Regulating Chaos, Part 3: Adware, Merchants, and Affiliates Speak Out

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When a market regulates itself, the players take action. In part two of this series, the affiliate networks discussed how they are attempting to regulate the industry. I asked the actual players -- adware companies, merchants, and affiliates -- for their take on the Code of Conduct and LinkShare's Addendum.

Adware Companies

TopMoxie's Patrick Toland, VP of sales and marketing, had this to say:

What we have is an emotional issue that results in very little financial impact (at least as it applies to TopMoxie partners) being championed by affiliates who have lost their ability to compete in online marketing. In the end, it will not solve the underlying problems of affiliates suffering from an eroding business.

The Code of Conduct and LinkShare Addendum are effective for us [TopMoxie] as they help define the rules of engagement in utilizing affiliate tracking methods. However, many other software developers are not only unwilling but also incapable of compliance due to their unsophisticated technology.

The Code of Conduct represents both a reasonable and realistic approach to the challenges of self-regulation among the parties involved. For cooperative software developers, the Code of Conduct ensures an ongoing relationship between the parties involved and an agreement that can evolve with ever-changing market conditions.

The LinkShare Addendum's primary weakness is the potentially variable terms executed by various software developers. Also, by signing a contract, LinkShare can enforce the issue; however, it limits the ability of each party to evolve quickly given any changing market conditions.

eBates's CEO Alessandro Isolani said: "We're as benevolent as you can get with this technology and our attitude towards other affiliates, but we're being depicted as Darth Vader. I don't have any interest in taking sales from anybody." Isolani continued, "What's frustrating from a software producer's perspective is that you can jump through all the Code of Conduct hoops, take all the feedback, and be in compliance with aggregators, yet still get slandered and slammed by this fringe group of affiliates. We've done something out of generosity, a sense of community to help these affiliates out. The response is, 'no, change your business model.'"

According to Gator's Chief Marketing Officer Scott Eagle, "The value to our users is free software they get and control on their desktop. As long as the consumer is empowered and all the content is branded, that's in the best interests of the consumer."

Eagle went on:

What's not fair is someone who adds no value to the consumer, steals a link, and grabs that consumers' attention. That's repugnant. We have talked with affiliates concerned with this issue and asked, "How often do you see Gator's ads? Are you rebelling against the concept of what Gator does or the economic impact?"

They say it doesn't matter, it's the principle. It's the idea that we are bringing ads to consumers in separate windows. These affiliates say, "Change your business model." We would like to educate affiliates about our approach:

1. We don't interfere with click-through or substitute codes. We agree that kind of behavior does not add value to the consumer.
   
   
2. We use a view-based and click-based technology to strike the best financial arrangements for companies we work with.

We could help affiliates and have worked in the past with some of the larger ones. We are working with the affiliate networks. But you can't ask us not to have our model of consumer empowerment.

Merchants

No merchants replied to my requests for comments, most likely because they are in an uncomfortable middle position between affiliates and adware companies. Making their opinions known could lead to more headaches than solutions. Wayne Porter, VP of product development at AffTrack (who works with numerous super affiliates and merchants), shared this view:

There have been a number of positive baby steps, but there are still idiosyncratic behaviors that need to be resolved. There have been some programming additions to the mix that are being implemented by software companies. The final solution will probably call for a two-pronged approach including both the Code of Conduct and technology innovation. Ultimately, the choice will come down to individual marketers, because they have the final authority on partner selection.

Affiliates

Mike Hyland, IMS Webmaster, had this to say:

The Code of Conduct will never be enforced on the major abusers, who will just devise on/off switches on their BHO (Browser Helper Objects) theftware applications. Why? Enforcement would require the networks to own up to the fact they endorse these applications, which give them a commission cut on non-commissionable links from their merchant partners. There is no bank robber or thief in the world who wouldn't plan a heist if they knew they had a six-minute automatic getaway escape route, let alone a 60-day head start. By having no provision for the BHO affiliate to not earn commissions while their programs get tested and certified for compliance, the Code of Conduct is totally meaningless.

What is the real purpose of a BHO theftware/adware application? Like a well-thought-out virus, they take advantage of the weaknesses of the existing network affiliate industry by exploiting the loopholes under the guise of loyalty/reward programs. They take the value-add work completely out of the commission earning formula and suck bucks from unwary merchants, not the networks.

A BHO overcomes these affiliate marketing hurdles. No need to generate domain traffic or generate paid [search engine] listings. No need to put up any banners, product links, or other time-consuming affiliate-coded creatives. No need to worry about cookie durations. Your BHO guarantees lifetime cookies. Hijacking and monetizing all links to a merchant's site with a point-of-sale pop-up reminder eliminates all branding and free traffic schemes by the merchants. A BHO like Gator or WhenU can also demand and generate domain-protection fees from all e-commerce merchants to keep competitors off their sites.

The cure: Turn off all network autofeeds of incentivized offers. Require a trackable impression/click for any affiliate to earn a commission.

Next: The Conclusion:

The opposing camps in the regulation debate are affiliates and adware companies, with merchants and affiliate networks caught in the middle. Affiliates continue to attack all forms of adware and seem unwilling to compromise. There are strong compliance signals from many adware companies.

What does it all mean? In the next and final part of this series, the ramifications of the regulation debate.