Is Affiliate Marketing Dead?

I had a question asked of me last week that kind of stunned me. An affiliate friend of mine who used to be one of my top performing affiliates a few years ago asked me “Sarah, be honest with me, is affiliate marketing dead?”

What? I was shocked!

I’ve watched millions of dollars being made through affiliate marketing programs over the last few years and have seen constant growth year over year. I’ve seen the level of awareness and interest in the affiliate space boom with no signs of it slowing anytime soon. There are new records of affiliate and merchants joining the space and new tools, resources, networks and solutions popping up to accommodate their needs.

So how could this affiliate, one who’s performed so well for so long, think the industry is dead?

Google’s Panda and Penguin updates KILLED their business model, that’s how. They spent years creating beautiful websites on particular subjects poring hours, weeks, days and years into great content and self taught SEO, only to get hit hard with Panda then killed completely by Penguin. How are affiliates to stand a chance? How can anyone still make any money?

Well, affiliate marketing is not dead. On the contrary, it’s absolutely booming. It’s just changed. And we need to change with it. As affiliate managers its our responsibility to help affiliates out. This affiliate didn’t have the budget or experience to complete in paid search, nor did they have the time or budget (at this point) to compete against the retailers themselves for those coveted first page placements in organic search. It would take several months to recover from what’s already happened to this affiliate should they start their SEO work again, let alone risk something else happen out of their control.

My affiliate friend asked many good questions. “Is Google trying to rid affiliates for good?” “Are they trying to make more money by forcing affiliates to use paid search instead of organic?”, “If I change my business model and try something different will I get hit again?” “Will another model even work?”.

I wish I had the answers to these questions. I let my friend know where the trends are right now: coupon / daily deal sites, mobile, social (including blogging), video and any new technology or traditional offline model that’s going online on a performance base.

My friend wanted to know which I thought was her best chance of recovery and longer term success.

My first suggestion? Don’t start a coupon site. Affiliate managers are sick to death of reviewing affiliate applications where 80% of the new applications are pop-up coupon sites that are trying to get into the market. If you’re coming in now, you’re way too late. Merchants do not need 100+ coupon sites. They only need a handful of selected ones to get the job done.

The more advanced affiliate managers hand select a few coupon sites to work with, then decline the rest. They are also starting to value different types of affiliates more than others, giving higher commissions or more credit to affiliates who drive long term loyal customers versus the “whoever has the best deal today and I don’t care what brand it is nor am I going to buy from them again if it’s not 60% off” type of buyers. Because of this coupon sites do not generally fall into the “high value incremental sale” column.

Affiliate managers also consider the amount of effort needed to find and convert that customer for the merchant. For example did they have a huge following they actively reached out to? Did they create an app that had an affiliate tracking link inside? Did a lot of programming or design need to be put into the effort? Is the sales strategy legitimate and fair? Or did they take five minutes to slap a code together and have results show up for trademark plus terms in the search engines? These are all things a good affiliate manager needs to consider.

From the affiliate side, not only is the coupon market already saturated, it’s almost impossible to compete against super coupon affiliates such as retailmenot.com in organic search. If you don’t have paid placement budget, then how are you going to get found? Facebook? Maybe. But I doubt you’ll get the volume you need in order to drive enough sales through performance marketing to earn a living relying strictly on Facebook as a coupon affiliate.

Blogging on the other hand is a completely different story. People go online to find solutions to problems they have, and generally they need to find information about something so they can make a decision for themselves. This is where bloggers have so much success in affiliate marketing. There are incredibly successful bloggers out there making an insane amount of money through performance marketing because they have found their voice, their niche and a loyal following of people who are learning and buying through their recommendations because they are considered experts on their topic. That, and they have earned the trust of their readers. You can blog about anything and everything under the sun and the cool thing is you can be as creative as you like.

Bloggers use different channels outside of (but not excluding SEO) to drive new traffic and business to their websites and build solid relationships with their readers through shared opinions that are either original, said with conviction or as a proven expert in their field. They rely on building a following through social channels, newsletters or RSS feeds, search, conferences, online and offline PR and even good old word of mouth. All in all, they don’t put all their eggs in one basket.

There are lots of tools out there to help bloggers better monetize their websites (future blog post to come), produce content more easily, marketing their sites more effectively and grow their fan base faster.

So what’s my point? Affiliate marketing is not dead. Not in the least. It’s simply evolved. It’s fluid and ever changing  so both affiliates and merchants need to be prepared to adjust to those changes and be ready to adapt.  You as the affiliate manager need to be ready to support affiliates in their quest for earning opportunities and changes to strategy. That’s why it’s important for you to stay on top of important topics in the space.

How can you do this? Be clear on what is working in the industry and not. Be clear on what strategies both merchants and affiliates are using so you can offer fair, honest and useful feedback to your affiliate partners. Be ready to offer helpful tools and tips affiliates can learn more about. The PMA blogs about all kinds of important issues – things that can help prepare both affiliates and merchants for those changes. That’s usually a good place to start.

As their leader, be their main resource for performance options. Know the stakes, know the issues, know the best practices. By being knowledgable about things like Google Panda and Penguin, you can help affiliates adjust to change more easily.

Sometimes it’s hard to turn away from a business model you’ve been using for years, especially one you’ve had previous success with and have stuck to for so long. But this industry changes rapidly and we need to be prepared to change with it.

We don’t need to be the rock in the water. We need to be the water itself.

How do you help your affiliates adapt to change?