I’ve had a busy year uncovering affiliate misconduct—Honey hiding stand-down violations from testers; Phia forcing clicks; ShopMy telling merchants to cancel others’ commissions; Wildfire Kudos forcing clicks. And actually I’ve been catching these kinds of problems since 2004. (Not a typo!) You might think I’d be sour on affiliate marketing. But no: I very much value affiliate marketing. Let me explain.
First, affiliate market aligns incentives to a greater extent than any other form of advertising. Affiliate marketers only get paid when a user buys. Yes, this can be gamed—use adware, shopping extensions, brand-bidding, or cookie-stuffing to find customers who were going to buy anyway. But it’s a lot harder than gaming paid search (click fraud, requiring only bots to fake clicks) or display ads (IFRAMEs to load ads). The smaller attack surface discourages attackers from even trying. Conversely, with incentives better aligned, advertisers can work with small publishers.
More than that, affiliate marketing is unusual, among online marketing channels, in making its rules explicit and contractual. What an affiliate has to do to get paid—that’s written in the governing contract, at least the network’s standard form contract and sometimes a customization from each merchant. How much pay for how much work—for sure, in the fee schedule. What tactics are prohibited—again, yes, it’s written down.
All that might sound like table stakes. How could a contract for advertising be otherwise? But consider Google. From its standard T&C’s: “Positioning of advertisements on the Google website or on any page therein is at Google’s sole discretion.” Under that nonnegotiable form contract, advertisers have little ability to insist on particular placements—and little remedy if Google substitutes inferior alternatives. A decade ago, I showed Google and its nastiest partners—adware vendors, typosquatters, and worse—inflating conversions and taking credit for sales that were going to happen anyway. Even an advertiser who read my work and was convinced of the problem would face a contract written by Google, and written to limit Google’s exposure to claims like these. Compare affiliate, where an advertiser can easily reject or eject an unwanted affiliate.
And Google’s “positioning … at Google’s sole discretion” is just the tip of the iceberg. A walk down memory lane: Google promoted AdX as a second-price auction, but multi-state litigation alleged that Google “us[ed] advertisers’ bids against them to manipulate publishers’ price floors.” Meta faces similar allegations of pricing shenanigans, charging a “blended price” intentionally between first price and second price, though Meta had promised to use a second-price auction. And the FTC and states allege that Amazon deployed “secret reserve pricing” to charge prices more than a second-price auction, adding a “slow rollout schedule” so advertisers wouldn’t notice and complain.
An advertiser dissatisfied with unwanted placements or inflated prices has little practical recourse against behemoth ad platforms like Google, Meta, or Amazon. First, the ad platforms wrote the contracts—and, as the Google “sole discretion” quote above illustrates, wrote them with their own interests in mind. Second, the behemoths are worthy of the name. Woe is the marketing executive who recommends foregoing Google, Meta, and Amazon. Creating their own gravity, these behemoths are too big to ignore, no matter how they mistreat their advertiser customers.
Affiliate is the opposite. A deeply dissatisfied merchant could close its entire affiliate program, as a few have over the years. But that nuclear option is rarely needed because affiliate dashboards offer extraordinary control: A merchant can eject specific affiliates any time, at most on 30 days notice but often effective immediately, for any reason or no reason. Furthermore a merchant can change the rules. Add more terms to your excluded keyword list? Pay lower commissions to shopping extensions that can’t demonstrate incrementality? Require every affiliate to upload screenshots showing promotional methods? The main limit is a merchant’s creativity.
My pipeline of affiliate misconduct write-ups is healthy, and I’ll have more in the coming months. I criticize affiliate marketing not because I dislike it, but because I want it to be better and know it can be better. Every time I compare affiliate marketing problems with larger alternatives, I’m reminded how fortunate advertisers are to have a channel that is both competitive and accountable.