Affiliate marketing tension—PayPal Honey exposé shows how creators approach the income stream

Creators and performance marketers are split on the value of affiliate marketing. While brands find it to be a low-stakes way to test a creator’s sales conversion capabilities, social media stars often denounce the practice as an unfair and unreliable source of income. The conflict is getting new attention in the wake of a legal battle involving PayPal Honey, a browser extension that promises to find consumers the best discount codes on the internet as they check out with online merchants. In a typical creator affiliate marketing deal, a creator posts about a product and gets a commission if someone clicks through from their post and makes a purchase. In December, YouTuber MegaLag released a 23-minute exposé detailing how Honey’s extensive affiliate program allegedly pocketed commissions from unknowing creators, including some of its affiliate partners MrBeast, Marques Brownlee and Linus Tech Tips. The video alleged that Honey would replace affiliate codes in URLs with its own once a consumer tasked it with finding discount codes on a checkout webpage—effectively removing evidence that a creator’s referral led to a sale while redirecting the commission to Honey. Soon after MegaLag’s video was released, other creators made videos calling Honey a scam and encouraging viewers to uninstall the software. In his video, tech reviewer Marques Brownlee stated that creators must be “even more skeptical about the products and companies that we actually put in front of our audiences, especially if they’re going to be sponsors.” Check out the latest Ad Age events and award programs Beginning in early January, creators filed multiple class-action lawsuits against Honey. “We filed a class action lawsuit seeking damages in the form of the money that we believe Honey prevented from reaching creators so we can give it back to creators and, equally important, we’re suing for an injunction to stop Honey’s practices in the future,” YouTuber and lawyer Devin Stone, AKA LegalEagle, said in a video announcing one of the lawsuits. The litigation seeks restitution for damages claimed to exceed $5 million. Honey vowed to fight the suits. “We dispute the allegations in the lawsuits, and will defend against them vigorously,” a Honey spokesperson said. “Honey follows industry rules and practices, including last-click attribution, which is widely used across major brands." Last-click attribution credits conversions to the last touchpoint a customer interacts with before making a purchase. It’s one of many attribution models and has specific policies depending on the publisher creating the affiliate link. For example, cashback browser extensions such as Honey and Wildfire often observe stand-down policies instructing the browser extension to act in good faith by not taking credit away from original referrers through pop-ups and dialogue boxes encouraging shoppers to activate cashback. Also read: Ad metrics that matter most in 2025 Billions of views Honey partners with affiliate networks run by companies such as Rakuten and Shopify to get discount codes to provide users. It derives its revenue from affiliate commissions–a minimum of 3% on sales made on partner’s websites and a minimum of 5% for enabling Honey Gold (cashback in gift card form) on purchases. The legal controversies have spilled out to other financial institutions offering discount codes and coupons. Last week, creators filed a lawsuit against Capital One alleging that its Shopping browser extension, which operates on last-click attribution, stole affiliate commissions in a similar fashion to Honey. “We disagree with the premise of the complaints and look forward to defending ourselves in court," a Capital One spokesperson said. MegaLag’s video revealed that Honey partnered with hundreds of creators on YouTube videos that were collectively viewed billions of times. The brand’s tools were reportedly used by about 20 million monthly active users before losing 3 million users in December. Jamie Gutfreund, founder of Creator Vision, a consultancy that provides brands with creator marketing expertise, advised creators to familiarize themselves with the ins and outs of the affiliate programs for which they sign up. “It was a massive wake-up call to vet anybody that you’re working with,” she said. Gutfreund said another issue with affiliate programs is when brands put roadblocks in place after a consumer has clicked on a referral link, which deprives creators of their commissions through no fault of their own. In June, Creator Vision released data from a Harris Poll study showing that 81% of creators said brands lost sales because of poor coordination between their content and the checkout experience. For example, a referral link may take a consumer to a webpage where a brand generates a quiz to collect first-party data, which may initially dissuade consumers from following through on their intended purchase but allows a brand to retarget them later on. Without knowledge of that quiz’s existence, a creator would be unaware of the obstacles keeping them from a paycheck. Gutfreund recommends creators go through the payment journey as consumers to identify possible roadblocks. However, affiliate attribution problems can often be nearly invisible to creators, especially if they stem from tech issues. Problems can arise with last-click attribution models. “Last-click attribution can get really finicky where maybe the brand doesn’t set something up correctly or you have the end of a URL not loading in the right way,” said Mae Karwowski, founder and CEO of Obviously, which creates creator networks for brands. “There’s a lot of breakage that can happen.” Ad Age Tech Power List 2025 We’re looking for top digital innovators from agencies, brands, platforms, ad tech companies and tech startups Enter here Other experts say creators can continuously monitor their affiliate deals to find discrepancies between how many people are clicking on an affiliate link and the commissions they’re receiving from completed conversions. However, some argue that that level of effort is beyond a creator’s responsibilities. “I don’t expect creators to be tracking every single potential way that their affiliate codes could be utilized across the web,” said Natalie Silverstein, chief innovation officer at Collectively, which measures and manages creator marketing programs for brands. “This raises questions for creators about what’s fair and where their work is being compensated versus where it’s not. Bigger picture, that could have an impact on where and how creators are choosing to monetize their work.” Other income streams Creators such as Gigi Robinson have nearly sworn off affiliate marketing entirely. Robinson, who has been a full-time creator for over four years, said she’s currently paid for about 95% of her work with brands through flat fees. And while she participates in affiliate programs such as the Amazon Influencer Program and has agreed to tack affiliate links onto fixed rate partnerships with several brands, she doesn’t dedicate much of her time or social content to promoting those links to her followers, she said. “Yes, there’s potential for creators to make money with affiliate [partnerships], but I don’t think it’s appropriate to compensate creators exclusively on an affiliate basis,” Robinson said. “Because most of the time, creators are not able to push enough sales to even make it a livable or worthwhile paycheck … For me, it’s not a lucrative enough source of income to even pour my energy into when I could go and get a brand sponsor to spend between three and 15 grand on [my] content.” Robinson isn’t alone in her aversion to affiliate partnerships with brands. A recent report from influencer marketing and talent management firm The Digital Dept. found that just 37% of creators are willing to enter an affiliate program partnership with a brand, whereas the vast majority (97%) of creators will readily accept a flat fee paid partnership. The report also found that roughly 58% of creators earn at least some of their income from affiliate links—but those creators are largely referring to their use of affiliate platforms such as LTK and ShopMy to “supplement their content creation business with an additional revenue stream,” rather than affiliate-based brand partnerships, Ali Grant, co-CEO and chief marketing officer of The Digital Dept., said in an email. View this post on Instagram A post shared by The Digital Dept. (@thedigitaldpt) Robinson agrees creators should bear some responsibility for vetting affiliate programs before joining them, but added that the agreements creators must sign before participating in affiliate programs occasionally contain hidden clauses (such as perpetual usage of the creator’s content) that can be challenging for creators to identify unless they carefully read the fine print. And often, if creators do pick up on those exploitative terms and ask the brand running the affiliate program to adjust the terms of the contract, “they just tell you not to join the program,” she said. Some experts expect that the Honey lawsuit will reduce creators’ already low desire for affiliate-only deals and may push performance marketers to clean those programs up, should talent collectively push for it. Brands typically manage creator partnerships through their marketing or communications teams, not through e-commerce, Gutfreund said. She added that some brands have dedicated teams just for affiliate marketing. These siloes can lead to issues where brands build and don’t communicate about roadblocks that ultimately prevent creators from receiving commissions, she said. “The plumbing isn’t connected,” Gutfreund said. “Creators do all this work and it looks like they’re delivering, but they’re not and it’s not their fault.” Check out the latest Ad Age events and award programs Other experts believe that while creators now have to take on the burden of vetting affiliate programs, they likely don’t have the leverage to change a brand’s internal structure. “So many of these things result in more work for the creators in order to discern what’s right for them and what’s going to work well for their business,” Silverstein said. “It’s kind of a take it or leave it power balance.” More news: TikTok alternatives compete for brands and creators The future of affiliate and hybrid models Despite creators’ opposition to affiliate-based payment models when working with brands, marketers aren’t likely to abandon that approach to creator partnerships any time soon. Not only are affiliate programs less risky and more cost-effective for marketers—as creators are only paid in these partnerships based on the number of sales they drive, rather than a fixed rate—they also increasingly serve as a way for marketers to measure the return on investment of their work with creators, said Annabelle Shea, senior director of enterprise client success at Later, an influencer marketing and social media management platform. “When influencer marketing first started to be something that brands were invested in, there wasn’t a clear-cut way to track ROI or track those lower-funnel metrics,” she said. “Affiliate is one of those ways that brands can concretely see the effect that creators are having on their ROI and sales, so brands are really leaning into that.” Indeed, Later acquired affiliate platform Mavely earlier this month after repeatedly hearing from marketers that their biggest challenges when working with creators were measuring the performance of the creators’ content and proving the ROI on their influencer spend, said Scott Sutton, CEO of Later. “There’s kind of this shift happening where CMOs historically were more okay with the top-of-funnel metrics—so, engagements, likes, impressions, reach, stuff like that—and what’s happening now is CMOs are getting more pressure from their boards, from their investors, from their CEOs, who are saying, ‘Hey, where are my dollars going, and what’s the return on that ad spend?’” said Evan Wray, CEO and co-founder of Mavely. Media measurement blog Tracking TV, social and digital updates Click here With tighter marketing budgets pushing CMOs to put a greater emphasis on ensuring their influencer marketing efforts drive ROI rather than just brand awareness, the metrics offered by affiliate programs—such as conversion rates, clicks and average order value, among other measures of influencers’ performance—have made the affiliate model increasingly appealing to marketers. Also read: CMO hiring is on the rise—behind the trend But “not all creators will agree to a partnership without an upfront fee for content creation, so brands may still need to offer an upfront fee in order to secure creators,” Grant said. A survey of nearly 200 creators conducted by Later last June revealed that 41% of creators refuse to work with brands on a campaign where they would earn commissions only on sales. As one surveyed creator put it, “You can’t pay for advertisements on television with commission. Why would this pay structure make sense for a content creator?” However, over half (54%) of creators said they would be “very willing” to partner with a brand offering to pay a set amount upfront and providing additional compensation in the form of commissions they earn through an affiliate program. That hybrid model has grown increasingly popular among influencer marketers over the past two years. “The problem really lies where brands are like, ‘We’re only going to work with you if you convert,’” Robinson said. “I don’t think it’s fair, to be honest, for people in the influencer marketing space to project that onto creators. And unfortunately, I’ve been seeing this happen a lot more.”

Affiliate marketing tension—PayPal Honey exposé shows how creators approach the income stream

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