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  • Affiliate Marketing: Remembering the Purpose of a Network, Regulation, and Internet Explorer 8

    Since I attended affiliate summit in Boston, I’ve come to truly appreciate how big this industry is. It’s an interesting beast, with many many more people in it than I would’ve expected(and from what I’ve heard ASE is one of the smaller conferences). The other thing that really changed is I started to take a look at the industry as a whole in regards to it’s sustainability and purpose of the various people in it.

    So here’s what I’m going to cover today.
    A Rant About Affiliate Networks: Trust Issues and their Purpose
    Is True Regulation Coming to Our Industry?
    Internet Explorer 8: Give me Back my Cookies!

    A Rant About Affiliate Networks: Remembering their Purpose (and some trust issues)
    Now I hate to write this section. Really I do. There’s some networks(and especially AMs) that I have tremendous loyalty towards. But it’s something that’s been in the back(and occasionally front) of my mind for awhile.
    Networks can do 2 things that a lone affiliate can’t (or won’t due to substantial effort being required).

    1. They can gather up the offers for us to promote easily (Biz Dev Department)
    2. They have the legal teams and power to make sure we get paid. Essentially we trust the network so we don’t have to trust the merchant.

    I definitely can’t speak for everyone in the industry, but the primary reason I run through affiliate networks is #2: so I don’t have to trust the merchants. I play largely in the online diet product space, and let me tell you guys, those are the dirtiest merchants on the planet. So essentially the I end up surrendering probably 10-25% of my total commission(depending on the product) to the network so that if that merchant runs away or refuses to pay or has tracking problems, the network can hopefully use their influence and legal teams to do that which I cannot.

    Unfortunately at some point this concept completely disappeared. Most networks are nothing but slaves to the merchants. If there’s an issue, most will not pony up the cash even if you’re within the TOS. The question then arises “What do you want us to do about it? He didn’t pay.” This makes me beat my head against the wall. I give the compulsary ~20% of my commission to the network just in case this stuff ends up happening once or twice. What happened to the legal teams? The financial backing and stability? If I wanted to deal with the merchant and worry about trusting the merchant, I’d just be going direct.

    I’m sorry networks, but this is your job. Give us a reason to not just go direct. You’re not protecting (or even acknowledging or reporting) us against scrubbing, the least you can do is make sure we get paid for our scrubbed leads. No, I really do not care about tracking issues. I do not care about credit card processing issues. I don’t care if the merchant gets stranded on a friggin desert island for months at a time. I’m putting my own money into these campaigns, and I fully expect to get paid come hell or high water.

    Let’s Talk Law Suits and Government Regulation
    The unregulated nature of affiliate marketing has always been a blessing and a curse. We have a lot more latitude in regards to promotion methods, but at the same time have to deal with payment issues that don’t really exist elsewhere (If Walmart buys 300,000 pens from Bic, they can’t say “Well, this wasn’t profitable. We’ll pay you for 100,000 of them though). It appears we’re getting cracked down on though.

    • Ringtones – Going to hell in a handbasket. Not impossible to run, but getting more difficult. Once it was “don’t say free”. Now it’s pricing on the carrier select page, pricing on the page where you enter your phone number, and pricing in the text they recieve. And it has to be prominent everywhere. You can’t even survive a carrier audit if you don’t spell out “monthly subscription”. Apparently $9.99/month is too difficult to comprehend. In addition to the networks auditing landing pages, the carriers are now auditing. And Google is getting restrictive on the landing page as well. Ringtones aren’t dead, but let’s say that catastrophic killer meteor is flirting with the atmosphere.
    • Crush Offers – Ok, nothing has happened here yet. But are we really pretending it won’t? These ones explicitly are targeted to those under 18. Considering the fate of flavored cigarettes (which was much less targetted to those under 18), I’d say it’s only a matter of time until the lawsuits start coming down here.
    • A Certain Asshole Merchant – Is getting sued in the UK. Karma is a bitch isn’t it Jordan?
      More on this later. It’s a very interesting story, with a truly bulletproof business setup(to survive law suits). I can’t wait to see if he comes out on top, or if he successfully implemented the patented Scott Richter “getting sued is fine if it’s still profitable” business model.
      Either way, I’ve got some wicked documents on his business registration and various LLCs he runs that really paint a picture.
    • Shaun Hogan of Digital Point Sued for Cookie StuffingNo merchant likes cookie stuffing. Apparently EBay(by far one of the hardest hit) is doing something about it. Hogan apparently got millions from cookie stuffing eBay, and they want it back.
    • MySpace Mania – CPAEmpire has emerged from the MySpace spam lawsuit(ok ok this is really old) and is not looking too shabby. They’re rebranding as Affiliate.com, ditching direct track, and I would put a heavy bet on the fact that they made more from the MySpace spam than they lost in the law suit.

    Internet Explorer 8: The only Real Benefit is Maybe it will Kill DirectTrack
    So the next incarnation of the shiite that is Internet Explorer is currently in Beta 2. What does this mean? The entire affiliate industry is about to get a massive update. It has a “privacy mode” that opens up a new window, and removes ALL traces of you once that window is closed. Including cookies.
    For those of you who aren’t much in the techie department, nearly every tracking system we have uses cookies to track our sales. So as soon as that browser window closes, so does any chance we had at getting credit for a sale.
    So what are the implications/possible results for this?

    1. Content Network Circle Jerk – Since no major PPC program has the ability to block by browser, we’re probably going to see a lot of people transforming a normal landing page into an MFA site if the user can’t accept cookies. Gotta make money off those clicks somehow, eh? If enough people start doing this, I think the quality of the content network is about to drop significantly.
    2. Ads on Live Search Will Be Worthless – Advertising on MSN has always yielded clicks that are nearly 100% Internet Explorer users who couldn’t change their default search engine. So let’s imagine for a second even 10% can’t accept cookies. Wow, that’s a traffic quality drop.
    3. New Tracking Systems – 95%+ of the networks I’ve used use cookie based tracking. The other 5% use click ID based tracking. Hopefully soon we can see a combination of those appearing to fill the void of DirectTrack(which is 100% cookie based).
    4. Increase in Whitelabels – Whitelabels give us the ability to more or less brand an affiliate site, and to capture users coming back later to make the purchase. The best part? They don’t use cookies. This is a huge opening for sites that want to dominate the affiliate market to make an offer that converts much better than the standard offers that will be crippled by IE8.

    -XMCP

    PS: If anyone has anything in particular they’d like to hear about in the future, drop a comment here. I’m having trouble finding new entries because my reader demographic is split amongst professional SEOs, affiliate marketers, and some MMO people. So leave a comment about what you want, and I’ll try and find a way to work it into all those niches.

    22 Responses to “Affiliate Marketing: Remembering the Purpose of a Network, Regulation, and Internet Explorer 8”

    1. Monty's Mega Marketing says:

      First of all, thanks for the link. Second of all, keep on posting that affiliate marketing news. It’s good stuff. I hadn’t heard about IE8′s privacy mode. Looks like the game is about to change (again).

    2. Domen Lombergar says:

      hehe, the porn mode on ie8. Wasnt this implemented in firefox2 a long long time ago?

      Anyways, still looking for a bit of good seo articles, you seemed to have wondered off somewhat.

    3. chatmasta says:

      Looking for more post ideas? I’d say keep pumping out the blackhat shit, just like the origin of this blog. :)

    4. justin chelf says:

      all i read was circle jerk wtf?

      haha

    5. Contempt says:

      All you would read is circle jerk, justin.

      Great post SSS.

    6. Gab Goldenberg says:

      Excellent material, especially your analysis of the implications on IE8 – that’s high level thinking, and quality too.

      Future posts – picking out Gbot from sitemeter logs or what not. I can give you access to mine for you to figure things out if need be.

    7. Lord Brar says:

      Google Chrome and Mozilla FireFox FTW!!! That Richter sure knows how to get a good deal — he snagged affiliate.com for $550,000. :D

    8. uGuX SEO says:

      “I’m having trouble finding new entries because my reader demographic is split amongst professional SEOs, affiliate marketers, and some MMO people.”

      Who says you can’t use SEO in affiliate marketing? ;)

      I’ve always appreciated case studies–I’m sure you’ve got a ton you could bring to your blog.

    9. MrInappropriate says:

      Can we have a bit more celebrity gossip pls?
      thx

    10. Adam says:

      Shady,

      If you’re having trouble thinking of new entries, one thing I’d love a post on is building networks of sites in one niche.

      I mean, building say 30 sites in a niche and one master site, then using the 30 to push links to the master site or something similar to that.

    11. Terry says:

      Great post…well written and very organized.

      Whats your thoughts on all the new networks popping up being run by succesful affiliates? Smaxor, Ruck from Cashtactics, PPC Coach, etc. When I saw this happening I wasn’t sure to take it as a good sign for our industry or not. Of course more competition between networks is great and so is having expert affiliates running them but it almost seems they are trying to cash out before the gold rush ends.

      They all had to be making a killing being affiliates why go through the hassle of forming a nework? Will regualtions and laws start to really impact the industry and thus make affiliate marketing not as profitable. So it might be better to try and build up a network so they can sell it for $50 Mil in a few years to a big media company jumping in at the top of the bubble?

      Or it might simply be that there is way more money in networks then just being super affiliates. I think a post on the influx of super affiliates becoming network owners could be interesting.

      Also do you think it is wise to just go balls to the wall for the next few years and try to cash out as much dough as we can before more regulation makes things harder?

      Also looking forward to more on the UK Merchant Lawsuit you wrote about.

    12. admin says:

      Heh thanks for the input everyone. It’s appreciated. I think I’ll be alternating entries. One hardcore SEO, one affiliate/PPC.

      @Terry: I feel like the new networks springing up from affiliates are a result of the various trust issues I listed above. I dont think there’s an affiliate alive who has worked with multiple networks and not thought “I could do this better”. And some of them are. Understanding the risks and mindset of the affiliate are imperitive when it comes to making a new network.

    13. Ad Hustler says:

      Great post dude,

      I completely agree with your affiliate networks section. If they aren’t going to guarantee us payment, what exactly is their purpose?

      Also why don’t they just require advertisers to pay up front and debit out of the account like shareasale does, this way there is no risk of them “not getting paid.” The whole network business model seems retarded.

    14. Jack Rack says:

      The Shaun Hogan story was surprising. Sounds like Ebay was just sitting around collecting evidence for a while.

      There’s no reason he would need to cookie stuff with ebay to make money. Should be smart enough to realize he could have used DP for many, many more things than he ever did. Still never sold direct ads. Didn’t leverage the DP people toward other products enough. He could have taken that forum by the balls and made plenty of money. But he never did much more than adsense, which made no sense to me.

    15. George says:

      Firefox 3.1, Safari , Chrome, and IE8 all have such a privacy mode.

      I don’t think it will make too big of a difference, as its a power user feature.

      Enjoyed the post.

    16. Pete says:

      Shady,

      I got burned pretty badly in promoting a weight loss product. I had just started out in affiliate marketing and got real lucky i think (started making sales almost immediately).

      However, I was new to the game and was dealing ONLY with the merchant. Needless to say the sneaky bastards never paid me and ran off with over $1200 of my money! There was nothing I could do.

    17. Ginette says:

      Besides Ringtones, Cellphones are one to really read the affiliate program agreements carefully. Some programs were shipping out phones and then if the customer didn’t pay their bill and/or return the phone the affiliate got hit with a demand letter telling them they had to pay for the “lost equipment” and sent affiliates to collection agencies. This was 6 months after the sales and commission had been paid out.

      As for the networks and their interfaces. The problem with a lot of them is they were and are being built by people who never managed or participated in an affiliate program.

      Payment issues floor me because the networks earn a percentage based on commissions earned by affiliates over and above the standard fees. An escrow account had to be funded to cover estimated commissions to affiliates before a program was even set up at one network I worked for.

      The quickest I ever saw a check cut by a big name merchant was when the affiliate filed suit and the merchant did not want any bad PR for their new product.

    18. Tracy says:

      Great job done. Yes, this question has been lingering in me as to why the affiliates networks do not guarantee the payment. There should be no losers at least.

      Tracy
      http://Welly-Mulia.com

    19. Wes (MasterlessSamurai.com) says:

      I think more and more merchants need to adopt server side IP/Cookie tracking, where the cookie is set and stored on the remote server. This makes browsers that delete the cookie a non-issue. Not that hard to implement, not sure why its not is wider use.

    20. Hotel Copenhagen Denmark says:

      …a lot of people transforming a normal landing page into an MFA site if the user can’t accept cookies. Gotta make money off those clicks somehow, eh? If enough people start doing this, I think the quality of the content network is about to drop significantly.
      —————
      Won’t it make the content network more profitable? don’t you think these content network ads shown to people who come from search engines will be more similar to search results?

    21. budarnik says:

      Спасибо за статью оказалась очень полезной.

    22. Ryan Eagle says:

      You get too scared about the regulations man, I’ve said this over and over. Get $, Get Paid.

      They go after advertisers and networks.

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