Merchant Naivete or Common Problems of Affiliate Programs

Today is the day when I’m starting to use videos in my blog, and I have decided to devote the first one to a question we’ve been discussing with Nancy (aka 2busy) via e-mail after she posted this comment of hers in my blog. After reading her comment I came up with a term “merchant naivete”. By analogy with the ecological naivete, it characterizes merchants that start their affiliate programs (i) without any Terms of Service (naively entrusting the promotion of their brand to whoever decides to join their program), and (ii) without any affiliate manager to actually manage the program (naively presupposing that it is the affiliate network’s responsibility to manage it). Both of these facts can (and often do) lead to deadly consequences.

Here is my video on the subject:

Nancy has shared with me that she has “evaluated 29 new (Jan 2009) affiliate programs, and found 17 with no terms at all, some claiming that they were professionally managed by a trusted third party.” 7 more programs “had some unusual terms, maybe PPC Restrictions but no real TOS” and “only 5 had full TOS and detailed PPC restrictions.” Wow. Stagerring stats! They do correspond to what I myself discovered when conducting an analysis of 100 affiliate programs for “A Practical Guide to Affiliate Marketing” back in December of 2006. I documented that 51% of the affiliate programs lacked Terms of Service (TOS) agreements altogether, 36% had extremely generic ones, and only 13% had full affiliate program agreements in place. In Nancy’s smaller sample the spread has roughly corresponded to mine: 60% had no TOS, 23% had very generic ones, and 17% had TOS in place. Over 2 years have passed, but things haven’t changed much. The sad fact is that they have actually worsened. The merchants that have no affiliate program agreements now say (and often believe!) that they are “professionally managed by a trusted third party,” misunderstanding an affiliate network for an affiliate program management agency [read about the differences here]. They make themselves vulnerable to those affiliates that are just waiting to feast on another new merchant’s affiliate program who has no clue what he/she is doing.

Nancy said that “whenever possible” she “would rather work with programs that are managed by people who know what they are doing,” and I believe, this summarizes the approach that the majority of serious affiliate marketers take. When an affiliate program is run an an ‘auto-pilot’, it is wide-open to unethical affiliate practices that we speak about daily. “No terms at all shows a poor understanding of the arrangement that they have with the network or a poor understanding of affiliate marketing,” says Nancy, and “in today’s economy it can make all the difference between survival of the program and failure.” I could’ve not expressed it better!

14 thoughts on “Merchant Naivete or Common Problems of Affiliate Programs”

  1. I would like to add that I signed up with one of those 5 programs that had terms. The TOS was clearly worded and reasonable, it seemed to me that this was a well run program. Usually I will visit the site before I sign up, this time I hadn’t because it appeared to be an intelligently run program from their terms. Now over 24 hours later I still have not received a welcome email with any contact when I had a question I went to the merchant’s website to look for a way to contact them.
    At the top of the page is a BIG 800 phone number and the invitation to phone in your order..hmmm. There is another prominent place to click to get a “Women’s Day” (magazine) discount and at least 3 big “get a discount today” banners that invite people to sign up for their newsletter. If someone makes a purchase on their site they can automatically subscribe them to an opt-out newsletter, no reason to push it from all sides. The program is for a merchant selling products but they do not offer a datafeed to work with, only banners. The chances of ever getting a commission from this site no matter how pre-sold my traffic might be is soooo small as to not be worth the trouble. It is pretty hard to presell a visitor with only a banner. It is hard to build a product page without at least a few images to write about.
    If I were doing PPC rather that content it wouldn’t be different. Their site is not affiliate friendly, neither are their creatives. It takes a lot to have a successful program. This one misses in too many ways.
    If a merchant wants to deal with affiliates this way they should pay per click, not per sale. These folks need help to understand how it works.

  2. Congratulations on your first video Geno. I think you performed very good for your first video. Looking forward to see more from you.

    @Nancy – I can relate to your issues very well. There are awful amount of merchants that still don’t understand that the more resources they provide to affiliates – the quicker and easier it will be for them to start promoting. There’s still long way to go to get there 🙂

  3. Nancy has made 3 important points… {seesmic_video:{“url_thumbnail”:{“value”:””}”title”:{“value”:”Nancy has made 3 important points… “}”videoUri”:{“value”:””}}}

  4. Pingback: Merchant Naivete or Common Problems of Affiliate Programs « Affiliate Marketing Blog « AffiliateFortuneCookies

  5. Just re-watched my above video-response, and thought it is necessary to clarify why having a prominently displayed call-now-to-order toll-free phone number on the merchant website that runs an affiliate program is not something you want to do. If you do not track phone orders that come through affiliate links, such a phone number becomes a classic example of a “leak”, or a link through which traffic leaks from the merchant’s website to contexts where affiliates are not remunerated for referring that traffic to the merchant. An affiliate does their pre-sell job, and refers the client to you. The client sees the phone number where you encourage customers to phone in, and place the order over the phone. They call in, place their order with you, and at that moment (unless you have a system of crediting that affiliate’s account for the phone order received) the affiliate is instantly excluded from the process.

    When working on my “Online Shopping Through Consumer’s Eyes” and polling online shoppers, I asked them this question: “All factors being equal, are you more likely to shop with a website that has a toll-free phone number prominently displayed on top of each page?” 56% of the respondents said “yes”, and 44% voted “no”. The decision is yours, but if you decide to have that phone number on every page of your website, you better track phone orders referred by affiliates. If you do not, I recommend you (a) place it only on the “Contact Us” page, and (b) do not call customers to phone in instead of placing their order online.

  6. Just a note to let you know I’ve still not heard a peep from the merchant I had contacted about their ‘deficiencies’. Their TOS gave the impression that the program was not on auto-approve so maybe that’s why no basic “Welcome” email. Whether they realize it or not, it is on auto-approve, and they do not respond to polite questions. I’m sending them a note this evening via the SAS interface and if that does not produce a response within a few days, I’m done with this one.
    I try to be patient because I realize that sometimes a realistic response can take time, but it tells me that maybe they have customers not getting a response as well and that is not so good.

  7. Nancy,

    Wow. Sorry to hear this. Feel free to send them to my video (or this post), and tell them I’ll offer them I a free optimization analysis of their affiliate program if they e-mail me back by the end of this Winter.

  8. Whoopee! Got a response today! They have contacted the network to see about implementing phone tracking and adding a datafeed. It won’t be overnight but I won’t be dropping this program. I’m including a link to this post for them, I think they are interested in running things right, just haven’t got all the information they need yet.
    I do hope they follow through with your offer, Geno, it could help them immensely!

  9. Nancy,
    Thanks…. for your patience and understanding.
    We are indeed a little “naive” when it comes to affiliate marketing, but we’re learning fast. This is a new venture for us. Reading relevant informational blogs such as amnaviagtor and dealing with “GOOD” affiliates such as yourself… should help a lot.

    We would love to take you up on your offer for a free evaluation! Where should I send the email to?

  10. Last week I sent an inquiry to a French online movie rental program asking for a product data feed and I got a response from the marketing director telling me she didn’t know what a data feed was. So I asked her who was managing the program and she pointed me out to [email protected]

Leave a Comment

Your email address will not be published. Required fields are marked *