Spam As a Marketing Tool - Part One: Who Would Fall for That?

An article on Silicon.com brought to light a disturbing phenomenon of which online gaming providers need to be careful. Casino-related spam advertisements are popping up on message boards all over the Internet, and they are most likely coming from members of the casinos' affiliate programs.

The 2003 passage of the U.S. CAN-SPAM Act set up guidelines for e-mail spam and penalties for violations of the rules. For example, the act requires that commercial e-mail be clearly and conspicuously identified as an advertisement and include the sender's valid physical postal address.

However, the policy does not necessarily apply to message boards.

Larry Walters, a First Amendment lawyer who specializes in online entertainment industries, feels the CAN-SPAM Act is the very reason affiliates are targeting message boards.

"Essentially they've made spamming an unprofitable business in its previous incarnation, where you just simply send an e-mail to a list of e-mail addresses," Walters explained. "So the affiliates are trying to find other ways to get their message across, and one of these ways is by these chat rooms, or message boards, which are essentially disguised advertisements promoting a specific casino, in this case, and providing links and so forth. Some of it is cleverly disguised spam.

"In the affiliate marketing industry, you have third-party affiliates that are highly motivated to use whatever tactics they can to try to promote whatever Web site they're promoting, particularly in light of the recent increased rewards and profitability of the affiliate marketing business. They're opening up close to 50 percent of the profits and signups to these affiliates. So there's some tremendous incentive for them to do whatever they can to get in front of the relevant target market."

Who Falls for It?

"The question with all spam is, 'Why is anybody doing this? Who's falls for this stuff?'" Walters said. "Given the inexpensive nature of spam electronic messages, you don't need a huge return on the investment. If you send out a million bulk emails and 0.004 percent responds, then it's absolutely worthwhile to send out e-mail. Similarly with these message posts, this is all automated and bots are posting this stuff. It's very inexpensive and if even a small percentage of the people who are on these message boards respond, then it's absolutely worth their while and time and effort in putting together the technology to get these messages out."

There will always be a target audience for this type of marketing. The Internet is not exactly shrinking, and new users are introduced everyday. And while a large percentage of people probably know better and recognize spam for what it is, new users may not be so in tune with the ways of spam.

"They (new users) see this attractive message and they say, 'Oh, I should check this out.' And they may not recognize it as a spam because it's not going to their inbox," Walters said.

So, who bears the responsibility of monitoring these insipid messages? Casinos cannot possibly produce enough manpower to police the activities of their affiliates. The time and effort it would take to monitor their affiliates would be unreasonable and costly. The affiliate marketing system and business model would break down if that was the obligation that's imposed, Walters said.

"That may seem unfair to the consumer," he added, "but the bottom line is that there is so much communication by so many affiliates throughout the world that it would be like imposing the responsibility on the credit card companies to micromanage every transaction that flows through their system."

If a casino receives complaints or has knowledge of an affiliate carrying on this type of activity, however, then it is bound, in the very least, to protect its business and its name by preventing it from happening.

This is why affiliates have to sign and comply with very strict regulations under affiliate programs. And repeated violations will most likely result in a termination of the relationship.

"The last thing that any of these casinos would want would be to be associated with some sort of hackers or terrorists or child pornography, or some of the more unsavory forms of communication on the Internet," Walters said. "But sometimes that happens, and they have to be very careful about how there business name is being used and what kind of activities their affiliates are undertaking."

IGN will be investigating this issue and the casinos and their affiliates called into question in the Silicon.com article. Look for Part 2 of this series later this week.