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For Better or For Worse?

Written on
Mar 18, 2010 
Author
DM Confidential  |

For as much as the performance marketing industry has changed over the past decade, some things have not changed all that much. We still use the pixel in order to track conversions. Email marketing still plays a large role in the overall revenue picture, and publishers still rely on the networks for their offers. Amazingly, despite the proliferation in the quantity of CPA networks, some of the biggest from years ago remain dominant today. The two largest have both changed their names to accommodate the demands of the broader market that equates seriousness of name with likelihood of long-term success and value. In a business that has little switching costs, owns almost none of its inventory, and often has few truly exclusive offers, a company can maintaining its leadership position year after year is no small feat. Despite usually having some star tech talent, these are not technology businesses; they are primarily relationship ones. They are also financial ones, providing operational capital to small businesses who cannot either take the payment risk from the advertiser or wait 30 plus days after the end of the month to get paid.

CPA networks playing a vital role in the performance marketing ecosystem speaks for itself, but are they good for the space? One marketer that I know says something to the effect of, “When a network starts pushing an offer in a vertical that I run, I start to consider getting out of that vertical.” Taken one way, it could read as though the person doesn’t want the competition, and who knows maybe that is ultimately the pain point. But, ostensibly, their point had less to do with perceived competition and more to do with what happens when they focus their attention on a sector – it usually goes away. Ringtones? Decimated. Nutraceuticals? Destroyed. Google Adwords? Hates us. The list of verticals and traffic segments that performance marketers have torn through goes on and on. This is how networks could look to you.

A Force of Evil
We are short-term creatures. We might know intellectually that we should not get to-go containers because they take up landfill space, but we’re in a hurry, so we will do it anyway. We shouldn’t make that extra trip in the car because it will add pollutants hurting the environment for our kids. That’s ok, we’ll make up for it next time, which never really happens. This is how we work. Throw in revenue and margin targets, and there is no way that someone incentivized on making money will worry whether this ad might not be right for the long-run or to the letter of the law.

Worst Practices – CPA networks actively promote the race to the bottom. They have little reason for wanting to promote best practices, so instead, they share worst practices, i.e. those that make the money. They have compliance teams, but they sit behind a Chinese Wall with account managers hoping that their clients don’t land on their radar. The two are anything but proactively working together.

Nothing Sacred – The benefits of working with networks comes at a cost. The more you share as a publisher, the more that will get shared with others. Information is not sacred. And, it’s nothing personal or even a deliberate betrayal. It’s an alignment issue. Those who work at networks take a portfolio approach to making money. They want all parties that they manage to do well. If it means their top guy might not hit his hypothetical peak but the sum of the others will eclipse that difference. That is what happens.

Landing Page Factory – Networks have always had creative departments. They are the Swiss Army knife of the company, pitching in however needed to make money. In the past that has generally focused on creatives, but as the market has changed so too have they. Creative teams now help churn out custom landing pages for publishers who might not have the resources. If you are good at buying traffic but not design, the networks still want that revenue so they will do what it takes. In the vein of nothing being sacred though, it means that they will look towards those things working for inspiration which is also what other publishers tell them. And, if there is one thing that other publishers don’t mind doing it’s borrowing from others regardless of what the owner’s think.

A Force for Good
There are periods of time when networks resemble all of the above. It’s what can happen and what has happened when they choose the Dark Side instead of embracing The Force. We need networks though, and they aren’t inherently bad. Here is the glass half-full look at their role in the performance marketing ecosystem

Best Practices – Networks have resources that far exceed those of their typical publishers. We often act bad when we don’t know what is right, and networks help publishers stay out of trouble by making sure they know what they can and can’t do. If there is a new rule, a policy change, or any other piece of critical information, the networks push that out to those with whom they work. They are the clearinghouse for making sure we all comply.

Locked Vault – As we have said before, the CPA Network space is much more a relationship game than a technology one. And, relationships rely on trust. Networks also know that many offers publishers could get elsewhere, so keeping them loyal relies partially on the payout du jour. It relies that much more in making sure their relationships believe that networks will do right by them. Right means not violating their trust and protecting secrets.

Sustainability – Keeping a space thriving takes a lot of work, and much of that work generates immediate returns. While we see networks throwing parties at conferences and putting on contests for their publishers, we don’t see the legal bills, the closed door meetings, and veritable lobbying done on behalf of the publishers.

Protection – Just as publishers rarely see the proactive work done by the networks, they also do not see the reactive work. Hardly any publisher of meaningful volume hasn’t either deliberately or inadvertently run afoul and caused some grief for the network. Fans of the movie “Saving Private Ryan” will recall a line that Tom Hanks’ character utters about senior officers never complaining. The same goes here. The networks often shield their publishers, helping them get better without just passing along any heat directly to the publisher.

CPA Networks. Good or Bad? If performance marketing expects to do more than just be one step removed from adult, i.e., to have businesses with substantial enterprise value, that happens only by the networks acting as a force for good. They are the key to the space, its driver of growth and long-term value. You can do it. No pressure.

By the Editor of DM Confidential





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

Reader Comments.

Companies invest a great deal in their website which in many cases is their only “store” where they showcase products and services. The challenge is to drive people to the website but as we all know, more people in the store will lead to more sales. Corporate employees send emails every day to clients, prospects, friends and others but these are plain emails that do not generate any traffic to the website.
WrapMail – http://www.wrapmail.com – offers a solution that does not require any installation but that seamlessly adds interactive letterheads (designed by the client) to every outgoing email so that each and every one becomes a promotional piece for the company and when clicked delivers the reader to the website. Furthermore the solution tracks the clicks and reports who is clicking on what and when (also in real time), turning the system into a research tool.
This “hidden” advertising medium is probably the most viral available and the least costly, WrapMail only charges $5 per user per month.

Posted by Rolv Heggenhougen | 2:03 pm on March 18, 2010.

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