Affiliate Information Category

AzoogleAds Responds Affiliate Marketing Rumors On Wickedfire

Many of you may have seen the post on?Wickedfire Forums?concerning Azoogle Laying off 16 people and that it was relate to affiliate marketting slowing down. It appears it is just a trimming of the fat at Azoogle to continue to grow. See Alex, Co-founder of Azoogleads response below:

Hi guys,

We did in fact let go of some people in our Toronto office, around 16 employees. This has nothing to do with the “cpa industry slowing down.” In fact, we are still growing like a weed. Azoogle still has almost 140 employees. In any growing company, you need to hire the best but also you need to ensure that you trim your staff when necessary to remove redundant employees, as well as your lowest performers. Just because someone “does the job” does not mean that they deserve to keep it. If someone else can service the client better, then we want the better employee to service the client. Azoogle was not built by hiring employees that were just “good enough,” we want the best and brightest in the industry to lead this company.

This round of spring cleaning won’t really affect affiliates at all, as the affiliate group is only growing, in fact its nearly twice bigger today than it was 6 months ago.

Cheers!
Alex

Pay Per Click Networks Tested

I get asked all the time how?I would rank different pay per click networks on how they perform. So?I decided to run a test with me and some friends that are part of various pay per click networks.?They were all tested with the same ad copy, keywords, pricing (.15 per click)?and landing page. (Remember this was a test case?and results with vary depending on the offer.)

Scoring for search engine networks are as follows:

? Traffic Volume (Most volume = 10 out of?10)
? Conversion Rate (Best conversion rate = 10 out of?10)
? Click Pricing (Lowest pricing =?10 out of possible 10)

For a Total Score of 30.

Many will ask, why didn’t I rate the interface? The main reason being if it converts well and the price is right we can live with a horrible interface, well maybe not horrible but you get my point (It’s about the $$$$).

Search Engine Score Chart

Traffic Is King and as you can see Google is still #1 when it comes to traffic! But if you can’t afford the traffic it does no good which is why it isn’t #1.

Conversions?are key to an Affiliate which is why every affiliate should give MSN a try as it converts better than the rest.

I think the numbers speak for themselves, in general use the ones near the top and stay away from ones near the bottom, EXCEPT 7search and enhance because with the right offer?I have had these SE networks convert extremely well.

This also proves a point that every offer is different and you should aways test on your own.?

Also check out a?Directory Vault?Blog post?about a .12 PPC campaign they ran across different PPC networks. (Had similar results)

What Is CPA-Based Web Advertising?

In the jargon-filled world of online advertising, CPA — cost-per-action — advertising may seem confusing at first. Also known as “pay for performance,” CPA is an effective way for advertisers to select how they want to pay for their advertising — by click, impression, sale, or other variable.

Pay-for-click advertising is very popular, but it can be costly. As such, it may be out of reach for many businesses. If you prefer to pay by sale, CPA-based advertising can deliver your customers to you and guarantee that you won’t pay a dime unless until you make a sale. In the highly competitive and expensive world of Internet advertising, this is a rare bit of insurance for your company?s advertising budget.

But sales aren’t the only “actions” you can choose to pay for. If you offer registrations or subscriptions on your site, a CPA-based program can be very effective. If you are simply seeking new leads for your company by using an opt-in mailing list, you can utilize CPA-based advertising to guarantee interested leads.

The benefit of CPA advertising is obvious — you get what you pay for. And your ads will generally run in more places for longer if you decide to pay only for specified actions. This can translate to greater visibility for your company.

How it works
Now that you know what CPA-based advertising is, how does it work? When you place your ad with a CPA agency, or through a site that offers the ability to run CPA ads, your ad will begin to display as soon as it is added to the rotation.

First, you will need to decide what actions you are willing to pay for. You can use the traditional pay-per-click option, or pay by sale or by registration, whichever fits your advertising budget.

Once your ad begins to display, it will be in the rotation until the set amount of actions

What Is CPA-Based Web Advertising?

As with any ad campaign, there is no silver bullet, and no one way approach can be right for everyone. Try a number of different approaches, and keep careful track of the results. Only then will you know which ads will deliver the best return on your advertising investment.

Affiliate Marketing vs. Network Marketing

by Jay Weintraub

I remember my mother buying Amway soap during my childhood. I didn’t quite understand how the organization functioned then, and I still don’t today. Amway, now re-branded as Quixtar falls in the multi-level marketing category, and when I think of MLM, what comes to mind is this advertiser that spent hundreds of thousands of dollars per month with Advertising.com, paying ridiculous amounts for first name and email address for a work from home offer. No one in the office could quite understand the “wheel” they kept mentioning, their system for taking leads generated and distributing them to others, but, they kept buying, month over month. All of this without a co-reg path, thank you offers, etc.

Not that any in our space have much spare time, but if you did, Quixtar members will have you wanting to believe. I know this because two friends have bought into that dream, and while I currently view Quixtar with immense skepticism, I find it a fascinating subject when viewed through the lens of online direct marketing and lead generation. This article looks at the differences between affiliate marketing and “network” marketing, paying particularly close attention to the “network” component. What we find is that somewhere at the intersection between affiliate and network marketing lies an immensely powerful business that someone will solve and earn the riches promised by the networking marketing lemmings.

Let’s start with the basics of affiliate marketing. Affiliate programs allow those not directly associated with a company to become an independent sales representative for that company, and more importantly, earn money on the sales that they generate. For whatever reason, this brings to mind a pajama wearing webmaster looking to integrate Amazon or eBay into their content. Affiliates are paid based on results. If they are promoting a product, they receive a percentage of the sale. If they are promoting a sign-up, they get paid a fee that translates to a percentage of the expected value of that new user.

Take Amazon and eBay for instance. An affiliate whose blog recommends a book will receive up to 8.5% of the sale price. With eBay, an affiliate whose actions lead to a new signup will receive a certain dollar amount (depending on volume) for that new user. With eBay, they will also receive commission for activity that user does on the site, e.g. bids, buys, etc. How affiliates drive traffic is entirely up to them, and whether they choose to stay active also depends on the affiliate. Amazon, who runs one of the top programs, offers on their sites an FAQ, along with a Performance Tips Section and Discussion Board. The Performance Tips section, for instance, offers tools to pick products to promote, links to websites to help the affiliate learn more, and best practices for getting traffic.

Amazon runs their own affiliate program, which means those wanting to promote Amazon products sign up directly with the company, whereas other companies, such as eBay run their program through an affiliate network. The structure is still the same for the affiliate – whether direct or through a network, i.e., they receive payment for revenue events, but working through an affiliate network often comes with additional benefits, including access to additional companies to promote, account managers to help with growth, and sometimes conferences the network puts on to get affiliates together and share information. The conference might cost a nominal amount to attend but becoming an affiliate does not. Smart companies and networks do everything they can to leverage this commission based, outsourced sales force.

Network marketing shares much in common with affiliate marketing. In fact, Quixtar (formerly known as Amway), operates much like a decentralized combination of Amazon and Commission Junction. The organization has exclusive products (their version of thousands of food and health products) as well as relationships with more traditional brands, e.g. Barnes & Noble, Circuit City, Blue Nile, Sony Style, 1800 Contacts, and FedEx Kinko’s just to name a few. Affiliates of Quixtar can promote both the exclusive products as well as those from it “Affiliate Partners.”

The terminology highlights one of the first differences. Quixtar calls its affiliates, “independent business owners.” Already, we can sense Karl Rove at work. Viewed from the lens of an online marketer, especially one even remotely involved with affiliate marketing, the independent business owner is really just an “affiliate.” But network marketing companies reserve that term for the third-party companies associated with Quixtar, the “merchants” in the affiliate marketing equation. They want users viewing the world a certain way, one that avoids parallels with online affiliate marketing.

The real differences start to emerge when considering joining Quixtar to promote products versus a company like Commission Junction. (For the purpose of this overview, pretend that Commission Junction had a division that created, manufactured, and distributed its own goods and services.) Again, in both affiliate marketing and network marketing, individuals act like an outsourced sales force. With affiliate marketing, joining is free, but with Quixtar, those who want to join must pay money, ostensibly to set up their independent business. And, while both affiliates and IBOs, as they are referred to in the network marketing world, have incentives tied to how much product they move, how they do it differs drastically.

With affiliate marketing, users receive cash for their efforts - whether it be driving sales or signups. With network marketing, users receive points first, then cash. What they physically earn is based on a complex system tied to not just how much product they move but how that product moves within their mini-organization. Network marketing revolves around how many people are actually in your network, i.e. how many you sign-up under you and how much product these people sell through their network. It’s like looking at two mirrors facing each other and trying to make sense of the almost infinite reflections.

A quick recap - so far, we’ve seen that affiliate marketing and network marketing sit on the same spectrum of generating revenue through an outsourced, commission-only sales team but that the two sit on opposite ends of that spectrum with respect to how they accomplish this. It’s free to join affiliate programs but not free with networking marketing companies such as Quixtar. Money comes through sales with both, but with affiliate marketing one earns cash only and with network marketing, one earns cash but the amount depends not on the product moved but on whether those sales come through a network of other people – their downstream. The two, affiliate marketing and network marketing, also differ on distribution, i.e. traffic, and the proximity of that traffic.

Affiliate marketers focus primarily on the web, and for the most part, on their ability to get people they don’t know to continue to a merchant’s site through their link. Network marketing couldn’t be further from that. As the term implies, it’s all about the network. In fact, Quixtar discourages anything but one-on-one selling and has set up their organization to make it difficult for those who can move a lot of product online to do so. Not only does Quixtar emphasize selling to your network, they go so far as to encourage personal use saying, “One key to your business success is to achieve profitability as quickly as possible. Converting your personal purchases to your own business as well as developing a customer base will give you adequate profit to pay for all basic expenses related to running your business.” Remember, the ability to promote Quixtar products comes at a cost. Because Amazon and others’ affiliate programs do not cost money, these companies do not suggest you purchase your products through your own link.

Using your own affiliate link to buy goods from places you already shop is actually a good idea, but it’s not common or actively encouraged within affiliate marketing. Why? Because doing so is the equivalent of receiving a small discount. Discounts are nice, but real money does not get earned that way. Real money within affiliate marketing comes from scale. Buying through your own link is in fact necessary within Quixtar, because you need the sum of these discounts to cover the cost of membership. In that sense, Quixtar is the equivalent of a wholesale club, except the savings come not in the form access to economies of scale (bulk discounts). The savings come in the form of a rebate. Again, it’s a valid thought – modify your buying habits so that you purchase certain goods through Store A (Quixtar) instead of Store B. Purchases through Store A might not cost less but you will at least receive a rebate check. The problem again is that you almost have to do so in order to make back the money you paid to join. It’s disingenuous, but it means for each member (who in theory is looking to earn residual income, etc.) they actually acquire a high value customer.

There are two other key distinctions between affiliate marketing and network marketing. The first touches back on an earlier point before the tangent on personal use, and that is the network. Companies like Quixtar, whom I highlight because they are arguably the least well understood billion dollar company, rely on direct selling – finding friends, business associates, church members, etc. and getting them hooked on the dream. You have to, because again, the real money only comes from how well one can recruit others, who then recruits others, and so on. But it’s not just how many you recruit but how much everyone buys themselves and sells to contacts. You need people to join your downstream, but you also need those besides yourself who aren’t necessarily members to buy goods.

The final distinction, at least for now, as this article has already tuned into a tome, and arguably my biggest personal rub against their form of network marketing, stems also from a previous point, incentives. It also merges incentives with the aforementioned points of selling to your network and paying to join. Network marketers receive nothing for getting others to join, and that conflicts with everything online marketers, especially those in lead generation, believe. Each new member of Quixtar pays an initiation fee and they typically buy a starter kit. The major add-on comes in the form of a personal portal site (no comment) for which you pay a not inconsequential monthly hosting fee. Nothing wrong with that, except members who refer other members do not receive compensation for new members. My back of the envelope calculations peg the value of each new member at $120 on the low side and $500 on the high end. Refer 10 people and you have earned the organization upwards of $5000 for which you receive practically nothing. Other work from home / network marketing offers will pay for the signup but none have the product depth and stickiness of Quixtar. Where that sign-up money goes is another huge mystery of Quixtar and a reason why they are so closely held.

If Quixtar were smart (maybe fair is the better word), they would have bought LinkShare and opened up the platform. Those behind Quixtar are undoubtedly brilliant because a select few make a disproportionate share of the money and they truly don’t have to work, which is unlike a normal executive or affiliate marketer trying to keep up with Google. Quixtar makes some good products, but like a drama, they make a select few wealthy by playing to the heart and not the mind. I wish I could promote some of their product, but, promoting it means not only joining the cult but having to work within rules designed to restrict normal business practices. If we thought AdWords was tough to figure out, just wait until you attempt to make sense of the individual business owner documentation. There is a lot to write on this subject, but it will wait for another time.

My judgments aside, the real opportunity comes from combining affiliate marketing and network marketing, and this is exactly what social shopping tries to do. One of my best friends, Alex Kim, has played a huge role in my purchase decisions. He’s an influencer and in all honesty deserves to receive some of the value that he has created for companies. Think of all the other occasions where individuals directly influence commerce – birthdays, receptions, etc., each represents a chance to receive a piece of the value. I have this image of a Prosper.com site where people form groups and buy through a group affiliate link, splitting the returns and where people buy through a group link / personal link that might have influenced their decision. While not related to my Prosper idea, David Lewis created a site, Cashbaq.com, that takes affiliate earnings and shares them with users (think Netflip but with more programs), and his is just the beginning. (I’d tell you another great idea immediately able to implement, but not here.)

When those in affiliate marketing and lead generation can do what network marketing has done – take the notion of affiliate and make it local, personal, we can create a formidable and open competitor to manipulative companies such as Quixtar. And, I think we will. Personal web portals just don’t work when it comes to making money. It’s time to learn from their success but build a site that jives with Internet marketing and the culture of transparency that comes with the Internet.

Jay Weintraub
Director of Market Strategy
Revenue.net
http://www.revenue.net
e: jweintraub@revenue.net
http://www.repvine.com/members/jayweintraub/

The Future of Google Fraud: CPA Fraud

Google’s recent announcement to offer CPA advertising has gotten a lot of attention. On my last entry on this topic. I got an interesting comment asking about accurate tracking and click fraud possibilities.

Tracking:
It will be interesting to see how they offer these types of CPA offers for sale to advertisers. My guess for tracking results is that they will use the conversion tracking technology that they provide as part of AdWords now, where the publisher will be required to place some sort of conversion code on their thank you for ordering page.

Assuming the initial deals are cost per lead, the advertiser would supposedly set an amount they are willing to pay for a lead, and when that confirmation page loads, Google will track this as a lead.

Here are some potential fraud scenarios:

Fake Leads / CPA Fraud:
Obviously there could be a scenario similar to click fraud, where instead of people around the world being paid to click on ads, they would be paid to generate fake leads, thereby generating revenues for Google and the sites hosting these CPA offer ads. I am sure this is a scenario that Google has thought of, and has looked at ways to track and prevent this, it will be much easier for the advertisers to identify fraudulent leads than fraudulent clicks. Google will need to come up with a way for advertisers to report these fraudulent leads. If they are simply using the conversion tracking codes, they will also need to deal with duplicate leads and page reloads the conversion pages.

Broken Site / Leakage Issues
The second type of “fraud” could come from the publisher’s end where they don’t always present the Google conversion code for all transactions, and thereby get clicks for free to their site without paying for “conversions”.

Imagine this scenario. Someone creates a page to capture mortgage leads, and throws a lot of AdSense pay per click ads on their page, and due to some “technical glitch” the customer have difficulties completing the lead form, all they can do is click on the AdSense ads or leave the site. The site owner would then be able to get clicks for free because they would have little to no conversion rates. An advertiser might be willing to pay a lot per conversion if only 1-2% of the clicks actually convert on the page, but the non-converters drive revenues.

This might not be done intentional; there are a lot of sites out there with horrible shopping cards and conversion flows. Additionally many site have multiple revenue sources, and there will be a lot of scenarios that the CPA deal that is tracked is just one of the ways the site is making money, Google and their publishers might not share in a lot of the revenues, and thus allow advertisers to pay less per click for their traffic.

By moving into the CPA deals, Google will be taking on more risk in the transactions. There PPC model is a lot simpler to operate and administer from Google’s end, because there is no transaction risk. In this type of free market, advertisers are willing to pay to the point of not being profitable, and in a perfect world, Google should be maximizing the return in the PPC model.

I guess my point for Google is, if it isn’t broken, don’t fix it. This transaction risk is what the advertisers and affiliates have been arbitraging on Google for some time using their PPC advertising model. When ads don’t work, we bid less or turn them off, as more and more bidders come into the market, Google’s PPC model seems like the best and simplest way for them to make money.

My guess is that Google will find the CPA world offers more headaches than it’s worth.

But you never know, if they ad a lot of intelligence behind the CPA model like they did with the PPC model, then only the best converting and most money generating ads (for Google) will display throughout the network, and the could open up a whole lot of new revenue sources and put some of these fly by night “CPA networks” out of business.
Posted by Adam Viener

HealthPricer Sees CPC As Near Death

Cost per click? Even the resources of HealthPricer can’t find a cure for the demise of CPC, as cost per action (CPA) becomes more appealing to retailers.

Why should a retailer settle for CPC action on a shopping engine when CPA offers a better return? Why should shoppers work with a site that features retailers based on their bid, and not their ability to best satisfy a customer query?

In healthcare comparison shopping, Mike Brown of HealthPricer thinks CPC and customer needs don’t work out well together. As he told WebProNews in an interview, the CPA model works much better.

HealthPricer’s index spans some 400,000 products, including prescription drugs, over-the-counter medications, contact lenses, supplements, and beauty/hygiene items. Brown said their 400,000 unique visitors per month has helped them attract attention from portals as a content provider and a sales facilitator.

He touted the advantages of using CPA for consumers, and showed how HealthPricer products show all of the costs with shipping, handling, and rebates accounted for in the price.

“CPA lets them get all the data to show the best price,” Brown said. “CPC just lets advertisers get to the top of a list. Comparison shopping engines need to be consumer-biased.”

Brown also touted the legitimacy of retailers HealthPricer has in its engine. He cited a certain competing site as an example, and claimed none of that site’s results for pharmaceuticals contained a link to a single legitimate pharmacy.

In finding good prices and CPA arrangements for real pharmacies, HealthPricer visitors will note a number of search results coming from Canadian drugstores. We asked if this might bring about FDA interference, but Brown thinks these sales aren’t taking a big bite out of Big Pharma in the US.

Besides the CPA model, Brown sees HealthPricer’s data normalization practices as a key point of difference between his site and competitors. Simply put, they have more information, better information, and higher-quality providers participating in the site.

There’s always room for improvement. Brown sees a need to add community features and greater interactivity, and to build more expertise in product knowledge beyond what they have today. As a standalone firm willing to partner with health portals, those can help accent HealthPricer’s value.

If HealthPricer does catch on, (Brown cited ongoing discussions with a few portals), a solid performance by them could push CPA harder with comparison shopping engines, through virtue of making that type of content delivery expected by Internet users.

Since people are going to try to find what they need online, why not give them a site that can help point them to legitimate sources with upfront pricing details? That could be the prescription for change in the use of CPA versus CPC in comparison shopping.

Submitted by David A. Utter?

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Cost-Per-Action Done Right

The tricky thing for advertisers is not going to be figuring out how much they’re willing to pay for an action, it’s figuring out how many actions they’re getting, crediting them to the appropriate source, and raising their budget based on that credit.? In order to do this, you can’t think like a search advertiser.? You have to think like a media advertiser.?

??????????? A huge part of the challenge to Google’s CPA ads, was highlighted by my colleague Kevin Lee in his recent ClickZ column.? Without too much repetition, the challenge for the CPA advertiser is going to be competing against all the other ads, including site-targeted CPM and CPC ads, and keyword-targeted CPC ads.???

??????????? The keyword-targeted CPC ads, many of which may benefit from a high Quality Score (which you can only get by advertising on Google.com) are the favorites to receive the highest impression frequency at the lowest cost.? Without a Quality Score on Google.com, and with the low click-through rate and conversion rates that are typical of display ads, the CPA advertiser is the underdog in this contest.???

Because he’s the underdog, he’ll have to pay very high bid prices for the publisher to even serve impressions, let alone get the clicks and ultimately conversions that will compensate the publisher.? However, as those of us in the media world know, a display ad’s click-based conversions typically make up a small percentage of the total conversions that the ad drives.? The rest are what we call view-based conversions.?

The premise behind the view-based conversion is fairly simple, a customer sees a display ad and doesn’t immediately click, but returns to the advertiser’s site later and converts.? Advertisers can track this by dropping a cookie onto every computer that sees their ad, and setting pixels on their Thank You pages to record each conversion and credit it back to the referring viewed ad.

Crediting view-based conversions appropriately can be a tricky business, especially if you’re running campaigns on a lot of different online networks and offline media platforms.? For instance, a customer may have seen your Google CPA ad, and then another display ad through a different online network, and it was the latter ad that drove the conversion, not the former.? To credit the conversion to the appropriate view, you’ll need a system that de-dupes your cookies and applies the credit to the view that occurred closest to the conversion.?

However, this begs the question, what if my viewer saw two ads, but it was the first ad he saw that really drove the conversion, not the second?? This will require you to review your analytics carefully.? If you see an ad that has a high number of views before a conversion, but is not always credited for the views, chances are that ad is performing well for you, and you may want to increase your CPA, or CPM if it’s on a different network.?

Advertisers can also run into crediting problems if they’re running campaigns on other media, such as TV, print, or outdoor.? A viewer may see your online ad, then see your TV commercial, and then convert on your website.? Your system may automatically credit that conversion to the online ad, but the TV ad may have been the primary conversion-driver.???

To adjust for this, you can set a time limit for crediting view-based conversions.? You’ll have to determine an appropriate time limit based on the extent of your other media campaigns.? For instance, if a viewer converts three hours later, you’re probably safe crediting that conversion to the viewed online ad.? On the other hand, if he converts three days later, maybe it’s because he saw your message on a different medium.? Advertisers will need to decide this on a case by case basis.?

Advertisers who have a system like this will have an advantage in the bidding war for impressions.? There will be a huge gulf between what they pay their AdSense publisher for an action, and what they’re actually paying per action.? If you can exploit that difference and dynamically raise your CPA based on a holistic performance metric that includes view-based conversions, you stand a good chance in the competition against the CPC ads.

Submitted by David Honig Email Email

To read most of the articles on Google’s expanded test of CPA-based content ads, you would think it was the greatest invention since the wheel.? It could be great for certain advertisers, but only if they do it right.? As it turns out, that’s not so easy.

The Rise of CPA Ad Networks

Online advertising is on the rise. With big-brand dollars fueling the marketplace and inventory on top Web sites being gobbled up, you’d think CPA ad opportunities would be declining. Why then are more CPA ad networks cropping up, with the top producer reaping $10-20 million per month in revenues? Networks such as CPA eMarket, clickbooth.com, CPA Empire, and PrimaryAds. What is it we don’t know or we’re not willing to give credence to? And what are our advertisers potentially missing?

First, let’s establish what a CPA ad network is. After all, isn’t that what an affiliate network is? Yes and no. Like affiliate networks, CPA ad networks rely on publishers who are willing to promote their advertisers’ offers, and both networks call these publishers “affiliates.”

CPA networks act more like direct CPA-deal brokers, whereas affiliate networks more passively facilitate the pay-per-performance process. CPA networks closely guard and nurture their affiliates, especially the top-producing ones, and are more likely to walk a great offer to top affiliates to ensure it gets picked up. Affiliate networks may require startup fees and advertiser prequalifications, whereas CPA networks have very few barriers to entry. And whereas affiliate networks may not pay their affiliates frequently or until a certain revenue level has been achieved, CPA networks pay affiliates more readily in an effort to woo and retain them.

Unlike affiliate networks, which focus on sales, many CPA ad networks focus on lead generation, or the “registration path,” as Shawn Collins, cofounder of Affiliate Summit, explained. That may be partially because affiliate networks don’t focus on this area, but it also may be because of another advertiser misconception: that CPA ad networks cannot handle large merchants with hundreds of SKUs and enormous data feeds. Not true, say the CPA network folks. The CPA networks also feel they have a leg up when it comes to advertisers with fewer products. Unlike crowded affiliate networks, CPA ad networks have a good chance of getting the advertiser’s limited product offer picked up.

All the CPA ad networks I spoke to say campaign success hinges on the offer. Even an enticing payout won’t do anything if the offer doesn’t generate action. Offers can vary, but here are some tips:

  • Reduce the affiliate payout, and minimize the number of required registration fields. This will generate more completed lead forms and ultimately more revenue for the affiliate.
  • Minimize the product price point. Pretty much nothing over $200 will sell, but break that up into four easy payments, and you have a shot.
  • Run hot prize giveaways. The ubiquitous iPod was it for a while there.
  • Create a solid offer with an extra-juicy affiliate payout exclusively for one CPA network.

In addition to the offer, have solid ad creative and landing pages built to convert.

CPA ad networks thrive by practicing “coopetition,” each network shopping its own offer to the other networks to maximize the ad’s exposure among affiliates. Because of this, networks emphasize the importance of advertisers working with legitimate CPA players, those with solid reputations and who avoid affiliates with poor practices, such as cookie stuffing, adware, spyware, spamming, and so forth. “Know thy network and their business partners,” said Missy Ward of CPA Empire. “There are networks I would never shop my offers to.”

The general perception is CPA ad networks only cater to less savory advertisers. The truth is big household brands make up 30 to 45 percent of all CPA advertising. Big-brand sites can also be affiliates accepting CPA ad buys, such as MSN when it has remnant inventory. Don’t be fooled. Big-name publishers are selling CPA buys. But more often than not, it’s directly to the advertiser and not through the network.

Nor are most CPA ad networks working with ad agencies. Most work directly with advertisers. Are ad agencies scared of CPA ad networks for the very reasons the networks warn us of — legitimacy? After all, how legitimate do companies with names like XY7.com, YFDirect, CPA eMarket, and TheBizOppNetwork sound? Maybe these CPAers need a dose of some good branding work, eh?

Why most of the CPA/Brokerage industry will not be around in 5 years.

?Many people currently involved in the CPA industry feel that this industry is rock solid and not likely to change anytime soon. They may be in for a shock. There are developments coming from technological, business and legal areas which are going to have huge ramifications on the industry. One of those just happened.

Specifically I am referring the brokerage fees that CPA networks and brokers charge (around 20%) to push offers to fill the internet demand for remnant inventory, and the inefficiencies and expenses that are put in place by having so many humans involved in making web advertising work. Over time these people will be replaced by technology, just as many industries have been overturned in the past by modernization causing blue collar workers to lose their jobs.

The three biggest sources of traffic for a typical network are:

a. Email marketing

b. Pay per click traffic

c. Web inventory such as banners and text links

We’ll talk about these one by one.

CPA search marketing

Pay per click marketing is changing. Google has just announced it is going to offer a CPA model. At the moment it is possible to make a decent living by being good at PPC arbitrage of CPA offers. This works right now because Google and Yahoo have focused their business model around selling clicks, rather than selling actions. They do this because this is their version of branded CPM advertising – they can generally get more for it.

However, this causes huge inefficiencies in the system, because it is time consuming and complicated to figure out how to drive lots of PPC traffic, enabling therefore arbitrage opportunities.

Since Google has now started offering a CPA system, and Yahoo certainly will, this will change dramatically. Advertisers will be able to add a bunch of creatives into the system, along with a list of keywords and a CPA they are willing to pay. The system will then automatically test the base keywords you inserted, along with an extra list of keywords google generated itself. It will test them all against the various creatives you made; keeping pricing under a certain CPA you have set. The entire system will be fully automated, and the current arbitrage which is possible today will go away. Google and Yahoo can make quite a lot of money by making this change, given the average network commissions and the money made by PPC arbitrage players. Google has already switched and it is just a matter of time before Yahoo does as well.

Notice I don’t mention clickfraud – I don’t believe this impacts Google and Yahoo moving to a CPA model.

Email marketing

Email marketing is an area which is going to change on two fronts. CANSPAM is a law with many loopholes, one that allows people to send as much mail as they want under certain (not very restrictive) limitations. A lot of mail is being sent which does not provide true value to consumers, its simply mass market monetization that is driving volume, a process I really disagree with. At some point a new email law will be passed which requires something like “at the time of sign up, the sending FROM address must be displayed clearly so the consumer knows where they will receive mail from”. And brokering of email data will be exclusive only. You join one list, you unsubscribe from that list, period. It’s only a matter of time until something like this is legislated. Don’t think so? A few years ago the telemarketing industry was doing great – now its been decimated with the FTC’s do not call rules. This kind of thing can happen literally overnight – look at how the online gaming industry has been affected recently.

Secondly, deliverability is going to get much more difficult. Right now, most ESP’s can get mail delivered almost anywhere except major ISP’s such as Yahoo and Hotmail. Reputation management is a new trend in email which will change this dramatically. Reputation management means that every IP address which is sending email is certified by an independent third party as to how that IP address is being used to send mail. It provides a lot of data to email receivers on exactly how that IP address is being used. If you’re certified and your reputation is positive, a lot of your mail will automatically be delivered. If you’re not, you’ll get blocked as spam.

Right now reputation management is being used by the major ISPs to confirm mail delivery – but once this is rolled out more widely across internet mail servers, mail blocking will improve dramatically, and those who are sending bulk co-reg data will find their deliverability falling through the floor.

Behavioural targeting

Thirdly, behavioral targeting is going to get much better. This has been talked about in the past, and never seems to truly work properly but it is starting to get much better now. Networks like Blue Lithium and turn.com are making a lot of progress with targeting and collecting a lot of data on their userbase. Reports I hear about Blue Lithium in particular are that it performs extremely well.

Impressive things are being done on the advertiser side to take advantage of behavioural targeting. For example, Think Partnership has a new product called Second Bite which saves shopping cart abandoners. If you decided not to buy a product and half completed your shopping cart, Second Bite will work to get you to finish your purchase. Think Partnership is just starting to buy banner inventory to save the cart purchase. What this means is that you can be browsing the web and you’ll see a banner saying “hey – come back and finish your purchase on <onlinestore.com> and get a 10% discount”. Once this kind of inventory is brokered out to major behavioural networks, no general interest CPA offer will be able to compete with the CPM’s they will be able to pay to save a purchase. Sure, this is a narrow application, but many more clever targeting applications of behavioural targeting will appear, increasing CPM’s across the board.

In addition, client side behavioral targeting will increase. By this I mean that users will allow more data to be mined from their computers locally, and some of it will be passed back to the network. In an extreme case, imagine if Microsoft made its Windows OS completely free – but in return for being able to mine behvioural data from your machine. This data would be fed back to online targeting networks such as Blue Lithium, to target web advertising more accurately. No popups or any other nasty applications would be included. That could be a huge value add for consumers – with free software AND better advertising. Yes, this has huge privacy implications, but over time these will be worked out – the ECPM increase from accurate targeting will be too valuable, and consumers will not mind their data being mined in aggregate.

That’s not to say that everything is bad. Some areas of the CPA and brokerage industry will continue to work well. These include:

1) Coupon and affiliate sites. Publishers that are actively going out and finding links to promote on their site for consumers will continue to make money and want to use CPA networks. The human interface in this instance provides tremendous value to consumers since the publishers truly understand what their market wants.

2) Newsletters. This will become the standard for email marketing as the more aggressive forms of email marketing will be made illegal. This is similar to coupon and affiliate sites where publishers will actively seek out links to target their audience due to their understanding of their market.

3) Web and chat spam is going to increase. Right now we’re seeing quite a bit of spam on myspace, and given the progress people are making on defeating CAPTCHA mechanisms, this will only increase. If the postings cannot be effectively blocked by computers, then more of it will be done. Unfortunately CPA networks will see more volume from various forms of aggressive webspam as time goes on.

The branding industry will have some impact on these, but it likely won’t change much from the way it is now – some inventory will be sold at higher ECPM’s for major brands, and the rest will be remnant inventory. Of course the big question is how high the ECPM’s can get for behavioural targeting and whether they can beat branded advertising.

Some people will read this article and be thinking to themselves “no, he’s wrong, this has always worked, and it will continue to work”. The reality is that the internet marketing industry has been around for a very short time, and we really don’t have any data points to compare against long term. The right way to think about it is “where is the true value for consumers and advertisers”. If your business model doesn’t provide true value to all stakeholders, then at some point what you are doing will stop working.

If your business model depends entirely on brokering, you may want to consider how you will operate in a few years time once the above become reality.

A good way to think about whether your business will be around in the future is simply by answering two questions:

1) By running my business, am I creating true value for all my stakeholders (customers, employees, consumers, partners)

And

2) Am I keeping up with the very latest trends that might affect my business, including industries that are not directly related to my daily focus?

For number 2, you can say you’re doing the right thing because you’re reading this. J

Does this mean that all CPA advertising and lead generation will go away? Of course not. These are very fundamental models and the backbone of internet commerce.

Just watch out if your business model is entirely focused around brokering remnant advertising. If this is your primary business, make sure you stay on top of your strategy. You don’t want your company to be made irrelevant like has happened with generations of blue collar workers in the past.

Adrian Bye
President
Tasmania Consulting Group
http://www.tasmaniaconsulting.com/
t: 305-433-8188
e: info@tasmaniaconsulting.com
My RepVine Profile

Gas, Air, And Spark - How Internet Marketing Is Like A Car’s Engine

I’ve never been much of an automobile mechanic, but about 25 years ago an old friend instructed me in the mysteries of how to find out why my old car wouldn’t run.“You see,” he said, “when an engine won’t run, it’s got to be one of three things. It’s not getting enough gas, air, or spark, because that’s all an engine really needs.”He taught me to check simple things, like pull a spark plug and see if it sparks when the starter turns over. Or pull off the air filter and see if I could smell gas in the carburetor. (That was before most cars were fuel injected!)I can’t count the number of times over the last 25 years that those simple words helped me during times of car trouble, especially in younger days with cars that were old “beaters.”If you think about it, Internet marketing is just as simple. All you really need is gas, air, and spark:1. Targeted traffic - the fuel that powers an Internet business.2. A product that people really need or want - something you can present as being as necessary as the air they breathe.

3. Sales copy that will sell - the spark that makes the targeted traffic want that product as badly as the air they breathe.

Okay, so maybe that still sounds a little tough, but hey - it’s only three things! Even though I’ll probably never be a skilled auto mechanic, I can comprehend and check three things. And you can catch on to just three things too.

Number 2 and 3 are probably the easiest to master.

There’s no shortage of great products and great ideas for things that people really want. It’s easy to find out what people really want with tools like:

- Wordtracker - find out the most-searched keywords

- Ad Word Analyzer

- Keyword Equalizer

Once you decide what keywords to focus on, you can check out what other people are selling successfully for those terms, and look at what affiliate programs pop up when you search for those terms. If you want to focus on affiliate sales, chances are there’s some great sales copy already written or that you can modify to fit it to you more individually.

Overture’s Maximum Bid tool will give you an idea what’s working successfully for other people, or Adword Analyzer can really speed that up by showing how many Overture and Google AdWords campaigns there are for various keywords.

Now you just need targeted traffic to send to read that awesome sales copy. If you don’t mind paying today’s gasoline prices for some high-octane gas, and you used Overture’s Keyword Suggestion Tool or Adword Analyzer, you already have a good idea what keywords would be good to bid on at Overture or Google AdWords. That will get you out of the driveway initially, then you can start building keyword-rich pages around the theme of your website and getting links from web sites that fit your theme.

Now you know the secret of how Internet marketing is like a car engine. So when that Internet marketing campaign won’t run, you know you only need to find out what it isn’t getting enough of:

- Not enough targeted traffic?

- Not enough of a market that really needs what you’re trying to sell?

- No spark to ignite the traffic and demand into a sale?

Because just like a car, that’s all an Internet marketing campaign really needs to run.

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