The authors examine online affiliate marketing programs in which
merchants oversee thousands of affiliates they have never met. Some
merchants hire outside specialists to set and enforce policies for
affiliates, whereas other merchants ask their marketing staff to perform
these functions. For clear violations of applicable rules, the authors find
that outside specialists are the most effective at excluding the
responsible affiliates, which can be interpreted as a benefit of
specialization. However, in-house staff are more successful at identifying
and excluding affiliates whose practices are viewed as “borderline”
(albeit still contrary to merchants’ interests), forgoing the efficiencies of
specialization in favor of the better incentives of a company’s staff. The
authors consider the implications for marketing of online affiliate
programs and for online marketing more generally.
Keywords: affiliate marketing, fraud, marketing management, incentives,
outsourcing