You’ve got to ask yourself, do Valueclick (VCLK), Linkshare, DoubleClickPerformics, Think Partnership’s (THK) Kowabunga, Digital River’s (DRIV) OneNetwork and Shareasale have anything to worry about when buy.at (operated by Perfiliate Technologies Ltd) launches its U.S. operation, sets up shop on Wall Street and announces its intent to expand its performance-based network to a U.S. audience? Sprinkle in a dash of buy at Inc.’s President, Malcolm Cowley suggesting that this market is “in need of a shake-up” and the European market for affiliate technologies and services has my attention.
Mr. Cowley’s first order of business was to nab entertainment Goliath Ticketmaster. Next they’ll move on to target retailers and other entertainment companies says Cowley boldly. Yet I’m here to throw a wrench into the mix by questioning Mr. Cowley’s understanding of the U.S. market and point to what I consider to be Germany-baed Zanox’s costly failure to cash in on the U.S. market as evidence that all may not be as it seems in the States.
Via ClickZ’s Jack Marshall, Mr. Cowley says…
“… the major difference between U.S. and U.K. networks is their relationship with agencies. ‘I would say that the U.K. was slightly ahead of the U.S. in terms of agency involvement. We work closely with agencies in the U.K.,’ he (Cowley) stated. ‘In the U.S., I think we have a huge opportunity to bring big interactive agencies into the picture.’
I find it hard to believe that Mr. Cowley actually believes this to be true — let alone that domestic affiliate marketing networks would leave money on the table (bypassing agencies) for nearly a decade now. North America has plenty of large and boutique, multi-faceted performance/affiliate marketing agencies — PartnerCentric, netExponent, AMWSO, AffiliatePeople, Forge, Pepperjam, Schaaf Consulting, Linkprofits and at least another dozen others on the boutique side. Multi-faceted agency firms like SendTec, Converseon and Commerce360 come to mind on the “interactive agency” side and are joined by just about every digital agency under the sun in claiming affiliate marketing expertise. So what’s going on here? Where exactly are U.S. companies leaving money on the table?
Follow The Leader
U.K. digital media and advertising markets tends to follow in the U.S. market’s footsteps. With this in mind, yes, the U.K. market is more competitive today given the phase it’s market is in. The U.S. market has cooled off for a variety of reasons that U.K. and European marketers (retailers in particular) would be wise to understand.
Affiliate marketing continues to have a “reputation problem” (SPAM, spyware, etc.) here in the States. Just ask Kris Jones of Pepperjam. Yet issues far more serious than these nuisances are negatively impacting the U.S. market — and are beginning to effect Europe too. These deal with the relative lack of value offered to marketers by affiliates. In short, marketers are starting to do some simple math and finding that all roads lead to search — much as comparison shopping search engines receive a majority of their traffic from search (confirmed again this week at Search Engine Strategies Chicago by Hitwise analyst, Heather Dougherty).
Distribution partners are competing with retailers in search for the same customers… and marketers are starting to pull back on their marketing and programs (looking for incremental sales… something they thought they were getting all along). They have been for years now. Back in 1996 MarketingSherpa’s Anne Holland and Stefan Tornquist even leaked it.
Affiliates & Search: Been There, Done That!
Let’s get real — affiliates and shopping comparison engines beat marketers to the punch with search marketing and many (like Pepperjam, DoubleClickPerformics) still leverage retailers’ lethargy into big money. As retailers increase search marketing efforts they’re coming to realize affiliates’ dominance of the space. They’re competing with affiliates for the same customers and clicks. This has led to the prime realization that affiliates have, for years, been grabbing “low hanging fruit” opportunities — such as purchasing search ads from Google based on the marketers’ brand and trademark. Isn’t this happening in the U.K. and Europe? If affiliate “typo-squatting” on URLs is happening ( here’s an example in the UK with European, Tesco) then surely all of these issues are at play — or will be soon.
More evidence: When contrasting the U.S. and U.K. affiliate marketing spheres one cannot overlook this year’s ASOS “grubby affiliate” episode. While most affiliates and bloggers were happy to attack Nick Robertson given his inflammatory statement few offered it more than surface level analysis. Mr. Robertson was, in fact, characterizing (and taking action with) affiliates based on experiences similar to those held here by most large U.S retailers. With this in mind Cowley’s remarks seem even more odd.
Bottom line: Affiliates in general earn a poor reputation and are not valued if they are nothing but low value opportunists who do not deliver incremental value to advertisers. Value is now being measured here in the States (mainly based on incremental sales).
Ka-Ching: The Exit
Those affiliates who are not “grubby” (those who offer value) are busy either being acquired or positioning to be acquired based on having matured from “grubby” to “scrappy” through innovation and having bonded with retailers’ customers — earning their loyalty (i.e. in the States, TrafficStrategies, MeziMedia/CouponMountain.com, etc.). The customer loyalty that mature, well-groomed affiliates have worked hard to secure is being honored by both advertisers and networks.
Affiliates: Making the Cut
Affiliate marketing has forever changed. Affiliates that haven’t made the leap to “publisher” or agency (i.e. Pepperjam.com, South African-based Clicks2Customers, FatWallet.com) are relegated to the disrespectful scenario that is so prevalent in the United Stats. Indeed, I say disrespectful and can back that up with dozens of examples. Here’s one that just happened. I cannot think of a bigger name (indeed, a living brand) than Shawn Collins — and notice how he gets treated.
If an overseas company were to come to the States intending on shaking things up I would think they would do so with a “social affiliate” approach in mind. My comments speak directly to the challenges (and the opportunity!). As do Jay Weintraub’s (one of the smartest and most successful entrepreneurs in performance marketing) and those of AMWSO’s Dave Oliver in comments (thanks, Dave!). There is tremendous opportunity to take affiliate marketing in a new direction — one that may result in an Affiliate Marketing Renaissance of sorts.
I hope to learn more about the European perspective on the U.S.-based affiliate and, indeed, digital performance marketing marketplace. While the folks over at TradeDoubler, Perfilliate/buy.at and DGM are brilliantly talented and savvy I’m — for now — fairly convinced that there are some serious gaps in understanding about our market across the pond.
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.