Increasingly, bean counters (CFO’s) at retail and catalog companies are taking aim at their Web affiliate programs by assigning audit task forces to uncover waste and fraud within the channel.  At the heart of such actions is a serious desire to root out “hidden costs” that are associated with affiliate programs.  These costs are often viewed as an additional “tax” on orders that would otherwise be delivered.  These include affiliate orders involving:

1) Adware and spyware (involving illegitimate commissions)
2) Search affiliates who used trademark/brand terms to “intercept” traffic already bound for the marketer’s site (assigning a cookie, earning a commission)

“Don’t we already own these customers?”

In addition to the above affiliate tactics being troublesome a larger question has popped into the minds of marketers as they rush forward.  At the heart of the matter lies loyalty and motivation—who rightly deserves credit for creating the sale.

“Aren’t we already investing in other media to earn these orders?”

Indeed, marketers are slowly realizing that they spend in many other ways in order to earn a sale from existing customers—through paid Web media (pay-per-click) arrangements with comparison shopping sites, radio and television ads, catalog and direct mailings, etc.  Affiliate programs were built on a false pretense: affiliates always deliver new customers and are always, solely, responsible for creating the sale.

In fact, other media costs are usually involved and audits are revealing the truth about affiliate programs.

The Last Marketing Channel Wins
Some savvy marketers are growing increasingly uncomfortable paying more than one party for a sales transaction.  In fact, some are going as far as only providing an affiliate with credit (commission) upon an immediate or 24 hour conversion to sale.  Others are creating tracking mechanisms—outside of affiliate networks—that allow them to pay affiliates only if they were the last MARKETING CHANNEL to refer the customer. 

As an example, an affiliate sends a user from its site to the marketer’s site.  A 30 day cookie (commission earnings period) is set.  The user clicks off and doesn’t purchase but returns 10 days later as a result of the marketer’s email campaign.  A transaction results and the affiliate cookie automatically negated by the marketer prior to passing on any data to the affiliate solution provider.

Affiliates & Affiliate Networks: Lose Lose
Who loses?  The affiliate network and the affiliate.

In fact, many affiliates themselves don’t realize this is occurring.  Close examination of marketers terms & conditions reveals an increasing number of marketers use this technique for a variety of reasons… some mentioned above.  They simply don’t shout it from the mountain tops and bury it in the legalese.  Don’t ask, don’t tell.

Are you concerned about affiliates adding a “tax” to your orders and/or leads?  Click on Comments below and share your thoughts.