GAME OVER: Affiliate Marketing Is Dead (Part 2)

(A guest post from Ratko Vidakovic (aka. Dr. SiteScout), Marketing Director at SiteScout)

There’s a bit of a debate lately with regards to the state of affiliate marketing as we know it.

As a traffic source, perhaps we can shed some light from another perspective.

Ad Networks Want To Distance Themselves From Affiliates

The first big wake-up call was in December of 2009 when many affiliates had their Google Adwords accounts banned. More recently, many of the traffic exchanges have implemented controls that effectively block many traditional verticals altogether. Since SiteScout is a popular platform for many performance marketers, we understand this better than most.

As further proof of hostility towards the traditional CPA affiliate model, AdMob recently terminated a large number of affiliate accounts. Don’t be surprised if more traffic sources become alienated towards affiliates in the future.

Why The Hate For Affiliates? Two Words: Ad Quality.

With the advent of RTB (real-time bidding), which is essentially automated media buying, the importance for publishers to control the ad quality on their sites has become paramount.

When it comes to ad quality though, affiliates and direct advertisers approach the situation with two completely different philosophies.

1. The Affiliate – or performance marketer, is inherently only concerned with ROI (return on investment), which naturally leads them to push the envelope in order to become profitable. In media buying terms, this usually means producing shocking, controversial, or obnoxious banners in order to inflate CTRs. These tactics produce low quality ads.

2. The Direct Advertiser – or agency representing them, has an inherent interest in maintaining brand reputation. This naturally forces them to count the cost (to their brand) for any marketing materials they produce. With the higher margins and lifetime value of customers, they can afford to run without super-high CTR banners. The most creative advertisers are able to balance the need for performance (good CTR) and brand reputation (ad quality). These are the kind of ads that appease publishers and exchanges and produce long-term campaigns.

Collateral Damage

Here is a quick list of denied ad types and verticals from one very large news publisher on our platform:

Denied Vertical Types:
	*E-Cigs (Electronic Cigarettes)
	*Teeth/Teeth Whitening
	*Hair Loss
	*Fake News

Denied Ad Types:
	*Belly Fat
	*Audio - Automatic
	*Expandable - Automatic
	*System Warning/Windows Box

Talk about killing legitimate markets. The amount of damage done to the perception of these verticals is immeasurable: teeth whitening, diet, colon cleansing, skin care, etc.

“Acai” will forever be associated with “scam” in the minds of many consumers.

Reconsider Your Business Model

Since we have a unique view of the industry, I would like to share some insights from our perspective.

What Does Not Work?

Unfortunately, we see too many affiliates (with CPA network offers) come into the system and drop out shortly after trying some initial campaigns. From our analysis, it usually boils down to the following reasons:

1. Poor Banners – They couldn’t get decent CTRs, combined with their payout, to get profitable. High CTR banners normally utilize tactics that result in disapproval.

2. Erratic Conversion Rates (scrubbing) – They are either profitable on one day and unprofitable the next or unprofitable altogether.

3. Low Payouts – They couldn’t get profitable on their given payouts.

4. Lack of Experience – Campaigns created without employing the best practices of media buying. We will be releasing a free guide shortly that should remedy this point.

With that said, it should be noted that international CPA offers often do get good traction, but the shelf life of campaigns is usually limited – especially once publishers/exchanges begin complaining or the offers go down.

What Is Working Best?

The most long-term and successful advertisers on our systems are in the following categories:

1. Lead Generation Marketers (edu, credit, debt, mortgage, etc.)
2. Digital Ad Agencies (representing larger brands with specific budgets)
3. Direct Advertisers/Merchants (offer owners: diet, skin, bizopp, downloads, etc.)

Needless to say, you have a much higher chance of succeeding with your media buying efforts when your target CPA is $100+ as opposed to $35.

There are also other facets of display advertising that better serve the direct merchant/advertiser vs. the affiliate: mainly view-through conversion tracking and retargeting.

Don’t get me wrong, SiteScout is affiliate-friendly. We owe much to the affiliate community. Anyone that has been around long enough knows that most innovative ad platforms are initially built on the back of the performance marketing industry. But pushing low quality ad campaigns through the system only jeopardizes the traffic relationships for everyone.

We are trying to help. What we offer is a unique, high-level perspective on what is happening on our system, and therefore in the industry as a general trend.

From what we have seen, and from what I’m sure everyone else has experienced, the proverbial writing is on the wall. Be wise and adapt.

NOTE: This is NOT a paid review.  Direct Response utilizes the SiteScout technology and believes 100% in the platform!!  MUCH <3 Sitescout Team!