Linkshare acquisition by Rakuten-- sign of rising times?
If ever there was any proof needed for the growing value of performance-based marketing in general and affiliate marketing in particular, the last few weeks have certainly presented it. Quite emphatically at that!
JP Morgan's recent assessment of ValueClick's prospects is one such example (more on that in a separate post). Linkshare's acquisition by Japanese portal Rakuten for $425 million in cash is probably the most emphatic statement as yet. To understand how drastically the valuations of companies in the affiliate marketing arena have changed in the recent past, just consider the fact that Linkshare is being paid more than 7 times the amount that ValueClick paid for Commission Junction (and that too as a combination of stock and cash!). Take a look at this post by Beth Kirsch for some interesting comparisons.
One of the questions that came to mind was what did a Japanese Internet company have to do with the acquisition of Linkshare, and what could it mean for affiliates?
I believe Linkshare's portfolio of merchants that includes some top retailers must have been of some considerable interest to Rakuten, which itself operates online shopping sites as well properties on travel, golf reservations etc. Secondly, Linkshare's recent enhancements & roll-outs of two new technologies -- Athena, a verification and validation system that helps merchants verify affiliate's contact information; and SynergyAnalytics Version 2.0 for sales reporting--- could have definitely played its part as well. I would also not discount -- though I must admit it is pure conjecture-- the Japanese connection in the Linkshare investor panel (Mitsui is an investor in Linkshare) in forging this deal.
From an affiliates' perspective, the recent technology enhancements and their performance in the second quarter when they added about 32 well-known merchants into their portfolio should certainly augur well. Moreover, I expect the geogrpahical expansion of the network with the acquistion by Rakuten to give affiliates more revenue-generating opportunities. True, affiliates have had several problems in the past with Linkshare --- their lack of responsiveness has been written about in a few fora previously. But probably that's where the Japanese influence could make some significant impact--- hopefully with all those principles of total quality management and total customer satisfaction in action !
A thought in passing --- Asia has generally lagged behind the West in most (if not all) aspects of online marketing. While online shopping is growing, it still hasn't reached anywhere near what it is in the US & Europe. Could this acquisition be the beginning of a more aggressive expansion of affiliate marketing in other markets in Asia? Is that part of Rakuten's strategy -- leveraging Linkshare's technology and expertise in this sphere to propagate this form of marketing in some of the key growth markets in the region?
The next few months should have the answers...
Until next time.
Ben Flux
