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Issues:

There is the potential for fraud in performance-based advertising.

The publication may report excessive performance results, although a reputable publication would be unlikely to take the risk of being exposed by audit.
A competitor may arrange for automatically generated clicks on an advertisement

Since the user's actions are being measured, there are serious concerns of loss of privacy.

Performance-based advertising mechanisms induce firms to distort the prices of their goods (usually upwards) relative to prices that would maximize profits in settings where advertising is sold under established pay-per-impression methods. Upward price distortions reduce both consumer surplus and the joint publisher-advertiser profit, leading to a net reduction in social welfare. Dellarocas (2010) discusses a number of ways in which performance-based advertising mechanisms can be enhanced to restore efficient pricing.

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Affiliate Markets Saturation

What It Is, How It Affects You and How to Avoid It? There is another word that can describe the nature of market saturation and thats consumer desensitization. Either term is bad news, especially if youre involved in affiliate marketing. These days, affiliate marketing is considerably one of the best ways to generate income online. But if you must contend with affiliate markets saturation, is still there point to joining this industry at all? More about Affiliate Markets Saturation

   

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