First what is affiliate marketing? It is the use by one Web site of other Web sites or in this case emailers to help market the first site's products. Typically, revenue is shared by the affiliate merchant—the Web site or email marketer featuring an ad or content designed to drive traffic to another site (the advertiser's)--with the affiliate receiving a fee based on the amount of traffic generated or orders received. It is thought that Amazon.com created the first large scale affiliate program; However, today's direct marketers worldwide rely on affiliates to drive traffic and generate orders, largely because advertising is usually paid for only upon generated results.
But before you run out and set the world ablaze there are rules!
These days almost all advertising is carefully scrutinized by the FTC and affiliate email marketing is no exception.
A recently settled CAN-SPAM complaint underlines the liability of companies for the actions of their affiliates.
Backed by a U.S. District Court in Nevada, the Federal Trade Commission (FTC) is requiring several porn sites keep detailed records on affiliate marketers.
The injunction order, filed in August, requires defendants obtain a name, address and working phone number for each affiliate and sub-affiliate who markets their content. Additionally, seven days before a campaign launches, affiliates must certify to the defendants how each email address on their lists was obtained, together with details of the message content.
"It appears to me that the FTC is demanding better control of the affiliate marketing relationships," said spam policy expert Trevor Hughes. "And it seems to me there is plenty of room for just that.
Hughes is executive director of the Network Advertising Initiative (NAI). He describes the reliance of advertisers on their affiliates and sub-affiliates as "cascading trust relationships" which can easily run amok.
"I worry that it is an issue that is ripe for real problems for the marketplace," he said. "By the time the ad appears before the consumer, you may be three, four, eight or 10 steps away from the original advertiser."
The three defendants addressed in the injunction operate porn sites and infrastructure under various names. In addition to the injunction order, they paid a total $621,000 in fines. The judge issued a default judgment against a fourth defendant, an affiliate marketer named Paul Rose, who spammed on behalf of his co-defendants. The FTC charged the defendants' outbound emails violated CAN-SPAM and the agency's adult content labeling rules.
"The settlement will bar future violations and will require the marketers to monitor their affiliates to assure they are complying with federal laws, as well," the FTC noted in a statement. "While the affiliate sent many of the e-mails that allegedly violated federal law, under the CAN-SPAM Act all of the defendants are responsible for the e-mails, including the defendants who paid others to send the e-mails on their behalf."