Weekly Insight 11/17/2006

weekinsight.GIFThe podcast this week was an interesting experience. Only three of the regular cast were able to attend (Lee, Jeff and myself), so the conversation felt more personal and directed than it has in the past. There’s always a different dynamic in a conversation such as this when only a few people participate as compared to four, five or six.

Again, I think we are slowly increasing the quality of talk and Jeff has done a nice job of improving some of the audio attributes.

Of course we cover the debate over CPA networks and affiliate networks which has raged on the comments here on the site over the last week. I have to defend my policy of not regulating comments in terms of requiring subscriptions, and voice my reasons for having this site in the first place. Jeff elaborates on some of his points he was hoping to get across in the podcast, and Lee provided a couple of great points (which need to be discussed further) in terms of affiliate value and the nature of the industry as the paradigm of online marketing continues to shift.

After listening again, I do realize there were a few points I let Jeff off the hook when I should have stepped in and corrected or disagreed with him (I’m sure you’ll hear them). For example, as a point in our discussion on affiliate networks and his point that the networks seem to be whithering on the vine. That’s not a completely accurate statement, and I wish we could have gone deeper into defining how many things affiliate networks (such as CJ) are doing well in some respects. I’m working hard to call out people on their mis-steps and over generalizations on the podcast, but it’s a work in progress.

Oh, and I make the point again that LINKS ARE DEAD. That might be a subject discussed here on CPN in the near future.

All in all, I’d recommend this as a supplement to the week’s previous discussions on networks.

I encourage thoughts and responses in the comments section!

Weekly Insight

November 17, 2006

  • CPA vs. affiliate networks
  • Social media, podcasts & video
  • Long term views: affiliate networks
  • Sam says, “Links are dead!”
  • Lee: Pubcon review

Download the Show (mp3)

http://www.hipcast.com/playweb?audioid=Pf05ad45fce8db477c45667b6e43f63dcZVB5RVREYmR1&buffer=5&fc=FFFFFF&pc=CCFF33&kc=FFCC33&bc=FFFFFF&brand=1&player=ap21

[EDIT 11/19 2:00AM: This will be my last time of participating on that podcast as well.]

6 thoughts on “Weekly Insight 11/17/2006

  1. Jeff,

    What about the theory that says, “In Affiliate Marketing – the technology matters less to an advertiser than the relationships that are brought to the table.”

    In other words… can a “Big 3” be displaced simply on the basis of new and innovative technology? Is there a larger “problem” that needs to be solved by a technological advance?

    Short of “Finding the new Cookie” – I don’t think so. Technology is cool, and it helps… but unless you are simultaneously researching what all of those companies are doing to build relationships and “Human Value” to their platforms, I don’t think you are seeing the whole picture on this.

    And Sam – why didn’t you tell me about your site?! I like – but now I have to play reader catchup. 🙂

  2. Your theory is one I agree with, Brian. Indeed, a “Big 3” affiliate network cannot be displaced by a technology advance alone. As I see it there are 2 pain points among advertisers:

    1) Flexible payment options for (different kinds of) affiliates (who bring different kinds of visitors)

    2) Affiliate networks don’t bring unique (unattainable in other ways) affiliates – advertisers must work to go get them and/or do things to attract them

    I’m constantly researching, yes, and advertisers tell me they are being offered no new options. Hence, companies like Mercent, ChannelAdvisor and others are jumping in to help them. Does this mean advertisers want to leave affiliate networks? Of course not. But what’s the glue?

    At the core here is “what keeps advertisers interested in working with affiliate networks?” What I posit is: Very little as time goes on as they realize 1 and 2 above.

    I’m sure there are advertisers out there who do not find 1 and 2 to be valid in their situation. I simply don’t know many. If you know one please ask them to post their thoughts and reasoning here or I’ll invite them, gladly, to a podcast interview.

    Example:
    I just conducted an interview with JellyFish.com’s CEO today. Here is another example of a company that is moving away from using affiliate networks as a means to access advertisers. Why? Their model involves advertisers using more flexible means to compensate affiliates (which is essentially what JellyFish.com is). Advertisers need the tools that Mercent, as an example, is providing in order to work with this innovative, search based affiliate.

    Even affiliates are moving away — toward companies that provide DIRECT access to advertisers and better technology tools that streamline… facilitate smarter, more flexible payment schemes.

  3. Quoting from Jeff:

    1) Flexible payment options for (different kinds of) affiliates (who bring different kinds of visitors)

    2) Affiliate networks don’t bring unique (unattainable in other ways) affiliates – advertisers must work to go get them and/or do things to attract them

    —-End Quote

    I’ll both agree, but offer a disagreement to both. I agree that both of the above are important – and flexibility I have always thought was the greatest assest a technology company can have.

    However, on point 1 – those options are there on a lot of the platforms, and growing in their complexity and flexibility. What I see more often than not, is that advertisers are not in the position to take advantage of many of the tech tools that are available from networks. For example, let us take PPC-keyword (non-brand) traffic vs. Coupon traffic.

    Assume that an advertiser wants to pay differently for those two types of traffic. The network can do that in most cases – but can the merchant/advertiser? In order to do so, they would need to be able to supress coupon codes on incoming PPC traffic… otherwise, the PPC affiliate isn’t going to play the game. Is the advertiser flexible enough within their own organization to do that… and, are they powerful enough in their brand to be able to stay on the high-powered coupon sites while offering a lower commission. These aren’t just easy-to-solve tech problems for a merchant, but often philosophical discussions that need to go through levels of management, etc…

    What I am saying is… is it really the “technology” at the network level that is holding the merchant back here?

    2) I actually just flat out disagree with this. Even if advertisers do have to go out and recruit their own partners (this is a bad thing?) – the relationship is often made much easier by the things an Affiliate Network has in place, and how they do business. Top coupon affiliates often only work with established networks because they have gotten used to how the datafeed and data-driven tools work on a certain network… Top PPC affiliates may only work with certain established networks that they can trust to pay on time to keep the cash flow up, etc…

    I know a lot of this based upon our own struggle to gain marketshare over the last 6 years – and how hard we have had to work for the trust level that we have established in order to play with a lot of the top affiliates. It isn’t easy, and it is something as a network we can bring to the table in a relationship building process. The people we have worked with over the last 6 years will more quickly work with a merchant because they trust the network platform, and they know how it works… This will be true for all of the networks that you mention because each one of them has been going out for the entire lifecycle of their company and building relationships – not just technology.

    Then, take into account the personal relationships that affiliates (top) have with networks… think of it this way, if a top affiliate is important to a merchant – they are going to be 100 times more important to a network. All networks have gone out and gone out of their way to pay close attention to that affiliate – whoever they may be. Does this not help the advertiser that is participating on that network?

    I will agree with you that change, innovation, and flexibility are extremely important – and should be things that all service providers in this industry are constantly working towards…. However, I do not believe that traditional “Affiliate Networks” are holding anybody back in this space. I’ve seen too many success stories and witnessed too many innovative steps that merchants have taken WITHIN the scope of an “Affiliate Network” to believe otherwise.

    Regarding JellyFish.com – are you saying that they don’t work with the “Big 3” networks, … ? From looking through their site this doesn’t appear to be the case ??

  4. Actually – I have to follow up on my own response. 🙂 haha

    Regarding JellyFish – I can see whey and how they would need different tools from networks… (Hey look, I just signed up, “Geek Marketing” works !)

    “Affiliate Networks” get a lot of their leverage by providing a “basic” set of tools, to the masses… However, without speaking for every “network”, I think it is safe to say that in specific situations the network has had to provide something a “little different” for a specific advertiser, or a specific affiliate. I know that we have – and I think this is where we will agree that a network needs to be flexible.

    Are your advertisers being told that they “cannot do certain things”, or are they not asking?

  5. “Even affiliates are moving away — toward companies that provide DIRECT access to advertisers and better technology tools that streamline… facilitate smarter, more flexible payment schemes.”

    Very general statement. Affiliates have different types of models. Some that deal mostly with lead type stuff will work mainly with CPA networks. Some that deal mostly with digitally delivered products will work mainly with networks like Clickbank. Affiliates like me deal mainly with merchants that actually sell stuff and it’s usually rev share type deals. Check out the biggest shopping/coupon sites out there. Go thru their merchant list. Mainly CJ, LS, Performics, SAS, indys. And you might have some offers from CPA networks in the mix, very small percentage. So it’s not either or, it’s more of a complement.

    “Oh, and I make the point again that LINKS ARE DEAD. That might be a subject discussed here on CPN in the near future.”

    That might need it’s own thread. And when you have it, I’ll come back to tear it apart 🙂

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