VistaPrint and Hydra Network Turn Blind Eye on Adware Affiliates

[Linda Buquet]

Ben Edelman published a report yesterday, saying that some Vista Print allowing affiliates to use adware to get commissions on sales they're not responsible for. I saw the story originally at Mediapost and was a little disturbed by a couple things in the story, so I went to Ben's site to investigate more.

I was really concerned with the fact the whole focus of the Mediapost story and even Ben's report was focused on adware affiliates hurting the merchant's bottom line and VPRT stockholder's profits.

Maybe I missed it but I did not see ANY mention of the fact that using adware also steals from Vista Print's HONEST AFFILIATES! The way I see it, if a merchant blatantly disregards the use of adware by affiliates, as Ben's research suggests, then they DESERVE to have their profits jacked! So I see the damage in a scenario like this, as primarily being an issue of dishonest affiliates STEALING from and affecting the bottom line of honest affiliates!!!

So following are a few quotes from Ben, but you need to read the whole thing to get all the details, which includes all the networks that Ben found using Adware referrals to VistaPrint. Then following that is the Medapost article with a quote from Hydra about allowing adware.

Auditing Spyware Advertising Fraud: Wasted Spending at VistaPrint
"It's easy to present VistaPrint as perpetrator: VistaPrint fails to adequately oversee its marketing partners. As a result, VistaPrint's advertising spending helps fund spyware and adware programs that sneak onto users' PCs, with serious harms to performance, reliability, and privacy.

But I also see an important sense in which VistaPrint is a victim: VistaPrint's marketing partners are defrauding VistaPrint by claiming commissions on sales they actually did nothing to cause. Such commissions are entirely wasted, yielding no bona fide marketing benefit to VistaPrint."

"When VistaPrint is cheated by rogue marketing partners, the costs fall in the first instance to VistaPrint shareholders. Every dollar wasted on worthless advertising leaves that much less for corporate profits, and VistaPrint's advertising budget is already strikingly large"

And Ben... what about the affiliates that were stolen from???

MediaPost reports: Report: Affiliate Marketers Use Adware Deceptively - "But Zac Brandenberg, president and CEO of Hydra, one of the affiliate networks examined by Edelman, said the tactics mentioned in the report don't appear to violate any VistaPrint guidelines. "We are complying with the instructions we've been given," he said. "Maintaining the integrity of the advertisers' campaigns is very important to us."

Brandenberg added that VistaPrint allows affiliates to use adware, as long the adware providers don't deceptively install the pop-up serving software on users' computers."

Kellie, your thoughts??? Anyone else???

[savvygrind]

Zac Brandenberg's statement is indicative of the shady side of affiliate marketing. Gray Hat affiliates hide behind Black Hat bashing while justifying their own actions.

[Kellie AFP]

Where to even start. There are a few things that are missing from the big picture in Ben's article. However, those things may wellnot have been the focus for Ben or supportive of the message he was wanting to drive home. The issues can become complex and sometimes it is hard to address everything in one article without boring the reader to death or overwhelming them. I do think some assumptions were made by Ben that might impact his conclusions.

So my attempt at the bigger picture regarding VistaPrint and contextual adware. I'm going to try and just bullet points that may factor into what is being seen with this end of VP marketing.

• I have observed the same issue with seeing VP displays through adware via affiliate links myself. This has been happening for quite a long time.
• VP is an aggressive online marketer. They operate through many networks and many channels. Their approach seems to lean towards "volume", that is getting their site in front of as many users as frequently as possible.
• VP generates revenue from their site not only from the products they sell on their web site, but do aggressive co-reg lead gen once a consumer has purchased from them. I experienced this first hand yesterday when I made a purchase from VP. I was presented with page upon page upon page of lead gen offers both at the beginning and end of the checkout process. In fact, with the final submit click to place my order I eventually ended up on the EverSave web site and never did get land on a confirmation page on VP. The point is VP monetizes their site aggressively through marketing for other themselves. This impact thier own ROI for their advertising costs. They can spend more on marketing (including affiliates using adware who are popping on their own site) and it still be cost efficient for them.
• Affiliates do not only target the VP for these types of pop-ups. I've seen the pop-ups repeatedly for other merchants. They are not restricted to just other business card merchants but also target merchants who are complimentary, such as merchants selling online checks. So it is possible that when VP is being "highly analytical" with their marketing efforts, they are factoring in the ROI, customer aquisition costs, etc from consumers pulled from their competitors and other merchants by their affiliates (and the affiliate assuming the risk of buying such ad inventory vs. VP buying it themselves) and it is cost effective. So they are willing absorb the cost of those pops on their own web site because other stuff is coming from other places as well.
• Affiliates are not the only ones who buy contextual adware inventory. Merchants do as well. There are merchants who use contextual adware themselves. In fact, I've been getting more direct buys by merchants vs. affiliates for a while now. Of course that impression may be skewed by the particular sites I go to during testing. The thing is there are merchants who are OK with this type of marketing whether or not they do it themselves or allow affiliates to do it.

All that above leads to a couple of points from my perspective. It's only fraud if the merchant doesn't allow it. For some they not only allow it but like it. It's a corporate mentality that focuses only on the bottom line ROI and/or customer acquisition cost. It doesn't matter how the traffic is generated as long as it's not illegal or the benefits outweigh the potential risks. This could be the case with VP. Ultimately the company feels the first obligation is to their stockholders and if they are being profitable then they feel they are meeting that obligation. I don't agree with mentality, but that doesn't make it not exist.

There are Networks who allow contextual adware usage as long as it's "compliant". Compliant meaning FTC guidelines for installation methods. Now some of adware applications listed in Ben's article focus on the marketing themselves as being "compliant". Zango and WhenU are two examles of that. So we end up seeing comments like those made by Hydra. It's the marketing end and consequences of "compliant" software. Hydra is not the only network with that type of policy.

Yes, affiliates other affiliates with VP can be financially hurt by the practices. So can other affiliates who don't partner with VP (in the case of pop-ups on competitors). So can other merchants.

Unfortunately, the practice of using someone else's web site to trigger and display your ad is not illegal. Personally, I strongly feel it should be, but it's not. It would still happen to some degree if it was illegal. It will certainly happen more since it isn't.

Until there is enough finacial incentive for companies to not embrace this type of marketing, it will continue.

For affiliates and merchants, the lesson is to know the practices/policies of who your are partnering with and if those practices match with your own values and business objectives.

Even more importanly, learn to separate out the marketing spin from actual fact and practices.

[Linda Buquet]

Thanks so much Kellie for the detailed and as always, level-headed response. You made some really good points!

For anyone that does not know who Kellie is, she's an expert in adware and compliance testing.
She offers lots of resources about fair affiliate practices over at the AffiliateFairPlay Blog.

[Kellie AFP]

Thanks for the kind words Linda. Such a strange journey from being a physical therapist in another life to expert in adware and compliance. LOL.

[Rob_TID]

"It's only fraud if the merchant doesn't allow it."

That's not so far from "but the merchant doesn't explicity disallow it"

Should we as an industry really be encouraging this even if the merchant "allows it"? Is it a cool thing for us to be associated with?

Affiliate marketing is on a slippery slope.

If we cannot get our act together soon, we are going to be regulated out of existence by people who haven't really got their heads around the technology or issues.

And it will be our own fault.

[Kellie AFP]

Rob,

My comment was very specific to Ben's article. His thrust was that these affiliates were commiting fraud against VistaPrint. He concluded with approaches that VistaPrint could possibly take against these affiliates, which included filing a lawsuit against them, such as the current one with Ebay.

If VistaPrint is aware of the activity by these affiliates and is allowing it or worse yet encouraging it, then it can't be fraud by the affiliates against VistaPrint.

That isn't to say that other affiliates in the VP may not feel they are being defrauded. But as Linda pointed out, that issue was not addressed.

Saying that it may not be fraud from a legal perspective, does not mean I encourage the practice, feel it's a good practice for the industry or practice that is good for the industry as a whole.

I personally think that merchant's who utilize such marketing themselves and/or allow affiliates to do so is in many ways worse than the affiliates who using such practices in networks and programs where it is specfically not allowed.

For affiliates and merchants, the lesson is to know the practices/policies of who your are partnering with and if those practices match with your own values and business objectives

That part is the most under-utilized weapon, IMO, in "cleaning up the industry" and self-regulation. Businesses will continue to use questionable tactics as long as they have a financial incentive to do so. As long as companies can have their cake and eat it too, they probably will.

I wonder how many honest affiliates who work with VP or the CPA Networks in Ben's report have contacted them expressing concern? How many merchants on those Networks have contacted them about concerns? In my own past experience, it happens rarely.

[Kellie AFP]

More concisely, I'm not inclined to paint VistaPrint as the victim here. There are victims here for sure, but VP themselves isn't at the top of my list. Just my own personal opinion.

[Linda Buquet]

Originally Posted by Kellie AFP

Thanks for the kind words Linda. Such a strange journey from being a physical therapist in another life to expert in adware and compliance. LOL.

I didn't know you were a physical therapist. What a transition!

I agree with you both on many points and am really glad to see an important dialog
being discussed here at 5 Star. I may have more to say later on this.

FYI I just posted a story another story that you 2 may want to weigh in on.
Gator AKA Claria AKA JellyCloud Bites the Dust!