“The Future of Affiliate Marketing” Part #1 – Quality over Quantity
I am sitting here in my hotel room at the InterContinental Amstel in Amsterdam.
I just arrived back from giving the keynote presentation at Affiliate Dag, which was held about 30 minutes from here in a town called Utrecht.
Affiliate Dag is the largest affiliate marketing conference ever held in Europe and it was an absolute honor to deliver the keynote address.
Sooooooooooooo….I’ve been holding out for a few weeks to make this post because I wanted to actually deliver the presentation and get some feedback before I spilled the beans on what I believe is the future of affiliate marketing.
This is my first post in a multi-part series that I’ll call – “the Future of Affiliate Marketing.”
While it may seem that my thoughts are a bit advertiser-focused, in reality I don’t see it that way. I actually believe (in a nutshell) that the future of affiliate marketing will empower both affiliates and advertisers in a way they are not used to. In contrast to the past where I believe affiliate networks really have controlled the conversation, I believe that the future includes a MUCH larger voice for affiliates and advertisers alike.
With the above said, here’s my first thought on the future of affiliate marketing says Kris Jones…
Quality over Quantity
In the past, if you asked an advertiser how successful their affiliate program was one of the first questions would be: How many affiliates do you have?
Well, that is a silly question, especially considering that 95% of affiliate marketing sales are driven by less than 5% of the affiliates.
The 5% of affiliates are actually the ones that control the industry – all advertisers vie for the attention of the top performing affiliates – right?
Clearly, there is a strong argument that in aggregate (total) smaller affiliates can make a tremendous impact on an affiliate program – I agree with this and I believe they deserve some of your attention, but despite this your affiliate program will be more successful by focusing on the quality instead of the quantity of affiliates.
Another primary reason I am advocating for advertisers to focus more on quality over quantity is because it will provide you with more control over your affiliate program, which has become a primary concern for many advertisers.
Control is very important in affiliate marketing, especially as it relates to controlling your marketing message and managing your brand and reputation.
The goal of this series is not to put down other affiliate networks. However, this is one area that Pepperjam Network is superior to other affiliate networks, including Commission Junction, Linkshare, and Performics.
Pepperjam Network was built on the premise of providing advertisers with the tools to focus on Quality affiliates, rather than large Quantities of affiliates – that’s what our transparency system is all about – we give you the tools to know who your affiliates are, what promotional methods they use, and what type of impact you can expect them to make in your affiliate program.
The other networks were built on scale…meaning that wanted to provide with the technology to recruit as many affiliates as possible. Not saying that a bad thing, I’m just saying it is not the future of affiliate marketing.
If you don’t believe me that the affiliate marketing industry is moving to more of a quality marketplace (versus quantity), just take the example of online retailer Zappos.
My understanding is that until relatively recently the Zappos affiliate program on Commission Junction was one of the largest (both in revenues and # of affiliates) affiliate programs in the United States. BTW – I am a major fan of Zappos and consider it one of the best (if not the best) run companies in the United States.
Well, guess what Zappos supposedly did recently – expired about 95% (my guess) of their affiliates.
Without starting a controversy over why they did it (or what the exact percentage was), it’s my guess that they did it for more control over their brand with a central focus on managing higher “quality” affiliates. In effect, this enhanced affiliate transparency makes the program much more managable and allows Zappos to grow their program even more.
Well – there you have it.
The Future of Affiliate Marketing includes the notion that quality is much, much more important than quantity.
If you have an follow-up questions or would like to challenge my reasoning – let me have it.
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May 20th, 2008 at 4:39 pm
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May 20th, 2008 at 11:35 pm
And yet the decision on who to cut out was based on Quantity over Quality. Or else they decided that quantity WAS quality. I know first hand that some of the highest producers have the poorest support and sell the shadiest software in very high volumes. I can get the little guys on the phone at least.
May 21st, 2008 at 4:04 am
Chas,
Thanks for your comment!
I believe you are touching on the exception, not the rule.
Advertiser’s are interested in knowing who their affiliates are and making sure that they are able to work more strategically with them (regardless of size) to maximize the relationship.
My point has less to do with “size” than it does the idea that advertiser’s should work with quality affiliates.
The argument is not only based on ”less is more,” especially if the “less” means higher quality transparent affiliates, but less is more managable and allows the advertiser to best manage their brand.
BTW – Advertiser’s need to understand the differences between the different types of affiliates out there and the promotional methods they use. That’s part of my argument – Quality means only allowing affiliates into your program that are consistent with the promotional methods you allow and want used to represent your product or service.
Thanks again for your comment.
Kris
May 22nd, 2008 at 5:40 am
Hi Kris,
Thanks for presentation on AffiliateDag, it was inspiring! As for your statement to ‘Quality over quantity’, I’m sure you’ve got a good point there. My question to you is, what will this mean for all those affiliate networks? Why do we need them, after we get to know our top affiliates?
Conversive, my company, is an affiliate management agency. With our contacts we can, in time, we can go around the networks.
Is that the future of affiliate marketing as wel?
kind regards,
Joris
May 22nd, 2008 at 7:31 am
Joris,
Outstanding follow-up question!
BTW – thanks for the nice words about my keynote at Affiliate Dag.
I believe you are right – as I mentioned, in many instances affiliates are becoming larger than the advertisers they promote.
While I think there will always be an advantage to affiliates to work through a network (variety, selection) and advantages to advertisers (scale of network, more access to affiliates from multiple categories) I agree that there won’t be as much of a need for Affiliate Networks (as we know them now) in the future.
As you know, I started out as an affiliate and became one of the larger affiliates in the United States by around 2002.
As you also know, I moved from being an affiliate, to an affiliate manager, and added pay-per-click and SEO services, and eventually created one of the fastest (and most celebrated) online ad agencies in the United States.
I went from being an affiliate to creating a leading company with over 100 employees. We do business with some of the leading brands in the world.
Then, we took our massive (and loyal) client list and launched our own affiliate network. Unlike the other networks we built our technology with years of experience as both advertiser (as affiliate program managers) and super affiliate. We are now without question the fastest growing affiliate network in the United States – the others are growing slowly, while we are launching new advertisers faster than I’ve ever seen happen in the 9 years I’ve been in this industry.
Long story short, I building the argument for you.
The answer is an unequivocal YES – successful, proven Affiliates are in a position to bypass the networks. Affiliates are also in a position to launch their own networks.
I will say, however, it is NOT easy.
It took Pepperjam over 2 years to build Pepperjam Network and we had the benefit of a very large existing client roster and a lot of employees ready to help us build the network.
I think other affiliates will attempt to launch their own network but will unserestimate what it will take to make it successful. They will need timing, money, and access to advertisers. Those things aren’t that easy.
Let me know if you have any follow-ups to my thoughts.
Early morning here in the US – I got home from Amsterdam last night and I’m not sure if it’s 7:43 in the morning or 1:43 in the afternoon? LOL
Take care,
Kris
May 22nd, 2008 at 3:32 pm
[...] Time for beer, uh networking and dinner. Kris went home already, because Robyn was feeling kind a tired by the whole Amsterdam Experience and we talked a lot with our friend from M4N and Afili.net, a couple of customers and people just wanting to know a bit more about SEO. Drank a couple of beers with some guys from GroupM/Outrider and just having a good time. [...]
May 28th, 2008 at 12:41 pm
I have a question about the future of this market, before I actually get into my inquiry about this subject I need for anyone viewing this to know that I am still rather new to the market so if this is off key at all excuse my ignorance on the subject. (hints the anonymous , I don’t want to look dumb)
I do understand the concept that quality over quantity, more is def not always better, it makes it rather easy to get lost and confuced in an affiliates site. Less is sometimes better! However, the real question that I have is in fact about the future of the market. From what I have learned to this point (and I am still learning) is that the consumer can benefit financially rather well by just taking the time and searching for deals through some of these programs. I do have a concern though, I feel that this market is going to explode with in the next few years at a rate that i feel will be suprising and perhaps even owerwelmingly (that leads me to my question) with the not so recent drop economically speaking, people need to save money.
Sooooooo the question that I have is what steps are being made in order to educate the uneducated consumer, I ask this because of people like my parents. My parents are what I like to call the traditional consumer, they tend to shop only at malls and such for their needs, they tend to use coupons that are only provided to them through newspapers and direct mailings, the reason why they did not shop through the web was because of the “everything is a scam” “I don’t want to give out personal information” and the ever so frustrating “I don’t know how this works” idealism. This was in fact their mind set until I introduced them to some of these programs and promotions now they get everything from lobster to underwear through the web.
I beleive that their are 3 types of consumers, the educated (what I feel I am, anyways hope), the traditional (Mom), and the NON educated consumer (those are the drunken sailors spending, spending, spending, spending.). But I really feel that these people that fall under the traditional and the non educated should be a focus point in the near future, they need to be reached by some method: radio, tv, maybe a consumer special on a local news network anyway that a mass conservative group can be informed. If these people where to get information I feel that the doors can fly open and take this market on a level beyond belief. I think all they need to know is that its safe and it works. With the slumping economy and gas prices being at almost $4 a gallon why not buy through the web, save yourself a trip and save in long run through promotions.
So basically that is my question, again if it is off the topic I am still new to the market and I do apologize.
June 10th, 2008 at 5:46 pm
Hello Kris,
I too enjoyed your keynote very much at our first ‘Affiliatedag’. Although I’m a small-time affiliate, I still got pretty inspired by your story.
Anyways, about the changes that may or may not follow; I am a webmaster with a couple of niche websites. The thought of small affiliates being left out in this transition doesn’t sound that much fun to me
. In contrast to many top affiliates I depend on the networks. Without the networks I cannot find suitable merchants, mainly because I’m in too much of a niche to seriously communicatie with these (often also smalltime) merchants. However, from the day I started working with some of the networks, I made quite some money with affiliate marketing. But, not that much to run my own show.
I some other discussion on the ‘Affiliatedag’ the final conclusion was that networks should focus mainly on technology, tracking and service, while merchants and affiliates should work together in terms of communication, marketing, branding etc. I see this happen already here in the Netherlands, but we’ve still got a long road ahead. I for instance get sick and tired of the – almost arrogant – attitude of some of the local Dutch networks. Again I depend on them, but I feel like they should enjoy all their liberties as long as it lasts. Sooner or later things will probably change. For example, some Dutch superaffiliates are in the proces of starting a special organisation for all 4 players (affiliates, merchants, networks, managers). I hope this will have a positive impact on the current situation.
Anyways, again thanks for the promising speech.