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January 31, 2006

Are Affiliate Network Employees Stealing your Business?

Posted by Adam Viener

Top affiliates are starting to seriously question the ethics and policies of the major affiliate networks that have long encouraged their employees to participate as affiliates in their merchant’s programs to help them better understand the affiliate marketing industry.

This issue was first brought to light by David Lewis on ReveNews. David indicated that three top account managers left CJ last week to avoid enforcement of a new policy that would forbid them being affiliates.

It has been very difficult trying to pull together the facts from the rumors on this issue. So far here is what I have heard and believe to be true:

1. Commission Junction used to encourage employees to participate as affiliates.
   
2. Commission Junction recently sent out an internal email letting employees know that the policy had changed and that employees could no longer be affiliates. Apparently this email pointed out Sarbanes Oxley compliance as part of motivation behind the change.
   
3. Shortly after the policy change went into place, the following CJ employees resigned: Chad Darling, Andy Powell, and Don Batsford.
   

At the industry gatherings, over the past year or so, I have heard growing concerns amongst the top affiliates about what information affiliate network employees may or may not have access to. These concerns and fears have only been heightened by a string of x-affiliate network employees turned super-affiliates overnight. The networks have been very quiet on this issue and are reluctant to make any public comments. This lack of communication is causing an increasing concern of potential wrong doing at the networks. When the networks have to talk to their lawyers before commenting, nobody feels comfortable.

I spoke with an x-Linkshare employee who confirmed that when they were with the company being an affiliate was encouraged. I chatted with an existing Linkshare employee who wouldn't provide any information. When pushed to comment, the most I could get out was that they knew if a policy was in place but wouldn't explain if it was a policy forbidding it or encouraging affiliate participation by employees.

My contact at Performics indicated that they do have a policy preventing employees from being affiliates. Some in the industry suggest that it's not about having a policy, but more about if the policy has been enforced.

In addition to the concern about network employees running their own programs, Top search affiliates are increasingly concerned about the protection of their data and keyword lists as the networks continue to grow their search practices, where they run paid search campaigns for their merchant partners. How does a top search arbitrage affiliate know that they keyword lists aren't being scrapped from the HTTP referrer data that the networks collect?

At CJ, I have been informed that this data is protected fairly seriously and that only 2-3 people have access to this data and all calls to that database are tracked.

The real problem is the lack of communication, transparency, and full disclosure. Clearly the networks have had issues where employees have had access to private information and strategies of their affiliate partners, clearly many of these employees had and continue to have access to private information and reports on the top affiliate’s business metrics. So spell it out. Send out a communication to your affiliate partners letting them know what your policies are and how their information is going to be protected.

Finally, the networks should take a hard look at these x-affiliates and communicate with the top affiliates they had contact with about what programs they are running, what sites they have, and give top affiliates a chance to determine if their business practices have been compromised.

The network's are in a precarious position here. Their business model only works because of the trust established with the merchants, and the affiliates. If the networks aren't open, ethical, and forthcoming about these types of issues, then their role in this industry will be diminished.

Clearly setting up a new network isn't rocket science. How many new networks started last year alone? In the past affiliates only went where the merchants were, as affiliate business have grown up, I believe that it's the other way around. Merchants will go where the top affiliates are.

I hope the networks will respond to these issues and re-establish that trust.

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