Adam Jewell - Search & Affiliate Marketing

When heading out to a conference, its nice to head out a few days before the conference to check out the sights, experience the local town and do some exploring. While I had grand ambitions to do a lot in Santa Barbara prior to CJU, I did make it to the Segway dealer and get a chance to explore the novelty that is Segway.

A great guy named Bill welcomed me to the Segway shop out there. His enthusiasm for Segway was contagious. It quickly spread to me as he walked me though the necessary paperwork needed to keep the lawyers happy and he guided me through the mandatory training session prior to taking a Segway out on the roads.

A few years ago I was on an old i67, maybe i70 out at the Google Plex for the Google Dance that goes along with the annual Search Engine Strategies out in San Jose. The brief stint was after a few beers and was relatively easy. Step on, lean a little bit, crank the handlebars and the Segway will go where you want it to go.

The new “gen2″ Segways are just a bit different. Instead of a fixed shaft and handle bar assembly, the new i2 models have the “lean steer” technology. You no longer turn the handles like you would a motorcycle handle, you tilt the entire handle bar assembly and it leans with you as the Segway rotates. It is much more sensitive than I remember the 1st generation Segways being and much more tricky to ride. It’s very intuitive but at first you just need to learn to trust it.

Following the training session, which includes an overview of how the Segway works, learning basic movements, and finally navigating a little course with some cones you go outside and learn to get a feel for how the Segway can over compensate when turning on an inclined surface. The motors in the Segway can move about quarter a ton each, are pretty powerful and sometimes react in strange ways that can make riding a bit of a challenge.

Santa Barbara is a stunningly beautiful area to visit. The weather is beautiful, the ocean is stunning, the skies are a deep blue when there is no forest fire clouding up the sky and it is always a great day to cruise or walk along the beach. This was the first time gliding along the beach.

After the training was complete, it was off to the sidewalks and trails along the Santa Barbara beach and all the way up to Monticello where Oprah and Ty Warner have their luxury estates. The first day during which I spent a couple hours on the Segway, it was a feeling of total freedom. It bought a smile to my face cruising down the trails, through the parks, by the hotels and the smile spread to most everyone else along the way as they looked curiously at this guy on a contraption they had probably heard of but not seen before.

The Segway is an engineering marvel and is a blast to ride, however it does have its kinks. The machine tops out at about 12.5 miles an hour (you can push it up to about 13) but it seems programmed to push back on you and if you tried to go much faster might push back enough to trigger an emergency stop which would send you flying head over heels over the control stick. It cruised over pavement with small cracks, up fairly steep hills, though grass and dirt that was a little bumpy and would even cruise down small curbs (say an inch or two) with no problem.

When riding a Segway, its best not to try to hard to push it past the built in 12.5 mph speed limit even though 12.5 mph seems kinda slow after a while. Another tricky thing is going up ramped curbs. If you don’t hit them straight on, one wheel will apply a little to much power, the Segway will turn quickly and throw you right off like it has a mind of its own.

Take curves and turns slowly when you are first getting the hang of the Segway. If you take them to quickly or force yourself to have to take them to quickly because of an obstacle or a curb, you’re likely to go sailing and the Segway will get confused and try to keep going in some direction that is likely not where you want it to go. On one hand, it would be nice if there was a kill switch on it, on the other hand, if there was a kill switch and you hit it at maximum speed you’d go flying.

Overall, if you are careful, the Segway is a great transportation and recreation device. If you’re in Santa Barbara, be sure to visit the Santa Barbara Segway for an hourly rental or guided tour. If you come across a Segway tour operator or rental place anywhere else you may be traveling, it is a great way to get out and see the sights and have some fun!

Thinking about buying a Segway? I’ve got some thoughts on that too. While I’m by no means a Segway expert, I’ve learned a little about buying them from various places including Ebay, SegwayChat.com & dealers. You’ll find some thoughts on buying a Segway here.

Another good resource for info on buying a Segway or even to find one for sale is the Segway Chat Forums

Mike Jacobs of iMarketing presented this track along with Mike Solomon, VP of CJ Search and what a doozy it was. For years, affiliate marketing like search has struggled to gain respect in the online marketing world. Search is so big now, that only the most backward and clueless companies still stick their heads in the sand and ignore it. Lots of companies still ignore affiliate marketing and those in affiliate marketing don’t often see how search can work harmoniously with their affiliate program and create an overall more powerful online marketing program.

No doubt, the speakers had lots of experience in online marketing and had been around search and affiliate marketing for a while. The presentation, however was very one sided. It was from the perspective of an agency that wanted to preserve its own interests rather than that of its clients. It was from the perspective of an advertiser that thinks it owns keywords and can dictate the practices and placements of those companies and media properties that take the risk and work on a performance basis to drive sales.

The presentation suggeted two key points.

1 - Do not let your affiliates link directly to your website from paid search programs like Google AdWords

2 - Impose restrictions on how much affiliates who have their own websites can bid on keywords you the merchant targets so that they don’t outrank you.

Unless a merchant is totally hands off in search, they’ll probably want to restrict an affiliate linking directly to their website from a PPC search program AND bidding on their brand keywords with that direct link. Most merchants prohibit this, as well they probably should but it’s up to them.

Sales from PPC campaigns on brand terms come easy for an agency, an affiliate or an in-house search team. In many cases, a lot of money could probably be saved but not bidding on these terms at all. At least that’s what Microsoft says (think that’s an effort to take a chunk out of Google’s revenue - nahh it’s got wholesome intentions written all over it) and there may be some merit to that.

Let’s step outside of an advertisers brand terms. An in-house team or an agency probably handles the campaign. These people get paid by the hour, a flat salary or on retainer and are not often compensated based on performance. This may result in fantastic campaigns because the parties running them have built or use great tools and have time to make the search programs connect with consumers or they may totally suck. Often they totally suck.

The creative and creative structure is designed to make setup easy for the employee or agency, the campaign is set on broad match and the advertiser doesn’t really know what is happening in the campaign. They look at the numbers but not the human interaction with the campaign, the ad text, the keywords and the landing pages. The campaign may simply not perform well. Even if it does perform well, when you factor out the costs and revenue from brand terms does it perform better than a 5%, 10%, 15% cost of marketing that the affiliate program pays? In most cases, probably not. The agency or in-house team probably lumps everything in together and says our PPC search campaign perform at a 10% cost of marketing or something like that. It all looks ok to the financial folks and the CEO so there is no reason to mess with it.

Now what happens if you open up the use of the display URL to affiliates so long as they don’t bid on your brand terms when they link directly to the website? What happens is you get affiliates, maybe 1, maybe 1000 looking for the most effective, efficient, targeted way to send traffic to your website to generate sales. Not only that, you don’t have to pay them unless they sell stuff for you. Would you let affiliates link directly to your website from PPC search ads? hmmmmmmm tough choice huh?

What if affiliates have their own websites and they use PPC search to drive traffic to their sites? Here again, it may make sense to prohibit them from bidding on your brand terms or to set some kind of bid or rank cap on how much they can bid or where they can rank.

It’s a whole different story on the generic terms like shoes, bedding, or whatever you happen to sell. Why does it not make sense to try to dictate “bid caps” for your affiliates when they bid on keywords to drive traffic to their own sites?

Despite what an advertiser or the CEO or traditional marketing manager turned interactive guru thinks, no company “owns” any keywords except for their brand terms and even there is can be a bit questionable with the way Google operates its TM policies.

“Bid caps” may have worked in the old GoTo.com and Overture models that dominated the search world years ago but now that ranking algorithms are based on (bid price * click-through rate), if an affiliate writes ad copy that pulls 5% the click-through rate of the merchant, a bid cap will be meaningless and no affiliate is going to spend hours and hours making sure that they artificially lower their bids enough to stay below a particular merchant. They’ll just drop the merchant work with a more forward thinking advertiser.

If an advertiser is going to try to have “bid cap” policies like this, it should be with advertising sites like shopping engines traffic from which is billed on a CPC or a CPM. As the advertiser you are paying to appear on the shopping engines regardless of whether or not you get any sales. Those CPC, fixed price and CPM ad sites are the ones you might have a gripe with but since there is no shortage of advertisers, they probably would not agree to those restrictions either.

Affiliates want to work with merchants who want to make money, who spend time working on the conversion rates of their sites, who are forward thinking. When an affiliate only gets paid on a rev share basis, why work with a merchant who wants to micromanage everything?
Obviously, I thought this presentation was awful, misguided and was frankly shocked that CJ would have a speaker like this giving a prime time presentation. Maybe if it was balanced. One person from the traditional agency mentality and another from the progressive ROI driven affiliate in a cage match would have been more entertaining, balanced and educational for the audience.

It will undoubtedly take a while for online marketing to sort itself out. The presentation on Search & Affiliates presented one view, this blog entry presents another on how to handle search. High-level relationships with traditional agencies still often dictate that the traditional agency will get the interactive business even if they have no idea what they are doing. As the traditional media perspective starts to retire and fresh thinkers who grew up on the net begin to take over, or companies wake up one day and find a savvier competitor eating their breakfast lunch and dinner, they’ll change or encounter some rough times.

Sometimes a great presentation doesn’t give you any new ideas. Sometimes it doesn’t give you any new spins on marketing. Sometimes it doesn’t spur any new marketing ideas. Sometimes it can open your eyes just a little bit so you can see the perspective of another party. In this case the other party is your “partner” who may seem (and sometimes is) completely irrational at times. It’s the merchant-affiliate relationship.

In “The Pulse of the Affiliate Market” presentation Rebecca Madigan took the audience through various scenarios in the merchant-affiliate relationship.

The face of the merchant tends to be the under appreciated affiliate manager who is often multiple levels removed from the decisions regarding budget for the affiliate program, decisions regarding search policies, creative assets made available to affiliates, payout percentages, and linking options made available to affiliates.

In an ideal world, the affiliate manger would be free to determine affiliate payouts, would have an unlimited budget to pay affiliates based on a profitable CPA or percentage of the sale, and be able to get new creative assets and website changes made to enhance conversion and provide affiliates the creative necessary to cater to their unique site content and promotion methods.

In the real business world, internal constraints and politics unfortunately often dictate the way the affiliate program is managed and the decisions that are made. In some cases, the affiliate program is viewed as a cost center and the company allocates fixed budget to pay affiliates for profitable sales. Lets see, you sell $100 worth of something that cost me $50 to produce and ship. I pay you $10.00 and I make $40. Now why would I want to put a budget cap on that? It doesn’t make any sense but some companies do it Microsoft included. Yep Microsoft. This is the same Microsoft that wants to catch Google in the search game. Microsoft should take their online marketing efforts in-house and learn how online marketing really works. They’d have a better chance of catching Google but that is another story for another day. Can you imagine Microsoft shutting down the production of Windows or Office disks that would starve demand stop sales of these products? Well, that’s how the Microsoft affiliate program works.

In addition to the issues mentioned above, the affiliate manager must often make snap decisions and judgments based on the desires and demands of other internal stakeholders. Creatures like CEOs and VPs sometimes like to Google “their” keywords which may be brand or trademark keywords and sometimes more generic keywords like shoes. They don’t always like what they see, particularly if some overzealous affiliate is bidding on the brand keywords with their own site or with the merchants display URL and displacing the merchants own in-house or agency campaign.

Sometimes it is affiliates looking to see what they can get away with. Sometimes it is a clueless affiliate. Often times it may be Google broad match out of control in which case an affiliate or competitor may NOT be bidding on the companies brand keywords but the Google algorithm taking the liberty to show ads on the companies’ brand keywords. Regardless of the cause, it is not uncommon for a draconian reaction from the CEO that may result in affiliates getting thrown out of the affiliate program, lawyers smelling blood, licking their chops and rejoicing in the opportunity to send out C&D letters or undue restrictions that may solve the immediate issue and hamper the long term success of the affiliate program.

Another key (and obvious) point of the presentation was that affiliates work on a performance basis. It is, of course the natures of affiliate and performance marketing. Affiliates must and do often invest thousands of dollars and hours with no guarantee of any return whatsoever. As a result, merchants should understand this and work with affiliates to develop policies; payouts and practices that an affiliate can count on when doing business planning.

The example provided was that of an affiliate of a tax company. The affiliate setup PPC search campaigns a couple months in advance of tax season to start building awareness of the company on his own dime and time. After running the campaign for several months, the tax company changed its policies to prohibit PPC search affiliates. From an affiliate point of view that sucks, it really sucks. So what’s an affiliate to do? get in touch with another tax company, change the links out, change the landing pages and display URLs and send those sales to the competition. Would you expect anything different? Would you do anything different if you were in the affiliates’ shoes?

The bottom line, is that communication goes a long way. Sometimes you need lots of communication, sometimes not, but its nice to know that if necessary affiliates and merchants can reach out to one another to build better relationships for everyone.

Over time, more companies will come to understand and appreciate affiliate marketing. As the affiliate managers move up in their respective organizations and bring a new perspective to online marketing, the landscape will start to change. Marketing budgets will start to be seen as an investment instead of an expense. The funds for affiliate marketing programs will truly become unlimited at a profitable cost per sale, per lead or percentage payout.

Let us hope, however, that the entire online marketing landscape does not become a pure affiliate model. There is value in branding and creating content that is not purely designed to sell more stuff. Great content sites aren’t often great affiliate sites and as such would be severely hampered and may start to go offline if they only generated revenue based on the number of direct sales they generated.

The affiliate model has a lot of growth left in it but is by no means the only model. For the sake of valuable content sites, lets hope we don’t eventually go only to a rev share or CPA model so that all or most online content is only there to sell more stuff.

On September 9, 2007, CJ kicked off another stellar CJU conference in Santa Barbara, CA. Having been to and spoken at numerous Internet Marketing conferences, CJU is always among the best. As is the case at most conferences, the presentations tend to be pretty basic but you always pick up a nugget here and there. The real learning & networking happens in the bar, at the networking events, and at other random places & activities.

CJ has a coupon feed in addition to the merchant catalog feeds that might come in handy. I don’t have a coupon site but knowing that such a feed is available, provides a bit more incentive to work on one.

It was great to meet affiliate managers from companies I’ve worked with for a while that I’d never met before, reps from CJ in various departments from technical services to client and account managers as well as lots of new people from companies ranging from HSBC, Chase Bank, to Fox Interactive and 1and1 Web Hosting. At an affiliate conference you tend to meet people who know how to get things done, to generate sales & leads; lots of them. There were plenty of top performers there with loads of different business models. Of course any conference has a schedule of presentations & some of the highlights are below.

While out there, we had some great times, great food at the CJ events and the local restaraunts, took a spin on some Segway i2’s from Segway Santa Barbara, had a few drinks, made lots of connections and came back a little exhausted but full of new ideas and contacts.