Affiliate 2.0

Inplace #2

DM CONFIDENTIAL – Here is a performance marketing pop quiz. What is the difference between one who does SEO and one who does PPC? The former is likely to not mind the label affiliate, while the latter will say they are anything but.

The distinction sounds small, but to those in the performance marketing space it has, in the past, been the equivalent of a nationality. Confusing the two didn’t carry the same weight as mixing up Israel and Palestine, but it was arguably a little worse than assuming someone from South Africa was from Australia. It wasn’t the worst thing, but it came across as a ding against one’s identity.

The reason, at least historically so, is that publishers and arbitragers (the non-affiliates) thought of themselves as more skilled. They felt their ability to drive traffic instead of just send clicks made them a more advanced breed. And, for quite some time I think that was a fair assessment.

Thanks to issues with misrepresentations and low value-add products for consumers, the publisher and arbitrage businesses have lost a little bit of their luster. Affiliate businesses, on the other hand, have started to come into their own. The hardest part for those who typically identified with publishers is re-orienting their frame of reference to think of affiliate businesses as worth pursuing.

Ingrained Vision

With a media-buying mindset, we have certainly been guilty of automatically devaluing the affiliate world. It was the group buying world and the fashion/tech world that had us start to rethink how we thought of the affiliate arena. Even now, we still struggle to see the affiliate world separate from some of the businesses that defined it — “Top 10” review sites, toolbar-based link hijacking and the countless number of reward sites.

It’s the reward sites that have in many people’s mind given the affiliate world a reputational hurdle. We could, for example, start the DMConfidential shopping portal and offer readers discounts on places they already shop today. If we did so, we’d get flack because the savvy readers would say something to the effect, “Yeah. That’s not so special. You’re not really giving discounts — only applying the affiliate commissions.” And they would be absolutely right.

Perhaps more amazing than the number of such sites, be it those that have been in existence for over a decade to those that are popping up almost daily, is the caliber of some of the companies that operate them — everything from the largest network marketing company, Amway, to one of the most storied consumer packaged goods firms, General Mills.

Fashionable Setups

Perhaps then, it’s time to no longer knock certain affiliate strategies but look for ways to do them a little better. We’ve found quite a few recently that seem to do just that. Some of the more unlikely come from the world of apparel.

One that we like creates a more individualized private sale experience. It learns what type of brands you like then monitors major retailers for sales that occur on the brands you like. When you happen to click on the link to go to the retailer, it just happens to go through an affiliate link. Over time, they will work directly with the merchants, but in the interim, using the affiliate channel has allowed them a potential monetization opportunity with brand name retailers out of the gate.

Another fashion-related startup focuses on a slightly different form of discovery and encourages people to tag styles on sites and clip images that represent their style. They use that data to try and suggest new things, monetizing not surprisingly using affiliate links.

There is even one in the group buying space. This startup focuses on setting up private buying groups for businesses, offering variable discounts based on the members of a group. It is meant so that DMConfidential could work with a technology service provider to create a discount for readers, but again, to get started this company backfills deals we might source with business related deals from the affiliate channel, e.g., Skype, GoDaddy, etc.

Work in Progress

We know we aren’t quite there just yet with the affiliate business model. When you suggest to some of the technology companies that they are just affiliate businesses, there is still a little bit of defensiveness, as if to say, yes, we know we monetize through affiliate channels but don’t think of us that way.

While they are still affiliate businesses, they are helping to at least alter our perspective of what affiliate businesses can be. Instead of viewing affiliate relationships as the monetization choice of last resort, the affiliate channel starts to look like a liquidity channel for commercial intent. It starts to become a more customizable version of AdSense as opposed to what you choose when you don’t know any better.

It will still take many some time to become comfortable with the idea of becoming affiliates, but if we do not, we might just miss out building a really interesting business.