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Your New Year’s Resolution: Monitor your Affiliates!

Published: January 20, 2014

Author: Lori Weiman

Marketers have enough things to worry about these days. Just keeping up with new technology and ad formats is enough to drive most of them crazy. So let me add another worry to their list: the FTC. It’s a sizeable worry (sorry).
In the last two years, the FTC has been very active in identifying companies who are using unfair and deceptive advertising practices and then fining them.  We’ve heard of at least 10 different legal cases brought against advertisers since 2012.  A particular one in 2012 resulted in an advertiser paying a $1 million fine and being forced to closely monitor its affiliates for future deceptive advertising practices.
Yes, advertisers, you can be held liable for the actions of your affiliates. Make it one of your top 2014 resolutions to keep a closer eye on how these companies represent you to consumers.
We created a tool to help advertisers monitor how well their affiliates comply with the advertiser’s established guidelines. We would like to share what we found in the first few weeks of January 2014 since it sheds some light on how big this problem actually is.
Affiliates want to drive sales back to their advertisers and are therefore financially motivated to be as creative as possible in that endeavor. Sometimes this creativity leads to rule-bending and breaking. So, we constantly monitor the paid search engine ads of more than 25,000 affiliates for all types of abuses and place them into four buckets, as illustrated in the chart below.

TSM - FTC Affiliate Post - Updated Chart

Full Compliance is like it sounds – we did not find any instance of them acting outside of their merchant agreements on the search engines. The second grouping starts to get a little more serious as it shows which affiliates are bidding on the merchants’ trademarks.
From there, the affiliate abuses get even more serious. The third group above shows which affiliates use their merchants’ URLs as PPC Display URLs, but then send traffic through the affiliate so they get the credit—a big no-no. And lastly, there is a large chunk of affiliates employing both direct linking and trademark bidding. This group needs to be contacted ASAP.
The point of the chart is that affiliate abuses are more common than you think. Constant monitoring is a business necessity.
To make matters worse, The FTC just hired a new Director for its Consumer Protection Bureau (Jessica Rich) who has already vowed to look closely at certain industries prone to deceptive claims, such as weight loss. In particular, if you operate in any highly-regulated industry (Finance is another great example, along with Health), it pays to make sure that your affiliates are obeying your program guidelines.
In case you’re wondering how we get this affiliate data: The Search Monitor looks at large volumes of keywords on search engines and has amassed a huge amount of data about affiliate marketer tactics over the years. We took that data, matched it with affiliate IDs, and then produced profiles on each affiliate’s marketing activities. These profiles allow affiliate managers to make good decisions upfront about which affiliates they do or do not want to work with. And that can keep them out of hot water with the FTC!

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