David Naffziger, CEO of BrandVerity , a robust technology platform which enables affiliate managers to combat trademark abuse and advertising fraud, joins us for an interview on merchant protection. At Affiliate Management Days SF 2013 (on Apr 16-17, 2013), David will be speaking on the topic of “Coupon Code Compliance: Protecting Channel-Specific Coupons.”
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Question: If you were to emphasize one important issue that every affiliate manager and online merchant should be paying attention to, what would it be and why?
David Naffziger: I’m certainly biased, but I really feel compliance is one of the least understood and under resourced aspects of affiliate marketing. The compensation structures throughout the industry do not typically align with conducting effective compliance. Not only is compliance poorly understood, but it often requires a different set of skills than the relationship focused skill set of many affiliate managers.
That’s why it’s a topic that I frequently speak on. We even put together a 30+ page guide to affiliate compliance 
that discusses many of its different aspects and helps affiliate managers develop approaches to compliance that best meets their needs.
Question: What do you see as the present day challenge for online and affiliate marketers?
Getting noticed. Online marketers, in particular, need to find ways of connecting to an audience that has otherwise become increasingly immune to online advertising. Banner click-through rates have dropped well below 0.1% 
and might be indistinguishable from accidental clicks. Email click rates continue to drop 
. Even Facebook click-through rates have recently shown decline 
At its best, affiliate marketing provides the antidote to online advertising immunity. Affiliate marketers can be incredibly creative and are often the first to adopt (and develop) new advertising strategies. The best publishers have existing, loyal audiences that trust them and their recommendations. I’d say that affiliates are doing some of the most creative marketing we see today. And the affiliate marketing channel gives marketers the chance to tap into that unique level of trust and engagement that is so difficult to achieve in more traditional forms of promotion.
Question: Online brand hijacking is a major problem for online advertisers/merchants. Some say that resulting misattribution of advertising dollars ranges from 40% to 90% per advertiser. Is this number really this high and what are the areas of vulnerability that advertisers have?
David Naffziger: No, the number is not that high. At least not from paid search issues. It could possibly be true of merchants in certain verticals. Direct response products such as “As Seen on TV” come to mind. But it’s not very likely.
Paid search abuse is a very real challenge and merchants absolutely need to maintain tight monitoring of their brand terms in paid search. The costs can sometimes spiral unbelievably high. However, any reasonably sophisticated paid search manager will notice large drops in the performance of their paid search campaign and can easily uncover enough issues to keep misattribution below those numbers.
Advertisers are typically most vulnerable to affiliates that do an effective job of laundering their referrers. This technique masks the source of a request by inserting an additional redirect link in between the advertisement URL and the destination URL. It can give the affiliate manager a false impression that the source of a visit legitimately earned the traffic. Not only is this technique used by affiliates to hide paid search traffic, it is also used to mask traffic from other prohibited sources such as spam, domain typosquatting, cookie-stuffing, adware, etc.
Question: If you were to give online merchants advise on how to protect themselves from violations, what would be your top 3 tips?
David Naffziger: Clarify the affiliate agreement. In particular, ensure that you identify whether affiliates are allowed to:
- Use your display URL.
- Run ads on search terms containing your trademark
- Run ads on search terms containing your trademark plus another term such as “brand coupons.”
If you don’t allow 2 or 3, require your affiliates to add your brand terms and misspellings to their negative keyword lists.
Second, regularly review your program statistics. Look for affiliates with sudden spikes in sales, unusually high or low conversion rates or promotional methods that you do not understand. I’m a big fan of the TinyPrints affiliate agreement 
that requires affiliates to be clear and responsive should they request more information about the source of any orders or clicks. As an affiliate manager, make sure you understand how your affiliates are promoting your program.
Third, become familiar with a suite of tools to aid investigations. In particular, we’re fans of HTTPFox for reviewing redirects. Proxies can be a great tool as well. At a minimum, check your search terms every time you travel for business.
Question: At AM Days SF 2013, you’ll be speaking on coupon compliance. Why the choice of topic? What exactly is “coupon leakage” and why would an online merchant care?
David Naffziger: We’ve increasingly learned about the challenges that merchants face with keeping their coupon codes under control and recently launched a service to help merchants ensure coupon compliance. Coupon leakage occurs when a coupon code meant for a particular audience or website spreads to websites that the merchant didn’t intend.
This commonly happens with coupons distributed via email to a merchant’s customers, and sometimes through offline mailing. In other cases, a merchant may give a select affiliate a custom coupon at a higher discount. In exchange for the exclusivity, the merchant gets premium placement and pays a lower commission per sale.
Whenever these coupons leak to unintended destinations, a merchant can lose a lot of money. Some merchants just can’t be profitable with their deepest discounts layered on top of affiliate commissions.
Furthermore, they lose their ability to effectively track the performance of that channel and even risk customer frustration and abandonment if they deactivate a code. Proactive compliance helps merchants stay ahead of these risks, both improving their profitability and increasing customer satisfaction.
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The upcoming Affiliate Management Days conference, where you can hear David speak, takes place April 16-17, 2013. Follow @AMDays  or #AMDays on Twitter; and when registering, make sure to use the code SBTAM250 to receive an additional $250.00 off your two-day (or combo) pass.
The rest of the interview series from #AMDays may be found here .