In a recent, controversial blog post Shawn Hogan has alleged that eBay program managers manipulated him into employing "grey area" techniques by assuring him there wouldn't be consequences for breaking their terms of service. After agreeing, he says managers then began suggesting different fraudulent methods he could employ, and even ways to hide from internal compliance investigators.
By using a variety of novel cookie stuffing and click fraud schemes across millions of ads and pages, Hogan quickly cannibalized honest affiliate's revenue, becoming eBay's single largest affiliate in less than a year.
It'd be easy to dismiss these claims outright, but program managers benefited immensely from Hogan, who generated $15.5 million in commissions between 2006 and 2007, while also made the program appear wildly successful.
Why managers didn't act sooner remains a matter of intense controversy. But fully aware or blissfully ignorant, they were forced to accept the same perverse outcome: Hogan's participation in their program helped create the illusion of success.
There is a natural conflict between the compensation structures of most affiliate managers (which is commonly based on program revenue), and affiliate sales that cannibalize other marketing channels.
Ultimately, an affiliate program is only as valuable as the incremental sales it produces, and companies should ensure their compensation structures align with the success of the program.