Chris Trayhorn Interviews Matt Frary on Merchant Risk and Technology Investment

What’s the easiest point of entry for a small merchant wanting to test the affiliate marketing channel? How much does the merchant have to put at risk?
Our agency wrestles with this question all of the time. We don’t want a small merchant to have to invest a ton of money into the channel just to find out it doesn’t work for them, but at the same time in order to test affiliate marketing you have to be willing to spend money.  Our litmus test of whether or not a merchant is going to work in affiliate is dependent on how much they are spending in Social and Search Media.  Launching an affiliate program without any other form of paid media will ultimately result in poor results in affiliate.  Affiliate marketing is not the silver bullet and cannot be used as a stand alone marketing tactic.  All forms of marketing play off of each other and a small merchant has to be willing to invest in all channels.  Another misnomer is that Affiliate Marketing is not risky or has low risk.  Just like any other channel you have to invest in the people building the channel either internally or externally, you have to invest time into building the relationships, and you have to invest in the technologies required to run the affiliate channel.  The affiliate channel may take 6 months to hit stride and the merchant has to be willing to accept the time and money spent to get it there.

We have seen a number of networks introduce new platform features or interfaces recently. Is technology investment by networks increasing? If so, why?
Technology investment is increasing at some networks, but not at others.  The ones that are not investing in technology will find themselves going out of business, or at a minimum not growing.  This industry is so fast paced and there is such a demand for information on demand that networks have to keep up.  The network and platforms that recognize this are the ones that will still be in the game 5-10 years from now.  Unfortunately there are very large networks that haven’t changed since 2000 and we are seeing our Clients wanting to leave those networks or not work with them at all.

What is lead scrubbing? Why is it necessary?
Lead scrubbing is the practice of returning a lead to the Publisher in order to not pay for it as the Advertiser.  Different companies have different policies about lead scrubbing, and you should be sure that you understand those policies before sending leads.  Our company has different reason codes for returning a lead that include for affiliate fraud, consumer fraud, partial information, or any other reason that the lead is not usable coded as “other.”  We return sales in much the same way with similar reasons, but we also include for sales a return if the product is sent back to the company and the sale has been reversed.  It’s necessary in our industry for an advertiser to make sure that they aren’t paying for leads produced fraudulently or under conditions that were not contracted for.  The industry faces a challenge policing those advertisers that return leads or sales for the wrong reasons, but also with the publishers that are producing leads in nefarious and questionable ways.

The FTC seems to have been more aggressively enforcing their rules over the last couple of years. How has that affected affiliate marketing?
In my opinion the FTC is aggressively enforcing their rules that should have been followed by people in the affiliate industry a long time ago.  If you already do everything ethically and above board there is most likely no issue for you as an affiliate or an advertiser.  The industry is maturing from the wild west days and mostly the FTC is just closing up loopholes that were being exploited.  The latest FTC actions are focused on disclosures and truth in advertising.  An advertiser or an affiliate can look at FTC.gov and quickly determine what he/she needs to do in order to be in compliance.  If you are ever in doubt, remember the “Yo Momma” rule.  Just don’t market products or in such a way that would offend your mom or that you wouldn’t sell to your own mother.

About
Matt Frary is CEO and Founder of SmarterChaos.com, an Internet marketing and sales agency focused on large brands. Matt was a founder of a former top-30 online ad network called ROIRocket.com, and is a frequent speaker at online marketing conferences. As a Mentor at The Founder’s Institute in Denver, CO, Matt enjoys working with start-ups to realize positive ROI quickly and is a passionate and serial entrepreneur.