The Dangers of Sub Affiliate Networks in Your Affilitate Programs

Before you read this post, I am not a lawyer and not an Accountant, CPA, etc….  I cannot give legal or financial advice and encourage you to talk to your company’s CFO, Accounting Department and Lawyer for a legal opinion if you have any questions about this post.  This post is just my opinion and how I manage my programs.  You have to determine what is best for your company and also if it is within your own terms and conditions if you choose to work with Sub Affiliate Networks and automatic monetization Affiliates.  If you have any questions for me or if you don’t understand something in this post, ask by leaving a comment below and I’ll respond.

Sub Affiliate Networks, IDs and Partner Networks are extremely common in Affiliate Networks.  I haven’t worked on a network that doesn’t have other networks in them which means that you really need to pay attention to who is applying to your programs and make sure that you never have a program set on auto approve.  They can sign up as a network, as a tool for bloggers and webmasters to automatically monetize their sites off of keywords, links and ads without having to code the links and sometimes they are just Affiliates who have their own programs.  Although it seems great that you’ll be getting extra exposure, and that they can drive a ton of traffic and sales, you could potentially run into a ton of issues.  This post is a follow up to a session from Affiliate Summit where people were asking about Affiliate Networks as Affiliates in their programs and what the negatives could be.

The negatives and potential risks of allowing other networks, sub affiliate networks or Affiliates with programs into your Affiliate Program.

Nexus Laws

By allowing sub Affiliate Networks, CPA Networks or Affiliates with their own affiliate programs or networks of sites promoting and monetizing offers into your program, you may no longer have access to see what states these sites that now have access to your offers are in.  Depending on the state, nexus law, or how you and your lawyer interpret the laws, this may mean you no longer know if you have to collect taxes in those states or if you are breaking your own rules with which states you can and cannot work with.  In other words, when one of these networks or Affiliates gets your links and then their partners get your links, you may now have Affiliates in states you cannot work with promoting you and causing you to potentially have to collect taxes which may put you at risk.
Creating a backdoor for declined Affiliates

Adware and Declined Affiliates

Approving Affiliates by hand is now out the door.  You may as well just have your program on Auto Approve if you work with these types of Affiliates.  One thing I noticed when I was working with one of these types of partners is that certain coupon sites and adware sites that I would never work with got in through them.  By enabling your offers to be given out by the Affiliate (or network who is posing as an Affiliates), you have now given Affiliates that you declined access to your offers.  If you cannot see the referring urls, tracking urls, etc… you don’t know who has your offers.  With some of them you do get to see referring urls, but they are driving thousands of people each day so it is hard to figure out when your offers are on sites they shouldn’t be on.  One thing to look at with these, especially the ones who monetize other Affiliates’ sites by entering links on them is to see the referring url that sent the sale.  Then see if they were declined and if they meet the needs and goals of your own program.  When you open your offers to these networks, from my past experience, you lose all control over who is in your program and everyone you declined can now have access to your program.
Not having access to your partners

By partnering with these Affiliate Networks who are posing as Affiliates or even say they are Networks, chances are they will never give you a list of the people who have your offer.  This would give you access to contact them directly and take their value away and decrease their income by removing them from the picture.  By not having this access and not knowing who your partners are, you can not only put yourself at risk with the FTC if advertising guidelines and Nexus laws are being broken, but you also can create horrible experiences for your customers if they are listing fake coupons, fake offers and fake reviews.  Not being able to reach out to your partners is one of the riskiest things you can do which is one of the main reasons you need to be cautious when you partner with sub affiliate networks or if you allow Affiliate Networks in your own Affiliate Program.

Networks hiding their partners – If you do have networks that hide there partners, here are a few things that could potentially happen.

  • Not knowing how to reach out to your “partners” for FTC disclosures on reviews – If the partners through the sub Affiliate Network have reviews without a disclosure, you probably don’t have direct access to them if the FTC comes to you requesting that you make them add it.  The sites that have these reviews may have no contact information, could be random and listed as private when you do a who is search and this could lead to gigantic fines from the FTC.  Because you do not have their contact information, you are taking a huge risk, especially for small and mid sized corporations because the fines for this are huge and many companies cannot afford them.
  • If they are breaking your TOS – If the Affiliates are breaking your terms of service, you don’t have any way to reach out to them.  Instead you have to go through the affiliate network who is in your program and hope that they can contact them and get them to take action and send you documentation of their conversation.  (I have rarely seen a case where they were willing to do this and it could be considered even remotely acceptable.)  Some times you’ll also find out that it was actually the Affiliate Network with an account on their network breaking your terms and conditions themselves and pretending it was someone within their network so you don’t kick them out.
  • Your Terms and Conditions are not read or agreed on – One thing that you should really consider is that the Affiliate Networks in your Affiliate Program may not post your terms and conditions within their network.  Instead they may have a regular terms and conditions or just enable sites to be monetized with your links.  Now these Affiliate sites can pick up your offers or take them or just send them out to other network partners who never saw your Affiliate agreement.  This means that your PPC, Trademark, Adware, etc… restrictions are now arguably and potentially void because the partners within that Affiliate Network never had to agree to them to get your offer.

No control over non approved creatives, marketing methods, etc…

If you have strict guidelines on branding, creatives and marketing methods, you can expect that they will more than likely no longer be able to apply.  If you have your offer going out on other networks because you let one in, whether you knew it or not, you can now find spam houses, adware companies, etc… creating their own creatives, distorting your logos or adding their own tag lines and using them.  They may not use the trademark correctly, include the trademark symbol, etc… which can potentially hurt your brand and possibly cause you to lose your trademark.  They can also start sending emails on your behalf with the sub affiliate networks ids and links in them and break CANSPAM laws which may have a direct effect on you, especially since you may not be able to contact the partner that is sending them since you may not have access to their information.

Closing the network to avoid fines, etc…

One thing that may happen is a network or third or fourth network somehow disappears when you start to ask questions because you are getting fines.  You don’t know how many networks now have your offer and how far down the Affiliate that is breaking your terms and conditions which could be causing you to get fined.  When you try to dig down they may close that network or partner to avoid getting into trouble and you have no way of ever getting the information or putting a stop to it which may mean you will get fined because you cannot prevent it or show you contacted that partner directly to try and stop them.

Causing damage to your brand

Besides not using your logo or trademarks correctly, if you cannot see the sites you are listed on you could end up having your site appear on sites about hate, racism, porn, etc…  You could have banners showing up next to products that would be offensive to your users, spammers angering your customers pretending to be you and a lot more things which could really cause damage to your company and it’s brand.  Branding is more than just recognizing a logo, tagline or image.  It is also about how people react when they see, hear or read it.  Having these partners create negative experiences with your brand can cause you to lose money and cause damage to your company.

Other networks join their network and push your offers out through their own.

One last thing is that once you let one of these networks in, you have now opened your offers, products and deals to an unlimited amount of networks through the new one.  Not only does this make it almost impossible to have access to contact partners who are breaking FTC guidelines, but you may never be able to track sites and partners down that are causing damage to your company.  By not being able to reach them, you cannot help reverse the damage to your company and by showing you are not properly managing your channel, you could lose your job.  There is nothing worse than having your boss and legal counsel asking you why you don’t know who you’ve given your company’s brand to and that you lost control over the channel you were in charge of.  This is a very good reason to understand that you need to be extremely cautious if you let these types of partners in your program.

There are a ton of reasons that you should really think about working with Sub Affiliate Networks, Affiliate Networks and CPA Networks as Affiliates in your program or Affiliates who have a network of Affiliates and partner sites in your programs.  I’m not telling you not to work with them, but you should contact your boss and general counsel and CFO before you begin working with them to talk about the potential risks.  They can drive a ton of traffic and sales, but they can also cause you to lose control over your program and brand.  I am not a Lawyer or an Accountant so I cannot give you any legal advice or advice on this topic for you to make a decision on.  I can only give you my opinion on them and tell you some of the concerns I have with partnering with Networks as partners in your Affiliate Program.

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