The Affiliate Industry Strives To Clean Up Its Act

Unfortunately, affiliates do not always abide by the rules and requirements of your program.  For example, you may specifically prohibit keyword sponsorship of your best terms or your brand terms. You may look to keep your affiliates from co-promoting you alongside of your competitor(s) on the same landing page, you may have restrictions on paid search regarding rank, or you may have restrictions on ad copy (e.g. affiliates cannot use the phrase “official site” or make superfluous claims about your product).   These terms may be explicitly defined in your affiliate agreement, but regardless of your contract, your affiliates want to make money and that is inspiration enough to break or bend your rules when it suits their needs.

The good news is that the affiliate industry is trending toward recognizing that these issues exist and need to be resolved.  I attended Affiliate Summit East earlier this week in New York.   I was pleased to see two sessions specifically dealing with issues of compliance and regulation of affiliate marketing activities.

Hot topics in marketing compliance and enforcement. This session dealt with the complexities and liabilities of false advertising, affiliate advertising practices and enforcement of the laws and regulations in the USA.  Speakers included a representative from the Federal Trade Commission, a law firm and several industry insiders.

Bullet-proofing your affiliate agreement. This session was conducted by an attorney who explained  the varieties of business rules that are important to lock down in your affiliate agreement in order to protect yourself from liability, enable the merchant to control commission payments when the affiliate is out of compliance and to control affiliate messaging and marketing efforts to stay within the boundaries of the law.

There is also an emerging trend in the industry among the top affiliate networks who either offer or are openly talking about offering network quality services to their largest brand customers.  Some are considering options for their smaller and medium sized customers as well.  Overall, the trend seems to be pointing to a desire to provide merchants with more control over the quality of their affiliate programs.

The good thing is that you are in control when it comes to defining the rules and requirements of your own program.  Without rules in place, you put your ad dollars in jeopardy.  Examples of issues that will confront you in the event of your affiliate quality is out of control:

Increase in CPC If you are battling your affiliates on your key terms, you run the risk of driving up your CPC as you essentially compete against yourself.

Decrease in ROI. When a consumer clicks on your affiliate’s ad they receive a cookie that will give the affiliate credit for any sale that occurs within the cookie expiration time frame (usually 7 or 30 days).  If the consumer also clicks on your PPC ads, and winds up buying something, your affiliate will get credit for the sale—not your marketing department or agency.  When this occurs, affiliate sales can under-value your keywords so that the revenue is lowered, causing an unwarranted appearance of decline in ROI for specific keywords or media properties.

Decline of your good will. In this instance, messaging is key.  Being shown on the same page with competitors, or allowing affiliates to promote old offers, or to make false or grandiose claims will diminish the good will of your brand.

A carefully crafted affiliate legal agreement is important to your success in avoiding channel conflict, to ensure your CPC costs are contained and that your ROI is not falsely deflated.