Affiliate Marketing Blog - a Traffic Junction Blog

Last week, the hot news was about Google launching its PPA program {limited edition beta}. One aspect that didnot get much attention in that was the option for in-text advertising.

Today, Amazon affiliates received communication announcing their own in-text advertising option, which they call “Context Links”. Even this one is supposedly a “beta” launch, but an “open” beta launch. With this, affiliates that create content have the opportunity to have relevant words hyperlinked to appropriate pages on Amazon.com and earn commissions for successful transactions.

While in-text advertising has been around for a few years now, there has been considerable debate on whether such advertising is right or if it was too much of a nuisance to the user, unlike traditional contextual text advertising. The answer seems to be a resounding yes– this form of advertising is here to stay and user-resistance is breaking down.

All in all, I think this is a positive move from Amazon that “content” affiliates will welcome.

According to a report on Clickz that quotes statistics from IAB, online marketers spent close to $600 million in acquiring leads in the first half of 2006, using various lead generation techniques. Yet, there have been questions on the effectiveness of this spend, mainly because of the uncertainty in the quality of leads generated.

Therefore the IAB has come up with a quality ranking system for evaluating the quality of leads, to help marketers/ advertisers decide where to put their dollars. The quality ranking system proposed takes into account five aspects: origination of the lead, lead exclusivity, lead age, customer motivation and validation/ verfication of the lead manually and third parties.

One of the challenges of this kind of a scoring mechanism, unlike defining something such as page impressions, user sessions, ad formats etc. which the IAB is involved with, is that it cannot be applied as an absolute standard and has to take into account factors such as the industry and the advertiser’s objectives. The onus is therefore very much on the marketer to accurately define the relative weightage of the above parameters as applicable to that advertiser’s objective and come up with an appropriate score when trying to compare various lead generation sources.

From a lead generator’s perspective, I think very often the “problem” is that marketers [or lead buyers] themselves don’t have a concrete idea of the exact kind of leads that they are looking for. Since they run the risk of identifying their prospect base too narrowly, there is a tendency to be quite broad with their specifications of what is considered a lead — and then we get into this discussion of lead quality. Obviously, the tighter the definition, greater will be the premium for the lead.

In today’s “long tail” world, may be marketers are willing to make compromises there and hope to widen the net with the hope of converting a few more of those “low quality” leads…

In 2006, there was a lot of smoke and fire about click fraud, the class action lawsuits and the settlements by Google & Yahoo. I have increasingly gotten the impression that this issue is being accepted by marketers as an unavoidable evil — an extra cost item that will just need to be factored in during budgeting / projections & ROI evaluations.

However, it looks like the issue has turned on venture capitalists who are putting their money in start-ups in this greenfield sector. Venturebeat reports that a new company Fraudwall has just received millions of dollars in VC funding to “stop advertising fraud online”.

According to the company website, “Fraudwall Technologies provides advertising networks and advertisers with a pioneering solution for identifying click fraud. Fraudwall combines cutting edge science with the aggregation of data and characteristics from networks, search engines, and advertisers into one complete scalable solution.”

On the face of it, the market for click fraud protection could be huge, even if we assume that search engines operating on the PPC model get only about 2% in fraudulent clicks. However, what is the value to the advertisers? Will the solutions offered by these new breed of companies prevent fraudulent clicks (which might be outrageously optimistic)? Or if they help detect fraudulent clicks, will the PPC networks accept those and refund the advertiser? What kind of advertisers can truly benefit from the tools & systems these companies develop?

We’d be watching the developments in this area with quite some interest (as would other high-volume affiliate marketers who use paid search advertisng extensively, I reckon).

It seems like some of the projections regarding a bumper Christmas shopping season have turned out to be true.. According to IMRG, online shopping in the UK during this past Christmas was over 50% higher than what it was last year. This growth has come at the expense of high street retailers who have reportedly recorded a drop in their Christmas sales.

As per a news report on e-consultancy, the biggest beneficiaries were Tesco & Amazon.com, with the latter recording an astounding 4 million orders on December 11. IMRG is predicting that online sales during the 4 weeks leading up to Christmas would have been about £3.7 billion.

All these figures are undoubtedly interesting for affiliates; better still, online sales now account for almost 10% of all retail sales in the country. I’ve viewed all increases in online sales as an opportunity for affiliates; yet, it is not as straight forward as that. The challenge is most certainly whether affiliates can continue to increase or even maintain their share of the pie?

One of the many challenges that affiliates will have to face upto is Web 2.0 /increasing ’socialization’ of the web (I’ve taken liberties with the use of that term). I’ve written previously that social networking is an opportunity that affiliates need to take cognizance of — I still retain that view; however, they also need to view it as a challenge that needs to be overcome. Here’s why — it is likely that in this era of Web2.0, merchants/ marketers are increasingly going to depend on end users to provide recommendations and market their products by the online ‘word of mouth’. In return these users will likely be compensated as well for their recommendations if it results in a paid transaction. uSuggest has a comparison shopping site along those lines, and I foresee the emergence of several others along these lines. In a sense, sites such as these are cutting down traditional affiliate marketers, who in many ways do the job of providing recommendations to their target users. Of course, affiliate marketers can still play a role by being active participants in sites such as these; I believe we may not have too much of a choice if we are to capitalize on the exciting numbers on online sales that we are seeing.

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 !

The last couple of weeks have been a period of major announcements from both Google and Yahoo. First up,Google declared some outsanding financial results while Yahoo, by its own admission, performed below the levels it aspires to. But beyond financials, it was the much anticipated announcement from Yahoo that is really important– the phased roll out of its new search marketing platform. A revamp of Yahoo’s existing search system was long overdue; this report by Heather Paulson on Revenews gives the impression that the new platform does have some of the nifty features that search marketers expect.

There were two other noteworthy developments from Google– one is the beta launch (by invitation only) of Google’s website optimizer, a tool that will allow marketers to carry out multi-variate testing of their web pages and optimize them accordingly. There are several other tools out there offering various kinds of testing and optimization, but Google’s product (when it gets more widely available) is expected to be free and therefore can be used by a much wider audience. A demo of the website optimizer is available here.

A couple of days ago, Google announced the launch of a “custom search engine” capability that allows anyone to build a custom search engine. Based on the Google Co-op that was announced a few months ago, users can select the sites from which they want the results to be pulled out from. We could probably see many more “niche search engines” now — here’s one on Affiliate Marketing that’s already out. How many end users actually begin using such search engines is questionable; Google’s objective, I believe, is to really use the idea of people contributing bto create “search from selected sites” to enhance their own results. While Co-op was founded on that same premise, it seemed too techy; the custom search engine concept seems much less so.

According to Jupiter Research, Europeans’ usage of the Inernet has surpassed usage of the print medium. Average time spent online by Internet users is about 19 hours a week, compared to 15 hours in 2003. TV still continues to be the dominant medium.

As is to be expected, the two main factors driving the increase in online media consumption are age and increased broadband penetration. The greater the broadband penetration, greater is the online media consumption: France leads Europe on both these counts.
These changing usage patterns have an obvious impact on how companies spend their marketing dollars, something that website publishers of all kinds should be ready to take advantage of, irrespective of the monetization model they opt for.

More online shopping this year; one third of online shoppers shopping less
Sounds rather contradictory, doesn’t it? On the one hand, Jupiter Research is predicting that the online holiday shopping will reach $32 billion this year, an increase of 18% compared to last year, while the number of people shopping online will rise by about 6%. That seems to indicate that the amount of shopping per user is going up.

At the same time, another study (reported on Revenews by Jimmy Daniels) claims that almost one-third of people who shopped online last year are spending less this year due to concerns on security and Internet fraud. That Internet security is still such a limiting factor can be seen by the approx. 80 million Internet users (I believe these are US figures) who haven’t bought anything online.

While the opportunity is great, it is also a reminder that so much more needs to be done to get more converts to join the fold of online shoppers.

Shortly after I posted this piece on Revenews last week, pointing out to a MarketingSherpa study showing greater ROI from SEO campaigns, I chanced upon this release from WebSideStory, which reports a marginally better conversion rate from paid search advertising clickthroughs vis-a-vis organic search clicktrhroughs.

The problem with stats is that it can confuse instead of clarify; putting the two studies above together has the potential to do the same at first glance. Conversions and ROI don’t mean the same thing, though it is so easy to mistake one for the other. Conversions only take into account the desired outcome without the cost of obtaining that outcome; ROI factors in both.

By emphasing on this distinction, I am by no means questioning the ROI from paid search advertising or advocating that folks go the SEO route. This is a choice that businesses will have to make depending on their objectives, the budgets that can be allocated and their own expertise in managing these traffic streams. We rely pretty heavily on paid search and therefore have built up considerable expertise in that stream to generate good returns; but may be SEO works better for marketing products from other industries. In an ideal world, the rate of conversion and return on investment from both these marketing channels will be equally high — but that’s a scenario with low likeihood of occurence.
Figure out what works best (or may be engage experts to identify the gaps) and optimize that channel first..

P.S: With the holiday shopping season, there is a bit of apprehension if there will be one of those Google quakes —-the algo update which sends the e-retailing industry haywire. Have you made your site Google quake proof or have you left it far too late?

We are almost at the beginning of the hottest season of the year (business-wise) — the eagerly awaited fourth quarter, when billions of dollars worth of shopping takes place online.

However, a recent study conducted by Harris Interactive (on a representative sample of over 2000 online shoppers) shows that almost 40% of online shoppers abandon a site without completing the planned transaction because of problems with the site. That is a significantly high number , particularly if one were to look at it in terms of lost opportunity. Not to forget that the e-retailer may have lost the customer for life.

The biggest problems reported by the study, which are not really new but those that continue to persist, that cause shoppers to permanently abandon a site are lack of adequate information; poor navigation ; inability to complete transactions and being automatically driven off a page.

As affiliates, we have a huge stake in what happens on the merchant site, even though we may not have lot of control over these. However, there are things that we could be doing to ensure that we don’t end up paying for inadequacies of the merchant sites.

For example, we can address the lack of inadequate information by providing as much detailed information as possible on our own sites. Or, test out the complete transaction cycle to spot problems with it. Provide feedback to the merchant and see if it will be fixed immediately.

If not, there is not much point in working with such merchants; best to work with those whose websites are really ready to convert visitors into customers always, and particularly during this season.

Tesco, which has dominated the UK online grocery market with over 66% market share according to ComScore, is now trying to capture the non-food market as well. The retailer is slated to launch a new non-food shopping website today.
It will be interesting to see how quickly Tesco will be able to capture market share and replicate its dominance of the grocery segment into the new market, though I suspect it may not be too difficult. (We are glad to have Tesco as a prestigious client:) )

Tesco’s dominance is amazing— it’s closest competitors, ASDA and Sainsbury’s have only about 15% market share each. Not surprisingly, its e-tailing success has been written about extensively in the international media, including publications such as BusinessWeek and The Washington Times.

Meanwhile, ASDA is also embarking on an affiliate marketing program with TradeDoubler. According to Netimperative, “ASDA will use the programme to promote the entertainment, floral, contact lenses, gift and photography sections of its existing website, www.asda.co.uk.”

The big supermarkets seem to be getting all set for the X’mas shopping season…