The Evolution of Search Affiliates

The final session that I attended at CJU, was by Steve August, Operation VP of Customer Marketing for Brookstone. This was certainly the best session of the entire show, and I actually stopped writing (hence the fact that I didn’t blog it), as I was set on getting a copy of his presentation for this blog. Steve kindly obliged, so I’m posting it here. There is a lot of great stuff in here, so I really advise you to watch it - obviously not as good as being there, but some interesting stuff nevertheless.

What’s interesting to note, is that Brookstone is divesting of Search Affiliates, as they are not seeing enough margin in that business for them. From the many discussions I had at CJU, this is a growing trend and the larger Search Affiliates are reinventing themselves into technology companies (Traffic Strategies was recently acquired by Linkshare), having had many years in which to build technology platforms without the need to go through long sales cycles to close business. This put Search Affiliates way ahead of traditional SEM agencies vis a vis focusing on value and not “bid management” - which drove SEM agency revenues. We also took the business on risk, which gave us the opportunity to experiment at our own expense, and determine what the optimal PPC solution should look like, and not be bogged down by client demands in the interim. The result is Media Manager, a proprietary multi-million keyword management system, that allows customers to target ROI, focus on very detailed business intelligence and growth the revenues by optimizing their campaigns, not just increasing their bids - as most other companies propose - especially since they work on a % of spend model.

The role of networks in this evolution is still up for debate. My view is that larger networks such as CJ, Linkshare, Tradedoubler & Performics will become dis-intermediated if they do not change their business models for larger affiliates. The good news is that many of them are already having this discussion and are very co-operative in evolving their businesses into platforms. In a world of mass supply, aggregators hold much of the value of the long tail. Affiliate networks have an aggregation business model, and therefore the value is really in the long tail that they have - the super affiliates or high volume players will need to be treated differently in order to support the business model evolution. The margins for search affiliates are certainly under threat, and Brookstone is experiencing zero-sum returns - this really means that it’s lose lose for networks and search affiliates if there is no margin left for the merchant - something has to give…

Clicks2Customers realized this shift in the industry a while ago, and has quietly become an in-house solutions company, supporting in-house teams by providing access to tried and tested technology that allows them to manage and optimize their multi-million PPC keyword campaigns with precision ROI management. Our Media Manager platform was build on the back of years of generating revenue for merchants, so unlike many of our competitors - it’s a tried and tested solution that focuses on generating revenue, and not increasing bids or spending more money (as per traditional SEM agencies). We’ve only recently embarked on the change in our business model and we’ll be announcing more details in the weeks to come - for now, it’s only being offered to select partners as we roll out. Our model is still performance based and we only make money for value added to a campaign - not the amount spent. We’re evolving from a Super Affiliate to a world class performance search marketing solutions provider!

If you’d like to be considered for our product roll-out, please fill in the contact form on this site. We’re currently only targeting advertisers with spend levels above $500k/year and the budget to grow aggressively.

More news to follow soon!

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