Want to make 2003 a good year? Start with a new focus on improving ROI and lowering customer-acquisition costs by focusing on performance. If you pay CPM, make it perform. If you run a CPA campaign, prove it works, so your affiliates will roll it out widely.
The funny thing about most end-of-the-year articles is that they try to predict trends based on what they hope will happen with company spending. Many of these writers are agency folks who love to take big budgets, charge outrageous CPM prices, pretend they're doing targeted marketing and then cry when the client goes away despite their polysyllabic defenses of poor marketing. This type of person hates affiliate programs because they are based on performance - on getting down in the trenches and actually acquiring customers.
- Email used to be quick and easy. Now you have to ask yourself if your message will get to its target. Is that list a spam list? Or one to which a billion messages are sent a month, making it inherently a spam list, no matter how it was compiled? Do you, like many others, wonder if you should even try to email AOL, Yahoo! or Hotmail? For a hint of the real future, look in your snail mailbox. See the piles of junk mail? Like it or not, this stuff doesn't go away, and neither will email. With such high margins, it is a game of volume, so those work-at-home and debt-consolidation offers won't go away anytime soon. For those of you who want to be snobs, remember that repeated marketing messages are most often a sign of success, not stupidity. While you may consider yourself superior to your neighbor, people out there are buying these products. Look for new regulations, massive lawsuits against scapegoat spammers, and a new trend towards sending less email more often so it gets to its destination by avoiding volume filters. Sound crazy? In the email environment of 2003, less is definitely more.
- The power of adware: meet the new boss, same as the old boss. Like it or not, it's working. Adware (aka "stealware") companies are on the forefront of controversy in the affiliate community, resulting in the new code of conduct issued by CJ, Performics, and Be Free. LinkShare is offering its own anti-predatory advertising addendum to keep adware companies from hijacking affiliate links through technology. Meanwhile, the major players in adware like Gator and WhenU continue to dominate the new game of contextual linking. Will the adware players agree to play by the affiliate networks' rules? In the ever-changing game of affiliate programs, some of these adware companies consider themselves more than affiliates. Merchants will follow the sales no matter what the controversy; in tight markets, ethics are nice but profits tend to win out. In the coming weeks, look for more articles in this column covering the ever-growing power of adware companies and the threat they pose to traditional affiliates.
- Pay-per-click affiliates continue to be threatened by Google and Overture. It's no secret that most programs' top affiliates dominate the pay-per-click search engines. These affiliates are better than most companies at buying groups of keywords, laying out their smart bets using a system like intelligent Vegas gamblers, and generating monthly revenue. But with Google's recent release of Froogle (and seeming animosity against top affiliates who learn their tricks), as well as Overture's inhibitive rules on affiliate links, these super affiliates are clearly threatened. Problem is, these affiliates still do it better than others who would take their place.
- Affiliate programs go pro with private affiliate programs. Why would you want thousands of affiliates posting your banner, when you can start a business development incubator within your company instead? The real value of affiliate programs is in testing and identifying the best partners with which to work. While most still use affiliate programs to place low performing banner ads, the new breed of affiliate programs carefully select and develop their top affiliates into business development partners. As with most good things, developing a business relationship begins with a foundation of proven performance and grows from there. After that foundation is established, you pay a hybrid mixture of CPM and CPA based on performance.
- Testing becomes sexy, and affiliate programs take center stage as the platform to do pay-per-performance testing. It is no longer sufficient for companies to keep their affiliate programs separate from their online advertising programs. The new affiliate program is a testing ground for new creative, new ideas, and new markets - with performance as the measuring stick. Even if the program doesn't sell, it can help save money on ongoing CPM buys by testing creative before making the ad buy. Sound simple? Then tell me why most companies still operate their affiliate programs as some form of amateur banner farm, instead of exploiting it for what it is, the most effective way to develop and test creative with an avid, active, and innovative marketing force paid on performance.
- Pay CPM, prove CPA: the risk reversal of affiliate programs is in high gear. Smart managers are now learning performance media buying, going out with their ads and buying low-cost emails, banners, and pop-ups to see what works. They understand the categories and sites that perform and benchmark their results. By paying up front for the initial test, smart affiliate managers prove their case and then scale up using the lessons learned; if not, they drop the campaign and try elsewhere. This is extremely cost effective and, most importantly, saves time for both the affiliate network and the affiliate.
As you can see, the top trends are right in front of your eyes. So it's your choice - wait for the day a predicted trend happens (in which case, by the time you hear it, it's old news) or invent your own future by taking charge, testing, and proving your affiliate program worthy.
Declan Dunn is CEO of ADNet International, a direct marketing services provider that focuses on select projects and its own super affiliate network, including the Net Profits business training systems delivered at ActiveMarketplace.