Affiliate Marketing R.I.P. ?
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I received an email on Thursday from an affiliate saying he wanted to have a white-label cashback site from our client V A C Media because cashback sites “may even wipe out traditional affiliate sites in the future. This is why I want to get on board now!”

It brought to the forefront of my mind yet again something that I was musing about from time to time last year: does affiliate marketing as we know it have a future?

I’d welcome opinions to the contrary, but here are four primary reasons why I believe old school affiliate marketing will be on its last legs in 2008:

1. The Rise of Cashback Sites

If the consumer can receive generous money back by buying a book or television via Site A that gives them cashback and absolutely zilch via Site B, which option is he or she likely to pick? The main thing stopping people using cashback sites is ignorance of their existence, but as the word spreads, there’s no reason why instead of today’s approximate two million members of cashback sites in the UK, there will not be 10 million by the start of the next decade.

Unless something is done, cashback sites may indeed “wipe out traditional affiliate sites in the future”. People will visit an affiliate site with book reviews, but instead of clicking on the ‘Buy this book’ link which sends them to Blackwell books they will visit their favourite cashback site and make their purchase through that.

There are ways to stop cashback sites jeopardising the future of quality content sites – such as setting up different commission rates – but this will not happen because the powers that be in affiliate marketing tend to be reactive rather than proactive.

The only solution will be for successful content portals to switch to other forms of revenue generation, such as sponsorship, CPM advertising and contextual advertising. These obviously do not come under the affiliate marketing umbrella.

2. The Rise of Coupon and Comparison Shopping Sites

It seems that everybody and his kid brother either has or is about to launch a voucher code and comparison shopping site. I find it amusing when a friend contacts me on Messenger to ask me for feedback on his nearly finished comparison shopping site and then 20 minutes later another mate does.

These are valuable resources and benefit the consumer, there’s no doubt about that, but once again they are not the kind of sites that generated the most sales CPS revenue a few years back.

3. The Rise of Google Adsense

Contextual advertising networks have only been around a third the length of time as affiliate marketing, but they have put merchants utilising affiliate marketing and affiliate networks to shame:

  • They are a breeze to use
  • They paid on time from day one
  • You add the code to your site and don’t have to touch a thing for years; affiliate programs, on the other hand, go up and down like yo-yos, close down without notification, stop tracking, reduce commissions, switch networks yadayadayada…
  • You get paid per click rather than being dependent on a merchant being able to convert the visitor to a sale and then reliably reporting that back to you
  • Contextual links don’t look like garish adverts; until just recently affiliate networks were still obsessed with banner adverts which became ineffective circa 2001

The evidence speaks for itself. If you go to forums like DigitalPoint, the most buzzing section is the Google Adsense one and there seems to be a post every three minutes asking when Yahoo Publisher Network will be opened up to non-American webmasters; the affiliate marketing section is lifeless and staid.

4. The Assault on Affiliate Sites by Search Engines

For the last few years Google has been doing its level-best to filter out affiliate websites. Of late, search engines which may have deemed to be more ‘affiliate friendly’ have also began to turn the screws on affiliates. To give just one example of many, if an affiliate tries to send visitors direct to merchant via Yahoo Search Marketing, they are now rejected under the URL Ownership guideline. They get a warning saying: “It appears that you do not own or control this domain.”

Because most affiliates did not create content that added value to the internet, search engines were compelled to come up with technology and guidelines to try to keep them out of the results. The easy ride is over for some and it leads them to spew venom at Larry Page and Sergey Brin on the search marketing forums.

The sad reality is affiliates brought this on themselves by deluging both the natural and paid results with pages lacking unique content. As an affiliate marketer who chooses to remain anonymous explains: “affiliates take five minutes to rewrite the review of a phone on the Vodafone website or rehash something on Wikipedia and call that unique content; that’s not providing something of value!”

This contrasts with the content I write for our and clients’ websites which often takes countless hours to research and write; a thesis I wrote for one of our literary sites is required reading on University courses in the United States and Germany and articles have been linked to from the BBC site.

The unfortunate thing is that search engines now are not only filtering out poor quality and duplicate content but are throwing out the baby with the bathwater: they have become so hostile to affiliate marketing it is affecting affiliates who have always strode to play by the rules and provide truly original content. Googlebot automatically deprecates pages that have a number of affiliate links; it assumes the content will be rubbish.

Search marketing affiliates have also been kicked in the groin from another angle: merchants themselves. Whereas most companies did not have sufficient knowledge about conducting effective SEM and affiliates could attract traffic with their superior skills as recent as two years ago, this is becoming less and less so the case. Merchants and their agencies are now fully clued up about both SEO and PPC, including the need to work on the long tail, and, with their far greater profit margins, can afford to blast affiliate sites out of the results.

The Grim Reaper may only be killing the old affiliate marketing
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Although adult affiliate marketing existed a short while earlier, mainstream affiliate marketing came into being into being at the end of 1994 with a music publisher, Geffen Records, asking CDNow.com to set-up a scheme to remunerate them for sending shoppers to the online store. Affiliate marketing was envisaged as a means for content producers to send visitors to e-commerce sites and be rewarded for referring customers.

There never was a ‘golden period’ when affiliate marketing consisted of affiliates setting up quality content-rich portals to refer visitors to online shops, but it seems that in 2008 we are as far away as ever from the original concept. Unless you are a brand name bidder, cashback portal, voucher site, comparison shopping site, grey/blackhat SEO, or somebody exceptionally creative and talented, it is unlikely you are or will be making a significant sum of money from CPA or CPS advertising in the long term. It is no wonder many experienced reputable affiliates have redefined themselves as Affiliate Managers, Consultants and SEMs.

Of course it is not to assert that a coupon code or cashback site is not an ‘affiliate’ site. They are as legitimate as any other and in many cases involve as much if not more work as the kind of sites that were generating the bulk of affiliate marketing sales in the late nineties and early noughties. But they are not traditional affiliate sites.

Affiliate marketing is now quite a different kettle of fish to how CDNow and Amazon would have envisaged it in the mid-nineties. However, more important than to look at the past with rose-tinted spectacles, is to focus on the future and embrace change. Savvy affiliate marketers have to evolve with the times – or sink.

The internet has always developed at a blazing pace; it is one thing that makes it such a pulsating field to work in. Ten years from now affiliate marketing will have metamorphosised in something else. So, while it may be time to wave goodbye to ye olde affiliate marketing, I’m sure the concept will be as alive and kicking as ever when England hosts the World Cup in 2018.

What do you think? Your comments are welcome below.

Related:   The Secrets to Success in Affiliate Marketing Revealed: An Interview with Awin Affiliate Network