After the conversation over the Molander / Ms. X podcast, I decided it would be a good idea to solicit ideas from you on a main question that was raised from the podcast and the ensuing debate in the comments.
“Are CPA Networks a threat to affiliate networks? Why or Why not?“
If you’d like more material to ponder, here’s an interesting thread at ABestWeb on the subject which I’ll be blogging on later today.
Here are the answers I received from around the affiliate and online marketing industry (in no particular order)…
Deanna Key from Rextopia:
With such similar business models, clientele and customer base, it would seem that this would be a rhetorical question. They are the same. Both act as intermediaries between an entity that desires a customer who is willing to commit a certain action and an entity that can deliver that desired customer.
No matter the lingo, lead or sale, advertiser or merchant, affiliate or publisher, the same principles hold true in order to be a successful network; choose your partners wisely, be fair and just to your partners and work as a team for the greatest collective good. The threat is found in the companies that do not follow these principles and cause a broad stroke to be used when diminishing the worth or validity of either kind of network.
Missy Ward from CPA Empire and Affiliate Summit…
As much as I would prefer to concur with Ms. X’s opinions given my day job ;-), I vehemently disagree that CPA Networks are a replacement for Affiliate Networks.
Saying to an Advertiser that a CPA Network can be a substitute for an Affiliate Network is like saying to a person waiting for a heart transplant that you’re going to give him a lung. While both organs have extremely important functions, one can not stand in for the other.While I am of the same opinion as Ms. X that CPA Networks can generate substantial volume for an advertiser if the conditions are appropriate, not every advertiser will benefit from working with a CPA Network.
Multi-sku retailers for example, would be hard-pressed to find success in a CPA Network. While a large portion of CPA Networks possess the technology to handle rev-share programs and even provide datafeeds, page creators, etc., it is near impossible to find a CPA Network that is doing it. And, it’s not because they don’t know how. I believe it’s simply a matter of realizing that they can’t be everything to everyone and focusing on what they do best, is what makes them successful in their own right.
Additionally, while Advertisers do receive the benefit of not having to manage Affiliates by using a CPA Network, there are inherent flaws that come along with that (transparency issues, brand concerns, etc.) That being said, no advertiser should delude themselves into thinking that whether they are working with a CPA Network or Affiliate Network, that they should take their eye off their baby.
Lastly and probably the least known to advertisers (yet, probably the most important) is that there are Super Affiliates that will NEVER work with CPA Networks. These are the folks that should not be overlooked because while they may not deliver a thousand sales in one day, they will always be consistent.
So while I am a believer that CPA Networks have become a force to be reckoned with (for lack of a better term), they should not be looked at as a substitute for Affiliate Networks for every advertiser. Rather, they should be viewed as a viable supplemental channel for the appropriate type of advertiser who wants to diversify their marketing efforts.
Jeff Doak from My Affiliate Program and Kowabunga…
CPA Networks are not a threat to affiliate networks simply because they serve different kinds of advertisers and, in most cases, different types of affiliates.
Working for a company that has both an affiliate network and a CPA network under the same umbrella, I see the differences between the two client bases quite clearly, and there is very little crossover.
In fact, when one of our company’s sales associates is contacted by a potential advertiser, we have trained them to understand the difference between a Primary Ads prospect and a Kowabunga prospect, and here are the differences:
1. Are they a retailer who sells a product or products (Kowabunga) or are they a company looking to gather leads from a landing page (Primary Ads)?
2. Does the prospect want continuing, long-term relationships with the sites that drive the traffic (Kowabunga) or are they only interested in traffic only, regardless of the source, and they may actually have a limit on the amount of leads they will pay for (Primary Ads)?
This differentiation doesn’t exist simply because we need to share prospects, it exists solely based on the types of clients that are acceptable to each division. If any threat exists at all to affiliate networks it is that they may lose their current lead gen advertisers (if they haven’t already). But since most affiliate networks tout clients who are big brands and big retailers, this is of little concern.
Wayne Porter (of his own fame and with Facetime)…
Traditional affiliate networks rely on long-term programs aimed at retailers. CPA networks tend to work verticals, and will do so more in the future, becoming adept at their particular niche.
As a result, they do not threaten affiliate networks, and in certain circumstances complement them.
However, transparency has been issue with CPA networks that must be overcome. In 2007 we should expect to see the most advanced CPA networks, and or those who have dominated high margin niches become prime acquisition targets.
Shawn Collins from Affiliate Summit and AffiliateTip…
I think the talk of the sky is falling is more symptomatic of people trying to either sell something to fix the “problem” or simply to garner attention.
In reality, I don’t see CPA networks as a threat to traditional affiliate networks.
No more than AdBrite, AdSense, BlogAds, Chitika, and any number of other opportunities for people to make money online.
Actually, I think CPA networks should be embraced by affiliate networks as learning opportunities.
If some affiliates prefer certain aspects of CPA networks, these things can be part of the evolution of affiliate networks.
Not to mention the fact that different types of affiliates promote per lead offers vs. per sale offers.
Since the vast majority of affiliate programs are based on per sale offers paying out a percent of the sale, the affiliates running CPA network deals could well be considered incremental to the existing crop of affiliate network affiliates.
Therefore, they could be potential affiliates of the affiliate networks down the road.
David Lewis from 77Blue (with the most original contribution)…
The answer is no, they are not a threat in any way.
Linda Woods from Partnercentric…
No, they are not. Here’s why – they are intensely focused on “offers”, primarily leads, and only in pushing high volume, easy to understand, consumer oriented offers. Affiliate networks are based on the relationship between retailers that are focused largely on product sales and the commissioned sales people (affiliates) that are interested in helping promote their brand and/or products for a performance fee.They care about the quality of the brand, the demand for the products by consumers, and to some degree things like customer satisfaction and site quality. This is a “people-driven” marketplace, not an “offer-driven” market place. Plus, there’s just too darn many CPA networks, they will start cannibalizing each other soon, and to some degree already have.
The responses here do run the gamut. My own insights into these comments will be coming later today, but first I want to get your thoughts and ideas on what has been presented here from around the industry.
So what do you think? Add your voice to the conversation in the comments. You can also subscribe to them without commenting if you would like to just follow along.
If you use search to reach new or existing customers, or rely on search marketers to expand your program or network, you need to pay 
The 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.
Jim Kukral, publisher of ReveNews and operator of BlogKits, has submitted a short but intriguing piece on MarketingProfs Daily Fix.
I have a proposal for anyone interested…