Triple Jangro
No, a Triple Jangro isn’t a skating move. It’s not a rare bone condition. It’s not a tool that mecahnics use on cars.
The Rumour Mill has it that three top account managers left CJ this week to avoid enforcement of a policy forbidding them to have affiliate sites of their own. (While Scott Jangro left CJ several months ago, he was neither an account manager nor leaving due to this policy… I just liked the sound of Triple Jangro.)
I noticed at the Linkshare Summit in San Francisco this week that there were quite a few former CJ and BeFree account reps who are now affiliates. This gives new meaning to the term CJU.
Here’s the problem: Affiliate marketing is entrepreneurial no matter what role you have in it. That’s why we’re all here. Not everyone can start their own business. There are many barriers, the biggest two being money and fear. The good news is that there are various roles and companies to join that offer the entrepreneurial spirit.
When you attract these creative people, their true entrepreneurial spirit will come out. They will decide to dabble and create their own sites (this is true for Affiliate Managers at merchants, account reps at the networks and employees at affiliate companies). Plus, it is good for competitive research and for folks to better understand the business when they first join. I assume everyone in our space has their own site(s).
With merchant and affiliate employees, I think that most people would agree that this is fine. What about network employees?
[Note: I'm not making a judgment call. I am offering this up for discussion.]
Is this a great way for network employees to better understand our business and let their entrepreneurial hair down or is it a conflict of interest as they may have access to publishers’ confidential information?
Update (1/31/06): Other sites have begun discussing this issue. After you have read the discussion in the 30+ comments below, check out the following:
Adam Viener
Vinny Lingham
Lisa Picarille
Update (2/1/06): Steve Shubitz wrote more on his own blog to follow up his comments below. Adam and an anonymous affiliate comment back and forth regarding a former CJ employee who knocked off the unnamed affiliate’s business in 2001. While Adam left a comment with the contact info for someone at CJ below, I deleted it. If you want to contact CJ, Adam would appreciate it.
"When you attract these creative people, their true entrepreneurial spirit will come out."
Yes and sometimes they see how easy it is to simply take CJ's advertisers and bid on their brand — making dollars on the pennies. Sometimes they see the scale that affiliates have and sometimes they realize that Google makes it easy (i.e. manage bidding from your Windows desktop).
Sometimes CJ employees realize that being a "trusted, hand-selected partner" (that helps you control your brand in search yada-yada) can 4X their pittance salary!
While interesting and I'm glad to see you discussing it, David, it shouldn't be a big shocker to anyone.
How did Mezimedia start? They realized, while employed by Overture, that you could own the term "coupon" for pennies and convert that into relationships with customers. Oh, and let's not forget the short-term benefit of taking huge margins on orders since nobody else was "crazy enough" (read: smart enough) to buy clicks at the time.
Brilliant entrepreneurs or just guys with their eyes open? Perhaps a combination of both when you look at how they've expanded their business.
Let's face it, affiliate networks were duped into believing that affiliates wouldn't someday compete with them (witness the dozens of CPA networks all swimming in cash flow to the point they FRONT THE CASH and maintaining 90%+ margins). Now they are reduced to tossing their affiliates out (the ones who became a network inside their network… ie. Azoogleads) based on competitive pressures.
That wasn't enough. They now have to force their employees to not become affiliates. Do mortgage brokers feel the need to become lenders out of profit motives? Not really. Then why do affiliate networks (and/or their employees) feel the need to become affiliates?
IMO, because of an economic gap that advertisers should seize on… but alass… they're happy to just keep on payin' fees that aren't really necessary.
These companies were founded in the late 1990's y'all… and it shows.
This piece is too subtle! I'd think a super affiliate would be more upset.
Let me get this straight, top affiliates shared their secrets with account managers at a network only to find out those account managers were their competition and using those hard earned secrets — I'd be fuming. So much for a trusted third party. Affilaites will become more private and more secret now.
Commission Junction deserves some credit for doing the right thing, though, too little too late. What of the other networks, are employees at the CPA Networks, LinkShare and Performics talking to affiliates then using those secrets and a full range of data network employees have access too win at the affiliate game.
Seems to me CJ just raised the bar and all other networks need to follow.
Very very interesting. In summary, it's all about the perception of an "unfair advantage" when you have a CJ employee engaged in the affiliate space via their own site. I applaud the actions of CJ.
Lets flip the issue David: How would you feel and what actions would you take if one of your current employees was also running a shopping/loyality site?
Finally, is this issue industry wide? Are Networks full of Account Reps who also run sites which generate affiliate income? If you can name names that would be even better.
Thanks for a great topic
Mason:
Interesting perspective. I'd like to focus on the "confidential information" as it is a recurring theme here at Revenews and many other blogs. One cannot steal certain things from networks who make employees sign legal documents. That's old hat. What they **can** take (and some call it "stealing" because they believe that they are the only people who should know) is insights and knowledge. They can also apply that. They have a right to earn a living and for a network to infringe on that right is pointless and wreckless (financially).
In most cases involving affiliate "secrets", what was "confidential information" is now publicly available information that is being protected by those with a stake in the status quo. Like so many things, search marketing is at the center of all of this.
When I helped build one of the "Big Four" networks there was only one kind of search engine — those without ads. Back in those days affiliates didn't have "secrets." They either had the traffic / users at their site or they didn't.
Our company earned advertisers' business by earning their trust. They trusted that affiliate networks were able to provide prospective customers that they, themselves, were not able to find. The assumption by the advertisers was, specifically, that the "affiliate had visitors that I don't have yet want."
Enter paid search which advertisers scoffed at for years. Today, search is where the action is and affiliates are already there. They have, for years now, been sending visitors to advertisers via search (paid and non-paid of course… witness the birth of Search Engine Optimization practices). SEO and paid search quickly became "secrets."
This is important because of the assumption that most advertisers made at the beginning: that affiliates provide a means to access customers they cannot. Today, they can, increasingly, understand and engage in search.
Uh-oh. Advertisers have the same opportunity that affilites do. What was now "confidential" is now publicly available and, as it turns out, not so difficult after all. An advertiser can even outsource the search beast to a SEM agency.
I forgot to mention that CJ's employees are working "at will" and not afforded any real protection in the end. So CJ may not really be so wreckless
"In most cases involving affiliate "secrets", what was "confidential information" is now publicly available information that is being protected by those with a stake in the status quo. Like so many things, search marketing is at the center of all of this."
I don't know what you are talking about?
How affiliates marketing, where affiliates market, what methods they use is NOT public information. And, what type of affiliate marketing is working for various advertisers in a vertical is also not public. And affiliates rightfully want to hide the core secrets of their businesses.
Do you see networks or merchants sharing this type of data.
Hi, Mason…
"How affiliates marketing, where affiliates market, what methods they use is NOT public information."
In my opinion, anyone who can use a browser can see how affiliates operate in the search space which is a huge part of affiliate marketing's actual prowess.
"And, what type of affiliate marketing is working for various advertisers in a vertical is also not public."
http://www.hitwise.com
http://www.emailanalyst.com
Pair up the date. Instant insight onto how affiliates use email and to what degree it's effective.
This is one example of how you can see how effective affiliates are at driving sales to merchants. It's all for sale. There are others and none of it is illegal.
Affiliates want to hide it, yes, because it's accessible and increasingly so.
I don't see networks or merchants sharing this type of data.
Hi, Mason…
"How affiliates marketing, where affiliates market, what methods they use is NOT public information."
In my opinion, anyone who can use a browser can see how affiliates operate in the search space which is a huge part of affiliate marketing's actual prowess.
"And, what type of affiliate marketing is working for various advertisers in a vertical is also not public."
http://www.hitwise.com http://www.emailanalyst.com
Pair up the date. Instant insight onto how affiliates use email and to what degree it's effective.
This is one example of how you can see how effective affiliates are at driving sales to merchants. It's all for sale. There are others and none of it is illegal.
Affiliates want to hide it, yes, because it's accessible and increasingly so.
I don't see networks or merchants sharing this type of data.
"In my opinion, anyone who can use a browser can see how affiliates operate in the search space which is a huge part of affiliate marketing's actual prowess."
Have you ever tried to figure out how to bid on the tail? Have you ever tried media (not search) arbitrage? Have you ever tried adding value in that chain. That is what affiliates do.
Strong affiliates understand that data and adding value is the key to their business. They understand that looking at data to increase the spread in arbitrage (be it media, sem, SEO, etc) is how you drive your business forward.
That is NOT public information, but it is information that people at the networks have and when account managers hear the secrets of affiliates and then can see the data, it's a huge conflict of interest.
Hello, Mason…
Your tone suggests that you are under-appreciated or that I under-appreciate affiliates (what you do)? I don't under-appreciate anyone's efforts including yours.
I understand what affiliates do, yes. I have not actually done many of the things that you describe; however, this does not mean that I do not fully understand them, appreciate or know of them. Many affiliates, such as David Lewis himself, have schooled me well.
We agree, best practices are not public information until someone makes them public, writes a book, consults to a client… transfers the knowledge. Affiliate best practices also become publicly available when what affiliates do is plainly seen — such as in search engines.
Indeed, we agree. People at affiliate networks have a better perspective on the situation. They have an easier time seeing **which** affiliates are ringing it up and they then know who to focus on… in terms of understanding how. Sure, that's half the battle (knowing who to study).
That stated, being employed at an affiliate network doesn't give them the ability to gain access to secrets or tactics affiliates use. I suggest to you that anyone with a browser and basic knowledge — as to how search or HTML works — can figure out what an affiliate is doing. In fact, Steve Shubitz does it all the time and he's never been employed at a network. Affiliates themselves and people like Ben Edelman figure out how affiliates operate without working at networks.
Overall, I fear my point (which relates to this event that David suggests took place) is being lost. Point being: affiliates are expected, increasingly, to do more than manage media risk. They're being asked/expected to actually deliver traffic that the advertiser either cannot or doesn't want to access.
In the case of search, many advertisers wish to have a hand in it and (logically) value affiliates who work in this space less. Certainly… affiliates can then (as you suggest) offer value by arbitraging other forms of media or by providing access to users loyal to themselves.
I remember this conversation a couple of year ago:
"Uh-oh. Advertisers have the same opportunity that affilites do. What was now "confidential" is now publicly available and, as it turns out, not so difficult after all. An advertiser can even outsource the search beast to a SEM agency."
I would pick hundreds/thousands of affliates doing SEO and PPC over a merchant's inhouse team or them outsourcing it to a SEM agency. No contest.
How did this conversation become about the justification of the channel? There have been a million of these on ReveNews, what about the Networks. What about the other networks that are still letting staffers be affiliates?
I had a conversation with Todd Crawford about this issue at Affiliate Summit. After talking with some top search affiliates who were concerned that CJ employees were looking at http referrer data to determine exactly which keywords they were bidding on were converting to sales. They seemed to have some internal evidence that showed that when they identified new keyword niches with no competition, that almost immediately after there was a conversion on those terms, new affiliates popped up advertising on those terms.
I told Todd that this was a discussion that was happening, and he insured me CJ employees were allowed to run affiliate programs, but that the people with access to this type of data were forbidden from running their own programs and all calls to that database were tracked and protected.
I told Todd that if this is the case, they had done a very poor job of communicating that to the affiliate community and their top partners.
I commend CJs actions because it removes the appearance of conflicts of interest, but I am also concerned about what information may have been seen or taken by these employees.
Jeff Molendar suggests that all affiliate information is public. That is just crap. On the paid search side, only the affiliate networks have access to the http referral data that can identify exactly what keywords and affiliate is bidding on and which ones are profitable. In the affiliate space, not even Google has access to this information.
I'm hoping Todd Crawford can come forward and give us a little more detail on what these X-employees were actually doing.
Mason…
I explained why things like what David report might happen and gave actual examples as to how they did happen to a network — Overture. The trend I point to (affiliates being expected to do more than manage media risk for advertisers) has everything to do with the phenomenon David describes in that as this trend continues it ain't so easy to walk out of a network with some insights and leverage them. Specifically, when advertisers compete more with their affiliates in search there's less low hanging fruit for affiliates (btw, I know that affiliates aren't just interested in the low hanging fruit but let's face it when that stuff goes away it's a bitch).
I don't think that any of this is defending or even questioning the channel. I'm reporting the news. If I'm off target just tell me where so I can learn, eh? I try to speak only from experience and label speculation as such.
Great to see you here, Adam, and calling my comments crap, thus elevating your own credibility.
"Affiliate best practices also become publicly available when what affiliates do is plainly seen — such as in search engines" hardly translates to "all affiliate information is public." One doesn't need exact search data, as you describe, to understand what's working for an affiliate and what isn't. One can purchase Hitwise data and use Google itself to gain enough insight to develop a winning strategy. One can also purchase data on the eMail side as I pointed out earlier. There are few secrets: that's my point… and what affiliates tend to call secrets are, IMO, best practices that advertisers want to internalize. If you want to challenge my platform that's a great place to start.
More importantly, if this entire subject is going to be discussed (network employees "stealing secrets") then we should clearly define what's going on here. That's what I'm challenging when I suggest that there's nothing really being stolen here. Practices are observed within networks just as they're observed by people outside of a network. What you see as a trade secret isn't IMO and I've put reasoning forward as to why this is my belief.
Today, affiliates seem to find themselves overly defensive when it comes to the plain truths I speak. The fact that people can understand, using a simple browser, that they've been Web advertising laggards infuriates affiliates who feel a sense of perpetual entitlement to search engine dominance (as an example).
The government issues patents to encourage innovation. If inventors can not receive a high enough return for their efforts, they will stop inventing.
In marketing and advertising, these protections do not exist. Others can use your ideas and best practices. There is always competition and always the chance (or even high likelihood) that someone will see your practices and use them themselves.
Affiliate marketing takes it to an even lower level of protection. Once an affiliate discovers a new and better way to market for the merchant, the merchant may decide to not only compete against you using your newly-discovered marketing methods but may, in fact, forbid you to use them any longer.
This is perfectly within the merchant's rights under the "standard"
terms and conditions used in these relationships. These are weak relationships by nature and the merchant has more power.
Two problems arise from this thinking though:
1) If merchants do this on a regular basis and innovators (yes, Jeff, there are creative innovators on the affiliate side) will leave the industry if they can not make a fair return on the efforts and for their ideas.
2) This is the merchant equivalent to affiliates who threaten merchants that they will run the merchant's competitors if they don't do something. If you don't like one of these, you should shy away from the other.
Then there is the issue of "trade secrets". If what Adam says is true, this is at a minimum a breach of ethics and possibly a breach of the network employee's employment agreement, the network's agreement with the merchant and the network's/merchant's agreement with the affiliate.
Even if Jeff is correct and similar information is public, this information in this form is not. While Jeff merely dismisses Adam's argument, he does not refute it. Traffic data is available in some cases but no one else has the conversion data and that is proprietary information. In addition, Hitwise does not provide keyword lists for most websites. If you've used Hitwise you know that it provides it for only the largest sites.
To Adam's point about logfiles showing keywords, this is only the case in "search arbitrage" (where the affiliate is not a publisher and does not have their own website). If there is a landing page hosted by the publisher, the search query will be hidden unless it is in the URL.
Lastly, employees may have knowledge of an affiliate's websites. Many affiliates don't want anyone to know their sites. If a network employee uses this information, it would be wrong. While the websites may be public, the pairing of the information of the success of the affiliate with the website and possibly other information is not public. Sometimes the combination of several pieces of public information results in something that is not publicly available.
David:
Fairly brilliant observations and perspective. Thanks for taking the time to share.
Indeed, affiliate marketing takes it to an even lower level of protection for sure. You're hitting nail firmly on head and articulating an important point. I hope people are reading this carefully.
Standard terms & conditions are increasingly worded in a way that discourages collaboration in my opinion. This is happening as advertisers feel they've been taken advantage of by some affiliates… most affiliates in many cases.
Central here to our discussion, David, is "fair return" and I'm glad you inserted this aspect. Advertisers feel that affiliates have been getting more than a fair return. Why? They've run the math (specifically in search but adware hasn't helped matters!).
Please realize that I did not dismiss Adam's argument. I simply didn't address it as I find that he's absolutely correct. I apologize if I seemed dismissive. I'd like to tone down the rhetoric that I've, admittedly, engaged in (ie. calling my comments crap).
Correct, Hitwise does not provide keyword lists for *all* websites. This doesn't diminish my point that information that can be used to glean vital knowledge (on affiliate practices) is available. One doesn't need peer into an affiliate network's data.
If I may, I'd like to again ask everyone to take new perspective on David's comments regarding right and wrong use of affiliate-related data within a network like CJ. Yes, affiliates want to conceal what they do, how they do it and where it's done. I simply don't find the secretive, protective stance that EITHER side (advertisers included) take to be productive, healthy. This unhealthy tension exists in online affiliate marketing (seemingly exclusively) and I think it's a festering, underlying problem that, some day, could serve to take a smoldering fire and ignite it… causing dramatic change. I think it's a risk for the industry as a whole especially as advertisers — and publishers — have so many other choices to strike partnerships (i.e. contextual advertising, shopping comparison, brand-focused/CPM campaigns, emerging technologies like podcasts, etc.).
Also… please note that I typically don't focus on the "positive elements" of our industry as they're not problematic. I'm more interested in solving *problems* when discussing matters (and problems don't lie in strokes). Because I don't constantly throw flowers on the industry, I'm painted as not recognizing that, in this case, there are creative innovators on the affiliate side. I have repeatedly stated that affiliates pioneered paid search and, in fact, SEO as an example.
I don't have any personal grudge with affiliates. I have problems with the industry's problems. I think many of us do.
First, let me say I don't want this to be some Beth-Jeff boxing match, so can we please stay away from that.
"Yes, affiliates want to conceal what they do, how they do it and where it's done. I simply don't find the secretive, protective stance that EITHER side (advertisers included) take to be productive, healthy. This unhealthy tension exists in online affiliate marketing (seemingly exclusively) and I think it's a festering, underlying problem that, some day, could serve to take a smoldering fire and ignite it… causing dramatic change."
But trade secrets are just that, trade secrets, you find them in every industry. If I could be so bold as to walk in an affiliate's shoe for a second, I think it's fair for affiliates to say some of our trade secrets were unethicially shared in this case. The network was supposed to be a "trusted third party" but infact, they ended up giving information to our competitors (and yes, we could go on and on about the trusted third party thing)
Business is all about how to do things better than your competitors and hording knowleadge.
Some data may be available but not as complete and not with the same conversion data that one can get from an affiliate network.
I'm not saying that this has been done by anyone. I am saying that it is very possible for it to be done, especially based on Adam's comment.
When the infamous The Affiliate List was released, a few affiliates were upset that they were on The List and that their identities and websites were revealed. I didn't understand why given that all of the information on The List was public. After looking at the issues here, I now understand.
One of the major issues I have with Network employees being affiliates is actually related more to the paid search arbitrage model than to any trade secrets itself.
CJ has about 2000 merchants, and it takes alot of time and effort to evaluate, negotiate, research & run test campaigns. Say that 1 in every 10 campaigns we test out, becomes a full blown campaign which is both scaleable and profitable. We don't focus on small campaigns, so typically we're looking for merchants who can do alot of volume and has great conversion rates.
An average test campaigns costs us anywhere from $5,000 to $25,000 before we even see a daily profit. Can you imagine our frustration when we take a program on CJ with a network earnings of 2 or 3 and turn it into a 5 overnight, only see other affiliates jumping onto the bandwagon – almost as if they had inside information.
If I worked at CJ or any other network and I knew who the top affiliates are, I would just wait for them to test out all the merchants for conversion rates, etc, and then run only the successful campaigns – why bother running test campaigns myself? Even worse, imagine after all our testing, the network employee gains access to the keywords we're bidding on, and the conversion rates?
Therein lies the biggest conflict of interest with network employees and search affiliates, my humble opinion…
Hello folks. A few quick thoughts:
1. I hope and pray that Mason Trimbell returns. Respectfully, some of "you" can be quite an imposing figure and it seems to me that the presence of an Affiliate/Publishers view can in fact help all of us.
2. Mason made a great point that needs to be underscored and enhanced. "Arbitrage" takes many forms and in this case that means an Affiliate buying CPM Campaigns with mainstream (NOT the Spyware folks) Networks. Lots of those links lead directly to the buy page and Networks have this data. It's an increasingly popular and worthwhile procedure for certain niches. Especially as the spread in the SE continues to constrict.
3. Perhaps THE most important issue which has not been discussed is this:
Do Networks in the CPA/CPL space have an internal document which manny would call a code of conduct which prohibits ANY Network employee from running a Web Site which in fact generates revenue or attempts to generate revenue from the Affiliate Space?
Respectfully, while you might find it interesting to debate the mechanics and backround issues, in my view the core issue is the appearance of a conflict of interest and I applaud and support every single Network who has this code of conduct in place and actually enforces same.
Do YOU? Is THIS issue discussed at your industry gatherings?
4. NOTE: I just saw Vinnys post and of course I agree 110%. He said "…Network employees being affiliates." Thats every single "kid" on the block. NOT just those who have special access to http referall code and conversion rates.
Great points, Vinnie and Steve. I think this is one of the most important and potentially newsworthy/news-making posts at Revenews in quite some time.
Specifically, an answer to Steve's #3. Guilty as charged (I've been focusing my points on the economics). I think Steve's angle is more important and newsworthy.
I suppose David, in raising this entire story, is pushing for this as well. I read that Lisa at Revenue Magazine has employee level contact on this issue but what about Commission Junction? What do they have to say and, as Steve suggests, what is standard policy (what do employees sign) now-a-days?
It is a huge issue, what a job for the networks does is remove all of the how do I do this type of stuff, like you see newbies asking on affiliate boards, how do I do this, how do i do that, what's the quickest way. Well, the quickest way is to have the url of a website you know is converting, ppc or not, that is a HUGE leap from where do I start, and is in fact, all you would need to begin. Lather, rinse, repeat.
I did raise issue number 3 in my first post, when I wrote, "What of the other networks, are employees at the CPA Networks, LinkShare and Performics talking to affiliates then using those secrets and a full range of data network employees have access too win at the affiliate game?" bad when I wrote later on, "what about the Networks. What about the other networks that are still letting staffers be affiliates?" But the issue was taken off track. I'm glad to see the issue back on track.
CPA/CPL networks are even more complicated from an ethics perspective. Take a company like Adteractive, they clearly buy paid media and search for their clients and arbitrage it, you can read that on their home page.
Then, affiliates might run the same offer in arbitrage plays for Adterative, and lets say you figure something out, what is to stop Adteractive from competing with you and taking more of a spread or someone working there doing affiliate campaigns on the side.
The solution is to hide what you do and have as little transparency in your business. Affiliates will become more secretive after this.
Jeff and Mason raised a point (each on a different side) that sounds like it needs to be uncovered a little more: trust.
Jeff has mentioned numerous times that affiliates cannot (or should not?) be trusted. While his writing may sound extreme, I am sure he would qualify that by stating that some or most should not be trusted. (To be fair, Jeff also says that affiliate networks should not be trusted.)
It doesn't appear to be a problem if affiliates aren't trusted. Of course, there is a simple solution that I often recommend: Pick your partners wisely. If an affiliate pops up with high sales and/or traffic (the "or" being more important than the "and"), you should know who that is. If you have not talked to the affiliate, cannot get an e-mail response, have never met them, etc., you should question if this is someone you want to partner with.
On the flipside, what happens if affiliates cannot trust their mercants and/or networks? Simple, the system breaks down. If it is as bad as some have commented above, the good people will leave.
I shudder to think it possible that the last bridge across our industry's Mississippi River collapses and no one is left to help rebuild it. "Molander Shrugged"?
Back around 2001 I was working for a lowly SEO agency and launched a few affiliate programs for clients. Most were in CJ and I was able to form good relationships with account people as well as technicians there. We were approached by someone who worked with super affilaites and noticed that Capital One credit cards were the largest merchant. This person teamed with a technician and built a dozen sites offering every flavor of credit card site: college students, bankruptcy, bad credit, etc. They cleaned up on the affiliates side until they got greedy, made all sites the same template and eventually lost all their organic traffic. Funny that debt consolidation programs were the next wave we saw.
Point is, sitting on that side of the data gives you the power to see what is converting, paying, drawing traffic, etc. We are going through a review as a merchant to see if we want to allow our employees to be affiliates. Personally, I am for it but not at the cost of affiliate relationships with non-affiliates.
The problem is they spend all day building affiliate sites instead of doing their work!
Evan
FreestyleRewards/Coolsavings Still Using Adware: 180Solutions
Coolsavings (FreestyleRewards) is, knowingly or unknowingly, moving on from Direct Revenue and into a relationship with 180Solutions via its Zango download — in violation of various affiliate network terms & conditions, rules, guidelines, etc. report…
To voice my opinion, I do not believe that a network or a network employee should use the information gleaned from inside knowledge of their own network to participate as an affiliate.
There is way too much information available on the inside, and in an industry where the barriers to entry are as low as the ethical bar – I'm not suprised this issue came up.
Occasionally, acting as an affiliate can help a network understand a merchant offer or even open up new avenues that affiliates can then use… this can be helpful to both parties. However, that is a far cry from reading referrers, and copying or mimicking an affiliate's hard work.
Unfortunately, the entrepreneurial spirit of this industry occasionally goes too far…
I also applaud CJ for the action that they took here, but I am not sure – as Mason suggests – whether or not they raised the bar, or simply brought themselves up to it, as that would require knowledge of what other networks are allowing. Either way, it was the right move.
So Beth or Jeff, does this dent your transparency argument at all?? Does this help explain a little more why affiliates are so sensitive to privacy issues, etc… I think these issues are related.
Hi Brian
Thanks for your comments. I agree with you, and to add to your point – I think it's too little too late. The immediate departure of 3 employees from CJ at the very moment this policy was instituted has raised eyebrows, industry wide and questioned the viability and risks of the network model, in many other forums, especially the departure of Chad Darling in particular who dealt with many super affiliates.
It is not well known, but the reason that this policy was instituted was as a result of a number of super affiliates having a discussion around these conflicts at Affiliate Summit in Vegas and presenting their discussions to the networks.
I too applaud CJ for being the first to move on ensuring that they prevent these conflicts, after hearing our feedback, but by the looks of all these comments and others – too little too late?
Vinny
Brian,
When we have talked about these issues in the past, you made me think and you have. However, before you jump on me — and lump me in the same group as Jeff
— understand my position because it is very different from Jeff's.
As an advertiser in a regulated industry and with the new FTC ruling, I think I need to know who my affiliates are and their contact information.
Affiliates protecting their data is critical and important in this game. In fact, personally, I think data is the secret sauce for affiliates — especially those working the arbitrage side of the game.
So clearly, protecting the secrecy of your data, your domain, your marketing secret sauce is perfectly fine, but hiding your identity from companies who products you are promoting and putting them at great risk is a problem and that is especially true with the FTC's new ruling.
To me, these lines become fuzzy, and it's hard to see clearly from both the advertiser and publisher side.
David Lewis was right when he said part of the issue is trust and it certainly when talking about these issues.
"Jeff has mentioned numerous times that affiliates cannot (or should not?) be trusted."
Actually, I didn't say or imply that.
As for believing that it's important to protect the secrecy of a business (affiliates') that revolves around arbitrage… I find that statement to be fairly illogical since arbitrage does, by definition, not involve trade secrets. At best arbitrage involves not knowing where to source things and that's not a 'trade secret' in my book.
Brian… so, how do you feel about Performics? Founded in 1998, we started it as an affiliate network. By 2000 we were actively selling search services (SEO and paid search) that competed head-on with affiliates. Why? Because we were a company that believed, as they still do today, that affiliates should not be arbitragers… they should have their own traffic. This should be core to their value to the advertiser.
My point here is that, for Performics, there was and is too much money involved in the business of competing with affiliates that engage primarily in arbitrage. Hence, Performics (now followed by CJ, DirectTrack, Linkshare) offer such services to clients. How did they decide to offer these services? Simple. I'll let you fill in the blank
Jeff,
My guess is that what you consider arbitrage is simply brand bidding arbitrage. That's another topic that has been hashed out over and over.
There is much more to search arbitrage than just brands, and keyword list building and identifying the tail terms that can convert traffic for our partners is a big part of the business.
Search affiliates that focus on arbitrage spend the time and energy developing proprietary keyword lists that many of the advertisers either don't have time to build or the resources to manage.
Oh by the way, I work with Performics as well. The real question that should be asked to Performics, CJ, and the others that provide search services to their clients in competition with their affiliates is how they do keyword research and if their search arbitrage partner's data is being used in any way. That hasn't been addressed by the networks and is a critical point of concern.
Adam
Hi Jeff
With all due respect, I don't think that you appreciate the extent of the technologies that affiliates have secretly developed in order to arbitrage effectively.
In theory, there should be no arbitrage left, if companies like Performics etc were able to reduce the margins. The reason that our company, for example, is not an agency is that our margins are just much higher on an affiliate basis, and our technology trumps most agencies out here.
Arbitragers play an important role, particularly on Google, as they help Google maintain relevancy by competing on the basis of better ad copy & CTR, which results in improved quality scores and rankings. This pushes more relevant listings to the top and allows the affiliate to arbitrage by increasing the value. Over time, only the affiliates with the technology manage millions of keywords and maintain high quality scores will survive – and there is definitely a place for them in this market.
The agency model is inherently flawed, as it requires the client to spend more for the agency to make more, and that increased spend is not always effective.
Affiliate arbitrage is not only about managing the same keyword lists and competing on pricing strategies, etc and using data from Hitwise, and anyone with that view has a very elementary one at best. The depths and variables involved in search engine marketing is overwhelming.
There are search arbitrage companies making over $1m a month in profits – nothing to laugh at, and having been doing so for many years. To reach that type of scale on an affiliate basis requires skill that is not even in the hands of many of the top "agencies".
I totally disagree with your view on trade secrets, as much of what we and other affiliates do revolved around such. The reason that you don't know about the trade secrets is that we don't bother filing patents and letting people know what we do. Electronic patents are worth as much as the paper it's written on, and to divulge our secrets in order to protect them is like publishing the formula for Coca Cola in order to protect it.
V
Hi Adam
Good point – I think everyone still thinks that we do brand bidding, anyways, that point has been hammered enough so I won't go into it.
You might want to check out my latest blog posting, as a follow up to this discussion.
V
If CJ etc are managing PPC accounts for merchants they are doing something the merchant would be doing anyway. It's because merchants have not become expert at PPC, which creates a revenue channel there for PPC management. We would never outsource our ppc management, but other less experienced companies would. Affiliates expect to compete with merchants for ppc traffic, the best affiliates are able to churn a profit despite whatever else is going on in the niche, where it be organic or ppc.
Are Affiliate Network Employees Stealing your Business?
Top affiliates are starting to seriously question the ethics and policies of the major affiliate networks that have long encouraged their employees to participate as affiliates in their merchant's programs to help them better understand the affiliate…
Adam:
Yes, I understand everything you point out although much of my time is spent on the trademark issue. I don't deny that affiliates offer value as an outsourced provider of search services. As for the real question for affiliate networks you are hitting nail squarely on head. No argument from me on the need to have that question answered. Having worked inside an affiliate network I can answer that question but it's rather moot as the community is more interested in hearing what those inside networks have to say for themselves today
Vinnie:
What you describe is a service. What I'm suggesting here is that advertisers have historically looked at affiliates as an un-accountable resource for search services. Key word: unaccountable. Why? Because THEY have (I've always admitted) asked for the lack of accountability. Suddenly now they want their SEM services provider to be accountable (increasingly) and affiliates must adapt (i.e. form direct, accountable relationships with advertisers). Whoops! That's contrary to the tightly fitting dress that affiliate networks want us to all wear.
While I agree that most agencies have more overhead and aren't first to innovate (develop technologies that help them scale), I disagree that they're inherently flawed as not all cost models "requires the client to spend more for the agency to make more, and that increased spend is not always effective."
"Affiliate arbitrage is not only about managing the same keyword lists and competing on pricing strategies, etc and using data from Hitwise, and anyone with that view has a very elementary one at best. "
Indeed and this isn't what I said nor am I laughing at people making a million bucks a month.
"The depths and variables involved in search engine marketing is overwhelming."
I'm not going to belittle this comment but I will say that it's my firm belief that search services, as a business, is far *less* complex than most who provide it make it up to be. Advertisers are increasingly told that it's so complex that it's overwhelming. In my experience the more they are let in to view what's going on behind the curtain the more advertisers realize that it's "hard work" (nod to Mr. Bush) but it's not like performing brain surgery.
Hey Jeff
I totally respect your point of view, mainly because I can't open the kimono to disprove your thinking, and I suppose, that's where the chasm is between our two worlds
V
Let me echo that thought as someone who runs a Lead Gen affiliate program focused on new customer acqusition
Vinnie:
I'd enjoy speaking offline some time, perhaps (you can perhaps give me a glimpse into the kimono in some way?); Adam as well. Mr. Lewis has schooled me and I'm always up for more.
One more comment and this is offered, of course, constructively: Why is everyone commending CJ for creating and then, simultaneously, enforcing a policy that it (probably) should have had to begin with? What would have been more powerful? Complaining about it in 2001 and seeing CJ take action.
People can commend CJ for taking this action but I think doing so reinforces the company's behavior — to act in a reactionary way, not pro-actively; to wait for (in this case) concerns over Sarbanes-Oxley compliance emanating from VCLK.
Funny; as we all hang out over at AffiliateManager.net and talk endlessly about the "should an affiliate manager be allowed to be an affiliate?" issue *this* practice has, for years, been going on without debate.
Again, I say, commending = reinforcement. Advertisers and affiliates need to raise the bar on their expectations.
Then again, if we look at it from a wider perspective we see networks being very forthright about competing with their affiliates via search services offered to advertisers. So is this that big a deal? Can't CJ's employees be lumped, essentially, into the same practice? You compete, he competes, she competes… we all compete with affiliates!
Hello movers and shakers:
1. Congrats to ALL the Super Affiliates who have stepped forward with posts. Please continue your efforts with posts.
2. IMHO, the core issues remain:
a. The perception of a conflict of interest with respect to current employees inside networks building web sites which either derive income from the affiliate space or attempt to do so.
b. The perception of a conflict of interest with respect to current employees inside the Corporate sturcture of a given Network who are engaged in "SEO/SEM/arbitrage".
3. For the sake of discussion, I find the numerous discussions about what is or isn't a "trade secret" and or exactly how easy or hard it is to execute "SEO/SEM/arbitrage" very interesting, informative, and understandable. If we zoom up to 40K feet for a big picture view, these issues/debates are really more of a legal nature (inside a court of law) and to a large exstent dilute the real core issues for the enitre industry and every single Affiliate and Network on planet Earth or Mars.
In this vein, I think it's very dangerous to assume that your "cloistered" discussions among Netowrk employees, Super Affiliates, and consultants since year 2001 or even today actually resolve the issue and more importantly IMPROVE the industry. Naturally, I'm assuming in a respectfull fashion that Networks value their brand and don't want it tainted via the "perception" issue in item 2.
My small "survey" of your typical 80% affilaite and 2 other Super Stars who actually read this entire thread indicate that while some had suspicions, the majority had no clue. Admittedly, it's not scientific and a very small sampling but it was a start. They are NOT happy campers and as others have pointed out, some will become more secrative unless I can temper their understandable paranoia with some advice. Credit to Adam who first raised this very issue of letting ALL your affiliates know about these "conflict of interest" issues and exactly what you have done and will do.
4. I'm conflicted on exactly what advice to provide the 80% crowd. Specifically, what would YOU suggest I say and what specific procedures would YOU suggest with respect to "due dillegence"?
As a super-affiliate focused on paid search, this is incredibly troubling to me. I have always had my suspicions about account managers as affiliates — this is TRULY is a GIANT conflict of interest. I have expressed interest in working for Google and Performics (AND contacted them) — but with Google, employees cannot be AdWords or AdSense customers/publishers and with Performics, employees cannot be publishers. Just thought I’d add my two cents. Are there any CJ employees that might be able to anonymously forward along the policy?
I know I am probably late to the party on this discussion but I do have to say I agree with Beth. I am not interested in my affiliates "secret sauce."
Unfortunately in an industry that is regulated as much as mine, I have a duty to report to my superiors and legal department what my affiliates are saying about the company and how they promote us. If I am unable to identify these people I have much more difficult time convincing upper management and legal council most of what we do is not voo-doo.
I posted a follow-up article about this issue on my Goyami blog (http://www.goyami.com), and had an anonymous commenter say they had an issue with CJ about 3 years ago, where the employee stole their ideas, site design, and optimization techniques.
I find myself agreeing with Jeff, that perhaps commending CJ for taking action now is just too little too late.
It's really a very sad day for me and I take no pleasure in widening the divide. Respectfully, "YOU" asked for it and thats what your going to get. Period!
My Blog entry takes a slightly different approach to this deplorable issue, provides suitable cross linking, AND provides ALL CPA/CPL Networks an opportunity to go on the record.
Thank you.
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Which network does the best job of sharing data trends with its membership?
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