Affiliate Marketing Challenges: 2012

To start, I’ll say that I didn’t join this industry on the ground floor.  It was 2003, and a fair number of folks had already taken advantage of money making opportunities online.  Amazon, CDNow (remember them?) and a decent number of online merchants had already enlisted webmasters (remember them?) from the United States and a handful of other locales to link to their sites for pay for performance compensation.

 

At the time, the chief concerns for affiliate marketers revolved around two key issues:

  • Tracking – Getting credit for sales you drove through cookies and pixels.
  • Parasites – Having your tracking mechanism over written in a nefarious manner by people who were gaming the system… Toolbars (new at the time), setting cookies without clicks, and other high tech methods deep in the click stream (or in HTTP headers) that we couldn’t all quite understand.

These days, the challenges for an affiliate marketer have expanded.  They haven’t changed, in that the above still exist. So what are the additional threats to the value of the affiliate marketing channel that exist now?

Social Media

Let’s face it. There’s no reason to pay for publicity you can get for free.  And while social media can damage a company’s reputation as often as helping it, being positive about a brand is easier than ever.  A simple click on a Like button, social sharing of custom or modified products, and sites like Pinterest have made free positive publicity the norm as opposed to the exception.

Brands used to fear the social internet, as negative people were far more likely to add input than were brand fans.  That’s changed, however, and social is driving traffic to B2C merchants in unprecedented numbers.

While affiliates are scrambling to find ways to utilize social media to do their own thing, only the biggest and brightest seem to have found a voice.  Niche marketing is key for affiliates here, and yet we see countless examples of affiliates adding to the noise, and not the signal.

In social, the paradigm of “adding value” is paramount. Affiliates need to address this in their marketing strategy.

Multi Channel Attribution

As an analyst, I delve into multi channel attribution on a daily basis. Here, we look at the effects of multiple clicks leading to a sale or lead. For some merchants, especially those that know and appreciate landing page design, we find that we get first click action.  New visitors take the bait, and buy or ask for more info.

The proliferation of “low value” coupon sites*, trademark SEO/SEM’s, and pure datafeed driven CMS sites has moved the affiliate channel into a smaller circle on the graph. While once affiliate ranked as the best ROI advertising channel available, it now is being considered an added expense when dissected on the multi channel level.

I’m all for multi channel attribution.  It’s a key component in a merchant understanding how they drive leads or sales. The side effect, however, is that the “thin affiliates” are exposed here, and potentially in an over estimated manner. Poachers and thin affiliates hopping in on the last click in a multi click process can cause concern, however.

The thought that a last click affiliate that simply provides a coupon deserves a full commission is fading, and the fact that so many affiliates provide coupon codes without any additional value is reason enough for many merchants to re-evaluate their affiliate marketing payouts and strategy.

State Taxes and Affiliate Marketing as Nexus

This shouldn’t be an issue any more, with key victories being won by the Performance Marketing Association, grass roots groups, and networks in many states.

Yet, the fact remains that many New York affiliates (New York basically invented the Amazon tax in 2007) are still left holding the bag, and are precluded from many programs. I was declined from one just this week, in fact.  Likely a merchant I could have driven significant sales to.

There are affiliates in other states suffering as well.

Until a national initiative is brought forth and ratified, be it a national online tax, or the final absolution of state initiatives in this area, the affiliate nexus issue will remain as a significant threat.

Is Affiliate Marketing Dead?

No.

Of course not.

For one, there are more and more publishers everyday. Pinners, bloggers, tweeters, Paper.li’ers, etc.  Sharing will always be monetized. Merchants are wise to embrace them, despite FTC regulation. While disclosure is mandatory, people are used to seeing ads. And if it’s from someone they trust? All the better.

Second, PPC affiliates who know what they’re doing are vital to merchants with large catalogs. They make up simply the best SEM firms out there. Ones who are paid for performance, and who cover key terms you’ve never even thought about. They are the allies, not the enemies to a forward thinking merchant.

Lastly, a well thought out affiliate program STILL brings you new sales. New customers. New opportunities.

Challenges are not dead ends.  They are simply hurdles that must be dealt with.  For affiliates, it’s noisier than ever. They need to be innovative, pick their niche, and provide value. That will always, and has always, been the case.

What are your thoughts?

* I don’t mean to say that all coupon sites are low value. If you’re in the industry, however, you’ll know the ones I’m referring to, and probably agree.

About kevin

I work as an internet marketing manager in domestic (US) manufacturing, and blog about B2B web lead generation, CRMs, web analytics, and a little bit about affiliate marketing. I also am an avid Kayak Fisherman.