Affiliate Marketing Blog - a Traffic Junction Blog

With the latest Adwords Quality Score update from Google, fresh talk about the future of affiliate marketing has resurfaced again (see this thread at the UK Affiliate Marketing Forum). There aren’t too many new insights – there seems to be near-consensus regarding how affiliates can survive the threat from search engine algorithms (irrespective of how many different ways it is put forth): build stickiness, with great original content.

I’ve mentioned this a few times, but the threat to affiliates is a threat to the affiliate networks as well, and it will be a pity if they don’t see it as such. The sad part is that we haven’t seen or heard of the big networks come up with new strategies that will help their publishers face these threats better. One would think the networks have the resources that individual publishers don’t.

Is it time for affiliate publishers to demand a different compensation model than the pure ‘pay-for-acquisition’ model? To be clear, I am all for the pay-for-performance model, but if the job of affiliates to acquire traffic (the first step to getting customers) is getting more difficult and expensive, then they need to be rewarded accordingly for their efforts to get customers. How about a model that combines the cost per impression and cost per acquisition models? Obviously such a model should still be weighed heavily in favor of reward for acquisition, but should take into factors such as the volume of impressions generated, the click-through rate and the conversion rate.

I have no pretensions that this will be a panacea for all the challenges that affiliates face. In fact, I can straight away sense some issues that merchants and the networks will have: impression fraud, click fraud and competition between merchants & affiliates. But may be, the networks can at least begin to look at some different ways to keep the affiliates excited and soften some of the blows that they are receiving.

IMRG has released a statement with its forecast for the 10-week run-up to Christmas pointing to a staggering £7 billion, which is almost double the figure recorded in 2004. That’s how Internet time goes!

Anyway, while any such optimistic predictions always make us feel good, there are a couple of recent announcements that we should take note of, if not anything else.

One, the relaunch of Yahoo shopping — the thing to note is the bargain center, which aggregates information on the best coupon deals from merchants. Obviously, something that will make coupon affiliates wary.

Second, MSN Shopping has tied up with Shopping.com (an eBay company….) to include results from the latter. Of course this relationship is an extension of what the two companies already share elsewhere. Some studies last year indicated the traffic pattern of search visitors first going to shopping comparison sites and then on to the merchant sites…. a move like this will most likely reduce one step.

It pays to be a bit concerned. Of course, we know that these sites have been around for a while, so it may seem quite natural to not pay too much attention. But the least we can do is to not be indifferent !

Being an affiliate marketer, I am obviously biased towards affiliate marketing, which is constantly questioned for its effectiveness and the ROI it can provide. In fact, the thinking amongst many marketers is that since afffiliate publishers tend to use the very same marketing channels that they could use themselves, they could get a much better return executing those techniques instead of going through the “hassle” of recruiting and managing affiliates.

How much value an affiliate can provide to a marketer really varies from affiliate to affiliate, but there is no denying that a well planned and executed affiliate program can generate great ROI (we have been part of several huge successes). Don’t take my word for it— check out this analysis from MarketingExperiments, the company that recently acquired MarketingSherpa. Even though the study might itself be a couple of months’ old, the findings should certainly be useful to marketers who are sceptical about affiliate marketing and want to rely solely on their paid search engine marketing.

As with anything else, there are no shortcuts. Identifying and managing good affiliates– the core of running a successful affiliate program– does require investment of resources. If one is not prepared to do that, there is not much point in trying out this channel for namesake and then discarding it as ineffective (we see that happen quite often).