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…
<ul><li>A  new ‘good ’ consumers aren’t familiar with </li></ul><ul><li>A  better quality  of an existing product/service ...
<ul><li>Entrepreneurs, or wild human spirits  (he coined  Unternehmergeist  - German for entrepreneur-spirit) </li></ul>Wh...
1934:  Theorie der Wirtschaftlichen Entwicklung , Joseph Schumpeter defined  economic innovation…  OK – We got the wild sp...
<ul><li>Companies with resources to invest in R&D </li></ul>Where does innovation come from?
<ul><li>Limited marketing reach </li></ul><ul><li>Limited sources of traffic </li></ul><ul><li>Limited media or space </li...
Affiliate marketing  =  entrepreneurs + savvy retailers + limited resources =  consistent  innovation Photo credit: Shawn ...
The Innovation Landscape
Innovation and adoption are increasing the rate of growth of affiliate spending US Affiliate Marketing spending 1994-2016 ...
The eras of affiliate marketing Wild west era Domestication era Affilination era US Affiliate Marketing spending 1994-2016...
The Wild West: Ruled by cowboys
Innovation came from the adult industry
<ul><li>Cybererotica: 1994 </li></ul><ul><li>Amazon.com: 1996 </li></ul><ul><li>Linkshare & Be Free: 1996 </li></ul><ul><l...
<ul><li>Choice of CPC, CPA and CPL programs </li></ul><ul><li>Geo-targeted banners </li></ul><ul><li>500,000+ affiliates <...
Domestication: Taming the beast
<ul><li>Explosive growth: ecommerce, new sectors </li></ul><ul><li>Innovations challenged by rules & restrictions </li></u...
<ul><li>PPC affiliates </li></ul><ul><li>Squeeze pages / email affiliates </li></ul><ul><li>Cashback / Rewards </li></ul><...
<ul><li>Affiliates penalized in organic/PPC listings </li></ul><ul><li>Looked for alternative traffic sources </li></ul><u...
New innovations displace old revenue streams Affiliate Window’s affiliate revenue sources 2005-2010
<ul><li>Controversial practices on coupon codes </li></ul><ul><ul><li>‘Click to reveal’ </li></ul></ul><ul><ul><li>Expired...
<ul><li>Hides or displays code box based on referring URL </li></ul><ul><li>Stops sales leakage for non-coupon code sites ...
Ubiquity: Affiliates are everywhere
<ul><li>Tipping point of major brands with programs </li></ul><ul><li>Recognizable affiliate consumer brands </li></ul><ul...
Major brands have affiliate programs <ul><li>Over 20,000 affiliate programs in 2010 </li></ul>
Consumers use affiliate sites every day  (and understand the model)
<ul><li>Startups see appeal of affiliate marketing </li></ul><ul><li>Low barriers to entry </li></ul><ul><li>No need for a...
10 innovations improving the purchasing funnel
Advertising
Merchants helping with distribution of data feeds through ad-units <ul><li>300x250 (MPU) ad-unit easy to add to an affilia...
<ul><li>Targeting a visitor with an ad for a product that has been previously viewed or placed in cart  </li></ul><ul><li>...
Retargeting with reward model driven by CPA Source: Mythings.com Free for advertiser Post-impression cookie CPA on sale
<ul><li>Post-impression/post-view cookie, dropped after 2 seconds </li></ul><ul><li>Potential clash as merchant may de-dup...
Social Media
<ul><li>Embed a Dominos widget easily </li></ul><ul><li>Available for Facebook, Myspace & more </li></ul>Social media embe...
<ul><li>Simple interface </li></ul><ul><li>Add ID via signup to Affiliate Window </li></ul>Interfaces adapted for ‘micro-a...
<ul><li>Blippy shares your purchase-stream </li></ul><ul><li>Automatically based on merchant or bank statement </li></ul><...
<ul><li>Thingbuzz tracks ‘trending products’ across Twitter </li></ul>Crowdsource what’s hot right now
Product Discovery
How do ‘real people’ search or discover products?
Mashup datafeeds with apps to create value
<ul><li>Official site limited in search capability </li></ul><ul><li>Merchant & affiliate worked together to identify the ...
<ul><li>Popshops’ storefronts and widgets </li></ul><ul><li>60m products to configure into a storefront </li></ul>Configur...
On-page monetization
<ul><li>Product references linked to top performing merchant </li></ul><ul><li>Geo-targeted link based on visitor </li></u...
Associate products right at the image source
Affilination: The future of affiliate marketing
<ul><li>Social media dominance </li></ul><ul><li>Microaffiliates </li></ul><ul><li>Micropayments </li></ul><ul><li>Real-ti...
<ul><li>Activity stream will be affiliated </li></ul><ul><li>Foursquare linked to physical purchases, Facebook aggregates ...
<ul><li>Everyone can be an affiliate </li></ul><ul><li>Challenge of low earnings threshold mitigated with virtual currency...
<ul><li>Micro-trends – hot product sales by hour or day </li></ul><ul><li>‘ Pre-purchase’ click data – most popular produc...
<ul><li>Watch Eat, Pray, Love the movie </li></ul><ul><li>Buy the fragrance, the eReader, and pillowcases  </li></ul>Merch...
Redefinition of affiliate marketing <ul><li>Referral marketing or “Referratization” </li></ul><ul><li>Not the process of t...
Referratization <ul><li>The tracking and reward of  every  individual part of a referral; whereby referrals are driving th...
Innnovation will drive this industry forward <ul><li>Looking at the past: we can see the cycle of innovation, challenges a...
Takeaway tip: Read “The Referral Engine” <ul><li>http://bit.ly/refengine </li></ul>Yes this is an affiliate link
<ul><li>Contact </li></ul><ul><li>joe@skimlinks.com  </li></ul><ul><li>@digijoe </li></ul><ul><li>Thanks to </li></ul><ul>...
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Affiliate marketing: the bleeding edge

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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.

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Affiliate marketing: the bleeding edge

  1. 1. Affiliate Summit East 2010 Innovate! New Exciting Applications of Affiliate Marketing Joe Stepniewski Co-Founder, Skimlinks
  2. 2. What, who, when?
  3. 3. 1934: Theorie der Wirtschaftlichen Entwicklung , Joseph Schumpeter defined economic innovation…
  4. 4. <ul><li>A new ‘good ’ consumers aren’t familiar with </li></ul><ul><li>A better quality of an existing product/service </li></ul><ul><li>A new method of production or packaging of something </li></ul><ul><li>Finding a totally new market </li></ul>Innovation defined The Theory of Economic Development, 1934
  5. 5. <ul><li>Entrepreneurs, or wild human spirits (he coined Unternehmergeist - German for entrepreneur-spirit) </li></ul>Where does innovation come from?
  6. 6. 1934: Theorie der Wirtschaftlichen Entwicklung , Joseph Schumpeter defined economic innovation… OK – We got the wild spirits bit sorted
  7. 7. <ul><li>Companies with resources to invest in R&D </li></ul>Where does innovation come from?
  8. 8. <ul><li>Limited marketing reach </li></ul><ul><li>Limited sources of traffic </li></ul><ul><li>Limited media or space </li></ul>Innovation often sparks from limited resources or limited environment
  9. 9. Affiliate marketing = entrepreneurs + savvy retailers + limited resources = consistent innovation Photo credit: Shawn Collins
  10. 10. The Innovation Landscape
  11. 11. 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.?
  12. 12. The eras of affiliate marketing Wild west era Domestication era Affilination era US Affiliate Marketing spending 1994-2016 Ubiquity era $bn
  13. 13. The Wild West: Ruled by cowboys
  14. 14. Innovation came from the adult industry
  15. 15. <ul><li>Cybererotica: 1994 </li></ul><ul><li>Amazon.com: 1996 </li></ul><ul><li>Linkshare & Be Free: 1996 </li></ul><ul><li>Shawn Collins: 1997 </li></ul><ul><li>Commission Junction: 1998 </li></ul>Wild West Era (WWE)
  16. 16. <ul><li>Choice of CPC, CPA and CPL programs </li></ul><ul><li>Geo-targeted banners </li></ul><ul><li>500,000+ affiliates </li></ul><ul><li>$250m revenues, 40% annual growth </li></ul><ul><li>Still only do checks to non US affiliates  </li></ul>Adult Friend Finder’s innovation: helping establish the affiliate model Source: Business 2.0 Magazine, Adult Friend Finder
  17. 17. Domestication: Taming the beast
  18. 18. <ul><li>Explosive growth: ecommerce, new sectors </li></ul><ul><li>Innovations challenged by rules & restrictions </li></ul><ul><li>New innovation grows as a result </li></ul>Domestication Era (DE) 2001-2008
  19. 19. <ul><li>PPC affiliates </li></ul><ul><li>Squeeze pages / email affiliates </li></ul><ul><li>Cashback / Rewards </li></ul><ul><li>Coupon codes </li></ul><ul><li>Data feeds </li></ul>DE Innovations: 2001-2008
  20. 20. <ul><li>Affiliates penalized in organic/PPC listings </li></ul><ul><li>Looked for alternative traffic sources </li></ul><ul><li>Now </li></ul><ul><li>Coupon code sites sit at end of purchase funnel </li></ul><ul><li>Rewards sites rely on viral traffic </li></ul><ul><li>Email affiliates just need to capture your address </li></ul>Search traffic restrictions drove innovation
  21. 21. New innovations displace old revenue streams Affiliate Window’s affiliate revenue sources 2005-2010
  22. 22. <ul><li>Controversial practices on coupon codes </li></ul><ul><ul><li>‘Click to reveal’ </li></ul></ul><ul><ul><li>Expired coupon codes </li></ul></ul><ul><ul><li>Poaching exclusive codes </li></ul></ul><ul><li>Industry response through IAB Best Practice Guidelines </li></ul>Innovation must not run unchecked
  23. 23. <ul><li>Hides or displays code box based on referring URL </li></ul><ul><li>Stops sales leakage for non-coupon code sites </li></ul><ul><li>Control exclusive deals </li></ul>Merchant innovation in response to coupon code challenges
  24. 24. Ubiquity: Affiliates are everywhere
  25. 25. <ul><li>Tipping point of major brands with programs </li></ul><ul><li>Recognizable affiliate consumer brands </li></ul><ul><li>Intersection with tech startups </li></ul><ul><li>Innovation explosion </li></ul><ul><li>Social media integration </li></ul>Ubiquity Era (UE) 2008-2013
  26. 26. Major brands have affiliate programs <ul><li>Over 20,000 affiliate programs in 2010 </li></ul>
  27. 27. Consumers use affiliate sites every day (and understand the model)
  28. 28. <ul><li>Startups see appeal of affiliate marketing </li></ul><ul><li>Low barriers to entry </li></ul><ul><li>No need for ad-units </li></ul><ul><li>Social activity can drive purchases </li></ul>Affiliate marketing, meet my friend: tech startup
  29. 29. 10 innovations improving the purchasing funnel
  30. 30. Advertising
  31. 31. Merchants helping with distribution of data feeds through ad-units <ul><li>300x250 (MPU) ad-unit easy to add to an affiliate site </li></ul><ul><li>Pre-load particular products/categories </li></ul>
  32. 32. <ul><li>Targeting a visitor with an ad for a product that has been previously viewed or placed in cart </li></ul><ul><li>Retargeted customers are 4x more likely to convert than new customers </li></ul><ul><li>Affiliates can recognize abandoned shopping cart and offer a discount, coupon or bundle deal </li></ul>Retargeting in affiliate marketing Source: Mythings.com
  33. 33. Retargeting with reward model driven by CPA Source: Mythings.com Free for advertiser Post-impression cookie CPA on sale
  34. 34. <ul><li>Post-impression/post-view cookie, dropped after 2 seconds </li></ul><ul><li>Potential clash as merchant may de-dupe across affiliate channel </li></ul><ul><li>Networks have indicated click cookie would probably supersede impression cookie </li></ul>PI Cookies carefully added to the marketing mix
  35. 35. Social Media
  36. 36. <ul><li>Embed a Dominos widget easily </li></ul><ul><li>Available for Facebook, Myspace & more </li></ul>Social media embedding brings affiliate marketing to masses
  37. 37. <ul><li>Simple interface </li></ul><ul><li>Add ID via signup to Affiliate Window </li></ul>Interfaces adapted for ‘micro-affiliates’
  38. 38. <ul><li>Blippy shares your purchase-stream </li></ul><ul><li>Automatically based on merchant or bank statement </li></ul><ul><li>Swipe.ly provides similar service </li></ul>Purchase sharing unearths products I care about
  39. 39. <ul><li>Thingbuzz tracks ‘trending products’ across Twitter </li></ul>Crowdsource what’s hot right now
  40. 40. Product Discovery
  41. 41. How do ‘real people’ search or discover products?
  42. 42. Mashup datafeeds with apps to create value
  43. 43. <ul><li>Official site limited in search capability </li></ul><ul><li>Merchant & affiliate worked together to identify the area of weakness </li></ul><ul><li>Affiliate site sits alongside official listing in PPC space </li></ul><ul><li>Augments official offering with destination-based search </li></ul>Fast-track innovation with affiliate merchant collaboration
  44. 44. <ul><li>Popshops’ storefronts and widgets </li></ul><ul><li>60m products to configure into a storefront </li></ul>Configure specific storefronts for groups of products or themes
  45. 45. On-page monetization
  46. 46. <ul><li>Product references linked to top performing merchant </li></ul><ul><li>Geo-targeted link based on visitor </li></ul><ul><li>Pop-up price product info or price comparison </li></ul>Automatically link keywords to affiliate links
  47. 47. Associate products right at the image source
  48. 48. Affilination: The future of affiliate marketing
  49. 49. <ul><li>Social media dominance </li></ul><ul><li>Microaffiliates </li></ul><ul><li>Micropayments </li></ul><ul><li>Real-time data </li></ul><ul><li>Multi-attribution </li></ul>Affilination Era (AE) 2013-?
  50. 50. <ul><li>Activity stream will be affiliated </li></ul><ul><li>Foursquare linked to physical purchases, Facebook aggregates online purchases (through Blippy etc) </li></ul><ul><li>Content sites will still benefit from generating purchase-intent (discovery, reviews) </li></ul>Social media a dominating influence
  51. 51. <ul><li>Everyone can be an affiliate </li></ul><ul><li>Challenge of low earnings threshold mitigated with virtual currency/credits on social networks </li></ul><ul><li>Micropayments e.g. electronic cash solutions will make it more compelling and compatible with offline </li></ul>Microaffiliates & Micropayments
  52. 52. <ul><li>Micro-trends – hot product sales by hour or day </li></ul><ul><li>‘ Pre-purchase’ click data – most popular products being viewed right now </li></ul><ul><li>Purchasing clusters could drive further group activity – Groupon style </li></ul><ul><li>Requires product-level tracking at affiliate networks (Amazon does it today) </li></ul><ul><li>Instant reward notification </li></ul>Real-time data will redefine ‘impulse buys’
  53. 53. <ul><li>Watch Eat, Pray, Love the movie </li></ul><ul><li>Buy the fragrance, the eReader, and pillowcases </li></ul>Merchandizing will continue to drive product association to film, music, books
  54. 54. Redefinition of affiliate marketing <ul><li>Referral marketing or “Referratization” </li></ul><ul><li>Not the process of turning into a furry animal </li></ul>
  55. 55. Referratization <ul><li>The tracking and reward of every individual part of a referral; whereby referrals are driving the majority of online purchases </li></ul>
  56. 56. Innnovation will drive this industry forward <ul><li>Looking at the past: we can see the cycle of innovation, challenges and new innovation </li></ul><ul><li>Looking at today: new innovations expanding the scope of affiliate marketing </li></ul><ul><li>Looking at the future: Wild West 2.0 as affiliate marketing goes mass-market </li></ul>
  57. 57. Takeaway tip: Read “The Referral Engine” <ul><li>http://bit.ly/refengine </li></ul>Yes this is an affiliate link
  58. 58. <ul><li>Contact </li></ul><ul><li>joe@skimlinks.com </li></ul><ul><li>@digijoe </li></ul><ul><li>Thanks to </li></ul><ul><li>Kevin Edwards – Affiliate Window </li></ul><ul><li>Matt Bailey – 7ThingsMedia </li></ul>Any questions?

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