The beautiful thing about economics and capitalism is that, unless you are the government, you will not stay in business if you are not adding substantial value to customers.
Google is one of the greatest companies on the planet because they have really smart people who understand this principle very well. Below are three reasons why such very profitable major affiliate networks are adding less and less value to their customers and thus, re-evaluating their business model or just shutting down altogether:
- Insufficient technology. Today’s performance marketing technology must be real-time, campaign management features have to be super-rich and reporting must be transparent, flexible and thorough. This is enterprise-level massive data management that requires seasoned and focused experts to architect and code, living and breathing the platform every day. Silicon Valley fame, armies of service providers and sales pitchers, and massive market caps do not guarantee that you’ll get the software right, or even close.
- The Pareto Principle secret. Also known as the 80-20 Rule, the Pareto Principle is the deep dark secret that the major affiliate networks such as GAN have not wanted advertisers to know. In many cases, 80% to 95% of the traffic they are bringing comes from one or two major publishers such as RetailMeNot and FatWallet. So where’s the value? Unless an advertiser enjoys paying unnecessary commissions and being locked out of direct relationships with publishers for 1-2 years, there simply is none.
- Premium service level. Advertisers deserve great service in any industry, especially in online advertising since it is so sophisticated and ever-evolving. A knowledgeable technical resource should be available to answer the phone 24/7 because the internet economy is a sleepless and global one. Advertisers need an experienced partner that cannot only help manage their program, but will also help protect the integrity of their brand and maximize their ROI. Even if it means “earning” significantly smaller commissions.
The performance marketing industry is participating in a collective standing ovation, praising the latest developments that are allowing the new wave of experts to raise the bar for advertisers. There is still a place for major affiliate networks to manage the massively dispersed “long tail” affiliates all over the web. But the latest technology and expertise that is now available begs advertisers to create direct, professional and transparent relationships with the sources of the majority of their traffic.