The ever-suspicious stone-turner Ben Edelman has released an interesting report explaining how yet another major computer vendor has affiliate programs and related campaigns that are picked up by spyware vendors and, through multiple levels of indirection and redirection, generate revenue for the spyware vendors from the vendor. This time the accused party is Vonage, the troubled VOIP company.
There’s more here than meets the eye, however. I’ve heard Ben explain his basic research methodology at the Affiliate Summit in Las Vegas earlier this year and was struck by how phenomenally difficult it is for affiliates and other marketers to control the dissemination and evolution of their campaigns once they get into the affiliate / pay per [action] space.
The real issue, however, is how reporting on this issue again demonstrates the how both bloggers and the media bend and distort stories as they travel from blog to media to blog, round and around. Let me show you what I mean…
First off, Ben’s report is worth reading as a starting point. He picked a nice, attention-grabbing headline: How Vonage Funds Spyware. Then it was picked up by Information Week, who wrote a good piece entitled Vonage Ads Delivered Via A Dozen Spyware Makers: Report. The Information Week piece is actually better than Ben’s original piece in terms of balanced reporting, actually.
So far, so good. The coverage is fair and accurate, but it’s mainstream media and professional journalists so far, remember. Move to blogs and here’s what we see: Spyware expert: Vonage injects ads into others’ sites. That’s from ZDNet’s Russell Shaw, ostensibly a professional writer too, but he’s completely distorted the story and makes it sound like the Vonage application itself is a spyware purveyor, even though that has nothing to do with what Ben reported in his original research.
Now Google’s Gnews service is ranking Russell’s piece as an important news story in the tech space, even though 1. it’s not news, and 2. it’s a significant distortion of the facts, facts that are questionable in the first place.
Techdirt also skimmed the story and then shot from the proverbial hip: “… you wondered why the [Vonage] customer acquisition costs were so high? Now you know that a large chunk of that money was going directly into the bank accounts of some awfully questionable companies.” Their title is inflamatory too: How your Vonage Fees Help Fund Spyware, but, to their credit, at least they don’t distort the story anywhere near as badly as ZDNet does.
Let me explain my concerns with Ben’s assertions further, since I know that’ll raise some hackles with the online community (and fairly so, most of what Ben does is great stuff). In his report, for example, he states:
“I have repeatedly observed Vonage buying “ordinary” spyware pop-up ads from vendors like 180solutions, Direct Revenue, and eXact Advertising. See e.g. the top thumbnail at right, a March 2006 screenshot of a Vonage ad appearing through Direct Revenue. See also my March 2005 report of Vonage ads appearing through eXact Advertising. These relationships add up to big money: BusinessWeek last week reported that Vonage paid Direct Revenue $31,570 in a single month of 2005 — a remarkable $110 for each customer Direct Revenue sent to Vonage.”
What I don’t see explained is how he “observes” Vonage buying specific ad space through given companies. Ben, do you have a webcam in their marketing office? Do you sneak into the Vonage advertising offices when they’re talking about allocating ad budget?
Of course you don’t. What you’re seeing is that these crummy spyware and popupware companies are advertising Vonage services, and that Vonage is, as reported by BusinessWeek, paying these companies for leads generated. That’s not the same as Vonage directly contracting with spyware companies to advertise their services. That distinction is incredibly important.
With a $110/lead payout, it’s no surprise that lots of affiliate marketers, ranging from the legit operations to the worst of the nefarious hackers, are attracted to the possibility of generating revenue. If Vonage signs up for, say, Commission Junction, a popular affiliate management service, and finds that its offers are valuable enough and have a high enough conversion rate to attract lots and lots of affiliates, some of whom use bad practices (but shield them from CJ and the individual merchants), is it appropriate to accuse and convict the merchant corporation of “supporting” those practices?
If I sign up for Amazon’s popular Associates program and find out that they’ll pay me $25 for each Harry Potter DVD set I sell, then I set up a couple of shell accounts that redirect links a few times so that the backlink on my referrals is clean and legit but I secretly use spyware or similar to push my link onto Web browsers throughout the world, is Amazon de facto guilty of supporting or “funding” my practices?
It’s the nuances, the gray area, that makes all of this tough, and that offers yet another risky area with affiliate marketing. After all, once you empower third parties to act on your behalf, you lose a lot of your control and have to trust that they act in accord with your corporate policies, beliefs and ethics.
And for the record, I don’t particularly like Vonage and use a different company, Vbuzzer, for my own VOIP services.
Go read Ben’s report, read both how the media and bloggers are covering the story, and then tell me: am I wrong, or is there some fast and loose reporting going on here, based on some mis-interpreted research findings?