The past few weeks have found the internet’s hottest new social media site, Pinterest, embroiled in a controversy regarding affiliate marketing and proper affiliate disclosure.  Although Pinterest responded yesterday to the controversy and changed their disclosure policy, we still wanted to give our clients and followers our take on the story and point them towards resources to learn more.

Pinterest, instantly popular with mommy-bloggers and wedding planners, allows users to “pin” content, in the form of images from other websites, onto a virtual “pinboard” or inspiration board.  People “repin” or “like” images, causing them to appear on their boards.  It essentially takes the concept of cutting pictures out of magazines and tacking them onto a bulletin board into the virtual realm.  The interface, which places these images side-by-side, replicates this sort of creative process.  When a user clicks on an image, they can follow a link to the original image location–often a retail site.

A few weeks ago, it became evident that Pinterest was changing links to retail sites into affiliate links using Skimlinks.  They did not appear to be hijacking other affiliate’s links, but seemed to be monetizing links posted by non-affiliate marketer users through a system that automatically converts URLs into affiliate links.  Compete posted a blog post showing how this traffic relationship worked.  For its part, Skimlinks encourages disclosure and even provides an FAQ on the best way to do so.

The general sentiment among affiliate marketers seemed to be a lack of concern–probably because Pinterest was not actively hijacking links.  What concerned others, however, including us here at BrandVerity, was that Pinterest didn’t disclose that it was modifying and monetizing user submitted links.  Some good posts on the subject can be found Josh Davis’s LL Social and Rex Hammock’s blog.

The idea that a site can modify users’ links in a monetization scheme, without ever revealing that they are doing so, seems to open some concerning doors: what would happen if Facebook,  Twitter turned every link posted to Amazon into an affiliate link (or in a more extreme case imagine that Google turned all links to retailers into affiliate links)?  It feels to us that it treats  users poorly and can lead to a range of conflicts of interest.

Happily, Pinterest realized their mistake and made a number of changes. Iin an interview with Davis today, Pinterest claimed that their prior partnership with Skimlinks was to track how people were using and purchasing items off of Pinterest, not to monetize the site.  Either way, they have also now posted a disclaimer on their website in the FAQ section entitled “How does Pinterest Make Money?”.  Pinterest has also ceased working with Skimlinks.

We’re glad that they seem to be taking the issue of disclosure seriously and hope that they continue to do so as they expand.  In retrospect, Pinterest’s failure to disclose the relationship likely also brought about a premature end to the relationship. We certainly sympathize with the need for a start-up to find a way to turn a profit, and believe that affiliate marketing is an exciting avenue to pursue, but we hope that Pinterest and others remember that when it comes to keeping merchants, consumers, and the bottom-line happy, full disclosure is always the way to go.