The Affiliate Conundrum – Partner vs. Pilferer
There is a topic for which I am unusually passionate. It is a distinction that to many even inside the world of internet advertising means little, yet it explains the difference between so much of what we see online today – that of affiliate vs. arbitrager. As I wrote previously, “At its most essential, the affiliate has an audience they try to which they cater, where as the arbitrager has only traffic. The true affiliate has their own site, their own brand in which they’ve invested time, money, and ego. They have something to lose if they mess-up. They can’t just fold-up shop and start again. The arbitrager on the other hand is the day trader who at the extreme is ephemeral, defined by his appearing and then disappearing act.” The fake blog fiasco which has culminated in lawsuits against 500 individuals and companies and will result in countless more when the FTC investigations become public has seen its fair share of blame thrown at affiliates, but the true culprit is the arbitrage. When people take financial risk and make decisions purely based on the need to recover costs and then some, that leads to behavioral detrimental to advertisers and the marketers.
Arbitrage isn’t all bad and those who perform arbitrage, from a small search affiliate up to the venture-back technology powerhouse Adchemy, can do it such a way that it adds value throughout the entire value chain – from end user to end buyer of the lead. Arbitrage in lead generation is such a tricky topic, though, that the turning on the affiliate tap must happen with great care. While it should be the traffic driver’s responsibility to ensure that the advertiser’s best interest are kept in mind, what we continue to see is that self-interest takes precedence and that means the advertiser must do the same. The buyer must be an informed buyer and understand the traffic side of the equation.
Let’s look at particularly interesting example that highlights:
- The affiliate challenge – how do you find third-parties that will drive quality consumers. How do you find a partner that understands your business objectives and do not just what they say they will but in good judgment.
- The need for informed buyers – one who enters with an understanding of what they will and won’t accept along with a target cost per acquisition. It also means a buyer that has in place the means to follow-up with leads, the ability to track the performance of leads, and communicates back to the affiliate the performance on as granular level as possible.
- The difference between those a partner and liability – everyone in the value chain wants to make money, but when it gets of alignment, no one wins; unlike a car, where it’s easy to tell when alignment isn’t there, it’s not always as easy when profit is involved.
This example comes from a recent post from famed affiliate-marketing rabble-rouser Jeremy “Shoemoney” Shoemaker, titled “Cashing in on Cash For Clunker With MySpace.” The reader of his very well trafficked blog (and quasi-online community) readers contain a large number of those hoping to glean the secrets to making money online. It’s a very different audience than one would find at LeadCon, for instance. This example caught my attention because it dealt 100% with lead generation. In short, Jeremy knew a local Omaha Nebraska Chevrolet dealer who already had a sales team handling internet leads and crafted an agreement to sell them leads at $10 a piece. As he writes, “I told them I would charge them $10 per internet lead (a small fraction of what they are currently paying) but with the condition I could publish a lot of the data on my case study (what your reading). I also told them I wanted to exclusively use MySpace for this test because in past ones we mainly focused on Facebook for driving social network traffic. ”
