It’s very difficult to find anyone in affiliate marketing better known than Shawn Collins, who earned his first commissions more than seven years ago.
Wearing his newest hat, as president/CEO of Shawn Collins Consulting, he provides outsourced affiliate program management. But he is, perhaps, better known as a co-founder of Affiliate Summit, as the author of the top-selling book Successful Affiliate Marketing for Merchants and for launching the highly successful affiliate program for ClubMom, a membership shopping site.
As a result of his numerous roles, Collins has not only become ubiquitous, but has helped to shape the industry through its childhood. He’s emerged as an expert for spotting new trends. Indeed, Revenue Editor-in-Chief Tom Murphy discovered some surprises when he interviewed Collins about where affiliate marketing is headed.
TOM MURPHY: You’re very well known in the industry as a superaffiliate, a guru, an association leader, a leader of an industry summit and, most recently, as a program consultant. How do you really define yourself these days?
SHAWN COLLINS: I guess I’ve been on every angle of the industry, working as an affiliate and affiliate manager. I worked with First Directory Preferred years ago. I guess, overall, I’d probably characterize myself as a cheerleader of the industry as well as a shepherd trying to push it in a direction that I think will be helpful for the industry.
TM: Do you think there’s a chance of spreading yourself too thin?
SC: I don’t think so, but my wife thinks I spread myself too thin a long time ago.
TM: You recently published your AffStat survey, which had some very interesting statistics in it. I’d recommend it to anyone who wants to know what’s going on in affiliate marketing. I had heard, for example, from a number of sources, that only about 5 percent of affiliates make any real money and only about 2 percent fall into the superaffiliate category. But your AffStat report shows 20 percent of affiliates making more than $2,000 a month. Do you think that’s an accurate figure?
SC: Yes. I had a pretty good cross-section here who were participating in the survey, from the very small mom-and-pops to some of the really big players. And I know who contributed the answers, so I think it’s a very accurate depiction.
One of the things that skews the numbers when they talk about 5 percent or 2 percent is that, in the past, there was a very big emphasis on quantity over quality of affiliates. And people are very proud to claim they had 75,000 or 100,000 affiliates. But naturally, you’re not going to have 15 percent of those being too powerful. These days, you see a lot more of a boutique approach to it, where people have 1,000 or 5,000 affiliates, so it’s much more realistic to have a good 20 percent or more be superaffiliates.
TM: I’d like to hear your thoughts on a few of the issues facing affiliates, including PPC, predatory advertising, Froogle and things like that. But, first, do you think these things taken together are really just symptoms of an evolving industry?
SC: Yeah, I really think they’re inevitable. It’s a more sophisticated industry than it was back in the ’90s. I think they’re good things. They’re hurting some of the smaller affiliates, but they’re making things easier for the affiliate managers because they’re shrinking the number of affiliates they have to deal with.
TM: It sounds almost like a natural, evolutionary process where there’s a survival of the fittest. Do you think that’s what is taking place?
SC: Absolutely. Back in 2000, and earlier than that, you really didn’t see any superaffiliates out there. You had SchoolPop and some others, but there’s been a big emergence of these sites over the past couple of years – various sites that have a tremendous amount of traffic, with membership sites and things. They’ve really taken a big bite out of the industry. They account for a big portion of the activity that goes on.
TM: Predatory advertising seems to be perceived as public enemy No. 1 in the community. Do you see that as a problem that’s getting better or worse going forward?
SC: I think it’s been limited to a degree over the last year or so, but it’s still a very relevant issue and I think it will be around for a while. Certainly, some of the affiliate managers have taken a cue from the networks. I think the affiliate managers have to be more proactive in their approach to stopping it instead of just sort of waiting for something to happen.
It is sort of a double-edged sword because a lot of the affiliate managers on a moralistic level would like to get rid of predatory advertisers. But when they have pressure from their bosses on the bottom line, they end up having to take those (predatory) affiliates because they’re seeing higher numbers with them. It puts them between a rock and a hard place. They want to do the right thing, but they want to keep their job[s].
TM: There’s a similar thing with spam. Nobody likes it. It hurts the image of the community. It hurts the consumers. And, arguably, it hurts the merchants and manufacturers, who spend a lot of time building up brand names. Do you think that’s also a double-edged sword for the merchants?
SC: With the parasites, there are some good adware products. But I think with spam, there’s never a good spammer. I think that has really hurt the industry tremendously because it’s resulted in the CAN-SPAM Act and that changed the face of affiliate marketing in one fell swoop this year.
TM: You wrote about the CAN-SPAM Act recently in a brief and in your blog. Could you reiterate your key points?
SC: Basically, a lot of the CAN-SPAM [requirements] are logical things, like you have to have an unsubscribe option and take care of things that any permission mailer always takes care of. But one of the things that makes it very difficult for affiliate marketing is the need to have a suppression list. If I’m an affiliate and I usually feature four different merchants in my newsletters, I’m now going to have to crush my entire subscriber list against their list of unsubscribes who never want to hear from them again. That makes it awfully challenging, not only to get that technology and make it work, but it throws some hurdles in front of affiliates who run email promotions.
TM: Some affiliates are feeling deeply threatened by Froogle, Google’s spider-driven shopping service. What kind of impact do you see from that in the affiliate area?
SC: Just from the power of Google, I think it’s certainly going to have a greater and greater impact on the smaller affiliates. A lot of the merchants like it because it gives them more exposure, the same as Shopping.com or Yahoo’s comparison-shopping engine. I think it’s a very positive thing in terms of affiliate programs getting more exposure and more penetration, but it’s definitely one of the things leading to a smaller world of affiliates out there.
TM: From what you said, it sounds like the number of people making some real money is on the rise, but the overall number of affiliates is declining. Is that right?
SC: Yes. Through a sort of natural selection, I guess. Since people used to take all comers, you’d get tons of sites from Geocities, and the free sites on AOL, and different free hosting services. So a lot of affiliates would be made up of free services where they never even bothered to put a link up. I wouldn’t even characterize them as affiliates because they didn’t know how to put a link up.
TM: I saw you referred to a lot of affiliates as “dead affiliates” in your report, people who haven’t provided a click in the last month or so. What sort of proportion do you think that is of the total number of affiliates out there?
SC: For the larger programs that haven’t done any sor
t of maintenance to clean out people who’ve been inactive for a while, they probably fall into that 95-5 rule (where only 5 percent of affiliates are making money). But (for) people who’ve tried to communicate often with the inactive affiliates, and sweep them out if they haven’t been active, it’s a much different percentage. But I think 80 percent of the programs probably have the 95-5 rule going on.
TM: That’s a pretty high proportion. And it’s contrary to a lot of other things we’re seeing going on with big business today. Most businesses in the last two years or so since the recession have been trying hard to maximize their efficiencies. And it seems like the affiliate program may be one of those areas that’s been overlooked. At the same time, I see affiliate programs contributing a bigger proportion of top-line growth to corporations these days. What’s your advice to corporations in general?
SC: It makes all the sense in the world to shrink the number of affiliates to just those affiliates who are going to be performing and who show some promise. But affiliates who have emails that bounce back and haven’t shown an impression in six months, I don’t think it’s worth carrying them on the affiliate roles. One of the reasons you see this perpetuating is that it’s all performance-driven. So even though they may be taking up some bandwidth, they’re really not costing anything for the companies that are keeping them on. But it makes more sense to me to shrink the size of the affiliate program so you know who’s promoting you and how they’re doing it, and you have a relationship with them.
TM: How do you think pay per click is changing the world for affiliates?
SC: In the last couple of years, there were a whole lot of affiliates basically using PPC – not even having their own Web sites. It was quite a successful tactic. I did it myself for quite a while, just driving activity right to the merchant. But in the last six months, a lot of merchants have been clamping down and adding a lot of restrictions because they found they’ve been bidding against their own affiliates and paying more than they have to. They’ve been concerned that a lot of searches normally would have ended at their site anyway. When an affiliate buys the keywords for a trademarked name, it’s a waste of money for the merchants because it would have been organic traffic for them.
TM: Do you think that’s an issue that will go away on its own because merchants will put a stop to it?
SC: I think what a lot of them are doing is damming the ability to bid on trademark names. Then they’re selecting certain generic keywords and saying, if you want to be in our program you can only bid a certain amount for these terms. And if you don’t like it, you just can’t do any pay-per-click promotions with us. Eventually, it will just sort of fade out and the affiliates will still do it successfully because there are a ton of words you can use without having to infringe on their trademarks. So I think that will be a strong channel for affiliates for a long time to come.
TM: Another interesting statistic in the AffStat report – I’m combining a couple of categories here – says 40 percent of affiliates have negotiated higher payments from programs. Does that fit with your anecdotal experience? And does that present a headache for affiliate managers?
SC: I was actually surprised by that figure myself. I’ve found, in personal experience, even for some smaller sites of mine, if I approach affiliate managers and tell them what I think I can do for them, a lot of them are willing to negotiate and make a special deal for you. So I think it’s really possible for just about any affiliate to do that. A lot of them never ask because they don’t realize it’s a possibility. But I don’t think the average affiliate manager would mind being asked, because then they know it’s an engaged affiliate and they can get more activity out of them.
TM: As a consultant, would you recommend to affiliate managers that they keep the door open to negotiations with affiliates? Or is there a time constraint that may limit their activities and put a lot of pressure on them?
SC: It’s something you’d have to model for. You just can’t put out projections for a year expecting to pay the rate you advertise on your site – say, a 7 percent commission. If you do that, you’re going to end up blowing out your budget. Because if you say you’re going to pay a 7 percent commission for everybody and you give 10 percent to superaffiliates, you might spend twice as much as you expected on commissions. If you don’t model for that, you’re going to be in trouble.
TM: How do you see the future for networks versus in-house programs? Do you see a bigger share for networks, or a bigger share for in-house programs?
SC: The networks still have the bulk of the activity in the space. When I did the AffStat report at the end of 2002, I think the networks had about 80 percent of the market share. But I think we’ll see an expanding role for in-house programs such as My Affiliate Program and DirectTrak. They’re getting more and more of the network programs to switch over, and they’re very aggressively recruiting new clients. I think in the next couple of years, we’ll see more prevalence of that kind of program.
TM: What do you think that means to the affiliates out there?
SC: It makes things a little more challenging to them in some ways if they have to go to a lot of different places to log onto their stats. But, otherwise, it’s a good thing for affiliates because it’s a little cheaper to run in-house programs so, theoretically, the affiliate programs can pay more to the affiliates in commission.
TM: The merger between Commission Junction and ValueClick is now a done deal. Nobody is sure what will happen to CJ in the future. What do you think is the future for big networks? And do you think this merger and other trends in networking open more opportunities for niche networks?
SC: It’s exciting to see this happen. It sort of validates the way the industry is moving, that it definitely has a future. It’s sort of surprising to some people that it took this long for there to be some consolidation because there have been rumors about various companies getting together for years and years. But it definitely sets the stage for some niche players out there who can take care of certain types of clients, with certain levels of start-up fees, because right now the bigger networks are not really an available resource for some of the mom-and-pops who are out there. It leaves an open door for ShareASale and MyAffiliate programs to capitalize on anyone who’s not in the Fortune 500.
TM: There are always new technologies coming down the pike, and I think we can all agree that’s a good thing. There wouldn’t be affiliate programs now if there hadn’t been technologies in the past few years that make it possible. Some technologies, such as the Norton firewall product introduced recently, block banners and can make links unclickable. Are there ways the affiliate community can change things when a company introduces a product that creates obstacles to what they do to make their living?
SC: I think the individual affiliates are powerless. We really have to rely on the networks banding together and going to Norton or whoever might make a similar product. One of the prime targets of these products are the domains that are serving all the banners and the clickable URLs for affiliate programs. The products are going after the URLs for LinkShare and Commission Junction and other companies, so it’s certainly in their best interest to get their hands dirty and try to take care of this as soon as possible. (See ReveNews.)
TM: Do you know if they’re doing that?
SC: I don’t know. I know in the past that was going on. Then, the end-user was asked if the
y wanted to block ads, and now it’s a default that I’ve just heard about. I don’t know how active the networks are. I would imagine they’re out there trying to find some sort of resolution for it.
TM: What will be coming up at your summit this year?
SC: The plan for the whole agenda is to be very focused on networking. We’ll certainly have our share of speakers and panels. But for every conference I’ve gone to during the last decade, it seems like the feedback from the people is always that they wished there was more networking, and nobody seems to be catching on to that. Every time you go to a conference you see the same cast of characters up there on a panel and running some PowerPoint, and it seems like it’s boring everybody. But the organizers aren’t seeing that. So my partners, Missy Ward and Ryan Phelan, and I figured we’d create a conference for people who hate conferences. We’ll have an emphasis on the things people love: the formal and informal networking as well as the educational sessions. And so we’re sort of expanding beyond what the past affiliate marketing conferences have been to make it more of a performance-marketing conference for affiliates.We’re also bringing in the experts on email and search to all get together for a four-day event. I don’t know if you ever heard of speed-dating, where people date for 30 seconds and then move on. We’ve sort of adapted that goofy concept to speed-networking, where you sit opposite another person for 30 seconds and give them your card and have these mini-meetings. You get a lot more comfortable and have a lot more interaction on a level that you can’t really see. (Note: For more information about the upcoming summit, please visit AffiliateSummit.com.)
TOM MURPHY, editor in chief of Revenue, has been writing about business and technology for more than 25 years. He is also the author of Web Rules: How the Internet is Changing the Way Consumers Make Choices.