Successful Affiliate Programs Keep Failure in Mind

One of the most powerful ways to make anyone truly ponder on the present is to envisage the future and more specifically: the end.

Stephen Covey popularized this idea in “The 7 Habits of Highly Effective People” pinpointing “beginning with the end in mind” as one of the key habits that people must develop. Here’s how the legendary author drove the point home:

See yourself going to the funeral of a loved one. Picture yourself driving to the funeral parlor or chapel, parking the car, and getting out. As you walk inside the building, you notice the flowers, the soft organ music. You see the faces of friends and family you pass along the way. You feel the shared sorrow of losing, the joy of having known…

As you walk down to the front of the room and look inside the casket, you suddenly come face to face with yourself. This is your funeral, three years from today. All these people have come to honor you, to express feelings of love and appreciation for your life.

As you take a seat and wait for the services to begin, you look at the program in your hand. There are to be four speakers. The first is from your family… The second speaker is one of your friends… The third speaker is from your work or profession. And the fourth is from your church or some community organization where you’ve been involved in service.

…What would you like each of these speakers to say about you and your life? What kind of husband, wife, father, or mother would like their words to reflect? What kind of son or daughter or cousin? What kind of friend? What kind of working associate?
What character would you like them to have seen in you? What contributions, what achievements would you want them to remember? Look carefully at the people around you. What difference would you like to have made in their lives?

We know that Covey – as so many of us, really – was deeply impacted by the work of Peter F. Drucker, an eminent business mastermind of the twentieth century. When talking about innovation and entrepreneurship in his eponymous volume Drucker wrote:

“Nothing so powerfully concentrates a man’s mind as to know that he will be hung in the morning,” Dr. Johnson was fond of saying.

Nothing so powerfully concentrates a manager’s mind on innovation as the knowledge that the present product or service will be abandoned within the foreseeable future.

Now, rewind some 300 years back before Covey and Drucker, and flip your “Bushidō Shoshinshū” open. This “Code of the Samurai” prescribed:

One who claims to be a warrior must keep death in mind at all times… [For as you do so,] you will also fulfill the ways of loyalty and familial duty. You will also avoid myriad evils and calamities, you will be physically sound and healthy, and you will live a long life. What is more, your character will improve, and your virtue will grow.

I believe it to be extremely valuable for any business that contemplates starting an affiliate marketing program, to begin with the end of their affiliate program. Furthermore, there is tremendous benefit in continuing to build your affiliate program with its “death in mind”.

Don’t get me wrong. I’ve witnessed a fair share of amazing business results driven by affiliate marketing programs (whether managed by us or by others), but failure is also very much a reality.

A few of the reasons for affiliate marketing failure were called out in my Affiliate Marketing Does Not Work post and the corresponding video. Today, however, let’s step back and think of two broad areas where every business must envisage the “death” if it wishes to succeed through affiliates.

1. Brand and Business Damage

Regardless of the definer, affiliate marketing is often rolled into partnership marketing, and rightfully so. Irrespective of the marketing media used by affiliates, your relationship with them represents a partnership with a common goal – that of generating revenue (sales for you, commissions for them). And it all flows nicely when everyone plays nice – in the spirit of a true partnership: adding value and meaningfulness. The reality, however, is never perfect. There will always be violations of rules (and I hope your affiliate program does have them in place) – sometimes deliberate, sometimes not. There is little difference to you. You are entrusting your affiliate partners with the most valuable asset that you have – your very brand. Because of this you must always know where and how they promote your business, your product, your name.

Below I list some of the most frequently occurring causes of business and brand damage to which certain affiliate program scenarios may lead. Before we jump to the list, however, I want to underscore one crucially important point: all of the below-listed situations (and respective damage) are not only avoidable but almost entirely off the table when your affiliate program is closely and carefully managed.

Now, let’s get to the list of circumstances that lead to brand and business damage in affiliate marketing-employing businesses:

Affiliate auto-approvals

More than a dozen years ago, I wrote a brief post on this and, all these years later, my warning is still the same: the main reason for the danger of automatic approvals lies in the immediacy of consequences. As soon as you’ve auto-approved an affiliate into your program, they can start marketing you (without any preliminary review on your part). And, as I wrote in my aforementioned 2010 post, “since no affiliate program manager is on duty 24/7, if a rogue affiliate is auto-approved into a program, they will have their time to cause damage to your brand while you’re sleeping.”

Negative-value partners

You’ve read it right! There are, in fact, affiliates who’d be of negative value to you. Instead of adding value, they are actually driving you into the negative: additional costs, misattributed conversions, and worse. Among negative-value “partners” I would highlight (a) trademark violators (through prohibited branded paid search and/or cybersquatting), (b) coupon harvesters and those employing click-to-reveal technique, (c) traffic hijackers of all sorts. At the end of the day, these and other “negative-value” affiliate activities lead to marketing cannibalization, misattribution, and lost revenues.

Misrepresenters of all types

At the outset of this section, we’ve talked about your brand being your most valuable asset. It is precisely because of this that it is important for you to know how and where your products/services and your name are being promoted. Certainly, you don’t want to end up on websites whose messages you don’t share or whose content you don’t want to be associated with. Avoiding this is fairly easy. You start with manual vetting of affiliate applications, and once an affiliate is approved into your affiliate program, ongoing monitoring and routine policing is a must.

FTC non-compliance

The Federal Trade Commission views your relationships with your affiliates in a sponsor-endorser light: by compensating them for promoting your product you are becoming a “sponsor” whereas your affiliates become “endorsers”. The FTC expects that advertisers (i) educate and equip their affiliates to provide proper disclosures, as well as (ii) monitor affiliate compliance, to (iii) remedy and prevent non-ompliance. Dive deeper into the specifics in this excellent post by Tricia Meyer.

Fraudsters and con artists

It is important to emphasize that “fraud” isn’t the same as a “violation” of your affiliate program’s rules. Neither is acceptable but calling things the right name is very important here. Affiliate program fraud is a form of advertising fraud (or ad fraud) where an affiliate aims to deceive an advertiser into believing that fake activity is real. It comes in an array of forms: from the usage of stolen credit card numbers to attribution fraud. Read more about the latter in the story on eBay and once-its-top-two affiliates, Shawn Hogan and Brian Dunning. Spoiler: eBay didn’t shut their affiliate program down but learned the lesson and keeps running a successful program to this date.

The above list is not meant to be comprehensive, yet it does cover the most common causes of brand damage in unmanaged and undermanaged affiliate programs.

2. Affiliate Program Failure

While one may argue that all the above-made points could easily cause failure in the whole affiliate program, I disagree. None of the above circumstances would automatically lead to a collapse of an affiliate program when the program is properly managed. There will always be violators, fraudsters, misrepresenters, and others who would want to take advantage of your affiliate program. The key is in doing everything possible to prevent all their destructive activity and to weed the bad players out (reversing any respective commissions) if any of them do manage to sneak in.

Now, let’s turn to the second area where you must envisage “death” if you wish to succeed – your affiliate program itself.

Unlike the points on my earlier list, I’ve decided to present you this section’s key points as questions.

Each of the below questions is intentionally structured in a specific way: with the first part always containing the right answer, while the second one: a short recipe for affiliate marketing failure.

1. Do you have an established product/website or is it something fairly new that you’d like to “try out” through affiliates?
2. Is your product priced competitively to sell well or are your prices intentionally inflated to make affiliate commissions possible?
3. Is your website one that converts well or is it not? (And in the latter case, it won’t matter how much you’re willing to pay in commissions)
4. Are you spending money/effort on other marketing and advertising or counting on affiliates only?
5. Have you set your conversion attribution rules in a way that’s encouraging the most valuable affiliate partners to promote you or are you relying on a pure last-clicks-wins rule, regardless of who sends that last click?
6. Are you committed to diversifying your affiliate base or are you putting all eggs in one basket, focusing only on one or two types of affiliates?
7. Are you carefully vetting new affiliates and policing compliance of approved ones or do you have no respective protocols in place and tools at work?

Of course, the above list is not comprehensive, but I did my best to cover the most common reasons for affiliate program failures.

To conclude, and rephrasing the timeless samurai admonition, whether you are just planning on tapping into affiliate marketing to drive revenues for your business, or you’re working on starting an affiliate program or building one right now… do “keep death in mind at all times.” Only then you’ll be able to concentrate on the truly important building blocks, and “avoid myriad evils and calamities” building affiliate marketing relationships that will end up being truly rewarding for all involved parties.

As always, your comments, additions, and criticisms are warmly welcomed. You may submit them using the respective area below or by emailing me directly. No message will remain unanswered.