Re: The CPA debate vs. Affiliate Programs

From: Wayne Porter <wayne_at_afftrack.com>
Date: Tue 12 Feb 2002 15:46:38 -0600

I have to fire off a retort in response to Pesach
Lattin's post regarding affiliate programs where he
says "Let's make it clear: affiliate programs are
not for professional marketers, or serious websites."
While I enjoy Pesach's sardonic wit and adbumb
publication, he is misinformed. There are a number of
large properties generating significant amounts of
revenue from performance based and/or hybrid
relationships- even with CPS structures. These are
serious businesses not hobbyist sites.
 
I not the least bit surprised at the ignorance
displayed toward "affiliate programs" in part due to
the large amount of hype and poor implementation of
partner marketing. First, an "affiliate program"
usually signifies a commissionable linking relationship
between a merchant and a publisher in its most *infantile*
form. The affiliate program is the most appropriate for
small sites, small business, etc. and assists those sites
in generating revenue. However, for larger properties
partner marketing or hybrid relationships are certainly
being entertained and when skillfully executed can generate
large amounts of revenue.
 
The concept received a bad rap when most of the networks
told people that millions of websites would drive sales en
masse. This never materialized for most merchants and never
will. I won't enter into the network debate here.
 
This does not mean the concept is a failure. In February
2001, our firm, AffTrack.com, reported analysis of over
$90,000,000 in e-commerce transactions for that month
across a broad base of heterogeneous relationships and
varied deal structures. I feel that number is significant.
Recently we issued a press release,
http://biz.yahoo.com/iw/020117/036880.html, citing a
tremendous jump in hybrid and pure performance deals
among tier one sites from last holiday season.
 
The failure occurs because publishers do not know how to
parse their real estate, layer in different types of
revenue sharing, use collaborative commerce, syndicated
selling and, most importantly, preserve prime real estate
from media cannibalism. The fact is that successful
performance based relationships take a high degree of
sophistication that many publishers lack.
 
I am not narrow minded and I am not saying performance
marketing is the *only* way. In defense of publishers
affiliate programs are not always the best model to be
pursued, and if not done correctly, can jeopardize
their stance as objective publishers. Performance deals
should not be a site's sole source of revenue, but an
important strut in a multi-pronged attack. When ad
spending is soft, performance will always carry a site
through the tough times. Note to publishers- not getting
any performance from those banners you are slotting into
your 486x60 slots? It is safe to bet your advertisers
weren't either and that is why they have gone elsewhere.
If your inventory isn't working then change it.
 
In summary, affiliate programs are an important form of
revenue generation for small and niche sites. Revenue
sharing in its more advanced form is very alive and well
among extremely large publishers. This includes brick and
mortar brands like General Mills that have morphing into
affiliates as well as merchants who are monetizing
post-transaction real estate.
 
Revenue sharing is very quietly driving hundreds of
millions of e-commerce transactions a year (at least from
my standpoint) while the rest of the advertising industry
complains. Ad dollars will ultimately go to those that can
deliver the best ROI.
 
Regards,
Wayne Porter
V.P. Product Development
AffTrack.com



Received on Tue Feb 12 2002 - 15:46:38 CST