Compliance Thoughts I Had Planned for AM Days

sam.engel May 23, 2014

I recently had the misfortune of missing out on AM Days London. I was originally preparing to speak on a panel entitled "Crossing the Pond: Growing Affiliate Programs in Europe vs. U.S.", but ran into a comedy of errors at the airport (weather, mechanical issues, customer service breakdowns) that ultimately prevented me from going.

It was very disappointing that I couldn't attend. I had been looking forward to interacting with fellow panelists Oliver Deighton from VigLink, Gavin Male from R.O.EYE, and Oliver Jones from Yieldify—as well as moderator Robert Glazer from Acceleration Partners. I was also pretty excited to add more of a compliance-oriented perspective to the discussion.

I'm sure the panel did a fantastic job—I've heard positive responses and noticed some good feedback on Twitter as well. Nonetheless, I thought it might be helpful to discuss a few of the talking points that I had outlined. Compliance actually informs quite a few of the differences between the U.S. and U.K. markets, so I think it ties into the overall topic in some interesting ways. Without further ado, here are some of the points I wanted to cover:

Industry Reputation

One of the more stark differences between the US and UK markets is the public attitude towards affiliate marketing. In the US, the industry is often met with misunderstanding or criticism. On the more scathing end, you'll find articles like this one on VentureBeat. Other pieces like this one from the New York Times aren't particularly critical, but seem symptomatic of the skepticism about the industry. You could almost say that a new genre of muckraking has been developed specifically for the US affiliate marketing industry. I may be regionally biased here based on my geography, but I believe that the UK is different. Sure, there may be the occasional piece that questions some aspects of affiliate marketing—but I don't expect that these pieces are as frequent or as extreme overall.

Interestingly, these differing attitudes are reflected in the adoption of affiliate marketing in each country. Of the top 100 online retailers in US, a good percentage don't actually have affiliate programs. By comparison, I believe that the vast majority of the UK's top online retailers work with affiliates. Furthermore, US-based advertisers are sometimes hesitant to shift budget over to the affiliate channel. But if you think about it, the affiliate channel shouldn't really be something you have to "budget" for—it should continually pay for itself. The skepticism even extends to the publisher side, where affiliates sometimes question whether their commissions are being poached away by bad-actors.

What accounts for all this? I'm not sure if it's simply the difference in industry reputation between the two countries, specific regional differences that have caused those reputations to diverge, or some combination thereof. As usual with these types of questions, I suspect that the answer includes both.

The Role of the Network

Another key distinction between affiliate marketing in the US vs. the UK is the network-advertiser relationship. In the US, the networks tend to take a more technology-centric view. Their role is to provide the tools and services that help advertisers connect with publishers. The result is an emphasis on advanced tracking and recruitment tools. However, compliance is generally left up to the individual advertisers (with some exceptions, of course). By comparison, in the UK the networks tend to take a more brand-centric approach and include compliance with their core product.

This may be related to another difference between the two markets: the number of networks that the average advertiser works with in each country. US advertisers (particularly smaller ones) tend to work with multiple affiliate networks. This seems to be less common in the UK, and could be explained by the different approaches taken by the networks in each country. If you're selecting your network(s) based on technology and maximizing your opportunities, it probably seems smart to sign up with several networks. Why not? More affiliates, more potential sales. But if you're selecting your network(s) from a compliance perspective, you may want to stick with one trusted partner who can provide highly vetted affiliates. More networks could mean more opportunities for non-compliance, attribution issues, and other challenges.

Industry Standards

The standards in each country follow a similar pattern. Just as the networks emphasize compliance in the UK, they are also the driving force behind the IAB's Affiliate Marketing Council—the body that guides the industry within the UK. The standards that it produces, such as the Voucher Code of Conduct and Software Application Code of Conduct, are specifically written to outline affiliate behavior. Backed by the authority of the networks who make up the Affiliate Marketing Council, the standards help to hold publishers and networks accountable.

But in the US, the standards aren't written for the same audience. It simply wouldn't make sense to address publishers or networks in a document like this. Since the networks serve less of a compliance-oriented role, it's up to advertisers to stay up on standards and best practices. It's easy to spot this difference by looking at one of the Performance Marketing Association's publications. For example, if you check out their guide on Evaluating Network Compliance, you'll immediately notice that it's geared primarily towards advertisers. Other pieces generally either address or are sourced from advertisers, agencies or OPMs. This is a very different setup from what we see in the UK.

One of the other key differences here is enforcement. Because the IAB's Affiliate Marketing Council is made up of networks, there is more opportunity to actively ensure compliance. The networks can directly remove non-compliant affiliates from their platforms. Furthermore, the networks are also expected to hold each other accountable for their affiliates' behavior. If a violation is identified, there are certain protocols to follow. By comparison, there isn't as clear of a pathway to enforcement in the US. This isn't to say that it doesn't happen, or that the networks are never involved. It's just usually up to each individual advertiser to spot and take action on violations relevant to their own brand.

Other Comparisons

Of course, this post can't exhaust all of the great discussion points that the panel would have inspired. I would have liked to discuss a bit more about the differences in regulations between the two markets. My assessment of the US market is that governmental regulations are scattered across different agencies and are often not very specific to the affiliate industry itself. My knowledge of UK regulations is unfortunately limited, so it would be interesting to hear how it compares.

There are certainly many other things to consider as well. So if there's anything you'd like to add, expand upon, or mention, I'd love to hear about it. Once again, apologies to the rest of my panel for my inability to attend. Hopefully we can collaborate at a future show!

Topics: affiliate marketing

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