Who: Committee of Advertising Practice (CAP)
Where: United Kingdom
When: 10 July 2014
Law stated as at: 5 August 2014
“Affiliate marketing” is a method of performance-based marketing where a third party (the “affiliate”) is rewarded by a brand for new customers attracted to the brand as a result of the affiliate’s marketing efforts. Affiliates will often be rewarded on the basis of a commission for the sales that result from their efforts.
Previous ASA adjudications concerning affiliate marketing
The ASA has recently upheld a number of complaints where such affiliate marketing campaigns are concerned.
For instance, in 2013 the ASA upheld complaints against LifeStyle Advantage Ltd t/a Essence of Argan, as a marketing communication for a free trial did not make it clear that the consumer would be automatically charged for the product the following month and certain efficacy product claims had not been substantiated.
The manufacturer of the product in question responded to the ASA stating that the ad had been created by an affiliate and that they could not provide contact details for their affiliates. Nonetheless, the ASA held the manufacturer responsible for the content of the ads and the fact the ads were designed by an affiliate was not considered a sufficient defence to relieve the brand of its responsibilities to ensure claims in its advertising were robustly substantiated.
The ASA has also previously investigated complaints about an online data storage business whose ads were making misleading claims regarding unlimited free storage. The business protested that an affiliate marketer had been responsible for the content of the ad in question, but as the ASA considered the business benefited every time a consumer clicked through and created an account, and that the affiliate was in effect an employee of the business, both the business and the affiliate marketer were held responsible under the CAP Code.
CAP’s top tips
CAP claimed that both CAP and the ASA commonly saw the same types of issues arising with affiliate marketing and so in July 2014 they published their top 3 tips for compliance of marketing communications associated with affiliate marketing. Their list reads as follows:
1. Make it clear that the content issues is in fact an ad
CAP acknowledged this may sound obvious but that many brands and their affiliate marketers have been on the receiving end of complaints upheld by the ASA because they cross the line between independent editorial content about a product and advertising copy making efficacy claims
The CAP Code requires that “Marketing communications must be obviously identifiable as such” and so CAP advises that if there is any doubt as to whether people will consider an affiliate marketing communication to be editorial or marketing, it should be headed “Advertisement feature” or similar to make the commercial intent of the communication clear.
2. Brands should ensure they have editorial control over their affiliates’ content
CAP highlighted that brands often mistakenly believe that because their affiliate has written advertising content relating to their product and are promoting it themselves, the brand is not responsible for that content or sales promotion.
CAP has reinforced that the ASA takes a different view on this matter. As the brand incites the affiliate marketer to promote their products or services and the brand benefits from each sale made by the affiliate (and then also enables the affiliate to benefit by paying them in some way on the basis of sales), both the brand and the affiliate marketer are held responsible for the advertising that is circulated. In light of this, CAP has flagged that it is therefore wise for brands to set certain rules regarding the content generated for their products by their affiliate marketers.
3. Ensure significant conditions applicable to a promotion are communicated
The CAP Code requires that all significant terms and conditions likely to affect a consumers’ understanding of a promotion must be communicated to them clearly and in advance. Exceptions to this rule can exist for ads appearing in media where space or time is limited (for instance banner ads).
In these cases, the significant terms and conditions for a promotion can be communicated on a landing page a maximum of one click away from the initial promotional copy. CAP has suggested that the ASA would be likely apply the same rule to affiliate ads that were significantly limited by space but the brand whose products or services are being promoted should ensure that the link to the product or service that the affiliate is providing, links directly to the terms and conditions of the promotion in order to avoid the promotion being problematic.
If an affiliate marketer is using content in a medium where space is not at a premium to promote a sales promotion then significant terms and conditions will need to be included on the same page as the promotional content and the brand should ensure this is the case.
PhonepayPlus communication regarding affiliate marketing
CAP is not the only body in the advertising space that has been considering the impact of affiliate marketing of late. In communications issued by PhonepayPlus on 30th July 21014, PhonepayPlus issued an update on the status of its own discussion paper on affiliate marketing following industry comment it received.
The original discussion paper was published back in March 2014. The update details the role PhonepayPlus has been taking in the interim period with industry to address their concerns regarding affiliate marketing where premium rate services are in some way concerned. So far in 2014 alone, PhonepayPlus has received more than 600 complaints from consumers relating to premium rate services marketed using some form of co-registration.
PhonepayPlus supports initiatives for the prompt sharing of disclosable information between itself and industry, and sharing amongst the industry itself, to help identify emerging areas of risk relating to digital affiliate marketing that can be dealt with in an appropriate fashion.
For more information about PhonepayPlus’ initiatives see here.
Why this matters:
CAP’s latest guidance is a reminder to advertisers who allow their affiliate marketers free rein over the content of their ads that they remain responsible for ensuring all such advertising for their benefit is compliant with the CAP Code.
The ultimate advertiser will be responsible for ensuring the content of all such ads is compliant and also that the ads are correctly targeted (as a brand learnt the hard way when a gambling ad was mistakenly sent by an affiliate marketer to a child – the ASA upheld the complaint and also named the brand in its adjudication (Club Website Ltd, 8 January 2014)).
It is therefore prudent (and will help advertisers to limit their legal and regulatory compliance risks) for advertisers to enter into contracts with their affiliate marketers which cover off this area of compliance. A brand would be wise to have approval rights over all ads created for its benefit or to at least have clear guidelines that all affiliate marketers are compelled to follow.