I had a problem with a color laser printer from Samsung and opened an online support ticket on Wednesday night. On Thursday afternoon they called me to get more details about the problem. A package with a new imaging unit arrived on Friday afternoon. That’s what I call customer service!
I’ve just heard the news about eBay pulling their affiliate programs in German-speaking countries out of Affilinet next month. eBay has done this in most countries before already. It makes total sense as they are now able to customize everything to their needs and switch to a performance-oriented click commission (away from pay-per-sale).
However, what struck me is the fact that Affilinet will continue to the following things for eBay here:
Now, isn’t this what we usually describe as “affiliate agency services” or “outsourced program management” (OPM)?
Granted, all networks are more than just technical solution providers. They try to push their affiliates into the most profitable programs, share data, and so on. Everyone is out there to get the most out of things.
However, networks must maintain a minimum level of neutrality. I think with Affilinet openly providing full service to a single merchant they’ve lost their neutrality. I’m a strong believer in the separation of powers between merchants, affiliates, networks, and agencies. Fishy stuff will happen whenever you mix up the roles.
Ask yourself: If you were a merchant, would you run an affiliate program on a network which is also the full-service agency of your competitor?
I’ve just returned from Leipzig where I attented the Affiliate Stammtisch. This networking event took place at the Moritzbastei in the city center, a medieval fortress-like building which looks like it was part of the ancient city wall. Wardrobe and restrooms probably used to be dungeons. At least they’ve kept the metal doors from back then. Nice location, perfect for the size of the event.
Affiliate Stammtisch was organized by Martin Dorst’s online marketing agency. They’re based in Leipzig and serve not only national retailers but also work for regional and local clients which I find great. Many agencies compete over the same clients, usually the large enterprises. But I believe the small and medium-sized companies are a huge market too.
I liked that they didn’t have a formal agenda for the evening. People go to networking events because they want to talk and not because they want to listen to lengthy presentations. Some of the sponsors didn’t even show up, probably because it was a Friday evening.
But most importantly, I really liked the fact that Martin wasn’t trying to turn the evening into a self-promotion show for his company. You know, at similar events organized by agencies they’re just using this for hardcore selling. Some companies don’t realize that they need to build reputation by action and not words. Martin understands this concept very well and I’m sure he and his team got something out of their work without having to push hard.
So thanks to Martin, Alexander and the rest of the team. I’m looking forward to next year’s event.
Lately I’ve checked out a number of (mostly American) CPA networks and realized how old-fashioned most affiliate networks turn out to be. Here is why I like CPA networks much better.
Programs vs. Offers
Affiliate networks are usually about merchants. Some of the programs bombard you with every possible banner, link and product feed they have and don’t really help you much in making a choice. CPA networks on the contrary are usually about landing pages. A CPA offer may have a couple of landing pages, but that’s it. Lately the affiliate networks have adopted the CPA trend and started what they call campaigns. They’re basically integrating landing-page-only programs into their portfolio.
Direct Relationship vs. Blind Network
In a traditional affiliate network the merchant (or the agency) has direct contact to the affiliate. In a CPA network the affiliate talks only to the network, not the merchant. Usually the merchant doesn’t know the identity of the affiliate either.
Approval Process vs. Instant Start
Most affiliate programs have an admission process, many of them approve affiliates manually. In a CPA network you have no direct relationship with the advertiser, so there is no approval process. Affiliates can start right away and pull their codes. Don’t you hate how long some affiliate managers sometimes take to approve you?
Open vs. Confirmed Transactions
Probably every affiliate network can assign leads and sales a certain status: unconfirmed, confirmed, denied. I can understand the point of the merchants as they only want to pay for transactions for which the customer has actually paid. But affiliates, especially those that do media buying, need to know their final revenue by the end of the day. They can’t do effective media buying if they don’t know much money they actually made the previous day. So it’s no surprise that most CPA networks don’t get into this. They solve this for example by paying for every transaction but with a lower payout.
Secrets vs. Transparency
There are still a number of affiliate networks that keep the performance of their programs secret. On the other hand, CPA networks are usually brutally honest and give you access to the metrics. Not only that you see the stuff in the interface. The other day I received an email from a CPA network with a list of all eCPCs for their search offers. I’ve never received this from any affiliate network before, even when I asked them for it.
Conclusion
Very simple. If you are a content publisher, stay with the good old-fashioned affiliate networks. They provide you with all the fancy ads that you can throw on your sites. Also, the really big brands want to be in control of their affiliates so you won’t find very many of them on CPA networks. However, if you are a media buyer who wants to drive hardcore sales, go for the CPA networks.
Shawn Collins recommending resources for mobile affiliate marketing on video:
Check out my Mobile Space podcast on GeekCast.fm!
Pascal Fantou is becoming one of my favorite bloggers. If you can read German you should check out his latest post on the future of the affiliate industry in Germany. I’m not 100% sure if things are going to change as drastically as predicted, but I can definitely see Pascal’s points. Here’s a short summary in my own words:
Advertisers usually group their online marketing teams mainly by traffic source: search marketing, display campaigns, affiliate marketing. Back in the dark ages affiliates were primarily web site owners who would place text links or banners on their own sites to make some extra cash. These days many affiliates have turned into full-time entrepreneurs who have expanded their dominance also to search engines and social media.
Pascal’s point is that the media agencies and not the affiliates will be the key players in the future. They’re in close contact with the advertisers, they administer the big budgets and they’re actually becoming better at what they do. At the same time, small- and medium-sized advertisers will run their activities more and more in-house instead of through an affiliate or search marketing agency.
So what will happen to affiliates? A lot of their territory will be taken away by large agencies or the advertiser itself. For example in search marketing, why should advertisers pay for the profit of the affiliates and the affiliate networks if they can pull the sales in themselves? In some cases that would lower the cost of acquisition by 50%. Same thing with Google. They’re going after affiliates big time these days because they want the other 50% of the advertiser’s budget.
With the redundance of traditiional affiliates, especially in search marketing, the traditional affiliate networks are going to be dinosaurs. If they’re not changing their role to a technical solution provider they’re likely to die out. The winners are going to be the media agencies. They can combine large budgets of several advertisers and that way pay a lot less for ad network traffic.
The key to survival and growth for affiliates is specialization. Affiliates need to find niches where they do not have to compete with large advertisers and agencies. How about mobile?
In my previous post I wrote about how smaller affiliate networks drive innovation. They feel the need to grow everyday and the only way to do this properly is through innovation. This strategy is quite promising actually since I observe more and more established networks falling behind.
For example let’s have a look at zanox. They’ve come out with an application store that encourages affiliates to make their own tools available to other affiliates as well. At first this may sound like a great idea.
But when you really think about it you start to realize that they’re trying to fool us here. In my opinion this application store is nothing else but their attempt to lower the internal IT cost and create some extra PR buzz on the side.
The message that zanox is sending out is: “We don’t want to innovate internally anymore. Dear affiliates, do the dirty work for us, please. And no, we can’t guarantee you any revenue from sharing your work with your competitors. Go and figure it out yourself.”
Maybe I’m missing the bigger picture here, but I don’t understand why successful affiliates should make their self-made tools available to competitors in the form of other affiliates or merchants.
Usually the larger an institution gets the less innovative it becomes. There are a few exceptions, but generally the big players of an industry don’t drive innovation.
After UK-based AffiliateFuture the German 2nd-tier affiliate network belboon has also introduced a tracking technology based on local shared objects, also widely known as “Flash cookies”. Back then AffiliateFuture observed a 7% increase in conversions. I’d be really interested to see belboon’s figures.
I haven’t heard of any large affiliate network implementing something similar. For example Commission Junction has become so slow over the years. I take these types of networks are going extinct like the dinosaurs at some point.
Flash cookies are somewhat similar to regular browser cookies. Essentially they are files stored on a user’s computer. The main differences are:
… may be March 19th, 2009. Internet Explorer 8 is out. The new private-browsing functionality blocks most affiliate cookies as they are third party. Let’s see how it goes.
I’ve been using Ubuntu Linux on my netbook for a while now. The user experience has been great. It runs much faster and my hard-drive is never busy without me doing anyhting. So I decided to equip all of our office desktop computers with Ubuntu too. You’re not seeing one single Windows machine around here. In the next weeks and months I might be adding a few posts on how to make the most out of your Ubuntu installation.