My colleague, Robert Reynard, and I just returned from Affiliate Summit. Special thanks to Shawn Collins and Missy Ward for having us. This is not the first time I have been, but nonetheless it impresses me to see the number of people who have an interest in this space.
Affiliate Marketing Regulation
One of the most interesting topics this year was around government actions which are threatening many who have profited from this space for many years. The Federal Trade Commission (FTC) is cracking down on Internet sites that profit from promoting other’s products or services without disclosing within that promotion that they received some sort of compensation from the company.
Compensation in this instance is not limited to cash. Let me give you an example that I heard at the show:
Let’s say a stay-at-home mom begins a blog to help other stay-at-home moms. A diaper manufacturer sees that blog and decides to send her a box of diapers with the hope that she would try them on her children and then blog about how well they performed.
That mom must disclose that this was a gift from the manufacturer and she must disclose that this blog post is partial to them for that reason, even if she would have blogged about “the diapers making it through the night without leaking” anyway and was in no way influenced by the fact that the diapers were a gift. In other words, even mommy bloggers could be held liable for product reviews.
This may be an extreme example, but thanks to some who may have been taking advantage of consumers through use of exaggerated claims and fake reviews and testimonials, it has become a necessary part of affiliate marketing.
Google Adwords frustration
Another hot topic surrounding this event was affiliate frustration with the Google Adwords program. Over the last year, many affiliates who used Google Adwords to advertise their site(s) were notified that they were no longer welcome to use the Google advertising platform.
OK, so “notified” may be a bit of a stretch, typically the way they found this out was without any sort of notification at all but rather by noticing that sales are lower or perhaps non-existent and logging into their Adwords account to troubleshoot.
After looking around for a bit, they probably found that everything seemed to be in order. On the surface at least. They then may have scrolled over a status column which, when hovered over, opens a small box showing a users Quality Score. To the affiliate’s surprise, the Quality Score ranking that once read 7/10, 8/10 or even 10/10 now says 1/10.
A 1/10 Quality Score ranking in Google Adwords is about as effective at removing advertisements as deleting the campaign altogether. Worse yet, starting over with a new campaign will not help. An advertiser’s Quality Score remains with their domain.
I have heard, but this has not been confirmed by Google, that the only way to receive a 1/10 Quality Score across an entire account is for a Google Policy Team Member to manually place this on the account…meaning that this does not naturally occur. Perhaps this is why affiliates have affectionately labeled this occurrence a “Google Slap.”
Can you imagine being in business one day and out the next? That is what is happening to some of these affiliates. So why would Google do this? After all, affiliates are paying them, right? Well, Google, like the FTC, is probably reacting to the bad apples. Google is fanatical about protecting its customers (i.e. search users) and if it takes hurting some legitimate affiliate’s business to protect customers from the bad apples, it looks like Google is okay with this concession.
What this may mean for 2010
It will be interesting to see how both of these situations play out over this year. I counted 46 businesses from the advertising and marketing industry that made last year’s Inc 500 list of the fastest-growing companies, private companies.
Many of these businesses have deep roots in the affiliate marketing business. Their growth rates have skyrocketed on the backs of affiliates using Google Adwords to advertise, and in some instances have grown off of sites that now must alter their pages to abide by the new FTC guidelines.
Will these companies be able to adjust their business models and continue these impressive growth rates in the face of these new obstacles? Share your thoughts in the comments section of this post or start a conversation with your peers in the MarketingExperiments Optimization group.