What is affiliate marketing?
Affiliate marketing is all over the internet, yet it goes largely unnoticed. You will almost certainly have come across affiliate marketing whether you know it, or not.
Affiliate marketing refers to schemes where companies pay money to publishers in return for promoting their products. Unlike traditional advertising, where companies produce their own adverts, affiliate marketers create their own content promoting the products. This content can come in many forms such as videos, blogs, news sites, social media profiles, email newsletters and more. The marketer then receives payments from the company directly related to sales by customers who they refer.
How does affiliate marketing appear to the consumer?
In theory affiliate marketing should be incredibly easy to spot. Rules in the USA and the UK state that affiliate marketing should be clearly identifiable. If affiliate marketing is present, you should know about it before you see it.
In reality many marketers do not comply with these rules. Even if the marketing is disclosed, it may be after the content or in the small print. There’s not much consumers can do about this as there is very little enforcement by authorities. There are more strongly enforced rules from companies themselves, however their requirements on the prominence of disclosure are less strict.
Currently the majority of schemes track referrals from marketers using custom links. So rather than linking to the normal website address, the address will include a unique identifier to track the referral. This means it is usually possible to spot affiliate marketing if you know what you’re looking for. Amazon operates one of the largest affiliate schemes in the world. The links below show a basic Amazon link and Amazon affiliate link.
You can see a unique identifier in the affiliate link, ‘yourconsumerg-20’, and if you click on it and make a purchase we’ll recieve a payment. In fact, Amazon will place a cookie on your computer and we would receive payments for any purchases during the next 24 hours. However, an affiliate link is not always clear before you click it. The link address is not normally shown and short URLs may be used.
Additionally, many affiliate schemes will redirect users through their own sites, or publishers will redirect users to another page on their own site first such as, publisher.com/affiliateclick. All is not lost however, as in most cases once you are finally redirected to the product page the address will contain some clue to the fact that the link is an affiliate link. This will depend on the scheme, but comparing the address to a normal product page will usually reveal it.
So it’s pretty tricky for consumers to spot affiliate marketing, but luckily there is a simple technique which you can use. Assume everyone is doing it. If a commercial publisher is linking to a product and not using an affiliate scheme, they are losing out on income. Increasingly, affiliate marketing is helping to boost the incomes of even the biggest mainstreams publishers. Just a few examples are Time, BuzzFeed, CNET and reddit. You’ll notice that (at the time of writing) not even the big publishers always comply with the official regulations we discussed previously.
So can you trust any product recommendations on the internet?
At this point you may be wondering if you can trust anything you read on the internet. And, of course, the answer is, it depends. Many affiliate marketers are producing useful content. The implication of the use of affiliate marketing depends on the publisher and their policies. Big publishers who make all their income from reviewing and recommending products are the most clear cut case. These publishers are where they are thanks to their reputation. To protect their impartiality they keep the people creating the content separate from those who subsequently monetize it by adding affiliate references. Take a look a the policies of thewirecutter.com and moneysavingexpert.com. But beyond these types of sites we enter a grey area. Lets look at what behaviour is incentivised by affiliate schemes.
1. Choosing to promote products purely based on affiliate payments.
This is the most obvious incentive and in this case the publisher will choose which products to promote based on the payments available. Alternative products with less lucrative payments, or none at all, are not going to be covered.
2. Rating products based on affiliate payments.
This could be considered more dishonest than the choosing or omisson of products. Publishers are incentivised to make sales and therefore to give a positive opinion of the product regardless of whether it deserves it or not. In addition, when comparing products they are incentivised to preferentially recommend products with higher payments.
3. Recommending retailers based on affiliate payments.
This is less obvious as it doesn’t appear to be promoting a product. But a retailer is a product! The product being promoted by the Amazon affilate scheme is primarily Amazon’s online store. A retailer affiliate scheme may not bias product reviews (though it may cause products not not offered by the retailer to be omitted) but it does incentivise publishers not to refer consumers to the cheapest or most appropriate retailer for that product.
So clearly we’ve got incentives which are not in the interest of the consumer, but also an incentive for publishers to protect their reputation by being impartial. The best way to deal with the negative implications of affiliate marketing is to be aware and informed. Just by reading this article you will probably now be more knowledgeable than 99% of consumers. By knowing the possible motivations of publishers you can do your best to use content to make informed purchasing decisions.
Top tips for effectively researching products.
The main time when we consume affiliate content is when researching products. According to Google we are increasingly researching even the smallest purchases these days. With that in mind, here are some key points to use that content effectively.
This is the obvious first step. Take in at least a few different sources of information to see if there is a consensus.
Find publishers who you trust.
As we discussed previously, publishers can build up a reputation for informative impartial content. If you find a publisher who you can trust then check them first. Many decisions are also subjective, so publishers who’s opinions you trust and like are even better. But if you really want gold standard advice for those big decisions then you should consider paying for specialist fully independent content from a publisher such as Which?.
Find first hand sources.
Much content is produced by publishers who haven’t physically used the product. The content is collated from third party sources or provided by the company. Content which based on actual use of a product can be far more valuable. If the photos or video in the content are used elsewhere, it’s likely that it’s not a hands on review of the product.
If you decide to buy a product then shop around for the best retailer for you. These days it’s quick to do and there will almost certainly be many more options than the publisher has given you.
Can I not refer myself and take the money?
Finally, you may be thinking it’s a bit unfair that companies are paying out money just for publishers sending them customers. Surely if they can afford to do that they could just give you the money in return for your custom? Whilst the answer is that they won’t let you, technically you can get some part of the payment through cashback sites. Cashback sites will give consumers a portion of the affiliate payments offered by companies. But bear in mind that cashback sites are also affiliate marketers so don’t rely on them for your product research and selection.