The Perfect Storm - Part 1

Like several other ad watchers and pundits, I've been tracking with interest not just the flogs but variations on the theme establishing a trust bridge in order to entice users into free trials for unknown brands. The products promoted almost always fall into the healthy and beauty categories and focus on predominantly natural weight loss supplements derived from edible products, e.g. Acai, supplements created chemically but based on organic compounds, e.g. Resveratrol and nitric oxide, teeth whitening kits, and work from home programs.

The products themselves all seem to share the following:

1. Low cost to manufacture
2. Easy to ship
3. Indeterminate value (higher perceived value)
4. Perceived need to continue using them for maximum efficacy

The marketing methods almost always:

1. Try to tell a personal
2. Tell a believable story
3. Create a sense of authenticity
4. Leverage trusted media brands
5. Leverage celebrity likeness and at times directly imply endorsement
6. Big results for little effort

The above is especially true for what we might call Flog v2 - the Fake News Sites / Fake News Articles. Instead of telling a personal story using a fake person in a blog format, they tell the story from the point of view of a reporter or journalist. It doesn't have the same level of personal connection as the mom, but treating the above like a formula, they increase the level of authenticity to compensate. This banner left is an example of one running on display right now, and it has all the necessary ingredients and then some, looking very little like an ad and mixing media property metaphors at will - leveraging 60 minutes, Barbara Walters, Dr. Oz, and for the first time that I had seen, promoting not a blog but a news site - The Boston Tribune. As many reading know, no publication named The Boston Tribune exists, but it certainly sounds like a reasonable publication, and using the iconic imagery of the clock and other known brands only gives this "publication" and what they have to share with you more credence. People will click on a banner that says lose weight with NuAge Resveratrol, but not many. Mentioned before, this is an economics game, a classic performance marketing arbitrage example, and without certain effective returns (high clicks on ad, high clicks on landing page, and conversions) they cannot afford the media. Whether this arbitrage advertiser pays on CPM or not, they must still perform well enough to receive the incremental impressions on the inventory. In cases like this, they often lose sight of the message and focus on figuring out any way to hit the performance metrics necessary to receive high volume inventory.

 Clicking on the banner above takes you to the following landing page:

The Boston Tribune
 

This particular site is part news site part review site, listing the product at the bottom - a dead giveaway that the site is purely marketing and not informative. As the first news site I came across, I found it particularly clever and evil; yet, as it turns out two things that shouldn't come as any surprise did. 1) This site is no longer up at its old address, and 2) others have replaced it much more devious and misleading in nature.

Here is one -

News9News.
 

You will notice the pre-requisite video clip but also something completely new. It has weather on the side, a graphical header of random people but that you must infer are the news cast, even "ads" along the side. The entire site looks and feels like a page off the local news site. For all that is bad, they chose a relatively innocuous site name. The same cannot be said of the following.

Los Angeles Tribune News
 

This site, also no longer live, married the best of both worlds - the news looking site and a copyright infringing style of brand. Unfortunately, the name of the publication is a little small. Something corrected in future versions.

New York Finance News
 

They refined the template, shifted a few things around, and better leveraged the other media brands. Best of all, they realized that they now had the perfect mini-platform. Witness...

The Atlanta Tribune News
 

There is only so far that this template can go, so it only makes sense to have another. May I present...

New York Guardian News
 

Just different enough, but not by much. And why not one more for your viewing pleasure.

Miami Gazette News
 

From an ad guy's viewpoint, the pages and methods used provide their own fascination, but the more interesting question is what's going on to contribute to proliferation of such ads. Feel free to share your views. Part 2 will be on not the big waves caused by the perfect storm but the conditions that enable it.

Comments

[gregw]

The fake news sites and the Google type scams are still flourishing. The new FTC guidelines do not actually go into effect until December, but they are recording all of the complaints right now. So, it would be wise for any affiliates to comply now, instead of waiting until the last minute.
There is a law firm in NY that is initiating a class action suit against some of these scams. This is separate of the FTC, of course, and will hit the pocket books of some of the people behind the scenes of these scam programs.
So, my advice is get out now, and pray that your involvement will go unnoticed. I see more legal actions in the future, and whoever is involved may be vulnerable on any level.
The law firm is:
David J. Meiselman, Esq.
Meiselman, Denlea, Packman,
Carton & Eberz P.C.
1311 Mamaroneck Avenue
White Plains, New York 10605
TEL: (914) 517-5000
FAX: (914) 517-5055
E-mail: dmeiselman@mdpcelaw.com

[Paul Schlegel]

Wow. The person who thinks that some affiliate networks don't encourage affiliates to run the fake news sites or fake flogs must be clueless or hasn't dealt with many affiliate networks.

Yes, there are many networks that put out FTC compliance emails, make affiliates sign FTC compliance agreements, etc.

But there is also a set of flog-friendly affiliate networks that actually HAVE sections of products that are marked as "OK" to promote via flogs - and guess what? The affiliate managers see that they're working and they DO try to encourage their affiliates to promote them in that way.

[Nick B.]

Very good point JL. Nice job on making everyone look like jealous cry babies!! hahahaha

[JL]

And what about Columbia House? Video Professor? All recurring billing products that do not disclose the rebill up front. Scams? If not, why not? Recurring billing has been around forever and the FTC hasn't outlawed it yet. Why do you think that is? It's because they would have to shut down a huge percentage of "legitimate" ads that use Doctors who aren't really Doctors but play one on TV.

If you're fat or insecure about how old you look, why don't you work on eating less and excercising or getting some self esteem instead of looking for a wonder pill to make you think or look 20 years younger?

[JL]

The number of people who are commenting here that have no idea what they're talking about is astounding. CPA Networks do not actively encourage you to promote anything in any way. In fact they stress that you be compliant.

As far as the style of promotion that you people are talking about, it is completely compliant with the proper disclaimers.

This is no different than a TV spot. How about all those people talking about Cialis or ScottTrade or any other branded service. Do you think those people are actually using the product and giving factual testimonials? Please. One of the "Doctors" on the Plavix commercial is an actor and works out at my gym.

The FTC is not after anyone using these methods unless you are suggesting that any results shown in your advertising are the same, guaranteed results that the average person will achieve. Simple disclaimers protect you from this.

Folks should actually read and understand the FTC guidelines before coming on to blogs like this an whining.

[John]

It looks like the FTC are finally going after at least two of the companies behind the deceptive Google work at home offers and fake Govt grant offers.

However, until Attorney Generals and the FTC crack down on the affiliates and the CPA networks (rather than just the original companies or individuals behind the offers) these fraudulent, deceptive and misleading ads and websites will continue - CPA affiliates and networks will just shift their focus to the next offer when the FTC focuses their spotlight on a particular company or individual.

Many CPA affiliate networks actively encourage their affiliates to use fake blogs /news sites, use fake testimonials etc - so it's not just a case of a few rogue affiliates as may be the case with a legitimate affilaite network (who would then remove them), but widespread acceptance of unethical, deceptive and illegal methods within this sector of the affiliate marketing industry as "the norm".

If you visit the forums at wickedfire.com you will find many of these affiliates discussing their promotion of said offers - the bulk of whom seem to think that being merely "an affiliate" somehow totally exempts them from compliance with advertising and trade laws! If you visit findaffiliateoffers.com or offervault.com and enter resveratrol or google or acai or grants into the search box you will find a list of the CPA affiliate networks promoting these offers on behalf of their clients - paying their affiliates a bounty of $30 to $40 for each "free trial" sign-up they recruit.

As you say, it harms all legitimate advertising online - but until the authorities do something about the CPA networks and their affiliates - it will continue to flourish.

[Mitch Sackson]

I hate to admit it but I fell for two ads recently that absolutely tought me to "keep my hands in my pocket". First, with the exact site you mentioned only morphed into an Opra, etc 'endorsement', I signed up for the 'free' shipping only but found I was billed $83 for the next 3 months supply. To boot, the "800" on the bank billing line did NOT exist. Now this is out & out fraud. I finally traced the original phone call only because they ran the same ad in a local newspaper. They denied they were the company I called but when I threatened them with my going to the FBI (who knows) they connected me to 'accounting' and the amount was cancelled.

However, in the meanwhile, I had my bank "block" my card & issue a new one. What a hassle.

-----
Mitch, thank you for sharing your story. It's a real shame, and it harms all legitimate advertising online.

Jay

[Steve]

It sickens me how unethical people can be when it comes to money. I'm assuming the FTC is not proactively seeking out these deceptive blogs/sites. What they need to do is hire a team of internet and marketing experts to catch these sites in action.

[Gab]

"What's going on to contribute to proliferation of such ads"

1. Generic affiliate networks that can profit and sustain themselves by promoting these offers to their affiliates.

2. Affiliates, like everyone else, are risk averse. So when something works, there's a pile on.

[yvonh]

If you keep a list of fake news sites, are you keeping only the url? or may you add a screenshot so as to reveal the pattern they use, plus some profiling information such as registrar, IP, when they appear, where and when they disappear? and so on.

[Cray]

Hey Jay, I just wanted to mention that this really interesting post got you a new feed subscriber. Loved your gallery of how the flog's template continued to be reworked on others

[Eric Shannon]

very interesting - I just added a link from my post on the job advertising side of this at http://www.internetinc.com/deceptive-job-advertising-evil

where is the FTC?

[Michelle Chance-Sangthong]

Thanks for this info. I saw one recently where it uses a GEO style tag and the ad showed and ad ...
Jacksonville Mom loses 37 lbs ... in the same format as your news above. It goes on --- let the buyer beware - or the clicker in this case. Glad to see other folks are taking notice on this.

[Ed Eaton]

Sure the advertisers are making lots of money too but they are taking on 10x more risk than the affiliates. Half of them get their merchant accounts shut down, millions of dollars frozen, getting screwed with by the AGs and Feds, etc. If you ask me the top affiliates promoting these deals are better off. Some of them are making a million a month and they don't have to worry about any of this stuff. They have their media buys all figured out and even that risk is practically nothing since they know their numbers and know how to manage ad campaigns.

[plunge]

"It'd be like having a sales force in the real world that all told lies, forged contracts and took drugs at lunch break"

7 years in (for me), this is the best description of affiliate marketing yet.

[Bret Rowe]

Vanguy good point. If you think the affiliates that run these sites are making money they are only making a fraction of what the principal company is making off the offer.

The affiliate networks that facilitate these ads as well as the principal company who is offering the product are looking the other way.

It'd be like having a sales force in the real world that all told lies, forged contracts and took drugs at lunch break and having management saying:"Great job guys"!

[vanguy]

Which is the bigger problem, the fake blog/news site or the actual offer itself which the user get's locked into the payment and takes forever to get out of it.

I just feel that the fake blog/news site is a copyright infringement issue while the FTC is more concern about the payment structure for the offer itself.

[Ed Eaton]

The thing is, these guys can make mini-sites that are just as deceptive and convert just as well (or at least close enough) without having to use bogus celebrity endorses. So assuming they aren't blatantly using a bogus celebrity endorsement, it seems that much more unlikely that they will ever get busted...

[jayweintraub]

Steve,

Thank you for the comment and for the link to TMZ. The blatant nature with which certain celebrities likeness gets used is amazing, as you mentioned Oprah; so too is the length of time that some have been able to use it. Even now, you see plenty of sites still named, "RachelRayBlog" or "RachelRayBlogging" (not to mention all the Dr. Oz references, or now in some case Dr. Os or even 0prhah.

[Steve Gerard]

Great post.

Certainly the reason these ads are proliferating is because they're making bank. And I'm guessing the websites/pages disappear after a short period of time because the affiliates are simply redirecting their existing & successful PPC campaign (or whatever) to a new, virtually identical site and removing the old one.

Why..? Perhaps to cover their tracks or otherwise limit their liability if they DO get caught ("I only had my site online for 2 weeks!"). Who knows - that's my best guess, but it wouldn't work for them anyway unless they're going to incredible lengths to cover their tracks.

(Un)fortunately, as we've seen, these guys are getting in trouble when the featured celebrities start getting their lawyers after them. Oprah's already started - and likely the catalyst for some State Attorneys who have begun investigations - and I just read that Barbara Walters has picked up the scent now too (re: the product & ad you've shown in this post that she's on)...

Via TMZ a couple days ago:
----
Walters is pissed at something called Exilatrol for using her picture in one of their online ads. Next to her photo it says, "As seen on Barbara Walters and 60 Minutes." She tweeted her displeasure, saying, "If u see ads for products with Resveratrol showing my photo and name they are false."

Babs talked about Resveratrol, an ingredient in Exilatrol, in an anti-aging special in 2008 -- but she has never specifically endorsed any product.

http://www.tmz.com/2009/06/16/barbara-walters-is-anti-anti-aging-ad/

----

It will be interesting to see how this develops and I look forward to your Part 2 post!

[jayweintraub]

Ed, that's a great point. I keep a list of all of the fake blogs and now fake news sites that I come across, and it's amazing to see how quickly they disappear. And, like you say, I don't think people have an understanding for the amount of money some of the more successful guys can make or how nefarious some of the practices can be. This includes many people in the broader online advertising community, including publishers that play an unwitting part.

[Ed Eaton]

If only I had no ethics, I could be rich in no time like these guys. I know some of the guys that run these sites and they are making more money in a week than most people make in a year.

They figure that if/when the sh*t hits the fan the feds will go after the advertisers and/or networks. These guys think they are untouchable.

They can put up a site like this in a day, make bank for a month, then replace it with a new one. They move so fast that I doubt the feds could/would ever even try to pursue them. It's crazy...