Cowritten with Robert Glazer, Founder and Managing Director of Acceleration Partners.
Did Fake News Sneak up on America?
A recent Pew Research Center study reports that two-thirds of American adults get their news on Facebook, yet our legal and law enforcement systems have not kept up with the dramatic advances in communication technology. Just as these tools have the power to bring us together and enhance our lives, we are beginning to realize they also have a dark side. The speed and anonymity of the Internet has led to the development of a phenomenon that challenges the foundation of our society: the rapid creation and sharing of scams and fake news. This problem has reached such epic proportions that many fear the rapid spread of fake Internet news actually affected our presidential election. Now we are left trying to understand how this tsunami hit us seemingly without warning.
The truth is that we had plenty of warning, but along with the biggest companies in America, we chose to ignore it. Fake news grew out of our prolonged national tolerance for “fake” or scam advertising. The law is only now beginning to catch up with this problem that has been going on for over ten years. In a precedent-setting case, the affiliate marketing network Leadclick was found culpable and warned by a U.S. court. What company will be next?
To understand how we, at The Dr. Oz Show got into this rut, here is some confidential data from the show’s battle with fake news and illegal advertising over the past decade. Because of its long history in the space, the show saw the earliest signs of this catastrophe and witnessed the tragic evolution. Perhaps the show was an early canary in the coal mine, but others have been deeply affected at this point. The show’s epiphanies could provide a treasure trove of opportunities for investigative reporters and savvy readers to cure the sepsis afflicting digital advertising. The fear is that if we don’t heal this process, the brilliantly democratic web will dissolve into an untrustworthy neighborhood where no one can safely travel.
After all, if a seven-time Emmy award-winning host of the top ranked health TV show can be exploited, what about the average American with far fewer resources?
The Dr. Oz Show Case Study From A First Hand Perspective
In many ways, fake news is a direct descendant of less sophisticated scam advertisements that many consumers have become wary of. Over a decade ago, I discussed natural antioxidants like acai berry on The Oprah Winfrey Show and that inadvertently gave rise to a cottage industry of advertisements that illegally used the names and likenesses of Ms. Winfrey and myself. Aggressive legal efforts to thwart these advertisements took place and the week that The Dr. Oz Show launched in September 2009, we filed a civil suit against merchants using our likenesses to sell and promote acai berry. No meaningful financial penalties could be collected due to the balkanized and covert structure of the illegal ad system.
Despite efforts to enlist the support of State Attorney Generals, including advanced conversations with Florida and Texas Attorney Generals’ Offices, none were willing to move forward. The general consensus was that these civil cases are civil matters that could be waged by the affluent victims, whose celebrity names were being exploited without their consent.
In September 2012, I took the case directly to my viewers as part of a multimedia blitz to warn the public of the fraudulent advertisements selling everything from weight loss supplements to wrinkle creams. Viewers were asked to join OzWatch to inform the show of “fake ads”. For nearly two years, The Dr. Oz Show concluded each show with a warning to avoid purchasing weight loss supplements promoted using my name. Over the next year, a service, which was enlisted to patrol the Internet and enforce its trademarks reported:
By May 2014, our viewers logged more than 37,000 reports on OzWatch that included:
All in all, we issued well in excess of 1,093 takedown notices to over 791 sites that resulted in the takedown of over 300 websites and more than 4,700 videos from YouTube. In addition, our investigation of scammers led to high profile sting operations that were featured on the show. These people threatened us with legal actions, but understandably never followed through. Despite these efforts, a United States poll revealed that most people still believe I sell supplements, which I have never done. My moves were dwarfed by the avalanche of false ads that attack consumers who enjoy the web.
A direct appeal was made to the leadership of Google, Amazon, and Facebook in May 2013. As a result, Facebook provided a direct contact and process for takedowns but the onus was still on us to play catch up and scour the Internet for offenders. Google and Amazon ultimately said it was too cost-prohibitive to vet these scam ads and sites and asserted that The Dr. Oz Show was solely responsible for enforcing its brand and policing the Internet. Our legal counsel came to believe the initial willingness of these large companies to collaborate evaporated when they realized that they would need to spend money and take legal risks that would result in millions in lost revenue from vendors peddling unscrupulous ads. It took me 10 years to figure out that the affiliate marketing juggernaut was too big to beat by myself. We identified a deliberate conspiracy of ignorance within the industry, which made enforcing the rules almost impossible. The system is designed to provide anonymity to members of the supply chain, which encourages and protects this unscrupulous behavior. So The Dr. Oz Show has now enlisted the help of insiders, including Robert Glazer, founder and Managing Director of Acceleration Partners, who are interested in cleaning up this problem.
The Insider’s Truth about Affiliate Marketing and Fake News
All companies who sell something engage in various forms of marketing to do so both directly and indirectly. In the online world, the selling and marketing process becomes more complicated as there are typically multiple parties involved and understanding just who they are and how they benefit from a sale can be confusing, sometimes for a good reason.
Consider affiliate marketing. At its core, affiliate marketing is like any other influencer, word-of-mouth or referral marketing. It’s about one person or entity sharing information about a product or service and why they find value in it. In this relationship, affiliates are paid on a performance or commission basis only.
Key affiliate marketing players include:
You (Customers) – Customers are, of course, the people who purchase goods and services from the retailers. They can be online shoppers looking for product reviews, price comparisons, and/or product recommendations or just browsing.
Publishers (Affiliates) – Affiliates come in all shapes and sizes. They typically have their own audience through content, Search Engine Optimization (SEO), e-mail, and social media activities. They can be bloggers, active social media posters, niche content and personal websites, shopping sites, loyalty, as well as coupon and reward websites. They earn commission when successful sales and transactions come through their properties.
Affiliate Networks – Affiliate networks and Software as a Service (SaaS) platforms act as intermediaries in the affiliate marketing space. Networks typically handle all tracking, reporting and payment to the affiliates/publishers whereas SaaS platforms serve solely as a tracking technology partner. They also help recruit publishers.
Merchants (Advertisers, Retailers) – These companies sell a product or service. Industries include financial services, travel, retail (for example health and beauty products), telecom, broadband, gaming, and more.
How Publishers Get Traffic
Historically, publishers directed traffic to their site through email (newsletters), search engine optimization and paid search strategies. They either have legitimate content credibility that allows people to find them organically when searching for a topic; have a large audience or e-mail list; or they buy traffic to their website through different channels.
As social media has grown in popularity, it’s become a new source of traffic for publishers and a primary source of traffic for “influencers” who have large followings on sites such as Instagram, Facebook, Twitter, LinkedIn, StumbleUpon, and Reddit. In its early days, this sort of social media-driven traffic was mainly “organic,” meaning it was earned, not paid for. However, the proliferation of paid social advertising has presented a complex new dynamic. It’s offered publishers and influencers the ability to target users by demographic and blurs the line between paid and organic marketing. In fact, many consumers struggle to know the difference.
This has created new opportunities for less honorable publishers who are generating traffic by leveraging fake news and often fake endorsements. Many people accept these types of marketing strategies as “organic”; they often don’t realize that these publishers are using specific tactics to target them, such as psychographic data and look-alike modeling to appeal to their predispositions. As an example, if you are someone who has commented a lot on Facebook about weight loss, you might be served a social ad leading to a bogus claim for a miracle weight loss drug.
These types of publishers are spending money to drive traffic through a variety of online sources by promoting information that isn’t necessarily true. What’s more is that they now have new tools to find the right audiences who are likely to believe their claims. The same is true for content syndication services that run on multiple large media sites. Publishers pay for these services to show consumers articles related to what they are already reading.
Identifying the Bad Apples
Networks are the glue that connect publishers and advertisers in the digital world. Some networks are full service and take commissions, and others are created using licensed technology to manage tracking and payment for which the technology vendor is simply paid a fee.
The trick is understanding if the network is actively involved or when someone has licensed technology to build their network. In these cases, it’s akin to someone who is selling a gun saying they are not responsible for how it is used.
Take, for example, the recent court ruling against affiliate lead generation network LeadClick that we mentioned above. A US federal court ruled that LeadClick engaged in “deceptive marketing” by recruiting and paying affiliates who were using fake news sites to generate traffic to LeanSpa, LLC’s products – specifically their acai berry “weight loss” and “colon cleanse” products. They tried to claim they were just the “tool” and could not be responsible for all the bad behavior.
However, the court found that LeadClick actively “managed” those affiliates, suggested substantive edits to their fake news pages and purchased banner ad space for these fake news sites on legitimate news sources. In some cases, the deceptive nature of the sites was further concealed because some of these players were using major news networks’ logos.
Prior to the ruling, the FTC had charged LeanSpa with publishing fake news about their acai berry and other products. The FTC’s complaint was that LeanSpa enticed customers with a “free trial” scheme before enrolling them into a recurring purchase program that was difficult to cancel. Eight months after charges had been brought against LeanSpa, LeadClick was named as a defendant in the case.
What’s important to understand is that the deceptive marketing practices that LeanSpa, LeadClick, and their affiliates engaged in is widespread, but it is not a standard practice in the upper echelons of performance marketing industry.
It’s important that we identify these activities and label them for what they are: fraud. Consumers also need to be smarter about not trusting everything that they read online. By blindly trusting what they see online, consumers create a demand and a marketplace for fake news and subsequent activity.
It can be quite challenging for companies to figure out what’s taking place online to promote or harm their brand. This is especially true when sub-affiliate networks are involved.
Simplifying Sub-Affiliate Networks
A sub-affiliate network is a company that offers to aggregate other publishers. The sub-affiliate network signs up as an affiliate with a brand and hundreds (even thousands) of partners may join a sub-affiliate network as a way to promote that brand and get paid commissions – without having to sign up as a direct affiliate themselves. When the sub-affiliate network gets paid, they distribute payment to the sub-affiliates within their network who drove sales and usually take their own cut.
While this model can offer significant value to brands, the fact that the sub-affiliates don’t have a direct relationship with the brand can sometimes make their activities murky and make it totally opaque as to who the company is even partnered with at the end of the day. For instance, there are cases where an affiliate has been removed from a merchant’s direct program because they’ve engaged in fraudulent activity, violated the programs terms and conditions, etc. When this happens, the affiliate will sometimes join a sub-affiliate network as a back door to continue promoting the brand.
An Authentic Approach
What makes the affiliate marketing model unique is that, when all these players are working cohesively together, they provide an infrastructure that allows merchants to track performance and return on investment. This is why almost every reputable, well-established brand has an affiliate marketing program.
Affiliates have long demonstrated that their influence can authentically and effectively contribute to the overall growth of a company and can represent an important part of a brand’s marketing strategy. What’s more is that affiliates are creative and entrepreneurial and can do an amazing job at cultivating strong customer loyalties.
Regardless of their industry, almost any company can benefit from a system that pays partners who direct paying customers or qualified leads to their business “after” they have delivered the desired outcome.
Like all marketing, affiliate continues to grow and evolve, especially as new technology platforms and applications come on to the scene. Advances in reporting and better access to data have made it possible for companies to manage their affiliate programs more effectively and identify and eliminate low-value participants. App-to-app mobile marketing and SaaS platforms are making way for even more performance-based approaches and giving companies the ability to strategically scale their marketing.
Will there be companies and affiliates who attempt to game the system? Most likely. Just as there are in almost every industry. Therefore, it’s crucial for those who engage in white-hat performance marketing strategies to protect and defend the industry and for companies to ensure that they are working with credible affiliate partners.
Having an actively managed affiliate program that requires transparency and brand alignment can alleviate many of the issues with problematic publishers. By evaluating the strength and condition of their affiliate program, brands can understand whether their affiliates are in compliance, the key to preventing fraud and maintaining brand-integrity.
Working Together Clean up The Web
All Americans have an obligation to police the web, but three groups share a special burden.
First, traditional news media should advance the narrative that sharing false news and ads on our social feeds is an unfortunate reflex of a hacked brain. The Dr. Oz Show recently highlighted how fake news designed to get clicks by eliciting strong emotion, can actually increase activity in the emotional centers of the brain, similar to what might happen when one encounters physical danger. By being aware and not sharing these stories we can take back our minds, and thwart unscrupulous vendors who are hurting our nation and our health in order to make a buck.
Second, corporate America needs to police their supply chains to root out unscrupulous vendors selling products through unethically created clickbait. This week, Randall Rothenberg, leader of the Interactive Advertising Bureau, which represents the 650 biggest online publishers and includes all the biggest companies we all know, joined The Dr. Oz show with an urgent plea to major companies to clean up the web. Companies that do not invest in this effort should be called out by honorable Americans. After all, who would you fault if a respected cereal manufacturer sourced contaminated grains from a disreputable supplier and caused a salmonella outbreak?
Third, we need to update laws and enforce the ones in existence. The web is fast moving and our legal process has fallen behind the times. The law treats the web loosely as a billboard, but the corporate entities outlined above should be held to standards resembling print media. Ads and fake news are carefully designed and served with intimate knowledge of consumer vulnerabilities. The rule of law is needed to give the average American a fighting chance.
The world of fake news and scam ads is dark and complicated and scammers will always use new methods to make money. But together we can stop the proliferation of news and ads designed for the sole purpose of taking advantage of our human nature. The key is accountability. We must hold companies that allow these activities to occur on their property accountable and demand action. We must hold the government accountable and demand that laws be adapted and enforced to deal with the modern scourge. We finally must hold ourselves accountable and take the time to make sure we only share the best information with our friends. Together, we can clean up our modern neighborhoods and make them safe for everyone.
Robert Glazer is the founder of Acceleration Partners, the leading independent performance marketing agency, which has worked with top brands such as adidas, Reebok, Target, Gymboree, Jet.com, Shutterfly, and Warby Parker. He has extensive experience in consumer, retail, and online marketing, has published more than 100 articles about performance marketing, strategy, and culture, and is the recipient of numerous accolades, including the Boston Business Journal “40 under 40” award and the SmartCEO Boston Future 50 award. A sought-after speaker, Robert has presented to global audiences, and has served as an advisor and board member to both nonprofit and high-growth businesses. You can read his Friday Inspirations at www.fridayfwd.com