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The Ironic Future of Affiliate Marketing: MLM (Part I)

The following is part of a MULTI-PART SERIES (see Part II here).

Where is online affiliate marketing (a la Linkshare, Commission Junction, etc.) heading? Ironically, forces with social media are driving it toward its roots — multi-level-marketing (MLM). Indeed, roots. You’ll recall, this is where it all started back in the late 1990’s. I was there and quickly steered the affiliate network I was helping build in the opposite direction of MLM upon noticing advertisers’ fear and disdain of it.

Fanista from Amway!“Eeew, gross” was advertisers’ reaction to what we Web marketers still call “two-tier” affiliate programs. Affiliate networks were quick to do away with “sub-affiliates” and the rest is history. We just don’t do ’em… until social media came on the scene. Now it’s back in vogue (as an example, Dan Adler’s Amway’s Fanista.com) and affiliate network stalwarts like Linkshare are… well… they’re missing the boat completely (see Sam Harrelson‘s latest on their rather backward achievements).

Facebook RadicalBuyThe real opportunity for the traditional (entrenched) Web-based affiliate marketing community is in combining affiliate marketing with basic network marketing principals. Social media platforms of today (i.e. Facebook) are ripe for development. Social shopping is the opportunity and companies like Linkshare, Performics (hello, Dan Chiss?), ValueClick’s Commission Junction and others stand to lose out. Facebook is on the move — this week announcing its RadicalBuy program which turns Facebook-ers into eBay style affiliates! Commission Junction? Hello? Pulse check? This as eBay runs like hell at taking its platform and solidifying its leadership position as a community of sellers.

The affiliate marketing community needs desperately to do what the MLM/network marketing industry has done — take the idea of “affiliate” and make it local, personal. They must also throw away bad habits — a culture that values and functions on anonymity (right, Angel Djambazov, Kellie Stevens?). Survival means embracing the Web’s new, socially-driven culture of transparency and authenticity.

Says Jay Weintraub, who is far smarter than I…

“… affiliate marketing and network marketing (i.e. Multi-Level-Marketing, Amway/Quixtar) sit on the same spectrum of generating revenue through an outsourced, commission-only sales team but that the two sit onJay Weintraub opposite ends of that spectrum with respect to how they accomplish this. It’s free to join affiliate programs but not free with networking marketing companies such as Quixtar. Money comes through sales with both, but with affiliate marketing one earns cash only and with network marketing, one earns cash but the amount depends not on the product moved but on whether those sales come through a network of other people – their downstream.” (source)

Jay actually said this in 2006!

This is the future. The inter-twining of network, or multi-level-marketing, and cost-per-action Web affiliate marketing. Ironically this is where affiliate networks started but the MLM association was a “dirty” one among advertisers.

In Part II, I’ll focus on why advertisers (and their traditional affiliate network helpers) aren’t leveraging the new, social cost-per-action affiliate realm to drive sales and leads. We’ll examine why this is, what they’re missing out on (who is eating their lunch — or, in the case of networks, who makes a good acquisition target!), how they can get in-the-game and what investments they should be making.

This is part of a MULTI-PART SERIES (see Part II here).

About the Author Jeff Molander

Jeff Molander is the authority on starting sales conversations online. He teaches a proven, effective and repeatable communications process to spark buyers curiosity about what you're selling. He's a sought-after sales prospecting trainer to individual reps, teams of sellers and small businesses owners across the globe. He's an accomplished entrepreneur, having co-founded the Google Affiliate Network and what is today the Performics division of Publicis Groupe.

Jeff also serves as adjunct digital marketing faculty at Loyola University’s school of business. His book, Off The Hook Marketing: How to Make Social Media Sell for You, is first to offer businesses a clear, practical way to create leads and sales with platforms like Facebook, LinkedIn, YouTube and blogs.

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Leave a Comment:

Dave Oliver says

The danger here Jeff, is from what I understand about MLM, is that you were encouraged to recruit and market to your *friends*. Same as with that Fanista site. I don’t think *friends* appreciate being marketed too ever…after all, if I’m your friend why aren’t you passing a discount to me rather than earning a commission off me?

Who are you going to trust with a recommendation? You’re friend who you know is actively pushing and marketing stuff….or just a friend who’s not really involved in marketing/promotion or even actively pushing recommendations.

The whole pushing aspect from friends acquaintances is what turned people off of MLM, and if people start using the social sites to PUSH products on their friends, they’ll get turned off just as quickly.

Now, if I’m looking for a product, and actively searching recommendations, well going online and finding a review site, or a blog talking about how a product is used from a stranger, might actually carry a higher level of trust. I don’t see that stranger pushing/marketing everyday, like I would see with my friend. I’m unconscious to the idea that the stranger is earning a commission, or even actively promoting a product.

Anyway, this is the challenge with the social sites. Finding a way to market to people so that they are unconscious of the fact they are being marketed too. Putting up a profile, adding all your friends, and then shoving recommendations over to them will turn people off, just as MLM has done.

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Jeff Molander says

“… after all, if I’m your friend why aren’t you passing a discount to me rather than earning a commission off me?”

Dave… totally agree with you. To your point above, I have had friends/colleagues take their commission and split it with me (on something I purchased through them). I’ll see if he’ll show up here to discuss.

Right! MLM got its bad rep this way — that’s something that few take the time to actually point out so thanks for doing so.

Anyway, this is the challenge with the social sites. Finding a way to market to people so that they are unconscious of the fact they are being marketed too.

Hey it sounds great but in practice but ultimately that ignorance is dismantled by the truth. People find out and when people find out INDIRECTLY (via someone other than their friend who sold something to them) they begin to wonder about their friendship — their trust bond. It gets called into question and THAT opens the door to resentment and THAT is death to a friendship.

At some point I look at the entire American culture of “sell sell sell” and start thinking like Doc Searls…

“The Economist asks, Will Facebook, MySpace and other social-networking sites transform advertising? Good question, but it’s the wrong one. The right question is, Can we equip customers to become independent of sellers and their controlling intentions — Including the unwanted crap that constitutes far too much of the world’s advertising? For the good of both sellers and buyers?”

and

“Advertising is about supply finding and ‘creating’ demand. Nothing wrong with that. At its best it’s good and necessary stuff. But think about what will happen when demand can find and create supply. That’s the real holy grail here. And it’s one that will take fresh development effort on both the supply and demand sides.”

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Jeff Molander says

Dave:
I just found this quick read. BINGO. Dee Wilson asks “How acceptable is social marketing within online communities?”

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Dave Oliver says

Good find Jeff. Also, I think I might have misrepresented what I was trying to put across when I said, “finding a way to market to people without them realizing they are being marketed too.” I don’t mean marketers need to make an effort to consciously trick or fool people, but rather craft/create a story that engages without overtly selling.

The author of the blog you reference does a good job of this with the Jamaican sunsets. The rich descriptions allow the reader to dream of being there, and tantalize an appetite and desire to escape.

Going back to the MLM concept, the big turnoff was that it is too “in your face” style. “This is what you need, and here’s why.” Rather than creating framing a story to bring out the need.

This is the challenge of social marketing. Marketers actually have to be creative to create a story that engages people, rather than just saying, “Hey Jamaica is a great place to go, and if you want to go to Jamaica, click here for the cheapest and best rates.”

PPC advertising, natural search and comparison shopping engines are a different story, since people are already searching for the thing they want to buy. Here the in your face, click here, I have the best/cheapest/etc., was acceptable.

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Jeff Molander says

Wow. Perfectly articulated, Dave. We are in agreement.

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