6 Comments

How To Save PayPerPost – Bonus!: The FTC & Affiliate Marketing

Dec 13, 2006
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I’m going to official break my own oathe to never mention PayPerPost again today because of this whole FTC story. Suffice it to say, PPP is screwed, yes? The rest of the world, and Jason Calacanis (so it must be true, j/k) seems to think so.

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Of course, my arch nemisis VC Dan (PPP investor) is already trying to spin the story, as he does here in this blog’s comments. Note the usual ridiculous attack against affiliate marketing as his counter argument.

DP Dan :
December 12th, 2006 at 7:50 pm | Permalink
As always, great observations Tony.

This looks like the FTC declined the petitioner’s 2005 (pre-PPP) request for a ruling against WOMM (see WOMMA.org’s victory post) and the opinion remains silent about the requirements of online service/marketplace providers like PPP, but the message to marketers (e.g. Amazon) and bloggers is clearly to err towards transparency. Given that the opinion specifically mentioned non-cash compensation (e.g. passes, products, exclusive info) and family/friend relationships as disclosable conflicts (like cash), this looks like a good excuse for every blogger to adopt a Disclosure Policy from DisclosurePolicy.org (my baby) or from scratch.

Your observations about the massive affiliate networks are spot-on as well and could shake-up a significant chunk of what funds the blogosphere/net – particularly given that aff bloggers, unlike Posties, get paid specifically for convincing readers to click/buy what they are pitching. As you hint, there is probably a role for site-wide Disclosure Policies there as well.

It’s time to give it up VC Dan. This is about deception in the form of content, from the perspective of the “companies” that enable this type of behavior, plain and simple. PPP does not require disclosure, and in doing so is a target in this situation.

A blogger writing a review about a book and linking to Amazon and using their associate link (disclosed or not) is VASTLY different than Amazon paying the blogger to write the content. Sure, the blogger “might” get paid if a sale is made, but the blogger does not get paid for writing the content.

There’s the difference that they are looking at. It’s the enabling of the deception. The intent, by “companies”, either PPP or any other big companies who think that fooling you is somehow going to create a long lasting brand. This does not affect affiliate marketing as I see it.

Nobody likes to be fooled.

I have gone on record in saying that PPP would fail. I just didn’t see this coming so quick and so real.

You have to think that the PPP’s great success at getting so much buzz is, in fact, what hurt them in the end. Or was it simply that it was the wrong model to begin with? Both I think. Like I said on my personal blog, if it feels wrong, it probably is, don’t do it.

Now, let me say this. If in fact PPP were to absolutely require disclosure, not just request it by paying off their bloggers, then I still believe that the model could work, and in my opinion, frees them up from this situation. I’m no lawyer, but that’s what I think.

So, PPP, VCDan, Ted Murphy…

You can end this right now perhaps? Adopt a fully required, iron-clad, built in disclosure policy today. What say you?

Filed under: Affiliate Marketing
  • http://www.disclosurepolicy.org/ DP Dan

    Thanks for highlighting my points at DJI — they are important ones for affiliate bloggers to understand.

    I provided a bit more color on another blog that relates to your 'it's about getting paid for content, not a sale' remark. Mary Engle, FTC director of advertising practices, states that "the FTC examines a number of criteria in deciding whether to bring a case against a marketer but usually looks more closely at actions that lead consumers to make purchase decisions. Some word-of-mouth marketing is focused on getting consumers to visit websites rather than to make immediate purchases." [AdAge]

    Now, match that statement against the facts that WOMM is largely for buzz rather than specific purchases (no spiff for a click/buy), BUT affiliate links are specifically for "immediate purchases" (heck, aff bloggers only get spiffed if the click/purchase happens). If you're honest with yourself and your readers, you'll appreciate that affiliate bloggers and marketers have the largest horse in this race.

    My minimum recommendation, as it was weeks ago, is for every blogger to adopt a Disclosure Policy from scratch or using our beta-level http://www.disclosurepolicy.org/generator/generat… for a kickstart; and customize the DP for your affiliations, practices and voice. Then, link to it with the phrase "Disclosure Policy" on your pages, so audiences always know where to look to understand who they are visiting. If we collectively do this right, we'll have a powerful, yet flexible framework to drive transparency going forward.

  • Jared Gordon

    The FTC's staff opinion does suggest that some of the less transparent forms of affiliate marketing (such as PayPerPost) may have some difficulties complying with FTC expectations. This problem may also be an issue for bloggers and others using direct links to ecommerce sites (e.g. Amazon) for products they discuss in their content, where they are affiliates for that ecommerce site.

    At this point, I do not know that an overarching disclosure policy would be sufficient, though the FTC might ultimately decide that. A less risky approach would be for an affiliate to mention their compensation every time they link to or mention the company they are an affiliate for. Frankly, this strikes me as good blogging netiquette, as well, and it's something I've seen bloggers do for years. Viewers will respect that transparency, and they may even react positively to it. A great example is:
    http://www.janegalt.net/archives/009554.html

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

    You know I love you Jim, but I think you’re doing your readers a disservice when you say this doesn’t affect affiliate marketing.

    The FTC opinion highlights the rules for endorsement, and those *already-existing laws* demonstrate that there are a lot of people who already are and could be liable for deceptive advertising by not disclosing the relationship.

    Several attorneys who understand Internet marketing have already chimed in on this. Here’s another one:

    http://www.copywritersblog.com/2006/12/13/ftc-cracks-down-on-word-of-mouth-advertising/

    It doesn’t apply to all affiliate marketing, but it does apply to reviews and other methods that consumers may not recognize as ads. It’s good to circle the wagons for the affiliate marketing industry, but don’t you have an obligation to try to tell people where the lines are instead of telling them not to worry about it?

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

    Haha Dan, keep spinning the web and counter-attacking if you think somehow it'll stray the story away from your fallout. Maybe some will buy it, but I don't. Who trained you? Limbaugh? It's really good work.

    Our ads are just that, ads, and by the sheer nature of them and their verbiage, clearly marked as such. I'm not going to talk about my network here, it's irrelivant.

    Bottom line, lawyer, or no lawyer, the target here is deception and your investment supports it through its lack of required disclosure. I'm sorry, my clever advisary, but I'm worried that unless you take my suggestion above, you won't get an advertiser to touch your service.

    Ofcouse, again, maybe I'm wrong, but I'm no lawyer. Spin away if you wish, but perhaps it might be time to start thinking about spinning out of the web instead.

  • http://www.disclosurepolicy.org DP Dan

    Good ideas Jared. That’s why I called the DP a minimum recommendation, it certainly helps provide some sitewide comfort — there are plenty of extra safeguards bloggers/videographers/podcasters could take.

    Given how passionate Jim is on the subject, I’ll be curious to see which approach his affiliate company mandates as part of their ToS/ToA. The words “disclose” or “disclosure” don’t even exist there right now, but I’m sure he’ll walk his own talk ;-)

  • http://www.disclosurepolicy.org/ DP Dan

    It's always fun jousting with you Jim, but I've known for some time that our interests are aligned. Given Mary Engle's FTC statements (not spin), I'd encourage all aff bloggers to adopt a custom Disclosure Policy that matches expectations between you and your audience. Use (aff) as well if that works for you, but don't susbstitute (aff) for a sitewide Disclosure Policy that shares your affiliations and disclosure practices for all visitors to see. Better safe than sorry…