Editorial Pages

March 2012

'Pay for results' advertising reclassified as 'secret commissions'

Public confession: OZmium takes secret commissions!

As is the case with other businesses, when an online bookmaker or gambling related business of some sort wants to advertise, there are two models they can use. They can either stump up money in advance for their ad and hope that it repays them in increased business, a risky assumption when dealing with the amorphous online entities of todays world, or they can use the popular and ever growing model of 'affiliate deals'.

With this model they pay a commission on either clickthroughs, turnover, or profits generated from referrals. The affiliate model makes a lot of sense for them, because they know that they are not going to pay anything for a dud campaign that generates no business, and in the case of commission on profits it enables them to have a much wider spread of advertising hosts since there is no cost without a corresponding profit to offset it. Affiliate deals also give the host company or individual an incentive to make the promotion successful. The host is likely to know more about what kind of exposure is most appropriate on their website and will go the extra distance to try and get a return for the advertiser and therefore themselves.

Enter Senator Nick Xenophon, who has re-branded affiliate deals as 'secret commissions' and for some reason singled out Sportsbet Australia, despite most of the online bookmakers and casinos, not to mention thousands of non gambling related businesses, using the affiliate model. He labeled it 'unconscionable' that gamblers referred to online gaming establishments were not told that clicking on an ad for a bookie and then opening an account could result in a commission for the business hosting the ad.

What? Is he assuming that all online gamblers are idiots? Isn't it fairly obvious to most people that if someone is hosting an advertisment that they are probably getting paid? It's not like the ads are subtle, or pretending to be anything other than promotional. What's the difference whether they are paid up front, per acquisition, or by commission on business transacted? Why is Xenophon only banging the drum about online gaming and not any other industry that pays commissions for results, such as real estate, car sales, or indeed sales of almost anything? If you buy a TV from an electronics store, or a bed from a furniture store, the sales person is quite likely getting a commission. Apparently not a 'secret commission'... that only applies to gambling, presumably because gambling is sinful and some gamblers get addicted.

In my opinion Senator Xenophon is confusing widely used commission payments with 'cash for comment' type conflicts of interest. There is a clear principle that if you pay for unbiased professional advice, such as from a financial advisor, or listen to a radio personality who appears to be voicing a personal opinion and doesn't appear to be advertising anything, then commissions in fairness should be disclosed. Maybe you could even mount an argument that this should be extended to every commercial product that is advertised on the planet, but it would become as irritating as a law demanding that everyone had to publicly acknowledge it every time they fart. What galls me is that Senator Xenophon singled out online gaming, and one particular company, for his emotive term 'secret commissions'. It's hard to see it as anything other than political grandstanding, an idealogical attack on a soft target for political consumption.

Anyway, for the record, if you click on any of the big fat banners advertising bookmakers or other gambling related businesses on OZmium sites that look and smell like ads, and then you do business with the company they advertise, OZmium may receive a commission by way of payment for promoting that company. No, we don't work 7 days a week to run this business as a charity and no, we don't promote other businesses out of sheer admiration for their contribution to society. Don't die of shock.

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