Outlook 2006: Transparency, Accountability Are Key for Affiliates

If I had to pick two words to describe where affiliate marketing will go this year, they would be “transparency” and “accountability.”

Look for more of both as affiliate networks battle to increase their revenues toward $500 million. Concurrently, the Federal Trade Commission is moving to balance marketers’ race to net customers with the best interests of consumers.

Search, adware and spam are front and center. Gone are the days when marketers fell back on affiliate programs for lack of better options. Search is in fashion among marketers who are realizing that affiliate networks, which get a piece of the affiliate-driven action, are dangerous places for their brand to swim. Networks may be questionable stewards given their reluctance to help marketers manage concerns about affiliates using adware, spam and search practices that conflict with their own.

Not on the sidelines anymore, New York’s attorney general and the FTC are swooping down on branded marketers like Gevalia and DirecTV, signaling that they won’t stop at prosecuting just adult industry marketers. More enforcement among big brands seems likely as the FTC demands that marketers keep better tabs on affiliates. If they don’t, they’ll be fined. Commenting on December’s DirecTV ruling, Allen Hile of the Bureau of Consumer Protection said: “Just because you’re using affiliate marketers doesn’t mean you’re off the hook. You can’t evade your responsibility for complying with the law because you have a loose network of affiliates that are bidding for your benefit. You must have control over it.”

What marketers should do. Affiliate marketing, the pay-for-performance model popularized by Amazon.com, is based on the age-old system of commissioned sales agents. Today, sales agents are actually Web sites earning commissions for customers they refer to the transaction-based sites they have partnered with. Simple. Yet marketers need to ensure that their affiliates are within control, contributing to the bottom line and supporting the brand. They should pop the hood and look around for trouble.

Behind the scenes, chief financial officers and CEOs have taken note of affiliate programs. Thus, marketers are auditing affiliate programs in a way that shines a spotlight on transparency and accountability of their affiliates and affiliate network. Though some networks, such as LinkShare Corp., rush to make affiliates more accountable and less anonymous, marketers working with networks like Commission Junction are finding affiliates within the network have themselves become networks – leading to inefficiencies and accountability gaps. Marketers must identify and retain only those affiliates proven to be accountable, support the brand and deliver customers efficiently.

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