| Affiliate Marketing Views |
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Welcome to the exciting world of affiliate marketing! Or, win-win marketing, because when done well, everybody --- the marketer, the affiliate and the affiliate network---wins. I'll discuss current happenings and my own insights into the implications and provide a forum for constructive discussion in the win-win spirit of affiliate marketing. Hopefully, we’ll create a platform for insightful, prophetic and even contentious thinking, while ensuring it is interesting, informative and valuable. |
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Google & affiliate marketing ?
This thread, about a suspicion that Google is doing affiliate marketing, certainly sent alarm bells ringing in many an affiliates' mind. If it is indeed true, does it sound the death knell for affiliate marketing as we know it? Are affiliates like us, without the financial muscle of a Google or a Yahoo, condemned to be an extinct species?
It feels a bit awkward to see these grim scenarios emerging just within weeks of seeing glimpses of some very rosy pictures. Undoubtedly there are threats to the affiliate marketing model (what doesn't face threats?), and it would be foolhardy not to recognize those and prepare accordingly with alternative approaches.
Obviously, the ramifications of Google acting like an affiliate can be severe on other affiliates--- especially those that are reliant on search engine traffic (read that as Google traffic; and at this point, I think all of us are to a very high degree).
However, it is as much of a challenge to the affiliate networks as it is to the affiliates. Because, if Google really wanted to get into generating revenue on a cost per acquisition model (like the affiliate networks do) merchants may not need the networks at all (considering Google's reach). Google could even opt for a bidding model amongst merchants to set up a minimum cost per acquisition that a merchant is willing to pay (a combination of a PPC auction and pay-for-performance model). They can then use their publisher network to distribute their own "affiliate ads"..... We could go on and speculate about the immense possibilities, but that is beside the point.
The point is that, the challenges and threats for affiliates and networks are interlinked; what could affect one will directly or indirectly affect the other. So, we'll have to work much more closely to overcome these together. Both in terms of strategies and execution. If we do, we'll be able to shape this marketing channel to continue to maintain its relevance and value, and reap the benefits of its enormous potential. If we don't -- and I hate to say this-- we'll be redundant.
I believe we all want to opt for the former option?
Until next time,
Ben Flux
Value of affiliate marketing questioned..
This post on Revenews reports on a recent story in the latest issue of Target magazine. The story indicates the apparent dissatisfaction of a few merchants with affiliate marketing leading them to question the value of this channel.
I haven't read the story myself, so I don't know the intricate details of the issues involved. A merchant is certainly justified in questioning the value of any marketing channel and ensuring that they are getting a sound ROI.
However, as a provider of affiliate marketing solutions to numerous merchants, I can categorically say that it is indeed one of the most cost-effective channels for merchants/advertisers. Primarily because it is purely a pay-for-performance model -- barring the odd exception. Merchants incur direct costs only when they get results, and that is a difficult proposition to beat.
It is possible though that merchants are incurring higher indirect costs--say, for example, the cost of monitoring affiliate activity and managing affiliates (assuming they are doing their program independent of any network), the cost of protecting their trademarks (which they would incur irrespective of whether they have an affiliate program or not), and even the cost of competing with affiliates in search engine marketing.
It is probably time for merchants to take a hard-nosed look at how they approach the affiliate marketing channel. Do they rely on anybody and everybody to deliver them sales? Or do they look at a select few affiliates? What are the clearly drawn out terms? Should they rely on a small group of trusted partners to protect their brands? Should they be directly competing with affiliates in search engine marketing?
Many more issues and question marks are bound to pop up, because this marketing channel is still evolving. But in terms of value being generated by affiliates for merchants, refer to my earlier post where I pointed to a recent e-Consultancy report.
Affiliates are expected to drive GBP1.35 billion in revenues to merchants this year, which will rake in about GBP83 million for affiliates. Work out the numbers. What channel can offer a better (lower) cost per sales dollar?
Until next time,
Ben Flux
Search engine strategy -- biggest threat factor to affiliates?
There's this interesting discussion going on about the sustenance of affiliates' revenue and the factors that could affect it.
Obviously a couple of technical issues figure in the list. However, what stands out is the search engine marketing factor. Almost 43% of the respondents in this poll consider search engine strategy and PPC restrictions as the biggest threat to affiliate revenue. Doesn't that give an insight into our reliance on search engine marketing to drive sales?
PPC is not getting any cheaper, and while it is probably still one of the most cost-effective marketing channels, the cost per conversions are only likely to go up as more and more advertisers compete for a clickthrough. Search engine optimization has its own recurring costs that are often underestimated. Yet, simply because of its wide reach, this channel will continue to be an extremely attractive option.
Trouble is, it is also the most likely option for the merchant themselves as part of their own marketing strategy. So, we are getting to a scenario where we could be competing with the merchant instead of complementing to generate the same sale. And you bet, it is a no-win situation for an affiliate, because the cost of acquiring that sale will be very high as a proportion of the revenue that will be generated.
What are the implications of this? I'm not too sure yet, though I believe it will definitely see the emergence of new and innovative strategies from some creative affiliates.
It may also be the beginning of a change in the affiliates' mode of operations itself. Until now, affiliates could get by just driving traffic to the merchant website, without owning the relationship with the customer.
Are we headed towards a model where affiliates own customer relationships? If yes, to what extent?
Until next time,
Ben Flux
The upcoming festive season-- time to don the thinking caps
After a week long hiatus, here I am...
It's the time of the year again that retailers love; as the festive season draws closer and shoppers loosen their purse strings to buy for themselves and their near and dear ones. Obviously, it is a great time for us affiliates and online marketers as well, as we help these shoppers find the products (or services) that they want to buy.
A word of caution though, it will be prudent to take a step back and plan the marketing strategy in advance, because while plenty of opportunities exist, selecting the best ones and optimizing marketing will dictate the relative success of each affiliate. I'd say it is 'think time' and 'decision time'.
There are lots of advertisers offering unlimited products and promotions during the peak online shopping season. Which of these products and offers should we be marketing? What should be the allocation of marketing resources for these products? It will be an interesting exercise, one that will challenge and test an affiliate's ability to maximize the revenue opportunity.
While aggressive and professional affiliate marketers like us already spend quite a bit of time and effort strategizing and executing our campaigns (unlike passive publishers/affiliates; and there's no dearth of that variety as well), we will have to use all our marketing (and market) intelligence, and the tools at our disposal. Can we determine what products users have begun to look for? What will they be most likely to gift this Christmas? Can we predict the purchase behaviour based on all the information available to us out there (some of which come at a price, of course!!)?
Just as shoppers will be out to choose, so will we have to choose from the myriad products available to promote. The ones that are able to unearth the gems and polish them (the promotional campaigns) will undoubtedly have a great holiday season!!
So, happy thinking and happy sales,
Ben Flux, Traffic Junction
The imminent shaketout
One event in the next few weeks will be of immense interest to online marketing industry watchers (and those who invest in shares of companies in this industry)-- ValueClick will announce its Q3 results on November 1.
The company has caught the attention of several analysts recently who seem to be increasingly leaning towards a "buy" recommendation for this company's shares. There have been some doubts raised in other quarters whether the company is overvalued. Probably not.
After completing the acquisition of FastClick last month, it projected a significant increase in its revenues for the year, expecting it to hit close to $300 million in 2005, an indication that the acquisition is fairly accretive. The company's track record of growth via its M&A strategy is quite impressive. ValueClick boasts a sound balance-sheet-- revenues have been growing quite rapidly, it has a profit margin of about 44% (!) and an operating margin of about 22%. No wonder, the company is bullish about its own prospects as are the analysts.
But looking at a wider canvas, the acquisition of FastClick as well as Linkshare's takeover by a Japanese company is symptomatic of impending changes with far greater significance. When this kind of consolidation & shake up happens, it is a sure sign that the industry is maturing and different players look for synergies to complement one another.
The implication for us affiliates is two-fold: on the positive side, we'll progressively have to deal with fewer networks, which would mean significantly lower operational and management overhead. On the negative side, mergers are seldom seamless--- there are bound to be numerous bumps along as the companies try to streamline their product and service offerings. Trust me, that's a painful period and is bound to cause quite some frustration. I guess we'll just have to learn to absorb the bumps, for we are facing the unexpected (one can never be sure what problems are likely to come up when two companies merge) and the inevitable...
Until next time,
Ben Flux
Whinge, by all means, but don't forget the gift horse
No, whinging is not really the theme of the week--far from it; I'm on vacation and in pretty good spirits (no pun there). But having written about it yesterday with an example of how an affiliate network (for that matter, any company) can leverage a public forum to be on the good side of its constituents, I felt I had to look at another aspect of the whinge story, prompted mainly by this series of posts here.
As affiliates and associates who spend the time and effort to drive business for the networks and their merchants (and of course, ourselves!), we do have a right to expect the best possible support from the networks in realizing those objectives, be it in terms of the technology, processes or marketing creative. Networks certainly cannot abdicate the responsibility of providing the right kind of back-end resources (no matter what the challenges), and if they do, affiliates have a right to feedback and like any consumer, make themselves heard. In other words, gripe or whinge...
I am all for the expression of angst that most of us instinctively do anyway-- yet, I have reservations about the extent to which we take it sometimes. The above outpouring against CJ is a case in point-- personally, I felt there was simply too much vitriol out there. There is no denying that CJ has goofed up with some of its updates--- but hey, it's a company that has helped a lot of us in finding our niche and make profitable businesses out of it. Can we afford to stop looking at that gift horse in its face already?
Have we tried talking to CJ directly? Maybe that is a better way to resolve the problems faced than the collective boycott as suggested (which I must state is an effective, yet often destructive, mechanism if one REALLY has to go down that path--- picking a winner is next to impossible)?
Drastic actions lead to drastic results, not all of it desirable. The question is whether the problems encountered so far warrant such drastic actions. After all, with most things in life, timing is indeed everything (well, almost...).
Well, in the part of the world that I am right now, it's almost 'sun down' time--- and I better stop whinging (or sermonizing as some would say?) ....
Until next time,
Ben Flux, Traffic Junction
The value of whinge corners
About a year ago, Buy.at started a whinge corner that most affiliates who check out the UK Affiliate Marketing Forum would know of. It was fairly active at least until the early part of this year but hasn't seen much activity out there off late. I am sure the buy.at folks are pleased ---- things must seem all too perfect, aren't they? By their own admission when the whinge corner was started, it was almost impossible to get everything absolutely perfect. Has the idea died? I hope not.
I thought it was a smart move by the company to start the whinge corner. For one, it consolidated the whinges in one place---makes life so much easier to keep track of all the negative vibes going on about the company, its products and service. Secondly, it was a proactive move from the company--- and it showed that it did care about feedback which it demonstrated by being fairly responsive to the various posts. That definitely touched a cord with the affiliates, I believe, just going by the tone of the posts. Undoubtedly there were complaints, but typically these were statements of fact and not laced with choice language that one finds sometimes on other forums when things get a bit out of hand.
Feedback was often constructive, sounding more like requests rather than a "matter of right" demands. There were ideas and suggestions for product development, and it almost seemed like the company was getting some free usability results. From an affiliates' perspective, it is reassuring to know that comments are listened to and feedback acted upon-- it instils a great sense of confidence in the network and enhances the network-affiliate relationship.
One challenge, of course, for any company attempting to try something like this--- and I hope there were more such sincere and interactive corners-- is to ensure that the company continues to be responsive to and honest about its perspective on the feedback being received. The old adage, "work must not only be done, but also seem to be done" is definitely true. It is easy to start an initiative only for it to peter out tamely; indifference can creep in rather easily. And if that happens, the organization faces the risk of being branded insincere and dishonest, a far worse label than something like "technically incompetent".
Hopefully, more of our affiliate networks will start leveraging these direct communication channels to build more profitable relationships.
Until next time,
Ben Flux
Zanox's American sojourn-- a welcome development
Last month, German company, Zanox, one of the leading players in performance-based multi-channel commerce in Europe announced setting up operations in the US. It was only a matter of time, I suppose.
In the five years since Zanox has been in operation, it has established itself among the very top in Europe and is quite profitable. It was bound to be looking at new markets to expand its offering and what better than the US. By the end of next year, online turnover in the US is expected to cross a whopping US$103 billion.
A market that size would be attractive for anybobdy, but for a company with the expertise and the confidence that comes from quickly penetrating and capturing a significant share in Europe was naturally bound to spread its tentacles wider. The confidence comes not in the least from its excellent suite of products that covers the whole spectrum of search & affiliate marketing as well as those supporting offline sales channels. Zanox has taken basic viral marketing and combined it with affiliate marketing with its ZanoxMail product. That's just one example of how the company has been successful at synthesising the best of various online and offline sales and marketing concepts to come up with its wonderful array of solutions.
Obviously, the US market offers unlimited growth potential for Zanox. But its expansion augurs well for the market -- both marketers and affiliates-- as much as it will benefit it. I, for one, like choice-- and Zanox will offer that choice. It will also bring to the table its proven products/solutions, considerable knowledge and technical savvy as well as the experience of operating in multiple countries. Linkshare and Commission Junction both have had problems with their products and/or operations & customer service -- which will hopefully be a thing of the past. Emerging competition from a credible competitor like Zanox will help to hasten the steps taken by the two embattled companies to mitigate the problems they've had and ensure that these are nipped in the bud. Overall, I believe, there will be a greater emphasis on getting quality people with greater expertise and a heightened sense of service to affiliates.
Isn't that something to be cheerful about?
Until next time,
Ben Flux, Traffic Junction
Does Bulldog deserve a benefit of doubt and a bit more patience?
In the times we live and work in, not being able to connect to the Internet is akin to taking away one of our fundamental rights. It is like rendering us incapable of doing anything of substance in the daily grind. And it seems like that's what Bulldog Broadband seems to have done based on this report by Watchdog posted on the BBC site--- 20,000 people have apparently signed up for Bulldog but are awaiting their connections.
The aforementioned report indicates that BT could be a guilty party in causing so much frustration and anger among consumers. But there has undoubtedly been a serious problem in the level of customer service accorded by Bulldog--- the company is accused of having known some of the problems faced by customers, but still went about acquiring and signing up new customers without fixing the problems on hand or ensuring their ability to deliver satisfactorily.
Now that is something Bulldog will have to address ASAP and fix. A company that displayed visions of taking players the size of BT head on and lead the market with super fast Internet access and cheap phone lines simply cannot afford to alienate its (potential) customers at any stage, but particularly very early in the game. For, customers who haven't been won over with some excellent experiences in the past will desert any seller forever (Apple might still be able to survive the storm created over its iPod batteries, but many others won't be able to..).
I understand some action has been taken towards fixing the problem as the company has reportedly stopped marketing to acquire new customers, which couldn't have been any sooner. Will it bear fruit and can Bulldog successfully deliver on all its promises?
As a consumer, I hope so. If not for anything else, Bulldog is a pioneer and has offered the market alternatives that it could be grateful for (assuming the problems are solved!). Speed & cost are two critical factors in most things we do today-- and those are precisely Bulldog's USPs.
As an affiliate, why would I consider promoting the Bulldog program through the TradeDoubler network? Firstly, because it is a different niche-- and niche areas, despite their own challenges, present affiliates with wonderful opportunities. Secondly, the GBP35 per sale itself is reasonably attractive.
Thirdly, I'd give pioneering companies a chance-- for if they succeed, it stands to benefit all of us so much more. One way of looking at it is--- cheaper and faster connections means our target customers are likely to be surfing more, which presents us greater opportunities to advertise the products that we are promoting.... greater sales... more revenues!!
Until next time,
Ben Flux, Traffic Junction
A slice of the GBP83 million pie.....that's what's in store for affiliates!
We are beginning to talk serious money here. E-consultancy's recent report on Affiliate marketing in the UK has some staggering projections. Affiliates are forecast to drive sales worth GBP1.35 billion to merchants this year, more than double the amount that was generated last year (GBP600 million).
But what's probably more exciting to us affiliates is the revenue projected to be generated as commissions for ourselves-- a not so insignificant GBP83 million. I reckon this estimate is based on the commissions driven through the affiliate networks (Commission Junction, Buy.at, DGM, etc.) . And if so, the actual commissions could be much higher because most affiliates also promote independent affiliate marketing campaigns worldwide. In all probability, we are looking at something in the region of GBP100 million. Now, isn't that exciting?
All the above numbers suggest a few things very clearly (I will list them anyway even at the risk of stating the obvious):
a) Affiliate marketing is growing at a phenomenal pace. More and more merchants are turning to this method to drive their sales
b) There is an immense opportunity for affiliates to make money
c) As this opportunity gets bigger, the challenges for affiliates will mount
The last point is not intended to be a dampener--- it is a forewarning to affiliates to be prepared to get more creative and sophisticated to be able to capitalize on the opportunities offered.
With affiliate marketing, the onus of generating sales shifts to the affiliate. The merchants will definitely look at the numbers and the sales generated, but the "how" of the sales generation is (in most cases) upto the affiliate.
In a slightly less competitive environment, this wasn't as much of a challenge as it will be when more and more affiliates try to leverage their websites to drive sales. How can each affiliate attract a steady stream of traffic cost-effectively that will convert well and purchase the merchant's product? What marketing channels should the affiliate use? How can the affiliate track the spend closely and optimize marketing? Simply put, affiliates will also have to differentiate themselves going forward in their thinking and operations, as much as the product and service companies have to do.
If you look at the first set of impressive figures, there's one thing that struck me. Affiliates will earn about 6% of total sales generated for the merchants as commission. This is pretty good as long as the marketing costs are low. Challenge is: can we affiliates continue to do keep the costs low?
Those that do will get the biggest chunk of the wonderful 100-million pie that we are talking about, while the others will have to make do with crumbs. And the time to start thinking about how to do it differently and better is now, when times are good.
Enjoy the business.
Until next time,
Ben Flux, Traffic Junction
eComXpo virtual trade show--- great idea; can it beat face-to-face networking
First things first: eComXpo, a virtual trade show and conference targeted at ecommerce marketers (we all would fit in that description I believe!) will be held from October 6-8.
The second run of this "online only" event does boast of an impressive line of speakers from the (online) marketing world --- Seth Godin of Permission Marketing fame is slated to the the keynote speaker, while some of the other speakers include the renowned John Battelle, a co-founder of Wired magazine and author of the popular Searchblog, Frederick Marckini of iProspect, Paul Colligan of The Affiliate Guy and Bruce Clay of Bruce Clay Inc. (there are too many names to list here). There will be some of the leading names in search and performance-based marketing in "attendance" including Google, Yahoo! Search Marketing, Commission Junction, Performics etc., and lots of educational tracks and panel discussions, that would be worth listening to. Starting at $29.95, it's not too expensive to register the attend (well you don't have to catch the red-eye flight for starters) and the best part is that you will have access to the presentations even after the scheduled run of the presentation.
I had attended the maiden event in February which I thought it was pretty well done. So, it's something I'd definitely recommend to everyone who's interested in this area. It could be money well spent...
Ok, now to the point of this post: not withstanding the clever idea of a virtual trade show complemented by good execution, I am a strong believer in the value of real-world trade shows.
One of the key reasons that most of us in business go to trade shows for is the opportunity to meet with people and network. I believe that is often the cornerstone for long-lasting business relationships. A virtual trade show takes away the opportunity (well, to a great extent at least) to build that relationship quickly (this comes from someone who successfully does a lot of business remotely with associates and vendors all over the world that I haven't met with).
I reckon that is the reason why "virtual trade shows" (the term has been bandied about ever since the Internet took off) have yet to achieve a serious level of acceptance. Numerous such events in various verticals have come and gone, while physical trade shows endure.
Can an event like eComXpo sustain itself after the novelty factor has worn off? Will it be able to deliver value to attendees and exhibitors and provide the right networking opportunities that can match the flavor of face-to-face meetings?
May be they will be able to-- after all, we live in a world of chat rooms and webcams and VOIP..... it could happen much sooner than we expect to.
I don't mind being proven wrong--- but at this point, you could still brand me a sceptic...
Until next time,
Ben Flux, Traffic Junction
I've read with some interest recent posts from eager & anxious marketers/web site publishers seeking to ascertain the legitimacy of setting up multiple websites to participate in the Google AdSense program and earn revenues.
The questions have generally been focused on whether it was a correct thing to do so. Did Google allow it? Is there a cap on the number of websites from one publisher that can participate in the program? Inevitably, there was a question betraying the fear of a ban by Google.
Prima facie, there is absolutely nothing wrong with the idea of setting up multiple sites and generating revenue through advertisements from each one of them, notwithstanding where the ads come from. To be honest, it reflects the ingenuinty of the website publishers to eke out the maximum from a particular revenue stream that's worked well for many of them in the short period since Google introduced it. As long as publishers do not resort to anything unethical-- yes, I'm talking about click fraud, the bane of PPC--- I'd say the strategy is worth a second look to make additional/complementary revenue. If you can make money out of the program legitimately, why not, because there's no point in counting the dollars that one didn't make when the program allowed you to after restrictions have been introduced at some stage in the future.
Now, that's a view from the "rightness/legitimacy" angle. But let's look at it from a business perspective. As mentioned earlier, most discussions related to this topic focus on whether it is a correct/legitimate thing to do. I believe that is missing the point. The (unasked) question should have been: does it make business sense to adopt this strategy?
What one mustn't forget is that there is a cost involved in building and maintaining lots of websites, and there's probably an even bigger cost in driving traffic to these websites. Unless one is able to generate a very high amount of traffic to each of these properties, and thereby increase the probability of click throughs to the AdSense ads, it's definitely not worth it.
Anyone who's done a bit of PPC marketing with Google Adwords and watched the typical clickthrough rates could quickly run some back-of-the-envelope numbers to determine the volume of traffic that would be required to generate a sufficient number of clickthroughs (for simplicity sake, assume a clickthrough rate of 2% of the total number of page views that you are getting) from the AdSense ads to be able to give you a decent cheque every month. Now compare it against the cost of generating that volume of traffic (including regular updates with good content to attract traffic)-- irrespective of the marketing channel you use.
Is the benefit to cost ratio favorable? If yes, then the choice is a no-brainer---go ahead, build and maintain those sites.
If not, then obviously one needs to re-consider the strategy and weigh in some of the additional advantages: the opportunity to cross-promote your own products/services/content across the multiple sites and the potential to get more in-bound links to the flagship website.
So, my point is--- generating revenues from AdSense cannot and should not be the raison d'etre for adopting a "lots of websites" strategy, simply because it wouldn't be cost-effective and sustainable. It can't be the foundation of the business model. By all means, go ahead and build multiple websites because of all the other opportunities (both directly revenue-generating such as other advertising opportunities that could yield a better CPM for you and the intangibles such as link-building for your core properties) that are available. Along the way, if Google AdSense presents you with a complementary revenue stream, take it and make the most of it while it lasts !
Until next time,
Ben Flux
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| • | Ben Flux - Traffic Junction |
| • | Hertford, Hertfordshire, United Kingdom |
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