So let’s cut to the chase here.  It is Day 2 at Affiliate Summit West and I could continue to share with you all of the festivities, the parties, the tweet-ups, and the other countless promotional events that are going on.  (By the way, I went to this party at the Palms last night in the penthouse suite…OMG!  Talk about a view…and a crazy party…enough said!)

But what is REALLY happening at Affiliate Summit and the world of affiliate marketing?

There is a definite undertone to the event revolving around the new FTC regulations on testimonials and endorsements, but even more so in the world of merchanting.

I first heard about this from my merchant a couple of weeks ago about how visa and mastercard are cracking down on negative option offers on the internet. For those who don’t know, negative option offers occur when people sign up for a free trial or a shipping only trial (called a “plus-shipping offer”) and then force the buyer into a continuity payment plan.

(Read the entire explanation at New Visa Mastercard Guidelines for Negative Options)

This is really nothing new to marketing.  Music clubs have been doing it for years.  “Girls Gone Wild” has been the king of this on TV.  But what we have seen over the past year is that this negative option offers have become more aggressive, lower quality and (I hate to admit it) scams in some cases.

Offers are being generated to get buyers into a “trial” when they are unknowing of the further payments they are responsible for.  Some offers spell this out in the fine print at the bottom of the page.  Some offers hide this in 10 pages of terms and conditions which the buyer agrees to in a checkbox.  Some offers don’t disclaim it, period.  This is the scam and it has been causing havoc in the merchanting industry.

So a few weeks ago, Visa and Mastercard stepped in and said “We’ve had enough”.

I really didn’t know what this meant at the time.  It made sense that it was going to happen, but were they really going to act upon it?

Affiliate Summit answered that question for me!  Talking with insiders in the business, this is causing a bit of chaos with advertisers (those who create the offers and sell them), the publishers (or affiliates) and the networks (like the CPA companies!).

Whole industries have essentially been shut down.  The diet offers (aka Acai Berry offers, as an example) have been almost wiped out.  “Google” offers, which were already on the chopping block due to the FTC regulations, are virtually non-existent.

And also because of this, we are seeing affiliate payout levels dropping from the networks.

Is this the end of Affiliate Marketing & CPA Wealth?

Not in the slightest, but I guarantee you will see some big changes in the business.  Personally, this helps me greatly in my business.  Lead generation (which in 2009) was virtually dead due to these low quality, negative option buyers, should start to grow again.  And with it, the affiliate payouts are going to return back to Earth.

This is going to make it tougher for affiliates, that is for sure, but nothing they couldn’t do just 2 years ago.  This inflated, high converting (and borderline unethical) market should return back to normal.

Still, the negative option is still not dead.  The free trial is still a very viable form of funnel marketing.  Having a good, communicative relationship with your merchant is the first step.  Explain what you are trying to do and review your offer with them.  Also, make sure to spell out EXACTLY what your customer is buying.   Manage your refund requests according and promptly and avoid chargebacks at all costs.  This should still work.

“But won’t that hurt conversion?”

Well, yes, but if you weren’t doing these things in the first place, you were probably misleading your customers anyway.

At the end of the day, this should help clean up the industry a bit.  The era of buyer leads will hopefully return and the strength of these uber-arbitrage affiliates should become a little less powerful…

…and that is an opportunity!  The playing field is slowly leveling again and anyone looking to jump in should do it now!

cheers…matt