Think eBiz; thoughts on eBusiness

Google takes on Affiliates? Probably Not.

Google announced that they are entering the CPA (cost per action) market, dominated by Commission Junction, Linkshare and others - and known formally as affiliate marketing. Google's move is an attempt to curb click fraud, since compensation is made only when a pre-defined action is taken, other than a click. For instance, click over to Prudential and fill out a form for a term life insurance quote is an action, a lead. Click frauder's won't spend the time to fill out forms to achieve their devious goals.

David Jackson, at the Seeking Alpha stock blog submitted his view that this move by Google spells the demise of Value Click and CJ. In fact, he is selling Value Click short. However there are many flaws to this prediction.

1. Google's track record for new business entrants is not stellar. Google Base, which some predicted would take on eBay - did not. GMail would spell the end of Yahoo and Hotmail, it did not. Google News did not cause a ripple in the online (and offline) news business.
2. Advertisers will divert their dollars to the the new Google CPA - is doubtful. Why? because advertisers want control in ad placement and where/when their ads appear. Adsense, which is the contextual click program by Google, can be placed on most any sites, and positiond in any location - as deemed by the publisher. This takes the control and brand protection out of the hands of the advertiser.
3. As for the publisher, the share (commission/compensation) they can achieve from CPA's may not equate to what they can achieve through the existing networks. Affiliates know they can earn 8% on a sale, but with Google - they are not provided with this level of information nor (I am sure) level of compensation. Adsense does not provide details on clicks nor on exact compensation - so Publishers will lack the robust reporting they rely on for their own control and ROI management.

I believe that David's short sell on Value Click is based on faulty logic or by his belief that anything Google touches is gold. Their capitalization is amazing, but their forays into far flung beta's may hurt them in the end vs more focused competitors. Perhaps this is one reason that Google has not broken out of it's 400 average trading bands. IMHO.   Stephen

Google's Affiliate Rule Change; A good rule?

Google recently announced an adword rule change that affects affiliate marketers. Is this a good rule change? As an affiliate manager and marketer myself, I see the good in this rule. Here is why.

Keep this fact in mind. The Google ruling affects affiliates that drive visitors direct from AdWords to the Merchant's site. If the affiliate has their own website, this property will remain within the visitors search results and are unaffected by this Google rule change. The rule is based on the Visible URL.

Relevancy for the visitor:

Yes, choice is good, it's the American way. However when one merchant is represented by dozens of affiliate links, this does not give visitors a choice of competing brands. This change enhances relevancy on search, with only the strongest affiliate (or the merchant site itself) being represented, based on their Ad Rank*.

"I think this is fantastic for the end user. It should lead to higher-quality sites being advertised," said David Lewis, president of 77blue, a private-label shopping site provider. "Advertisers are either going to have to build quality sites, or disappear altogether." source: clickz.com

Good news for Merchants:

For the Merchant, this policy may protect their investment in their own search marketing strategy. Why should a merchant compete with it's own affiliates? However, if an affiliate out-optimizes the merchants keyword, they can supersede the Merchant listing. However, most affiliates are not financially equipped or skilled enough to out-gun a merchant's listing.

"Finally, it takes the heat off some parent companies who don't like affiliates competing with them on keywords. Instead of needing to police those affiliates directly, they now have the option of bidding a bit higher, or getting off their duffs and optimizing their ads, or both. Most affiliates won't be able to compete."  source: Traffick.com

In other words, affiliates will not significantly cannibalize potential sales from their existing search channel marketing by the merchant.

How does this benefit the affiliates?

For affiliates that create their own web sites or include banners on their eCommunity sites, or use email marketing, this policy will have no affect (even if they use search to attract attention to their sites).

Most "quality" affiliates add value by creating their own website or attracting traffic to their eCommunity. Clearly, this is the intent of affiliate marketing in the eyes of the merchant.

"For those affiliates who actually build their own websites, this policy change does not affect them at all. It's mostly aimed at the types of advertisers who are playing the "Google Cash" game of sending searchers directly from an AdWords listing right to a parent site, with an affiliate code on the URL." source: traffick.com

"Lewis said the move will benefit affiliates who add value to a merchant's marketing program by providing useful information, linking directly to specific, relevant areas of a merchant's site, and investing time in optimizing the message they are conveying."    source: clickz.com

Conclusion:

In other words, this rule change may help to enhance affiliate marketing, presenting quality web sites and well optimized search programs at the expense of those that play the "Google Cash Game".

Additional Articles: Forrester Blog and Revenews.

* Google Ad Ranking is based on Click Through Rate (CTR) times Max CPC. The more your ad clicks through (effectiveness) and the higher you are "willing" to pay for that click - determines your ad rank.

Affiliate Marketing, an SEO Strategy?

Google rewards websites that represent expertise in a given subject, a go-to Internet property on a particular topic. Relevancy is vital to SEO success. Does the content and theme of your site relate to a specific keyword or phrase? And, do other web owners recognize your site as being a subject matter expert (SME)?

SEO success is made up of many factors, content being preeminent. However, to be truly recognized as relevant is best realized from your peers.

And just how do your peers recognize your web site as a SME? By linking to your site from theirs; known in the SEO industry as "linking" strategy. Next to content, linking strategy is one of the most effective means of naturally promoting your website. To be effective implement a linking strategy in a manner as follows:

• The site that links to yours should be relevant to the site's topic or keyword/phrase.
• The anchor text of the link to your site should contain the keyword or phrase that you are trying to be listed and search engine ranked.
• The link should be mono-directional, not reciprocal, from their site to yours.

Affiliate Marketing can support linking strategy. Affiliates, by their very nature, are mono-directional links to your web property, often with text/alt tags that describe your service. Great, except I can hear you point out two drawbacks to this strategy:

1) Affiliate links often go through an intermediary, such as Commission Junction.

2) Affiliate websites may be highly generic or not tightly relevant in relations to your own.

So how do you implement an Affiliate SEO strategy?

• Use a direct link from the affiliate to the merchant site, where the affiliate network supports a pixel based tracking strategy. The visitor clicks direct to the merchant, which then fires up the pixel tracking, which is placed on the merchant landing page, to the affiliate network.
• Approve affiliates that are "on-message" or relevant. If you want to have a large cast of affiliates, provide the direct link to the highly relevant sites, and the regular intermediary tracking code for all others.

In this way, relevant affiliates help support your SEO linking strategy, while driving business to your website. A winning Internet strategy for your business.

It takes an eCommunity

Build a website and they will come. Well, not exactly. Building a website does not make for a successful online venture. Successful web site owners and affiliates know that it takes a community. An eCommunity.

The challenge is to establish site credibility and foster a loyalty among your target users, to provide incentives for your target visitors to click over to your site often. The ultimate scenario is turning your visitor into an evangelist for your site (by telling others and establishing links on their websites). Naturally, your site must be informative and/or provide a product or service that your target visitor wants or needs. Assuming this, how do you build your community?

First and foremost, keep your content fresh, offer new "related" products and offer specials. Provide the incentive for your visitor to come back to your website to see what's new. If your website focuses on home repair, provide timely tips for "winterizing" your home or a review on snow blowers, and links to related products they can buy online.

Second, create an opt-in ezine (emailed newsletter) that draws your community back to the website. Don't offer hype - respect your communities email box. Instead, alert your "members" of new offers and the latest information on your chosen subject. Make your visitors feel like valued members of your community.

And get your members involved. Offer to display the best advice or tips submitted by members. You might even provide a reward for doing so ($25 for the best tip this month).

Affiliate, a key channel in your online arsenal

A recent article in iMedia Connections discusses the rise of "independent" affiliate networks, away from the big-3 (CJ, LinkShare and Performics). As the affiliate market matures, these big three will need to evolve to compete with "private" networks and their lower utilization costs -- and thus higher potential ROI.

However, this article presented another factoid of interest :

"The affiliate marketing industry is in the midst of rapid growth. A Forrester Research 2003 study found more than half of online retailers were using affiliate programs -- and 99 percent of them said the tactic was effective at driving sales. That finding outstrips the approval ratings for email, search marketing and portal deals. In addition, affiliate programs generally can attain between 10 to 30 percent of a brand's total online transactions over time."

I cannot fully endorse that affiliate "...outstrips the approval ratings... ...search marketing... ". Instead, I view affiliate as a highly effective channel - another "weapon" in the arsenal - for driving qualified traffic and buyers to our client's web assets.

A possible one-two punch for driving ROI and Brand Awareness for your ever more vital web assets.

Click here to read the full iMedia story.