Sam Harrelson

Reading the blogs this morning and came across a post by Linda Buquet at her 5 Star Affiliate Blogs which made me think of a post by Jeff Molander earlier in the week on the same topic. Here is a section of Linda's post (read it on her site as well, she lists sources etc)…

The performance-based affiliate marketing model continues to offer top ROI for major brand name retailers. 324 of Internet Retailer's Top 500 Retail Sites have affiliate programs and it looks like CJ has the lion's share according to this recent CJ press release.

"Commission Junction, is used by more advertisers on Internet Retailer's Top 500 Guide to Retail Web Sites than the next two affiliate marketing providers combined. In addition, Commission Junction leads in powering programs for 10 of the 13 market categories being used by advertisers to expand reach and increase online revenues. Among Internet Retailer's list of top retail Web sites, Commission Junction powers brand names such as SonyStyle.com, Zappos.com and Real®. Performance marketing continues to be one of the most cost-effective channels for driving online revenues. As a result, it has been widely adopted by the online retailing industry with 324 of the top 500 retailers running affiliate programs either through networks like Commission Junction or in-house solutions. Commission Junction powers more of these affiliate programs than any other single network provider, and is the preferred provider for the majority of the advertiser categories tracked by Internet Retailer, including Apparel/Accessories, Books/CDs/DVDs, Computers/Electronics, Flowers/Gifts, Hardware/Home Improvements, Health/Beauty, Office Supplies, Specialty/Non-apparel, Sporting Goods and Toys/Hobbies."

Of course this is formulaic PR info from CJ.  However, how should affiliates and affiliate managers read between the lines of reports such as this one at such a crucial and perhaps (or even likely) transitional period in the affiliate world?  Is there a deeper level of redaction that can point to the ultimate motives of the authors (questions we like to ask when reading ancient texts)?  Read all of that over and then read Molander's thoughts on Valueclick's recent moves…

Advertisers are tired of paying Commission Junction for Google-supplied visitors through affiliates.  Valueclick is tired of operating Commission Junction, allowing Google to pocket the big money. The operational aspects of Commission Junction’s (CJ) recently announced Link Management Initiative draws attention and concern but there’s more afoot.  Valueclick (NASDAQ: VCLK) has already told us what they intend on doing with their Commission Junction unit and, in fact, where the affiliate marketing segment of Web marketing is heading—cost-per-click (CPC).  One need simply put things in perspective; hence, I posit, they’ve announced their intentions.  They’ve declared war with Google and will now run like hell from affiliate marketing—a novel idea but a colossal missed-opportunity that Google has cashed in on.

…then read on down in his post…

Advertisers Want to Set It & Forget It Advertisers love ‘em and hate ‘em.  Affiliates.  So why are affiliate programs the darling and, as MarketingSherpa and others have documented, concurrently the most under-funded marketing channel?  In my experience, a majority of advertisers don’t want to know affiliates at varying degrees—they’d just assume look past them (especially those using adware and spam).  Marketing teams are paid to move the needle and blow through ad budget.  As Wayne Porter points out in my interview with him, this does not include detecting what amounts to be ad fraud.  Again—it’s a lot of work to know your affiliates (build relationships) let alone run investigative campaigns on them each week. Advertisers Leave CPA, VCLK Ready to Help Search + Incentives = The Affiliate Marketing Sector CJ has told us that this is true and one need only do simple math to figure out who’s benefited most from affiliate marketing since its inception—GOOGLE.  If most of affiliate marketing is search, incentive shopping and coupon sites then isn’t the need to dump CPA for CPC fairly obvious?  VCLK is simply removing the middle-man… namely Google in a colossal cash-grab.  The implications for Google here are quite serious in my estimation.  Moreover, advertisers: - Struggle with having to discount themselves (work with coupon and “cash back” sites) - Hate “sharing loyalty” (partnering with the likes of uPromise) - Are clashing with affiliates in paid and natural search engines - Are taking calls from Google reps asking “tired of paying your affiliates a premium for our visitors?” VCLK’s success has, for years now, been limited AND tied way too close to that of the affiliates in their network—who use PPC search (Adwords) and “natural” search optimization techniques to drive visitors to their sites.  The optimization affiliates are getting whacked by Google (systematically taken out of the index faster and faster). Are advertisers ready?  VCLK thinks so.  I think so.

I see the validity of Jeff's argument.  I'm still formulating how I think all of this will play out over the coming decade, but I do think the Google automation factor will be a major push towards the CPC affiliate model.  I wrote about this idea in 2004 and looking back (ah, Revenews…why did I ever leave thee?  I was young and stupid).  I think I share many of Jeff's sentiments.  Any ideas on how to relate these two pieces of information? 

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