Bitly/Viglink Partnership Raises FTC Concerns

Jennie Scholick May 7, 2015

If you’re a regular reader of our blog, you’ll know that here at BrandVerity, we’ve been thinking a lot lately about regulations and disclosures--particularly with regard to the FTC and its take on affiliate marketing. Today we’re happy to have a post by our own Mason Smith about a new, somewhat concerning development, in this field: Bitly’s announcement that they are testing a new partnership with VigLink. This news was a hot topic of conversation at AM Days a few weeks ago and we thought it would be of particular interest to our readers. Mason, take it away!

The recent announcement that Bitly is testing a partnership with VigLink presents interesting questions for companies with affiliate programs. For those who haven't heard, Bitly is testing out a partnership with Viglink that transforms their shortened links into Viglink affiliate links. In other words, if someone shortens a link to an ecommerce site using Bitly, that shortened link is now an affiliate link. Any clicks on that Bitly link will be routed and monetized through Viglink’s platform.

The likely business arrangement is that Bitly and Viglink will split newly generated affiliate commissions by sending Bitly traffic through VigLink before landing on a merchant website. Our friends over at Schaaf PC recently posted about how this new relationship can impact marketing attribution, and in particular, what happens when a merchant’s own link becomes a Viglink affiliate link. Their update suggests that Bitly is working to iron out that aspect of the relationship and Bitly has confirmed that they will not overwrite existing affiliate links.

However, just because merchants’ own links are not becoming commissionable links doesn’t mean that there aren’t still questions to be answered. In particular, my focus and concern is the legal and financial implications this relationship may have for merchants with affiliate programs.

Why the FTC Likely Cares

As previously discussed on this blog, affiliate advertising practices are something the Federal Trade Commission (FTC) is keeping a close eye on. The FTC has made it clear that commission payments to third-party affiliate advertisers create a "material connection” that makes both the affiliate and the merchant liable for how they market products to the consumer. And while the FTC is still turning somewhat of a blind eye on social media disclosures--even after updating their online disclosure policies to be more clear about social--the ubiquity of Bitly as a link-shortening tool and the lack of clarity regarding what links are being routed through Viglink should be getting the FTC’s attention.

For example, what if a Twitter user who is not an active affiliate sends misleading tweets about a product and links to the merchant’s site through Bitly. Does this action create a material connection between the misleading tweet’s content and the merchant? Technically, that tweet is serving as a paid advertisement. The interesting wrinkle is that the commission payment doesn’t make it back to the person who created the tweet’s content, but rather to Viglink and Bitly. That said, as Practical Ecommerce pointed out, this connection can be interpreted as passive: Bitly itself is not promoting a product or service, but rather is a tool being used by a third party leaving it somewhat outside the realm of current FTC language. In spirit, however, if not in letter, this relationship does seem to create a non-transparent, undisclosed material connection in opposition to the FTC’s regulations.

Where Do We Go from Here?

It is worth mentioning that Bitly is publicizing this as only a test. Regardless, while this test is running, or if Bitly green lights this test for expanded rollout, how will the FTC view the new scenarios this relationship creates?

As a merchant with an affiliate program or as an affiliate, it seems reasonable to inquire about this partnership test and where it is going.. This partnership is also a reminder to keep yourself up-to-date on how regulatory bodies look at nuances in online marketing. Resources available on the FTC website and through the BrandVerity FTC and FCC Resources Page provide more information about affiliate disclosures and material connections. A full understanding of these regulations can help you make the best decisions for your program.

Do you think the Bitly/Viglink relationship creates FTC issues? Are you using Bitly and/or Viglink? Let us know in the comments below or contact us at BrandVerity.

Mason Smith is a Sales Manager at BrandVerity. During his free time Mason roots for the Seattle Seahawks and enjoys getting into the outdoors as much as possible.

Topics: affiliate marketing, Marketing Compliance

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