CPA Networks Must Change or Die


ADOTAS – Many individuals, both from within the affiliate industry and outside it, have previously written about the future of the performance marketing channel. Some have even forecasted that there isn’t a future for it. We now have some hindsight with which to judge these speculations.

This article outlines five predictions for the trends, if not the actual events, that affiliate marketers can expect to see in the performance industry in the next few years.

Networks will need to become more than platforms

Arguably, the three most crucial responsibilities of any affiliate network are to track, report and handle affiliate payments for all transactions. Of all the responsibilities held by networks, these are considered the most important by both advertisers and affiliates. But what is the difference, then, between an affiliate network and a platform provider? Why would advertisers choose to pay an affiliate network if they could develop or purchase an out-of-the-box solution that did all of these things in-house? For this reason, affiliate networks will need to prove that they are positioned at the core of affiliate marketing, rather than just the intermediary between advertisers and affiliates. This means that as well as providing market leading campaign management and technological innovation, networks will need to be the go-to source of solutions for industry problems, the place to discover and develop new affiliate opportunities, and the advocates for the performance marketing model more generally.

The biggest affiliates of today will be bigger tomorrow…

The recent purchase of and by cashback giant demonstrates that affiliate marketing is not only maturing but consolidating, with the largest affiliates pulling away from the broader mass that constitutes the networks’ memberships.

…. But advertisers will be less willing to rely on them

While this progression should be embraced, advertisers do not want to become overly dependent on a few top affiliates. Most large brands have affiliate programs, which have in the most part reached the point of maturity. Their affiliate managers know who their top affiliates are, and most programs are likely to share the same affiliates among their respective top revenue-drivers. These are the affiliates that advertisers will always want to work with, but are not necessarily considered key to long-term growth.
The demand for new affiliates with new ideas will be vast, and with this, affiliate networks will be tasked with identifying and catalyzing these new opportunities.

The long tail will be tested

Can the long tail – however an advertiser chooses to define it – be engaged with well enough to produce volume? Diversifying an affiliate program so that the top revenue-drivers constitute a lesser proportion of overall sales is the desire of many advertisers, and content-based sites are most often looked to in the hope of achieving this. At present, activating the affiliate long tail has proven difficult and left untried. To say that the long tail will be tested is fairly obvious, but whether it will pass the test remains one of the biggest issues for the future of the affiliate industry.

Mobile and display are the biggest sources for new opportunities

Mobile is driving many of the emerging trends we are witnessing today in affiliate marketing, from the incorporation of social elements to the monetization of the offline space, to the use of geospecific consumer incentives. Click-to-call also presents significant opportunities, with Google reporting 5 to 30% increases in CTRs when a phone number is included in a search ad. The fact that existing affiliates are, in many cases, ahead of advertisers in producing mobile apps and mobile-ready sites can be taken as evidence of the promise this trend holds for the future.

With as much as 40 percent of display inventory unsold, the opportunities for this to be used on a CPA model are extensive. This may necessitate the increased use of post-impression cookies, weighted differently from post-click cookies, in the same way as is standard in the UK affiliate community for behavioral retargeting companies (which themselves have only in the last 18 months started to work as affiliates on a CPA basis). With some exceptions, publishers have had great difficulty attempting to monetize content itself, and it is extremely challenging to do this on a large enough scale to be viable. Running display opportunities on a CPA basis also offers the ability to treat affiliates as much as a branding force as a sales force, something I have presented on previously as a neglected factor in what affiliates can offer their advertisers.

In an industry as fast-paced as affiliate marketing, the accuracy of the above predictions will come to fruition before too long.

What's your opinion?