Sam Harrelson

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.

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.]

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.

There’s still time (two hours) to participate.

Email me your answer to my question…

“Are CPA Networks a threat to affiliate networks? Why or Why not?“

Jim Kukral, publisher of ReveNews and operator of BlogKits, has submitted a short but intriguing piece on MarketingProfs Daily Fix.

The main question he poses has reverberations that continue to expand like a rock thrown in a pond if you consider the essence of what he’s asking.

Here’s his question:

What is affiliate marketing’s brand? When you think of it, what comes to mind?

I should also point out that this is a good exercise for any marketer to put to use. I think what you’ll find, as I have in other areas, is that what your customer and/or the rest of the world thinks, is drastically different than what you think.

As you begin to form an answer in your head, remember that the audience of MarketingProfs is different than ReveNews or this blog. He’s asking this question to individuals who stand outside of affiliate marketing in general, but who also are deeply entrenched in other online marketing platforms.

Why be concerned over the definition of affiliate marketing’s brand? Why do some of us use the moniker affiliate marketing while others of us shun that term, but continue, in practice, to be associated with affiliate marketing?

For insight into this answer, I think back (as I often do) to an episode of ze Frank’s The Show where he launches into a brilliant tirade of why John Mark Carr would want to associate himself with Jon Benet Ramsey (it was August and that was the only news, remember).

Like Jim’s rock in the pond, Frank’s observations also expand outwards from his three minute video and have implications for the brand that many of us associate ourselves with: affiliate marketing.

ze Frank’s comments go along these lines:

“What the hell do you mean by brand?

Brand is an emotional aftertaste that is conjured up by, but not necessarily dependent on, a series of experiences.

Everything has an aftertaste, and everything is a brand.”

Nothing earth shattering there, unless you like to limit the definition of brand. Frank nails it on the head by saying that everything is a brand and has an emotional aftertaste, however… including affiliate marketing.

If everything is a brand (including affiliate marketing) why associate with a particular brand? Why seek out these types of definitions as Jim is aiming to do? Frank gives more insight:

“Right now platforms are fracturing. There are fewer specific places that have access to a large market share and it’s getting harder to speak to lots of people.

But the shared emotional aftertaste of brand is platform independent.

If you leverage those aftertastes, people pay attention regardless of where they are.”

So, I don’t have an answer for Jim’s question. But I do hope he finds one. There are such a wide variety of emotional aftertastes experienced within (and without) the realm of affiliate marketing, that to figure this out will require more than a few minutes of pondering.

Great question, Jim.

Visit the links below for more information and please do watch the episode of The Show…

Sources:

Jim’s Marketing Prof Daily Fix Article

• Jim’s ReveNews Blog

• BlogKits

ze Frank’s Video Post on Brands

I have a proposal for anyone interested…

I want to bring together a number of different insights into a specific question brought up over and over on the Molander/Ms. X podcast and in the debate raging in the comments below. It’s a question that I’ve been pondering for about three years since I was there at the launch of AdDrive (a CPA network) and have worked on but never come up with a satisfactory answer.

If you’d like to see and respond to the question, email me (sam@costpernews.com) and I’ll send it to you. The catch is that I want a response from you by this Friday. That’s not a lot of time, but the iron is hot, and we all need a good homework assignment. You should email me your response back as soon as possible (at the latest by Friday at noon est).

On Friday at noon est, I’ll post all the responses (with links to your respective programs and your pic if you’d like) at once in an amalgamated post. I’ll post your answer in full and respond to them as a whole and then to each of them individually with my own insights.

I’d like to get at least 10 of you to do this homework assignment. So, if you’re interested in my question and promise to respond by Friday noon, send me an email and I’ll get the question (and a copy of these instructions) over to you immediately.

Looking forward to a good debate.

Do a search for “co registration.”

It can be a scary thing. Consumers have complained voraciously. As Wayne Porter and the brilliant Jan Hertsens point out, there are also serious security concerns over these types of offers.

Nevertheless, companies have made millions on co registrations in the CPA network space. Not only that, but new firms are popping up every day attempting to monetize the reg path and make use of the path that users take to confirm purchases or prize sign ups. Is it worth it? Has the coreg market met its plateau of revenue?

Registration path offers (co-regs) have had a storied history in our industry. The platform has suffered from a lack of real time reporting, a lack of real time validation and a lack of transparency. What was once primarily a broker driven market eventually received enough traction to hit the big networks, portals and merchant offers. In addition, the data points gathered are now greatly enhanced to full lead forms that mimic the advertisers’ web sites, which gives rise to even more concerns over brand recognition and recovery.

The simple “yes/no” opt-in platform has morphed into a very lucrative model. The leads produced in the co-reg model are now held to be of higher quality than other channels such as email, banner or pop (in many circles). Whereas many advertising networks kept registration path offers separate from their email counterparts, many advertisers and publishers are re-examining the co-reg and finding it a very successful model. But, the hotness of 2004 is beginning to wear thin with consumers and advertisers (lead quality lagging). Is the platform still valid for CPA networks and affiliate marketing?

The UK blog One Little Duck (Ze Frank homage?) makes a very good post about this issue. Jason there includes four examples of issues that he has with coregs within the scope of affiliate marketing…

As an affiliate we promote Co-Reg competitions from a number of networks, but I have to admit to being increasingly concerned about the quality and standard of the merchants involved in this sector. Furthermore, comments from our userbase indicate quite strongly that they are far from impressed by the quality of the competitions and this has led to less promotion and diminishing revenue.

Check out his four examples. He’s on to something and this is an area of the online marketing galaxy which needs to find exposure and spotlight. Coregs are and can continue to be a profitable revenue stream for new and existing CPA companies which sale leads, but the consumers have to find trust within this platform to make it work in the long term.

Today brings the launch of another partnership marketing network, AllAdSpace.com. However, this network is putting a twist on the common notions of what being a network means. As more of these networks launch, what sorts of implications do their hybrid way of doing marketing online have for more traditional affiliate and CPA networks?

AllAdSpace’s hook is that it is free for both webmasters and advertisers. So, webmasters and site owners are able to sell ad space by listing it for free, and advertisers are able to search and browse listings of ad space, also for free. Unlike other online ad marketplaces and auction services, AllAdSpace.com charges no fees to ad buyers or sellers, and doesn’t take a percentage cut of any sales made.

According to the site, the network was conceived as a response to the online marketing industry’s lack of a completely free ad marketplace where site owners can sell ad space without having to pay a fee or give up a percentage of the sale.

The founder, Joseph Messina writes:

“No one should have to settle for only a percentage of their ad revenue. The future of buying and selling ad space online is definitely heading in a new direction, and AllAdSpace.com is proud to be taking the initiative to lead in this revolutionary idea.”

Essentially, these networks eliminate the middle-person in the publisher/network relationship. Just as importantly, this platform also eliminates the tracking, paperwork and bandwidth issues that can plague CPA networks which grow too fast or which are not equipped with adequate resources.

The real question is about the publishers. Will publishers see an opportunity for transparency and full reclamation of their generated commissions, or will they see these platforms as lacking essential protections in terms of reporting, payout dates and insertion orders. The publisher must decide if it is worth the 10-30% margins that most networks take to provide these services.

For all of their problems, networks do bridge the vast expanse which exists between most advertisers and publishers. For that reason, I don’t see these platforms cutting into the margins of CJ or Linkshare who rely on larger merchants and relative anonymity of relationship within the publisher base. The smaller CPA networks, however, should pay attention.

Affiliate (or partnership-based) online advertising can and must change dramatically in how it is executed. We are truly in the junior leagues with “affiliate marketing” and “shopping comparison” in terms of cost and delivery structure. There are too many limitations. There are tectonic shifts occurring, today, beneath our feet and driven by advertisers.

Specifically, systems flexibility will drive change. Are you a vendor to advertisers who doesn’t provide flexible delivery and payment options for advertisers? You will lose.

Once the inflection point is reached certain vendors will win and others will lose. Innovative shopping solutions — either search-based (Like.com, Jellyfish.com) or relationship based (FatWallet, CouponMountain) — stand to benefit but only those who achieve adoption in critical mass for their market segment.

Like.com has made an interesting move in search-based shopping solutions for advertisers and consumers (I use that word because the individuals using Like.com are, in all likelihood, seeking to consume something). I chatted with Beth Kirsch, the Marketing Director at Riya/Like.com (and ReveNews blogger) about her thoughts on the future of partnership marketing and Like.com’s goals at helping to shape that future…

What parts of your previous experience with affiliate and performance marketing help you the most in your role at Riya/Like.com?

Riya has two teams that are in charge of revenue generation: the biz dev team and the marketing team. My role at Riya is running the marketing team and I’m not managing relationships at all since that is handled by Biz Dev. Riya hired me for two reasons. First, I understand the blogosphere and second, my experience on the advertiser side generating traffic as well as developing and optimizing campaigns and websites. I think a focus on ROI driven advertising helps me everyday at work and is clearly derived from my affiliate and performance marketing background.

Also, as we all know, the affiliate business model is a challenging business model. From my first day on the job, I was thinking about ways to overcome those challenges because I have a performance marketing background. Let me provide two examples: (1) I’m thinking about reasons to give the consumer to buy though us in the first place; and (2) I’m particularly concerned with retention, in other words, a reason for consumers to come back and buy though us again and again. Watching affiliates and other marketers develop solutions to these issues over the years clearly has helped.

What is interesting is in my interview with Riya, I did not mention affiliate marketing once. I just interviewed as a marketer than happened to blog. My affiliate marketing background is just an added perk for them, but it clearly helps.

In your latest series of posts on ReveNews, you write: “I thought transitioning to a smaller company than Audible and LowerMyBills.com would be fun, smooth and simple. I figured I know how to open up channels and grow them, how hard can this be?” How does the new aspect of Like.com further complicate or simplify that paradigm?

We have been working on Like.com for a while and kept it in stealth mode for PR purposes. When I wrote that statement, I knew about the release, so nothing changed that much in that perspective. What does feel different about the launch are the expectations from everyone. My colleagues in research and engineering are looking at me and my partner in biz dev waiting for us to monetize their product. I also feel the eyes of affiliate marketing community looking at me too wondering if I can pull this off. This is my first time leading the marketing strategy and a department, so the pressure is on. I tend to like working under pressure, so I welcome the challenge. But I expect it to be hard and that I will stumble a little along the way.

In that same post on ReveNews, you write that: “When I got to Riya I realized that search was important and we needed to win at the search game which to me means the need for a serious bid management tool.” You thought this was an important insight but later your CEO, Munjal Shah, helped you to realize some new insights into the growth of your company. In retrospect, what advice would you give merchants or affiliates in regards to the importance of search in growing a site, program or company?

I still think search is an important channel for the company, we just staffed it differently that I thought we would. As for advice, that is a hard one, search is different for companies at different points in their growth cycle. I do believe that search will become even more important over time though and we all need to understand it as well as we can as marketers. I think it’s important to career success if you are interested in online advertising.

How do you answer critics about the celebrity/bling nature of Like.com (given Riya’s original mission of a facial recognition search platform)?

I’ve heard one person doing this and I’d call it link baiting. 😉 More seriously, we took money from investors and it’s our job to give them a return on their investment. Companies change business models all the time. Here is a blog entry by Peter Rip, one of our board members about the change in biz model called “the Riya Pivot.” I think this talks about the change in biz model very well and the reason why.

As an experienced affiliate marketer, what implications do you see for the future of the industry in terms of what is going on with Like.com?

Riya has been very fortunate to be embraced by the Web 2.0 community. I think there is a lot of synergy between Web 2.0 and affiliate marketing. First there are affiliates that are using Web 2.0 tactics. Scott Jangro has Costumzee and Vinny Lingham has Synthasite. Both have been featured in TechCrunch, the bible of Web 2.0. To me affiliates will embrace Web 2.0 because affiliate marketers are the first to adapt to new technology.

Second, As Web 2.0 companies learn how to monetize their product, I think they might turn to affiliate and performance marketing. Riya did, ThisNext has and so have others. This in combined with the release of CJ’s long awaited web services might lead to interesting affiliate business models. It will be fun to watch. I can’t wait to see what people come up with.