Affiliate marketing: the bleeding edge

Affiliate Summit East 2010 Innovate! New Exciting Applications of Affiliate Marketing Joe Stepniewski Co-Founder, Skimlinks

What, who, when?

1934: Theorie der Wirtschaftlichen Entwicklung , Joseph Schumpeter defined economic innovation…

A new ‘good ’ consumers aren’t familiar with
A better quality of an existing product/service
A new method of production or packaging of something
Finding a totally new market
Innovation defined The Theory of Economic Development, 1934

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

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 $2bn 16% p.a. $7bn 20+% 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 sources
Now
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
joe@skimlinks.com
@digijoe
Thanks to
Kevin Edwards – Affiliate Window
Matt Bailey – 7ThingsMedia
Any questions?

Affiliate marketing: the bleeding edge

by Digi Joe on Aug 25, 2010

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Affiliate marketing: the bleeding edge — Presentation Transcript