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Quit Bugging Me!

Many online affiliates are being bitten by software that wrongly credits Web site referrals. Are you a victim?

Small online merchants who are members of the Web's affiliate marketing programs are becoming concerned about a relatively new technology referred to as parasiteware, which credits the wrong party when online stores tally commissions for Web referrals. In typical affiliate transactions, consumers click on a link from a Web site that points to a product on a merchant site such as Amazon.com. If a customer decides to buy the product, Amazon pays its affiliated Web site operator a commission for the sale, which is usually 5 to 15 percent of the purchase price.

Now, some online merchants are noticing they are not getting their commissions. Why? In some cases, parasiteware overwrites, intercepts, appends to or changes a performance marketing tracking link so that credit is registered to a third party for whom the link was not originally coded.

A user often unknowingly downloads the parasiteware since it usually piggybacks on top of popular programs such as those used to download free music. For example, parasiteware overwrites the cookie settings of different ad network scripts or overwrites browser helper objects integrated into browsers. Some companies with parasitic applications keep their techniques proprietary.

The music download sites do not operate these parasitic applications themselves--instead, they usually contract with a third-party company that specializes in online shopping. The parasiteware can generate revenues for software publishers through pop-up ads or by generating affiliate links for that publisher when the user visits a site with which that publisher has an affiliate relationship.

"Basically, with parasiteware, people are manipulating technology to make money," says Shawn Schwegman, director of affiliate marketing at Overstock.com, a Web shop in Salt Lake City that has thousands of affiliated Web sites receiving commissions for directing customers to its site. "Sometimes in doing that, they are taking dollars or commissions that other people, especially smaller companies, would have generated."

Schwegman says that while smaller affiliates are concerned because they are not getting their commissions, merchants are also facing a burden because many of them have had to deal with upset affiliates and threats of boycotts since parasiteware popped up about two years ago. According to Haiko de Poel Jr., CEO of Abestweb.com, an online discussion service for affiliate marketers in Jamaica Estates, New York, "It's not fair that the small Web site operators or affiliates get taken advantage of."

In December, three major affiliate aggregators--BeFree (www.cj.com) and Performics (www.performics.com)--agreed on a code of conduct that basically prohibits affiliates who use parasitic marketing practices from joining their networks. Companies that are noncompliant will have to bring their activities into compliance.

Wayne Porter, vice president of product development at AffTrack, an Oak Park, Illinois, independent aggregator and analyzer of third-party statistics that works with some of the largest affiliates and sites on the Internet, says LinkShare (www.linkshare.com), a major affiliate network that did not sign the code, does ban certain software applications from its networks, but it also lets certain applications in if they meet strict guidelines. "Many affiliates feel the LinkShare addendum is not stringent enough," he says.

Porter also says he's disappointed LinkShare isn't involved because "we are specifically looking for something that the whole industry can adopt." Porter believes that most merchants are happy about the code, while some affiliates believe it is not strong enough, some are waiting to see if it will be enforced and others are jubilant that something is actually going on.

So is there anything that affiliates who may be losing commissions can do now to remedy the situation? Here are two ideas: Select partners carefully, and learn all you can about the problem at www.parasiteware.com or Abestweb.com. "I feel online affiliates and merchants are responsible for whom they partner with," adds Porter. "Affiliates and merchants have the power not to enter into partnerships that may cause problems. Just as offline businesses do a good amount of due diligence, online companies must do the same."

According to Porter, the problem is still in its infancy. "At this point, no one is able to pinpoint how big of a problem this is based on the amount of losses," he says. "However, it will be a big issue in the future if not addressed."


Melissa Campanelli is a marketing and technology writer in Brooklyn, New York.

Melissa Campanelli is a technology writer in Brooklyn, New York, who has covered technology for Mobile Computing & Communications and Sales & Marketing Management magazines. You can reach her at mcampanelli@earthlink.net.

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This article was originally published in the March 2003 print edition of Entrepreneur with the headline: Quit Bugging Me!.

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