A Better Link Between Merchants, Affiliates

LinkShare has announced a new software platform that includes a validation tool to weed out phony affiliates.

LinkShare’s Athena is designed to make it easy for merchants to keep track of their affiliates and prevent falsified data and click fraud.

Online marketers and retailers offer affiliate programs to let individuals and Web publishers help promote products or services. Affiliates get paid when they enable an action specified by the marketer, such as an ad click or customer referral.

LinkShare’s software tracks, manages and analyzes the performance of affiliate programs, search advertising and e-mail marketing. It also provides account management services for merchants’ affiliate programs. The company’s customers include J.C. Penney, 1-800-Flowers.com, American Express, Avon Products and Dell .

In June, 77 percent of the 50 fastest-growing Web retailers ran affiliate-marketing programs, according to LinkShare competitor Commission Junction.

But the industry has been plagued by fraud, with affiliates accused of using unsavory business practices to gain traffic. In April, Hypertouch, a small Northern California ISP, sued Kraft International Foods and the importer of Gevalia Coffee for allegedly violating CAN-SPAM and the Computer Fraud and Abuse Act. Hypertouch complained that the companies’ affiliates sent 8,500 unwanted e-mail ads to their subscribers.

Athena automatically verifies a new affiliate’s contact information and updates it when it changes. The company said the system lets merchants protect and monitor how their brands are used, as well as to get better acquainted with their affiliates.

“The system has helped to reduce the number of invalid transactions that are made, and has provided clear contact information to enhance communication between merchants and affiliates,” Stephen Messer, LinkShare’s CEO, said in a statement.

Despite problems, investment research firm Piper Jaffray expects the sector to grow 30 percent in 2005.

Writing in his blog, Jupiter Research analyst Gary Stein said, “I firmly believe that this is one of the most interesting spaces for online merchants. Merchants who are able to control the issues (and there clearly are issues of spam, fraud and brand-abuse) find that they have a very clever, very motivated group of people doing great work for them.”