Second-Hand Reputations

Written by Brook Schaaf

As a host on Bloomberg Podcasts noted to the reporter, “This is complicated to explain.” And it is, to regular people (keep them in mind for later), but not to you as an affiliate marketing insider. Retail and resale shopping extension and iOS app Phia stands accused of forcing clicks, aka cookie stuffing.

Bloomberg (paywall) first broke the story on its site after conducting its own testing across some 50 merchants, leading to an explosion of stories on TechCrunch, TBPN (hat tip, Mike McNerney), and dozens of other sites, many with thoughtful if slightly confused reporting. Mashable had a roundup of social media posts. More importantly, for our purposes, Ben Edelman published his research and sat for an interview on the Always Be Testing Podcast.  

Of course, comparisons were made to Honey. Let’s break down what is apt, what is inapt, and why it matters to everyone. First, it cannot go unnoticed that both cases received outsized attention with slobber-bait. I suppose “celebrity (daughter of Bill Gates) steals” is even juicier than “celebrities (influencers) stolen from.” 

Recall that this second narrative may have been what made creator Megalag’s 2024 video explode, garnering over 19 million views, despite being filled with misleading statements and erroneous explanations. From the perspective of industry insiders, it was largely noise—it probably didn’t impart any new information or shift any affiliate marketer’s positions. Ditto the warmed-over, histrionic nothingburger a year later. But soon came a third video, which offered proof of stand-down violations from code that went back to long before PayPal’s acquisition, as tested by, yes, Ben Edelman. This led to repercussions and changes so that the browser extension does not entice clicks by appearing on traffic that has come from a competing affiliate. 

Interestingly, Edelman found stand-down violations when he tested Phia, but, much more seriously, he, along with others, found automatic redirects with its iOS app. As I note in my forthcoming book, The Affiliate Hypothesis, “Cookie stuffing,” also known as a “forced click,” is when an affiliate secretly places a cookie in a customer’s computer in order to take unjustified credit for a sale. Common ways to do this are to open invisible iFrames or to open and then close additional browser tabs. This is never allowed. It is not only unethical; it may also be illegal.

This apparently conditional behavior has apparently ended. It was claimed to have been a recent bug, but it goes back to December, and, frankly, that it was an accident strains credulity. (A rogue product manager would be more believable, but just barely.) Network investigations, account freezes, and lawsuits (perhaps by other affiliates as well as merchants) are likely to follow. Edelman stated bluntly that “Phia is [perhaps now ‘was,’ after the changes] brazenly out of compliance.”

Now let’s come back to what normal people make of all this. One of the TBPN hosts said of the Honey situation, “the creators were sort of promoting their own demise in some way… very ironic.” This is a great hook, but it was never really true. First, the percentage of time that two affiliates are both in the clickstream is less than 5%, based on all the data I’ve ever seen going back decades. Second, most of these major creators are already doing paid placement or hybrid deals. Third, if they’re doing lots of product stuff, they are probably mostly working with Amazon, which generally doesn’t even work with extensions. 

That said, I have always wondered how much money this was worth and never seen a good number. TBPN threw out twelve million in gross merchandise value, possibly from the Bloomberg articles. In particular, I’d guess the cost to the affiliate industry is much higher. People simply don’t understand the intricacies of these dealings, but they do understand the concept of cheating and stealing, and then they associate it with affiliate marketing, a notion no competing channel is going to disabuse them of. 

Three things are likely to happen from here. First, well-funded Phia will presumably estimate its own vulnerability to lawsuits and proactively settle to avoid process discovery, if nothing else. (The prospect of law firms that sued other browser extensions now taking them as clients is certainly entertaining.) Second, media-savvy Phia will find some way to spin this situation to its advantage and actually take advantage of the publicity or at least move past it (strictly an accident, lesson learned, tried too hard to help consumers, etc.). Third, everyone else who is not Phia will bear another burden.

There is an old saying in politics that if you’re explaining, you’re losing. Affiliate marketing has always required a bit of explanation without starting from a trust gap. By the time you’ve distinguished stand-down violations from forced clicks and clarified how attribution actually works, your audience probably is no longer paying attention, and only remembers a sense of distrust for the channel. As Olivia Kory (hat tip, Tye DeGrange) of “causal marketing platform” Haus posted, “welcome to affiliate marketing.”