Information and Incentives in Online Affiliate Marketing
Benjamin G. Edelman
Harvard University - HBS Negotiations, Organizations and Markets Unit
March 25, 2014
Harvard Business School NOM Unit Working Paper No. 14-041
We examine online affiliate marketing programs in which merchants oversee thousands of affiliates they have never met. Some merchants hire outside specialists to set and enforce policies for affiliates, while other merchants ask their ordinary marketing staff to perform these functions. For clear violations of applicable rules, we find that outside specialists are most effective at excluding the responsible affiliates, which we interpret as a benefit of specialization. However, in-house staff are more successful at identifying and excluding affiliates whose practices are viewed as "borderline" (albeit still contrary to merchants' interests), foregoing the efficiencies of specialization in favor of the better incentives of a company's staff. We consider the implications for marketing of online affiliate programs and for online marketing more generally.
Number of Pages in PDF File: 33working papers series
Date posted: November 23, 2013 ; Last revised: March 27, 2014
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