Captive and Stealth Affiliates
In every niche, there are “opportunities” that seem open for exploitation, and usually the affiliate manager can identify several such opportunities. For example, she may say, “There should be a web site that compares pricing or service levels for [these products/services].” Or she may identify one or more “acquisition targets,” such as content sites which are “stale” and which are either available for purchase or due for expiration.
- Captive Affiliate: One option is to create and manage individual web sites “as a service of MerchantName.com,” where the site is clearly sponsored and/or owned by the company. (If you want your affiliates to link to these sites, you can’t include your own affiliate links within these sites; if you include your own affiliate links in the site, your affiliates won’t link to it.)
- Stealth Affiliate: The alternative is to create or manage certain sites as “apparently independent” affiliate sites, where the ownership by your company is not discernable on the web site or in the WHOIS data; such sites might even be separately hosted on shared servers. (I would never recommend the use of deceptive or misleading claims, nor “shill endorsements” or “reviews” by stealth affiliate sites. Any “subjective” content would be risky. However, the “stealth affiliate” strategy may be appropriate for “informational resources,” such as generic articles about products, SEO, affiliate programs – potentially including “objective” directories, price comparison sites, or product comparison sites.)
- Costs: Each “captive” or “stealth” affiliate adds to the overall costs associated with the merchant’s marketing efforts – including hosting costs, domain renewal fees, and staff time to create, manage, and update content. (Ideally, these expenses will be offset by “in-house affiliate earnings,” but frequently these costs are not allocated or analyzed carefully, creating some risk that the costs for such sites may grow beyond their value.) In general, most “stealth affiliate” sites are designed to be “timeless,” with no need for frequent updates; a public “captive affiliate” site, with the merchant’s brand more directly at risk, usually involve more attention to content quality and “freshness.”
- Transfer or Sale: Ironically, the same reasons that may make a “captive or stealth affiliate” valuable to a merchant might also create a perception of value for others. Over time, the merchant may elect to profitably sell certain domains or web sites (to non-competitors), or to sell or gift them to affiliates who have proven their ability to successfully exploit such sites.
- Reputation Risks: There are two “reputation risks” of operating either captive or stealth affiliates. For “stealth affiliates,” there is the obvious risk of “getting caught” and identified as the owner of a site which had not previously disclosed its ownership or control – with possible accusations of deceptive marketing tactics. For any “owned affiliate site,” there is always a risk that site may offend someone or infringe the rights of others. And for either type of site, there is a risk that independent affiliates will be upset at perceived “competition” from the merchant, so that the “playing field” is not level for regular affiliates.
