I already wrote a blog post on HasOffers about the challenges facing Refer.ly with regard to the affiliate community. Anyone who goes the route of working with sub-affiliates will face similar challenges. But something else isn’t sitting right with me about the service.
Refer.ly founder Danielle Morrill is quoted in multiple news outlets about how she’s bringing a greater level of transparency to affiliate marketing. This implies transparency is currently lacking.
On Pando Daily Morrill is quoted as saying, “People donâ€™t traditionally like affiliates, because itâ€™s kind of shady. We are going to blow that open entirely, because through this, weâ€™ll learn who is really credible.”
I’m not sure which people she’s referring to, but at this point there’s a long history of building trust into the affiliate marketing ecosystem. It may not be perfect, but I dare someone to show me an industry that is.
A Transparent Contradiction
In terms of knowing how my affiliate marketing efforts are performing, the industry has never been more transparent than it is right now. If I have expired links still out in the wild, most affiliate programs provide some visibility into where those links are hiding. If I generate sales, some affiliate programs will tell me the page they originated from, even when I wasn’t smart enough to use a unique tracking link so I could deduce that myself. It’s going to be hard to provide that level of transparency inside Refer.ly, because each affiliate program shares data differently, which means a Refer.ly user would really need access to the affiliate program in order to see all the data.
While the system may not catch everyone who tries to break the rules, bad actors get caught with some regularity. People making wild claims about products are frequently shut down, just like they would be in other forms of marketing.
There are two sides to the transparency issue and affiliates have been burned at least as many times as the companies who pay them. Affiliates have survived technological hurdles when tracking technologies failed to properly credit sales. Affiliates also had to grow through scrubbing, with unscrupulous affiliate managers removing credit for some percentage of leads.
Based on my own conversations with people outside the online marketing community, the vast majority of the world has no clue affiliates even exist. The only people who seem to specifically dislike affiliates are journalists. Case in point, VentureBeat’s Jolie O’Dell, who is otherwise a fantastic writer, recently referred to affiliate marketing as part of the “seedy underbelly of online marketing.”
There’s also something a little shady about the way Refer.ly is approaching the idea of transparency.
TechCrunch writer Kim-Mai Cutler says, “[Morrill is] also giving up the entire affiliate fee to Refer.lyâ€™s users for now. So the companyâ€™s not taking a cut.”
A Question of Commissions
And that’s where any discussion of transparency fails. Refer.ly may not be taking a cut, but they also fail to disclose that affiliate commissions don’t pass through 100 percent to the Refer.ly user. At the moment, Amazon and eBay commissions are passed through VigLink, which is itself an affiliate with sub-affiliates. I’m assuming VigLink is getting the same 25 percent cut for Refer.ly commissions, just like they do for other publishers. That means the Refer.ly user is really getting 75 percent percent of the commission, which may be 100 percent of the dollars received by Refer.ly, but is definitely not 100 percent.
I’m not suggesting the dollars don’t work out to a Refer.ly user’s advantage. If you look at the classic direct signup to Amazon’s Associates Program, the casual affiliate will likely fall in the 6 percent commission tier, which is for volume of 7-30 products per month. I’m going to assume that Viglink does a high enough volume of Amazon traffic to always be in the 8.5 percent range.
Using those numbers, for $100 in gross sales, an affiliate would generate $6.00 in affiliate commissions from Amazon (assuming they crossed the sales minimum into 7 or more products sold). With Viglink sitting between Amazon and Refer.ly, that same $100 in sales would be good for $6.38 after Viglink takes their cut. So for the little guy, Refer.ly might be a better deal.
For the sake of transparency Refer.ly should be disclosing those numbers, not gloss over the middleman while calling the rest of the affiliate marketing industry names.
About Jake Ludington
Jake Ludington blogs about performance marketing for HasOffers. Jake has over a decade of experience building content publishing teams, coupled with more years as an affiliate marketer than he cares to admit. He is currently working on a book on online video marketing.