Opinions
Affiliate Managers Must Have More Information on Affiliates: Part One in a Series
By Jeff Molander
Dec 4, 2005, 13:33

Increasingly, retailers and direct marketers operating affiliate marketing programs are moving to learn more about their affiliates and keep more detailed records on their activities… or at least they’re considering it.  Why?  Where affiliates obtain visitors from and how they go about it is becoming worrisome.  Setting aside the search conundrum (wherein retailers realize some affiliates compete with them for the same customers), recent developments have given reason for pause to reflect on affiliate marketing as a long term strategy.

What's the Worry?

Today, both multi-channel and pure Web marketers are considering the Federal Trade Commission’s recent ruling wherein an adult industry marketer was fined and ordered to keep better tabs on all affiliate activities... with special focus on e-mail.  What are the ramifications for mainstream retailers and direct marketers?  The industry is abuzz.  According to a media source I’ve been in touch with the FTC hesitates to distinguish between an adult industry marketer and a retailer marketer… specifically as it refers to this ruling (note: I am not probing further at the FTC myself, at the moment, so as not to scoop an editor who works for a print publication).

Marketers are also considering the FBI’s ongoing investigation of hackers seeking to take down AOL’s instant messaging (IM) systems using a variety of tactics ranging from botnets (leveraging a network of spyware infected PCs across the glob to unknowingly engage in the attack) to adware.  What’s the rub on affiliate marketing?  Affiliate links are helping investigators track down the terrorists, according to Chris Boyd of FaceTime Communications.  He says the Middle East-based terrorists weren’t keen on simply bringing down IM networks; they also enjoy making a buck or two on concurrent adware installs. 

Affiliate Marketing & Terrorism

Could affiliate marketing be used to fund terrorists?  I'm not the first to ask this seemingly fantastic question or make such a speculation.  In fact, Wayne Porter suggested, in 2003, "Imagine, as a business, acquiring a customer for $0.10 and being able to make $10.00 off that customer in the course of a year. This plush economic Petri dish could be used as the very foundation to execute and fund a sophisticated, blended terrorist attack."

Important Questions Arise

Considering all of the above, responsible marketers are forced to consider that they either have no means and/or desire to track where affiliates are actually sending visitors from.  Affiliate networks (who they have entrusted) have, thus far, proven to be of little help and have a financial dis-incentive to provide more transparency... although as they become acquired (diversify their offering to advertisers) some, such as Linkshare, are showing signs that they may be moving to correct this problem.  Are their customers wising up?  You bet they are and have been for a while now.  The pressure is on.

Can the Chief Marketing Officer of any company afford to “not know” and practice “see no evil, hear no evil” marketing when it comes to affiliates and their use of e-mail, adware, search  marketing?  In years past the answer has been a resounding “yes” but given new developments what risks are entailed?  Are unkempt or loosely managed affiliate programs a liability and to what degree?  What of the role of trusted affiliate networks and their network quality assurances?  Clearly we see change here as well and some would say overdue change (i.e. ValueClick’s Commission Junction has not only booted the more obvious trouble-makers but has also beefed up its legal ability to collect un-due affiliate commissions on behalf of its clients).

As I see it, affiliate managers have been forced to fly blind for too long… not knowing who to partner with and without any kind of standardized approach to measuring quality or monitoring affiliate activity like adware, download usage and search marketing tactics.  Will marketing executives give them better tools to work with and/or demand more of affiliate networks who house both valued and (still a good number of) troublesome affiliates?  As marketing executives begin to look at pay-per-click marketing through a new set of eyeglasses, does affiliate marketing lose its luster?

Jeff Molander is CEO of Molander & Associates Inc., a consulting company and publisher of The Affiliate List, a six hundred page report profiling top retail affiliates across a variety of third party data sources.  He can be reached at jeff *at* molanderassoc.com.