In this interview, we discuss four key trends within the affiliate marketing community. First is the impact that artificial intelligence (AI) in affiliate marketing will have over the next year. The second relates to the extraordinary growth of influencer marketing and the recognition by influencers that the performance-based commissioning model gives them an opportunity to make more money.
Our third subject for discussion is CTV, at a time when more and more companies are leveraging performance-based deals to access increased budgets and higher volume. Finally, we close the discussion on the increasing use of dynamic bidding in Pay Per Call and why this offers significant advantages for the entire ecosystem.
Blue Book: Let’s begin with Artificial Intelligence (AI). It has had a huge impact over the last few weeks, particularly ChatGPT. Do you think it is a game-changer for performance marketers?
Todd Stearn: Yeah, AI is fun. We’ve been using ChatGPT and other AI tools internally for everything from copywriting, job postings, image production, drafting legal documents, and scripting videos. My money is on this leading to significant growth in content produced by content marketers, brands, influencers, and news organizations. Of course, we must be careful to avoid the lowering of quality by ensuring human editing and checks for factual misrepresentation, plagiarism, and resonance with your target audience remain part of the process.
Blue Book: AI seems like it is going to allow essentially unlimited content creation, and in that situation maybe authenticity becomes more valuable.
Todd Stearn: Absolutely. Take CNET for example, they used ChatGPT to produce boilerplate articles for SEO purposes, which in theory is a sound way for AI to make content, but how they did it made a lot of people upset. They made it seem like an editor on the site was responsible for the content produced by ChatGPT when that was not the case. And worse, ChatGPT produced errors and plagiarism which was not caught before it was published.
The point about mass production via AI is that an infinite supply of anything tends to reduce its value to zero. Brands and content marketers are all now asking themselves how they prevent that from happening to their own content efforts while still taking advantage of these tools. What will make the difference and what people are going to value is authenticity and transparency. Long story, short: people are going to value human-produced content just as much as they do now.
Blue Book: What does that transparency look like in a year’s time? We already know that content can be effectively watermarked as AI-produced. Are we going to see search engines and browsers automatically flag AI content when they find it, for example?
Todd Stearn: I hope that they do. We need to make sure that people feel comfortable reading content and using Search, with confidence that the information was crafted by a person, which is something that people are always going to prefer.
Ultimately, I don’t believe that most people will want to click on links and read content that is mass-produced by an AI. More likely, the AI-produced content is tightly edited, while saving time and increasing production, while readers are none the wiser.
As an industry and as affiliate marketers though, we need to be transparent about its use, because ultimately, I think people simply don’t want to be lied to. Trust and authenticity are going to become even more valued than they are now and I expect brands to introduce contract language limiting how affiliates can use AI to avoid blowback on their image.
Blue Book: Ultimately it comes down to if we think there is only a finite amount of attention in the world. If you pump more content in, then the value of each piece of content gets reduced. Which content becomes valued in this case?
Todd Stearn: I love that line of thinking and I think you are absolutely right. We did a team-wide Lunch and Learn on AI and ChatGPT. The general message was, this shouldn’t scare you, it should encourage you to learn how this tool will help you grow as a professional.
There’s tremendous talk about AI displacing jobs but that’s half the story. Our people are learning how to use AI in their everyday jobs and we are examining several larger-scale projects to incorporate AI into all facets of our business. Successful marketers will need to use AI better than the next person to stay ahead in the new economic reality that is dawning.
Blue Book: Let’s talk about influencers. Why are influencers suddenly so important in the industry?
Todd Stearn: There are a few reasons but the primary one is that TikTok changed the social media game and facilitated a huge increase in creator content production and monetization. Previously, everyone looked at follower count: that was a big marker for how much reach you had. Now, however, TikTok’s success with short-form video and a content-serving algorithm based on watch time has transformed what virality looks like. It has led to an environment in which hundreds of thousands of influencers are able to reach larger audiences based on quality and resonance, instead of posting frequency and patience. Most of all, they can effectively monetize their creativity.
Then, I think, you have the economics of supply and demand. A larger supply of content creators who can reach mid-six to high-seven or even eight-figure view counts on a single video has given brands more opportunities to reach a creator’s audience. That, in turn, has allowed performance pricing to come to the forefront of influencer marketing. Ultimately, I think creators will see the benefits of performance pricing to earn more money for higher-quality content.
Blue Book: This sounds much like the process we went through with bloggers a few years back. Are there parallels?
Todd Stearn: There are a lot of similarities. Many bloggers were able to grow their businesses into real media companies and that’s what I expect to happen with influencers too. We are already seeing some influencers becoming mini media moguls, commanding large ad budgets from brands who seek their devoted audience. There are advertisers chomping at the bit to reach the audiences that these creators have so some are definitely going to grow into much bigger companies over time.
Blue Book: How are networks handling this? Some seem to be building dedicated influencer networks. Is that the way you see it going?
Todd Stearn: There’s a sea change beginning to happen, so it tends to be a hybrid approach still. Take us as an example: we might take a client on our agency that is looking for penetration on TikTok. We work with creators who can produce authentic content and have the right audience. That’s the creator side of things. Then we would take that content and amplify the reach of those videos through paid ad spend.
So, what that looks like is a hybrid of influencer and paid media to achieve the client’s goals. We have seen tremendous growth in these kinds of engagements just in the last few months so there is huge interest in this approach.
Now, for affiliate networks, I do think that the business model is to have an influencer network separate from and run by a different team than the existing affiliate network Influencers are finally – its officially – a new channel of the affiliate marketing ecosystem, but they are a far different breed than mature content sites or media buyers. They need different resources and more guidance to turn their influence into a successful performance revenue stream.
Blue Book: That idea that performance-based commissions are more profitable seems to be impacting Connected TV as well, right?
Todd Stearn: Absolutely. We feel that CTV is ripe for migration to performance pricing. Remnant, unsold inventory is being gobbled up by media buying agencies who are repackaging it into a new offering being sold to performance marketers. The successful agencies will pepper in their own exacting standards for creative production and make that a low-cost, low barrier to entry for a recalcitrant performance marketer. We’re seeing it on a very small scale now and I expect it to grow quite a bit this year.
Blue Book: How is that capability being built? Is it something that traditional performance networks can do, or is it more challenging than that?
Todd Stearn: I do believe traditional performance marketing agencies and affiliate networks will gain access to this space, as the versatile affiliate network gets their client’s traffic from all corners of digital. But as with other channels, they’ll primarily sell a bundle of performance-channel opportunities to clients and provide affiliates with access to performance-pricing campaigns. It will be the media buying agencies, operating as affiliates, who are tapping into this inventory, who fully understand the creative medium, and who are putting up their own capital that will actually turn this into a scalable performance channel.
Blue Book: What kind of money are we talking about to get creative together for something like this?
Todd Stearn: We’ve been approached by agencies looking for a minimum $5k investment in creative production – that’s it. It’s up to them to turn this profitable for themselves on the arbitrage model. The prevalence of video inventory has made the cost of entry lower, but good creative will always cost a pretty penny. And creativity is everything.
Blue Book: Let’s turn to dynamic bidding in Pay Per Call. How does it work and why is it needed?
Todd Stearn: Dynamic bidding in Pay Per Call has been around for a while, but we are seeing adoption accelerate significantly. What’s happening is that there is lots of volume, but until recently there hasn’t been an efficient way to differentiate good calls from bad. Dynamic bidding solves that problem. It allows a pay-per-call agency to maximize EPC by making real-time decisions on which leads and calls should sell for a lower price, which ensures that calls don’t just fall through the cracks because there is no buyer. At the same time, buyers can decide if they prefer to pay more for higher quality, or a little less for greater volume. The benefit is that more leads and calls can be monetized, and EPC increases as a result. Everyone wins.
Blue Book: For a brand, what’s involved in starting to use dynamic bidding?
Todd Stearn: It’s generally a SaaS solution, via one of the big platforms such as Invoca and Ringba. There are other platforms too and I suspect they all offer it or will do so soon. More and more brands are adopting dynamic bidding and we expect that to become the norm. That means that networks, lead-generators, and traffic channels are all rushing to incorporate it into their businesses too. Certainly, it is a big focus for us as we continue to scale up our ping post-operation.
Blue Book: There has been incredible growth in pay-per-call in the last 12 months. Is that going to continue, or do you think the market is now saturated?
Todd Stearn: It will certainly continue, with more brands seeing the upside of handling inbound, qualified calls sent to them via affiliates than continuing the onerous operation that is buying, qualifying, and outbound dialing thousands of leads per day.
In the past few months alone Aragon has seen major growth in our call campaigns on the back of some volatility in the industry. Networks that are one-vertical focused are not prepared when the ground shifts under their feet. Recent changes in compliance and ROI in the Medicare vertical is a case in point example. Aragon was readily migrating our affiliates to new verticals that were more opportunistic, and several smaller networks were not. This led to an influx of new affiliates looking for the next big thing.
Pay-per-call is ultimately a vehicle for brands to acquire leads and customers, and reliant on a tried-and-true affiliate commissioning model. Brands continue to use affiliates because they want to hedge risk and entrust a portion of their growth marketing budget to experts in media buying and lead gen. This will only continue to grow as a channel.