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Beware of the danger of
Exclusive Affiliate Programs!
(An Exclusive Contract can become an Abusive Contract)


If you're a merchant (advertiser) and you are looking to sign up with an affiliate marketing company, you should be very wary if any company offers you an "exclusivity" deal where you are supposed to sign up to their network and exclude all others. This is inherently dangerous. I'll explain why...

* The company can "assign", ie be bought-out by another company, and they may not be of the same character as the original company which you signed up with. You are then effectively snookered, because the new company can ruin your affiliate program, either by upsetting the affiliates by imposing corporate contracts, or by mishandling your business promotion. Ordinarily you'd leave them, but because you've signed up to be exclusively with that company, you are in shtuck, and you might as well change your company head-office address to "Company Registered in Shtuttsville".

* There is no meaningful value in being exclusive to one network. A company offering you (the merchant) a discount expecting you to sign up because of "preferential terms", is not giving you a beneficial deal. The only reason I can see for such an offer is in order to trap you. Once trapped, you and your contract can be sold off. This ulterior motive can generally only be seen after the fact, with hindsight.

* Signing up to exclusive deals with one affiliate network, nomatter how good that network apparently was to start with, is seriously anti-competitive at a second level, as it interferes with proper business competition between affiliate marketing companies. By signing away your own rights as a merchant, you've turned your own good company into a stick by which the network can enslave affiliates. This shifts the balance of power, and gives an unfair advantage to bad practice. Here's an interesting allegory: Supermarkets usually compete with each other on the basis of how good a deal they can offer to customers. What keeps that healthy competitive market alive is the freedom that customers have to choose to go to one shop or another. Now supposing one supermarket stated to the customer "If you sign this legal contract to shop ONLY WITH US, we'll give you all your shopping at half the marked prices", then if they could find enough mugginses to sign up, they'd soon have a market of captive shoppers, and although they'd lose money for a few months, the value of that supermarket itself would rise, and it would be on sale to the highest bidder. The buyer could then triple all the marked prices and force all the captive shoppers to continue to shop there. By people signing up to such a deal it's changed the market from a fair competition market to an abusive market.

* I, as an affiliate, have a serious aversion to such dodgy deals, and if I find out you have signed up with a network on an exclusive deal, then nomatter how good your company is and nomatter how good the network is, I will attempt to redress the balance in favour of the free competitive market by counterbalancing it with a larger value stock in other networks and with other merchants, even if it is financially disadvantageous! It may be a curious point, but, I am one of the people who buys Free Range Eggs. I might still be on your affiliate program, but remember, it has to be counterbalanced here to keep the majority in the Free zone.

* As with the idea of having a backup generator in case the power fails, I recommend any affiliate merchant bigger than a certain amount should have at least two affiliate programs, with different networks. However, to small companies that can only afford one affiliate program, I say Don't Worry! If you can only afford one affiliate program, there's no problem, provided you don't sign anything that makes it "exclusive". Your freedom to set up a second affiliate program somewhere else if the first one turns out to be naff, is worth more than any discount any company could offer for you to lose that freedom.

Also see Contract clauses to beware of

The sometimes-quoted counter-argument to the criticism of exclusivity agreements is "it saves money". The idea is that it's cheaper to have one affiliate program than two, and that you get a further discount by agreeing to giving one company exclusivity. Well, although the first part might be true, that having one affiliate program is cheaper than two (like having one estate agent to sell your house rather than having two boards up on the front), the rest of the argument is false. It's a bit of pennypinching similar to the cutprice auctioneering allegory in The Camelot Assumption. Although the headline price might seem cheaper, the knock-on effects and other problems make it akin to signing a contract with The Devil. Really, it doesn't matter how cheap the contract is, it's not going to be cheap enough to save anything because of all the lost freedom, lost PR, and contract-reselling nonsense which can ensue as a result. The amount saved is marginal, and at best is only part of the cost of the affiliate marketing company's fees. On the other side of the equation is the disastrous loss which can occur if the affiliate marketing network were to alienate some of the affiliates. In fact, come to think of it, even the first part of the argument is questionable, because some houses for sale really are with more than one estate agent, and they are both then even more keen to help to sell the house!

A word that you sometimes see is "consolidated". For example "The company has consolidated its affiliate marketing into such-and-such a company". It might be a robust sounding word, "Consolidated", but it still comes to the same thing, putting all your eggs in one basket.

Interesting to note that one of the things which sometimes goes with an exclusive agreement is a cloak-and-dagger clause where you are compelled to keep it secret. If you think this suggests there to be something sinister about it, well, you may be right! It's not that different from the way protection racketeers want their victims to agree to keep the arrangement secret from the police. Regardless of whether exclusive agreements are legal, and in some countries they are, like the way pyramid schemes are legal, there is a moral opinion which says they are a form of wrong-doing. Once you get ensnared in an exclusive agreement, you are at the mercy of whoever your new masters are, and whoever they want to sell you and your contract to.

In general, to keep the competitive edge, it's best to have those affiliate networks in keen competition with each-other, and get the best deal you can, but AVOID any "exclusive" deals.

Exclusive deals are nothing to boast about. More a matter of shame, something to slink about and hide.

In the interests of free market economics, here's a list of affiliate marketing companies, where there's free competition.