In early February, Bitly, the popular URL-shortening service, partnered with affiliate tool Viglink to auto-monetize every shortlink generated by Bitly’s millions of users. To understand the impact of this partnership, consider that Bitly encodes more than 600 million links per month. Those links generate approximately eight billion clicks monthly. Today, every one of those eight billion clicks potentially sets a Viglink affiliate cookie on the end-user’s machine. And every time Viglink earns commission, it shares it with Bitly.
Here’s how it works. Say that you find a sweater you like on Amazon. You want to see what your friends think about that sweater. So, you post a link to that sweater on your various social networks. However, to stay within the character limit constraints of the social media platforms, you use Bitly to shorten the URL.
Since Bitly has partnered with Viglink, when your friends click on that link, Viglink’s affiliate cookie is dropped onto their computers. This means that Viglink, and subsequently Bitly, could earn a commission on any purchase your friends make on Amazon, provided those purchases were made within the cookie duration window.
Effect on Ecommerce Merchants
The challenge for ecommerce merchants is deciding whether or not this is a commissionable occurrence. The ideal definition of affiliate marketing is paying commission for a sale driven by fully disclosed marketing activities.
So, in the example above, the question for many observers is, “Did Bitly do anything to influence the commissionable sale?” When you posted the Bitly link, you were not intending to get your friends to purchase the sweater. In fact, you were not trying to influence any of their purchases. Yet, if your friends clicked your link and completed a purchase, should Viglink and Bitly earn commission on those sales? This is a decision that will likely need to be made on a merchant-by-merchant basis.
The partnership most certainly interferes with attribution within the affiliate channel. Say a blogger, who is one of your approved affiliates, promotes your brand across her social media channels. To keep her posts short and pithy, the blogger uses Bitly to shorten the affiliate link. Now that Bitly is in partnership with Viglink, if the blogger’s post drives a sale, that sale is attributed to Viglink, not to the blogger. You may be able to see evidence of this in your affiliate reporting. See if Viglink is driving more sales than usual. Then, look to see if you have less sales coming in from your bloggers.
Where Do Sales Come From?
This partnership is also likely interfering with attribution across your own internal marketing efforts. Say that you are having a sale and you want to promote it to your followers on Facebook. You post a link to your sale on your Facebook page, and again, due to character limit constraints, you shorten your URL using Bitly.
This is a post that you created yourself, distributed across your own social media channels, with the intent of driving traffic to your own site. All ad spend and all resulting revenue should be attributed to your own promotional efforts. However, since you used Bitly, the resulting transactions are now being attributed to Viglink and thus to your affiliate channel. Further, you are now paying commission on these sales, which means you have ad spend coming from social media. The transaction is less profitable.
Bitly Deserving of Revenue?
Before you object to Bitly’s new partnership, consider what you are paying Bitly for its URL shortening service. If you, as a retailer, use Bitly to shorten your links for free, and you are benefitting from Bitly’s reporting, then perhaps Bitly is deserving of a payment. However, you still need to decide whether to attribute the sale to your social media channel or to your affiliate channel.
In 2013, the U.S. Federal Trade Commission updated its disclosure guidelines to state that if a blogger or social media user receives any sort of monetary compensation to promote a product, brand, or service, he must disclose that relationship.
But since Bitly is a passive tool, it is not promoting a product, brand, or service. It seems to fall outside of the technical definition provided by these FTC disclosure guidelines. However, the practice of auto-monetizing user-generated content does not seem to follow the spirit of transparency and disclosure.