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The Future of Affiliate Marketing – Part 2

This is part 2 of our 2 part series on the future of affiliate marketing to coincide with the panel on the topic at Affili@Syd which we, unfortunately, were unable to attend owing to flight cancellations. Rob wrote the first post which took a broad look across many areas of the industry with an eye towards the technical side. Here I (Murray) present my views with an eye towards the business side of things.

Does Google still matter to affiliates in 2011?
Google, and to a lesser extent Bing and Yahoo, are still the primary drivers of traffic to affiliate websites. To a certain extent some affiliates have managed to successfully leverage social networking platforms such as Facebook and Twitter. The tools provided to date by these platforms for small-scale advertisers are unfortunately still quite primitive compared to Adwords which has been (at the time of writing) more than a decade in development.

In recent years Google has taken a much harder line with various types of affiliate business models particularly (but not limited to) those it regards as engaging in the following activities:

  • Arbitrage
  • Bridge pages
  • Get rich quick Schemes
  • Mirroring and framing
  • Misleading and inaccurate claims
  • Information harvesting

Affiliates deemed by Google to have been engaging in some of these practices have for the most part been given the opportunity to improve their “site quality”. Others, however, who had promoted get-rich-quick schemes (common on lower quality networks), made-for-Adsense (MFA) sites as well as email address harvesting sites (give me your email address and you could win $500 worth of free dog food and a lifetime supply of spam), were banned from using Adwords altogether unless they “changed their business models”. The infamous “Google Slap” was beefed up by the folks at Mountain View into a killer blow with an algorithmic baseball bat.

Consequently many affiliates found themselves booted off the Adwords platform and were forced to find alternative sources of traffic in order to make a living. Some of these included the Bing/Yahoo alliance (and other smaller search engines), social networks, display advertising and the adware/spyware-driven pay per view traffic (PPV).

It has been suggested by many people in the performance marketing industry that “Google hates affiliates” or that Google has “declared war” on affiliates. In our experience this is not the case. It is, however, probably fair to say that Google hates lazy affiliates but tolerates hard-working ones with approved business models. As regards affiliates engaging in models, practices and techniques of which it disapproves, a “war” is not an entirely inaccurate descriptor.

The announcment of a new landing page “quality score” system in late 2005 almost went by unnoticed. Like an unmanned drone dispatched late at night to spy on its enemies, a new landing page quality score bot was unleashed upon unsuspecting Adwords user’s websites. Within hours a machine-driven algorithmic judgement on “landing page quality” was handed down upon tens of thousands of affiliate websites. Suffice it to say, the “Google Gods” were displeased with what they found and apparently not in a forgiving mood. Thousands of webmasters were slapped overnight with $10 minimum bids across the board and, for all practical purposes, banned from the platform. Compelling “victim impact statements” lodged to Adwords support the next day by affiliates hit by the slap were simply brushed aside.

Advertisers were shocked and dismayed to discover that this wasn’t an algorithmic glitch or a bungled roll out of the new bot. It was part of a carefully planned strategy to aggressively weed out lower quality sites and had the full approval of the company founders Larry Page and Sergei Brin. These events of December 2005 were the opening salvo in a highly systematic and and increasing sophisticated campaign Google has waged since then against so-called “thin” affiliates who in their view deliver “a poor user experience” with little value-added original content.

These events kicked off a reaction among many affiliates not entirely dissimilar to the one outlined by Elizabeth Kübler-Ross who detailed what people experience when they told they are about to die. Commencing with denial:It’s surely just a temporary technical/algorithmic glitch“. Through to anger:Why me? I spend 6 figures a month on Adwords. God damn it they owe me!” Through to bargaining: “Please just tell me what I did wrong? I promise to be good.” Followed by depression: “Looks like it’s game over for me”. And ultimately acceptance: “Hmm, is there life after Google?”.

Many thousands of affiliates and unsuspecting webmasters were totally wiped out by minimum bids of $10 and simply surrendered. Other more savvy affiliates were eventually able to pick themselves up, dust themselves off and slowly recover from the quality score bot carnage by registering new domain names and adding new content such as reviews, articles and price comparisons. Since 2005 Google has not relented and has continuously raised the bar for affiliates seeking to use their platform.

These developments have meant that Adwords then (and Adwords today) is simply no longer an option for large numbers of “ma and pa kettle” wanna-be performance marketers looking to supplement the income from their day jobs. The official line from Google is that quality score is primarily designed to improve the overall relevance of search results for Google users and also to improve the ROI for advertisers. People who can’t devote the time, resources and energy or who don’t possess the know-how to improve their quality scores are now simply forced to find other sources of traffic or give up all together.

For those affiliates, however, who have been able to satisfy the Google landing page algorithms the introduction of landing page quality score has actually proven to be a positive step in some respects. This is because it has reduced competition from other less savvy affiliates who had been driving up the costs of keyword auctions with MFA sites and thin “bridge pages” which linked directly to merchants.

Is the “bridge page” affiliate model dead?
For affiliates for whom search engine marketing is an important traffic source, content is critical. Content can draw people to a site and keep them coming back regularly for updates. The Google search algorithm loves high quality original content – even more so now after the recent panda update. Content often takes the form of user reviews, price comparisons, articles and blogs. It is no longer sufficient for affiliates to quickly knock up so-called “bridge” landing pages to send traffic to merchants. The search engines have progressively made these kinds of pages impossible to advertise on paid search and have taken steps to remove them from organic search.

Quality though can be a double edged sword for affiliates. Generally the primary goal of an affiliate’s website is to send highly-targeted traffic to a merchant’s site so that the traffic can convert to sales and leads for which the affiliate receives commission. If, however, the affiliate has built an outstandingly content-rich site it may be the case that users have too much choice of what to do and either get confused or consume the content and leave without clicking through to a merchant. In reality the best click through rates are often obtained with thin bridge pages containing a single, large “click here now” button to send users through to a merchant. Consequently affiliates need to find the a balance between building sites with loads of quality content to satisfy the search engines whilst still providing plenty of easy exit links to merchants so they can monetize the traffic. It comes back to the business model as well. Are you trying to send as many people through to merchants as quickly as possible on their first visit or are you trying to build an audience that will convert later without a continuous ad expense to keep attracting them back? Juggling both of those requirements can be difficult.

Is the future mobile?
Mobile is without doubt going to be a vitally important component of eCommerce and affiliate marketing in the years ahead with the sales of Smart Phones predicted to exceed the sales of PCs. In 2011 the percentage of mobile users who purchased something via their mobile devices was 13%. In addition to making mobile-friendly landing pages affiliates will need to consider if their niche lends itself to the development of a mobile application. If it does it could open the door to copious amounts of quality free traffic. Although the development of a smart phone app is a much more demanding process technically for traditional affiliate marketers, if it is well designed and marketed it can provide a massive source of new traffic to generate qualified leads and sales.

Ideally affiliates should develop a traditional site optimised for a PC, a mobile site for smart phones and tablets as well as a mobile app. Such a strategy would future-proof an affiliate’s traffic sources; however, it runs the risk of diverting time and attention away from the affiliate’s traditional means of acquiring traffic (ie. the standard website optimised for a PC) which may still deliver a better ROI for the time and money invested. As an interim measure affiliates should at the very least start to track traffic and conversions from mobile devices and tablets separately from traditional PCs and Laptops and build up a profile and knowledgebase of their mobile traffic so that they can make informed decisions about whether it is in their interests to invest time and money in optimising their sites for the mobile platform.

What kind of analytics tools are useful for affiliates?
We believe that high quality landing pages, built to appease an increasingly fastidious Google algorithm, combined with the use of third party analytics tools such as Google Analytics as well as a new breed of specialist affiliate-friendly apps likes Afflclicks are going to provide the most profitable outcomes for affiliates in the long run. The concept for Affclicks arose after many years of running performance marketing campaigns virtually blind. We realised that Google Adwords’ conversion tools were exclusively geared towards the requirements of eCommerce merchants with no options available for affiliates to measure how effective their PPC activity is at a granular level once a site visitor has clicked through to a merchant – other than through tedious manual correlation of IP addresses which is so time consuming as to be completely impractical. Other products we sampled either proved to be ineffective in terms of gathering the required PPC and commission data to effectively determine profitability or were geared towards agencies and were cost prohibitive.

Affclicks has been designed to help affiliates invest their hard-earned in the areas of their business that drive revenue and profits and cut their costs on activities that are not delivering a solid ROI. The primary focus of the application to date has been PPC keyword and adgroup performance analysis. However the application has recently been expanded to encompass organic search data analysis. There are plans afoot to increase the scope of the application even further to include landing page and ad creative performance analysis. Common tasks such as the pausing of unprofitable keywords will be automated and/or semi-automated via sophisticated user-defined business rules and will take much of the grunt work out of maintaining large PPC campaigns. If in spite all of the barriers to entry Google has erected, your site makes the grade in terms of quality score, Affclicks can help you tweak and fine tune your PPC campaigns to perfection squeezing the maximum possible ROI from the platform.

The Future of Affiliate Marketing – Part 1

This is part 1 of a 2 part series we are doing on the future of affiliate marketing to coincide with our panel at Affili@Syd on the same topic. Unfortunately now that we are unable to make the panel these posts can now be taken as a summarization of our views.  I (Rob) will be taking a look at the progression of the technical side of Affiliate Marketing while Murray will take a closer look at the business side of it.

The way the future will affect your affiliate business is probably strongly tied to the model you are using. I identify 2 main models: those in which your product is presenting affiliate products in a way which you consider to be more useful to the end user than them going directly to the merchant and those in which your main product is some other form of content or user interactions which you are using affiliate marketing as a way of monetizing a user base.

One of the key drivers of change in affiliate marketing is Google. Google makes up the vast majority of search traffic that most sites receive (dwarfing it’s nearest rivals Bing/Yahoo), it has the power to both build and break vast content networks as sites like Mahalo have found out. In the past, when Google was just beginning search advertising, the restrictions on what you could advertise were weak, placing down a single landing page with a few links could produce a large return for affiliate marketers. Of course in many cases this wasn’t overly useful to end users, as with most platforms (Facebook, Apple app store etc) there is a gold mine for early adopters before things settle down and quality rises to the top. A large portion of Google’s revenue, 96% in 2010 in fact, relies on users continuing to find Google ads to be useful enough to click on.

The result is new rules which effect the way affiliates advertise, a couple of instances which can results in bans are made for Adsense arbitrage and bridging pages. Made for ad sense pages are ones which have been created with the primary purpose of getting the user to click on the Adsense ads to drive profit to the publisher. The arbitrage component is when the publisher is bidding on Adwords with the intent of making more money per click through Adsense than it is costing them in Adwords. A bridge page is when Google considers that the primary purpose on the landing page you are advertising is to drive traffic to another page, in this case products on a merchant’s site. Bridging pages are a little harder to avoid, especially when your main product is presenting merchants products.   Google expects each site to value add around the products being presented. Stuff like comparisons to the same product at different merchants, user reviews and ratings, professional reviews and additional descriptions. This is driving a lot of change in affiliate websites as what was once thriving, profitable campaigns are now no longer being allowed onto Adwords, the time of a one page affiliate site is coming to a close.

Those publishers using affiliate marketing to monetize their original content are also facing hard times and a changing landscape courtesy of Google. Recently Google introduced the Panda search update, aimed ranking content lower which was deemed to be from low quality content farms or taken from other online sources. This has had the unintended side   effect of making it harder for legitimate to rank above those either outright taking or rehashing their content. Google search results is mostly a winner take all game, with around 50% of searches resulting in the first result being clicked on. Having this converted first position for the keywords relevant to your business can easily be the difference between turning a decent profit and making a loss. You may ask, why isn’t site the that has invested the time in creating relevant and useful content being rewarded with the best results? This is mostly due to an arms race between Google those working on search engine optimization. Many of those creating spam sites using other content are also well honed at optimizing their websites to be exactly what the Google algorithms are looking for, leaving the smaller operators coming off second best despite investing in producing content.

 

Example Click Rankings : Taken From A Leak Of AOL Search Data in 2006, read more: http://www.agent-seo.com/seo/click-distribution-percentages-by-serp-rank/

 

Despite the hype around social networking being a saviour for those sick of having to deal with Google’s effective search monopoly I don’t think search marketing is going away any time soon. While social will work for certain affiliates, those that can cultivate an audience around their offering and engage them regularly (similar to those that have successfully ran discussion forums in the past), those looking to acquire users and push them quickly to convert won’t see a great deal of help from social ads of a basic social presence. The motivations behind the users that is seeing your ad on a social networking website are very different. With search they are actively seeking out the product that your keyword is matching for, on a social network they are generally conversing with friends and aren’t in a buying frame of mind. Ad’s that attract their interest and send them to a Facebook page based around it rather than trying to directly convert will see far better click through rates. It is possible social sites such as Facebook may eventually take hold with enhanced search engines drive be social recommendations rather than algorithms but this is still in the distant future. It is more likely we will see search engines like Google leverage social recommendations to aid algorithms rather than replace them as we are seeing emerge with the +1 button.

In addition to Google creating a need for more complex websites consumers are pushing in this direction to. Consumers have progressively grown more tech savvy and have placed more importance on the online medium as a primary method for both product research and purchase. While I don’t agree with needing a full blown system of product comparison, searching, sorting and user reviews around every affiliate site consumers are certainly demanding more of the sites which they visit. For those interested in attracting repeat customers much though must be put into creating unique value over the merchant sites you are linking to.

Unfortunately all signs are pointing towards the future becoming increasingly difficult for newcomers to affiliate marketing. Becoming established though is becoming ever more valuable as increasing amounts of consumer purchasing is done online. This is driving more merchants to consider opening up their businesses to affiliates as a new revenue stream. Merchant uptake of affiliate programs, especially in Australia has been fairly slow, many of the established retail brands like Harvey Norman, Kmart, Target and Myer are only now realizing that online is quickly becoming consumers preferred way to purchase.

As affiliate marketing grows the technology powering it becomes more important. Many affiliate networks currently have out of date software that make it hard for the affiliate marketer to get all the information they need to run their business. The more progressive networks though are moving towards things like cookie-less tracking to ensure affiliate based sales aren’t missed, comprehensive reporting, prompt payments and API’s which allow users to both retrieve performance data and access product feeds to automatically update their websites. On the Australian front I look forward to the launch of Commission Factory which appears to be a network that will embrace these technology changes needed to support the increased sophistication of affiliate marketing into the future.

Networks are also turning an eye towards mobile, the new boom area in computing. While mobile can be similar to traditional online experiences there are tighter restrictions because of screen size and the intermittent/ slower nature of connections. A very recent movement in mobile is known as responsive design, basically this means using media queries in CSS3 to apply different types depending on the screen dimensions of the viewing device. I think as there is support from more devices for this standard it will be used more and more to manage a single presence across the normal web and mobile without having to maintain individual projects.

Mobile also allows for location based services, which depending on your site/ app can be used to choose what to present to a user. An example of that is only showing content relevant to local merchants to a user when they view your page, this especially works well when it’s services that you are selling. Many are seeing the value, despite the extra effort required, in building native apps for platforms such as iOS and Android. Caution must be shown here though, as building native apps generally requires a separate technology stack for each platform, resulting in either a steep learning curve and maintenance for affiliates building these apps themselves or a hefty bill to outsource quality the building of quality apps which pass Apple’s and other review processes. I would recommend, if going down the app path as an addition to your current offering to build a html app first to test the waters before investing in platform specific apps.

As affiliate marketing gets more complex it is important to track as much data as possible, even if the data may not be able to be used now. An example with Affclicks is that I was recently thinking about tracking amount of sales that come x number of days after a click through to a merchant to determine things such as is a 10% commission with 60 day cookie deal better than a 12% commission with 45 days cookie deal. While that currently isn’t a feature, having the data there allows these future inferences to be made. Another few areas of tracking which may be on the rise is A/B testing, heat mapping mouse movement and also heat mapping eye tracking. A/B testing is when a the same page is displayed to users with different small variations in order to measure which variation has the most positive impact. In terms of affiliate marketing this may be measured on either click throughs to merchants or commissionable sales/lead from the merchant. Tracking mouse movement with a heat map can show what is grabbing users attention and what is confusing them, leading them to click away from your page rather than convert. Similarly eye tracking tests are easier than ever to conduct with companies such as GazeHawk using webcams to conduct them.

A example of what a mouse tracking heat map looks like, identifying where the most attention is given on the page. Source: clicktale.com

Affiliate networks exist to serve the interests of both the merchants and the publishers/marketers, Google serves their own interests and those of their end users both in advertising and organic search results. This means that they both aren’t always serving the affiliate marketers best interests. That’s where Affclicks comes into the equation, built from the ground up by affiliate marketers for affiliate marketers specific to their needs across both the search marketing side and the

Increasingly, having the best offering means joining programs across multiple affiliate networks, without good aggregation software though this has meant a large increase in the affiliates workload to monitor these efforts through different reporting interfaces. Also even with mastering these offerings reconciling commission with organic and paid search efforts has been a challenge. Going forward software like Affclicks a similar will be key to maintaining increasingly complex affiliate marketing efforts.

Affclicks makes it easy to manage the many networks a modern affiliate business may use.

Changes have and will continue to present challenges for affiliate marketers, the barrier to entry has increased in recent times and looks set to continue to do so. For affiliate marketers that can overcome this barrier though there is a wealth of new opportunities, both now and into the future. Having the right tools to navigate the affiliate landscape and ensure that your effort is being placed in the right areas has never been more important.

 

The Google +1 Button

Just this week Google has released the +1 button for embedding it websites. This button is similar to the social buttons we have seen from the likes of Facebook, Twitter and others. It has been available to be clicked on in the index for some time, although this breaks the normal flow of searching then viewing results pages, people don’t want to click on your site then go back to Google to +1 it.

Currently the motivations for users to click on this button aren’t as clearly defined as they are for other social buttons, with Facebook clicking the like button is a shortcut to sharing content you like with friends, with Twitter it is a shortcut to sending a Tweet with the same effect, sharing content. With the +1 button due to Google’s lack of a centralized social platform currently the main effect of a user hitting a +1 button is that their friends (if they are connected to them on Google through things like Gmail and Buzz) will see those sites +1ed highlighted in their search results. Given how diverse search results are and how friends aren’t necessarily going to like each other’s recommendations this button provides little utility to the end user currently. It seems more of a play by Google to build up a graph of recommendations as to not fall behind on all the data Facebook from the like button.

Having said this though, depending on your affiliate model this button could be the most important one you can have for users to click on. This button is also being included for paid ad results, while quality score won’t be affected by it currently the social proof of a site having quality content will lead to better click through rates than those that don’t. It is also being used as a factor for organic search ranking meaning that appeasing the Google algorithm isn’t the only concern to take into account now when working on an SEO strategy.

 

 

With all the social services currently competing to have their social add buttons across the web (a quick look at addthis.com shows over one hundred services with buttons to choose from) button fatigue becomes a real issue. Having too many buttons may just confuse users and have them not clicking on any of them. I would suggest not having more than 4 and removing ones fairly quickly that are showing little impact relative to others. The choice on the +1 button, as I said earlier, comes down to your model. If you are a straight through affiliate site, relying primarily on organic and paid traffic with little retention then the +1 button is your number one and may suffice being the only button. This is because most users will be more likely to share the sites your linking to rather than your own site, all you want is better organic rankings and better ads click through rates. If you are an affiliate that tries to retain a customer base through value add the choice becomes a bit harder as the Facebook like button is probably the number one thing you want.

As always making measurements on your choices and iterating depending on the numbers will lead to the best results.

Rob.

 

Welcome to the Affclicks Blog.

The Affclicks blog will serve a dual purpose, firstly to inform and discuss developments on the Affclicks product, then also to follow the latest news and techniques from the fields of Affiliate Marketing, Search Engine Optimisation (SEO) and Pay Per Click Advertising (PPC). We will also cover Social Media and the other forms of online advertising. These are all areas which are covered widely online, but not always from the perspective of the Affiliate Marketing community that we serve. Here you will have discussion of these topics tailored to your needs with the emphasis on how you can use this information to improve your business.

For those that don’t know Affclicks is a web app that provides analytics for affiliate marketers. These metrics differ from the type you get from say Google Analytics in that our focus is metrics relating to financial performance, the profit and loss breakdown of your affiliate business. The key things we track are the costs incurred from PPC and the profit in term of leads and commissionable sales that this spend has driven. This is done right down to the keyword/ search term level so you can get granular performance information allowing you to both monitor and make actionable decisions.

We remove the need for separate tracking on both the cost and the profit sides. Many affiliates use affiliate network stat aggregation products to track their leads and sales, Affclicks does this in addition to the extra tracking features and features on the ads/cost side. We also track organic traffic through your site and leads leads/ sales generated from this to help with SEO strategy.

That is just a basic introduction to the product which will be examined in more detail on this blog as time goes by and release gets closer. If you are interested in getting early access our beta release head over to affclicks.com and leave an email address. Affclicks is now being refined for public use so a beta isn’t far away.

If you have any other questions, drop us a line and we will be happy to answer. If people are interested and need specific network support we can also accommodate this if demand is strong enough for specific networks, currently supported networks are:
Commission Monster
Clix Galore
Commission Junction
Affiliate Window
Web Gains
TradeDoubler
Adtraction
Link Share
Paid On Results
Zanox
Affiliate Future
Buy.At

Thanks for reading and expect to hear much more on Affclicks soon.
Rob.

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