Tuesday, February 20, 2007

How Major Advertisers Get Sucked Into Adware

FTC Fines Adware Company $1.5 Million

No major advertiser who values its brand wants to associate it with dark-gray-hat adware companies. Certainly Travelocity, Cingular and Priceline didn't want to. So how does it happen?

One common way it happens is through affiliate marketing. When an advertiser wants to spend a lot of money to acquire a lot of customers under very tight CPA goals, they tend to spread their dollars around to more sources, and the deeper into sources they get, the less diligent they are vetting the sources. When an advertiser signs a CPA media deal with ad networks, even big-name networks owned by major media companies, they are charging the network with the responsibility to drive high volume within that cost goal, and historically they do not ask very pointed questions about the networks' tactics or affiliates. It's a sort of "don't ask/don't tell" tactic that they hope doesn't blow up on them.

Some affiliates of brand-name networks might be networks themselves with their own set of affiliates, and some of those affiliates might be affiliate networks, too. So sometimes, by the time your advertising actually appears on a site or in a desktop app or bundled with a software download, it might be several times removed from the original deal the that you the advertiser did with the big-name ad network. Unless you have the right kind of tracking software -- and not many low- or mid-budget CPA advertisers do -- you have little idea where your ad actually ends up.

Exacerbating this is the common tactic of networks to cloak their affiliates from the client, ostensibly to keep the advertiser from doing business directly with the affiliate and thus cutting out the ad network middleman. But another unacknowledged reason is that if you as an advertiser knew who some of the affiliates really were, you might well demand your money back. I have before -- I recently had some $170,000 in CPA advertising credited by one network when I discovered a certain affiliate that was carrying my advertising in a manner that blatantly and brazenly violated the insertion order terms and conditions.

This incident should probably wake up large customer acquisition-oriented advertisers to vet their ad sources more carefully, at least in the short-term. What they should try to do is insist that their ad network vendors be fully transparent and report where their CPA advertising runs, or else either take their business elsewhere or build their own affiliate networks.

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