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Well thought out piece. I think that the "yay us" phenomenon is good to call out since the comScore piece is aggregate growth and the reportings of the networks is network specific. Obviously then affiliate marketing is still not that big of a piece of the pie. But I do understand why the industry wants to focus on the positive with so many negative articles about the economy now. Still spin is spin.
However Best Buy is dead wrong. I rant about it here on Revenews: http://www.revenews.com/angeldjambazov/best-buy-g...
You point out that part of what Best Buy is cutting out is Loyalty affiliates running toolbars. I sincerely doubt that's the case. I would bet money that Ebates and others have exclusive commission structure deals that are not impacted by this decision. I think it is an easy cut made for profitability’s sake under the thought that demand for items like the wii will drive the customer. But the wii is not exclusive to best buy and good affiliates are responsible to helping to funnel those customers. It's a dumb move to cut them off.
Don't mistake what I wrote for saying that BestBuy made a good, right, or smart move.
I don't think they're cutting out loyalty publishers. I think the problem is bigger than a few of them. If I had to take a bet, I'd wager that deals sites contribute to this even more than the toolbar toting publishers that we love to hate. Therefore, it's so big that they have no choice but to slash the entire program if they want to affect it. That's my gut feel anyway.
Coupon sites and loyalty sites both appeal to a certain segment of the consumer market. One common trait of this segment is the idea of getting something extra, or wanting reassurance that they are getting the best deal. In this sense I think coupon sites provide an excellent value. In addition to strong conversion, they also usually contribute high average order values.
Both models appeal to basic human nature and long predate affiliate marketing.
This discussion usually does go toward talking about attribution in the case when more than one affiliate/channel are involved, but I'm not even talking about that this time.
Coupon and Loyalty sites do appeal to a segment of consumers, and a large and growing one at that. There is no question in my mind that they add to conversion and contribute to higher sales, especially when someone has been shown a good deal at a site they weren't previously headed toward, and then they go shopping with it.
I'm not questioning that either.
My point is that value is averaged down because these same sites have extended their presence deep into the buying process, and are able to more and more get commissions on sales that were going to happen anyway.
(+) Coupon lover finding a deal and going shopping = high value
(+) Loyalty shopper going to make a big purchase and looking for the best place to shop to maximize what they give to charity = some value, I guess (though I have a hard time with this one from the merchant perspective)
(-) Shopper ready to buy at a merchant site discovering that they can get a deal by hunting for a coupon = low value (especially when they don't even find a deal.)
(-) Shopper ready to buy at a merchant site and a percentage of EVERY purchase automatically being handed to a loyalty site and charity regardless of how much it will cost the merchant = low value
People buy stuff. There simply shouldn't be an affiliate with their hand in the pot getting a cut of every sale.
If there's enough of the "had customer" (-) commissions, that diminishes the value of the affiliate program, and affiliate marketing. At some point it's got to give.
The main idea here is that the purchase would have happened anyway. "Would have happened anyway" is an idea that deserves examination but can be a dangerous assumption.
In these scenarios, the shopper is abandoning the cart (bad) only to return later and purchase (good). It is not logical to assume the customer would have returned to the checkout process, though it is certainly possible. This goes back to the philosophical questions about intent.
I think for a lot of people they need something extra to persuade them to make the purchase.
I believe these coupon/loyalty shoppers will always be a fraction of the marketplace. Most people probably have personal experience with getting a better deal by having more information but they do not consistently seek out more information. This is pretty much true everywhere in life.
To take an example from outside of affiliate marketing, consider Consumer Reports. This is a magazine that applies specific techniques toward evaluating product quality and value. In theory, we should all have a subscription. And yet the Consumer Reports best values are often not the top selling products among a given type.
Again, I think this is a useful issue to explore but we have to be careful about making behavioral assumptions.
In my minus points, I said "ready to buy". Not "on the fence". Not "shopping around". Not "need a push".
You cannot deny that there is a percentage of buyers who don't need something extra to persuade them to make a purchase. They're going to buy something, no matter what it costs.
But, a coupon field sends them off looking. A shopping plugin takes an indiscriminate cut.
I'm not asking you to change your mind about coupon and loyalty sites and shun them. I'm not trying to make a blanket statement for the purpose of destroying loyalty and coupon models. Some of my favorite people in the world make a living off of coupon models.
I am asking you to open your mind to the idea that affiliates are taking commissions that they don't deserve. That some affiliates have methods that create low or negative value.
Call it philosophical if you want. Does that mean we should ignore it? Personally, I think it can be measured.
It's not necessarily a large percentage (I wish I knew what it was), but there is danger that it is a growing percentage. And as it grows, it lowers the value of affiliate marketing.
As our model continues to evolve, we can anticipate more sophisticated value segmentation entering the marketplace. One example is a new customer bonus. How that value segmentation works will be based on certain assumptions. As an industry, we should be careful about how those assumptions are created.
Scott, are you saying that you think intent can be measured? What is an example of such a measurement?
Clearly you cannot measure intent. You measure value.
A buyer who consistently searches for coupons after arriving at the shopping cart, and returns through an affiliate link probably has different value than a buyer who came from an affiliate link from a coupon site in the first place.
That can be measured.
I'm making an appeal for people to think about this stuff because I fear that a bubble of sorts may be forming from affiliates who can take too much because they're better at getting in the clickstream than they are at driving value.
When merchants get less value and drop commissions globally, or drop their affiliate program, that hurts everybody. The bubble bursts.
And I'm not advocating that the industry (i.e. networks or organizations) take some standard stance on this, certainly not based on global assumptions. I'd rather see merchants be given the tools and information they need to make informed decisions. These are individual merchant decisions.
As a community, it is important for us to talk such things through. I do feel that most people in this industry believe in value and that it is entirely appropriate to segment by value because different traffic sources do have different values. An example of this is paying different commissions for incentivized versus non-incentivized leads.
I definitely agree that everyone should have a good understanding of these issues.
I told you... if you're good at this, and possess ethics, you'll reach the same conclusions I have. And I was right.
I've also come to see others arguments as tainted by their roles in the industry. Myself, I play many different roles - product ppc affiliate, domain name bidder as a ppc consultant, coupon affiliate, direct to merchant theme ppc, site bound non-coupon affiliate using seo, or ppc, or both, or more, merchant, merchant consultant, seo consultant, conversion and analytcs consultant, OPM, AM rescue, poaching police, BHO and adware cop and on and on - that I can easily see this from everyone's viewpoint. I haven't worked directly for a network, but I have done plenty of network and inhouse tracking consulting also... so I do understand these other perspectives very well.
Intellectually, that's lazy. From a business perspective, it's inefficient. Either of those conditions leads to things... and Scott, I think you know where that is. I'll see you there. :-)
Anyone at any age over 18 years old from any background can learn how to do this and start making money on the Internet right now.
As anything else, the market will adjust itself. As long there is demand for anything, then there is someone coming up to produce it in order to fill the need. And this someone will also need other people to promote it and spread the words about it - that is what is affiliate marketing all about.
At some point soon the real merchnat management will demand and receive higher commission going to new customer affiliate generators, product shgowcase creators with great SEO SERP pages, and lower commission percentages to those poaching sales at the last minute.