Per your update, I don't think you're being alarmist at all. I think this will change the nature of how the game is played in such a significant way that, as Ken Calhoun pointed out, many BS artists will be knocked out of the game. Or they will continue playing it while dancing on the knife's edge, with the career longevity of a black market smuggler.
RogerJH
· 2 months ago
Great post Michael, thank you for sharing.
I wonder if the FTC rushed to judgment. Where are Amazon.com and Google, who depend on third party advertising? And I wonder who they are trying to protect here. Is it the consumer? Or traditional marketers who view affiliate marketing as taking a slice of their pie?
Michel Fortin
· 2 months ago
Not sure, but good point. Bottom line is, while clamping down on a rare few that's been abusive, they are also stomping on legitimate marketers. Collateral damage, perhaps. But at what cost?
asrguy
· 2 months ago
Re your question "But does that mean we have to tell everyone when an affiliate link is an affiliate link?"
... you just answered it when you dropped that affiliate link to Armand Morin and I don't see a disclosure anywhere :)
Notwithstanding the fact that you didn't disclose the link, this opens another can of worms since that's clearly an affiliate link but maybe it's not yours?
I'm no lawyer but I think all the FTC is trying to do is make us more transparent and I think it's a good think and will make affiliate marketing even stronger, as a powerful way to increase sales when done right.
(Disclosure - this post may result in you following my link to my own site http://www.affiliate-software-review.com and that might mean you like my site and sign up to my double optin newsletter and heck you might even buy something from me or from someone I recommend)
Michel Fortin
· 2 months ago
Thanks for your comment, although I don't think you needed to point out the obvious. I'm aware that there's an affiliate link, but no, it still doesn't answer my question as you pointed out.
The issue remains. I'm not against the rulings and especially the intent behind them. But just like someone pointed out, someone at the FTC, who may be having a bad day, may apply the letter -- not the spirit -- of the law and make an example out of a small fry marketer.
So clarification is necessary.
Michael A. Stelzner
· 2 months ago
Michael;
Good article.
The way I read this is that the affiliate is the one who will be liable not the company in a relationship with the affiliate.
The other question is enforcement. How could this possibly be enforced?
Mike
Michel Fortin
· 2 months ago
And other, like Armand, read it the other way -- i.e., the vendor/company is liable.
I agree with your assumption, but the fact that this opens up so many potential misinterpretations (your comment is proof of that, when you said "the way I read this"), is what can lead to potential problems.
They say "ignorance of the law is not an excuse." But what if the law is unclear? Should the FTC ignore legitimate marketers who want clarity and prefer to remain above board?
Thanks for your comment.
Dan Sherman
· 2 months ago
I'll preface this by saying I am not a lawyer. So everyone should do their own research.
The problem with "ignorance of the law is no excuse" is that there are so many laws that one can hardly keep track of them. It is a concept stemming from Roman Law. And in my studying of Roman Law, I understood this principle to mean fully that ignorance of the law is no excuse when engaging in activities outside a person's sphere of normal action.
So opening a nuclear power plant, and being ignorant of the legalities of doing so is no excuse. But visiting a state that requires a license plate on the front and back of your vehicle when you live in one that does not should be perfectly excusable (especially in the interest of capturing tourist dollars).
But that's not going to get you out of trouble. No judge or lawyer will allow the above to be argued in court.
I'm not a raving fan of Objectivism, but I find this quote to be fitting whenever the government encroaches upon our ability to move freely about our lives.
The only power any government has is the power to crack down on criminals. Well, when there aren't enough criminals, one makes them. One declares so many things to be a crime that it becomes impossible for men to live without breaking laws.
Joshua Collins
· 2 months ago
That is a solid reply.
The fact that many interpret this regulation different is the main concern. Why?
Two reasons: First, you interpret the regulation wrong and do your own thing. Perhaps you consult with your FTC lawyer and he even interprets the regulation wrong... this is one reason we hire lawyers because of their interpretation of a law, however, a Judge may interpret the law different than even our own lawyers.
Either way, you misinterpreted the regulation and doing so puts you in harms way when the FTC slams the hammer down.
Secondly: Let's assume you DID interpret the new regulation correctly. All good... you run your marketing campaigns the same as you have been since the new regulation change, and 5 years down the road new staff are hired into the FTC.
They interpret the FTC guidelines different than the old staff, and now you are back at square one. Why? Because no clarification was ever made...
You are again in harms way when the FTC hammer slams down.
So, whether or not you are interpreting the regulation correctly now... the fact that it is convoluted and not worded properly will mean future disasters for marketers who ARE trying to abide by the laws.
Poor schmucks never had a chance!
JC
ronakshah
· 2 months ago
What if an affiliate if not from the US of A?
Look, what people outside the US of A do on the internet cannot be regulated by the FTC. So, what do you think will be the impact on affiliate marketers across the globe living outside the United States?
Rachel Henke
· 2 months ago
It certainly sounds like a scary scenario for affiliate program holders, and affiliates.
Is this a global thing or does it apply purely to the US do you know?
Michel Fortin
· 2 months ago
The U.S., for now. But it's a slippery slope. Watch other countries starting to follow the FTC's lead. I'm in Canada, but my company and its server are in the U.S. Does that make me liable, too? At this point, I don't know. Which is exactly my point. We don't.
jboettcher
· 2 months ago
Great post Michael - this wasn't really on my radar until now!
One wonders how this affects all the 'big' names in IM - Amazon, Ebay, and all the rest. Possible big implications for your average internet marketer or product owner, but I suspect this issue will be settled on levels higher than most of us operate at first, then trickle down. Or, as the FTC has done many times in the past, they may studiously look past the established huge players and pick on the mid-level guys instead.
2 cents
D.K. Fynn
· 2 months ago
Mike,
You and I are in Canada. How do you think this plays out on an international level. What if an affiliate vendor is in Canada, and has US affiliates, or vice versa?
Michel Fortin
· 2 months ago
As I said to Rachel, above... This affects the U.S. only, for now. But it's a slippery slope. Watch other countries (like Canada) starting to follow the FTC's lead. The CRTC usually does.
I'm in Canada, but my company and the server this blog resides on are both in the U.S. Does that make me liable, too? At this point, I don't know. Which is exactly my point. We don't know.
michael_webster
· 2 months ago
It would not be the CRTC that would be following the FTC's lead, it would be the Competition Bureau.
As to whether the FTC can regulate you effectively, being in Canada but having a US audience, I suggest that you take a look at the long line of telemarketing cases brought against Canadian scammers whose targets were Americans. The FTC took jurisdiction.
The FTC, like all regulatory agencies, is complaint driven. You would have notice about these complaints long before the FTC a) ever heard of them or b) acted upon them.
Affiliate programs in the future will be run more like franchises and less like independent contractors since the liability to the trade mark holder is joint for misleading advertising.
D.K. Fynn
· 2 months ago
Oh...and no, I don't think this will be the end of affiliate or online marketing. Not at all, it'll just weed out the folks who can't back up their claims, and make it so that the cream rises to the top. We just have to get compliant, and get better.
Michel Fortin
· 2 months ago
That wasn't my point. The lack of clarity may kill affiliate marketing for a lot of good, legitimate marketers, and may even force a few of them out of business as a result. I don't think it will be drastic, but I do think this could change the landscape of affiliate marketing -- and not necessarily all for the good, either.
auccello
· 2 months ago
That is so stupid. Their general rules have so much ambiguity that it will pretty much be a grey area for every case, and if you get in hot water it depends who reviews your case.
Stupid stupid stupid!
Reeveso
· 2 months ago
Wow, I've been reading about all this but I didn't realize it was THIS serious.
I have no problem having an affiliate site and telling my readers that I make money by reviewing products or whatever, but it seems like this is way too ridiculous.
All they need to do is hire a few people who's SOLE job is looking for obviously un-ethical companies. When they find them either have them clean up their act or get fined - and give them a certain amount of days to do so.
I'd be willing to pay a few extra cents in taxes to pay for those people. If they're doing it full-time, all you need is a few dozen employees anyway.
I mean seriously, isn't the government supposed to think these things through before making judgments like this? I just thought of that idea in about 3 seconds and I'm 1 person...
I will say this though - if it all ends up as bad as how you described it - our economy is going to TANK.
Just think about what would happen if all these major companies would depend so much on affiliate networks all of a sudden just disappear? The FTC would single-handedly bring down our already fragile economy.
I don't think the rulings are as serious as their lack of clarity and potential misinterpretations -- which can be made at the government as much as at the blogger or marketer level.
Which is my point. We need clarity.
JosephRatliff
· 2 months ago
It seems to me, and I'm not an attorney, so check with yours first...that if you have a blog sponsored by Nike with a "continual" relationship with Nike...you have to disclose that if you regularly blog about Nike shoes and sell via affiliate or paid advertising.
This situation seems like it will develop over the course of a few months...but I'm taking it very seriously.
Michel Fortin
· 2 months ago
Agreed. But without clarification, this could push some marketers out of business who may not want to take any risks. As I said, this may be the end of affiliate marketing as we know it -- not necessarily the end of affiliate marketing in all. It remains to be seen.
JosephRatliff
· 2 months ago
I'm in agreement with you too Michel, this could seriously dampen the way some marketers conduct business (not just affiliates as you pointed out).
I'm most seriously paying close attention to this, as the FTC is not the group anyone would want to mess around with...that's for sure.
Scott Murdaugh
· 2 months ago
Scary stuff...
On the one hand I agree with some of the rulings by the FTC, on the other hand it is going to make affiliate marketing extremely difficult if not impossible.
I guess it's too soon to say for sure, have to keep an eye on it.
-Scott
Haroun Kola
· 2 months ago
Thanks Michael, looks like a re-evaluation of the business model.
Paul
· 2 months ago
It's all a big hoo-haa over nothing as far as everyday affiliates and bloggers are concerned Michel. They're after the rogues, which they always have been, so it isn't going to change a hell of a lot for the large majority of us. You can see right through it when you apply a little bit of commonsense.
Michel Fortin
· 2 months ago
Paul, I would agree with you 100%. But my intent wasn't to fear monger, as much as it was to question, express concerns, get clarity, and point out some discrepancies -- rather than sweeping it under some carpet hoping it will go away, only to have it come back and bite you in the posterior anatomy.
For example, you say they are after the rogues. And I believe that, too. But all you need is someone within the FTC, having a bad day or go on a witch hunt. Even if that's not the case, the lack of clarity alone is enough to push people from an otherwise legitimate and ethical business.
Just a thought.
Paul
· 2 months ago
That's a fair point Michel. I'm sure the same thing could have happened last week too though, the way the advertising regulations were laid out before. I'm in the UK, but I'm sure that the trading standards dept. and advertising commission's legislation here isn't all that different to the US and the rules are pretty simple... don't make false claims, don't defraud people, ultimately "don't make money by deception".
That said, the FTC seem to have a knack for taking something that was confusing enough already and adding their own unique, even more confusing, twist to it :)
Michel Fortin
· 2 months ago
I added this short update to my blog post, to show an example...
Personally I'm thrilled about this because many of my competitors are bs-trader-marketers whose entire business model is heavily dependent on affiliates. And once the FTC starts going after high-profile marketers like they are, they'll be shut down/heavily fined, which is fine with me.
Something many people are surprised to learn is that yes they can subpeona your webhost server/ISP for IP logs to verify whether or not you posted a bunch of phony forum/blog posts to fake-endorse products (which my trading industry competitors do, you can tell many blog posts are phony).
As always, doing things the hard, honest way is the best way, as long as you're honest in how you run your business and aren't just some wannabe trader marketer trying to "monetize everyone's lists with namesqueezes" you're in a much better position.
I built my entire business for 10 years with zero affiliates, which is unheard of in internet marketing, I was just now launching my affiliate program a couple of months ago, I'll likely hold off on it for a bit until case law is established and precedent cases involving my competitors and others are established.
What's more problematic is testimonials, because as you pointed out results by definition will vary for educational type products and there is no data on typical results, so it may mean dramatic changes to testimonials and how they're gathered, used and positioned in salesletters. I agree it's a "game changer", for now the best course of action I'll take is to err on the side of being overly conservative and careful.
-k
Michel Fortin
· 2 months ago
Ken, you and I are friends, so I intimately know your situation. And believe me, you are a great example to follow. The value you provide and the authority you bring to the marketplace speaks more volumes than any affiliate can.
but by the same token, you expressed my concern in your comment, in that you'll "likely hold off on it for a bit until case law is established and precedent cases are established."
You're being prudent, for sure. And it's the best way to go. But for some legitimate marketers, with existing, legitimate affiliate programs, it presents a number of problems, risks, and possible, unintended expenses. My intent was to simply shine a light on it.
kencalhoun
· 2 months ago
Hi Michel, right - for those who depend on affiliate income for a major part of their livelihoods, this new ruling presents unique challenges. I certainly understand and empathize with the plight of the affiliates who do things ethically and are honest in their efforts.
My remarks are intended to explain that personally since many people in the trading industry are unethical (as are many affiliates), and since it doesn't impact me, then I'm glad that there will be more transparency required of those marketers and their affiliates.
So right - for legitimate folks, it poses a lot of challenges. And I hope that they are able to market effectively and find honest, solid solutions.
For those who aren't legitimate (as with the hidden forced continuity recent ftc actions, and many of the trading/marketing affiliates who incessantly cross pitch unproven things just to hustle a buck), it's good to see that there will be some regulation designed to help improve authenticity and honesty of what's going on out there (which has largely been going unchecked til recently). No more fake blog posts, no more endorsed mailings without disclosure "instead of "gee look at my new buddies' great new bs trading system/webinar pitchfests", it'll have to be "here's my recommendation for my buddies' new trading system AND by the Way I get paid $750 if you buy it from this time limited offer!: (insert affiliate link here). So the TRANSPARENCY And DISCLOSURE of affiliate relationship commisshes and working relationships is great - it'll help end the hidden bs out there. At least one hopes :)
Bottom line is, my take is that this will make it much BETTER for legitimate people (adwords issues notwithstanding) who are solid, credible content producers - cream rises to the top - and all the hustlers out there who post fake blogs and do the rest of it will appropriately be taken care of. I do realize there are some obstacles for the legitimate marketers, and that's understandable; hopefully some ethical solutions will arise from clarifications resulting from upcoming regulatory actions.
So if affiliate marketing is a tiny fraction of how you make money, which I think it should be, then no big impact. But for those who had been affiliate marketers as their primary business model, they're in trouble. Personally I'm on the "hurray! it'll hurt my competitors" side of it, so I'm personally thrilled about this. Because I built a successful online empire with virtually no affiliates, the hard way. And it's working. I realize affiliates are how most of the internet business are built, so I'm in the minority here.
It's an example of how regulatory change can "in an instant" change entire businesses. What matters is to be adaptive, flexible, honest and hardworking *beyond affiliate marketing as a primary business model*, and that should make a difference.
Background/why I feel this way: this last 4-5 years my industry (trading) has been flooded by a swarm of internet marketers parading as traders (forex, day/swing trading, options you name it) who have No credibility and rely heavily upon product launches driven by their affiliates to foist crappy non-working products on the trading community. And they are at the top end of the pricing tier, eg a handful of discs costing thousands of dollars, for utter basic crap from people who can't even prove they trade (w/broker screencaps, as I show).
As an authentic trader and industry published figure in that sector, it bothers me to see them making millions (!) with affiliate driven programs, not because of the affiliate success but rather their content is so awful (I hear tons of complaints from my thousands of traders on my lists), and it's overpriced and hawked primarily by affiliates who just want the money. They don't want what's best for the customers. That's marketing gone very bad. I'd rather make a fraction of their income, by producing authentic, honest, real products than foist overpriced bs on the customers. Doing it right, one valued customer at a time. Not just jv relationship driven IM, that's only part of it, requiring no credibility nor authenticity.
Agree clarification would be a big help from regulatory agencies, with examples. For example my wife runs an amazon-affiliate model type dvd review site, I'm thinking all she has to do under new rules is simply post something saying "I get a commission if you buy this from my link", which isn't a big deal, right?
-K (sorry for long post, I'm in a rush)
Name
· 2 months ago
I appreciate the heads up, but the claim -- could be death of affiliate marketing -- is based on a statistically (okay, logically) atypical outcome. Pun intended?
However insidious the FTC ruling, it only limits one aspect of affiliate marketing: claims used as proof of promises made. The death of affiliate marketing is not only possible outcome.
The sort of proof offered in the most effective direct market copy emphasizes atypical results. Not all and often not most people get that result. If that kind of claim drives direct marketing as we know it, then yes, loss of that tool could impair the motivational machinery that drives direct marketing and affiliate programs.
Granted, big results depend on big claims, at least in the market environment up until this time. But the only proof needed to run an affiliate program, technically, is proof a product will be delivered. If it's a book, a seller and affiliates might simply market the title, and a description of the contents. In the case of a diet pill, the description could be exact measures of ingredients in the pill. Were merchants to market their pills by offering such analysis of their product -- and of their competitors, what would happen?
The copywriting profession would certainly change. This could spell the death of the copywriting profession as we've known it, but it's not necessarily a killer for the mechanism known as affiliate marketing. The rule might bode worse for intangible products and for products sold at significant price differentials than retail versions based on spurious claims, but affiliate sales of tangible items might be mostly unaffected by the revised rule.
Rick Rakauskas
· 2 months ago
Here is an example of a new site disclaimer just published today selling a one size fits all solution. Does it work?
" ... INCOME DISCLAIMER: These income examples are representative of some of the most successful participants in xxx. Some members may make little or NO MONEY AT ALL with this program. It does take effort to make money and it just wont happen if you do not learn and apply the system. Worse, some people never even complete the training and therefore never see any results. Theses claims are not a guarantee of your income, nor are they typical of average participants. Individual results will vary greatly and in accordance to your effort, determination, hard work, and ability to follow directions .."
Michel Fortin
· 2 months ago
I'm not a lawyer, so I don't know. But based on my interpretation, no, it doesn't work. That's the "safe harbor" disclaimer that the FTC says, in its new ruling, which has been done away with. You can no longer make such blanket disclaimers like that.
I may be wrong. But I read and re-read the rulings, and I am pretty sure I'm right.
michael_webster
· 2 months ago
Michel, you are correct. If a marketer doesn't have studies and information which would describe the typical consumer performance or history, then the typical disclaimer will be ineffective.
Since most marketers are collecting this information, the use of the disclaimer should trigger two things. First, the consumer should ask for evidence about the typical consumer's history with the product, and flee when it is not forthcoming. Second, the consumer should then report to the FTC that marketer was a) using a disclaimer and b) did not have the relevant history or evidence.
One thing that will probably slow down the FTC's reach is that these guidelines are formulated by a different division within the FTC than the division which would typically regulate affiliate marketers, or business opportunity sellers.
Jai
· 2 months ago
The US seems to think it can stretch its long arms into other countries. On this, however, how long a stretch is the FTC likely to make with companies organized and located outside the US? Of course, with the internet, you have no control over US visitors vs Canadian, Chilean, Chinese, etc, visitors, and you can get electronic buyers from anywhere, too. So how will the FTC interpret its reach? US-based companies? US-hosted websites (which are often other countries' companies)? US-based visitors, buyers? Or what?
I should think the first line of defense, especially given the ambiguous nature of these "rules," is to be a non-US company with a non-US-hosted website. US companies with US-hosted websites are going to be vulnerable to problems with the FTC no matter what they or their affiliates do. I should think this spells the death of US-based affililiates, US-based companies, and US-based webhosting before it ends "affiliate marketing" per se. Again, this makes US companies & US affiliates uncompetitive on world markets - as if the US tax and other laws weren't sufficiently byzantine as it is.
Manogolf
· 2 months ago
Folks, the FTC oversees a whole lot more than what goes on in our world on the internet. While I agree the implications are threatening for internet marketers the big fish are on television. How do you think those markets are taking this news. The number of aired commercials per day for weight loss, skin care, exercise equipment, whatever, are countless.
In fact when my piece of exercise equipment arrives this afternoon I expect to revert into a 29 year old hard body the instant I posses it. Combined with wrinkle cream and weight loss, tomorrow I'll look 20 again.
It will be interesting to find how these advertisers react. More air time will be spent disclaiming their products than selling them. This is already evidenced with how pharmaceuticals commercials are presented.
Then there is radio, billboards, direct mail, newspapers, magazines...
Yes we are in the mix but not the focal point, for now.
Obviously Google has been preparing for this announcement.
jodejong
· 2 months ago
Thank you for this update; I haven't kept up to date on my own and suspect I'm not alone. :)
As an American living in New Zealand, I'm up to my ears in socialist BS, so the first thing that jumped out at me is that this allows the consumer to abdicate responsibility for his own actions. Furthermore, it's pretty rare to see a product offered by an affiliate that doesn't carry a money back guarantee, which I think is consumer protection enough.
Affiliate marketing is nothing more than advertising; I wonder if advertising companies (which I don't believe are compelled to divulge the identities of their clients) are held responsible for the products of their clients. If I buy a car that's a lemon, it would never occur to me to mention it to the manufacturer's advertising agency.
Michel Fortin
· 2 months ago
And therein lies the rub. (And don't forget us copywriters, too.) Who is really liable? That is still unclear and left to be seen.
davidmccauley
· 2 months ago
I find this very interesting. Now what would happen if I get free soda pop from the number one cola company, and I get some t-shirts that have the name on them (from a driver- employee of said company) and I start to offer "Loose Weight with Soda Pop" affiliate coaching program. I then get some testimonials from people that drink soda pop, have lost weight (not necessarily from the pop) and are wearing the free t-shirt, tie it up into some remarkable gotta have limited edition product launch scheme, giving away the t-shirts and pop, and an ebook of cola recipes for losing weight, used the disclaimer "results may very", then selling coaching lessons on how to build an affiliate program with free stuff from a large corporation, yadda yadda-
Now can the corporate soda pop company be fined for my program, because an employee gave me pop and t-shirts, do I have to disclose that the employee gave me the pop and or the t-shirts, or the just company- (by nature of business- anyone wearing a uniform and taking actions, regardless of authorization from corporate or not, it can be implied that the corporate authorized it).
And what about the recipes - because I "borrowed" them from the corporate site and repurposed them into my ebook? - hey a person can loose weight from a cake mix made with cola instead of water - they just have to excersize twice as much to burn it off, but it could happen..
Ok this is a bit far fetched, and I hope you (FTC) sees my point. There are shady businesses doing exactly this kind of business, and doing it legally. But by trying to stop the few bad businesses, they will also stop the good. Although I don spend my money on these 'limited edition product launches" and I feel that sometimes they are a little shaky, or even a bit misleading at best, but for the most part, I do see (some of) them as effective starting point for entrepreneurial beginners.
I think the FTC should first fix some of the other issues...for example, one of their rulings is that mail order type business must provide a 30 day money back return policy. They should also require that the businesses must state "We offer a FTC required 30 day return policy" - and not allow companies to imply that they are offering 30 days risk free. If a company truly believed that they have something to offer, they would offer 60 days policy. Better yet, call the customer at day 59 and ask if they are happy. That is when you will get the best true endorsements/testimonials. The FTC should also eliminate rebates as a gimmick. Companies want to reduce the price on a product for a sale, well, just give me the discounted price Now, and not lure me into a rebate and act like it is a favor.
Well, enough of my rants. I just think government should not make policy of things that they know very little about, or are not spending enough time to understand the true impact of their decisions.
Michel Fortin
· 2 months ago
Your last paragraph says it all. I think the FTC knows little about our business and how it works. I appreciate their intent -- goodness knows there's a lot of crap out there that needs to be dealt with. But just as there is abuse of the law, there is also the potential for abuse in the interpretation of the law, on both sides, if left unclarified or unchecked.
Crankyowl
· 2 months ago
Thanks for the food for thought, Michel.
I am a bit of a conspiracy theorist myself but look at this whole thing this way:
Google comes out of the woodwork with first chrome and then the sidewiki. The alphabet agencies start to clamp down on testimonials, affiliates etc. Why have they taken so long to do it?
Is Google not involved in this? Is the sidewiki not in a test phase now to enable them to later usurp all affiliate commissions? Or even to gobble up the internet as we know it?
They are taking website real estate without the site owner's permission. It is like a fast food company putting a massive billboard on my lawn without my permission.
Michel Fortin
· 2 months ago
Check out my wife's blog, she posted a piece on Sidewiki blockers. She will also post a full article soon on the implications -- and potential harm -- that Sidewiki entails...
Michel, thank you for this post. The repercussions you note are broad *and* deep. Much deeper than I had realized.
I was thinking of doing some affiliate marketing, but need to rethink that decision. What concerns me is the "typical" user and result. I don't mind so much disclosing material relationships, but this other piece could sure get sticky in a hurry. Thanks again.
Michel Fortin
· 2 months ago
If you think I'm being alarmist, for no reason, I encourage you to read this little update I added at the end of my blog post.
I'm just waiting for an internet law expert to put out a compliance guide. Until then, the FTC will have their hands full dealing with the acai and weight loss people and shouldn't pose a problem to us.
I don't want to change anything now just to come back and change it later and look like a fool for being scared of muddy FTC regs. Putting ourselves out of business before they even come knocking, if they ever would, makes the issue a moot point. That's my personal decision and I'm not a lawyer and this isn't legal advice, lol.
These things get tricky because the good intent to weed out the truly bad often unintentionally hurts those of lesser deeds. The devil is in the details. First, we need to see how the FCC will enforce this and second, it will take test cases in the courts I certainly am NOT a fan of fake blogs and corporate crapola passed off as objective reviews. (That's all the dang corporate controlled news is but I digress.) I think the extreme cases of this is what they will go after. They wouldn't even have the manpower to go after all the little guys. They probably hope it is the FEAR OF PROSECUTION that will be the major enforcement vehicle. (Is this terrorism?) Now I know a lot of people are not comfortable with that and I do not blame them, but that's how most of those government entities work and the government folks know it. Do you think the IRS has time to go after everybody? Thank God no, but if you do get them on your ass they are more tenacious than a dang pit bull. The FCC has been an impotent political sycophant to the big money guys for years. I wouldn't mind them re-growing a spine but we also do not need them to suddenly become Joe Friday turning the web into a better place for the innocents. Sigh....if people would be more ethical in the first place, we wouldn't have the Nanny State creating well-meaning but ambiguous rules that could potentially be draconian and counter productive. I personally am not going to let it change anything I do, at least not right away. I am already doing things above board, plus I am a risk taker with an independent streak ten miles wide. If they come after me I will blog about the fact that they are wasting taxpayer money on a witch hunt.
Dan Thies
· 2 months ago
First thing I thought about when they did this was, "gee, isn't the rogue affiliate scenario what happened to that 'well-known marketer' I know?" But the more I look at it, it *is* that, only worse, and much more expansive.
Now it seems that an affiliate can simply illustrate actual results that someone actually got, without adequately describing "typical" results, and the original marketer could end up paying the price? How would an affiliate even know what "typical" results are, and how would a reviewer know whether their own results were "typical."
Especially with internet marketing stuff, where the typical result may be "bought it, signed for the shipment, stuck it on a shelf, and forgot all about it."
Michel Fortin
· 2 months ago
Precisely.
And thanks for popping over, Dan.
robertscanlon
· 2 months ago
And exactly how do we "retro-fit" new rules to all the existing properties that have buried affiliate links; blanket disclaimers ... with the explosion of social content and outsourced cheap labor there is a ton of internet real estate out there - with varying quality.
So what if one of my affiliates has made a ton of hub-pages?
What about all the content I've distributed?
Just to bring all the legacy into compliance is mind-boggling.
Think about highly active and widespread marketers such as Howie. I can't even imagine how they will go about reversing possible breaches (I'm not suggesting any of these folks are rogues ...)
Let's just "hope" it has the desired effect of severely curtailing the return of the snake-oil movement and that decent marketers who have ethical practices and little complaints about their products would easily defend themselves, even IF they had a rogue affiliate.
Thanks Michel for writing about this and for others taking time to shed more light.
Surely is a game-changer for the game-players.
Robert
(Typically most people will read this blog and do nothing. Please take my comment as unsubstantiated opinion that is not legal advice. Any links in my comment could lead to you spending money. You may not have a good day and it could be as a result of this comment.)
Roosevelt Cooper
· 2 months ago
Hi Michel,
Great blog post on this topic. Based on my understanding of the FTC, everything is complaint driven. So if you don't get a lot of complaints you shouldn't have a problem.
However, based on my understanding of the guidelines (and I'm certainly no legal expert) this is in fact a game changer in the internet marketing community.
1. If you are an affiliate and you put up an affiliate link, my understanding is that you are considered providing an endorsement and you must disclose that it is an affiliate link. The FTC does not want a consumer thinking that you are just a regular John Doe recommending a program when in fact you earn a commission if that consumer clicks on that link and buys from you.
2. Regarding testimonials my understanding is that they don't care if we are in a market where there is so many variables. If your testimonial is performance based (I.E. I brought Michel's copywriting course, wrote a sales letter and made $100,000), you have to disclose what the typical result is. That means you better be prepared to create a case study where you take 100 people, have them all use your product over an 8 week period, have them track the results and then have a disclosure that illustrates "based on your study of 100 people the average person made $500.
Alternatively, you can frame that testimonial in a way that illustrates the unique circumstances behind that individual (i.e. This person has been studying internet marketing for 5 years, worked 60 hours a week on his marketing and purchased $50,000 worth of other marketing materials prior to getting this result).
If you don't do this, you have to simply use general testimonials (i.e. I brought Michel's copywriting course and it was great, I learned a lot from it.)
3. If one of your affiliates breaks the rules, my understanding is that they hold BOTH the affiliate and the parent company responsible and will continue to do so. Case in point, if you study the network marketing industry (which is simply a multiple level compensation affiliate program) you will find scenarios in which distributors of MLM companies made unsubstantiated claims about the products. Regulating authorities held BOTH the distributors as well as the parent MLM company responsible for those claims. I suspect the same will be the case here.
While I don't think this is the end of affiliate marketing, I do believe that this is a major game changer. Most of the sales letters that are out there are going to have to be revised based on these guidelines. Business owners are going to have to make some tough decisions on whether they want to continue to run affiliate programs with the increase liability that they offer or whether they will shut their programs down.
Michel Fortin
· 2 months ago
Game changer, indeed. Thank you for an awesome comment.
Melanie Jordan
· 2 months ago
Hi Michel, Very informative perspective on this issue that is one that we must all pay attention to. As a former VP of Marketing in the banking world, I'm used to dealing with lots of federal regs and required disclosures which many people doing business online are not. They'll get used to it, and more clarity from the FTC will definitely help.
Hamant Keval
· 2 months ago
Hi Michel
Many thanks for that very detailed review of the FTC "Crackdown"
I received an actual pdf but that was in "legalese" which made it quite difficult and understand the true implications which are quite hazy any way. Your views and comment definitely clears up much confusion but as you say we shall have to wait for more clarification. One point that I have not heard anything about is weather the FTC has durisdiction outside of The US in this area and will it affect bloggers and marketers out of the US, and weather their actual business is based in the US or not.
Many thanks again for the most clear explanations of the FTC rulings.
Take care
Ps Have you been taking care of that back - and the Sciatica.
Michel Fortin
· 2 months ago
I find it funny that I was being "clear" on how the FTC was being "unclear." ;)
My back is doing well. Inversion and decompression therapy are helping greatly.
Will
· 2 months ago
Once again, a small few have ruined it for the majority. But if that's the price we have to pay to get rid of those slimy marketers, then so be it. It's about time they were held accountable for their shady marketing tactics. It has been going on for far too long now.
I think this will make it easier for us 'real' marketers.
Michel Fortin
· 2 months ago
Oh, I agree. But if not clear, "real" marketers can be at risk, too.
opportunities
· 2 months ago
We will all be at risk, and many businesses will not take the rtisk that a rogue affiliate will create a liability for them. They will simply shut down their affiliate programs for all but their affiliates for which they have a very close relationship with.
Will
· 2 months ago
Thanks for the update Michel. It has certainly made things a lot clearer. I won't be in a rush to shut down any of my affiliate programs. I think education is the key here. We need to spend a little more time on educating our affiliates on the right way to promote our products.
There will always be affiliates who go a little too far with their promotions. Having said that they are certainly in the minority. This will help to weed out and educate those people on the correct and ethical way of doing things.
I'm glad they have made it clear that there will be warnings issued before prosecution. This is the fairest way to do things and gives us product owners a chance to rid ourselves of any rogue affiliates. We can't be expected to keep an eye on every promotion our affiliates create.
George
· 2 months ago
The US government is good at making laws that have good intentions that wind up with very bad ramifications. I am not sure how this will be interpreted but it seems like things got tougher on all of us. I just wish they used the same rules for their campaigns :)
inday
· 2 months ago
I agree with you, Michel. Clarity may be confused for authority. If someone screws up the meaning of terms in the FTC guidelines (because meanings of a word can be widened or covertly narrowed if with reference to the normal criteria of a word), then worries about "real definitions" would come in. You open up a can of worms because people would ask what is the real meaning of the term? Normally people are not simply asking a dictionary definition rather what lies behind the definition.
One, whether authority or marketer, must always be on the lookout for ambiguities and shifts in meanings because in the absolute sense, there is no word that has one single clear meaning. There are always clusters of related ideas, more or less.
Jim Cook
· 2 months ago
Hi Mike,
"My intent was to simply express my concerns, as the lack of clarity can become problematic for legitimate marketers. It may change affiliate marketing as we know it."
Like the lack of clarity is unusual in any legislation or government agency pronouncement?
Why the FTC can't enforce the rules already on the books for fraudulent activities is beyond me.
Like the SEC and Bernie Madoff, right?
I'm sorry, my rant goes beyond the subject matter of this post to the root of the problem. Government involvement beyond their authority and ability to enforce.
Oh, if you do business on the 'Net, you do business in the U.S. Why do I say that? because, unless your site is specifically geographically targeted, as Willie Sutton, a famous bank robber from the early 20th century, said when asked "Willie, why do you rob banks?" - "Because that's where the money is!"
Probably, the FTC is doing this because "that's where the money is." Ah,yes! The hidden agenda. The real Modus Operendi.
Our government is in dire need of money. They are, according to President Obama, broke. We will see a lot of unnecessary legislation and government agency pronouncements over the next couple of years.
I, frankly, believe that all affiliate programs should be closed. In other words, you need to own or be involved with the product and/or service to comment, review and/or promote it.
The greatest problem with affiliate marketing is it's greatest draw -> it's free to become an affiliate. One need not know a damn thing about what one promotes. How disingenuous is that?
I strongly dislike the word "free." It is such a misnomer.
There is nothing in this universe that's free. Everything comes with a price, cost and/or obligation.
Because of this - "FREEEEE" - the cost of affiliate marketing has just gone up. It's called FTC scrutiny.
Many of you may take this post as the ranting of a right wing, libertarian nut. Thank you, I'll take that as a compliment.
Michel Fortin
· 2 months ago
From one libertarian to another, thank you for commenting. ;)
However, I don't think affiliate programs should be closed. It is an intrinsic part of the web, thanks to Amazon. But, I do think the rulings are necessary and some changes need to be made to crack down on the crap. However, too much can be left to interpretation.
And, even if you do away with affiliate programs, scammers will always find ways to beat the system. That's what scammers do. They try to game/beat the system.
opportunities
· 2 months ago
And all too often what government does in response to a few scammers is spoil it for everyone, with not enough thought as to how it affects the non scammer. In part this is because so many people love to be dependent for government to protect them, and have become less able to think for themselves.
This is but another example, albeit one that hits much closer to home than does typical government heavy handedness.
Darko
· 2 months ago
Hi. My first post here. I've been researching this and after reading though your and other people posts, some comments and using my own common sense I came to a conclusion:
1) If you're an affiliate no need to worry for now. We can maybe expect changes from merchants pointing us to do something different as a result of this regulation. So continue doing what you're doing.
2) If you're a merchant uh..that's harder situation here. As I've seen nothing is really clear (seems FTC knows not very much about how various internet models work.)
But I'm an affiliate and that was my advice.
Also it would be VERY HARD to track every single affiliate from a perspective of a merchant so I guess FTC will take that into consideration as well and maybe be not so strict. Or maybe we can expect merchants to do stronger selection process of their affiliates.
Michel your title was misleading honestly, this may be the end of affiliate marketing as we know it but it's not definitely the end of the entire industry. Do you have an idea how would this impact Google let's say if affiliate marketing dies? They'll get less money from Adwords, less business on them. So we should expect a bit of opposition from the big guys as well in my opinion.
Michel Fortin
· 2 months ago
The title was indeed to convey "the end of affiliate marketing as we know it." But that was too long. And the title was a question, not a direct statement. And finally, it did get you to read the post, didn't it?
This is no different than my report, "The Death of The Salesletter."
I appreciate the comment. But as an affiliate vendor myself, and just as your post implies, this DOES affect me. So while you think it's business as usual for affiliates, vendors need to take heed and be very careful.
ronaldredito
· 2 months ago
I have read this news from a top affiliate marketer from the Philippines I think yesterday and he thought we are not affected by this.
Reading your presentation, I believe all affiliates will be affected by theses moves. That is a sad one. Being a newbie, I am just starting out making money through affiliate programs. And if the assumption that the vendor itself will be accountable with all affiliates' actions, then they will be stricter than before and would cut the numbers of affiliates. Only the established one.
Then the whole industry will be affected because whom do we sell these products. Then the buyer itself will be interested to be an affiliate especially in the "making money online" niche.
Also Google, Yahoo and MSN will be affected PPC advertising will diminish because majority of advertisers are affiliates!
This thing is really alarming!
Dan Thies
· 2 months ago
For anyone interested in reading more than the press release, here's a link to the document filed in the Federal Registry by the FTC:
In terms of strategy for internet marketers, the added exposure and burden of policing affiliate endorsements of the product itself leads me to conclude that the greatest risk is in allowing affiliates to refer direct sales.
In designing my new affiliate program I've been putting a heavy emphasis on lead generation (via free content) and tying leads to affiliates. This makes it easier on affiliates (no selling required), and allows me to control the advertising message when a product is sold.
Given these guidelines, I may go so far as to not provide affiliate links to the sales page, or any other pages where money is taken, and only allow affiliates to promote free content.
Naturally, as we all should, I will be seeking legal advice.
Franck Silvestre
· 2 months ago
Thanks for the link, and I am thinking about the same thing, I mean getting affiliates to promote via free stuff, and getting the leads.
Franck
opportunities
· 2 months ago
Michael, Great post. The legal ramifications will be sorted out in time by (high priced) attorneys. The problem for now is that many bloggers and affiliate marketers cannot afford such legal representation. An $11,000 fine represents too great of a risk for many of them. For those affiliate marketers and bloggers earning a few hundred or thousand extra dollars a month through some affiliate links, be prepared. Start getting to get used to a lower standard of living.
Compliance with this ruling may prove very difficult for some with an Internet presence. I have some blogs with thousands of pages of quality posts, which took years to create. Some of those posts have affiliate links on them, even if I was not actually endorsing the product or service in question. In many cases the product was just a good tie in to the post. Is it now incumbent upon me to sift through every page of every site and blog I have on the net, or risk an $11,000 per occurrence penalty? Will it not be easier to just shut down these blogs entirely, rather than take the risk that the FTC will basically "know a violation when they see it"?
Most large companies will basically kill their affiliate programs for all but their best producers, rather than take the risk, because it will drive their legal departments nuts. How does this affect companies like Amazon, and their affiliate program? It is even more troubling for smaller companies and individuals selling their own products using affiliate links. If you're selling a $27 - $97 info product, are you ever going to make enough sales to justify the risk of an $11,000 fine for one of your affiliates that makes a claim. What if that affiliate does not live in the U.S.? Are you still liable, even though they are not bound by the FTC's mandate?
What if you have an Adsense link on your blog? Does this constitute a material connection? I would think it does, although that connection is actually with Google, not the sponsor of the Adsense ad. There are millions of blogs with Adsense ads. Will these bloggers now be required to place a disclaimer on every on of their pages stating a material connection? Most people probably realize that the bloggers have a material connection and are paid in some fashion for placing the ads on their sites, but is this common sense test enough?
Michel Fortin
· 2 months ago
I posted another important update. In a recent interview, the FTC says "don't worry."
With your latest update: Would the phrase 'who blog about one particular product or business' be interpreted as 'who blogs about one particular niche'?
You may be reviewing multiple products from multiple businesses, yet, you are catering towards one niche. I assume this is where the perceived authority comes into play?
While somewhat clearer, still not clear enough... perhaps everything will clarify itself as time goes along.
Oh, and I do have a question that maybe you can answer Mike... maybe not (since this might be a question for a lawyer).
But, let us assume you have a product of your own which you created. Let's say this product is in the weight loss niche.
While you cannot have testimonies anymore which claim certain results that give an impression of 'typical' results and you are not shielded by the disclaimer anymore... What about your own testament?
Will writing a sales letter stating how you used your own system and lost so many pounds be construed as a testimonial spouting 'typical' results, or might it be okay seeing how you use your own testament to prove that you have done it yourself and know what you are talking about... thereby making you an expert on your system and giving you reason why you are able to share your knowledge.
Same can be said for other info products. For instance, teaching others how to bag high-end clients for freelancing or whatnot.
This is one area where I am still confused if it would be considered 'testimony' or viable proof of authority.
Thanks, JC
Michel Fortin
· 2 months ago
1. I don't know about "niches," and you are right... a lot is still left unanswered. We'll have to wait and see.
2. My interpretation is that your own testimonial falls under the same rules. If it's not a "typical result," you must a) say that it isn't, and b) share what typical result people should expect.
Yup, another can of worms.
Joshua Collins
· 2 months ago
That was what I was assuming as well about your own testimonial within the sales copy.
I suppose it is best to take the Frank Kern approach and spout the following: "I'm not saying you'll make money. You might not make any money. You'll probably lose money. You might end up broke and homeless."
LoL
But, this leads to a craziness... cause a sales letter in it's own essence is touting that it will give you a certain desired result for a certain pain or problem you currently face.
So, will an entire sales letter -- not spouting specific results -- but leaning towards teaching you certain methods to increase your bottom line or whatnot be considered a testimony in it's own right?
In my opinion a sales letter is nothing more than a fancy drawn out testimony of the product creator stating that they have the desired solution to your problems -- and one whom buys expects to achieve the results which are being sold to them (whether explicit testimonials are used or not... they will still expect a 'typical' result even though no 'typical' result was stated directly).
Perhaps sales letters (and other sales copy) will need to have disclaimers stating that they do not promise any typical results from their product... whether or not a testimony was used in the sales letter.
Ahhh, you have to love government mandates and the clarity of which these mandates are forced upon us.
All in all, I do believe this will better the world of marketing as a whole... but I would hate to be the one whom tries to comply and a three months from now get a warning, a cease and desist, or worst... all because I interpreted the mandate incorrectly :-\
JC
Roosevelt Cooper
· 2 months ago
Hi Michel,
Just had a conversation with one of my attorneys regarding the regulations. I am not going to give legal advice here. All I will do is tell you what I'm going to be doing based upon that conversation...
1) If I receive or have the potential to receive anything in value, whether it's money, a free course, whatever, I am going to disclose it. Adsense ads, affiliate links, anything and it doesn't matter whether its on my blog, facebook, twitter, whatever it's getting disclosed.
2) I'm not using any performance based testimonials anymore in my marketing.
3) I will still allow affiliates. The parent company has always been responsible for what their affiliates do even before this policy so I see no reason why I would need to do anything different in that area.
George
· 2 months ago
Michel,
There are so many sites out there, both big and small, that use case studies... could the FTC potentially go after all of them?
That would just be bad for the economy in general. I can't imagine that is their plan.
Michel Fortin
· 2 months ago
I don't think so, either. That's why I posted an update at the end of article, from a recent clarification the FTC made.
kencalhoun
· 2 months ago
Personally I'm going to take down all my testimonials and suspend my affiliate program until I see precedent case law, examples of what the FTC means *exactly* about all of this (Frank Kern has a lot of good insights on his blog too btw on this topic). I think "better safe than sorry" is prudent given we all collectively don't know the extent and scope of this.
I think it's a great move by the FTC, to require more disclosure and authenticity. Some marketers will try and squeak by and avoid it (big mistake), the ethical ones like a few of us will play ball by the rules and respect the regulations. I think compliance and TRANSPARENCY and DISCLOSURE among 'who's getting paid by who, to endorse what", is a good thing, and long overdue, fwiw. Our customers deserve it.
The right response for me at least, is to continue staying squeaky-clean with everything and let the product quality speak for itself.
Like working with Michel, a genuine authentic world-class resource who's been instrumental in my success (thanks, Michel!), it's important to focus on working relationships with credible AUTHENTIC experts. Thanks Michel for providing such a great role model (even from back in 2000 w/your posts at Corey's sites), you're one of the best things about doing business right on the internet, the top resource in my opinion.
Ken Ca|houn
Gary Simpson
· 2 months ago
Hi Michel, Interesting article and lots of interesting comments. I couldn't read them all. Read a few and just skimmed the rest.
Where I live in Perth, Western Australia we have a select group of prize d*ckh*ads who cause misery to everyone and every thing. The response to this by our successive Governments is to restrict and control everything. Effectively, what this amounts to is that NOBODY now can conduct their life WITHOUT transgressing some idiotic law virtually every day. In essence, the deeds of a few have disrupted the lives of the masses.
To give an example, we recently had a situation where a man playfully hit his wife with a pillow. It was witnessed by somebody who reported it to the Police. The Police then charged the husband with assault despite the wife pleading with them not to. It just went on and on to the nth degree of ridiculousness.
The FTC have to have some control but what I predict is that once the regulations come in, the lawyers will then take over and start nailing every shingle in place so that doing anything on the internet will require the knowledge and application of as much legislation as we are bound by in tax laws. It will become unmanageable. I hope not but all these lawyer graduates coming out of universities have to have something to do. More lawyers = more laws = more litigation = more money for lawyers.
Taking this a step further, maybe Google can be drawn into EVERY misdemeanour by virtue of it being the biggest player presiding over almost everything on the Internet - ie just keep marching up the line machine-gunning every target until Google is reached. And Google has lots of money!
[DISCLAIMER; The purported author of this comment may or may not have made these statements. If said statements are acted upon by any individual then the purported author gives no guarantee or even implies that there is a guarantee that the said individual will achieve any result whether implied or not.]
Steve Davies
· 2 months ago
Great article as usual, Michel.
One thing you talk about (that I haven't heard yet from others) is how the FTC could potentially come after the owners of these affiliate programs and not just the affiliates.
It's obvious that lawyers had their hands in writing this new ruling... hence, going after the deep pockets.
When I first heard of this, I was quick to assume that "any" links on a blog where an affiliate gets paid would be under the same scrutiny (ie. Google adsense links)... where one doesn't disclose getting paid for visitors clicking on your links.
BTW - Does the FTC cover Canadain bloggers/marketers... just wondering. ;0)
sharie
· 2 months ago
It seems, as per usual, the game of the day is legislation to the lowest common denominator. And when those with or without good intentions enact these things, if a side-effect is that they makes lots of money--well, hey, so much the better, right?!
Now, as another "real-live newbie," I'm only assuming that putting up a landing page (obviously) including testimonials in general (i.e. expected results, as in 'we expect you'll benefit from this information and get rid of xxx problem or we wouldn't have wasted our time and yours explaining it to you' or whatever), if not specific cases, with a link to the actual vendor's sales page (where they presumably include testimonials) is the same as a blogger who features particular products for compensation...right??? :)
Talk about clear as mud...maybe I shoulda been a lawyer too...;)
norene
· 2 months ago
Thanks for the clarification, Michael. It is important to keep on top of such things and I appreciate you sorting it all out for us. -Norene
Michel Fortin
· 2 months ago
Attorney Mike Young published this FTC special report, and puts it into plain language. I like it. At the end, he even offers an "affiliate disclosure compliance form," which he sells. I'm in no way affiliated, and I recommend this report.
Thank you, I'm going to read it now. My last read for today..
Franck
jasonsparker
· 2 months ago
Thanks for going into detail about being liable for your own affiliates. That's great info to know.
Also, if you have some rogue affiliate like you said, the 3 step process is breath of fresh air.
omnistarva
· 2 months ago
Hi Michel,
Great article. It made a lot of things clear. I have been in the marketing field for about an year and most of the things mentioned in the post are new to me. Good Luck Mark Robinson http://www.osiaffiliate.com
AskJamesHolmes
· 2 months ago
Michel - Consider this my non-paid endorsement that this blog post and comment stream should be mandatory reading for all affiliate product creators and affiliate marketers. As so often is the case with legislation, how is this going to be enforced (man power and budget) and what are the unintended consequences?
It seems a bit of a challenging year for affiliate marketers with the State sales tax issues (in selected states) and the new endorsement rules as discussed, the landscape has certainly changed. My advice is to recognize that the sky is not falling; however, I become concerned by any threat to free markets and entrepreneurship in principle.
No way its the end, its the beginning of a new era. I love how things are changing for the better for people doing the RIGHT thing and becoming harder for those doing the wrong thing. The cream is rising to the top.
Mike
· 1 month ago
I think 1 million rogue affilates should get every person in trouble even themselves, so someone could stand up and hire a good lawyer to point out to the FTC just how ridiculous their new policies are.
Man, this is a huge cluster****.
George
· 1 month ago
The FTC already is being sued because of the differences in their Internet regulations vs. what they require of offline media. There's even a facebook group dedicated to abolishing the FTC...
I personally don't think the new interpretation of the current regulations is going to be that big of a deal for most online marketers... but I AM NOT A LAWYER AND DON'T PLAY ONE ON TV. NOTHING I SAY SHOULD BE TAKEN AS LEGAL ADVICE...
All Comments
I wonder if the FTC rushed to judgment. Where are Amazon.com and Google, who depend on third party advertising? And I wonder who they are trying to protect here. Is it the consumer? Or traditional marketers who view affiliate marketing as taking a slice of their pie?
... you just answered it when you dropped that affiliate link to Armand Morin and I don't see a disclosure anywhere :)
Notwithstanding the fact that you didn't disclose the link, this opens another can of worms since that's clearly an affiliate link but maybe it's not yours?
I'm no lawyer but I think all the FTC is trying to do is make us more transparent and I think it's a good think and will make affiliate marketing even stronger, as a powerful way to increase sales when done right.
(Disclosure - this post may result in you following my link to my own site http://www.affiliate-software-review.com and that might mean you like my site and sign up to my double optin newsletter and heck you might even buy something from me or from someone I recommend)
The issue remains. I'm not against the rulings and especially the intent behind them. But just like someone pointed out, someone at the FTC, who may be having a bad day, may apply the letter -- not the spirit -- of the law and make an example out of a small fry marketer.
So clarification is necessary.
Good article.
The way I read this is that the affiliate is the one who will be liable not the company in a relationship with the affiliate.
The other question is enforcement. How could this possibly be enforced?
Mike
I agree with your assumption, but the fact that this opens up so many potential misinterpretations (your comment is proof of that, when you said "the way I read this"), is what can lead to potential problems.
They say "ignorance of the law is not an excuse." But what if the law is unclear? Should the FTC ignore legitimate marketers who want clarity and prefer to remain above board?
Thanks for your comment.
The problem with "ignorance of the law is no excuse" is that there are so many laws that one can hardly keep track of them. It is a concept stemming from Roman Law. And in my studying of Roman Law, I understood this principle to mean fully that ignorance of the law is no excuse when engaging in activities outside a person's sphere of normal action.
So opening a nuclear power plant, and being ignorant of the legalities of doing so is no excuse. But visiting a state that requires a license plate on the front and back of your vehicle when you live in one that does not should be perfectly excusable (especially in the interest of capturing tourist dollars).
But that's not going to get you out of trouble. No judge or lawyer will allow the above to be argued in court.
I'm not a raving fan of Objectivism, but I find this quote to be fitting whenever the government encroaches upon our ability to move freely about our lives.
The fact that many interpret this regulation different is the main concern. Why?
Two reasons:
First, you interpret the regulation wrong and do your own thing. Perhaps you consult with your FTC lawyer and he even interprets the regulation wrong... this is one reason we hire lawyers because of their interpretation of a law, however, a Judge may interpret the law different than even our own lawyers.
Either way, you misinterpreted the regulation and doing so puts you in harms way when the FTC slams the hammer down.
Secondly:
Let's assume you DID interpret the new regulation correctly. All good... you run your marketing campaigns the same as you have been since the new regulation change, and 5 years down the road new staff are hired into the FTC.
They interpret the FTC guidelines different than the old staff, and now you are back at square one. Why? Because no clarification was ever made...
You are again in harms way when the FTC hammer slams down.
So, whether or not you are interpreting the regulation correctly now... the fact that it is convoluted and not worded properly will mean future disasters for marketers who ARE trying to abide by the laws.
Poor schmucks never had a chance!
JC
Look, what people outside the US of A do on the internet cannot be regulated by the FTC. So, what do you think will be the impact on affiliate marketers across the globe living outside the United States?
Is this a global thing or does it apply purely to the US do you know?
One wonders how this affects all the 'big' names in IM - Amazon, Ebay, and all the rest. Possible big implications for your average internet marketer or product owner, but I suspect this issue will be settled on levels higher than most of us operate at first, then trickle down. Or, as the FTC has done many times in the past, they may studiously look past the established huge players and pick on the mid-level guys instead.
2 cents
You and I are in Canada. How do you think this plays out on an international level. What if an affiliate vendor is in Canada, and has US affiliates, or vice versa?
I'm in Canada, but my company and the server this blog resides on are both in the U.S. Does that make me liable, too? At this point, I don't know. Which is exactly my point. We don't know.
As to whether the FTC can regulate you effectively, being in Canada but having a US audience, I suggest that you take a look at the long line of telemarketing cases brought against Canadian scammers whose targets were Americans. The FTC took jurisdiction.
The FTC, like all regulatory agencies, is complaint driven. You would have notice about these complaints long before the FTC a) ever heard of them or b) acted upon them.
Affiliate programs in the future will be run more like franchises and less like independent contractors since the liability to the trade mark holder is joint for misleading advertising.
Stupid stupid stupid!
I have no problem having an affiliate site and telling my readers that I make money by reviewing products or whatever, but it seems like this is way too ridiculous.
All they need to do is hire a few people who's SOLE job is looking for obviously un-ethical companies. When they find them either have them clean up their act or get fined - and give them a certain amount of days to do so.
I'd be willing to pay a few extra cents in taxes to pay for those people. If they're doing it full-time, all you need is a few dozen employees anyway.
I mean seriously, isn't the government supposed to think these things through before making judgments like this? I just thought of that idea in about 3 seconds and I'm 1 person...
I will say this though - if it all ends up as bad as how you described it - our economy is going to TANK.
Just think about what would happen if all these major companies would depend so much on affiliate networks all of a sudden just disappear? The FTC would single-handedly bring down our already fragile economy.
Jeremy Reeves
www.ControlBeatingCopy.com
Which is my point. We need clarity.
This situation seems like it will develop over the course of a few months...but I'm taking it very seriously.
I'm most seriously paying close attention to this, as the FTC is not the group anyone would want to mess around with...that's for sure.
On the one hand I agree with some of the rulings by the FTC, on the other hand it is going to make affiliate marketing extremely difficult if not impossible.
I guess it's too soon to say for sure, have to keep an eye on it.
-Scott
For example, you say they are after the rogues. And I believe that, too. But all you need is someone within the FTC, having a bad day or go on a witch hunt. Even if that's not the case, the lack of clarity alone is enough to push people from an otherwise legitimate and ethical business.
Just a thought.
That said, the FTC seem to have a knack for taking something that was confusing enough already and adding their own unique, even more confusing, twist to it :)
http://www.michelfortin.com/affiliate-marketing...
Something many people are surprised to learn is that yes they can subpeona your webhost server/ISP for IP logs to verify whether or not you posted a bunch of phony forum/blog posts to fake-endorse products (which my trading industry competitors do, you can tell many blog posts are phony).
As always, doing things the hard, honest way is the best way, as long as you're honest in how you run your business and aren't just some wannabe trader marketer trying to "monetize everyone's lists with namesqueezes" you're in a much better position.
I built my entire business for 10 years with zero affiliates, which is unheard of in internet marketing, I was just now launching my affiliate program a couple of months ago, I'll likely hold off on it for a bit until case law is established and precedent cases involving my competitors and others are established.
What's more problematic is testimonials, because as you pointed out results by definition will vary for educational type products and there is no data on typical results, so it may mean dramatic changes to testimonials and how they're gathered, used and positioned in salesletters. I agree it's a "game changer", for now the best course of action I'll take is to err on the side of being overly conservative and careful.
-k
but by the same token, you expressed my concern in your comment, in that you'll "likely hold off on it for a bit until case law is established and precedent cases are established."
You're being prudent, for sure. And it's the best way to go. But for some legitimate marketers, with existing, legitimate affiliate programs, it presents a number of problems, risks, and possible, unintended expenses. My intent was to simply shine a light on it.
My remarks are intended to explain that personally since many people in the trading industry are unethical (as are many affiliates), and since it doesn't impact me, then I'm glad that there will be more transparency required of those marketers and their affiliates.
So right - for legitimate folks, it poses a lot of challenges. And I hope that they are able to market effectively and find honest, solid solutions.
For those who aren't legitimate (as with the hidden forced continuity recent ftc actions, and many of the trading/marketing affiliates who incessantly cross pitch unproven things just to hustle a buck), it's good to see that there will be some regulation designed to help improve authenticity and honesty of what's going on out there (which has largely been going unchecked til recently). No more fake blog posts, no more endorsed mailings without disclosure "instead of "gee look at my new buddies' great new bs trading system/webinar pitchfests", it'll have to be "here's my recommendation for my buddies' new trading system AND by the Way I get paid $750 if you buy it from this time limited offer!: (insert affiliate link here). So the TRANSPARENCY And DISCLOSURE of affiliate relationship commisshes and working relationships is great - it'll help end the hidden bs out there. At least one hopes :)
Bottom line is, my take is that this will make it much BETTER for legitimate people (adwords issues notwithstanding) who are solid, credible content producers - cream rises to the top - and all the hustlers out there who post fake blogs and do the rest of it will appropriately be taken care of. I do realize there are some obstacles for the legitimate marketers, and that's understandable; hopefully some ethical solutions will arise from clarifications resulting from upcoming regulatory actions.
So if affiliate marketing is a tiny fraction of how you make money, which I think it should be, then no big impact. But for those who had been affiliate marketers as their primary business model, they're in trouble. Personally I'm on the "hurray! it'll hurt my competitors" side of it, so I'm personally thrilled about this. Because I built a successful online empire with virtually no affiliates, the hard way. And it's working.
I realize affiliates are how most of the internet business are built, so I'm in the minority here.
It's an example of how regulatory change can "in an instant" change entire businesses. What matters is to be adaptive, flexible, honest and hardworking *beyond affiliate marketing as a primary business model*, and that should make a difference.
Background/why I feel this way: this last 4-5 years my industry (trading) has been flooded by a swarm of internet marketers parading as traders (forex, day/swing trading, options you name it) who have No credibility and rely heavily upon product launches driven by their affiliates to foist crappy non-working products on the trading community. And they are at the top end of the pricing tier, eg a handful of discs costing thousands of dollars, for utter basic crap from people who can't even prove they trade (w/broker screencaps, as I show).
As an authentic trader and industry published figure in that sector, it bothers me to see them making millions (!) with affiliate driven programs, not because of the affiliate success but rather their content is so awful (I hear tons of complaints from my thousands of traders on my lists), and it's overpriced and hawked primarily by affiliates who just want the money. They don't want what's best for the customers. That's marketing gone very bad. I'd rather make a fraction of their income, by producing authentic, honest, real products than foist overpriced bs on the customers. Doing it right, one valued customer at a time. Not just jv relationship driven IM, that's only part of it, requiring no credibility nor authenticity.
Agree clarification would be a big help from regulatory agencies, with examples.
For example my wife runs an amazon-affiliate model type dvd review site, I'm thinking all she has to do under new rules is simply post something saying "I get a commission if you buy this from my link", which isn't a big deal, right?
-K
(sorry for long post, I'm in a rush)
However insidious the FTC ruling, it only limits one aspect of affiliate marketing: claims used as proof of promises made. The death of affiliate marketing is not only possible outcome.
The sort of proof offered in the most effective direct market copy emphasizes atypical results. Not all and often not most people get that result. If that kind of claim drives direct marketing as we know it, then yes, loss of that tool could impair the motivational machinery that drives direct marketing and affiliate programs.
Granted, big results depend on big claims, at least in the market environment up until this time. But the only proof needed to run an affiliate program, technically, is proof a product will be delivered. If it's a book, a seller and affiliates might simply market the title, and a description of the contents. In the case of a diet pill, the description could be exact measures of ingredients in the pill. Were merchants to market their pills by offering such analysis of their product -- and of their competitors, what would happen?
The copywriting profession would certainly change. This could spell the death of the copywriting profession as we've known it, but it's not necessarily a killer for the mechanism known as affiliate marketing. The rule might bode worse for intangible products and for products sold at significant price differentials than retail versions based on spurious claims, but affiliate sales of tangible items might be mostly unaffected by the revised rule.
" ... INCOME DISCLAIMER: These income examples are representative of some of the most successful participants in xxx. Some members may make little or NO MONEY AT ALL with this program. It does take effort to make money and it just wont happen if you do not learn and apply the system. Worse, some people never even complete the training and therefore never see any results. Theses claims are not a guarantee of your income, nor are they typical of average participants. Individual results will vary greatly and in accordance to your effort, determination, hard work, and ability to follow directions .."
I may be wrong. But I read and re-read the rulings, and I am pretty sure I'm right.
Since most marketers are collecting this information, the use of the disclaimer should trigger two things. First, the consumer should ask for evidence about the typical consumer's history with the product, and flee when it is not forthcoming. Second, the consumer should then report to the FTC that marketer was a) using a disclaimer and b) did not have the relevant history or evidence.
One thing that will probably slow down the FTC's reach is that these guidelines are formulated by a different division within the FTC than the division which would typically regulate affiliate marketers, or business opportunity sellers.
I should think the first line of defense, especially given the ambiguous nature of these "rules," is to be a non-US company with a non-US-hosted website. US companies with US-hosted websites are going to be vulnerable to problems with the FTC no matter what they or their affiliates do. I should think this spells the death of US-based affililiates, US-based companies, and US-based webhosting before it ends "affiliate marketing" per se. Again, this makes US companies & US affiliates uncompetitive on world markets - as if the US tax and other laws weren't sufficiently byzantine as it is.
In fact when my piece of exercise equipment arrives this afternoon I expect to revert into a 29 year old hard body the instant I posses it. Combined with wrinkle cream and weight loss, tomorrow I'll look 20 again.
It will be interesting to find how these advertisers react. More air time will be spent disclaiming their products than selling them. This is already evidenced with how pharmaceuticals commercials are presented.
Then there is radio, billboards, direct mail, newspapers, magazines...
Yes we are in the mix but not the focal point, for now.
Obviously Google has been preparing for this announcement.
As an American living in New Zealand, I'm up to my ears in socialist BS, so the first thing that jumped out at me is that this allows the consumer to abdicate responsibility for his own actions. Furthermore, it's pretty rare to see a product offered by an affiliate that doesn't carry a money back guarantee, which I think is consumer protection enough.
Affiliate marketing is nothing more than advertising; I wonder if advertising companies (which I don't believe are compelled to divulge the identities of their clients) are held responsible for the products of their clients. If I buy a car that's a lemon, it would never occur to me to mention it to the manufacturer's advertising agency.
Now can the corporate soda pop company be fined for my program, because an employee gave me pop and t-shirts, do I have to disclose that the employee gave me the pop and or the t-shirts, or the just company- (by nature of business- anyone wearing a uniform and taking actions, regardless of authorization from corporate or not, it can be implied that the corporate authorized it).
And what about the recipes - because I "borrowed" them from the corporate site and repurposed them into my ebook? - hey a person can loose weight from a cake mix made with cola instead of water - they just have to excersize twice as much to burn it off, but it could happen..
Ok this is a bit far fetched, and I hope you (FTC) sees my point. There are shady businesses doing exactly this kind of business, and doing it legally. But by trying to stop the few bad businesses, they will also stop the good. Although I don spend my money on these 'limited edition product launches" and I feel that sometimes they are a little shaky, or even a bit misleading at best, but for the most part, I do see (some of) them as effective starting point for entrepreneurial beginners.
I think the FTC should first fix some of the other issues...for example, one of their rulings is that mail order type business must provide a 30 day money back return policy. They should also require that the businesses must state "We offer a FTC required 30 day return policy" - and not allow companies to imply that they are offering 30 days risk free. If a company truly believed that they have something to offer, they would offer 60 days policy. Better yet, call the customer at day 59 and ask if they are happy. That is when you will get the best true endorsements/testimonials. The FTC should also eliminate rebates as a gimmick. Companies want to reduce the price on a product for a sale, well, just give me the discounted price Now, and not lure me into a rebate and act like it is a favor.
Well, enough of my rants. I just think government should not make policy of things that they know very little about, or are not spending enough time to understand the true impact of their decisions.
I am a bit of a conspiracy theorist myself but look at this whole thing this way:
Google comes out of the woodwork with first chrome and then the sidewiki. The alphabet agencies start to clamp down on testimonials, affiliates etc. Why have they taken so long to do it?
Is Google not involved in this? Is the sidewiki not in a test phase now to enable them to later usurp all affiliate commissions? Or even to gobble up the internet as we know it?
They are taking website real estate without the site owner's permission. It is like a fast food company putting a massive billboard on my lawn without my permission.
http://www.marketersboard.com/google-sidewiki-b...
I was thinking of doing some affiliate marketing, but need to rethink that decision. What concerns me is the "typical" user and result. I don't mind so much disclosing material relationships, but this other piece could sure get sticky in a hurry. Thanks again.
http://www.michelfortin.com/affiliate-marketing...
I don't want to change anything now just to come back and change it later and look like a fool for being scared of muddy FTC regs. Putting ourselves out of business before they even come knocking, if they ever would, makes the issue a moot point. That's my personal decision and I'm not a lawyer and this isn't legal advice, lol.
http://www.theinternetpatrol.com/the-new-ftc-ru...
These things get tricky because the good intent to weed out the truly bad often unintentionally hurts those of lesser deeds. The devil is in the details. First, we need to see how the FCC will enforce this and second, it will take test cases in the courts
I certainly am NOT a fan of fake blogs and corporate crapola passed off as objective reviews. (That's all the dang corporate controlled news is but I digress.)
I think the extreme cases of this is what they will go after. They wouldn't even have the manpower to go after all the little guys. They probably hope it is the FEAR OF PROSECUTION that will be the major enforcement vehicle. (Is this terrorism?) Now I know a lot of people are not comfortable with that and I do not blame them, but that's how most of those government entities work and the government folks know it. Do you think the IRS has time to go after everybody? Thank God no, but if you do get them on your ass they are more tenacious than a dang pit bull.
The FCC has been an impotent political sycophant to the big money guys for years. I wouldn't mind them re-growing a spine but we also do not need them to suddenly become Joe Friday turning the web into a better place for the innocents.
Sigh....if people would be more ethical in the first place, we wouldn't have the Nanny State creating well-meaning but ambiguous rules that could potentially be draconian and counter productive.
I personally am not going to let it change anything I do, at least not right away. I am already doing things above board, plus I am a risk taker with an independent streak ten miles wide. If they come after me I will blog about the fact that they are wasting taxpayer money on a witch hunt.
Now it seems that an affiliate can simply illustrate actual results that someone actually got, without adequately describing "typical" results, and the original marketer could end up paying the price? How would an affiliate even know what "typical" results are, and how would a reviewer know whether their own results were "typical."
Especially with internet marketing stuff, where the typical result may be "bought it, signed for the shipment, stuck it on a shelf, and forgot all about it."
And thanks for popping over, Dan.
So what if one of my affiliates has made a ton of hub-pages?
What about all the content I've distributed?
Just to bring all the legacy into compliance is mind-boggling.
Think about highly active and widespread marketers such as Howie. I can't even imagine how they will go about reversing possible breaches (I'm not suggesting any of these folks are rogues ...)
Let's just "hope" it has the desired effect of severely curtailing the return of the snake-oil movement and that decent marketers who have ethical practices and little complaints about their products would easily defend themselves, even IF they had a rogue affiliate.
Thanks Michel for writing about this and for others taking time to shed more light.
Surely is a game-changer for the game-players.
Robert
(Typically most people will read this blog and do nothing. Please take my comment as unsubstantiated opinion that is not legal advice. Any links in my comment could lead to you spending money. You may not have a good day and it could be as a result of this comment.)
Great blog post on this topic. Based on my understanding of the FTC, everything is complaint driven. So if you don't get a lot of complaints you shouldn't have a problem.
However, based on my understanding of the guidelines (and I'm certainly no legal expert) this is in fact a game changer in the internet marketing community.
1. If you are an affiliate and you put up an affiliate link, my understanding is that you are considered providing an endorsement and you must disclose that it is an affiliate link. The FTC does not want a consumer thinking that you are just a regular John Doe recommending a program when in fact you earn a commission if that consumer clicks on that link and buys from you.
2. Regarding testimonials my understanding is that they don't care if we are in a market where there is so many variables. If your testimonial is performance based (I.E. I brought Michel's copywriting course, wrote a sales letter and made $100,000), you have to disclose what the typical result is. That means you better be prepared to create a case study where you take 100 people, have them all use your product over an 8 week period, have them track the results and then have a disclosure that illustrates "based on your study of 100 people the average person made $500.
Alternatively, you can frame that testimonial in a way that illustrates the unique circumstances behind that individual (i.e. This person has been studying internet marketing for 5 years, worked 60 hours a week on his marketing and purchased $50,000 worth of other marketing materials prior to getting this result).
If you don't do this, you have to simply use general testimonials (i.e. I brought Michel's copywriting course and it was great, I learned a lot from it.)
3. If one of your affiliates breaks the rules, my understanding is that they hold BOTH the affiliate and the parent company responsible and will continue to do so. Case in point, if you study the network marketing industry (which is simply a multiple level compensation affiliate program) you will find scenarios in which distributors of MLM companies made unsubstantiated claims about the products. Regulating authorities held BOTH the distributors as well as the parent MLM company responsible for those claims. I suspect the same will be the case here.
While I don't think this is the end of affiliate marketing, I do believe that this is a major game changer. Most of the sales letters that are out there are going to have to be revised based on these guidelines. Business owners are going to have to make some tough decisions on whether they want to continue to run affiliate programs with the increase liability that they offer or whether they will shut their programs down.
Many thanks for that very detailed review of the FTC "Crackdown"
I received an actual pdf but that was in "legalese" which made it quite difficult and understand the true implications which are quite hazy any way.
Your views and comment definitely clears up much confusion but as you say we shall have to wait for more clarification.
One point that I have not heard anything about is weather the FTC has durisdiction outside of The US in this area and will it affect bloggers and marketers out of the US, and weather their actual business is based in the US or not.
Many thanks again for the most clear explanations of the FTC rulings.
Take care
Ps Have you been taking care of that back - and the Sciatica.
My back is doing well. Inversion and decompression therapy are helping greatly.
I think this will make it easier for us 'real' marketers.
There will always be affiliates who go a little too far with their promotions. Having said that they are certainly in the minority. This will help to weed out and educate those people on the correct and ethical way of doing things.
I'm glad they have made it clear that there will be warnings issued before prosecution. This is the fairest way to do things and gives us product owners a chance to rid ourselves of any rogue affiliates. We can't be expected to keep an eye on every promotion our affiliates create.
One, whether authority or marketer, must always be on the lookout for ambiguities and shifts in meanings because in the absolute sense, there is no word that has one single clear meaning. There are always clusters of related ideas, more or less.
"My intent was to simply express my concerns, as the lack of clarity can become problematic for legitimate marketers. It may change affiliate marketing as we know it."
Like the lack of clarity is unusual in any legislation or government agency pronouncement?
Why the FTC can't enforce the rules already on the books for fraudulent activities is beyond me.
Like the SEC and Bernie Madoff, right?
I'm sorry, my rant goes beyond the subject matter of this post to the root of the problem. Government involvement beyond their authority and ability to enforce.
Oh, if you do business on the 'Net, you do business in the U.S. Why do I say that? because, unless your site is specifically geographically targeted, as Willie Sutton, a famous bank robber from the early 20th century, said when asked "Willie, why do you rob banks?" - "Because that's where the money is!"
Probably, the FTC is doing this because "that's where the money is." Ah,yes! The hidden agenda. The real Modus Operendi.
Our government is in dire need of money. They are, according to President Obama, broke.
We will see a lot of unnecessary legislation and government agency pronouncements over the next couple of years.
Here, from 1983 -> http://www.ftc.gov/bcp/policystmt/ad-decept.htm . It's already enough!
I, frankly, believe that all affiliate programs should be closed. In other words, you need to own or be involved with the product and/or service to comment, review and/or promote it.
The greatest problem with affiliate marketing is it's greatest draw -> it's free to become an affiliate. One need not know a damn thing about what one promotes. How disingenuous is that?
I strongly dislike the word "free." It is such a misnomer.
There is nothing in this universe that's free. Everything comes with a price, cost and/or obligation.
Because of this - "FREEEEE" - the cost of affiliate marketing has just gone up. It's called FTC scrutiny.
Many of you may take this post as the ranting of a right wing, libertarian nut. Thank you, I'll take that as a compliment.
However, I don't think affiliate programs should be closed. It is an intrinsic part of the web, thanks to Amazon. But, I do think the rulings are necessary and some changes need to be made to crack down on the crap. However, too much can be left to interpretation.
And, even if you do away with affiliate programs, scammers will always find ways to beat the system. That's what scammers do. They try to game/beat the system.
This is but another example, albeit one that hits much closer to home than does typical government heavy handedness.
1) If you're an affiliate no need to worry for now. We can maybe expect changes from merchants pointing us to do something different as a result of this regulation. So continue doing what you're doing.
2) If you're a merchant uh..that's harder situation here. As I've seen nothing is really clear (seems FTC knows not very much about how various internet models work.)
But I'm an affiliate and that was my advice.
Also it would be VERY HARD to track every single affiliate from a perspective of a merchant so I guess FTC will take that into consideration as well and maybe be not so strict. Or maybe we can expect merchants to do stronger selection process of their affiliates.
Michel your title was misleading honestly, this may be the end of affiliate marketing as we know it but it's not definitely the end of the entire industry. Do you have an idea how would this impact Google let's say if affiliate marketing dies? They'll get less money from Adwords, less business on them. So we should expect a bit of opposition from the big guys as well in my opinion.
This is no different than my report, "The Death of The Salesletter."
I appreciate the comment. But as an affiliate vendor myself, and just as your post implies, this DOES affect me. So while you think it's business as usual for affiliates, vendors need to take heed and be very careful.
Reading your presentation, I believe all affiliates will be affected by theses moves. That is a sad one. Being a newbie, I am just starting out making money through affiliate programs. And if the assumption that the vendor itself will be accountable with all affiliates' actions, then they will be stricter than before and would cut the numbers of affiliates. Only the established one.
Then the whole industry will be affected because whom do we sell these products. Then the buyer itself will be interested to be an affiliate especially in the "making money online" niche.
Also Google, Yahoo and MSN will be affected PPC advertising will diminish because majority of advertisers are affiliates!
This thing is really alarming!
http://www.ftc.gov/os/2009/01/P034520endorsemen...
In terms of strategy for internet marketers, the added exposure and burden of policing affiliate endorsements of the product itself leads me to conclude that the greatest risk is in allowing affiliates to refer direct sales.
In designing my new affiliate program I've been putting a heavy emphasis on lead generation (via free content) and tying leads to affiliates. This makes it easier on affiliates (no selling required), and allows me to control the advertising message when a product is sold.
Given these guidelines, I may go so far as to not provide affiliate links to the sales page, or any other pages where money is taken, and only allow affiliates to promote free content.
Naturally, as we all should, I will be seeking legal advice.
Franck
Great post. The legal ramifications will be sorted out in time by (high priced) attorneys. The problem for now is that many bloggers and affiliate marketers cannot afford such legal representation. An $11,000 fine represents too great of a risk for many of them. For those affiliate marketers and bloggers earning a few hundred or thousand extra dollars a month through some affiliate links, be prepared. Start getting to get used to a lower standard of living.
Compliance with this ruling may prove very difficult for some with an Internet presence. I have some blogs with thousands of pages of quality posts, which took years to create. Some of those posts have affiliate links on them, even if I was not actually endorsing the product or service in question. In many cases the product was just a good tie in to the post. Is it now incumbent upon me to sift through every page of every site and blog I have on the net, or risk an $11,000 per occurrence penalty? Will it not be easier to just shut down these blogs entirely, rather than take the risk that the FTC will basically "know a violation when they see it"?
Most large companies will basically kill their affiliate programs for all but their best producers, rather than take the risk, because it will drive their legal departments nuts. How does this affect companies like Amazon, and their affiliate program? It is even more troubling for smaller companies and individuals selling their own products using affiliate links. If you're selling a $27 - $97 info product, are you ever going to make enough sales to justify the risk of an $11,000 fine for one of your affiliates that makes a claim. What if that affiliate does not live in the U.S.? Are you still liable, even though they are not bound by the FTC's mandate?
What if you have an Adsense link on your blog? Does this constitute a material connection? I would think it does, although that connection is actually with Google, not the sponsor of the Adsense ad. There are millions of blogs with Adsense ads. Will these bloggers now be required to place a disclaimer on every on of their pages stating a material connection? Most people probably realize that the bloggers have a material connection and are paid in some fashion for placing the ads on their sites, but is this common sense test enough?
http://www.michelfortin.com/affiliate-marketing...
Would the phrase 'who blog about one particular product or business' be interpreted as 'who blogs about one particular niche'?
You may be reviewing multiple products from multiple businesses, yet, you are catering towards one niche. I assume this is where the perceived authority comes into play?
While somewhat clearer, still not clear enough... perhaps everything will clarify itself as time goes along.
Oh, and I do have a question that maybe you can answer Mike... maybe not (since this might be a question for a lawyer).
But, let us assume you have a product of your own which you created. Let's say this product is in the weight loss niche.
While you cannot have testimonies anymore which claim certain results that give an impression of 'typical' results and you are not shielded by the disclaimer anymore... What about your own testament?
Will writing a sales letter stating how you used your own system and lost so many pounds be construed as a testimonial spouting 'typical' results, or might it be okay seeing how you use your own testament to prove that you have done it yourself and know what you are talking about... thereby making you an expert on your system and giving you reason why you are able to share your knowledge.
Same can be said for other info products. For instance, teaching others how to bag high-end clients for freelancing or whatnot.
This is one area where I am still confused if it would be considered 'testimony' or viable proof of authority.
Thanks,
JC
2. My interpretation is that your own testimonial falls under the same rules. If it's not a "typical result," you must a) say that it isn't, and b) share what typical result people should expect.
Yup, another can of worms.
I suppose it is best to take the Frank Kern approach and spout the following:
"I'm not saying you'll make money. You might not make any money. You'll probably lose money. You might end up broke and homeless."
LoL
But, this leads to a craziness... cause a sales letter in it's own essence is touting that it will give you a certain desired result for a certain pain or problem you currently face.
So, will an entire sales letter -- not spouting specific results -- but leaning towards teaching you certain methods to increase your bottom line or whatnot be considered a testimony in it's own right?
In my opinion a sales letter is nothing more than a fancy drawn out testimony of the product creator stating that they have the desired solution to your problems -- and one whom buys expects to achieve the results which are being sold to them (whether explicit testimonials are used or not... they will still expect a 'typical' result even though no 'typical' result was stated directly).
Perhaps sales letters (and other sales copy) will need to have disclaimers stating that they do not promise any typical results from their product... whether or not a testimony was used in the sales letter.
Ahhh, you have to love government mandates and the clarity of which these mandates are forced upon us.
All in all, I do believe this will better the world of marketing as a whole... but I would hate to be the one whom tries to comply and a three months from now get a warning, a cease and desist, or worst... all because I interpreted the mandate incorrectly :-\
JC
Just had a conversation with one of my attorneys regarding the regulations. I am not going to give legal advice here. All I will do is tell you what I'm going to be doing based upon that conversation...
1) If I receive or have the potential to receive anything in value, whether it's money, a free course, whatever, I am going to disclose it. Adsense ads, affiliate links, anything and it doesn't matter whether its on my blog, facebook, twitter, whatever it's getting disclosed.
2) I'm not using any performance based testimonials anymore in my marketing.
3) I will still allow affiliates. The parent company has always been responsible for what their affiliates do even before this policy so I see no reason why I would need to do anything different in that area.
There are so many sites out there, both big and small, that use case studies... could the FTC potentially go after all of them?
That would just be bad for the economy in general. I can't imagine that is their plan.
I think it's a great move by the FTC, to require more disclosure and authenticity. Some marketers will try and squeak by and avoid it (big mistake), the ethical ones like a few of us will play ball by the rules and respect the regulations. I think compliance and TRANSPARENCY and DISCLOSURE among 'who's getting paid by who, to endorse what", is a good thing, and long overdue, fwiw. Our customers deserve it.
The right response for me at least, is to continue staying squeaky-clean with everything and let the product quality speak for itself.
Like working with Michel, a genuine authentic world-class resource who's been instrumental in my success (thanks, Michel!), it's important to focus on working relationships with credible AUTHENTIC experts. Thanks Michel for providing such a great role model (even from back in 2000 w/your posts at Corey's sites), you're one of the best things about doing business right on the internet, the top resource in my opinion.
Ken Ca|houn
Where I live in Perth, Western Australia we have a select group of prize d*ckh*ads who cause misery to everyone and every thing. The response to this by our successive Governments is to restrict and control everything. Effectively, what this amounts to is that NOBODY now can conduct their life WITHOUT transgressing some idiotic law virtually every day. In essence, the deeds of a few have disrupted the lives of the masses.
To give an example, we recently had a situation where a man playfully hit his wife with a pillow. It was witnessed by somebody who reported it to the Police. The Police then charged the husband with assault despite the wife pleading with them not to. It just went on and on to the nth degree of ridiculousness.
The FTC have to have some control but what I predict is that once the regulations come in, the lawyers will then take over and start nailing every shingle in place so that doing anything on the internet will require the knowledge and application of as much legislation as we are bound by in tax laws. It will become unmanageable. I hope not but all these lawyer graduates coming out of universities have to have something to do. More lawyers = more laws = more litigation = more money for lawyers.
Taking this a step further, maybe Google can be drawn into EVERY misdemeanour by virtue of it being the biggest player presiding over almost everything on the Internet - ie just keep marching up the line machine-gunning every target until Google is reached. And Google has lots of money!
[DISCLAIMER; The purported author of this comment may or may not have made these statements. If said statements are acted upon by any individual then the purported author gives no guarantee or even implies that there is a guarantee that the said individual will achieve any result whether implied or not.]
One thing you talk about (that I haven't heard yet from others) is how the FTC could potentially come after the owners of these affiliate programs and not just the affiliates.
It's obvious that lawyers had their hands in writing this new ruling... hence, going after the deep pockets.
When I first heard of this, I was quick to assume that "any" links on a blog where an affiliate gets paid would be under the same scrutiny (ie. Google adsense links)... where one doesn't disclose getting paid for visitors clicking on your links.
BTW - Does the FTC cover Canadain bloggers/marketers... just wondering. ;0)
if a side-effect is that they makes lots of money--well, hey, so much the better, right?!
Now, as another "real-live newbie," I'm only assuming that putting up a landing page (obviously) including testimonials in general (i.e. expected results, as in 'we expect you'll benefit from this information and get rid of xxx problem or we wouldn't have wasted our time and yours explaining it to you' or whatever), if not specific cases, with a link to the actual vendor's sales page (where they presumably include testimonials) is the same as a blogger who features particular products for compensation...right??? :)
Talk about clear as mud...maybe I shoulda been a lawyer too...;)
http://mikeyounglaw.com/ftc-disclosure-special-...
Franck
Also, if you have some rogue affiliate like you said, the 3 step process is breath of fresh air.
Great article.
It made a lot of things clear.
I have been in the marketing field for about an year
and most of the things mentioned in the post are new to me.
Good Luck
Mark Robinson
http://www.osiaffiliate.com
It seems a bit of a challenging year for affiliate marketers with the State sales tax issues (in selected states) and the new endorsement rules as discussed, the landscape has certainly changed. My advice is to recognize that the sky is not falling; however, I become concerned by any threat to free markets and entrepreneurship in principle.
Excellent post!
James
http://Twitter.com/AskJamesHolmes
Man, this is a huge cluster****.
http://www.abolishftc.com/
I personally don't think the new interpretation of the current regulations is going to be that big of a deal for most online marketers... but I AM NOT A LAWYER AND DON'T PLAY ONE ON TV. NOTHING I SAY SHOULD BE TAKEN AS LEGAL ADVICE...
http://raven-seo-tools.com/blog/1490/how-are-pa...
So affiliate links are OK as long as you don't publish affiliate links in your every 1st post lol
http://jimedwards.s3.amazonaws.com/ftc-advertis...