“auto pop for cookie drop” (you don’t stop)

Written by Brook Schaaf

MegaLag came out with another video, a typically hyped mix of old and new news, plus some snide remarks about industry folks, including yours truly. The old news is various tracking platform penalties for Honey, which, as far as I’m aware, have been resolved. The new news is a judge denying parent company PayPal’s motion to dismiss based on an amended complaint, including the critical revelation of concealing stand-down violations. PPC Land has a sober recap.

This controversy has been overshadowed by the one regarding Phia, which also came back into the news last week, but before going there, I want to address some of the sneering commentary. 

About two minutes in, he goes after Awin CEO Adam Ross for “basically insinuating that my video was sensationalist clickbait.” No link, but I think he meant this post, which addressed the contemporaneous issue and was mostly an explanation of the policies, including Awin’s theretofore little-known soft-click approach. Awin and other networks took decisive action after the later, third major video came out. 

He accuses me of calling him a “hit job,” a phrase I did not use and which doesn’t represent my attitude toward him or his work. I did write that “As far as I am aware, both they and the many other commentators I read and viewed are 100% wrong.” This was true at the time, posted well before the revelation of stand-down violations. 

This was the first of several points I made, along with comments that most of the supposed influencer victims probably work with Amazon, if they work with any affiliate program, that Amazon doesn’t work with Honey, and that most programs already didn’t work with any browser extensions. This story is actually included in The Affiliate Hypothesis. 

Along the way, he got a lot of details wrong but made no clarification or correction for his errors that I’ve seen. Given these facts and the histrionic use of language like “evil,” it’s fair to say his content has been and remains sensationalist and his titles clickbait. 

In the most recent video, he tips his hand that he had been holding the information about the stand-down revelations. After the first dismissal, he gloats that he “had an ace up my sleeve. That of course being the discovery of Honey’s defeat device.” Hmm. That sounds a bit like a political campaign dumping opposition research at the most damaging time before an election; otherwise, why wouldn’t you play the card as soon as it came into your hand in the interest of expeditious truth-telling? You already know the answer. He times his releases to maximize their impact. (Perhaps a key component to his success as an influencer.)

This isn’t to take away from the significance of the information but to point out that you can’t trust him to summarize or characterize affiliate technology or the affiliate industry. Unfortunately, MegaLag has a much bigger megaphone than most of us in the space, contributing to confusion and reputational harm—which takes us back to Phia. 

Oh, Phia! 

 Bloomberg followed up with another hard-hitting expose, including revenue estimates: “After Phia disabled the [forced click] features in early July, average daily revenue at the company dropped from about $80,000 to between $10,000 and $28,000, the [internal] chart [seen by Bloomberg] shows. A Slack message posted by a Phia data scientist on July 7 and reviewed by Bloomberg estimated that cookie stuffing accounted for about 51% of the merchandise value Phia claimed credit for selling in June.” 

$80,000 a day is almost $30 million a year, presumably more with natural growth and Q4 seasonality. That’s real, scalable, … investable. And 21,000 reviews on the mobile app store are nothing to sneeze at, even if it’s modest compared to Capital One Shopping’s 1.7 million. 

Phia later stated to Bloomberg that they turned off most revenue-generating features and that the data scientist used “an incorrect methodology that overstated the potential impact.” As with the earlier claim that it was a bug, both of these statements strain credulity. 

Ben Edelman found more misconduct on Phia’s mobile browser extension, namely forcing clicks on exit (closing the window) and automatic cookie refreshes, both clear violations of network rules and somewhat redundant to each other. 

Bloomberg also published Slack messages fairly characterized as “damning,” one of which is quoted in the title to this blurb. Co-founder Phoebe Gates allegedly wrote that forcing clicks was “SUPER core to rev[enue].” My guess is that for Phia, as for pre-acquisition Honey, it was super core to valuation. As an Inc. headline blared, “Phia Touted 11-Fold Revenue Growth… months before Phia’s $35 million Series A.” 

So, as in the case of Honey post-acquisition, why continue it after the event? Evidence indicates Honey’s code was updated and even refactored. I have no insider knowledge here, but I remain skeptical it was particularly valuable for revenue generation. (Remember, this was, to the best of my knowledge, the relatively minor infraction of violating stand-down plus hiding from inspections, not forced clicks.) So either it was marginal but added up to something because of volume, or it just got rolled into the requirements and shrugged off. A settlement was always the most likely outcome, so I doubt we’ll know. Hopefully, both cases are resolved in a timely manner, so we can turn our energy to rehabilitating affiliate marketing. 

We’ll cover these topics in the rest of the series.