Surely, the example given in the article about the actors and the camera phones is just clever marketing? No one is getting duped and I can't see the harm. If this ever got off the ground from the land of free speech, ahem, it will be a very sorry day indeed.

    Adrian (UK)
    Affiliates World

  • Philip Davis

    Oh yeah, thats going to work… Full disclosure hasn’t ever been enforced effectively. You cannot regulate ethics and morals, never have, never will. The efforts to regulate lobbists in any form are doomed to fail. Starting with our elected officials and ending with teenagers with camera phones just exactly what are the chances that government can or will be able to regulate it? Just exactly who will pay for it? Who and how many would they have to hire to enforce it? The chances of this working are about as good as Microsoft’s and the RIAA’s successes at stopping piracy… Good Luck to Them (whomever they are)!

  • http://www.partnerperform.com Mike Payne

    I don’t see how this article implicates affiliate marketing as the problem. If anything, the only “story” here is that Revenews is trying to sensationalize it.

    Can a consumer gain value when a merchant lies to them? Absolutely not.

    Can a consumer find value when FlamingoWorld recommends a holiday sales deal? Absolutely.

    I love Revenews, and I hate to criticize– but am I missing the point?

  • http://www.revenews.com Jim Kukral

    Mike, we’re just trying to cover the story. Despite what we think, there are memes beginning to sprout that call this the end of affiliate marketing.

    So perhaps we sould use our expertise to stop that? Or shall we just let the conversation happen around us without chiming in?

  • Doug

    The government is going too far. The only ones to benefit… Lawyers.
    There will be a case where a waitress will recommend a item on the menu, and if she doesn’t disclose that she is being compensated (wages), then she could be liable. That may be taking it to the extreme, but, there are a lot of lawsuits based on stupid laws that are taken to the extreme and are won. Like someone trespassing, breaking in to a place and getting hurt, suing and winning.
    That is my take at this point.
    Guess that is why you need to hire a lawyer to get any government benefits. The government is afraid to tell you what to do, except to consult with a lawyer.

    Thanks.
    Doug

  • http://www.jimmydaniels.com Jimmy Daniels

    They certainly have a different perspective over at adage http://adage.com/article?article_id=113749

    Heck, this would probably help affiliate marketing more, I can think of some affiliates who need policing by the ftc.

  • http://www.partnerperform.com Mike Payne

    Here’s what I think:
    If the FTC wants to come digging around in our yard, I’ll be the first to give ‘em a map and a shovel. What could they possibly find?

    - They will find value in affiliate marketing. They’ll find review sites, coupons, cash back, contexual content, on-topic blogs, and more. This will help them find the product they want.

    - They’ll also find scumware purveyros. They’ll find those who inject themselves into the consumer experience without consent.

    Who will the FTC target? Value-adding affiliate marketers, or the parasiteware pimps?

    Our industry needs to go under the microscope more than it needs a name change. Those who provide value to the consumer and their partners, be they merchant or affiliate, should have no fear of government persecution.

    Pretty wording aside, I think this could be a positive step.

  • http://www.copyblogger.com Brian Clark

    This isn't the end of affiliate marketing by any means. But it should be something we all discuss rationally.

    As an attorney, I've always thought that the "independent review" websites that list the "top ten widgets" based on the highest payouts violated deceptive trade practices law. What is worth talking about is the fact that the FTC came out and issued an opinion that agrees with that view.

    Don't get hung up on WOMM vs. affiliate marketing. The FTC has not crafted new law, they've said that certain practices can be construed as deceptive under existing law.

    The combined practices are:

    * Recommendation
    * Compensation
    * Lack of disclosure

    That covers many of the most profitable affiliate marketing business models. The question becomes, will there be any enforcement? Is a site wide disclosure good enough (not if you continue to otherwise mislead the consumer into believing you are impartial). What about other situations?

    There's a lot to consider, but I don't think hysterics are called for. Jim, thanks for opening the dialogue up over here.

  • http://www.extravagantmedia.com Russell Rockefeller

    I think if there is any truth to this there is less interested in pursuing legitimate affiliates than there is interest in going after PR firms that hire bloggers such as the recent DIGG Scandle.

    See article here:
    http://tech.netscape.com/story/2006/12/12/top-dig…

  • http://www.NETexponent.com Peter Figueredo

    As a consumer (and an advertiser) I have no problem requiring that ads be marked as such. I honestly do not see how this impacts affiliate marketing in any negative manner.

    I do not know who is calling this the end of affiliate marketing but they clearly do not understand our space and what makes it valuable to consumers and advertisers.

  • Twain (UK)

    …Man, this country is starting to get on my nerves. First, the anti-online gambling bill, now this. How can this country define itself "the land of the free"? This is absurd, for a so-called free country. My god, you are out of mind, pals…

  • http://www.amazing-bargains.com Michael Coley

    I just went to Yahoo's home page and found all of the following with no disclosure:

    * An ad for Enbrel (a prescription drug). This is the closest that they come to discloser, with a small link that says "Ad Feedback" below the ad.
    * Links to the "Hottest Holiday Deals".
    * A whole "Marketplace" block with ads for online colleges, mortgages, jewelry, credit reports, and other products.
    * A "Holiday Focus" on "Popular Digital Cameras".

  • http://www.copyblogger.com Brian Clark

    Michael, something that is made to look like an ad wouldn't be at issue. It's the reviews and personal recommendations that don't look like ads that might require disclosure.

    The real issue is not what affiliates can or cannot get away with. It's whether the companies and affiliate networks that recruit and pay affiliates will make disclosure part of their terms and conditions due to fear of an FTC or state action.

  • http://www.schaafco.com Brook Schaaf

    I don't think this regulation will affect most affiliate marketing, unless it is very broadly defined. To Michael Coley's point, people will still recoginze ads as ads and most affiliate marketers shouldn't be affected.

    If you want to talk about compensation for "Top Products" etc, take a gander at magazine advertorials or newspaper articles that have "Advertising Section" printed in the corner.

    This would seem to delineate differences between the Word of Mouth space and the Affiliate space. I also agree with Philip Davis that this sort of regulation generally doesn't work. While you might be able to hinder the activities of large corporations, clever marketers will probably find ways around these restrictions when they want to keep the relationships secret.

    For example, you could shift the compensation time period to not overlap with the activity period, you could alter the form of compensation, or you could hire professionals to recruit volunteers such as family members.

    And, of course, you can simply be straightforward about the relationship. I think people, particularly people online, respect a company or organization for engaging directly with them.

  • Jonathan (Trust)

    Just a copy and paste, I'm a big time management fan:

    "The only people that should worry about the FTC getting involved in anything are those up to no good. So that's not a deal at all to most. As far as disclosure. Not a big deal either. Most affiliate sites are pretty self explanatory. If anything you might have to disclose on some Terms Of Use page on your site that nobody reads that you get compensated when sales are made off your links. I've had that for years and again for those that don't and if the FTC says you must disclose. A few minutes of work adding it in. So when I read this, it's just business as usual. It's getting blown up into a bigger story than it actually is."

  • http://www.affiliatecrew.com/our_advertisers.php Chuck Hamrick

    If they want to start with word-of-mouth then they will have to go after Avon and Amway first. I can see that a competitor could use this (if they pass legislature) to try to bring down their competition but it would take some deep pockets.

    This reminds me of the urban legend that the US Postal service was going to charge for emails. I am not worried about this, lets see where it goes.

  • http://www.internetmarketersnetwork.com Jim Hood

    This sure looks like this applies to affiliate marketing.

    I’m not concerned about it though. Disclosure for securities analysts and brokers didn’t kill off that industry, and it won’t kill off affiliate marketing either. The worst case is that there will be more transparency… which is a good thing for a marketer’s reputation in the long run.

  • Ben

    The government should not be involved in this, people are crafting laws who don’t know anything about the industry.

    Spyware/parasites is bad but this doesn’t target that.

  • Jared Gordon

    After having read the staff opinion letter, I think an FTC policy following the test laid out in the letter would not pose much of a problem for online affiliate marketing, at least for my company. Generally, the ads our affiliates distribute for our advertisers are clearly advertising, and a reasonable consumer will easily be able to determine that the promotion is most likely being paid for by an advertiser. For email marketing, the CAN SPAM Act of 2003 already requires that email advertisements clearly indicate that they are an advertisement. Similarly, most banner and paid search advertising is clearly an advertisement, with paid search even being marked as a sponsored listing on major search engines.

    It’s unlikely that this policy will have much effect on the major cost-per-acquisition affiliate networks, since it is usually clear that our affiliates are providing paid advertising. It may even serve to move more advertising dollars to the online affiliate marketing world and away from offline word of mouth marketing, because larger firms will have to find somewhere else to put their advertising budget, and nothing has a more effective ROI than online affiliate advertising.

  • Scott Hazard

    The sky is falling!

  • http://www.hollywoodproductionjobs.com Rick

    What I don't understand is why the FTC doesn't go after the news cast that show corporate PR packages as news (drug manufactures are notorious for this). Have you every switched from one news cast to another to see a report on some new drug. Ever notice how they all have the same footage–of course they each show a different segment of the footage, but you can tell it was from the same PR package.

    Doesn't a PR package represented as news border on the Word-of-Mouth issue that the FTC is going after in the affiliate market. Don't get me wrong, I believe that full disclosure will be better for everyone concerned; just don't stop with the Internet.

  • http://www.affiliatecrew.com/our_advertisers.php Chuck Hamrick

    Isn't this being a bit hyper sensitive. I don't see a mention of affilaite marketing in that article.

  • http://janelake.blogspot.com Jane Lake

    I have found that in trying to monetize my blog that the easiest way to

    build income is through referring visitors to programs that have no cost and

    require minimal time and make them money. This is much more efficient than

    adsense and other afiiliate programs.

    Two programs that fit this criteria and have worked extremely well for me

    are:

    Take The Internet Back

    (link removed because it's spam)

    and

    AGLOCO

    (link removed because it's spam)

    Let me know what you think.

    Jane Lake