Last evening, during a dinner meeting with a merchant regarding improving their Terms of Service contract for Affiliates, we were discussing the BP oil leak. As we spoke, I realized that there is quite a bit to be learned from the oil industry’s mishandling of the incident; these lessons could and should be applied to our very own industry.
It has been over a month since the explosion on the Deepwater Horizon oil rig on the Gulf of Mexico on April 20. Eleven workers died and fifteen were injured. Two days later a second explosion occurred and two days later the leaks were discovered. At first it was estimated to be leaking 1,000 barrels a day; later, this was revised to 5,000 barrels a day. (Independent estimates are that the oil is leaking at a far greater rate – 7 to 11,000 barrels a day.) The government stepped in, called for an investigation. A short time later they mobilized National Guard to help minimize some of the damage from the oil which continued to spew.
Since capping was not successful, BP has begun to drill a deep water intercept relief well which will prevent oil from reaching the leaking rig. This drilling will take approximately 3 months to complete. Meanwhile, BP has continued to attempt to plug the leaking rig. Although their latest efforts of the past day or so have seen some success, oil continues to leak.
There has been outcry from both private sector and government officials. Several government officials, including the President, have expressed the opinion that more government oversight is needed for the oil industry. Leaders have vowed for more oversight.
Now examine our industry. Several issues have helped move our industry under closer scrutiny by government. Many in our industry have expressed the opinion that we need to self police before the government steps in. I was once one of those who believed that we needed to self regulate before the government stepped in; I believed we could do it. While I still believe that while we need to institute clearer standards and self regulate more, I now believe self regulation mostly serves a different purpose. It wont prevent the government from stepping in, but it will offer them a guideline.
There are several reason for the increased attention on our industry. Of course, Internet sales tax is a hot issue. Legislators in dozens of states are looking at our industry as they seek to modernize sales tax laws. As they look at our industry they see how unregulated it is. Online marketing is seen by many legislators as a “loophole”.
Several large companies are also branching out, blurring the divisions that once existed within our industry. Search engines, networks, merchants and even program managers are generating revenue from multiple areas. Search engines have become networks. Merchants have joined forces forming networks. Outsourced program managers are also affiliates. Network representatives are also affiliates. Is it fine, or is it a conflict of interest or even worse, a monopoly. Is our industry squeezing out the small individual Affiliate?
Look at the precarious state of affairs for affiliates caused by lopsided affiliate Terms of Service. As we have seen, there is little or no protection for Affiliates. Slightly better situation for some merchants but lack of knowledge and understanding leaves even merchants vulnerable. Lawsuits and complaints against merchants and networks for non-tracking or non-payment all bring more attention to our industry.
Spam, phishing and other Internet attacks bring even more attention to our industry because many attribute this to our industry.
There have been some small steps. Outrageous product claims by a few merchants and affiliates have prompted a crackdown by the FTC. Some merchants have even stepped up their oversight and are cracking down on Affiliates promoting non existent coupons and Affiliates advertising expired price points. However, there is not much consistency in standards and in how they are applied. Quite often it seems like different standards are applied to different Affiliates and merchants. In some cases, performance, relationships and reputation impact the standards.
As seen in the BP oil incident and even in the Toyota recall fiasco, our government is demonstrating a lower tolerance for mishandling and mismanagement. The public sector too, is demanding and expecting more. The oil industry was not adequately prepared for this incident. Recognizing this, the government will be taking a larger role in overseeing and regulating. Of course, whether or not that will be effective in preventing similar disasters in the future is debatable.
How does this relate to our industry?
This means that regulation for our industry, either self imposed or imposed by the government, is inevitable. Over the past year or so I have begun to feel that our industry is either not ready or not willing to self regulate.
While our industry has made several gains, we are still lagging, especially when it comes to instituting and adhering to fair and balanced industry standards that better protect both Affiliate and merchant.
How long before the government steps in? I think it is closer than many expect. Or maybe that is just wishful thinking.
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Interesting. I also think the government will be stepping in with in the next year or so. They all ready started with need for disclosure on blogs. And they are taking action against those after purchase add on rewards. Long time coming IMHO. Consumers have gotten hurt by some affiliate and merchant activities so government will step in further. Affiliates will benefit as a secondary effect.
Affiliates have to also step up and make demands. Don’t let merchants and networks get away with some practices that are iffy. I grew tired of being screwed by non tracking and reversals and dropped several merchants. The finger pointing is ridiculous. If the network did not help me in trying to recover my losses I also made sure my new merchant was on another network.
Enjoyed this post.