Affiliate Marketing Blog - a Traffic Junction Blog

Recent news from the big European players in the online marketing/ affiliate marketing sector presents a very positive picture. It is the season of growth, expansion and industry events [the Affiliate Summit UK followed by the A4U Expo].

First up, TradeDoubler posted an impressive 77% increase in Q3 revenues which reached about €82m; the company’s profits also rose by 39% in the corresponding period to €18m. One of the factors responsible for the impressive growth, according to the company, is its foray into search with the acquisition of The Search Works earlier this year. The company recorded growth in all its geographic markets.

Meanwhile, buy.at has opened an office in New York as part of its plans to tap the US market. The company had already moved into the US earlier in the year, launching one program. Other recent activities at buy.at includes its acquisition of Lightstate to add lead generation to its mix; in terms of product offering buy.at also introduced its ContentEngine- a fully-customizable, contextual content engine. According to the company website,

“ContentEngine is a flexible application designed to deliver buy.at affiliates of all abilities, with tailored and relevant content to their websites. It is also fully customisable and easy to use! The application provides our affiliates with the means to boost their sales, by presenting their site visitors with the specific products and services they want to buy. ContentEngine also includes HeadlineOffers - a feature allowing merchants to nominate best selling or special purchase items to be promoted in affiliate’s content units.”

It’s always great to see and hear of positive developments and new offerings!

CJ has appointed Colin Elms, former head of ITV.com, as the head of pan-European client development. His brief, according to a company press release, is “to work with sales and the account management teams in France, UK, Germany and the Nordic region to develop and maintain senior level client contact with advertisers, agencies and affiliates and other partners”.

There has been a slowly growing perception in the affiliate marketing industry that CJ is losing ground in the UK. Whether this senior appointment which follows another senior sales appointment a few months ago are an attempt to alter that is not known. The company itself thinks differently and positions these new appointments as investments for future growth in the region. In fact, according to ValueClick Europe CEO, Carl White, CJ is aiming to be the number one player in the affiliate marketing space in Europe by 2008. It is also likely the new appointments may tie in with ValueClicks plans to be a publisher, with sites such as classifieds.co.uk and local.co.uk, which Carl White had spoken about earlier this year [speculating here ]

Internet Retailer reports that Wal-Mart.com’s site-to-store service is successful in attracting new customers, with more than 50% of those using the service being first time buyers on the site. This service, which is akin to online ordering for a ‘food takeaway service’, allows shoppers to order online and pick up the items ordered from their nearest Wal-Mart store. It’s a simple concept and is even entirely new, but has made quite an impact for the company [by cutting down on transportation/distribution costs and riding on consumers’ tendency to buy more when they are at the store] as well as to consumers [who save on shipping costs].

Excerpts on how the service has benefited everyone concerned from the article:

Shoppers who have used the Site to Store service often buy additional items when arriving at a store for pickup of the online order. Since the service was launched, Wal-Mart has seen as 20% increase in the number of Site to Store customers who spend an additional $60 or more on in-store purchases, the retailer says.

The service has saved Walmart.com customers $5 million in shipping fees for more than 500,000 products shipped since the service started, Wal-Mart says. By consolidating shipments of online orders to stores instead of to consumers’ addresses, the service has also provided Wal-Mart with more efficient transportation and packaging operations, saving the retailer 1,000 gallons of gasoline each week and 20,000 packing boxes each month, it adds.

I wasn’t really thinking about affiliate marketing when I decided to write this post, but there may be some benefit to affiliates too, with its success in attracting NEW customers. I actually wrote this because I felt there’s a simple lesson for any business- online or offline: there are numerous opportunities and ways business/ sales/ operations can be optimized/ maximized, if we were to only look deeply enough. There is ALMOST ALWAYS a different, new and better way of doing things that can yield better returns at a much lower incremental cost. Can you spot it?

I saw this discussion thread on the UK Affiliate Marketing Forum about brand name bidding- an affiliate bids only on brand names of a company and generates sales. Is it the correct and acceptable thing to do?

Like many affiliates participating in that thread, I believe this isn’t a clear-cut black & white issue, and one cannot be judgemental about the morals and ethics of the affiliate concerned. If a merchant we promote has no objections whatsoever on bidding on their brand name, why would we not do it? Afterall, users are more likely to click through and buy if they recognize a particular brand. It’s a different matter if the merchant or network does not permit brand name bidding or has imposed conditions and guidelines that are being violated — in which case the affiliate deserves appropriate action.

Another problem with brand name bidding is ignorance [of course, ignorance cannot be used to prove innocence, and I am not justifying it by any means] — there are a large number of affiliates that not only do not know the rules related to brand name bidding but also numerous other guidelines.

A significant part of the responsibility therefore lies with the merchants and the networks– for affiliate education, monitoring and taking corrective & preventive actions. When it indeed comes down to unethical practices and somebody knowingly tries to flout the rules, make the affiliate pay for it- it’s as simple as that.

A new ad marketplace, AdJug, which enables advertisers and publishers to buy and sell ads directly has been launched with aspirations to be the leading ad marketplace in the UK. The platform will allow for sales of both text and display advertising on CPC and CPM basis. More details about how the network works.
Based on a quick review, i get the impression that it is a combination of a service like AdBrite and Google’s Site Targeting for Adwords, wherein advertisers can choose what sites their ads can appear and define the amounts they are willing to pay.

As I see it, the key challenges for any new network/market place of this kind are: differentiation and the value addition to the online advertising process; a critical mass of advertisers and publishers to ensure that there is sufficient ‘trading’ for everyone to benefit. On a disappointing note, the site did not offer a lot on both of these counts. For example, when I searched the marketplace to check the kind of publishers participating, I did not find any publisher for most categories. It doesn’t look like the marketplace has been able to build a good mass of publishers for the launch phase.

However, the site is founded by people with strong background in online advertising and marketing- so hopefully they willl get it right.

A feature article in Internet Retailer says, “Gaining sex appeal, affiliate marketing is receiving more attention”. Without giving a lot of detail/ statistics as to why they think affiliate marketing is getting sexier, the piece talks about retailers looking at this channel more closely and altering their strategies.

Sexier or not, there are a few discernible (if inevitable) changes that have happened in the recent past:

(a) Affiliates getting more tech-savvy. Not only have they been early adopters of some of the emerging technologies and social phenomena (user behaviour), in many cases affiliates are leading the way and sowing the seeds of change.
(b) Affiliates becoming enough of a force to reckon with to make the large networks listen to them (even though there are some companies that believe affiliates are a lowly bunch out to steal commissions from them). With their expertise, proprietary tools and capabilities, and most importantly, results in terms of greater sales, affiliates have shown the power to shape decisions at networks and merchants.

Undoubtedly there has been continuous growth in affiliate commissions in the past few years, which one would expect considering the growth in overall online marketing budgets. There are two questions that most of us in this field look at closely, the answers to which are probably a better indicator of the health of the affiliate marketing industry (a) are merchants increasing their affiliate marketing budgets as a proportion of their overall online marketing spend (b) is the proportion of revenue contributed by affiliate marketing growing compared to other marketing methods?

Continued success for affiliates will depend on being where their consumers are (whether that be the forums or review sites) and secondly, speaking in the language of their consumers (if consumers like videos, then the affiliates better give them videos..). Of course, these rules apply to any form of marketing; thus far, affiliates have pretty much followed these rules to a ‘T’ and there’s no reason why they wouldn’t continue to do so and get even sexier…

In a detailed interview with e-Consultancy, ValueClick Europe CEO Carl White speaks on a number of topics including the current consolidation in the online markting industry, the Google threat and their own plans for the UK. His answer to the expected question about the Google threat, particularly with the latter’s entry into the CPA market, was also along expected lines [how could he answer it any differently?]: that Google’s entry only reinforces the CPA model. He also tried to project the “strengths” of Commission Junction as a “high touch” model, instead of it being completely automated. Well, I’d be surprised if that response wasn’t solely for the media– because Google has shown an uncanny ability to successfully automate processes that we once thought could never be completely devoid of intervention by support staff. While we can’t argue with his assertion that Google’s entry reinforces the model, if ValueClick/ Commission Junction (or for that matter, any of the networks) don’t see it as a challenge, it wouldn’t be smart at all.

The other highlight of the interview [and this has more bearing on affiliates] is ValueClick’s plans to be a publisher– there are apparently a large number of domains that are in their portfolio that they intend to roll out including the relaunch of classifieds.co.uk and the development of local.co.uk. ValueClick already has the shopping portal shopping.net. When a network is a media agency and is also a publisher, there is always the apparent conflict of interest; but this looks like a fairly common (and acceptable) scenario in the online media world.

Not for the first time, we are hearing of results of a survey that higlights the lack of adquate attention to customer service amongst online retailers. Whether it be lack of prompt response to e-mail or telephonic calls from customers or prospects, impersonal / indifferent communication with customers, the complaints always remain the same. Is it that online retailers have become too complacent and indifferent considering the continuous boom in e-commerce? One would think that in an era of ‘activist’ users, user-generated content, viral / word-of-mouth marketing and online reputation management, companies would be more cautious and diligent about raising their levels of customer service. At least on the surface, the consequences of not doing so would seem disastrous.

As an affiliate, such a situation is worrying. Merchants are extremely alert and quick (rightfully so, I might add) to monitor the performance of affilaites– the traffic and the results they generate as well as the methods they employ to achieve the results they do. They would be a lot better off if they could spend a little bit more time on setting their house in order and improving the things only they can control– such as ensuring their website is fully functional, the content is informative and the quality of customer service is great. Affiliates don’t control these aspects other than passing on this feedback to the concerned merchant. The only other option an affiliate has is to walk out on the merchant; but if you are a large affiliate publisher with an established user base, you may be doing your own reputation some serous damage and risk alienating customers. Betterl not to get into a relationship with a such a merchant beforehand rather than let your users educate you.

On the topic of complacence amongst online retailers, they might better be forewarned — for the first time, seems that entertainment sites in the UK are attracting more traffic than online shopping sites. Hopefully, this was an aberration and that online shopping would be back to its rising best sooner rather than later, but retailers should ignore any of these exceptions at their own peril.

Soon after Linkshare set up operations in the UK, it looks like Linkshare’s parent company, Rakuten plans to tap into the UK’s booming market for online shopping. The Japanese internet giant plans to set up a ‘virtual shopping’ along the lines of what it has in Japan[news courtesy: The Independent, e-consultancy.co.uk], though it is not clear if it will follow the same business model in the UK [a membership fee for merchants + a percentage cut of all transactions].

A few affiliate networks have launched recently in the UK– adding to the many established players. There are a couple of blogs asking these related questions: do we need more affiliate networks in the UK and whether new networks will be able to attract affiliates?

As to the first question, I think the answer really depends on who you ask. At the rate at which online shopping is growing, may be there is space for some networks that operate in their own niches [whether it be in terms of vertical segments or size of advertisers/ merchants or the type of rewards programs they run]. As long as they are able to identify and create a strong niche for themselves, I suppose there will be takers for these networks and they will survive. I think the answer to the second question also lies in the above sentence- affiliates will join networks provided they find good programs to promote with considerable potential, the compensation offered is good and the network can deliver on service and support and affiliates can believe that they can trust the network.

It is also likely that the recent spurt in new networks entering the market is driven by some of the M&A activity going on in the online advertising space and the large sums of money involved. I just hope that networks are not launching with the end goal of being part of an acquisition and hope to enjoy the inevitable ‘consolidation’…

I know it is the era of social networking, community participation and user generated content…while I quite like the democratic nature of the web with active involvement of everyone concerned, I can’t help but be apprehensive of certain aspects. These are not new issues by any means; nor do I have any ready solution to the same [which is the unfortunate part], but I had to write these down anyway.

A new study commissioned by American Express and reported on Netimperative states that Brits are increasingly swayed by online reviews. In a nutshell, it seems that almost half of those who researched hotels online did not book a particular hotel because of a negative review. The question is, how legitimate is that kind of influence?

The same article points to a small proportion of users who actually bother to write these reviews– which potentially skews the reviews all the more. There are two distinct groups that have a vested interest in manipulating such reviews and opinions: marketers who would like to get a favorable opinion out and competitors who’d like to use such ‘user generated content’ to their own advantage. Can the end user who is being swayed by these opinions really be sure that they are not being manipulated?

I just hope there will be greater checks and balances that will enhance the credibility of these reviews/ratings so that they really serve the purpose they were designed for.