You never know who you’re going to bump into in the Cayman Islands. I had my first brush with greatness a few years back at Edoardos one of my favorite Italian restaurants here.. My friend Vern and his wife Kari had come down for a visit. We were having wine (before appies) when suddenly ‘the man in the golden wheelchair’ rolled in. Say what you will about Larry Flynt but he is a fearless American legend. ‘The People vs Larry Flynt’ was more than a movie. It’s precedent continues to shape American democracy today. There he sat, with a smokin’ hot babe (his pilot) and a big tall beefy tough-guy (his bodyguard) at a small round table having dinner about 4 feet away from us. Cayman attracts a slightly older wealthier clientele and the folks around us obviously knew who he was. I just couldn’t resist reaching out to say something; so to break the ice and add levity I complimented Larry on his gubernatorial run in California and told him that I liked him much better in that race than Gary Coleman or Arnold Schwarzenegger. He laughed. His pilot and body guard laughed (I was really glad his body guard laughed). Then the older WASP folks at the next table complimented him and said they had always wanted to meet him (I thought to myself how they were probably happy to see him go to jail in the 70’s)…
Anyway.. Seeing Larry Flynt at dinner that night gave me a new sense of empowerment. I started to compare myself to him .. and suddenly felt very small. But I was bigger on the web. If you marshaled all the organic adult traffic we control (it came to nearly 100,000 unique visits a day back then [just adult]) we were surely bigger than LFP was online. Galvanized by my meeting I decided to cold-call Larry Flynt Publishing in Los Angeles. I am not a bad cold-caller and I have something tangible to offer (we were selling traffic to the intermediaries LFP was buying from at the time), so I navigated the phone system, assistants and managers to some guy (The Big Guy) who’s name I can not recall. I made my pitch about what we do and after enthusiastically explaining why we should partner with LFP on the adult vertical I got the following response:
"Oh you’re one of those squatters.. let me give you the name of the guy who runs the affiliate program". (insert the sound of the record needle ripping across the record-album here)
I was really put off.. Firstly, "squatters" deliberately target the trademarks of others. Here I am, a high minded internet entrepreneur who has cobbled together some very good organic traffic, generic adult domain names and " I " am a squatter!?! Secondly: the affiliate program?!? Here is Larry Flynt Publishing.. paying thousands of dollars a day to buy traffic on a per-click basis from the major search engines, but when I own a generic domain name with organic traffic (of higher quality than you can buy from the Search Engine’s search-box), I am relegated to some second-rate affiliate program where I don’t earn a nickel for my traffic until LFP’s slow loading websites manage to miraculously convert the visitor into a sale??! I hung up the phone with this "LFP thought leader" and resolved to continue selling my adult traffic to the Search Engines (Yahoo and Google) who could continue to let Mr. Flynt’s marketing department live under the illusion that the traffic they were buying was in fact coming "from" the search engines search-box (much of it came from ’syndication partners’ like me)… Then I tore down my People vs Larry Flynt movie poster.. Okay.. that movie poster part didn’t happen but everything else did.
The whole episode got me thinking about what a scam affiliate programs (in general) are for publishers. If the affiliate program is incompetent and can’t convert visitors to sales, the publisher doesn’t get paid. Where is the incentive for the affiliate manager or advertiser to create a better website that engages visitors and draws out a sale if they are getting the work-horse traffic for free? Compounding that is the fact that affiliate marketing is usually the first check-box on unsophisticated advertisers’ to-do lists. I understand that alot of domainers target their names within affiliate programs to make more than PPC, but those sophisticated and analytical folks (who are to be complimented) are basically doing ‘all the heavy lifting’. They shoud really be running the affiliate programs or selling the products themselves IMO. They don’t need the affiliate programs. JMO. I have tried affiliate programs (lots of them) and often been frustrated to see those same advertisers who are taking my traffic for free (on the affiliate side) be the very top paying bidder on the PPC side. Its almost as if they are dollar cost averaging.. getting the affiliate suckers to give them traffic for free and then offsetting against the top pay position in PPC… I’ll have more on this later…
I have to disagree. A well run site has *every* reason to convert – the more conversions, the more they make. A big brand like Larry Flynt may not care about that, but smaller sites without the heavyweight brand *will* try their best to convert.
Well run PPC campaigns run at a fixed ROI. The ROI from an affiliate program is lower (as they don’t spend money or time in obtaining that traffic). Furthermore, the ROI on PPC is across various sources – search engines, domains, other large sites (eg About.com/NYTimes), and then also the contextual network. If domains do indeed have better traffic, the conversion will be higher, and with a slimmer margin on ROI, the affiliate program should do better.
Excellent comment but you have to concede, Google, Yahoo, AOL, Ask, About are all built on PPC model. If you go to CJ.com right now and join as a publisher you’ll be given hundreds of programs where advertisers pay 5%-15% of sales. But that completely discounts the branding value you are building by sending all your visitors there to draw a sale. So I sell 1 in 300 people a toaster oven for $59 and make $5.90 .. I am giving free branding in the form of the 299 people who saw the offering but didn’t buy today. Next time they are looking for a toaster oven say 29 of the 299 (10%) might remember to go to this merchant. I made nothing. Then there’s the whole time component of managing 100’s of little campaigns.. I’d love to hear a talkaround on that. I don’t know one domain owner who runs Affiliate Programs to make the bulk of their money. The ones who did, sold their portfolios at a discount to the guys running PPC programs or converted to PPC themselves.
An affiliate program that only pays on he click? That is a crappy affiliate program then
Any ‘decent’ one gives you a 30 day cookie, and better ones will give you a 90 day cookie. Let them stew and come back.
Of course, there are *other* problems with affiliate programs – purposeful shaving, cookie hijacking by spyware, etc. And yes in certain markets PPC have a 0% ROI (eg Expedia bids to be #1 no matter what).
Yes affiliate programs take a while to Google themselves are trying to move to create a CPA model that pays them handsomely. Just lots of bastardly companies out there
Frank-
Great post that identifies the ‘laziness factor’ inherent in CPA. Affiliate programs are simply an unwarranted shift in conversion risk to the affiliate.
With PPC, upfront financial risk combined with competition for the traffic forces buyers to squeeze every drop of revenue out of the traffic stream – they literally have to convert or die.
To wit, market pressure creates more value for traffic holders than traffic that is riskless for the program!
Well said FP.
Hi Frank, Ahmed, Fp … Thought I would add my 2¢ here.
I run a very successful Ticket super affiliate site. While there are the typical affiliate negative considerations/issues as with any affiliate program … I have managed to build a very solid relationship with Ticketsnow.com and they have gone out of their way to work with me to allow my sites growth and branding.
Many of the negatives of affiliate relationships disappear or drastically lessen when you create your own branded site using feeds or plugins. I guess it comes down to just what you are willing to put up with/tolerate for the bottomline.
As an affiliate your pretty much always going to have to deal with the company your working with to try to snag your larger clients ( at least ) thats an inescapable part of the business. But thats where cookies, choosing a good developer for your site ( thanks Ahmed ) and most importantly choosing the right domain to brand come into play. To date I have very good client retention and sales growth with no real limits besides how much time and effort I want to put into it.
Sometimes I find myself upset that Ticketsnow ( or any affiliate program company ) isn’t cooler about trying to take clients but I try to take a deep breath and think about everything involved and what benefits I get as an affiliate as opposed to having to run the whole business. Also, you have to keep in mind that like mentioned above … companies that run affiliate programs are probably more interested in the traffic you send across their branded site/s than they are in the sales you make thats icing on the cake. Bu that is why if the program offers you a co-branded/white label solution/ or feed use to completely brand your own site you should jump on it. There will still be client loss but consdierably less … BUT then you will have to perform with sales to earn the use of the feeds or white label site.
They handle all stock, processing, shipping, payments and customer service if I need it at no charge. My end is I do some marketing, handle some custoemr service calls ( which helps greatly in client retention ) and in the end I can concentrate on other projects or take a vacation or go play poker and not be concerned that my customers are being taken care of.
I do ppc as well and I do ok but I never went for high traffic, generic domains as I try too now. I was from an advertising background and was stuck on brandability. So I could get by on PPC but Ticketstub.com has so far outpassed it by leaps and bounds.
The problem I have been finding n relation to affilaite programs is finding companies that offer either white label or feed solutions. I have found that just redirecting to the affiliates sie as mentioned in anothr post above converts like crap and doesn’t make what it with PPC. So essentially I am “donating” my traffic to the affiliate company for free.
Anyhow … there are positives and negatives to say about both ppc and affilaite relationships. I wish I had millions of uni coming in but I don’t … but I do have some pretty damn nice developable domains to the logical path is to stay ppc on them until the right partnership and development possiblity comes along.
Sorry rambling
Time for nic eshot of Patrone to start thenight off.
I suggest you make it a double next time Ira.. this is excellent perspective sir.
As mentioned in some of the posts here, the main problem I have with affiliate deals are the facts that:
1. You are reliant on the ability of the program to successfully convert your traffic. From my experience most programs do a crappy job of this with poorly designed conversion pages and action navigation.
2. I’m convinced some programs deliberately design their sites to close a lower amount of sales so that they can just grab as much “free” traffic as possible from affiliates and then resale that traffic to other paid advertisers and ppc advertisers on their sites. I’ve also found programs routing traffic out to other programs they own or control where obviously by doing so the affiliate won’t get paid then.
3. Most shoppers don’t buy on the first trip to a site. Most shoppers do extensive product or service research first and will visit many sites and then go back to the site with the best price, value, credibility and quality in the mind of the consumer. Now the programs always claim your affiliate code is protected by a cookie to be credited for any sales from that visitor within a certain time period usually 30 days to 90 days. But I just don’t have much confidence in this. People delete their cookies all the time. So considering most don’t buy right away, but do bookmark, the affiliate loses out most always from traffic sent like this, where the bulk are not instant buyers, but may be future buyers.
4. Trusting programs to be honest in their sales reporting is another concern as an affiliate. How do we really know the company is honestly reporting sales? They all claim they do, but how do we really know? My experience is if people have the opportunity to be greedy many will take advantage of that opportunity and “shave” sales. In the adult arena, this has always been a hotly debated topic and most program owners now admit shaving is a fact of business so they can stay competitive.
In summary, I’m a big believer in the old fashioned advertising model. If someone wants to advertise their product or service, then they should pay for the impressions and branding you give them. It’s their job to close sales from those ad impressions, not the advertisers.
When I’ve been on the other side of the fence as a buyer of this kind of advertising its been a sometimes good and sometimes not so good experience (i.e. when your print ads don’t work and pull.) I’ve advertised in print magazines for many years, and that’s how publishers operate and make so much money, and you have to pay upfront and months in advance of the actual publication. If you get no response from your magazine ads that’s your fault they’ll tell you. The publishers take no responsibility. Despite, its a well known fact that print publishers, including magazines and newspapers both, almost always overstate their circulation by huge amounts. And they’ve been laughing all the way to the bank for decades. So of all the ways to sell traffic, this is by far the best way to go as a publisher and seller of traffic in my opinion, getting paid for the impressions and/or clicks you provide, not the sales generated.