Regulating Chaos, Part 1: Adware and the Affiliate Code of Conduct

Before reading, suspend your cynicism about the economy and the Internet. There’s reason for optimism.

Most online marketers theorize how e-commerce should regulate itself. The affiliate industry is actually doing something about it and the challenges of adware.

With the recent release by Commission Junction (CJ), Performics, and Be Free of the Code of Conduct, along with LinkShare’s evolving Addendum, the affiliate industry is attempting to build best practices by regulating itself in the face of controversy.

More important, this serves as a template of how diverse Internet interests can come together and find solutions. Although the problem isn’t resolved, the movement is so important I’ll explore it over three columns.

In an industry where technology spurs change before fair business practices are established, the affiliate industry found itself in a quandary in early 2002.

Adware companies, or as their foes call them, spyware, parasiteware, and thiefware, are downloaded onto desktops left and right, often bundled with other software. Instead of relying on Web traffic, they do things with the desktop, including comparison shopping, redirecting affiliate links, spawning pop-ups on sites, even ballistic things such as TopText link stealing on Web pages (see “The Big Lie About Spyware and Adware“).

Adware turned marketing into applications. Like most technological innovations, the challenges it spawned could never have been predicted. Some affiliates started seeing lower sales.

In April 2002, LinkShare came out with its first Addendum draft. Most merchants ignored it. Who’s LinkShare to tell them what affiliates they can work with or to set the rules? With no enforcement, challenges continued. By late 2002, the problem was growing. Irate affiliates demanded solutions. The New York Times and other mainstream media picked up the sound and fury.

That’s how a November conference in New York was born. Members of the affiliate industry feared the event would be a backbiting bloodbath, like most conferences involving the affiliate networks.

Instead, a strange thing happened. The affiliate networks organized the meeting together. Adware companies such as WhenU.com showed up and spoke, ideas were exchanged (and sometimes accusations). Weary affiliates asked for regulations from the networks and adware companies. They started a dialogue.

The mediator was Wayne Porter of AffTrack, an unlikely centerpiece in this high profile conference but indicative of the power of the affiliate industry. Unlike other sectors, which constantly promise self-regulation under the aegis of major companies, this industry sector began to do something, with all players participating. By most accounts, the meeting was a positive first step.

As I wrote last November, the controversy centers over the rapid rise of adware applications, basically plug-in software providing everything from comparison shopping to passwords to straight out rogue pop-ups. Now that the affiliate industry is calming down after the storm, it’s finding its way to self-regulation

The Code of Conduct, released last month, is a joint effort arising out of the conference. The promising first step focuses on simple concepts:

We have jointly drafted the following Code of Conduct (the “Code”) to provide guidance to each of our advertiser customers (“Advertisers”), Web publisher customers (“Publishers”) and software download technology providers (“Technology Providers”) regarding the use of certain downloadable shopping software applications.

Instead of tarring companies with the pejorative “adware,” they’re calling them Technology Providers. Instead of dictating, guidance is offered. Extremists on both sides will always exist, but this first move shows promise, and trust in self-regulation. The current draft focuses on several key business practices:

• Do not interfere with affiliate links and referrals.
• Do not alter a Publisher’s Web site.
• Make initial attempts at rules regarding software installation and de-installation.

Yet all is not well in the affiliate kingdom. Many are complying, but much of the old software is still out there. Affiliates are still worried, and many believe the Code is too weak. Change takes time.

The LinkShare Addendum attempts to combat the problem with technology. Though first to market, it now stands as a litigious and isolated effort, confined to one affiliate network. The goals are the same and LinkShare’s document has the right spirit, but it is limited to its own network. In typical fashion, the LinkShare document runs 22 pages; the Code of Conduct is merely a page.

No one takes the Code to be a final solution. It’s a step in the right direction. In my upcoming columns, I’ll interview the heads of affiliate networks and technology providers. Finally, I’ll let affiliates weigh in to share perspectives.

Time will tell if these first steps are effective, but look at it this way: They’re more promising than efforts to stop spam, aren’t they?