A Penny for Your Clicks?

For the uninitiated, affiliate marketing is a mom-and-pop sliver of the online advertising business with a big impact. Most participants are regular folks who work from home, posting online ads and promotional-text links for thousands of brands, ranging from AT&T (T) and Wal-Mart (WMT) to lesser-known outfits like SexPlayCam.com. While the majority earn less than $100 a month, their numbers are vast (Amazon.com (AMZN) alone is said to employ more than a million), and their efforts may account for as much as 7 percent of online spending. Anyone can participate with zero investment and little upfront effort — I recently became an official Wal-Mart affiliate on my lunch hour — and companies love that this army works on straight commission, earning only when consumers click on their links and make a purchase. But as Calacanis warned, the industry's proliferative and sometimes deceptive practices could backfire. Affiliate marketers threaten to pollute the web so badly, he said, that users could stop surfing altogether.

Even if you can't identify affiliate marketing on sight, you're probably already tired of it. It often takes the form of promotional-text links buried in sham product "reviews," blog posts and email spam. But the larger annoyance is the stunning proliferation of useless web pages created solely to serve up affiliate-marketing links: bogus business directories that pop up when you mistype a web site name, blogs filled with computer-generated gibberish, and endlessly repetitive sites carrying content stolen or "scraped" from legitimate sources. They often rank high in Google (GOOG) search results, forcing web surfers to wade through dozens of useless pages in the quest for useful information. Calacanis estimates that these sites account for more than half the content online.