Governance Mechanisms in Internet-Based Affiliate Marketing Programs in Spain

Abstract

Internet-based affiliate marketing programs have emerged as one of the fastest-growing methods for online retailers to acquire customers and increase sales by tapping into the power of independent web sites to reach a large, diverse audience of potential customers. However, while these programs have proven effective in increasing website traffic and sales, illegal or inappropriate activities on the part of affiliates could negatively impact a retailer’s brand in the eyes of customers. This study is an exploratory analysis of governance mechanisms (formal contracts, partner selection, incentives and monitoring) in one-to-many affiliate programs in Spain. Agency theory and transaction cost analysis provide the theoretical background. The conclusion is that there is a significant lack of transparency in the guidance and restrictions communicated to affiliates, and a lack of systematic monitoring of affiliate behavior, which increases the risk of opportunism or misconduct. General recommendations for managers of affiliate programs are considered.

Technology Ecosystem Governance

“…This problem is not only more severe from the perspective of the final purchaser, but also between other members of the distribution networks where "joint action interdependence" (Caglio and Ditillo, 2008 p. 877) generates a mix of nonsequential processes that obscure accountability (Miller et al, 2008). Given the emergence of affiliate and social marketing, and other Internet-based marketing structures where direct lines of responsibility are latent (Fox and Wareham, 2010), additional research on this topic is desirable.…”

The effect of social media and advertising activities on affiliate marketing

“…Individuals may use digital advertisements, such as banners and sponsored links, on their websites to promote the merchant's products or services (Duffy, 2004(Duffy, , 2005. Other business models include, for example, blogs, communities and price comparison sites that redirect consumers to the merchant's website (Fox and Wareham, 2010;Prussakov, 2011). Affiliates receive a commission depending on consumer actions predefined by the merchant (Libai et al, 2003;Sarkar et al, 1998).…”

“…Merchants may pay their affiliates for a simple redirect of a consumer, such as a click-out to their online shop (Olbrich and Holsing, 2011), for a lead, such as requesting further information about a service (Cartellieri et al, 1997;Olbrich et al, 2016), or for a sale buying a product or service (Lee and Lee, 2012). Moreover, merchants may organise their affiliates themselves or employ affiliate networks that provide access to affiliates and additional services, such as performance tracking and financial services (Fox and Wareham, 2010).…”

Affiliate marketing: An overview and analysis of emerging literature

“…Affiliate Marketing Programs are one of the most dominant tools for online marketing as the person presenting the product or a service decides on the commissioning model and the commission is granted only if the anticipated outcomes have been reached (Iva, 2008). They have emerged as one of the fastest growing methods to acquire customers and enhance sales on the web (Fox and Wareham, 2010;Gregori et al, 2013;.…”

“…The literature suggests that the academic research on affiliate marketing has been conducted across different industry sectors, largely adopting the merchant's perspective (e.g., Fox and Wareham, 2010;Libai et al, 2003) and some on affiliate perspectives have also been undertaken (Benedictova and Nevosad, 2008). A very few studies (e.g., Janssen and van Heck, 2007) have also undertaken some empirical research on this topic.…”