Is affiliate marketing dead?

Posted by Nadeem Azam as Affiliate Marketing, Online Advertising

Affiliate Marketing is Dead, Long Live Affiliate Marketing

As a background summary for those that don’t know me (Nadeem Azam) particularly well and may be wondering what qualifies me to write this article, I have been working full-time in affiliate marketing since 1997, regularly spending 100 hours a week running a business which not only operates as a major affiliate / publisher, but provides Outsourced Affiliate Program Management Services for advertisers and, among other involvements with the industry, has provided consultancy services for three of the four largest affiliate networks in the world (indeed, I spent a large part of my weekends over many years anonymously writing blog posts for one of them); I have probably spent more of my life carrying out, analysing and discussing digital affiliate marketing than anybody in the world.

I was blessed to have been able to drive many hundreds of millions worth of sales via affiliate marketing in the noughties. My company, Azam Marketing, was one of the top ten affiliates on several networks.

I have often been asked over the last year “is affiliate marketing dead?” and it’s also a regular feature on affiliate discussion forums and conferences. The question has prompted me to script my two pennies worth.

Being an affiliate often feels like you’re being attacked on all fronts like ISIS

ISIS created so many enemies with their barbarism combined with political naïvity that – after many years of dithering – the most powerful stakeholders in the Middle East joined forces to try to eliminate them. A case in point is the battle to liberate the city of Mosul in Iraq from ISIS which ran from 2016 to 2017. It led to an enviable coalition lauching an assault on the terrorist forces which had captured the city a couple of years earlier, consisting of the government of Iraq; the government of Iraqi Kurdistan; local Assyrian Christian, Yezidi, Turcoman and Armenian militias; the US; the UK; France; Turkey; Iran; Russia, and a few other entities. Eventually the coilition succeeded in destroying ISIS in July 2017.

In the last few years it has certainly become harder to be an affiliate, as affiliates’ businesses have also been attacked by all and sundry, on almost every front imaginable:

commissions have often been slashed, particularly by big brand advertisers (Amazon used to pay 15% commission on a book sale when I started sending them customers in the late nineties; now you’re made to feel lucky if you receive 2.5%)
commission tracking for many advertisers is highly dubious and often doesn’t work (with the extensive testing my staff and I have done, up to 20% of all sales are not tracked or paid commission for)
earned commissions are usually left in a “pending” status and unpaid by advertisers for months; over eight months is not unusual
the Zeus of the online world, Google, has been on a war-path against affiliate websites of most types and has largely filtered them out of the top of both organic and paid search results
in terms of paid search marketing, CPC costs for the most profitable terms have increased at an astronomical rate over the last decade
ISPs have become more adept at blocking affiliates’ promotional emails
hundreds of millions of people have installed ad blockers, which block affiliates’ ads and tracking
most – not all – affiliate networks have failed to significantly evolve their technologies in the last decade
affiliate program account management services are overwhelmingly provided by inexperienced graduates of substandard degrees from tier three and four universities who often don’t know what they are doing beyond the basics
coupon and cashback websites are taking an ever-increasing share of commissions from other types of affiliates
many leads driven by affiliates on mobile devices – now responsible for up to 55% of sales on some affiliate programs – do not tracking for a variety of reasons

The affiliate ship is being abandoned faster than you can yell “Titanic”!

Almost all the “super affiliates” who I knew from the late nineties and early noughties have long since left HM Affiliate Marketing and jumped ship to either becoming retailers themselves, now run digital marketing agencies, or have simply retired.

Of those figures still engaged in the cut-and-thrust of cybermarketing, many have migrated their businesses, conferences and ebooks away from using the “affiliate marketing” brand to the term “performance marketing”, often because the former has a negative association and is deemed to be restricted within an arena that is not as profitable as it once was.

A development that highlights the lack of interest in affiliate marketing is that the majority of affiliate marketing discussion forums have long since closed down; this is in large part due to the rise of social media, but is also a result of most affiliates giving up on the game. Both the biggest affiliate forums in the USA and UK, respectively ABestWeb and PeformanceIN, have died a death.

Yesterday I was updating my training presentation for my staff and of six of the affiliate marketing forums my slides encouraged them to join and participate in, four have shut down in the last three years.

So what is the besieged affiliate to do?

There’s a lot that can be said in terms of stratagem to deal with the decline of mainstream affiliate marketing, but our agency has largely moved away from the vagaries of CPA and CPL to far more robust, profitable and stable income streams, aka CPM, CPC and tenancy fees and consultancy charges for our work. We have the likes of Dell, Disney, HP and Google biting our hands off to book CPM campaigns.

To be in such a position means building a brand, a reputation and utilisation of technologies that is on a completely different level to how the average affiliate runs their business, and I would encourage my affiliate friends to consider doing the same.

It takes time, it takes patience, it takes diligence and it takes financial investment. 99% of online marketers are not willing to make those sacrifices . . . which creates a splendid barrier to entry. It means entrepreneurs with the appropriate fortitude, aptitude and attitude have significantly higher chances of succeeding than slugging it out in the cesspit of low-grade grey-hat-style affiliate marketing for a few scraps here and there. No more partnering with advertisers who often, behind-the-scenes, treat affiliates with disdain, perceiving them as a “cheap and cheerful” means to gain customers (the same advertisers who don’t think twice about paying Google AdWords $1.50 a CLICK frown upon paying affiliates $1.50 for a SALE).

Only affiliate with the very best advertisers

If you are not yet in a position to be able to charge CPMs or tenancy fees, affiliate marketing, or to use its more contemporary moniker performance marketing, is far from dead and the CPA route can still be extremely lucrative; Azam Marketing and many others still make a pretty penny from commission-based lead generation.

It’s essential to diligently research each advertiser you’re looking to partner with (I have written a guide for my staff to use when appraising which affiliate programs to consider partnering with and it comes to several thousand words long – without a shadow of doubt it’s the most valuable document in our company as advertising the right / wrong advertiser on a commission-only basis can make / lose us tens of thousands of dollars).

You should try to pick advertisers that pay generous commissions: 75 cents here and $2 there – which is the kind of earnings one makes on the affiliate program of Amazon and many other retailers on an eventual sale (if, indeed, they don’t either legally or illegally try to wriggle out of paying the commission at all) – is not going to earn you enough net profit to even put a smile on your face when sauntering into your local dollar store.

Critically, the tracking must work (which I will emphasise it doesn’t on a regular basis for many advertisers and networks) and the advertiser must have multiple forms of tracking to maximise the chances of your sale being tagged back to you. Ideally they should pay recurring commissions on future sales made by what is your customer.

For much more insight on picking the most lucrative affiliate programs, please read my article here: 10 Hot Tips on Finding the Right Affiliate Program or Business Opportunity.

Rather than just funnelling a customer to an advertiser and losing them forever, it’s essential to add him or her to one’s own database too so that you can market to them again.

After going through quite a few challenging years over the last two decades since we started in affiliate marketing, in recent years Azam Marketing has been more profitable than ever. You should study this blog, where my team and I have scripted many articles revealing how we transformed our business by migrating away from an over-dependence on the affiliate channel.

Affiliate marketing is not going the way of the dodo. Become a more astute marketer and the online world’s your oyster!

In her down-to-earth, sincere and often humorous style, Rosalind Gardner guides you through the entire process of building an affiliate marketing business on the ‘Net. In 220+ pages, and more than 68,000 words, you’ll learn how to pick the best programs, negotiate a commission raise and save time, money and effort on everything from affiliate software to web hosting. To learn exactly how she does it, click here.

P.S. known as the ‘bible’ of Affiliate Marketing, Rosalind Gardner’s Super Affiliate Handbook is a must-read for anyone who wants to become an affiliate marketer and successfully circumvent the hurdles I highlight above.

In a style that is friendly and humorous, the Super Affiliate Handbook is peppered with real examples of what Rosalind did to become one of the most recognizable Super Affiliates in the world. And she doesn’t just tell you what she did right — she exposes the mistakes she made as well — to help you avoid potential problems.

Exceptionally well written, Super Affiliate Handbook covers absolutely everything you need to know about making money as an affiliate marketer.

I HIGHLY recommended it.

Get the Super Affiliate Handbook today!

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27 Responses

Fred

January 13th, 2017 at 11:57 am
1

Affiliate marketing has certainly got tougher. But it’s certainly far from dead as you say!

It just requires being a much smarter cookie in the 2010s. I’m making a fair packet from it, as are my buddies.
Ben Cockburn, Senior Account Manager, CAKE

January 14th, 2017 at 1:55 pm
2

I think we can all say that as established veterans in the industry that Affiliate Marketing is not dead, but there is a sense that it is. I think that is mostly because it has evolved in a way that it is no longer the broad-based, bottom-up industry that it used to be.

The best days of the bedroom coders are gone, in their place larger and more sophisticated operations have emerged that compete ferociously for audience share that mean it’s really difficult for the noob affiliate to generate volume traffic.

Areas that were Affiliate dominated are now changed:

> Brand PPC has been locked down by Advertisers and in the generic space keyword price competition is crushingly high on the terms that Affiliates used to dominate. Advertisers of all stripes overspend relative to CPA income because they accrue non-performance benefit from owning the search space and have the capital to ‘invest’.

> Organic search is increasingly dominated by professional teams of people who have powerful toolsets for optimising on keywords, monitoring the search engines and responding quickly to changes, with first mover advantage crucially important. Being in the know on upcoming changes to the algorithms means hanging on every word Google’s search teams missives.

> The biggest and best Affiliates are now ‘partners’ with ‘web properties’ who work direct. Comparison sites, for example, are simply big Affiliates done good, to the point they negotiate CPC and CPM deals to guarantee income stability. Numerous PPC Affiliates or their staff morphed into search agencies. They have slick websites sites with social media operations, apps to build customer relationships, they buy media, advertise on TV and cut deals to merge offline with online.

I went in to see Clickwork7 this week and while Neil Durrant is still going strong, he works in an office surrounded by bright young things for whom this is not a fun and interesting sideline, it’s their job. Graphics designers, social media specialists, client managers, developers, infrastructure engineers, even (shock, horror!) IT support – this is not an Affiliate like I used to know.

They come in at 9 in the bucolic surroundings of Kentish suburbia, do a shift and go home at 5.30 in their cars to their mortgaged houses with their cats, partners and kids. Most these people don’t go to events, their future is not bound up on reading the latest forum musings of old hands like us. Collectively they do everything an old skool Affiliate did, but individually they’ve specialised and with that they stopped being ‘Affiliate’ like it used to be as a social construct.

And that is what people feel is dead. The geeky generalists building websites and setting up servers one day, doing booze-fuelled deals in Get2gethers the next, exchanging tips and life lessons on forums, whipping people into line by the righteous principles of Affiliate, flying around the world on the profit of a frontier industry – the little guys versus the big Advertisers.

It was the nerds versus the suits and beating them on our turf was thrilling for its time. Sure, there’s still beer & pizza o’clock, events that still rock (hello ASW or any Clickdealer party I’ve been to) and more nerf guns than other industries, but nowadays its much more like any other business and so be it.

Affiliate is dead. Long live Affiliate!
Shawn Collins

January 14th, 2017 at 5:18 pm
3

I think I read an article suggesting affiliate marketing was dead for the first time in 1999.

I started in 1997 like you, and I’ve seen all of the evolution of the industry with people moving on or moving out, but also a constant flow of new people and innovation.

Forums closed, but not because of a lack of interest in the industry, rather because the conversations moved elsewhere. I interact with people on Facebook in various affiliate marketing groups now and have for years.

And we are on the verge of the latest Affiliate Summit in Las Vegas with over 6,000 people from more than 70 countries. While it dies for some, it’s continually born for others.
Azam Adminstrator

January 15th, 2017 at 3:56 pm
4

Thank you for the feedback Fred and Ben!

Your appraisal of the evolution of affiliate marketing is spot on Ben. Your insight into Clickwork 7’s set-up is indicative of how the industry has moved on.

It’s not affiliate marketing that is dead, but the culture. In the early days, it was like the gold rush days in California, with individuals panning for gold; now the big guys with the industrial diggers have come in (or the one man bands of old have grown to larger entities).

In many ways the evolution has beeen a positive development, as the industry was run very haphazardly fifteen and twenty years ago.

In other ways some affiliate’s business models are flakier than ever – as an astute industry observer I was in a meeting with a few days ago pointed out, the reason 100% cashback sites haven’t been bought up is because, by giving away almost all their commission earnings, he stated they are not particularly profitable – and, as a result, have destroyed margins for other affiliate businesses as well.

// Nadeem
Chris Garner, General Manager at Cashrewards

January 15th, 2017 at 6:21 pm
5

Awesome article. Strong with isis references. Switching to a subsidised tenancy model in addition to CPA makes perfect sense. All the cashback sites like ebates, quidco and Cashrewards charge ad fees. And rightly so the tracking is shocking.
Adeel Farooq, Founder & CEO at iLeadDigital.com

January 15th, 2017 at 6:22 pm
6

Great insights Nadeem.
Azam Adminstrator

January 15th, 2017 at 6:27 pm
7

Thank you for the feedback Adeel and Chris.

Agree with what you say Chris. You’ve been playing this game for a fair while so have seen how the industry has evolved.

There’s been quite a few interesting comments here and on social media in response to the article.

// Nadeem
Azam Adminstrator

January 15th, 2017 at 6:33 pm
8

Interesting to read your opinions Shawn.

You make a fair point about the migration to other platforms. Like I wrote, the demise of affiliate marketing forums has been: “in large part due to the rise of social media”. It’s also due, as Ben comments, to the shift away from eager ‘hobbyists’ conducting affiliate marketing to those simply looking to earn a few bob to pay their bills by working at an affiliate company (any company would do); the latter are nothing like as passionate about the industry, and generally only too happy to go home at 5pm to spend time on what they really enjoy.

As you say, the rise and rise of Affiliate Summit shows that the industry has got a bright future. It’s evolved massively, but it’s far from dead in the water (as I say in the op-ed).

Have a terrific Affiliate Summit West.

// Nadeem
Tom Bryant, Managing Director, Magic Freebies

January 16th, 2017 at 3:33 pm
9

I’d agree with a lot of what Ben Cockburn is saying. I’ve been going 20 years on the main site and we’re experiencing great growth year on year. I’d say the industry is far from dead. I would say that is so much more professional now with less one man bands who you could get drunk with and do a deal with there and then.

The bedroom affiliate, in most cases, has been forced out or forced to adapt by a lot more competition and professionalism. Being able to build a half decent looking website used to be a big barrier to entry in the industry. Just by virtue of being able to code you could make a decent living with an idea. Now, any man and his dog can build a fully functioning website with ease. That’s raised competition and also allowed people who are potentially more business savvy than the “geeky coder” to enter a market they were unable to before.
Nadeem Azam

January 16th, 2017 at 3:45 pm
10

Great points Tom!

As with most fields in business, there is an evolution and only the strongest or most tenacious survive. With the internet growing at the pace it has, as you say, the “geeky coder” can’t just prosper in this day and age as a one man band on his (almost always a “his”) ability to thrash out a nifty website.

I’m pleased that your venerable business is one of the survivors, and, indeed, is going from strength to strength.
Joe Connor, Owner, Renegade Publishing Ltd.

January 16th, 2017 at 7:12 pm
11

I think you’ve nailed it Nadeem.

Having stuck around too long when one of my previous ventures became unprofitable it was easier to notice the signs affiliate marketing had no future for my business model and I think I got out (or was pushed out) at about the right time.

I don’t miss the daily slog of adding promotions, dealing with networks, agencies and merchants or working 365 days a year but I do miss the amazing times a gang of us spent together during the most profitable years my business has ever enjoyed.

I understand there are a few large players and talented individuals able to thrive/survive in the harsh reality of affiliate marketing today, so hats off to them, but it’s not going to get any easier and I’m happier devoting myself to more fulfilling, but less profitable, projects.
Andy Guest, Director eAZe Media Ltd

January 16th, 2017 at 7:18 pm
12

Nadeem, what an article – you are correct on many of these points, I don’t believe Affiliate Marketing is DEAD however I do believe that some of the networks are helping to squeeze the life out of it – tracking is one thing but communication is my personal bugbare!

PerformanceIN was a great source to let affiliates know what was going on for our own programmes, communicating offers and recruiting new publishers in a clean two-way environment, the decision to remove this was flawed in my mind and was probably due to profitability however they have now become a magazine version of the IAB which I now no-longer view!

Affiliates themselves have done themselves no favours, I can’t remember the last time I felt welcomed to phone a (sub 20) affiliate and communicate offers to them, most conversations start and end with – “just email me and i’ll look at it”.

Affiliate used to be a level playing field for smaller companies to compete for consumer business, to a degree it still is however the affiliates need to make this happen, be more responsive, be more communicative and amenable to offers without the standard “I want an exclusive code” or “Tenancy” there is nothing wrong with this at all but would be better received if sales were delivered initially!

Anyway, its still a great industry and I love working in it just wish it was a little easier to open fruitful conversations.
Nadeem Azam

January 16th, 2017 at 7:21 pm
13

Andy, hear hear!

I know you’re a very proactive Affiliate Manager and wish there were more like you in the industry, all too happy to pick up the phone and close a deal.

I am of the same ilk as you know and have no shame in telephoning someone several times a day to close a deal and get their campaign off the ground pronto so that I can begin to drive the leads they require straight away.

I have tried to instill that ‘can do’ attitude in my staff, the willingness to pick up the phone and get the job done rather than pffaff around playing email ping pong with clients for weeks on end to get the campaign live etc.

Of those that listened I’m very proud to see them earning large five figure and in some case six figure salaries. Of those that didn’t, they struggle to earn anything like half that money.

I’m totally with you as regards the professionalism and communication of many affiliates. It’s a personal bugbear of mine. To the extent that I gave a presentation about it at a4u Expo, or Performance Marketing Insights as it’s now known, encouraging affiliates to project themselves in a much more professional light, up their game when it comes to trying to procure juicy campaigns, and sharing some of the secrets of my business’s success. You can see it here: http://www.slideshare.net/azammarketing/the-affiliate-sales-kit-writing-killer-proposals-and-selling-yourself-to-merchants-part-2

Unfortunately many affiliates have stubbornly refused to move from their comfort zones and professionalise their businesses. As you say, the thought of even picking up the phone – a basic business tool – is an anathema to them. They refused to create the essentials for any publishing business: media packs, rate cards etc. They refused to leave their homes, put smart clothes on, and meet advertisers and their agencies to promote their businesses and garner lucrative campaigns.

I’ve heard some affiliates brag about the fact that they would never go to the Performance Marketing Awards because they will never be seen dead wearing anything other than a t-shirt and trainers. Well, that’s a choice they’ve made. But by stubbornly clinging onto an amateur way of running their businesses and their interactions with advertisers and collaborators, they’ve catastrophically missed out on opportunities to grow and prosper.

Those affiliates that were not stuck in their ways and were the more professional outfits have gone from strength to strength.

Each to their own at the end of the day.

I’m delighted the go-getters of this world – aka your eAZe Media – are going strong!
Dan Strayer, Digital Marketing Manager, SearchQuest Europe

January 17th, 2017 at 8:24 pm
14

Great read Nadeem!

The smart marketer is the one who can adjust for multi-channel purposes, and your firm is showing the ability to do just that.
Nadeem Azam

January 17th, 2017 at 8:27 pm
15

Thank you the kind words Dan.

Wishing you a prosperous year ahead!
Nadeem Azam

January 30th, 2017 at 11:45 am
16

One of the affiliates has posted a message on the subject of low commissions on an affiliate discussion forums. I have responded to him as follows, and am posting here as I address the point in my article above:

Commissions paid to affiliates are appalling. Affiliate marketing has been sold in to advertisers for two decades now as a “cheap and cheerful” means to acquire customers and that’s why it is not held with the same esteem or value by advertisers. The Powers That Be, who’ve got their careers, pay-packets and businesses invested in keeping the affiliate marketing house of cards going, avoid passionately addressing the question head on, but I’ve often try to raise it as a major concern.

On a pure CPA model, no money is paid by advertisers for any of the following: the brand building value of their logos / ads / promotions often being given hundreds of thousands if not millions of impressions; of the approx up-to-20% of leads and sales advertisers receive without paying commissions because they are not tracked; of the cashflow benefits because the advertiser receives the payment from a customer straight away whereas the affiliate often gets paid several weeks later (or never, if the advertiser or their agency decides to go into liquidation) etc. etc. So at the very least the commissions that are paid should be decent.

I’ve just come back from a meeting where an ex-staff member of a well-known, small network has revealed to me that one of the head honchos there used to willingly not pay our (or other some other affiliates’) full commissions, and ultimately skimmed us out of many thousands of pounds. As they have the ultimate control of the tracking we naturally had no concrete evidence of it, though my staff and I would often complain to the network that the earnings we received were too low, which they would dismiss. It reminds us all once again of how much fraud and criminal activity there is in affiliate marketing and how affiliates often get screwed without ever knowing about it.

It’s for these and other reasons that the vast majority of major reputable online publishers stay well away from affiliate marketing, whereas they are all-in with other channels display, programmatic etc. (Just consider how many publisher discussions there are on forums and eagerness about even Google Adsense compared to affiliate programmes.)
Ben Corrigan, Co-founder and Marketing Director at Pouch

January 31st, 2017 at 7:29 pm
17

Very interesting read, thanks.

I would be curious to hear your thoughts on soft-click browser extensions and plug-ins in the world of “performance marketing” as they can sometimes be contentious.

Also, I think that is the first time anybody has compared the perception of Affiliate Marketing to ISIS!
Nadeem Azam

January 31st, 2017 at 7:32 pm
18

Thanks for the positive words Ben.

Yes, those browser plug-ins and extensions are controversial. I can see the advantage of them, both from the perspective of the publishers and advertisers, and the end-user. But there is the very real issue of them ‘stealing’ clicks from other publishers. Neither we nor any of our clients have ever gone down the route of creating browser plug-ins or extensions. But each to their own at the end of the day.

Yes, the ISIS analogy is a bit off-beat Ben!
Andy Sears LSINWP

January 31st, 2017 at 7:40 pm
19

My own experience with affiliate marketing started 10 years back, it was buzzing, commissions were fair, and with my first ‘dip of the toe’ into it , was surprised at the rate sales came.

As time went on, commissions became unrealistic and soon was narrowing down the merchants I worked with.

Next I noticed a trend of merchants not paying the AM agencies, and thus me not getting my commission, the merchant still got their sales though. I was always miffed as some time after these merchants came back onto the scene, sometimes with the same network, sometimes on another.

Today I do very little, there is just not the worth in it, and even the little I do, I still see sales not being tracked, not big sales and commission is sometimes just pence, but still not tracked all the same.
Nadeem Azam

January 31st, 2017 at 7:41 pm
20

Very interesting to read your experiences Andy. They seem to echo mine in many ways.

Yes, it has always perplexed me that the advertisers can choose to not pay affiliates for their leads, close down or pause their affiliate programs, and then come back onto the scene a short while later… only to repeat the pattern later.

Unfortunately most affiliates are pretty spineless and will continue to work with these unethical advertisers, which encourages their behaviour. The lack of ethics among many advertisers, and the lack of unity among affiliates, is the reason we also chose to move into other specialisms.
John Soudi

March 28th, 2017 at 11:36 am
21

Hi, your article is informative. I would like to read more from you about affiliate marketing. Very useful tips. Thanks!
Dan Fell, Digital Marketing Professional

April 11th, 2017 at 1:34 pm
22

The marketing buzzword ‘holistic’ comes to mind for affiliates. It’s not about one channel vs another anymore, nor has that been the case for a long time.

It’s about a deep understanding of your business, industry and customers, as well as the avenues they choose to purchase.

As we know the traditional funnel has disappeared for some industries. Customers linear path does not exist.

Touchpoints with consumers has gone up a lot too.

Essentially marketing to your audience just got more expensive, through a variety of factors.

I think the payment structure for affiliates obviously cannot be CPA, nor should it be affiliates vs paid.

The questions is about the right mix of marketing channels to achieve your business objectives.

Objectives vary massively and As a result affiliates may be a key or non existent part of that marketing mix.

I personally think affiliates provide very good value in certain cases.

Also remember Google tried and failed to create an affiliate network which to me is a good thing.

It’s one of the marketing channels where experience counts more than tech.
George Bett, Director at GB Consult

April 11th, 2017 at 1:35 pm
23

Great article Nadeem.

My opinion on Affiliate marketing is that it still offers clients a great opportunity to try a new channel or a new technology, without the fear of long-term commitments and expensive setup costs. Countless techniques have been born with a performance metric as a way of “proving the concept”. Later these have been taken into direct relationships on retainers (retargeting, email remarketing, page abandonment… just to name a few). As long as these exciting new innovators continue to use affiliate marketing as their testing bed then affiliate marketing has an exciting future.
Nadeem Azam

April 11th, 2017 at 1:36 pm
24

Dan, I’ve just seen your comments.

You started in affiliate marketing a long time ago and so have seen the developments in the industry first hand.

I wholeheartedly agree with your astute observations.
Tiago Faustino, SuperCroud PPC Manager at Croud

April 14th, 2017 at 10:20 am
25

Really interesting read, thank you.

I don’t believe it’s dead, however the standard CPA model is exhausted and networks/ agencies will need to move from it in order to attract the right affiliates.

The tracking technologies did not evolve enough to keep up with affiliate and clients needs (is quite difficult for agencies/networks to develop a in-house tracking technology that would be advanced enough to track without deduplication issues or untracked sales, given that the biggest networks/agencies only work on a specific channel and therefore are blind to what is happening on other channels as paid search or social media).

If the biggest players continue to ignore these and other underlining issues instead of accepting they will need to change their current model, diversifying their offering and upgrading their tracking capabilities, the affiliate landscape will soon be composed only by cashback and voucher code affiliates, as those are the only ones placed at the end of the acquisition funnel to make CPA profitable, slowly the remaining affiliates types will move to more profitable models, more and more clients will decide to manage this channel in-house, leaving the outdated agencies and networks only with smaller clients, outdated tech and difficulties to make their business scalable and profitable.

There is however a few types of affiliates that can bring some fresh air to the affiliate landscape, such as RTB, retargeting or shopping card abandonment, but with all of those there is the need for 3rd party code, and with that will come some resistance from clients either regarding the incremental value of those affiliates, or regarding the technical set up required to implement these affiliates.

I still believe there is some hope, however there is a need to rethink how affiliate networks/agencies will move forward.
Thomas Luijten, Marketing Director at LiveAboard.com

April 14th, 2017 at 10:35 am
26

No. Classic networks riddled with worthless cookie dropper sites might be dead. I don’t see why two quality partners wouldn’t want to grow each other’s businesses anymore….
Nadeem Azam

April 14th, 2017 at 10:51 am
27

Tiago Faustino – that is an astute observation that I would wholeheartedly agree with.

You’re right that the model is fatally flawed. It means that, as you submit, usually only cashback and voucher code sites can make revenues under the current set-up (and even in most cases with those there is not much profit – it’s why neither of the two biggest cashback sites in the UK have been bought-up because their dubious business models give away near-enough 100% of their affiliate earnings back to their users). The industry is in position of statis and, while the vested interests of the main stakeholders at networks and agencies (who are employees, earning a guaranteed salary each and every month, irrespective of which way the industry is heading in the long-term) are not aligned with those of affiliates (depending on fair commissions and reliable tracking etc.), it will continue to struggle along.

Thomas Luijten – You made a good point Thomas.

Unfortunately the definition of a ‘quality’ company is debatable. I have spent twenty years hearing from affiliates about how the leads they drive are not tracked, they are not paid their due commissions, affiliate programs close down with zero notification and so on and so forth, and this is how ‘quality’ companies treat them time and again.

The fact of the matter is that the very same people who pretend they are reputable lose most of their scrupules when they are in ‘business mode’ and have very little regard for underpaying their affiliates who they will never see. It’s why c. 98% of super affiliates I knew have moved into other lines of work.