Will Affiliate Marketing Disappear?
I have not thought a ton about affiliate marketing in years, since we launched the practice at eonMedia in 2003 and wound it down to focus on paid search only by 2004. Recently, I was engaged in a conversation about the future of affiliate marketing.
I then did a bit of digging. I could be missing something, but I can’t see affiliate marketing, in its present state at least, becoming a growth industry. In fact, I can see how it might cease to exist completely, at least in its present form.
According to Forrester projections (passed on by affiliate marketing blog AMnavigator) affiliate marketing continues to be a small percentage of online media spend, representing ~$2B in 2009 (in a roughly $70B global digital media industry, according to Magna).
While the value to advertisers of free acquisition is clear, it’s hard to see how affiliates can continue to secure the cheap inventory and traffic on which they rely. Three traffic sources affiliates rely on will continue to become less available to them:
Paid Search – as CPCs increase, CPC-to-CPA arbitrage will be less of an opportunity to affiliates, as large marketers continue to optimize their own websites and web marketing programs, adding to competition.
SEO – Especially with Bing’s attack on Google, the search relevancy battle will continue to work in favor of major brands and authentic sources, and SEO efforts of affiliates will continue to decline in effectiveness as Google and Bing continue to strive for relevancy.
Cheap RON (run of network) display: Exchanges, DSPs, and DMP (data management platforms) will continue to allow advertisers and publishers to better optimize the kind of high volume/ low cost inventory, driving up the cost of the banners and links typically bought by affiliates to arbitrage CPM into CPA.
If that’s not enough, the increased focus advertisers have on conversion attribution, or looking beyond the last click to determine conversion credit, will only serve to take credit from the channels, such as affiliate, which rely on their ability to generate clicks which directly precede coversions, regardless of causality.
I’d love to hear from folks who have been closer to affiliate marketing than I have been…
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