So eBay is cutting him a check for $1 million to $2 million per MONTH. This equates to $2 million to $4 million a month in profits for eBay that they share 50% with the affiliate.

When his traffic drops, the affiliate manager calls him and asks to do whatever it takes to get his numbers back up. It looks bad on her. "Why is affiliate revenue down 20% this month?" her boss asks.

She doesn't even CARE that it's crappy traffic. She needs affiliate revenue to rise and rise every month no matter what.

Every person at eBay doesn't have to act in the best interests of eBay, just in the best interests of their job at eBay. I'll believe that there were dozens of people at eBay who were encouraging him to do whatever he could to get his numbers up, no matter if it was white hat, grey hat or black hat. They didn't care.

And then suddenly one day someone cared.

I'm not saying its right to defraud them. I'm saying I can believe they condoned it at one point.

Obviously eBay thought that the traffic is compliant. They didn't know that this was just cookie stuffing and that the sales they were paying to him for would happen anyway. When his affiliate sales declined, affiliate manager would of course be worried and try to re-engage the affiliate. But how stupid eBay affiliate managers could be if they didn't notice that actual sales volume was the same whether with his traffic or without. Well, maybe not completely stupid after all, if they finally had some grey matter to realise something fishy (and so simple) was going on..

The problem is that, unbeknownst to them, consumers received a stuffed cookie from eBay from some random website having no awareness of anything regarding eBay at the time. It's only because these consumers just so happened to visit eBay on their own initiative within 30 days and performed specific activities that an affiliate payment was generated. Had these affiliates not even been involved, there would be no change in the behavior of the consumers; they would have visited eBay anyways and eBay would therefore not have had to pay out any commissions.

I agree with the rest of your analysis. Someone who was incented according to affiliate activity likely did encourage this, even if they suspected or had knowledge that it wasn't above board.

Saying "one rogue account rep sanctioned this" (which even that I deeply doubt) is quite a world removed from saying that the company sanctioned it, which was your original statement.

I'm not saying the rep was "rogue". I'm saying eBay set up their affiliate program to encourage affiliate sales "no matter what" and then in 2008 they started caring for quality of affiliate links when they didn't care before. Let me try this another way.

There are companies out there that pay salespeople a percentage of total revenue they get customers to buy, regardless if the order is profitable for the company. So salespeople offer 50%-75% discounts for their products to customers in order to get customers to buy, the salesperson makes the commission off the full retail price before discount, and the company loses on every sale with -75% gross margin. It's a fast-track to bankruptcy. No sane company would do this right? That company was called Ecomom. It happens that companies do things against their interest without knowing it as long as top line sales go up.

Companies give people license to do things in their own interest that are NOT in the companies interest all the time.

Right, I agree with you. It's easy to imagine an affiliate rep who is incentivised by affiliates doing well, i.e. they get paid based on affiliate sales. You can even imagine some ebay affiliate reps being "ok" with a description of how they're generating their hits because they're incentivised by the affiliates doing well. Until someone upstairs figures out what's going on. Then, of coure, the affiliate rep is completey clueless about what happend and is shocked that someone would do this!

What a scam both ways.

> Why? It provided absolutely no value to them. Actually worse, it cost them affiliate fees on sales that rightfully would have been affiliate fee free.

Well, it provided value to ebay's affiliate manager who could boast about how much revenue his affiliate program drives in. In a big corporation there are many factions. :)

Exactly.

Theory: Not eBay, eBay but maybe the affiliate managers encouraged it. Maybe they get cut based on affiliate sales so it was in their best personal interest to have as many aff sales. Downsides are plenty but only if discovered and if top eBay management didn't like it.