30 Comments

The FTC, Affiliate Marketing, and Chicken Little

Dec 15, 2006
by

cl_header.jpg

Has anyone else laughed as news spreads throughout the Blogosphere on the FTC’s new regulations on Word of Mouth Marketing and some have once again declared the end of affiliate marketing? It seems Chicken Little is alive and well in affiliate marketing.

I IMed Shawn Collins this morning about Affiliate Marketing’s Chicken Little Syndrome and between the two of us, we came up with a list of past imaginary death threats to affiliate marketing that made us laugh. I thought I’d share the joke, so here goes:

  • The return of CPM
  • CAN-SPAM
  • Spyware
  • Cookie blocking from the anti-spyware products
  • The rise of CPA networks

  • Pretty much everything from Google: Google’s arbitrage rule, Google checkout, Froogle, AdSense, The Florida Update, The Quality Score update, etc

  • A bunch of invented catastrophes from our industry’s very own Chicken Littles – we have one or two ;-)

    • You have to believe in the entrepreneurial spirit of affiliates to overcome all obstacles, and the FTC ruling is barely a bump in the road.

    Did I mention that affiliate marketing is bigger than ever and Anne Holland even pointed out at Affiliate Summit West 2006 that $6.5 billion in commissions will be paid to affiliates in 2006?

    The sky seems pretty blue to me and is certainly not falling.

    Hope this Christmas sales are rolling in! Happy Holidays!

    About Beth Kirsch

    You can find Beth on Twitter @bethkirsch

    Filed under: Affiliate Marketing
    • http://www.converseonaffiliates.com Jamie Birch

      You are right on the money Beth. Will this change some things about affiliate marketing, possibly, but the sky is definitely not falling and the affiliate world as we know it is definitely not over.

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

      This is the type of post I was hoping would come out; this is exactly what needs to be heard… the people in the middle of the industry speaking out.

      Yeah, WE all know that affiliate marketing isn’t dead, nor will be anytime soon. That’s besides the point, which was that once again, outside influences look to point the finger, and while we can all sit back and laugh and say they’re wrong and silly to do so, the fact remains that what they do think/say does in fact effect our brand as an industry.

      Should we care? I argue we should, or maybe I’m just prideful.

      Perhaps this is a longer post I need to write.

      Good work Beth. For those outside the affiliate marketing industry reading this, take note, especially about the Sherpa part :)

    • http://www.thoughtshapers.com Jeff Molander

      Stop thinking like that, Sam!

    • http://www.affiliatetip.com Shawn Collins

      Reaching back to the good old days of seers dooming affiliate marketing, one of the first instances I can recall was a panel at Affiliate Force nearly 7 years ago.

      The patent office had granted Amazon.com a patent on for their affiliate program and there was a chill in the air that all other affiliate programs might have to fold.

      And throughout 2000-2001, the Dot Com Bubble bursting was going to be the end of affiliate marketing, too.

      To all of the budding Nostradamus wannabes out there – in the words of Lloyd Dobler, “You must chill. You must chill.”

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

      “Lloyd Dobler, “You must chill. You must chill.”

      Affiliate marketers are sitting behind the ‘gas n’ sip’ drinking beers, there’s a picture.

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

      Jeez people… I’m not sure who said that affiliate marketing was dying, but it certainly wasn’t me.

      But, it’s clear that some common affiliate business models are deceptive and violate existing law, which I think was the point.

      And you know what? I don’t care. It’s not my problem.

      Carry on with the cheerleading.

    • http://www.affiliatetip.com Shawn Collins

      > But, it's clear that some common affiliate business models are deceptive and violate existing law, which I think was the point.

      I disagree that there is any clarity regarding affiliate marketing and the existing FTC Act.

      The discussions in the Washington Post and elsewhere have centered on word of mouth campaigns constructed to dupe the public.

      To me, this is not the same as a passive, contextual link within non-evangelistic content.

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

      >>To me, this is not the same as a passive, contextual link within non-evangelistic content.

      Shawn, I think that is a fair statement. But the situation I pointed out in my post was the so-called independent review" sites, which are clearly deceptive. If you extrapolate from there, is disclosure required when a blogger specifically recommends a product and uses an affiliate link? The FTC Endorsement Rules (referenced in this latest opinion) say yes.

      Sam, I apologize. I did lose my cool a bit, since Jim made a point to come back over to my place and drop a link to this post in my comments, as if it's some kind of rebuttal to what I said (it's not). All I wanted to do was discuss the issue and see if we could determine where the lines are. It seems to me that there's more hysteria coming from the people who don't want there to be a problem, rather than from those trying to point out that there are in fact some forms of affiliate marketing that are endorsements and are subject to disclosure of compensation.

    • Beth Kirsch

      It seems to me that there's more hysteria coming from the people who don't want there to be a problem, rather than from those trying to point out that there are in fact some forms of affiliate marketing that are endorsements and are subject to disclosure of compensation.

      That seems like an extreme statement to me. Brian, to work in affiliate marketing is to overcome problems like this everyday. Honestly, this is a little one, not a big one and the so called "hysteria" that you mentioned is just the perspective of "been there, done that" before.

      It's fair to say this is a bump in the road and to slow down not get tossed around a bit as we go over it, but relative to other challenges this industry has faced, it's pretty little and affiliates will adapt and morph if they need to.

      Beth

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

      And your "Chicken Little" analogy was a bit offensive to me, Beth, or at least it felt that way when Kukral used your post to get in the last word over at my blog. So let's just call it even and move on. I agree that this is not that big a deal for ethical affiliate marketers, and that's why it's ultimately not a problem for me and not worth dwelling on.

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

      Hey Brian,

      So I'm now "Kukral", instead of Jim eh? LOL. The only reason I am challenging you on this issue is your headline "Affiliate Marketing Disclosure Now Required By Law?"

      You're a copywriter, and a darn good one too, so you know the persuasion power of a good headline. To me, your headline was very persuasive, and by the nature of it, it does in fact create a presumtion that in my opinion puts out the wrong message about the industry I work in.

      So when I saw that headline, then read all those comments over there I spoke up. Then on your email "why aren't people talking about this at ReveNews", I took up the subject here at ReveNews, ONLY because of what was being said elsewhere.

      The reason it didn't get mentioned here earlier is that the majority of us in this industry just didn't have your same opinion.

      Really, this is all my fault for creating this subject line. You can see now though that we're a defensive bunch in this industry, partially because many don't understand us, and everyone else keeps saying we're dying.

      Can you see how your headline spurred this? Just more proof that you're a master copywriter dude. Maybe too good :)

    • Jonathan (Trust)

      Beth nailed it, same thing I’ve been posting as well as other actual affiliate marketers. It’s good for page views, fear, drama, watch out, beware. Some of the comments I’ve read

      “Are links dead?”

      “FTC taps lightly on spyware (IMHO) yet now appears to drop the hammer on affiliates.”

      Talking about legal ramifications, state action, FTC action etc.

      Come on, little less on the dramatics.

      That’s what affiliate marketing is. We get paid to successfully refer shoppers to merchants. It’s pretty self explanatory and in the future if we have to put something on one of our pages to explain it, whoop dee do.

    • http://www.wayneporter.com Wayne Porter

      Actually Beth I am laughing- at how someone who is *not an affiliate* and *has never been one* can say "The sky seems pretty blue to me and is certainly not falling."

      This is based on what? Anne is sharp and has my deepest respect…but then again this is an industry that will swallow any metric. Alexa stats, Comscore numbers, Hitwise data- all wrong by a huge factor. How do I know? a) I know how they work b) I know how they can be manipulated

      The sky is never "falling"- see my recent post where the interview (over six years ago) talked about a number of problems. There are always problems…

      let's face it- *you* are just link baiting…

      The sky isn't falling, but the atmosphere is changing and has been for sometime. Someone, or a few, are slowly working that valve.

      "FTC ruling is barely a bump in the road".. again who benefits from such rulings? Let's not be naive. You worked in politics…

      regards,
      Wayne

      regards,
      Wayne

    • Jonathan (Trust)

      (Sam's post)
      I said less dramatics :)

      I haven't questioned your passion, your credentials etc. I gave examples of sensationlism. We could use less of it.

    • Jonathan (Trust)

      Asking critical questions is fine. But like I mentioned a few times already, some bloggers do have a flair for sensationism. You guys are making it to be a bigger deal that it actually is. As pointed out in this thread by Beth along with Shawn and other places:

      http://www.jangro.com/a/2006/12/14/the-end-of-aff…

      Not a big deal. But I'm used to it. Over the years lots of things of been blown up to be bigger than they actually are.

      And Wayne, not like you, usually you're very professional:

      "Actually alot of the questions I ask are rhetorical, it's just many have an ignorant world view. I didn't say stupid- just ignorant"

      I

    • Wayne Porter

      ""Actually alot of the questions I ask are rhetorical, it's just many have an ignorant world view. I didn't say stupid- just ignorant""

      Jonathan- what euphemism do you want me to use? Look up ignorant. I didn't aim it anyone or make it personal. Ignorance simply means- not lacking all the information, or being naive. Not dumb, not stupid.

    • Wayne Porter

      "Wow, a personal attack Wayne. OK, I can take the heat. Jeff has left me alone for a few weeks now life was getting boring. :-) lol! j/k. All in good fun Wayne since you laughed so hard at me. ;-) "

      I made no personal attack. Perhaps you took it that way? Why? It is not personal.

      I will respond to the rest of your post in a moment and later on down the road when it is more pertinent.

    • http://www.affiliatetip.com Shawn Collins

      > Shawn, I think that is a fair statement. But the situation I pointed out in my post was the so-called independent review" sites, which are clearly deceptive.

      Hey Brian –

      I didn't see your post until after initially commenting here.

      I agree that purported independent review sites, which are not so independent, should have disclosures.

    • http://www.affiliatetip.com Shawn Collins

      > Actually Beth I am laughing- at how someone who is *not an affiliate* and *has never been one* can say "The sky seems pretty blue to me and is certainly not falling."

      Is there some kind of litmus test to determine who gets to opine about affiliate marketing now?

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

      >>So I'm now "Kukral", instead of Jim eh? LOL.

      Don't make me start using your middle name. ;)

    • http://www.wayneporter.com Wayne Porter

      Jonathan,

      Why dont you quote the full post in context, instead of taking the part that suits you.

      Thanks,
      Wayne

    • beth Kirsch

      Brian,

      I did not see you post either until I found out Jim used mine on it. What I wrote was not towards you or your point at all which is more than fair and accurate.

      That said, what I don't understand about this whole thing is the big affiliates these days are

      – Incentive sites
      – Search sites
      – loyalty sites
      – coupon sites

      For the most part, most of these will not be impacted by the FTC and so, most affiliates wont be touched by this.

      Beth

    • Wayne Porter

      "Is there some kind of litmus test to determine who gets to opine about affiliate marketing now?"

      No Shawn. I was merely laughing. I know it is unusual, but it happens at times. Then again I don't opine about things outside of my sphere of experience, e.g. lumberjack politics.

      If Beth has acquired that POV- then by all means opine away!

    • Beth Kirsch

      Well, actually Wayne I work for an affiliate now in case you missed that.

      But I wrote this as an expert in the field. Feel free to challenge that.

      Beth

    • Wayne Porter

      Never challenged that at all Beth, I know your experience- I challenged your POV.

      If you work as an affiliate now- then tell us about it. Illuminate. If you can't give numbers- then illuminate in some other fashion.

      How do you like the deal structures?

      Do they seem fair?

      -wayne

    • Beth Kirsch

      Wayne,

      I'm not talking about my business model or numbers in public and I would not expect anyone else to either.

      What is public is we are five bar CJ publisher. I'll leave it at that.

      Beth

    • Wayne Porter

      you didn't ask my questions…maybe frodo will…

    • Wayne Porter

      sorry- "answer" my questions.

    • http://www.stopscum.com Steve Shubitz

      Of course the sky is not falling and the Affiliate channell and everyone else involved will continue to work. However, I respectfully believe that some of you may be missing the point with respect to any potential FTC oversight downstream which sorta dovetails what Wayne said and echoes Craig's's excellent thoughts.

      1) Affiliates mean those involved in any of the following and or a combo: CPA/CPL, CPC/PPC, Email, and last but far from least CPM (which is really CPA! in a significant number of Campaigns) For better or worse :) It's all of these from a regulatory standpoint and although YOU may not work in CPM (for example) it seems to me that you should pay VERY carefull attention to any regulatory action and or pending issues. NO ONE and or NO type of site is immune downstream.

      2) Bolded by me and directly from the FTC:

      "Although the number of companies advertising online-and the number of consumers
      shopping online-are soaring, fraud and deception may dampen consumer confidence in the e-marketplace. But cyberspace is not without boundaries, and fraud and deception are unlawful no matter what the medium. The FTC has enforced and will continue enforcing its consumer protection laws online to ensure that products and services are described truthfully in online ads and that consumers get what they pay for. These activities benefit consumers as well as sellers, who expect and deserve a fair marketplace.

      From the following page which also contains tons of juicy thoughts that have the potential to effect every single person involved in the Affiliate/Merchant/Network space:

      http://www.ftc.gov/bcp/conline/pubs/buspubs/dotco…
      :)

    • http://www.stopscum.com Steve Shubitz

      Of course the sky is not falling and the Affiliate channell and everyone else involved will continue to work. However, I respectfully believe that some of you may be missing the point with respect to any potential FTC oversight downstream which sorta dovetails what Wayne said and echoes Craig's's excellent thoughts.

      1) Affiliates mean those involved in any of the following and or a combo: CPA/CPL, CPC/PPC, Email, and last but far from least CPM (which is really CPA! in a significant number of Campaigns) For better or worse :) It's all of these from a regulatory standpoint and although YOU may not work in CPM (for example) it seems to me that you should pay VERY carefull attention to any regulatory action and or pending issues. NO ONE and or NO type of site is immune downstream.

      2) Bolded by me and directly from the FTC:

      "Although the number of companies advertising online-and the number of consumers

      shopping online-are soaring, fraud and deception may dampen consumer confidence in the e-marketplace. But cyberspace is not without boundaries, and fraud and deception are unlawful no matter what the medium. The FTC has enforced and will continue enforcing its consumer protection laws online to ensure that products and services are described truthfully in online ads and that consumers get what they pay for. These activities benefit consumers as well as sellers, who expect and deserve a fair marketplace.

      From the following page which also contains tons of juicy thoughts that have the potential to effect every single person involved in the Affiliate/Merchant/Network space:

      http://www.ftc.gov/bcp/conline/pubs/buspubs/dotco…

      :)