Affiliate Ads: Publishers Eye Profit, But Are Readers Being Misled?

imageWhat do each of these news web pages have in common? Hover your mouse and you’ll see that many of the editorial hyperlinks, even some of the stories entirely, are actually sponsored – crafty and cryptic, but paid-for nonetheless. UK spend on affiliate marketing like this is projected to grow by more than a fifth to £4 billion this year as publishers, struggling to profit online, entice advertisers with ever more engaging formats. But in the rush to revenue, how much can really be gained from commercialising editorial? Our investigation revealed bullishness on the model – and a regulatory loophole that leaves readers confused about what they’re actually clicking…

Clicks could ring up sales for publishers: Joe Stepniewski, co-founder of affiliate advertising vendor Skimlinks – which adds in-page sponsored links for publishers including Mail Online, Telegraph.co.uk, after articles have been written – tells me: “Everyone’s aware that newspaper revenues are declining rapidly and they need to supplement that with online ads. The problem with display ads is that people are getting blind to them, so newspapers need to look at other ways.”

Louise Green, client services head at affiliate network Buy.at’s parent Platform-A (NYSE: TWX), says: “It was certainly in its infancy eight years ago, back then clients hadn’t even heard of it. Now there’s a lot of interest in affiliate because of the return on investment, it’s really taken off.”

Guardian News & Media commercial director Adam Freeman says Guardian.co.uk comfortably makes a seven-figure sum each year from affiliate and he’s in no doubt it will play an important part in the company’s commercial future. Guardian.co.uk hosts the usual string of white-label partnerships like these, has its own environmental ads network featuring commercial partners and carries in-line commercial links, a practice Freeman says he’s looking to extend to areas such as lifestyle as rivals such as Telegraph.co.uk already have done. But Guardian.co.uk is also running paid text advertorials that look just like regular articles, like this fake film review for Orange. (Disclosure: paidContent:UK’s parent company ContentNext Media is a wholly-owned subsidiary of Guardian News & Media).

An ethical question is brewing: But, as the practice grows, could ethical issues arise from sponsoring editorial text? Offline, the church and state of journalism and commercial are separated by an Advertising Standards Agency (ASA) order that advertorials must be clearly marked. Guardian.co.uk’s film review only added its “Advertisement Feature” notice after publication, although Freeman says this was an oversight probably caused by migrating advertorial features to the main Guardian.co.uk server; a series of website recommendations on Telegraph.co.uk omitted any such warning despite commercial links routed via TradeDoubler and Skimlinks. The Telegraph declined to speak to us, but has previously defended the practice (via Paul Bradshaw). ITV.com also last year turned some of its text content in to sponsored hyperlinks through Vibrant’s Intellitxt.

Skimlinks’ Stepniewski is clear on the issue: “We wouldn’t recommend that they do it on their news sections… we say ‘Do not be overly commercial with it‘.” His software adds links automatically after publication without journalists’ involvement; the company has even rejected clickthrough sponsors it decrees are “not adding value”. Stepniewksi recommends that publishers display their affiliate policy online – but admits it’s “up to them” whether they do: “This is a case of writing about products they (journalists) were always going to write about, but previously they weren’t making any money from it.

Freeman says the wall between journalists and sales activities should remain: “We would never want to influence editorial’s choice on what fashion items to review for example but, if they are going to review them anyway, it seems ridiculous not to monetise that. There needs to be clarity and we’re still working on exactly what that will look like. Will we have a roll-over which says ‘Be aware that The Guardian’s going to earn money if you do this?’ We’re working on the detail at the moment.”

Loopholes may be exploited: But, while the publishers begin forming their own codes of conduct, paidContent:UK has learned the regulations which so stringently demand printed advertorials be identified as such have not yet caught up with the truth that many online equivalents are going unchecked.

The advertorial rule is laid out in clause 22.1 of the British Code of Advertising, enforced by the ASA – but are affiliate links even considered “advertising“? The authority told us the issue was a grey area: “The ASA has yet to investigate complaints made about this marketing practice and therefore there is no test case that has established a precedent. However, in principle, yes, affiliate marketing would come under our remit.” The agency, which already covers pay-per-click and paid search ads, did say the relationship between an advertiser and a publisher “may be an issue if we thought something was advertising masquerading as editorial content or part of a product“.

That’s not all – while the ASA didn’t write the code (it just polices it), it admits it’s “fully aware of the potential regulatory gap that exists for consumers as technology develops and marketing practices in new media emerge“. The code is regularly reviewed – and the Digital Media Group ad industry umbrella is working to extend the self-regulatory advertising system to cover all forms of online ads.

Isn’t it obvious?: Do the middle-men think readers should be explicitly told what they’re clicking? Platform-A’s Green: “We leave that to the publisher, they have different ways of doing it.” She says many Buy.at publishing affiliates occupy a specific niche category they write about “passionately” and are only too happy to serve up relevant links. She adds that few publishers would choose to write about a product just because it has an affiliate campaign from which they can earn commission. Green has faith in people’s ability to understand than some links are not editorially placed but paid for: “I would be intrigued to take a proportion of consumers and actually understand how many of them didn’t know that… Most consumers implicitly know that those hyperlinks go to that product and that’s a form of advertising.”

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