Affiliate marketing: the bleeding edge

Affiliate Summit East 2010

Innovate! New Exciting Applications of Affiliate Marketing

Joe StepniewskiCo-Founder, Skimlinks

What, who, when?

1934: Theorie der Wirtschaftlichen Entwicklung,Joseph Schumpeter defined economic innovation…

1. A new ‘good’ consumers aren’t familiar with2. A better quality of an existing product/service3. A new method of production or packaging of

something4. Finding a totally new market

Innovation defined

The Theory of Economic Development, 1934

1. Entrepreneurs, or wild human spirits (he coined Unternehmergeist - German for entrepreneur-spirit)

Where does innovation come from?

1934: Theorie der Wirtschaftlichen Entwicklung,Joseph Schumpeter defined economic innovation…

OK – We got the wild spirits bit sorted

2. Companies with resources to invest in R&D

Where does innovation come from?

• Limited marketing reach• Limited sources of traffic• Limited media or space

Innovation often sparks from limited resources or limited environment

Affiliate marketing = entrepreneurs + savvy retailers + limited

resources = consistent innovation

Photo credit: Shawn Collins

The Innovation Landscape

Innovation and adoption are increasing the rate of growth of affiliate spending

US Affiliate Marketing spending 1994-2016

$bn

$2bn16% p.a.

$7bn20+% p.a.?

The eras of affiliate marketing

Wild west era

Domestication era

Affilination era

US Affiliate Marketing spending 1994-2016

Ubiquity era$bn

The Wild West: Ruled by cowboys

Innovation came from the adult industry

• Cybererotica: 1994• Amazon.com: 1996• Linkshare & Be Free: 1996• Shawn Collins: 1997• Commission Junction: 1998

Wild West Era (WWE)

• Choice of CPC, CPA and CPL programs• Geo-targeted banners• 500,000+ affiliates• $250m revenues, 40% annual growth• Still only do checks to non US affiliates

Adult Friend Finder’s innovation: helping establish the affiliate model

Source: Business 2.0 Magazine, Adult Friend Finder

Domestication: Taming the beast

• Explosive growth: ecommerce, new sectors• Innovations challenged by rules & restrictions• New innovation grows as a result

Domestication Era (DE) 2001-2008

• PPC affiliates• Squeeze pages / email affiliates• Cashback / Rewards• Coupon codes• Data feeds

DE Innovations: 2001-2008

• Affiliates penalized in organic/PPC listings• Looked for alternative traffic sourcesNow• Coupon code sites sit at end of purchase funnel• Rewards sites rely on viral traffic• Email affiliates just need to capture your

address

Search traffic restrictions drove innovation

New innovations displace old revenue streams

Affiliate Window’s affiliate revenue sources 2005-2010

• Controversial practices on coupon codes– ‘Click to reveal’– Expired coupon codes– Poaching exclusive codes

• Industry response through IAB Best Practice Guidelines

Innovation must not run unchecked

• Hides or displays code box based on referring URL

• Stops sales leakage for non-coupon code sites

• Control exclusive deals

Merchant innovation in response to coupon code challenges

Ubiquity: Affiliates are everywhere

• Tipping point of major brands with programs• Recognizable affiliate consumer brands• Intersection with tech startups• Innovation explosion• Social media integration

Ubiquity Era (UE) 2008-2013

Major brands have affiliate programs

• Over 20,000 affiliate programs in 2010

Consumers use affiliate sites every day (and understand the model)

• Startups see appeal of affiliate marketing• Low barriers to entry• No need for ad-units• Social activity can drive purchases

Affiliate marketing, meet my friend: tech startup

10 innovations improving the purchasing funnel

Advertising

Merchants helping with distribution of data feeds through ad-units

• 300x250 (MPU) ad-unit easy to add to an affiliate site

• Pre-load particular products/categories

• Targeting a visitor with an ad for a product that has been previously viewed or placed in cart

• Retargeted customers are 4x more likely to convert than new customers

• Affiliates can recognize abandoned shopping cart and offer a discount, coupon or bundle deal

Retargeting in affiliate marketing

Source: Mythings.com

Retargeting with reward model driven by CPA

Source: Mythings.com

Free for advertiser

Post-impression cookie

CPA on sale

• Post-impression/post-view cookie, dropped after 2 seconds

• Potential clash as merchant may de-dupe across affiliate channel

• Networks have indicated click cookie would probably supersede impression cookie

PI Cookies carefully added to the marketing mix

Social Media

• Embed a Dominos widget easily• Available for Facebook, Myspace & more

Social media embedding brings affiliate marketing to masses

• Simple interface• Add ID via signup to Affiliate Window

Interfaces adapted for ‘micro-affiliates’

• Blippy shares your purchase-stream

• Automatically based on merchant or bank statement

• Swipe.ly provides similar service

Purchase sharing unearths products I care about

• Thingbuzz tracks ‘trending products’ across Twitter

Crowdsource what’s hot right now

Product Discovery

How do ‘real people’ search or discover products?

Mashup datafeeds with apps to create value

• Official site limited in search capability• Merchant & affiliate worked together to

identify the area of weakness• Affiliate site sits alongside official listing in PPC

space• Augments official offering with destination-

based search

Fast-track innovation with affiliate merchant collaboration

• Popshops’ storefronts and widgets

• 60m products to configure into a storefront

Configure specific storefronts for groups of products or themes

On-page monetization

• Product references linked to top performing merchant

• Geo-targeted link based on visitor

• Pop-up price product info or price comparison

Automatically link keywords to affiliate links

Associate products right at the image source

Affilination: The future of affiliate marketing

• Social media dominance• Microaffiliates• Micropayments• Real-time data• Multi-attribution

Affilination Era (AE) 2013-?

• Activity stream will be affiliated• Foursquare linked to physical purchases,

Facebook aggregates online purchases (through Blippy etc)

• Content sites will still benefit from generating purchase-intent (discovery, reviews)

Social media a dominating influence

• Everyone can be an affiliate• Challenge of low earnings threshold mitigated

with virtual currency/credits on social networks

• Micropayments e.g. electronic cash solutions will make it more compelling and compatible with offline

Microaffiliates & Micropayments

• Micro-trends – hot product sales by hour or day

• ‘Pre-purchase’ click data – most popular products being viewed right now

• Purchasing clusters could drive further group activity – Groupon style

• Requires product-level tracking at affiliate networks (Amazon does it today)

• Instant reward notification

Real-time data will redefine ‘impulse buys’

• Watch Eat, Pray, Love the movie• Buy the fragrance, the eReader,

and pillowcases

Merchandizing will continue to drive product association to film, music, books

Redefinition of affiliate marketing

• Referral marketing or “Referratization”• Not the process of turning into a furry animal

Referratization

• The tracking and reward of every individual part of a referral; whereby referrals are driving the majority of online purchases

Innnovation will drive this industry forward

• Looking at the past: we can see the cycle of innovation, challenges and new innovation

• Looking at today: new innovations expanding the scope of affiliate marketing

• Looking at the future: Wild West 2.0 as affiliate marketing goes mass-market

Takeaway tip: Read “The Referral Engine”

http://bit.ly/refengine

Yes this is an affiliate link

Contact• joe@skimlinks.com • @digijoe

Thanks to• Kevin Edwards – Affiliate Window• Matt Bailey – 7ThingsMedia

Any questions?