Adam Jewell - Search & Affiliate Marketing

So the last time I spoke at Search Engine Strategies was in Toronto in 2006, I believe. That panel was on shopping engines (yawn!). Sure, there are some things you can do with shopping engines. You can try all the different ones, spend lots of money on them, pay their ever-increasing cost per click rates and sometimes generate a decent ROI. For the most part, you just send them a feed of your products, enable people to do price comparisons, and generate smaller average order values than other online marketing vehicles tend to generate.

This time around I’ll be on the “Dealing With Affiliates” panel. It seems that maybe affiliates have a bad reputation in the Internet Marketing industry. When the panel is called “Dealing With Affiliates“, it kind of gives it a negative connotation - kind of like dealing with a clogged toilet, not very pleasant.

To some degree, affiliate marketing deserves this negative connotation because of some of the early aggressive tactics used by affiliates over the years. Spyware and cookie stuffing have been problems over the years that gave affiliate marketing a bad name in the past. Affiliates have frequently spammed the search engines so merchants don’t have to do it themselves so that probably makes some affiliates evil in the eyes of Google.

One problem the affiliate industry has is that few people really understand it. In traditional sales and marketing terms, an affiliate is really just a contract sales person who doesn’t get paid anything unless they generate sales. An easy way for the average online marketer to think about affiliate marketing, is that the affiliate does the same thing you do, except they generate sales much more efficiently and at a much lower cost of marketing than the average online marketer. The affiliate has one goal - sales.

Affiliates tend to be small companies or individuals who don’t have to with the organizational issues associated with most organizations. They find what works and do it. They adjust their promotion methods to maximize sales and profits. They don’t get paid for fancy ads or aggressive bidding unless it makes money. Good affiliates may have big egos but they run tight, smart, profitable online marketing efforts.

Most of the issues around search and affiliates are only issues because companies have a lot of things that distract them from making money. They focus on things that really aren’t that important. Is the affiliate out bidding us on “our” keywords? If “our keywords” are anything but the company’s brand terms, the company should be happy that the affiliate is promoting them and not another company.

When it comes to paid search, many companies prohibit affiliates from using their display URL in PPC ads and linking directly to the merchants website. Sometimes there may be good reasons or this. If the merchant has a really, really good internal PPC program, opening up use of the display URL may not be advantageous. Lots of in-house or 3rd party run PPC search programs suck and as such could use some affiliate involvement to make more money and get better coverage. This is always a hot topic and is sure to lead to heated discussions on the panel. It did at CJU 2007 in Santa Barbara and definitely will at SES.

One company sent me an email today about their affiliate program with the headline:

Company XXX Search Marketing Allowed! Please review

Hmmm, I must have joined this program at some point but never did anything with it. I probably never will. Search marketing is allowed with the following restrictions:

Strike One - Affiliates can NEVER under any circumstances use the company display URL in a search ad.

Strike Two - Affiliates must never use company brand names in search copy regardless of the keyword searched. hmmm..is that paid, organic or both?

Strike Three - Affiliates must NOT serve ads that appear in a higher position than our ads. hmmm…so if the affiliate can write search copy and link the ad to their own website, this merchant is going to tell the affiliate to stop bidding on the term or get the (CTR*bid price) down below the ads run b the company.

So they do permit search marketing, but you can’t mention the company you are promoting in “search copy” whatever that means, you can’t link direct from PPC ads and you can’t appear above the merchant in the search results on any keyword.

This is exactly how you encourage any search affiliate to promote the competition if the industry has any opportunities for affiliates. This company either has amazing search programs going, has a lot off ego, or doesn’t put much value in the affiliate channel.

See ya in Chicago for a lively affiliate session!

A recent article in the NY Times echoed my own thoughts about management & the MBA. Granted my edumacational background is in Industrial Engineering and I might go for an MBA one of these days; more for the networking and to explore some new stuff, than to be able to beat my chest and say I have an MBA.

Even in Industrial Engineering, there seemed to be quite a distinction in the approach and methodologies between solving engineering problems and business/management problems and issues. Most of my business classes were taught by the business school. Some were good and some like accounting were “educational” I guess but often times seemed to make no common sense. In a science or engineering arena, the goal was to understand how things worked and solve problems. In business, the approach was to project a certain way of thinking onto a business and the market and try to make things work the way you thought they should work - even if things obviously don’t work that way.

In science and engineering classes, problems had to be solved - you had to work hard to understand something outside of yourself. Science works the way it works and its up to you to understand it and figure it out. In business classes and accounting in particular, an artificial model of the business is developed and we then proceed to try to make reality fit in a spreadsheet. It never seemed to be like that made sense. It makes the accounting types frustrated because they can’t get reality to fit in a spreadsheet and it makes everyone else crazy because the management theory tries to make people and the things they do fit in a spreadsheet.

In a TQM class, we had to read The Goal - by Eli Goldratt. It was at that point that things started to make sense and it seemed that someone had finally recognize the connection between science and (sometimes) living and breathing organisms called businesses. Finally, a way to figure out what to do, where to focus energies, efforts and investments to push more stuff through a system by elevating the one thing (constraint) that keep the system from growing or becoming more efficient. Along with the Theory of Constraints (TOC), the idea of the Learning Organization and Systems Thinking as written about by Peter Senge in The Fifth Discipline will become more necessary.

Back when Alfred Sloan was developing management practices to streamline GM, those typical B-School types of management theories and practices helped to bring more consistency to the operation of a business and helped to fuel the Industrial Revolution. At that time, there was no Internet, advertising and marketing were targeted based on demographics and there was a clear distinction between advertising and sales.

In the past, businesses did some market research, developed products and services and then forced people to view advertising on TV, in print & via direct mail. The advertising was quite separate from the sales process. You couldn’t click on your TV or newspaper and make a purchase. You also really had no idea how most of your advertising and marketing dollars were performing. If overall sales went up, you probably spent more. If they went down you spent less.

As the Internet continues to grow and even before it took off, some of the most successful business leaders like Bill Gates didn’t get MBAs or graduate from business school. Now that the torch is being passed to Google and Google charges ahead on its way to being the most valuable company in the world, it is again non-MBA/B-school types that are leading the charge.

Google makes virtually all of its money from selling text ads targeted to people when they are actively looking for something. They’ve turned advertising and marketing upside down and given most business people big headaches. In order to succeed, businesses now have to understand how their customers think and cater to them instead of trying to make the market buy things the way the business thinks they should be bought. Big traditional agencies are stumbling and so are big businesses themselves. The good ol’ boys still think, why would I want to target people who are looking for what I have to sell them when I can just market to the average person who buys my stuff through demographic targeting? Maybe they think if they can just keep the status quo until retirement in a few years, they won’t have to face the new business reality. Good luck with that!

While business fundamentals like organizational skills, project management, finance and accounting are still vital to a business; they need to be adapted to the new marketplace. How can you teach the realities of the new marketplace in a business school or any school? In my opinion you can’t. People either “grok” the new business reality or they don’t. The successful organizations of the future are more likely to be led by those that can bridge the gap between technology and understanding consumers and interpreting statistics & web analytics.

So just how do we train the business leaders of tomorrow & how will business school programs evolve to the new realities of the marketplace? Could technology evolve far enough to handle marketing and sales to individuals online and enable the status quo to remain in place? Will tomorrow’s business leaders even need to go to business school or will they grow up with an intuitive sense of the opportunities the web presents and naturally just get it. One thing is for sure. There are plenty of web savvy marketers working their way up some really large organizations who know that their companies don’t get the web. In 5-10 years (maybe sooner) these people will start to get more senior positions, become some of the most valuable execs in their organizations and the business world will undergo an even more rapid evolution.

The Segway is an engineering marvel but does that mean you should buy one if you have an extra $2,000 (for a used generation 1 model) to up to $6,500 for a new generation 2 model?

Well in some cases, a Segway is a solution without a problem. If you’ve ever been on one, you probably marveled at the freedom it provides, how effortlessly you can simply lean that way you want to go an go there. Maybe you took a tour while on vacation and had a blast and are thinking about buying one now that you’re back from vacation.

The first time you tried a Go-Cart you probably had a blast driving it around the track and thought about how much fun it would be to have one at home. Despite your enthusiasm, you probably didn’t buy one because you didn’t think it practical and pobably wouldn’t use it. While a Segway has more practical uses than a Go-Cart, just becaue you had a great time on a Segway and in most places you CAN take it out on the sidewalks, doesn’t necessarily make it a good thing to buy.

If you are going to buy a Segway, you need to buy it because it will serve some purpose. Maybe you can take it to work instead of driving or using public transportation, maybe you can take it shopping for quick local trips, maybe you know somoene else who has one and will have a partner to go gliding with. Maybe the local golf course permits Segways and you golf a lot. In any case, if you are going to lay out the cash for a Segway, buy it because it will serve a purpose, not because it is a cool technology toy.

In most cases, you probably won’t be able to cost justify the purchase of a Segway in terms of realized cost savings from simply not driving your car because you’ll still have to pay for car insurance (and for your car if it is not paid off). You’ll save a few bucks in gas but if you burn a gallon of gas per day going to and from work and gas skyrockets to $5.00 a gallon and there are 250 work days in a year, you’ll only save (250*$5.00) = $1,250 in gas over the course of a year. It will take you about 3-5 years to save enough to cover the cost of your Segway. If you can save gas and say, $100/month in parking (because in most cases you can take the Segway right into your office or cube), then you may be able to beak even in as little as 2 years. In this case, a Segway may actually be considered an investment.

If you can use it to run errands, go for shopping trips when you don’t need to bring back a lot of stuff or for simply traveling around the neighborhood, then you’ll get some additioanl use out of it that can help justify the cost.

Many of the people who have Segways available on Ebay are in fact people who tried a Segway, thought it was a great way to get around or just a neat toy. They went out to a local dealer and bought one or more only to find that they didn’t really have and good use for it. If they paid retail, chances are they are going to have to take a loss of up to $2,000 per unit when selling the unit(s) on Ebay.

If you are going to buy:

Make sure you have a real use for your Segway

Consider buying a very lightly used Segway since you can often get one for $3,500 - $4,500 and save $1,000 or more off retail.

Buy from a local seller if at all possible so you can inspect the machine you are buying.

If you are tight on cash and looking at a Segway as an investment that will pay for itself in other transportation cost savings, be real about how much you will actually save. Unless gas gets really expensive, or you can get rid of your car, it will be tough to cost justify a Segway.