Minimizing Internet Marketing Risks
How well you understand internet marketing risk will directly impact your online success.
Despite rumors of all of the easy internet riches that await the entrepreneur, instant millionaires and
DOT-COM legends, there is also a genuine ugliness to the web. Unknown to newcomers, the internet
is not safe, and to the unprepared it can be outright dangerous. As an analogy, let us consider a
fictitious hero facing peril, escaping danger and winning the day in the end. It makes for an exciting
story, but in reality we should stick with the “safe and boring.”
People ARE out to get you on the internet. If you are not careful they can, and will, take your money
and run. Deceit can come from both small and big internet businesses alike.
Minimizing Internet Marketing Risk - Quick Tips
-Minimize campaign duration
-Minimize campaign size
-Understand the fine details in your contract
-The contract should account for "bad leads" or invalid sales
-Engage in performance-based agreements whenever possible
-Share resources with a sister/partner company
-Develop a rigorous sale/lead validation process and anti-fraud mechanisms
-Integrate detailed campaign tracking software
The first part of setting up many marketing campaigns is to sign a marketing agreement or contract.
You will be legally bound to the terms and conditions of the agreement. If you are not careful, you
may be legally bound to a disaster. Most importantly, do not risk more than you can afford to lose.
“During the early days of SharpNET, a Pay-Per-Click marketing contract was created with the search engine
LookSmart. The contract reserved key-word based search engine traffic to the websites I was interested in
marketing. Everything was laid out in black and white - or so I though. Unfortunately through purposeful
trickery on the part of LookSmart, and my hastily signed agreement, LookSmart socked SharpNET for
thousands of dollars of unplanned expenses. Buried within the contract, LookSmart claimed that it could
over-deliver double the amount of web traffic indicated. One simple line stated (Campaign $15,000 -
double). When my campaign came due at the end of the month, the bill was for $30,000. The salesman did
not inform me that the campaign would be doubled, there was no definition or explanation of what (-double)
meant, and I did not look closely enough at the contract to notice or ask what it was there for. I of course
refused to pay “double” and LookSmart immediately threatened with legal action. It was a mess.”
You must read carefully and scrutinize every word in your contract. If you don’t understand everything
clearly, then have it cleared up before signing. Below are other fundamentals in minimizing the
internet marketing risks embedded within a contract.
Minimizing Contract Obligation Risks:
Minimize Contract Duration - Approach every contract and agreement as if something could go
wrong. Limit your risk and have a way out if things turn ugly. One critical step is to minimize
the length of every contract. Most companies want you to sign a long-term agreement lasting
1-2 years. Don’t fall for it. Negotiate the shortest length of contract possible by asking for
reduced obligation, such as 3 months or 6 months. If the campaign goes well, your vendor will
be more than happy to renew, but if it does not you will need a quick way out.
Performance Based Services – One miracle of the internet is the allowance of “Performance-
Based” marketing campaigns, where you only pay the advertiser when a sale or request is
generated for you. Hence, you don’t pay unless you receive a business acquisition. Many
internet marketing companies allow performance based marketing campaigns, so seek these
companies out first. Purchasing internet media, such as impressions, emails distributed,
sponsorships, etc., are all a gamble and the odds are against you. There are exceptions of
course, but wherever possible, implement campaigns where you pay only after you get what
Minimize Campaign Size – Every salesman will want a giant obligation from you. Don’t be
oversold, you must understand that there is a good chance that any campaign can fail and you
will need to minimize your financial risks and obligations. Approach every campaign as a
“minimum sized test” and if all goes well then you can expand the campaign the next go-
“Before finding SharpNET, a client created an internet marketing agreement for sales lead
generation that demanded a $25,000 pre-payment. Payment was made but sales leads came in at
only a trickle. Six months after the launch of the campaign, the client had consumed only $3,000 of
their pre-paid budget. It can be assumed that eventually the entire $25,000 budget will be
consumed, but it may take years. Unfortunately, the quality of the leads generated was also very
poor, resulting in an internet marketing nightmare.” Avoid large upfront payments "at all costs",
especially with new and untested internet marketing channels.
Sharing Marketing Resources – Not every company can or is willing to make the pre-payments
necessary to launch a large marketing campaign. You may also find yourself in a situation
where more leads or sales are coming in than you can handle. These issues can be resolved by
finding a buddy. There are other companies out there just like you, doing the same thing and
operating with a similar budget. Consider joining resources with another company or friend
and launch a campaign cooperatively. Pool your resources and spread the costs and internet
marketing risks. By working cooperatively, you can engage in internet marketing resources
that would otherwise be unreachable.
Fraud Identification and Prevention Tips:
Fraud happens, and it is common. Fraud can range from a tiny and almost unnoticeable incident on
through to a glaring unmistakable disaster. Fraud is prevalent when dealing with performance based
campaigns, but it can happen with other internet marketing techniques as well. Learning to identify
fraud before it becomes serious is instrumental for minimizing internet marketing risk. Fraud generally
affects the sales lead industry more than the retail industry, but both are susceptible. Your first line of
defense is through your website, where fraudulent activities can often be detected. For example, a
performance-based sales lead generation campaign may receive a lead with a Texas phone number, a
Colorado zip code and a reported State of residence as Georgia. Your website must be smart enough
to detect these inaccuracies.
(1) Does the information provided make geographical sense? Can someone with a Texas
phone number live in Georgia? Is someone opening up a phonebook and generating a fake
sales lead that you have to pay for? Reduce your internet marketing risk by focusing on an
elaborate lead validation script within your website.
(2) Every person who navigates the web is doing so with a unique and identifiable IP address.
If you receive multiple sales leads, each lead should come with its own IP address. If you are
receiving many leads from the same IP address, then there is fraud. Your website designer
should be able to track the IP address of every individual who is generating a lead on your
website. If they can’t, then get a new designer or find help if you are designing your own
(3) For retail sales, does the name of the credit card match the name of the person who is
making the purchase? Allow zero tolerance when credit card information does not match
contact information. Make a follow-up phone call for international orders, as international
internet business is plagued with fraud and is a large source for internet marketing risk.
(4) Spot-check your leads and retail sales sources. Periodically call the person who generated
the acquisition. Make any excuse you can, such as a “customer satisfaction survey.”
(5) If a lead or retail sale fails your validation process, DO NOT tell the individual why. Telling
a fraud why validation failed is the same as providing them instructions on how to cheat you
next time. If you are uncertain if data is fraudulent, then give them a call and verify
information manually. An example would be when you receive that sales lead with a Texas
phone number and they state they live in Georgia. Your website should NOT say “sorry, but
the State and phone number reported do not match.” A fraud will just click the “back” button,
correct the mistake, and try again. Rather, just accept the lead and pretend everything went
okay, but do not give sales credit for the lead that was generated. Record the IP address of
the fraudulent lead, and block that IP from being able to generate a lead ever again. The fraud
will not be aware they have been caught or gain information on how to foil you next time.
Importance of Campaign Tracking and Traffic Analytics
Accurate campaign tracking plays a direct and relevant role with respect to minimizing internet
marketing risk. Web tracking is your key in determining which advertising campaigns work and which
do not. Be sure to implement web tracking in a manner that each advertising source can be
individually monitored so that the poor performing campaigns can be canceled. Web tracking can be
implemented for free with useful but limited resources, or in great detail through paid tracking
accounts. Free web tracking services are generally sufficient for a new website generating low volumes
of sales, and can be later upgraded to a paid account as is warranted.
Don't Let Your Guard Down
Marketing across the internet can be volatile. What is working and generating sales today may be
broken tomorrow. It is common for an effective marketing source to become non-productive despite
its prior success. It is so common in fact, that the chance of you losing a viable marketing resource is
probable, or even eminent. SEO may inexplicably fail and all associated sales cease virtually
overnight. Your offer may become “old” and oversaturated across Affiliate Networks or your audience.
A competitor may wedge you out, or dilute the market with their advertising. Vendors who were once
effective may start sending you junk, or sales lead sources may decline leaving your phones too quiet
for comfort. A myriad of unexpected marketing failures can and will happen, and you must be
prepared to compensate. Whenever you become highly dependent on only one marketing channel,
you are increasing your internet marketing risk. To combat this crisis, be sure to have a backup plan.
Qualify multiple vendors or traffic sources and be ready to make the switch on short notice. If you
don’t have a backup plan, you may panic due to your sudden loss in business and make hasty and
inappropriate decisions that only worsen your situation and expose you to increased internet
Keep on the defense with regard to internet marketing risk, and don’t be naïve towards hostile
intentions against you. Knowledge and preparation will significantly minimize your risks. With a good
defense and knowledge of what is out there, you can shrug off lurking internet dangers or avoid them
altogether. What remains is the marketing miracle of the internet.
Chris W. Sharp