Affiliate Marketing Blog - a Traffic Junction Blog

Affiliate marketing network, Linkshare, has acquired a US-based ‘lead generation’ company, TrafficStrategies.com with plans to incorporate the latter’s expertise into its own lead generation offerings. In many ways, it looks the acquisition is akin to a major network acquiring the capabilities of an ‘affiliate’/publisher, which is what many of the independent lead generation companies are. Not entirely surprising considering that top performing affiliates seem to be equipped with better skills and proprietary systems than some of the companies and networks they generate leads and sales for.

While the above news might be welcomed by merchants/ advertisers that could leverage the ‘complementary’ strenghts of the two companies, earlier this week week Linkshare announced something of interest to affiliates.The company introduced a new web services offering for affiliates, called Automated LinkGenerator. According to the announcement, “this new tool does not replace Merchandiser (LinkShare’s datafeed), but will be helpful for getting direct links from merchants that do not offer Merchandiser feeds.”

The M&A activity in the online advertising space has likely peaked for the immediate future (though a question about the future of ValueClick or Commission Junction is never far away)— the intense activity of the past two months is going to be tough to beat anyway. The next few months may see some more consolidation, but I suspect the focus will now shift on product and service enhancements targeted at end users rather than market capitalisation and P/E.

It’s a season of big name mergers & acquisitions in the online advertising space. Google, Yahoo, Microsoft and WPP have all been out on a shopping spree shelling out serious money in the past couple of months . What’s more, the mother of all mergers [Microsoft & Yahoo] is waiting to happen, if all the rumors are any indication [of course, the wait has now gone on for more than a year].

Compared to the multi-billion dollar deals that have happened recently, Zanox’s acquisition by Axel Springer and PubliGroupe seem to a much smaller deal at €214.9 million (plus some performance-based payments). The acquisition will result in the formation of 2 companies that will operate the zanox brand. While the deal looks like an an all European affair, the intent (as expressed by the management board of Zanox) is to grow internationally.The punchline, stated by all three of those board members in a video release, is ‘monetize the Internet’.

However, the attention will invariably shift to ValueClick/ CommissionJunction– the spotlight has been on ValueClick for more than a year already, but it has been overlooked thus far. The moot question is: even if it is ready to be acquired, which major online media player (of course it doesn’t have to be one) will it be?

A couple of weeks ago, Google Checkout made its anticipated launch in the UK. A good discussion thread evaluating the pros and cons of this to merchants, affiliate networks and affiliates is here. From an affiliate perspective, as long as there aren’t any issues with their affiliate tracking ids being incorporated, it shouldn’t impact them negatively. Having said that, I don’t find any reason to get overly excited by the news either, as I haven’t really heard much about Google Checkout contributing to a direct increase in sales for merchants. Many of Google’s offerings have taken considerable time to mature- so we’ll have to wait and watch how this one pans out.

In an unrelated news, Yell.com, has introduced an affiliate program. From what has been described in their press release, the affiliate program still seems to be a work in progress. It looks very much like Google’s “AdSense for Search” program— affiliate publishers place the Yell.com branded search boxes on their websites and get credit for users submitting search queries, which are displayed on Yell.com (of course, they do mention that there are other custom / tailor-made programmes available). The main difference is the option for a fixed monthly fee offered to publishers (like traditional online advertising) instead of just an action-based rewards program (like typical affiliate programs). It’s good to see different models emerging/ raising its head every now then and stir the affiliate marketing pot.

Another trend I expect to see now is a change in the format used for creatives —- I’d have expected to see audio/video in the creative mix. There are some interesting developments happening in this area, but more of it later. However, even if merchants/ networks haven’t gotten used to incorporating these formats in their creative mix, there is nothing stopping affiliates from using those..

For $3.1 billion, Google acquired advertising solutions provider DoubleClick. Google has been stirring the online advertisng pot for a while now and coming up with various concoctions— while all the while getting closer to near absolute control of worldwide online advertising [well, it looks like Google is out to control not just the online ad scenario but any known form of advertising — albeit, leveraging the Internet to do so].

Organizing the world’s information is the company’s stated goal, but everything the company seems to be announcing these days seems to be about getting control of the advertising options available when presenting that information.

Just a month ago, Google had announced its plans to enter the PPA market; with the DoubleClick acquisition, Google may have made further headway into the affiliate marketing space since the former’s affiliate marketing unit “Performics” is part of the deal. What exactly Google does with Performics will be very interesting.

Will there be a conflict of interest now between between different units of the same company? Google is known to be pretty hard with affiliate marketers, who have found it pretty challenging with their search engine marketing efforts on Google [both organic and paid]. Will this change ? Obviously, we can expect Google to say that everything is controlled by their powerful algorithms and everybody gets equal treatment—- but can everybody continue to buy into that without any doubts whatsoever?

Another thing to look out for in the next few weeks and months is the moves by Yahoo & Microsoft and what they do with some of the other big ad networks. We can be pretty certain those two companies will not surrender in the battle for advertising supremacy without a decent fight—- though from the look of it, there seems to be only one winner.

“The 2007 Search Attitudes Report, commissioned by search marketing firm Tamar, indicates that consumers lack trust in paid search and are turning overwhelmingly to natural search results when making purchase decisions.
2007 Search Attitudes Report,” says a report on Netimperative (emphasis mine).

If that were indeed the case, how does one explain the continuing growth of paid search? It is fairly obvious that more advertisers seem to be channeling money into paid search now more than ever, and this trend cannot be out of sync with the search user’s behaviour. Such a statement makes me sceptical and distrust the study that is being reported; particularly since we rely on paid search marketing to a great extent for our own business.

Two aspects of the study might still be of interest to affiliate marketers: (a) consumers depend natural search results more — I think this is more due to where/ how the results appear rather than any distrust in paid search results and (b) consumers are influenced by negative views appearing in search results.

For a), the obvious action for affiliates is to put more effort in getting organic search traffic; but that decision depends on the affiliates’ overall marketing strategy and priorities. For far too many affiliates, depending on the search engine’s algorithms to drive traffic may be too much of a long wait. Also, being used to absolutely measurable results, many affiliates do not like the “cost of uncertainty” associated with organic search traffic and choose to ignore this option altogether (despite the knowledge that SEO will have “long-term” benefits).

Affiliates as agents of online reputation management

There is an indirect (”rather convoluted) benefit of affiliates doing more with their SEO efforts—- assuming the affiliate sites do begin to get visibilty, they are decreasing the probability of customers getting influenced by the “negative publicty”. In fact, committed affiliates are potentially a powerful tool for a merchant’s “online reputation management”, which is certainly not easy to control. While merchants will have to focus on their end-users to ensure a great reputation, affiliates have a part to play in building and projecting that reputation— be it by creating excellent content, generating their own “user-generated” content or using techinques like blogging.

2006 was a bumper year for UKonline advertising, surging by over 41% from the previous year, according to data released by the UK Internet Advertising Bureau. The internet now accounts for over 11% of all ad spend in the UK.

Some of the key details from the report are excerpted below:
“The results reveal that expenditure on the internet overtook advertising in national newspapers, which last year recorded growth of 0.2% to £1.9 billion and a market share of 10.9%. In 2006, the internet was just over half the size of the TV advertising market, which experienced a fall of 4.7% to £3.9 billion.

In 2006, online display advertising (including banners, skyscrapers and online sponsorships) rose 35% year-on-year to £453.7 million.

Traditional advertising formats, such as banners, were reinvigorated by an increase in the use of rich media, which includes graphics, audio, video or animation. Once again online display advertising is experiencing growth far greater than any other display medium.

The growth of paid-for search (sponsored listings that advertisers pay for when a consumer clicks through to their site) was sustained, increasing by 52% to £1.2 billion of total online ad spend or a 57.8% share.

Online classified advertising was also up 45% to £379 million, a share of 18.8%. This is in contrast to traditional press classified advertising, which experienced a significant decrease of 7.8% year-on-year. “

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The increase in online advertising spend can be correlated to the increasing penetration of broadband Internet in the country, with more than 50% of the country’s adult population now having access. According to a report on Netimperative, based on the Digitial Progress Report by Ofcom, “more than 13 million UK homes and small and medium-sized enterprises (SMEs) are now connected to broadband, compared with 9.9 million a year earlier and 330,000 in 2001. “

Both of the above news augur well for affiliate/ performance marketers who depend for the most part on online traffic for sustaining and growing their businesses.

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Meanwhile TradeDoubler, which has been in the news for various reasons, has had some changes in its top management. In the UK, the company has appointed Mike Glegg as its UK Sales Director to “to drive new business across multiple programmes, to further expand the UK sales team, and to build on TradeDoubler’s UK achievements to date, which have seen the company ranked as the 24^th fastest growing digital media company in the UK* with an impressive 284% revenue growth over two years.” This follows William Cooper taking over as President and CEO of the company towards the end of last month.

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.

For almost 2 years now, speculation has been rife about Google’s entry into the “affiliate marketing” arena as we commonly know it [granted Adsense is an affiliate program, which is never viewed that way]. With the latest announcement of the pay-per-action option (beta) in Adwords, Google’s arrival into this space is formally confirmed. Not unsurprisingly, there’s considerable buzz about this development on the major affiliate marketing portals / blogs.

As always, one of the first questions being asked is: does this kill affiliates? On the contrary, I think this could serve to be an opportunity for affiliates. Here’s why. Currently many professional affiliates stay away from using Google’s AdSense program, simply because the CPA programs they promote provide a much better return per conversion than what one could hope to make from AdSense [in general; i know there may be some segments where CPC revenues might be quite attractive]. With the PPA [or CPA] program from Google, these affiliates can now begin to use the AdSense program as well.

We don’t know yet what kind of criteria Google is going to set for advertisers to sign up for this program when it is made public, but I’d think it will offer a much bigger pool of advertisers/ merchants than what most affiliate networks currently provide. Therein lies another opportunity for affiliates.

Two audiences could feel the heat at some stage: a) the networks: how will this move affect the marketing strategy of their current crop of advertisers and what will their reaction be? (b) the large number of AdSense publishers who thrive on the CPC model— I’m not sure if Google will move completely with a CPA model for AdSense [as the company has quite a bit at stake], but if the CPA trial works out well, there might be changes to the way AdSense is run {of course, it is pure speculation}.

Nevertheless, we will be waiting to see the (domino) effect of this announcement.

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…