Hello affiliate marketing. Goodbye declaration of independence

Hello affiliate marketing; goodbye independence

The cardinal rule of affiliate marketing is that the commercial relationship is obviously identifiable – clearly and conspicuously. If only marketers knew that to be the case…

As a B2B marketing agency head, I’m fast-earning the reputation for curating (and creating) some of my sector’s best, highest quality and most engaging content.

How do I manage to? Well, for starters, I devour huge volumes of content daily.

My RSS feed channels dozens of the world’s leading business and marketing-related publications with Forbes, MarketingProfs, Inc, Marketing, CMO, Content Marketing Institute and Marketing Insider among my top rated. It’s a rich and mostly rewarding blend of news and views.

Of course, only a small percentage of what I digest is share-worthy.

Lately, however, I’ve noticed that some of my favourite editorial platforms are morphing into advertorial assets. And because the ‘ads’ are disguised as editorial, they feel like fake news.

The content I’m referring to, of course, is affiliate marketing.

affiliate marketing noun
a marketing arrangement by which an online retailer pays commission to an external website for traffic or sales generated from its referrals.

Affiliate marketing, like influencer marketing, has permeated the western world. Whether B2B or B2C, product or service, marketers are scrambling to enter into performance-based commercial relationships with media outlets, digital publishers, celebrity and micro influencers.

Affiliate marketing is pervasive because it’s highly effective, both in generating sales and creating customer loyalty. To quote Carolyn Tang Kmet from Loyola University of Chicago:

“Customers driven by content tend to have a higher lifetime value than others. This is because a customer referred by content is informed. Her purchase decision is based on a need or desire cultivated by the content. This is in contrast to a customer that is referred by a coupon or deal site. That customer is likely to be a discount shopper. His purchase decision is influenced by price or the perception of a good deal. The discount shopper is less loyal, and will likely purchase from your competitors for a better deal… [and] once quality content is out there, it will continue to show up in search results and drive customers to your site for years.”

Consequently, an increasing proportion of my ‘news’ feed would now more accurately be described as advertising than editorial.

I’d be fine with that if we were all being open and transparent about it, but we’re not.

Affiliate marketing requires full disclosure

Affiliate marketing, influencer marketing or endorsements. It doesn’t really matter what you call it because from a regulatory standpoint it’s all treated much the same way.

The cardinal rule of affiliate marketing is that the commercial relationship is obviously identifiable – clearly and conspicuously.

Marketers and affiliates are compelled to reveal their commercial relationships under the US Federal Trade Commission guidelines, the UK’s Advertising Standards Agency Code, and potentially other country equivalents. If there is a material connection between an advertiser and an affiliate or influencer, that relationship must be disclosed.

If only marketers were aware.

According to 2016 research conducted by Lightspeed GMI and Research Now for Izea, marketers have an inadequate understanding of the regulations governing affiliate marketing. For example, while most US influencers understand the FTC guidelines (60% understand; 23% somewhat familiar), more than half (56%) of marketers are not aware of, or not familiar with FTC’s policy.

It gets worse. According to Izea, even if marketers are aware of the regulations they commonly ask influencers not to disclose their compensation arrangements. That’s dangerous considering it is marketers who are ultimately responsible for what their affiliates say, and for whether and how their affiliates disclose their commercial relationship.

Last week, I received two email communications, days apart, from Kim Garst, one of the world’s highest profile social media influencers. Both were hard sales pitches for an online marketing academy and the assumption I’ve made (I’ve sought confirmation) is that Kim will receive a commission for any registrations that are generated from her expansive network. Neither of these seemingly sponsored emails disclosed the existence of a commercial relationship. Nor is there any reference to one on the landing page to which I was directed. Is this an example of ignorance, oversight or non-disclosure?

Compliance or Customer Experience?

In the US and UK, the regulators are cracking down on breaches of the guidelines. And while compliance must be marketers’ top priority, those that are serious about delivering a world-class customer experience will go above and beyond to ensure transparency.

By not doing so, marketers and affiliates or influencers risk damaging their brand and reputation. Consumers won’t just vote with their feet – they’ll vote with their fingers: Unsubscribe. Opt out. Unfollow.

As I did with Kim Garst.

Here’s another slightly different example:

Mashable is increasingly producing sponsored content and is doing the right thing by including a prominent statement at the top of each article (Just to let you know, if you buy something featured here, Mashable might earn an affiliate commission). But is that enough?

Just as Instagram endorsements must be disclosed above the ‘more’ button, commercial written content should be disclosed in the headline. That way, consumers could immediately identify – and, yes, filter out – paid material.

In Mashable’s case, full transparency would result in headlines going from this:

Learn how to make content that doesn’t suck

to this:

[Sponsored] Learn how to make content that doesn’t suck

Harvard Business Review gets it – here’s one of its recent headlines.

How to Become a Digital Enterprise – SPONSOR CONTENT FROM DXC TECHNOLOGY

In the short-term, it might suck that fewer people click on the sponsored content but in the long-term Mashable and its advertisers will benefit from the disclosure.