Adotas

Where media buyers start online

Featured Author

DM Confidential is a leader in the Affiliate marketplace. The DM Confidential Newsletter and web site is focused on the online marketing industry. To read more from DM Confidential visit: www.dmconfidential.com

More articles by DM Confidential





Features

Will Performance Marketing Survive

Written on
May 25, 2009 
Author
DM Confidential  |
Share
Will Performance Marketing Survive

marketing_small.jpgDM CONFIDENTIAL — When thinking about the performance marketing sector, it amazes us that we have only used Charles Dickens’ famous line “It was the best of times.

It was the worst of times,” only once before in the past five years. For at no point in our past have companies made as much money as they do today, but similarly, at no point in our past have we stood so precariously at the precipice of success and the abyss of failure as we do today. As we have written countless times before, no one doubts the value proposition that cost per acquisition marketers bring.

More and more, though, companies start to doubt the value that cost per acquisition marketers bring. And, at risk of sounding like a broken record, it isn’t because the per acquisition marketers act as aggregators, and it isn’t because many of the aggregators act as arbitragers. It is because of a handful of aggregators and arbitragers.

The credo of the performance marketing space should read something similar to, “Enabling businesses to connect with users more effectively than on their own.” They do so by focusing on quality users to advertisers at controlled, i.e. desired volumes, by offering transparency into the marketplace, and by taking risk on behalf of advertisers without necessarily increasing the risk that advertisers take.

More often than not, especially recently, the risk that marketers take on comes with equal if not greater risk on behalf of the end advertiser for whom the marketer drives conversions. The reasons have nothing to do with taking risk but what the marketers no longer do. They no longer insure that users understand the offering, provide access to a wider array of options, and/or simplify complex markets. Instead their actions follow a completely different credo. They no longer act as enablers for others. Instead, they “Ask not what the user can do for you, but how much the user can make you.” Ironically, some of the most prominent marketers today are anything but prominent.

Forget the FTC, the FBI would have a hard time tracking down some of the more successful marketers. It’s not that arbitrage is inherently bad; it’s how people perform arbitrage today that is bad.

Coming back to the question that started it all, “Will we survive,” we not surprisingly find ourselves of two minds. At one level we think of course we will. It’s like asking whether cockroaches will live longer than humans. Put just slightly more eloquently, a group of survival specialists will figure out how to survive regardless. But the real question then is whether this is any way to live?

Taking risk on behalf of others isn’t bad, nor is being paid on a conversion basis. But, if we think about the activity that drives those dollars today, is this really any way to live? The performance marketers driving the vast majority of the conversions today for so many of the networks are like cockroaches. They might be creative and making money, but they don’t want to be known.

They know that the more visible they are, the more likely they are to be shut down, and they scurry about trying to avoid detection. Again, it isn’t arbitrage itself but how different people handle being paid on a per-conversion basis that leads to behavior detrimental to the entire online customer acquisition industry. And, for those who have followed our writing to any degree, that is what matters to us.

We aren’t trying to denigrate anyone. We also know that our “cockroaches” currently provide for quite a number of companies and people. It’s an ecosystem that if eradicated tomorrow would have some large ripples, and we certainly aren’t looking for that. We just want to see the evolution of performance marketing on a different track. Why do we have to operate in a way that continually draws both negative attention and the ire of the major traffic owners?

We’re like the farmers who burn down the Amazon in order to plant short-term crops. Yes, we need to eat, but at the expense of land that can never be replaced? Looking at the way some perceive us, it feels as though we are that backwards culture, still valuing things that don’t matter, the ones that cut elephant tusks and kill endangered animals because we care more about ourselves than anyone else. In other words, though, at what point do we stop adding value with our approaches and become a detriment to the whole.

Thinking about the farmers, everyone has a right to survive, and no one wants to see farming go away. But at some point, the food produced adds less value to those consuming it than the costs for making it. We love the relatively low barriers to entry and how entrepreneurial our world is, the vast opportunities it creates for just about anyone with an idea and the willingness to try. We don’t want to see our world turn into the energy sector where entry means working for another company because the capital costs are too extensive for a group to enter.

At some point though, entering has to become more about solving a problem than solving only for one’s wallet. It’s not just a shallow existence, but it’s the type of purely selfish existence that has lead us from being seen as problem solvers and innovators to at best a necessary evil and at worst worth exterminating. If you’re happy with that, so be it. We’re not.

So, now that we’re done bitching. Does anyone know where we can get a teeth whitening offer at better than $36? We built a killer flog.

Courtesy of DM Confidential editor

– Express your opinion, comment below.





Reader Comments.

I would recommend some more caution to go with that bitching…do you think for one minute the return to over priced CPM cost structures that also come with large pre-payments are going to make things any better?

If you just put together that killer Flog, and point some of that effort at any offer, if the recipient of said low to no quality traffic couldn’t identify it and quickly, they should think about other endeavors. Especially if they allowed that source of traffic to directly hit a merchant account(s).

Advances in fraud detection, more transparency from the larger names like Google, Yahoo, and Microsoft are what are needed most! These “cockroaches” as you refer to them are just the players…don’t hate the players, change the game…

Take the performance out of marketing and you’re back to the old days of imagination marketing…and that really works(not!).

Posted by Nick Carbone | 11:59 am on May 22, 2009.

I have to admit your headline grabbed me.

While I do acknowledge that our industry has a shady side, I think (or hope) it is declining as the industry grows.

One point I would like to make about the secrecy of the industry is there are legitimate reasons for much of it. IN our case we have over 25 vertical category sites. Our partners know what they are, but we don’t share them on our company Website: Vertive.com.

However, with the recent launch of Offers.com we have been shared that we are creator and publisher.

Posted by Steve Schaffer | 2:54 pm on May 22, 2009.

Loved the article. Especially the comparison to cockroaches. “Used car salesman” might work too. I fundamentally disagree with CPA for a core reason – it shifts ALL risk to the publisher/arbitrager. Haven’t we learned a lesson from this recent financial crisis and the world of CDS’s and MBS’s about what happens when you encourage the shifting of risk too aggressively and create the perception of “riskless” opportunities. I agree with Nick Carbone to an extent… the rules of the game must change. However, I think just like with our current mortage crisis, the player too need to take personal responsibility for their actions. Making money at any costs is not acceptable. It will hurt our industry. There’s a reason for the non-transparency…. they are ashamed of many of their tactics and they know that advertisers would be too. Advertisers, putting your head in the sand and taking the “just don’t tell me how you did it” approach is not good either. It didn’t work for bankers in working with mortgage companies who dealt in LIAR and NINJA loans, and it won’t work for your brand in the long run either. EVERYONE needs to take responsibility and everyone needs to share in the risk and rewards (that’s the foundation around a “win-win” relationship).

Posted by R.J. Lewis | 9:39 am on May 29, 2009.

Leave a Comment

Add a comment

Tags: , , and
Article Sponsor

More Features


  • Right now, at the beginning of 2012, what are you watching the most closely for its ad and marketing opportunities?

    View Results

    Loading ... Loading ...

Latest News

News Archive

Spotlight

Sponsormob Leads the Way Into RTB for MobileADOTAS – For more than half a decade, Berlin-based tech firm Sponsormob has remained relevant in an industry characterized by [...] more...


Adotas Partnership