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Scandal in Affiliate Marketing or: Why in Affiliate Marketing You Need Someone Who Knows What He is Doing…

During the summer months, you could really feel the effects of the silly season in the affiliate marketing landscape. After a period of rarely any news Venturebeat started the fall season with a small scandal. The article with the headline “The big, ugly affiliate marketing scam” sent a shockwave through the business community.

In order to avoid bad surprises in the affiliate channel, you should consult an expert

In order to avoid bad surprises in the affiliate channel, you should consult an expert

In this article, the author describes how he was pushed by a marketing consultant at his company to start an affiliate program for one of his pages and the consequences it entailed. The main criticism in this article was that the majority of affiliates who were active in that program were discount code affiliates. They marked users with their cookie for bookings on brand combinations, using for instance the words “voucher” or “coupon”, although they had already been in the check-out process of the webpage and were therefore not really new customers anymore. This was enough for the author to lead him to a general reckoning with the affiliate marketing channel and he thus ends his article by saying that this channel was not a sustainable business model.

While non-specialist readers might agree with the article, online marketing experts see first and foremost many inaccuracies that need to be straightened out:

1) Not all affiliates work with discount codes, and especially in other segments there is great potential to win new customers (although admittedly the discount code segment is one of the stronger growing ones).

2) Against the article’s assessment, the discount code segment is suitable for winning new customers- in some cases it makes sense to offer discount codes to customers who are already in the shopping cart. For instance, when the customer, while looking for discount codes, finds corresponding offers from competitors, he might still drop out even in the last steps of the check-out process. Regular readers of our blog are probably suspecting it: the discount code strategy is an important lever, which requires a detailed and ongoing analysis in both the affiliate channel and in connection with the other advertising measures.

3) The article described above deals with the start of an affiliate program which did not have any restrictions regarding its partners. Obviously, the individual partners were not checked for their proceedings either. If after reading this article you only keep one piece of advice in mind, let it be the following: Do not do that!
Before starting an affiliate program it is essential to develop a strategy together with an expert and determine what you do and do not want to pay for. It might be the case that most good advisors will encourage you to test the discount code segment. But they will also offer appropriate measures to closely control the success of the program and to gain empirical values.

This case shows quite well why affiliate agencies warn about solo runs in this sector; on one hand – and this cannot be denied – there is a high risk of fraud in the affiliate channel and of paying inefficient commissions. On the other hand, affiliate networks are not always an effective control station for these risks, as the author of the article seems to have expected (although of course not all agencies can claim that either).

This is why below you can find a list (though certainly not complete) with warnings for potentially insufficient counseling when operating an affiliate program. You should be cautious when in your affiliate program:

• … all publishers are automatically accepted,
• … prepared transactions and sales are not aligned,
• … post-view payments are enabled for a large number of partners,
• … many discount code partners generate sales without offering discount codes,
• … there are no restrictions for partner approval (SEA usage etc.).

And just to change the perspective and highlight that it makes sense to lead this discussion into the other direction as well, you could look at the question of fairness with regards to the commission distribution. For instance, a partner with a good content page (whether it is a bargain portal, a price comparison website, or a fashion blog), who calls attention to a brand does not, according to the last-cookie-wins principle, receive a commission if the user clicks on the SEA brand ad and concludes a purchase some hours after his attention has been won.

However, in affiliate marketing even more important than good advice is the realization that you work directly with people. There are good partners and there are less good ones. Basic guidelines would therefore be the following:

1) You should choose your partners carefully
2) … and know them.
3) You should communicate with the partners
4) … and recognize good partners as such, which means working with them on an equal level.

And last but not least: in case of doubt you should seek help from someone who is well versed in affiliate marketing and who also takes his time to fulfill the task properly.

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