affiliate marketing: the bleeding edge
DESCRIPTION
Speaker session from Affiliate Summit East 2010 - A practical look at innovations in affiliate marketing driving the industry forward. Framing the discussion around the 'eras' of affiliate marketing in the past, present and future. Slightly tongue in cheek.TRANSCRIPT
Affiliate Summit East 2010
Innovate! New Exciting Applications of Affiliate Marketing
Joe StepniewskiCo-Founder, Skimlinks
What, who, when?
1934: Theorie der Wirtschaftlichen Entwicklung,Joseph Schumpeter defined economic innovation…
1. A new ‘good’ consumers aren’t familiar with2. A better quality of an existing product/service3. A new method of production or packaging of
something4. Finding a totally new market
Innovation defined
The Theory of Economic Development, 1934
1. Entrepreneurs, or wild human spirits (he coined Unternehmergeist - German for entrepreneur-spirit)
Where does innovation come from?
1934: Theorie der Wirtschaftlichen Entwicklung,Joseph Schumpeter defined economic innovation…
OK – We got the wild spirits bit sorted
2. Companies with resources to invest in R&D
Where does innovation come from?
• Limited marketing reach• Limited sources of traffic• Limited media or space
Innovation often sparks from limited resources or limited environment
Affiliate marketing = entrepreneurs + savvy retailers + limited
resources = consistent innovation
Photo credit: Shawn Collins
The Innovation Landscape
Innovation and adoption are increasing the rate of growth of affiliate spending
US Affiliate Marketing spending 1994-2016
$bn
$2bn16% p.a.
$7bn20+% p.a.?
The eras of affiliate marketing
Wild west era
Domestication era
Affilination era
US Affiliate Marketing spending 1994-2016
Ubiquity era$bn
The Wild West: Ruled by cowboys
Innovation came from the adult industry
• Cybererotica: 1994• Amazon.com: 1996• Linkshare & Be Free: 1996• Shawn Collins: 1997• Commission Junction: 1998
Wild West Era (WWE)
• Choice of CPC, CPA and CPL programs• Geo-targeted banners• 500,000+ affiliates• $250m revenues, 40% annual growth• Still only do checks to non US affiliates
Adult Friend Finder’s innovation: helping establish the affiliate model
Source: Business 2.0 Magazine, Adult Friend Finder
Domestication: Taming the beast
• Explosive growth: ecommerce, new sectors• Innovations challenged by rules & restrictions• New innovation grows as a result
Domestication Era (DE) 2001-2008
• PPC affiliates• Squeeze pages / email affiliates• Cashback / Rewards• Coupon codes• Data feeds
DE Innovations: 2001-2008
• Affiliates penalized in organic/PPC listings• Looked for alternative traffic sourcesNow• Coupon code sites sit at end of purchase funnel• Rewards sites rely on viral traffic• Email affiliates just need to capture your
address
Search traffic restrictions drove innovation
New innovations displace old revenue streams
Affiliate Window’s affiliate revenue sources 2005-2010
• Controversial practices on coupon codes– ‘Click to reveal’– Expired coupon codes– Poaching exclusive codes
• Industry response through IAB Best Practice Guidelines
Innovation must not run unchecked
• Hides or displays code box based on referring URL
• Stops sales leakage for non-coupon code sites
• Control exclusive deals
Merchant innovation in response to coupon code challenges
Ubiquity: Affiliates are everywhere
• Tipping point of major brands with programs• Recognizable affiliate consumer brands• Intersection with tech startups• Innovation explosion• Social media integration
Ubiquity Era (UE) 2008-2013
Major brands have affiliate programs
• Over 20,000 affiliate programs in 2010
Consumers use affiliate sites every day (and understand the model)
• Startups see appeal of affiliate marketing• Low barriers to entry• No need for ad-units• Social activity can drive purchases
Affiliate marketing, meet my friend: tech startup
10 innovations improving the purchasing funnel
Advertising
Merchants helping with distribution of data feeds through ad-units
• 300x250 (MPU) ad-unit easy to add to an affiliate site
• Pre-load particular products/categories
• Targeting a visitor with an ad for a product that has been previously viewed or placed in cart
• Retargeted customers are 4x more likely to convert than new customers
• Affiliates can recognize abandoned shopping cart and offer a discount, coupon or bundle deal
Retargeting in affiliate marketing
Source: Mythings.com
Retargeting with reward model driven by CPA
Source: Mythings.com
Free for advertiser
Post-impression cookie
CPA on sale
• Post-impression/post-view cookie, dropped after 2 seconds
• Potential clash as merchant may de-dupe across affiliate channel
• Networks have indicated click cookie would probably supersede impression cookie
PI Cookies carefully added to the marketing mix
Social Media
• Embed a Dominos widget easily• Available for Facebook, Myspace & more
Social media embedding brings affiliate marketing to masses
• Simple interface• Add ID via signup to Affiliate Window
Interfaces adapted for ‘micro-affiliates’
• Blippy shares your purchase-stream
• Automatically based on merchant or bank statement
• Swipe.ly provides similar service
Purchase sharing unearths products I care about
• Thingbuzz tracks ‘trending products’ across Twitter
Crowdsource what’s hot right now
Product Discovery
How do ‘real people’ search or discover products?
Mashup datafeeds with apps to create value
• Official site limited in search capability• Merchant & affiliate worked together to
identify the area of weakness• Affiliate site sits alongside official listing in PPC
space• Augments official offering with destination-
based search
Fast-track innovation with affiliate merchant collaboration
• Popshops’ storefronts and widgets
• 60m products to configure into a storefront
Configure specific storefronts for groups of products or themes
On-page monetization
• Product references linked to top performing merchant
• Geo-targeted link based on visitor
• Pop-up price product info or price comparison
Automatically link keywords to affiliate links
Associate products right at the image source
Affilination: The future of affiliate marketing
• Social media dominance• Microaffiliates• Micropayments• Real-time data• Multi-attribution
Affilination Era (AE) 2013-?
• Activity stream will be affiliated• Foursquare linked to physical purchases,
Facebook aggregates online purchases (through Blippy etc)
• Content sites will still benefit from generating purchase-intent (discovery, reviews)
Social media a dominating influence
• Everyone can be an affiliate• Challenge of low earnings threshold mitigated
with virtual currency/credits on social networks
• Micropayments e.g. electronic cash solutions will make it more compelling and compatible with offline
Microaffiliates & Micropayments
• Micro-trends – hot product sales by hour or day
• ‘Pre-purchase’ click data – most popular products being viewed right now
• Purchasing clusters could drive further group activity – Groupon style
• Requires product-level tracking at affiliate networks (Amazon does it today)
• Instant reward notification
Real-time data will redefine ‘impulse buys’
• Watch Eat, Pray, Love the movie• Buy the fragrance, the eReader,
and pillowcases
Merchandizing will continue to drive product association to film, music, books
Redefinition of affiliate marketing
• Referral marketing or “Referratization”• Not the process of turning into a furry animal
Referratization
• The tracking and reward of every individual part of a referral; whereby referrals are driving the majority of online purchases
Innnovation will drive this industry forward
• Looking at the past: we can see the cycle of innovation, challenges and new innovation
• Looking at today: new innovations expanding the scope of affiliate marketing
• Looking at the future: Wild West 2.0 as affiliate marketing goes mass-market
Takeaway tip: Read “The Referral Engine”
http://bit.ly/refengine
Yes this is an affiliate link
Contact• [email protected] • @digijoe
Thanks to• Kevin Edwards – Affiliate Window• Matt Bailey – 7ThingsMedia
Any questions?