When Customers Pay More For Using Affiliate Links

Update : This has now been resolved. My personal stance from now on will be to check the businesses that I promote. As part of the process of assessing a companies overall conversion process I will check the affiliate link versus the “naked” link and I won’t promote any company that charges more. I did a few spot checks already and haven’t found any other businesses doing this so far, so I hope and presume this is quite an isolated case.

It has recently come to light that VivaStay, a hotel booking website, has set up their website to increase selling prices for traffic that comes from affiliates. (Their scheme is at Affiliate Window).

Try a search here

Now, try the same search after visiting via this link.

Unless things change, you’ll probably be offered a higher price on the latter link (also notice on the affiliate version the phone number is removed as is the third party advertising, top marks for that ! – see also my post on the “perfect” affiliate scheme)

Danger to Credibility of Affiliate Marketing

Clearly if this practice spread, then affiliate marketing as we know it would be in grave danger. It wouldn’t take long for public awareness to grow since people would notice the price differences when using cashback sites. This would lead people to be much more careful about the links they click on for fear of paying extra because it’s an affiliate link (though I’m sure there are people who think that now anyway).

A main attraction of affiliate marketing for businesses is “Only pay for generated sales” isn’t that good enough ?! why risk your brand trust by being greedy like this?

I can imagine this happened as VivaStay came at this from a travel industry perspective (where paying % and all sorts of complex % arrangements and “pricing by channel” has always been fairly common) rather than from an affiliate marketing perspective. Different to an airline and most tour operators a hotel booking website such as Vivastay does not own or committ to any inventory so if they get their affiliate marketing commissions wrong they can end up losing money on each transaction.

Here’s the thing – (e.g.) 10% margin – 7% affiliate commission – 7% discount code = losing money on every booking. OK, I know some market share hungry companies are happy to lose money like this since they reckon on keeping the customers in their database and reselling to them again and again but for most companies this sort of thing would get a thumbs down from the finance chief. I wonder if vivastay is taking a similar approach to their inhouse PPC ? (assuming they are doing that).

The way Vivastay has set up their scheme, they probably thought they were onto a winner from their affiliates with no risk of going into the red and lots of “free” impressions from banners and content all over the web. Now their pricing by channel activity has come to light I guess most affiliates will turn off activity for them though – after all there are hundreds of other choices out there.

Which Companies Charge Customers More For Using Affiliate Channel?

What I’m wondering is if there are any other companies doing this ? Please use the comments section if you know of any other businesses charging customers more for using affiliate links. I know of one online travel company that did it once but no longer so I won’t mention them.

I would also be grateful for any other comments from those in the travel industry / affiliate marketing world and of course from a consumer perspective.

Comments

  1. Wow what an own goal. I’m amazed though perhaps I shouldn’t be. Thanks for flagging this rob.

  2. An unfortunate incident and one that arguably can be identifed from a user’s point of view.

    Whilst it’s tempting to try and maximise every penny from every sale (isn’t that why we’re all here?) there should be a longer term view that building a customer database that can be resold to for less outlay is a key goal to any business.

    I can’t help but think that the affiliate programme for VivaStay may need some TLC to repair any damage.

    In the wider context, affiliate must be considered as part of the overall marketing mix and costed accordingly with customer and churn analysis to identify the quality of business coming through the channel.

  3. imagine if th tabloids got hold of this info. All it would take is one front page headline of ‘internet adverts cost you millions’ and th entire affiliate industry halfs in size overnight. The IAB are quick enough to lambast affiliates for semi-dodgy activity, but do they have the same level of control over merchants?

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