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Ethical Issues in Affiliate Marketing — Affiliate Summit West 2009 Session Report

Jan 19, 2009
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Now that Google Affiliate Network (GAN) is a reality, affiliate marketing has finally received some mainstream credibility that it has always struggled for. After all, when Google puts their name behind something (in this case, Performics), online marketers pay attention.

Mind you, not all that much has changed since GAN entered the industry. The industry is still largely as it was before; there are just as many white-hat and black-hat affiliates and programs as there were before. It’s just that outside perceptions have started to change. Where things will get interesting is when those outside perceptions cause new players to enter the industry, and those new players cause it to change.

Ethic in Affiliate Marketing PanelWell, at this past Affiliate Summit West 2009, I sat in on a session called Ethical Issues in Affiliate Marketing. Moderated by Haiko de Poel, Jr., owner and administrator of ABestWeb, the panelists include:

Although they all discussed what counts as ethical and what can be done about it, they all failed to note one important fact: affiliate marketing is about to go mainstream and attract a lot more trusted, household brand-names, and as it does, there will be a lot less room for unethical affiliate marketing practices.

Profiteers & Programs
The panel was kicked off by Haiko likening the current state of affiliate marketing to how Vegas has lost its soul when profits became more important than “the Vegas experience.” Haiko saw this as happening in affiliate marketing because it’s become progressively more corporate and profit driven.

Now, there are usually as many sides to the stories as there are players. In the case of this session, though, there were only five sides to the story, so the picture they drew is somewhat incomplete. However, most of the panelist pretty much agreed that affiliate marketing gets unethical whenever:

  1. a network is an affiliate of their own program,
  2. a network share info on its affiliates with one of their preferred/super-affiliates,
  3. or an affiliate or network offers a toolbar that overwrites cookies.

The Responsibility of Networks & Merchants
This place most of the fault on the networks because either the network is running its own program, favoring certain affiliates over others, or looking the other way when one of its affiliates is doing something unethical. With that being said, Haiko, the moderator, turned his attention to how networks can address it.

Most importantly, he emphasized how the primary role of a network was to track sales, write checks, and prevent fraud. For that reason, it’s imperative that companies not only take a stance on what practices are ethical, but enforce them.

The Responsibility of Affiliates
Of course, just because something isn’t your fault, that doesn’t mean it’s not partly your responsibility. People can often cause messes that we all have to live with and, therefore, have to help clean up — the environment is a case in point. And this is where affiliates come into the picture of helping the industry become a cleaner place.

Aside from those who actually over-write cookies themselves, Haiko felt that all affiliates were responsible for the state of the industry if only to the extent that they work in such isolation from one another. He pointed to how the affiliate side of the industry can have a very short and attention span, with individual affiliates overlooking specific incidents that don’t relate directly to them, but rather to the industry as a whole. For instance, if an affiliate hears about a cookie-jacking toolbar, but promotes a vertical that isn’t affected by it, they’re likely to forget ever happened.

For this reason, Haiko wrapped the panel by encouraging affiliates to take an ethical stance with the networks (and merchants) they do business with. Now that a line has been drawn by the network (in their TOS), he asked, what are individual affiliates going to do to hold them to it. He stressed that networks are in it to make money, and seemed to suggest that affiliates show them that there are less gains to be had by working with black-hat affiliates who can yield a quick return at the expense of the majority.

Rocks, Hard Places, & Affiliate Marketing
The funny thing about word-of-mouth and the media is that they tend to focus mostly on when things go wrong. That is, you rarely hear about when things run smoothly.

Haiko was bang-on when he pointed out that the job of networks is to track sales and prevent fraud. And to that extent, when something goes wrong with affiliate tracking, it is usually the fault of a human-error or a bug in the tracking software, and not greed or malice.

That being said, many companies have been built on shady practices, and have then gone clean once they had a nice cushion in the bank. However, such companies are the rule rather than the exception.

But as long as there is someone out there who wants to profit at the expense of others, there is a market-demand for black-hat tactics. And if there is anything that capitalism has shown, it’s that as long as there is a demand for something in the marketplace, someone will step in to fill it.

The best we can count on, then, in the world of affiliate marketing, it’s that now that the industry is maturing into the mainstream, more and more household name-brands will rely on this channel to promote their goods and services. Most trusted, household brand-names, moreover, are loath to have third-parties tarnish their reputation through shady distribution practices.

As these brand-names set-up affiliate programs, then, you can pretty much count on them leaving the black-hatters out in the cold. What that means is that there will be a lot more money in it for networks who keep their own act and their affiliates clean. What that means, in turn, is that black-hatters are pretty much slated to bet pushed out of big-money affiliate marketing, and white-hat networks and their affiliates can count on their piece of the piece getting a lot bigger in the near future.

About CT Moore

A former Staff Editor here at Revenews.com, CT Moore is a recovering agency hack with over 7 years experience leveraging search and social media to help brands meet their business goals online. By day, he provides SEO and social content strategy to both SMBs and enterprise level companies in the tech, entertainment and travel industries, including Acquisio, Microsoft Canada, and Luxury Retreats. CT is also an accomplished blogger, podcaster, and conference speaker who educates groups and companies about how they can effectively leverage different online channels.

Twitter: gypsybandito
Filed under: Adware, Spyware, Greynets, & Internet Fraud + Affiliate Marketing + Events
  • http://twitter.com/trust Jonathan (Trust)

    Agree with most of what you posted except this part a little:

    "As these brand-names set-up affiliate programs, then, you can pretty much count on them leaving the black-hatters out in the cold."

    With Google getting into the mix, more big brands will take a look but you already have 9/10 biggest merchants out there with affiliate programs. All kinds of major brands. And most of them have affiliates in their programs that other affiliates consider bad since most adware, cause, loyalty type sites, usually have the major network, big brand merchants on their sites. Not saying all loyalty sites out there are bad, there are some good ones as well.

    With what you posted about big brands and black-hatters etc, I think it's more of a problem with big brands because the affiliate program is usually way down on the ladder because big brands aren't dependent on affiliate programs compared to a small merchant, where affiliates can drive a bulk of their sales. Big brands are well known, usually have lots of type in traffic, big subscriber lists for their newsletter, usually great SERPS, their sales still come primarily from the offline world etc. So just big brands coming into the mix isn't going to do it.

    I think the major problem is who they have running the affiliate program for them. And if they knew what some of these people were doing, I would imagine some would be out of a job. There are some good affiliate managers out there and there are some that just want to make their numbers look good and getting involved with affiliates that do nothing more than turn a merchant's free traffic into commissionable traffic will do just that.

    Sometimes the affiliate program is just something else someone in marketing has to do, they don't have somebody dedicated to the channel or understand how to utilize it correctly. I think any merchant out there that has somebody dedicated and understands it, should be a great success since you only pay for actual performance, there's not a better model out there.

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

    Trust, my thoughts exactly. The point I wanted to make is that big brands coming into the channel will increase black hat, adware and unethical practices because of the tradenames and offline ad spends. Concur that the AM for new big brand programs will not have the tools or experience to monitor these bad practices. This is why so many toolbar affiliates are the top producers for many programs, they make the numbers and the AM doesn't want to know how!

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

    I agree, and some of the big brands will end up being run by network employees as well. Why would they have to look for bad affiliates when they have people just for that? (tongue planted in cheek)

    I remember someone who worked for a network at one time said that the big adware affiliates are some of the first ones signed up to get the big numbers out of the gate.

  • http://www.amnavigator.com/blog Geno Prussakov

    Education and wider coverage of the problem is still desperately missing. Hence, the ignorance.

    To extend what what Gary Vaynerchuk was saying in his keynote, how many of us are passionately speaking about the subject outside of our own organizations and comfort zones?

    Herbert Spencer used to say that the "great aim of education is not knowledge, but action." So let's go out and fight (through articles, seminars, speaking at other conferences, etc) to empower both merchants/advertisers and affiliates with the education that would drive action!

  • http://www.shareresults.com CT Moore

    @Jonathan (Trust), I agree with you that their affiliate program is usually down the ladder because they aren't dependent on affiliate marketing, but I suspect the marketing channel is going to become more of a mainstream consideration, and that's going to lead to them policing how others represent their brand. For instance, many companies have very strict guidelines on how PPC affiliates can use their name in a PPC ad, while other companies don't care at all. Personally, I feel that as some very brand-conscious companies become more aware of affiliate marketing practices, they appreciate affiliates who overwrite cookies or do drive-by downloads in the name of their brand.

    @Chuck Hamrick, I guess my hope is that as affiliate marketing becomes more mainstrean, larger brands will actually look for AMs who are stand-up and reputable to represent their program. Granted, I could be wrong. After all, a lot of major brands outsource their call centers to India and sometimes even prisons.

    @Jimmy Daniels, I suppose that in this respect, there are two kinds of major brand: those that care only about number, and those that care more about their brand image. I've had publicly traded clients that take a week or two to approve a 400 word press release because it has to go through the legal department that scrutinizes every last verb and how it relates to their brandname. So hopefully those same publicly traded companies will be conscious about how AMs or OPMs, and the affiliates they recruit represent their brand in the marketplace.

    @Geno Prussakov, I think you're right. Perhaps if we create more awareness of these issues and their ramifications, more brands will pay closer attention to how their products and services are promoted through affiliate marketing.

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