Adam Jewell - Search & Affiliate Marketing

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.