That companies entice bloggers with gifts and cash commissions is no big secret. It’s a common practice called affiliate marketing. Some bloggers are paid for the number of clicks they can generate as an affiliate for an advertiser. Others are paid for each sale they successfully trigger.
In the banking world, big banks clearly prefer the pay-per-sale model. Some 80+ financial institutions offer pay-per-sale commissions to bloggers through FlexOffers.com, one of the larger and more popular companies managing affiliate programs. Chase, Citi, Mint.com, Applied Bank and IberiaBank are some of the many retail financial institutions FlexOffers counts among its clients. Through FlexOffers.com, BofA promises to fork over $120 per credit card approval. Discover pays $115. Perkstreet Financial only $50 per opened account.
European banks have their own affiliate programs. Santander pays a £32 commission (around $50) to bloggers for each business checking account they get people to open.
Alliance & Leicester pays bloggers for everything from opened accounts to loans that close. Among the commissions they pay on a half-dozen different products, bloggers can bag £45 for a current account — that would be almost $75 for a checking account in the US — and £20 for a e-savings account (USD$30).
Key Questions: Do any of these banks offer similar referral incentive programs to their staff and customers? Why not? What’s the distinction?
In some cases, the blogger may run a modest banner ad to generate sales of these products. But many times, bloggers go further and write favorable editorial reviews, explicitly encouraging their readers to open accounts bank more affiliate commissions. Some affiliate programs even have performance incentives.
Glowing reviews of Ally Bank products
Take a look at the following affiliate reviews of Ally, each extolling the fantabulous virtues of the bank’s checking and savings products:
“Why I am switching? Ally is everything my current online checking account is not. Ally has taken all those things I hate and made them disappear with their Ally Interest Checking account. I feel like I got the real pony from the commercial, not the toy one.” (complete review at Suburban Dollar)
“I’ve chosen Ally as a new savings account for our family. I just set up my account this week and it was easy!” (read complete review at One Money Design)
“I usually tell people to go with a local credit union for no fees, and an online savings account linked up for higher interest on savings. Online checking accounts started getting popular with ING Direct’s Electric Orange Checking, but currently I find the best all-in value proposition at the Ally Bank Interest Checking account.” (complete review at My Money Blog)
Click on the links to read the complete reviews. You’ll quickly recognize a pattern; all the reviews take the same narrative path:
II. Is Ally Safe?
III. Account Features
IV. Account Opening Process
V. Customer Service
So with such formulaic write-ups, how can all these bloggers’ endorsements, recommendations and testimonials be real, honest and straightforward — all the stuff Ally claims to be?
And what about Ally’s latest ad campaign, where it claims to be loved across the social media ecosphere? There may be lots of “love” out there for Ally, but at what cost?
The lines blur further. Money Crashers, an Ally advertising affiliate, posted a favorable review of the bank on its blog. Then Ally, in turn, featured Money Crashers on its own blog. Quid pro quo?
In its blog post, Ally asked Money Crashers to list three words that describe the ideal bank. “Transparency” was one of them. Ironically, Ally failed to disclose its financial relationship with Money Crashers. Same thing when Ally blogged about DepositAccounts.com. Ditto for 20 Something Finance.
“Oh, by the way… We pay these bloggers to help us open accounts.”
Ally denies pay-for-love scheme
Ally, one of FlexOffers customers, is keen to point out it doesn’t pay for favorable reviews, it pays for ads that lead to sales. Some, like Mike Piper at Oblivious Investor, might say Ally is playing a game of semantics. Piper ran afoul of Ally’s affiliate program when he wrote on his blog:‘
“Bloggers make money recommending companies that have affiliate programs. For example, I earn a commission if you open an account at Scottrade through one of my links. I earn nothing if you open an account at Vanguard. Similarly, it’s more profitable for me to recommend Ally Bank than Bank of America.”
Apparently Ally Bank didn’t like that. On Ally’s behalf, FlexOffers shot an email off to Piper:
“[Ally Bank is] not pleased with the insinuation that they ‘payoff” affiliates for recommendations on publishers sites. They want you to modify the language to make it clear that they do not pay affiliates to recommend Ally Bank, however Ally Bank pays affiliates to place their ads on their sites. Ally Bank is concerned that this language may come off wrong to customers.
Piper says he was merely pointing out to his readers that he earned a $40 commission whenever they opened an Ally account, whereas BofA paid him nothing. Piper declined to edit his blog post, so they pulled the plug on his affiliate status.
“In my opinion, Ally’s position that they pay for ‘advertisements’ rather than ‘recommendations’ is nonsense,” Piper said. “When you pay a commission, what do you get? You get people to sell your product.”
“I think the key is to be clear and transparent about what’s paid placement and what’s not,” he added.
Back in 2009 when GMAC launched Ally Bank, CEO Al de Molina promised “a new approach of treating customers with total transparency.”
Ally may have a commitment to “complete transparency,” but what about its bloggers? Are they transparent when they get paid to represent the Ally brand? What would Ally’s infamous advertising antagonist, Mr. Disclaimer, have to say about this practice?
Ally could proactively encourage its transparent values in online advertising affiliates by requiring them to emphasize a disclosure (rather than letting bloggers bury it in small type below the post): “In honor of Ally’s transparent brand, I want you to know I get paid $40 when you open an Ally account.” They could also discourage personal endorsements from those who aren’t actually customers.
Bloggers wrestle with conflict of interest
“There is a conflict of interest between bloggers and readers,” said Mike Piper on his blog. “Bloggers benefit when we get consumers to sign up for the best-paying products and services. Consumers benefit they sign up for the best products and services.”
“It’s worthwhile for readers to ask the question and be aware of the ways in which [bloggers’] compensation might influence the way we present information to readers,” he noted.
Piper says about one-sixth of his income comes from affiliate programs.
Wojciech Kulicki, publisher of Fiscal Fizzle, worries about his motives. “Even if I write a completely objective review on a product that I use personally, there could be some things I’m omitting subconsciously that I should really make known,” she said.
Even the folks at the Bible Money Matters blog can’t resist the temptation of easy affiliate money. “I do review some products that I might not have otherwise, solely because they have an affiliate program.”
“I have issue with people who pump a product, but don’t use it,” noted the publisher of Investor Junkie. “In the personal finance blogosphere, there seems to be a lot of them.”
Piper at the Oblivious Investor doesn’t think the reviews are deliberately malicious. “I suspect that the primary result of affiliate programs (in the personal finance niche at least) isn’t so much dishonest posting but rather a degree of coverage that’s unwarranted solely on the actual merits of the products/services.”