Is Affiliate Skimming Still An Issue In 2010?

Having read and digested the title, I’m going to take a stab in the dark and presume you’re thinking one of three things:

• Of course skimming still goes on, you moron
• Skimming doesn’t happen anymore, it’s too risky for merchants
• What on earth is skimming? Seriously, what the hell are you talking about?

In the interests of providing a good user experience for you my beloved reader, I’m going to try and address all these possibilities as best I can.

What is Affiliate Skimming?

If you search on Google for skimming, you’ll find a whole myriad of definitions for the word. What I’m talking about has nothing to do with credit card fraud, reading, plastering or throwing rocks in a lake. In relation to affiliates, skimming is simply where the merchant company in question purposely doesn’t pay commission revenue to affiliates for a proportion of orders generated.

Skimming literally refers to taking some commission payments off the top of the pile, like skimming cream from a vat of milk. However in most cases it’s much less hassle for merchants to just not credit a proportion of legitimate affiliate commissions in the first place, rather than try and hide them later.

For example, a particular merchant might decide that for 10% of orders through affiliate links, they’ll block the tracking of affiliate commissions (whether that be through their own affiliate system or through a 3rd party affiliate network) and thus save themselves healthy wads of commission payments.

You’d be hard pressed to find anyone who didn’t frown upon this kind of behaviour. Due to the nature of affiliate tracking in general, it’s very difficult to spot skimming on a modest scale which puts affiliates in a vastly inferior position when trying to hunt down and deal with any offending merchants. I remember Dave Naylor speaking about his hatred of affiliate skimming with some passion at SES London 2009 and my feelings are pretty much the same. It’s just plain wrong and I say that from both an affiliate and merchant perspective.

Surprisingly perhaps, there isn’t a great deal online on the subject of affiliate skimming. Most of the posts I saw were from 2007 or earlier; perhaps it’s just not an issue anymore?

A modern day example

So as you may well have guessed by now, I do have a 2010 example for you with some facts and figures. Before I get into this I should just say that I have no interest in “outing” companies who may or may not be skimming affiliate commissions so I won’t be naming the company in question. However it would be difficult to write this post without mention of the affiliate network they reside on.

The network in question is Webgains. In my opinion they are one of the better affiliate networks in the UK. Their site works, the data feeds work and when I’ve needed to contact them the response time for support messages has always been good. In no way do I think that Webgains condone affiliate skimming, but I do feel they could perhaps be more proactive in preventing it (more on that later).

Some background

I run a few affiliate sites and so on in my spare time; one of them is a modest price comparison site for electronics. For this site, I’m affiliated with around 80 companies on various affiliate networks; 9 or 10 of those are on Webgains.  Towards the end of last year, I needed to purchase something fairly substantial and decided to go through my affiliate link for the company in question.

So I clicked my link and I placed my order. Nothing too unusual there. Unfortunately for me, no commission was recorded. A friend of mine needed to purchase something as well and wanted to use this particular site, so they also clicked one of my links and purchased, but again no commission.

OK, so at this point I’m slightly perplexed so I double checked my links and so on and they were all fine. A few weeks later I had one final go and purchased something else. Again, no commission was recorded. The difference this time was that I saved a copy of their checkout success page….

And what did I find?

Well, this is where it gets slightly more interesting. On their checkout success pages, there was no Webgains affiliate tracking code. In fact, the only reference to any Webgains tracking code was this handy comment:

That was it. No other Webgains tracking code whatsoever. Now when I saw this the alarm bells started ringing for me as this indicates that the company is question is deciding whether or not to display the tracking code on a server-side basis. That’s not a good sign. At all. Eeek.

So what did I do next?

Well, I contacted Webgains and I attached a copy of the HTML code. Prompt and professional as always, I received the following reply from a support representative:

I have placed a test and our full tracking code is present. I also used a datafeed link which I guess it what you are using on your site as well.

So now the alarm bells in my head have gone from a quietish ring to DING DING DING DING DING.

Now, just to be clear, I have no reason to doubt that the Webgains test order tracked correctly. But it got me thinking about what the merchant company in question might be doing with their code to facilitate this eventuality. I figured they could well be doing something along the lines of this:

Just to explain for my non-geek readers, this simple script checks if the customer came from a Webgains site, has a Webgains email address or has an IP address that we know Webgains uses. If so, then the tracking code will be displayed and the order will be tracked correctly. To make sure some commissions keep ticking over (it would look even more suspect if no commissions were ever generated), this script will also track roughly 10% of legitimate orders as well.

Ignoring the signs

A short while later, I was fortunate enough to receive the following update:

I have just manually added commissions for the two untracked orders. Tracking for xxxxxxxx seems to be working fine so I would make sure that your links are working properly.

Well, thanks for the cash but really? You think there’s something wrong with my links? Maybe Webgains should take a look at their own data (click to make bigger):

I’ve pixelated all the company logos but the one I want you to consider is at the very bottom. I took this screenshot a couple of weeks ago, but the situation has been like this for months. The offending site has a conversion rate of 0.19% and makes affiliates £1.12 per hundred clicks. Those are not just figures for my site by the way; they are figures for all the affiliate traffic those sites receive from Webgains.

As you probably already know, those figures are criminally low for any e-commerce website. I’ve purchased from the site and sure, it’s not perfect, but it works! There are no major conversion blockages (like only delivering to the billing address etc) and I had no issue with either of my two purchases.

Webgains have got to be looking at those figures and thinking “Wow, the CR and EPHC are seriously crap, we should look into this”. In my view Webgains and indeed all affiliate networks should be proactive in addressing suspiciously low commission generating figures; after all in their interests as well.

But instead, they decide that the best option is to tell me that I’m at fault with my links. Wrong answer.

So why am I still promoting this merchant?

Yeah, yeah – that’s the obvious question I know. Why promote someone who is (probably) skimming my commissions? Like I said earlier, I promote them on a relatively modest site. The only reason my site generates revenue (aside from some strategic organic rankings of course ) is that fact that it compares prices from far more merchants than any of the multi-national comparison sites. It’s therefore key for me to be able to be able to compare prices from as many merchants as possible. The offending merchant doesn’t get many clicks so I’m probably not losing too much if I’m honest.

And in the end, this all means what?

The more I think about it, the more I get the feeling that skimming is still a big problem for affiliates and an issue that is probably under reported. Obviously the evidence against the company above is pretty damning, but I’m sure they’re not the only ones engaged in this. I should also add that I’m still firmly of the belief that merchants who skim affiliate commissions are in the minority. Having said that, thanks to the recent economic climate, I’m sure there are many companies who might have seen this as an easy way to save some online budget.

Most merchants could skim 5-10% of legitimate commission revenue without anyone even noticing. Remember, they wouldn’t have to be anywhere near as blatant as the site I’ve detailed above; it would be quite straightforward to show affiliate tracking code that looked perfectly correct but didn’t actually track your commissions. And if an affiliate complains that their order didn’t track? It’s a simple “sorry, sorry, technical error, here’s your commission for that order” and everyone moves along none the wiser.

I guess the moral of this story for affiliates is that you need to be aware. Place test orders, check that commissions are tracked and watch out for suspiciously low conversion patterns. Then, if you’re in a position to pick and choose who you promote, dump anyone who looks suspect and move your plentiful affiliate traffic elsewhere

1. How To Choose An SEO Company

Be Sociable, Share!

•