Can Affiliate Networks Survive?
I have worked at two affiliate networks over the last 7.5 years so I not only understand the pressures involved from this side but more importantly I have seen how this has rapidly changed. Back in 2002 there were a few key networks, UK Affiliates (now dgm), Commission Junction, Online Media Group, Affiliate Window, Tradedoubler and Buy.at. So much the same as it is today except for a few additions from outside the UK.
When I started in affiliate marketing back in 2002 I started as an account manager, dedicated to one rather large account which later became two accounts, but never more than two. Because my time was solely spent on these accounts I knew their business model inside out, I knew all of the affiliates, I had history with the accounts so I knew which levers to pull to drive sales. It was an incredibly successful partnership. Over the last few years I sadly think that this dedication to account management has been lost from many affiliate networks, visible proof of this has been the entrance of agencies into this space and some clients moving their campaigns in-house.
So why has this been lost? I think there are a few reasons for this but the most significant is that overrides have decreased. It is becoming harder for networks to justify the time they can allocate to each account and these conversations happen regularly, the sign of a saturated market perhaps? I also think that in a quest to gain business affiliate networks have shot themselves in the foot by selling themselves on incredibly low overrides.
So, where does this leave affiliate networks? It’s a tough environment out there at the moment for networks, the barriers have dropped and online agencies have got a foothold in the market, selling themselves on consultancy. Off the shelf tracking technologies are easily available and some networks even lease their own technologies. The larger affiliates have more buying power and can easily move direct and clients themselves are seeing advantages of taking their entire campaign or the top affiliates in-house. So perhaps a hopeless case you might say? However, ever the optimist I think that there is still a place for networks but they need to position themselves carefully, should they offer service and added value or should they simply be a technology provider?
I will watch this space with extreme interest but I would expect that in the next year things will only get tougher and will be interesting to see where the networks strategies take them next.
If you are interested in this topic get yourself to Day One of the A4U Expo as this is a topic being discussed and I would expect it to be a lively, heated and emotional debate.
