Third parties may wish to store information on the equipment of a user, or gain access to information already stored, for a number of purposes, ranging from the legitimate (such as certain types of cookies) to those involving unwarranted intrusion into the private sphere (such as spyware or viruses). It is therefore of paramount importance that users be provided with clear and comprehensive information when engaging in any activity which could result in such storage or gaining of access. The methods of providing information and offering the right to refuse should be as user-friendly as possible. Exceptions to the obligation to provide information and offer the right to refuse should be limited to those situations where the technical storage or access is strictly necessary for the legitimate purpose of enabling the use of a specific service explicitly requested by the subscriber or user. Where it is technically possible and effective, in accordance with the relevant provisions of Directive 95/46/EC, the user’s consent to processing may be expressed by using the appropriate settings of a browser or other application [underlining mine].

In essence, the new legislation proposes that no cookie is installed on the end user’s machine without his/her explicit consent which must be sought every time a cookie is about to be recorded.

This legislation is not yet signed into a law, but is expected to become one if signed within the next 18 months (implementation due: 04/26/2011).

Will the EU Law Bury Affiliate Marketing?

If such a legislation becomes a law, will it really bury affiliate marketing in Europe as some are already being afraid? I do not believe so. While the majority of present day affiliate marketing tracking solutions do rely on cookies, the industry’s existence does not have depend on them. There is a way to track affiliate-referred sales/leads via cookie-less solutions, and at least two European affiliate networks are already employing them (AffiliateFuture and Webgains). So, while the is little joy for affiliate marketers behind the newly proposed legislation, it is certainly not the end of the world.

Bigger Picture — Wider Implications

The real problem is that if this draft becomes a law, many other areas of online marketing will be automatically affected. To mention but a few scenarios, cookies are being extensively used for/in:

• Affiliate marketing
• Ad serving
• Personalization and optimization of user experience
• Shopping carts
• Web analytics

The implications are significantly wider than just the affiliate marketing. In fact, as suggested above, affiliate marketing does have alternative solutions on hand. Are there effective ways to deal with the possible complexities on the other fronts mentioned?

Related articles and discussions:

• Big Threat to Affiliate Marketing? (discussion)
• EU Adopts Law Requiring User Consent for Cookies
• EU Cookie Rule Passes, But Ad Impact Still Unclear
• EU Proposal Could Cripple Common Web Ad Practices
• Consent Will Be Required for Cookies in Europe (legal take)
• New EU Cookie Law Smacks Of Windows Vista’s Constant Nagging
• EU: No Cookies Without Consent. Will EU Affiliate Programs be Killed? (discussion in comments)

As look through the above statistics, the two things that I see in it are:

1. Social Media Channels Are Top Priority

While I am not entirely sure why “Blogs” and “Consumer ratings” have been mentioned separately from “Social Marketing” (I would argue that these two represent a Social Medium each; see my Types of Social Media to Use in Marketing post), it appears that the exploration of Social Media is currently the top priority for US online retailers.

2. Affiliate Marketing Includes Most of These

While it is unlikely that any affiliate will happily engage in “Live chat” with customers, and/or do the merchant’s work of “Product personalization”, the top four “applications” on the list are right up the affiliate marketing alley. In addition to a decision to explore these channels on their one, online retailers should realize (but will they if no one explains it to them?!) that affiliates can also effectively promote them through Social Media, distribute their videos, give them excellent exposure in their niche/product-specific blogs, and even help obtain additional ratings and reviews (some put such tools together by themselves, while others could definitely use advertisers’ help with this). With proper attention to the affiliate marketing channel, the employment of the top “applications” can be considerably more efficient, and happen on a much wider scale.

I started a brand new affiliate account with Commission Junction, placing my affiliate website into the “Marketing” category, and listing “Web site / Content” and “Search Engine Marketing” as promotional methods. After this I have applied into a program that does not prohibit any of these marketing methods in their TOS. The Home Shopping Network’s affiliate program caught my eye, and I have decided to apply into it. I carefully read through the program’s Terms of Service, agreed to them, applied, and automatically got the following message:

Since I have copied and saved the restrictions from the TOS prior to applying into the program, I went back to them, and found no indication of how my website could be in violation of any of these. Here’s an excerpt from their well-put-together affiliate agreement:

…HSN may reject the Application if the website is deemed, in HSN’s sole discretion, to be unsuitable for the Program. Unsuitable websites include, but are not limited to, those that:

• display or provide content containing pornographic material of any kind;
• display or provide content that is grossly offensive to the communities served by your website, including blatant expressions of bigotry, prejudice, racism, hatred or excessive profanity or post any obscene, lewd, lascivious, filthy, excessively violent, harassing or otherwise objectionable content;
• sell or promote any products or services that are unlawful in the
• location at which the content is posted or received;
• introduce viruses, worms, harmful code and/or Trojan horses on the Internet;
• display or provide material that is intended to attract children under 18 years of age to your Member Site;
• post any content or otherwise infringe in any way or violate any copyright, patent, trademark, service mark, trade name, trade secret or other intellectual property right of any third party;
• promote, solicit or participate in pyramid schemes;
• post any content that holds HSN open to public scorn or ridicule;
• engage in any libelous, defamatory, scandalous, threatening, harassing activity;
• post or disclose any personally identifying information or private information about children or any third parties without obtaining their consent in a legally sufficient way (or their parents consent in case of a minor); or
• post any content that advocates, promotes or otherwise encourages violence against any governments, organizations, groups or individuals, or which provides instruction, information or assistance in causing or carrying out such violence;
• engage in unethical search engine marketing or search engine optimization techniques. Examples include, but are not limited to: redirects going from a search engine results page directly to HSN.com versus taking the user to your site’s landing page with HSN related content; keyword stuffing; spamming; cloaking; hidden text or hidden links; or
• operate or utilize (i) a website, or (ii) a link of any kind to a website, that contains or promotes any of the foregoing.

All of the above points require an actual review of the applicant’s website (or monitoring of their “search engine marketing or search engine optimization techniques” if we’re talking SEM/SEO). An automatic denial excludes the possibility of someone actually reviewing the affiliate site.

Apparently, the automatic decision was based on the data that is already reflected in my test affiliate account. The application could have been declined either because of the location of the affiliate (although I highly doubt they do not accept U.S.-based affiliates), or on the CJ’s 5-bar scale ranking (mine is obviously at zero), or on how new the affiliate is to the network (my account was opened just today). Are any of these really relevant to the affiliate’s potential for any affiliate program? Not at all. As mentioned yesterday I have seen new affiliates go from zero “bars” to 4 bars within one month. Suppose CNN.com or Forbes.com just joined CJ as an affiliate, and applied into the HSN’s program. Would a decision to automatically decline such affiliates based on the “bar ranking” benefit the advertiser? Unlikely! It will only do their affiliate program a disservice, hindering its further growth. Remember, the affiliate may never write back to find out why they were declined, and simply go to a competing merchant instead!

Additionally, it is important to mention that if you are declining affiliates based on factors other than the above-mentioned ones, the best practice is to make affiliates aware of these factors before they click that “Submit” button.

This application got declined on the following 5 reasons. These are the things that are very frequently happening with affiliate applications, and I think it is important to devote my today’s post to it. If you want your affiliate application to be declined, follow the below 5-step advice:

1. Use a made-up name instead of your real one

Coming from a linguistic background, and being born in the Soviet Union, it just makes me smile when I see a Georgia resident bearing such a name. A simple research helps me undertand where they got the name from. There is a person with this name living in Atlanta, Georgia. Additionally, it is apparent that the “affiliate” has confused the state with the country, thereby revealing that he/she is probably neither Cocomonti, nor a resident of Georgia.

2. Assume that website is not necessary

I would argue that it always is essential for an affiliate to have a website (or at least a page) where he/she would explain to advertisers the marketing methods they are planning on employing to promote advertisers. The explanation can be however general, or however detailed you want, but it is hard to imagine that an effective online marketer could have no website whatsoever. The affiliate-stated relevancy of the “Web site” question is all the more suspicious in light of the fact that they have chosen “Web site / Content” as one of the promotion methods that they are going to use. How when you don’t even have a website?

3. Make spelling mistakes

As one can see from the above screenshot, the word “applicable” has been spelled two different ways: neither one of which is correct.

4. List yourself in an random category

Not all affiliate networks require affiliates to place their websites into categories. Commission Junction (which is the network on which this application has happened) does, and this affiliate has chosen “Cars & Trucks” for his notapplicaple.com nonexistent website. Any randomly filled-out information (name, location, website, categorization, etc) may be taken for an attempt to deceive an affiliate program manager.

5. Ignore emails asking for clarification of intent

If you have received an email from an affiliate program manager who wants to clarify how exactly you are envisaging working with their affiliate program, a non-reply is the worst thing an affiliate can do.

I could have also mentioned the free email account, but many affiliates choose to do this for obvious reasons, and I’m certainly not going to recommend declining an affiliate application based just on that.

Some staggering statistics has been published by the

AdAge wrote:

Less than 10% of online retailers’ web traffic, on average, comes from search engines…

Nielsen found the majority of retailers’ web traffic (61%, on average) comes from people going directly to a retail site — consumers typing, say, Amazon.com into a browser address bar.

Nielsen’s findings are based on second-quarter traffic for 200 online retailers. The analysis shows that comparison-shopping sites, such as NexTag or Scripps Networks Interactive’s Shopzilla, collectively accounted for about 1% of traffic. Other referrals, such as affiliate programs or advertising (basically anything that wasn’t direct navigation, comparison referrals or search), accounted for the remainder.

Interesting information which once again emphasizes the importance of brand protection in online marketing, and while I am not at all convinced that the direct domain type-ins mean that the consumer hasn’t previously been pre-sold by an affiliate (or other online publisher/campaign), this is not something that I would like to draw merchants’/advertisers’ attention to. I think it is extremely important to emphasize two things in connection with the above-quoted statistics:

• Watch out for parasites who may be cannibalizing even on those direct type-ins [video here]
• Check your affiliate programs for trademark poachers that know how important trademarks are, and often target just your trademarks exclusively — including “www.brandname”, “brandname.com” and other domain-like keywords typed into SEs’ search boxes [more here]

Browsing through this report I have found it absolutely fascinating! Richly illustrated (those illustrations are simply masterpieces, in my opinion), it brings up some extremely interesting stats. Here are just some of the facts that company owners, CEOs, CMOs (and CFOs!) must know about:

• Digital brand experiences are not your customary “awareness” or “conversion” plays but rather: customer-creation plays (i.e. “digital brand experiences create customers”).
• Depending on how companies treat the digital space, it can either build a brand or break it. “65% of consumers report having had a digital experience that either positively or negatively changed their opinion about a brand” and “of that group, a nearly unanimous 97% say that their digital experience influenced whether or not they eventually” made their purchase from that brand.
• The new kind of branding/advertising is “branded experiences (or actions)” such as branded games, interaction with the consumer via social media, etc.
• Twitter, Facebook and MySpace are quite probably “the outlet malls of tomorrow”. 44% of respondents follow brands on Twitter (and 37% “friend” brands on Facebook and MySpace) to have “access to exclusive deals”.
• Consumers spend 34% of their total media time online and 35% watching television.
• Customer engagement is now being largely defined in terms of social media interaction with brands.

The full 65-pages report in PDF may be found here. The above is just a sneak peak of what’s in it. I strongly recommend everyone involved in any kind of commerce to review it.

Surprisingly, most major affiliate networks make no recommendations on the maximum recommended banner file size. The first network that I have seen make such a recommendation is LinkConnector. They advise that advertisers’/merchants’ banner sizes do not exceed 30 KB. Now, in reality, their “advice” is much more than one. It’s actually a restriction. You cannot upload a banner that’s larger than 30 KB while setting up your affiliate program with them. While, imposing such restrictions may not be a very good idea (30 KB is not much for larger skyscrapers and leaderboards, especially if we want them to be of high quality), advising merchants on the file size is actually a very good idea. It helps everyone who is involved in the affiliate marketing channel: affiliates who are using the banners, networks who are hosting them, merchants who risk being less promoted when/if their files are too bulky.

Over the past two weeks I have been polling my blog’s readers on this subject, and while so far the response hasn’t been too overwhelming (to put it mildly), it does look like that 30 KB limit is right around the comfort level mark for online publishers:

Conclusion: by all means, do everything possible for your banner file sizes not to exceed 30 KB/each. If one does have to be larger than that, 60 KB is the next threshold that you want to keep in mind. It’s easy to remember 30 * 2 = 60.

Banner file size is not a small issue. Knowing what’s preferred should help merchants build more affiliate-friendly affiliate programs. If you haven’t yet expressed your opinion in the above-quoted poll, I would highly appreciate you voicing your opinion out by casing a vote, and/or posting your comment below.

Does it [the passing of the new Federal Trade Commission's disclosure rules for "endorsements and testimonials"] only affect product or service endorsements or even all affiliate links, banners, etc that a website may publish?

I’ve just given the Guides a second (or really third or fourth) look. They state that the Federal Trade Commission was specifically looking to address issues connected with “the messages conveyed by consumer endorsements” and particularly with “the use of so-called “disclaimers of typicality” accompanying testimonials that do not represent experiences that consumers generally achieve with the advertised product of service” (p. 2). Upon receiving feedback on the 1980 version of the Guides, some of which argued that “the proposed revisions to the Guides could have a negative affect on emerging media channels and impede the ability of businesses to communicate with consumers through legitimate testimonials and endorsements”, the Commission has still decided to proceed with the new Guides. The purpose of the newly introduced rules was not to interfere with legitimate reviews and testimonials, but rather: to address the so-called “non-typical testimonials” (pp. 3-4). What exactly is the FTC trying to address, and who exactly is affected? Reading on, we see the following paragraph:

The Commission does not believe that all uses of new consumer-generated media to discuss product attributes or consumer experiences should be deemed “endorsements” within the meaning of the Guides. Rather, in analyzing statements made via these new media, the fundamental question is whether, viewed objectively, the relationship between the advertiser and the speaker is such that the speaker’s statement can be considered “sponsored” by the advertiser and therefore an “advertising message.” In other words, in disseminating positive statements about a product or service, is the speaker: (1) acting solely independently, in which case there is no endorsement, or (2) acting on behalf of the advertiser or its agent, such that the speaker’s statement is an “endorsement” that is part of an overall marketing campaign? The facts and circumstances that will determine the answer to this question are extremely varied and cannot be enumerated here, but would include: whether the speaker is compensated by the advertiser or its agent; whether the product or service in question was provided for free by the advertiser; the terms of any agreement; the length of the relationship; the previous receipt of products or services from the same or similar advertisers, or the likelihood of future receipt of such products or services; and the value of the items or services received. An advertiser’s lack of control over the specific statement made via these new forms of consumer-generated media would not automatically disqualify that statement from being deemed an “endorsement” within the meaning of the Guides. Again, the issue is whether the consumer-generated statement can be considered “sponsored”. (pp 8-9)

The FTC’s concern is clear: are the “positive statements” (note the adjective here!) influenced by the prospect of earning money, or are they posted without any monetary motivation attached?

So:

• The FTC is concerned with consumer-generated media — specifically with product/service endorsements/reviews/testimonials.
• The main question is whether there is a sponsorship relationship present between the website owner (or producer of the content), and the advertiser, or not.
• The goal is to provide a transparent environment where if a sponsor-endorser relationship exists the end-user/consumer/reader must be notified of it through a proper disclosure of the relationship

Additionally, since the above text talks specifically about “positive” reviews and endorsements, the question of whether a negative review with a merchant’s ad on the site be deemed an “advertising message” remains open. Knowing that negative reviews also increase sales, it would only be just to presuppose so. However, this (just as anything that is written in this post) remains to be my personal presupposition.

Another question related to the consumer-generated media would be this: what if someone starts a forum which offers its readers a platform for their reviews (non-biased, subjective yet not sponsored in any way), and decides to monetize it by adding ads to it (be they text links from within the people’s reviews, or rotating banners, or even a directory of the services that are being reviewed where every link is being compensated in some form)? Would the obvious monetary interest of the forum’s owner affect the trustworthiness of the reviews posted by independent reviewers? Unlikely. Can the FTC get concerned? Most probably so.

And finally, let’s briefly look at other websites that have an obvious monetary interest in promoting merchants, but are not producing reviews/endorsements as such.

Example 1

Comparison shopping engine (with or without a “review product” function) which provides consumers with an option of searching products across different advertisers, sorting them by price, popularity (either based on a review rating, or on the “most frequently viewed” stats), alphabetically, etc. Would it be necessary for such a website to disclose the monetary connections with the “sponsors”? Obviously, this includes not only affiliate websites with a comparison shopping function, but also such giants of the comparison shopping vertical as Shopping.com and Epinions.com, Shop.com, NexTag.com, PriceGrabber.com, mySimon.com, Shopzilla.com, and multiple others.

Example 2

A fishing (or any other topic) blog where the author is post his fishing tips and pictures, and has either banners, widgets, or other types of affiliate links “on the side”, but offers no reviews as such? Would this website be required to disclosure the blogger’s financial interest in his readers purchasing from the advertisers he/she promotes?

Example 3

A cashback affiliate (e.g.: FatWallet.com), or a coupon affiliate (e.g.: CouponCabin.com).

Example 4

A paid search affiliate (whether they link their PPC ads directly to the merchant, or route them via a website of their own, but provide no merchant reviews on the latter).

The list of examples could go on and on. The primary question is what we started this post with or Does a publisher that is not explicitly involved in reviewing their advertisers’ products or services have to provide disclosures of monetary connections? I don’t see anything that would imply this in the FTC’s guides. The Commission’s concern seems to be specifically with the objectivity of the “speaker’s statement” when endorsing a product/service. It is being stated that all “endorsements must reflect the honest opinions, findings, beliefs, or experience of the endorser” (p. 60) and when there is a material connection between the endorser and the vendor, it must be clearly disclosed. If there is no such connection, there seems to be nothing to disclose. If there is no sponsored endorsement, there seems to be nothing to disclose either.

Don’t treat any of the above as a legal advice. These are just my personal speculations based what I’m reading in the Guides.

As always, feel free to chime in with your thoughts on the subject by posting them in the “Comments” area below.

Hi Geno,

I want to touch base with you to divulge October information as well as obtain feedback. First, let me give you the numbers for October:

- Your earned $0 in October from 0 clicks
- Eight affiliates made their first sale with us last month and earned an additional $20 bonus
- Bonus payments made up over 12% of the regular commissions paid in October

For the feedback, anything and everything is welcome; from questions to criticism. My role as affiliate manager is to make you more money. If there is something I am not doing that you want me to start doing, let me know. If I am doing something you want me to stop, tell me.

Basically, give me any feedback you want. If you respond with quality feedback for me or the program by Friday, November 6th, I will give you $5 cash! I want to encourage well-thought out feedback and not one line answers just to get the cash. This is meant to help me improve the program so you can be more successful.

Here is how you can reach me:

[contact info and the rest of the message]

This came from Patrick Vesperman of MagnetStreet.com.

I always say that I am not a fan of extrinsic rewards, but there is time and place for them. This is certainly one of those cases! The only thing that I would have changed in his promo is the deadline (giving people a few more days would’ve been nice). Other than that, it’s brilliant!

No, five bucks isn’t a lot of money, but fair enough for a one-liner, right? Also, it is important to mention that the MagnetStreet’s affiliate program (no, I never promote an affiliate program without a good reason, and Patrick has certainly earned this link!) is already one of the top wedding-related affiliate programs at ShareASale. However, this program manager keeps pressing on, and believes that affiliates are not making money with his affiliate program, there is something he may be doing wrong, or isn’t doing something he should be doing. Wow. Simply exemplary. Hundreds (if not thousands) of other affiliate program managers should learn from Patrick.

The new FTC’s guides, which prescribe mandatory disclosure of affiliate links, come into full force in just 25 days, but it seems that regardless of the size of the company that launches a Twitter tool, an important point is being continuously missed — that of helping affiliates stay compliant with the new rules. Additionally, there is also a growing concern among merchants/advertisers that do not specifically offer any tools for promoting their brands on Twitter, but wonder how exactly they are can be policing/monitoring affiliates that promote them via social media. It is these two questions that I would like to address in my today’s blog post.

1. Helping Affiliates Stay Compliant

If I am reading and hearing the Federal Trade Commission right, the burden that’s being placed on the merchants’/advertisers’ shoulders is actually considerably greater than that which is being placed on the backs of the affiliates. On October 7, 2009 Richard Cleland, the FTC’s assistant director of advertising practices, stated that in case with “bloggers” the “approach is going to be educational”, and no one should fear a “penalty if they inadvertently make a mistake.” He also added:

We’re focusing on the advertisers: What kind of education are you providing them, are you monitoring the bloggers and whether what they’re saying is true?”

Is including a relevant clause in the affiliate program’s TOS going to be enough? Not really. There are two components that the FTC will be looking at: (i) education, and (ii) monitoring. The clause in the TOS will take care of the former, and I will address the latter below (see point #2). What I think every merchant/vendor who is putting a Twitter tool ought to also do is ensure that the disclosure is in place: be it with a use of an #ad hashtag or something similar to what cmp.ly is doing, but the disclosure of the monetary connection between the “endorser” and the “sponsor” must be in place.

2. Monitoring Affiliate Compliance

This is another thing that is expected of advertisers. How do you do this on Twitter? Coincidentally, Nathan Hangen of of Making It Social has just published a directly relevant post at TwiTip.com. In it he talks about the three tools that companies can use to monitor their brand on Twitter. These three are: TweetDeck, Hootsuite and Tweetizen. All three can be successfully used for monitoring what your affiliates tweet about your brand. Hangen writes:

TweetDeck panes: …TweetDeck is robust and easy to use. The simple way to set up monitoring in Tweetdeck is to add a few search panes for the keywords and hashtags that represent your brand. For instance, I have a search going for #twitterrockstar and Twitter Rockstar to see what people are saying about my Twitter course.

Hootsuite tabs: …a fabulous web client that has all of the features of TweetDeck without having to download an application, which is perfect places where you can’t download (like at work). You can handle multiple accounts here as well, but the best feature of Hootsuite in my opinion is being able to set up a tab for each brand. I set up tabs for Twitter Rockstar, Beyond Blogging, Nathan Hangen, and any other product or name that I want to track. Since everything is saved to my account, it’s always ready and waiting for me when I log in.

Tweetizen: …a great way to not only track your brand, but to show it off to others. Tweetizen allows you to create a “group,” which you can use to track keywords or hashtags, but the difference here is that you can embed the results in any web page. This is great for product pages or launch pages so that you can build hype for your brand without having to force it on your own.

Great lineup, and affiliate program managers can certainly use the above-quoted tools for monitoring what their affiliates say about them (and their products) on Twitter, and whether their tweets are compliant with the FTC’s rules.