I have had several email conversations and several phone conversations lately as to why there seems to be an exodus of merchants in the affiliate marketing world. In the past few months, Vermont Country Store, Fun to Collect and several other merchants who have been in the affiliate marketing arena for some time have exited.
Some of these merchants have cited trademark abuse and their inability to control it as a reason for leaving affiliate marketing. I see this as a frightening trend that will only get worse unless this problem is brought under control.

Here is the problem as I see it. A merchant enters the space with a new affiliate program and the management of the program is placed in the lap of someone in the marketing department. This person is told to create banners, text links and other similar materials for affiliates to place on their web sites. Meanwhile, they are auto-approving affiliates because it takes too long to manually approve them and those who do nothing but bid on the merchant’s domain name show up, fleece the merchant out of thousands of dollars and the merchant never even knows what hit them. All they know is that they have this pool of affiliates now standing between them and a customer who was looking for them by name. They find one affiliate who is doing this, remove them and there are 10 more in line with their Adwords account cocked and ready to do the very same thing.

Meanwhile, the merchant might or might not have gotten a brief education on the perils of trademark abuse from the network when they signed up for their affiliate program. The merchant certainly did not enter the affiliate marketing space knowing that they would have to dedicate someone to police their affiliates. Furthermore, they probably did not bother to set terms forbidding this practice when they set up their affiliate program. Why did they not do this? Because they had no clue that it was necessary.
The bottom line is that we have networks making huge stacks of money from this valueless proposition to the merchant and affiliates who know better, but just can’t seem to stop because the money is so good. The networks and the offending affiliates are the very first people in line to blame the merchant for not disallowing the practice. My question is how did the merchant know this would be such a large problem? They signed up to have affiliates promote their products and/or services, not to have affiliates bidding on their domain name and tricking the customer in to clicking an ad to get to the merchant’s web site. It is truly a mess.

Are affiliate managers and OPMs to blame? Maybe so. If they did not take the time to educate their clients about this abuse, then they are indeed at least partially to blame. Those affiliate managers who have clients who implicitly disallow trademark bidding yet still allow it are criminal in my opinion. Most affiliate managers and OPMs seem pretty responsible, but there are a few out there that blatantly disregard the will of their client in the name of a dollar. This will stop soon enough, when their clients realize they they are being fleeced and file huge law suits against the rogue managers.

Are the networks to blame? Let’s follow the money on that one. If a network has 2000 merchant clients and 1500 of them are being abused by affiliates poaching their domain name, who is making the real money here? Yep, the networks are making huge amounts of money from this activity.

Is auto-approve to blame? In a word….YES! If an affiliate can join an affiliate program with nobody performing any vetting at all of that affiliate and their operation, auto-approve only fuels the fire. It has been my contention for some time that auto-approve is to blame for much of the abuse in the affiliate marketing industry today.

In conclusion, there is no simple answer to this problem. Merchants need to be educated. Networks need to take at least some steps to alert new merchants of the potential of abuse. Granted, if a merchant is brand new, has no traffic and an Alexa rating of 4,387,987 then their domain name will likely not be a big payday for a trademark poacher. But merchants who already have an existing base of customers and traffic need to be educated and I say that it is the network’s responsibility to do that. They are the one who profits from every single sale. They are the one who have the fiduciary duty to both the merchant and the affiliates.

By the way, kudos to the Avantlink network for recognizing this problem and addressing it in their generic affiliate terms. If the others would follow suit, the affiliate marketing industry would be a healthier place to do business for everyone.