Month: November 2006

In his wrap-up coverage of this year’s ad:tech NYC, Scott Rewick of NextInternet writes that one of the things unique about this year’s conference was:

Rise of the “new networks” XY7, ClickBooth, CPA Empire, HydraMedia. I grew up in the early days of the Internet when the companies attracting all of the attention were Adteractive, MetaReward, and Azoogle. I sense a “changing of the guard” as the older companies mature, while the younger ones are aggressively pursuing growth.

I agree with Scott on the transformation that has been happening in the network side of the industry over the past four years. I was with SubscriberBASE at the time when the affiliate network phenomenon was just beginning to take off, and Jeff French had the foresight to see the need to expand our business to include this emerging space with the AdDrive network. Working with AdDrive in the early stages of growth and brand expansion was an incredible experience, and as Scott points out, the main competitors early on were the likes of Azoogle.

However, the market of affiliate networks soon experienced a Big Bang explosion which created an entire universe of networks along with a seemingly inexhaustible supply of material for the creation of new networks.
What’s the reason for this “changing of the guard” as Scott calls it? It has less to do with the ability of the “older” networks to keep up with shifting marketing forces, and more to do with these networks (Azoogle, Adteractive) maturing and expanding their scope in relationship to the largest of networks such as CJ or Linkshare.

As Jeff Molander pointed out last year,

I wonder… is it possible that Azoogle hopes to net a good number of the more cost-sensitive, smaller advertisers from the CJ network (during the most expensive time of the year)? Those, perhaps, who feel under-served (by CJ) and who have declined to purchase service packages for themselves? Might Azoogle be inclined to believe that they can make a better “value offer” to such advertisers… including a more affordable service offering that keys on the existing Azoogle “sweet spot” of hooking advertisers with their existing network of productive affiliates?

Spot on questions, Jeff. These questions are still not answered by Azoogle or any of the networks making the move from a publisher-network to industry competitor and are still relevant for discussions about the CPA space. With Google potentially considering a CPA move, next year could be quite interesting for everyone involved.
The stars seem to be aligning for major acquisitions in this space in 2007, so maybe the haze around the future of these networks will begin to clear then.

Valleywag is reporting a tip that some of the top people at Yahoo! are going to be receiving the pink slip in the immediate future.

Guaranteed

• Bill Demas, Senior Vice President & General Manager, Yahoo Publishing Network
• Will Johnson, VP & general manager of the Yahoo Publishing Network

Any connection to the coming class action lawsuit first elaborated on by Jeff Molander?

Steve Rubel writes

Within a year we’re going to see blogs transforming themselves into customized start pages. This won’t happen with all blogs. It will start with high-traffic sites that zero in on popular verticals like tech and politics. As these tools become more sophisticated and easy to use, the trend will migrate down the Long Tail into other niches.

As I have mentioned before, you can easily transform your default home page into a one-stop-shop that covers most of your basic needs. So why can’t a blogger provide the same service to people who share a common passion on a topic?

Similarly, affiliate marketing in general (from the mom-and-pop sites up to the large loyalty sites) could see such a transformation if a 3rd party platform was made available to the industry. What would spur this metamorphosis? Limitations of scaling.

Rubel points out that one of th reasons this transformation has not occurred en masse in the blogosphere (particularly high traffic niche blogs) is because of the lack of infrastructure. Widgets require registrations (how about co-registrations??) and the ability to cope with large amounts of demand for personalized data. Simply put, most affiliates (and affiliate networks) don’t have the tech infrastructure for such an undertaking. Rubel suggests that in the next year, 3rd Parties will see this deficit and

“will handle the back end processing in exchange for a piece of the generated advertising revenue. This is a great next step for AdSense.”

Take this one step further into the realm of affiliate marketing. Providing a platform for delivering personalized data based on registrations in exchange for a piece of generated advertising revenue sounds very much like the model which most affiliate and CPA networks already operate under. That is no accident, because serving widgets and serving ads (particularly customized ads based on user choices and user registrations) have more in common than anyone in the affiliate marketing world has taken time to notice.

With the introduction of attention and more venture capital into the CPA network space, companies with familiarity of API’s and widget technology are also bringing new tools into the industry. Could the utilization of widgets enter with these newcomers?

The idea of building or morphing a high traffic affiliate site (especially think of loyalty sites such as uPromise, eBates, FatWallet or BizRate) into a widgetized one stop shop beyond the context of just hyperlinks into the realm of customized and portable content is not hard to imagine. Would this be profitable? Yes. Would this encourage user interaction? I definitely think so.

Transforming an affiliate site into a widget building blocks site requires one central thing besides the technology: relationship. Relationship is something (in theory) affiliate marketing is capable of producing across a wide variety of diaspora channels. And this producing of relationship engenders a community receptive to certain forms of communication. Of course, email marketing was effective before we killed it, and RSS has been called by many the next great hope.

However, let’s move beyond those models which still enforce that top-down dictation model and focus on models (like widgets) that produce a back and forth between user and affiliate site. That’s where affiliate marketing shines, and that’s the promise that widgets specifically have for pushing certain parts of the industry in the right direction.

For example, the new email company Gigya shows how utilizing widgets to communicate ideas, data and micro-entertainment might work in practice. Using Gigya’s interface, users can embed widgets containing music, videos, games and even their MySpace layout into an email. The person who receives the email will be able to play back the video, song or whatever has been embedded if they can view HTML email. Imagine an affiliate site or loyalty site pushing company or user generated content in such a format.

Jeff Molander makes the following lucid and well thought out insights about affiliate marketing’s scalability in the context of the relationship paradigm…

Why the freak-out by traditional affiliate managers and executives as Google enters the space? One word: Scale. It’s a word that, to many, is not comfortable in a realm that is dominated by relationships (those nasty little things that don’t scale!). The concepts of transparent (you know who, what, how, when you’re dealing with) advertising and opaque (you have less of an idea) are central as the former offers less scale, the latter more. As time goes on (competition for advertisers heats up) making performance-based ad buying frictionless is becoming more important. Hence, “traditional” (relationship-oriented, transparent, high maintenance) affiliate programs become more focused (coupon and loyalty shopping sites) and receive less attention (as they require more people power to scale).

The link is dead. Content customization based on a relationship (even as simple as user registration or co-registration) and micro-systems of delivery of that content is the new black. Affiliate marketing, with its ability to make relationships, has a great opportunity to make use of widgets and widget delivery to set the larger industry standard.

In this mode of widget usage, scalability is not a detriment to affiliate marketing. Rather than adhering to that long held belief that the non-scalability of affiliate marketing is what’s holding the industry back from the major leagues, realizing that new platforms (such as widgets) provide a way for affiliates and networks to utilize the relationship factor as a positive… an incredibly profitable and long-term solution positive.

Alterian is a provider of software for analytics and lead integrated marketing.  According to their press release, the goal of their software platform is to make it cost effective for marketers to gain insight into their data and use this to drive an integrated marketing strategy, across multiple online and offline channels, from a single set of applications and infrastructure.  A few of their clients include Accenture, Acxiom, Allant Group, Carlson Marketing Group, Experian, Epsilon, Donnelley Marketing, Harte-Hanks, Merkle, Ogilvy One and Euro RSCG Worldwide.

Experian is a big player in online marketing, so pay attention to this.

Merkle, who will be using Alterian’s software for email and their online marketing programs considers itself a data-driven marketing solution that enable large national organizations to maximize the results from their marketing investment.  Basically, Merkle provides customer strategy, business intelligence and analytics, data sourcing, media targeting and measurement, and marketing technology solutions to medium to large size corporations.

Alterian (LSE:ALN), the leading global provider of Analytics Led Integrated Marketing software, has signed a three-year licensing agreement with Merkle for the latest addition to its marketing suite, the Dynamic Messenger online marketing platform. Merkle is one of the nation’s largest database marketing agencies, and under the agreement Merkle will roll out Alterian’s technology to current and new clients and integrate Alterian’s solution with other online and offline marketing services and solutions.

Why is this important?  Let’s analyze the press release of this partnership…

“Integrated marketing promises many benefits, but achieving these benefits depends on having insight into customer, transactional and marketing data to create appropriate strategies, and the ability to leverage this across multiple channels quickly.,” said David Eldridge, Alterian’s chief executive officer. “Marketers are turning to service providers and technologies with the capability to provide this insight, combining online and offline data, and to take immediate action as a result. We are excited to be working with Merkle to deliver our solution’s unique capabilities, which we fully expect will provide significant advantages to their clients.”

The synthesis of online and offline marketing is a no-brainer, but the platforms available to large corporations interested in leveraging customer relationships across verticals and and independent channels has been slow in development and even slower in adoption.

This piece from Merkle’s homepage sums up this sentiment…

It’s no longer effective to broadcast your marketing messages to millions of anonymous people and hope for a solid return on investment. Available information about your customers and prospects has increased exponentially. And for the first time in the history of marketing, you can base your strategy on real facts.

However, as the consolidation of user generated content and social media continues to gain momentum, this synthesis will escalate rapidly and more partnerships of this type will occur and have large implications for affiliate marketing and the way the chain of ad spending which funds affiliate marketing is done.

Big week for MediaWhiz. Last night in NYC to celebrate ad:tech, MediaWhiz threw a poker tournament. Today, it was announced that they’ve acquired Text Link Ads.

Was this a good buy for MediaWhiz? Where are they looking to move with this buy?

Text Link Ads doesn’t use “no follows” for their links, which has given the platform a good deal of suspicion and has given rise to some debate about its long term health as a model.

Isn’t the link dead in terms of long term value to the market?

New Yorks’ Media Whiz advertising firm has acquired Cincinati’s Text Link Ads. The deal was announced this morning, but the financial details aren’t being disclosed.

Text Link Ads typically sells small text ads for a fixed monthly rate, not pay per click. They advertise on blogs extensively (disclosure: including this one). The company recently released a product called “Feedvertising” that allows publishers to easily place ads from Text Link Ads, ads the publisher sells themselves directly or other messages into their RSS feeds. We use this service to promote other sites in the Crunch network. I hope that this product continues to flourish post acquisition.

Techcrunch » Blog Archive » Text Link Ads Gets Bought by MediaWhiz

Techcrunch features the new Turn CPA network, which is launching with 18 million in venture capital. What is interesting about the new network is its approach on CPA and a growing trend “up the food chain” of utilizing CPA but doing so in a more automated fashion (think BrightRoll or RightMedia).

One thousand advertisers are said to be participating along with 30 publishers. That seems like a small number compared to traditional CPA Networks (smaller networks having in the hundreds of publishers up to the larger networks with many thousands), but the platform needs quality, not quantity, and doesn’t have time to educate or steer webmasters and mom-and-pop affiliates.

Marketing through CPA networks farther down the chain involves working with publishers and affiliates in a dynamic based on relationships. Affiliate marketing teeters on the edge of long term sustainability by a few entrenched and well deserving sites or being subsumed by the contextualization of advertising on the web, turning affiliate marketing into something like an automated widget.

This transformation is already occuring within the realized limitability of affiliate marketing to scale effectively. Hence, new platforms like Turn are looking for a work around…

Buying ads in the Turn Network doesn’t require keyword selection and management. Instead, buyers identify actions they want their audience members to take and how much they would be willing to pay per time those actions are taken. That action might be a site visit, email sign-up or completed transaction.

When visitors come to a site, data about those users, contextual analysis of the site, of the ads and of every ad permutation’s success in that and related sites are all considered in determining each ad’s probability of success. That probability of conversion is then considered relative to the price being paid on a CPA bases. The CPA bid divided by the probability of the action being takes equals an ad’s effective revenue per thousand impressions. And thus an ad is served!

What is at stake is a ten year history (and some would say promise) of performance marketing on a more individual and even democratic level. Continued automation of the space at the higher levels doesn’t bode well for the plethora of CPA networks paying for booths and parties at this year’s ad:tech NYC right now.

How will this affect CJ or Linkshare or Azoogle or AdDrive or VendareNetBlue in the near or long term future?

Along with the start of a very crowded ad:tech NYC today, the online marketing world is buzzing with news of Google’s print ads program. According to BusinessWeek, the most notable part of Google’s print program is its size and scope at launch…

Google Print Ads is notable for both the number of newspapers that have signed on, as well as the participants it’s attracting. Among the participating papers are some of the nation’s largest and most renowned: The New York Times, The Washington Post, The Boston Globe, the Chicago Tribune, The Philadelphia Inquirer, and The Denver Post. More than 100 advertisers will take part as well. (The test hasn’t yet started, and Google declined to release the names of virtually all advertisers.) Tom Phillips, director of Google Print Ads, says he expects the program to be expanded to include weekly newspapers “sooner rather than later.” He says weekly magazines eventually will be involved as well.

Print publications have long been wondering about their future with the competition of online advertising showing increasingly higher returns and shares of advertising budgets. By bridging this gap, Google is issuing forth a strange extension of life for offline content publications. In one respect, the new influx of ads and interest (and relevancy) which Google brings to newspapers and eventually magazines is a blessing. At the same time, there is a fang’s edge to the print content industry in that Google is positioning itself as a metric setter, as it has done with search.

Google Print Ads differs from Google’s AdWords search-term auctions, in which advertisers bid for space adjacent to search results for selected keywords. The new program allows newspapers to set minimum prices. Another difference: In at least one early move into this arena, Google simply bought ad space from publishers and auctioned off pieces to advertisers. But with Print Ads, “rather than create some artificial scarcity by buying [ad] inventory and then auctioning it off,” says Google’s Phillips, advertisers will “bid on inventory and then allow [newspapers] to decide on whatever makes sense.”

So, there’s the crux of this whole development (which has been in small testing since late last year and was seen as inevitability). The question was not if Google was going to go print, but how, and would their move into the space create disproportionate and falsely increased ad rates as the print publishers and advertisers sought to find the market equilibrium. It seems as if Google is inverting what it does with AdWords and bidding on the space already in existence.