Jeff Molander recently let loose on what’s getting in the way of innovation in the performance marketing (affiliate) industry. Jeff’s an outspoken guy with a keen eye on challenges our industry faces. I’m glad to report his agreeing to occasionally offer AMWSO readers insights on how affiliates can survive the storm – thrive in an increasingly hostile environment. I asked him to comment on what affiliates should be doing to add value to their site visitors in a way that drives financial results for both themselves and the advertisers they represent. The following was his response…
Affiliate Call to Arms: Add Value Now or Die!
There’s never been a time where advertisers have demanded more of cost-per-action (CPA) affiliates – period. Today’s affiliates are asked to walk on water among other things. So what’s a responsible business owner to do? “Adding value” to merchant relationships sounds good but what the heck does that really mean beyond the buzzword? I’ll give you a handful of value-add strategies to consider and implement in short time. Ready?
Say Buh-Bye to Pimpin’ Traffic
First, let me empathize a bit with you veterans out there and for newbies listen up! In 2006 I was falsely accused of saying in front of an ad:tech crowd, (it was actually Declan Dunn’s catch phrase!), “it’s tough out here for a traffic pimp.” What prompted Declan to make such a funny yet truthful statement that ad:tech itself chose to play dumb on? A pre-session discussion among panelists who’s heads were all spinning from major changed handed down to the affiliate marketing industry. At the time, both eBay and Google were dishing out all kinds of new rules – issues that affiliates of all sizes and flavors were forced to confront. Decisions were being made by Powers Almighty and their fate seemed out of their control.
Yet things ARE in your control if you choose to place yourself in the driver’s seat. The choice is yours as a CPA affiliate or any small business owner on the Web: You must “live life” rather than “let life live you.” The choice is yours. Which will you choose? If you’ve read this far you’re at least interested in the latter choice – viva la affiliate!
My driving point here is this: advertisers don’t need your “traffic.” From lead buyers to retail marketers they’ve evolved beyond “traffic.” They’re busy managing the intersection of search and affiliate programs. They’re interested in:
- Diversifying their mix of distribution points across the Web (NOTE: they’re already doing their own search marketing and rely less on yours!)
- More incremental sales, higher quality leads and/or new customers
Innovate or Die
There are tremendous obstacles impeding your march toward increased revenue and innovation. The affiliate marketing industry is going through serious growing pains and don’t let anyone tell you that it’s not. And no… “Web 2.0” is not exploding opportunities for affiliates. Yes there are rare exceptions (i.e. best practice using video and affiliates) and if you keep on reading this blog you’ll notice that AMWSO is leading the way J
“Affiliate marketing has evolved and it’s difficult for newcomers to jump in without any capital and start making money,” says Chris Finken, of OrangeSoda.com. “Blogs remain a popular tool for affiliate marketing ‘on the cheap,’ but successful affiliates are still making great money without experimenting with video and mobile.”
The point: none of this is easy anymore. It’s time to get honestly innovative but even that is tough. The future of affiliate marketing is being retarded by incumbents. Yet Mr. Finken and I both remain hopeful… but only when focused on making the best choices.
Ok, Molander, so what are the choices?! In short form, they are derived from what advertisers want most. Let’s tackle a few.
Better Distribution (Increased Subscribers for You!)
Ok, ok so a few affiliate networks are actually innovating here including Linkshare with its FlexLinks. AvantLink is taking an open source approach to innovation, opening up its system to affiliates for further development, rather than simply offering them a boxed solution. AvantLink makes a bevy of RSS-enabled tools available to affiliates and advertisers. What does that mean?
“We’re offering merchants the ability to maintain ‘on sale’ and ‘deal of the day’RSS campaigns for affiliates to publish on their sites,” says AvantLink’s Gary Marcoccia. “And to take it one step further the affiliates can promote ‘subscriptions’ to the same RSS feeds.”
“The key in generating feed subscribers from their site (in addition to, of course, sales), is affiliate IDs being embedded in links from the deal feeds… for as long as they are in use,” adds Marcoccia.
Impressive! Affiliate link syndication by way of customer subscription. Bada-bing (merchant value), bada-boom (value to your business). Now I’ll be straight with you this is a strategy with plenty of tactics. Paging RSS for marketers Guru, Rok Hrastnik… please pick up a blue courtesy phone (or better yet, fair reader, check out Rok’s ‘Unleash the Power of RSS’ book and encourage him to finish up his new book). RSS is frighteningly open-ended and innovation intense. The challenge is how to make it rapidly used by consumers! Then again, my mom, dad and I’ll bet your grandparents are using RSS today without knowing it. We all are!
Revtrax, formerly Oncard Marketing, is all about taking affiliate marketing to stores. That’s right, dirt world stores. They’re literally providing a means for advertisers to partner up with affiliates who have distribution outside of the Web– like stores or direct mail (think ad-stuffers that ride along with utility, credit card and other bills). Might you be able to tap into such distribution based on people you know at the local Rotary Club or business card exchange? I’ll bet you might! Talk about the Holy Grail of advertiser value!
Think also about successful CPA affiliate sites like Buzzilions.com – one of the first in our business to convince advertisers that wrapping customer-generated content (product reviews) around their products (distributed to them via affiliate networks and direct merchant relationships) was valuable. Was it new distribution for advertisers? You betcha it was.
Flexible, Performance-based Cost Models
Revtrax and other successful affiliate businesses – including those that remain family-run/owned like FatWallet.com or SheFinds.com – have one thing in common. That is, they’re diversifying themselves and, in fact, transforming from affiliate to publisher and finally to media company. This involves offering advertisers more than just commission-based placements. Look also to small business successes like Jellyfish.com who blend various performance payment models and customer-facing value. Don’t forget, the major comparison shopping engines all started as CPA only and migrated to CPC with some blending CPA+CPC today. Use your historical data with advertisers to your advantage. Negotiate other types of pricing based on effective CPA.
Of course, earning those CPM/fixed fee placement and/or cost-per-click (CPC) dollars isn’t easy. Doing so requires a high degree of professionalism and unique insight as to the demographic composition of your site visitors. It also requires a sales staff that can speak the language of other departments within marketers’ office… or interact with their external advertising agency. It often requires thinking and acting outside your comfort zone. Doing so is difficult but once you’ve overcome the fear, packaged yourself up and closed a few deals the fear goes away.
Denial is Not Just a River in Africa
Ever notice how things can smell like a skunk in affiliate marketing… but many pretend that everything is fine and rosy? Next think ya know, whammo. Affiliates get dished a raw deal… but ultimately they’re forced to swallow a bitter pill. Maybe an affiliate network stabs an affiliate in the back. Or maybe an affiliate turns around and bites the hand that’s fed it since childbirth. Other times affiliates themselves win the battle…but make no mistake, there IS a battle being waged. Let’s quit denying it and address the real issues. I’m not confident that affiliate networks are able to or actively addressing it on your behalf. Aaah, for the glory days of Commission Junction when it catered to affiliates first, advertisers second!
It’s sad but true: there are people who prefer to avoid talking about the fact that advertisers are asking for more. Are you one of them? I recommend getting off that train and now!
Although these battles create difficulty for affiliates they serve a purpose – to force change and create new opportunities. Will you be there “left holding an empty bag” or will you keep an “ear to the track” and listen to that train coming down the track before it pulls into the station? The choice is yours and in the end you need to take action that creates true value for your visitors first, advertisers second and, as a result, your business.
Jeff Molander is CEO of performance marketing consulting company, Molander & Associates Inc. where he provides executive-level guidance on digital marketing and media to multi-channel retailers, entrepreneurs and investment firms. He’s also a principal with The Partner Maker LLC, a new affiliate management system designed to drive increased revenue between affiliates and marketers. His background includes helping found digital marketing services company, Performics Inc.; today a division of Google. He can be reached at jeff*at*jeffmolander.com