Are Affiliates Getting Screwed?

I was just reading over a blog comment from my FTC Regulation post (with 1 hour audio interview!) and the commenter made an interesting point about affiliates getting screwed these days.   I have a few comments on this worthy more than just a comment on that post…

Affiliates ARE getting screwed!

Kenneth (the commenter) first makes the point about trust.  How do we, as affiliates, know about the developers of products (you know, the advertisers?).  As he suggests, maybe you have to do your own research first find out the truth about these companies, including where they are located.

Is the Affiliate Accountable for OverSeas Shenanigans?

This was the biggest concern.  If you are promoting a product that ends up screwing over people or breaking US Laws, can you be liable?  Well, I’m not a lawyer at all, but my assumption is that there is always the possibility.  (This is one reason why I chose to incorporate TheWebReviewer back in 2006 when it started to make some money.)

This is a Two-Way Street

But still, just because the affiliate can take some liability in the circle of internet marketing, it is still the advertiser (the person selling the product) that has even greater risk.  Despite the efforts of companies like Google to thwart affiliate efforts online (because they say it “adds no value”), the affiliate (also called a publisher) is actually in a better legal position than the advertiser.

Advertisers Are Getting MORE Screwed Now.

Being both a publisher and an affiliate, I have good insights and experience in both sides of this game.  And lately, as an affiliate, I have come across conflicts such as Google Adwords Bans and FTC Compliance.  Nothing that couldn’t be resolved.  Nothing that can get me into trouble.

As an advertiser, though, I have first found the new FTC regulations slowly making the product seller responsible for their affiliates.  If I choose to put an offer in a network and an affiliate chooses to SPAM it to 1,000,000, it is really MY problem.  Sure, I can ban those affiliates, but it is usually too late.  If an affiliate creates a flog, yes, per the new FTC regulations they are liable for that…but so is the advertiser.

And What About Merchanting?

Call me a Conspiracy Theorist, but I think all of these things are related:  Google Bans, FTC, and now Visa stepping in and shutting down online merchant accounts.  And this gets back to Kenneth’s original point…Can you control what is going on overseas?

• Google tried to ban them, but there is no way of patrolling it (too many sites, too big of an internet).
• The government (FTC) stepped in and tried to outlaw this (still, people just moved their companies overseas).
• So now (with pressure from Google and the FTC…conspiracy speculation!), I think Visa is stepping in to tap the whole system off from the top.

If you cannot process credit cards online, you don’t make money.  It is that simple.  Of course, we are now seeing surges of overseas merchant accounts forming, but the business models have changed!  Higher reserves, huge increases in rates (over 10% in most cases) and payments usually take days or weeks to make it into your bank account.

This makes it tougher for the rogue product owners (still, it doesn’t stop them, but costs them a lot of money and puts their own cash flow in jeopardy).

Legitimate Businesses Getting Screwed!

But what sucks is that it hurts the Legitimate businesses domestically who DO follow the rules.  Again, this is something that I have recently fought (and resolved!).

As you can see, everyone is being hit here…not just affiliates.  And remember, if the affiliates are hurting, it is logical that it hurts the advertisers as well.

In part 2, I’ll talk about what should you do in this current climate…Give up?  HECK NO!  Despite all of this mess, there are many new opportunities in the horizon (especially the for “just starting” internet marketer!).

Off to take the kids to school…cheers…matt