Regulation has traditionally been a barrier to entry for startups in many industries.
Compliance towards regulation is expensive, time-consuming and requires specific expertise to keep up with the ever-changing contours of the sector and the concerns of the industry watchdogs.
Banking is a classic example of regulators as gatekeepers. After the financial crisis of 2008, lay observers could have been forgiven for wondering why the established retail banks were so welcoming of the Financial Conduct Authority and the Prudential Regulation Authority. Banks hadn’t suddenly developed a conscience and decided they needed watchful supervision.
They rolled out the red carpet (to a point) for the newly established FCA and the PRA because they knew they’d run interference on their competition, the challenger banks looking to capitalise on newfound consumer dissatisfaction with the established banking landscape.
Plenty of challenger banks made it over the drawbridge, but many others found that compliance with the industry’s new rulebook was prohibitive.
So it’s always a surprise when a new entrant into an established industry marks their arrival with calls for regulation.
The affiliate marketing is one sector that suffers from reputational issues that a regulator could go some way to fixing. And it’s a rapidly growing UK startup that’s leading the charge. Offers365 was founded in 2019 with the “goal to create a true performance marketing network capable of helping businesses to grow their customer base”, according to founding director Seun Olabisi (pictured).
Olabisi explains: “We acquired clients in the UK, US, Australia and a lot of European countries and starting with publishers around the world to provide high quality traffic to clients.”
The firm is growing quickly. In May this year they received a significant cash injection which will allow them to double their headcount and attack the market aggressively.
But as Olabisi explains, it’s an industry with a trust issue and he wants his firm to lead the way in fixing it.
“The industry needs more regulation for sure. Affiliate Marketing and lead generation on the whole is still an industry where a lot what what we call ‘data cowboys’ exist and operate. Often we see how difficult it is for advertisers to choose the right partner. A lot of the ones that come to us have bad stories to tell. Some end up deciding to spend their marketing budget on other channels based on the bad experiences they had before with an affiliate network.
“We want to play our part in changing that by offering exceptional levels of transparency and accountability, but we can’t be the only ones. It needs to be a level playing field in that regard, with all players abiding by the same principles.”
The major challenge facing any operator in the affiliates space is geography. Regulators typically derive their power from laws and laws are written and enforced locally. It’s why press embargoes in the UK carry very little weight in America. So any regulator seeking to get its arms around the affiliates sector has two choices; hope firms abide by regulations based on ways of doing business in other countries, or look for a global standard and enforce that.
At present, much of the burden of compliance falls on publishers and there has been a significant clean-up in certain areas, especially when it comes to disclosing paid-for content and commercial relationships. This has affected how social media influencers operate and it’s something Olabisi welcomes.
“Influencers and affiliates can now have a grown up conversation about how they work together. The rules are clear and the parameters of fair play are established. My strongest recommendation to any new entrant to the affiliates space is to start building your influencer database now. It’s going to be a big growth area for our industry.”