Groupon says its focus is on the bottom line, rather than top-line growth.
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Besides the low value he felt he received from coupon sites, Smoter, like some of his peers, expresses frustration at two other aspects of affiliate marketing: Accurately tracking where a sale comes from, and the difficulties of working with bloggers as affiliates.
The problem with bloggers is how to match products on the retailer's site with what the blogger is specifically writing about. That's where affiliate marketing firm Skimlinks sees opportunity. Its technology enables web site operators to automatically turn product references in blogs, community posting sites or other published content into affiliate links that drive traffic to retailer sites.
Imagine that a blogger recommends one of the quirky gadgets sold by Skimlinks client ThinkGeek—for instance, a Star Wars fanatic or a beer geek might promote the Millennium Falcon bottle opener. Skimlinks recognizes that reference and inserts an affiliate link to ThinkGeek into the blogger's text, provided the blogger is part of ThinkGeek's affiliate network. A consumer using that link to buy the bottle opener will result in an affiliate fee to Skimlinks and—out of that fee—a commission to the blogger. "Skimlinks allows small guys with good blogs and good content to more easily find us," a ThinkGeek spokesman says.
Skimlinks bills from 2% to 3% of the purchase amount on high-value items in the electronics category, from 10% to 15% for fashion items, and 20% or more for low-cost items. For the largest e-retailers, Skimlinks charges on a cost-per-click basis. Skimlinks works with more than 30 affiliate networks and "tens of thousands of retailers," says director of marketing Aaron Weissman.
New technology from Google Inc. shows what's being done to help affiliate managers more clearly track where sales are coming from. Launched in early October, the free Google Tag Manager is an Internet-hosted software platform that collects all the tags on a web site and stores them in an off-site repository, or "container" in Google's lingo. Google replaces the tags, with a single line of code, which Google calls a "container snippet," on each page of a web site. Retailers add tags to their sites from advertising and affiliate networks so that they can pay commissions when consumers coming from those marketing channels make a purchase.
Google's e-commerce technology competitors note the value of the platform. "It will be a good fit for small businesses that have limited digital marketing requirements and are dependent on Google products, such as Google Analytics," says Ali Behnam, CEO of tag management company Tealium Inc. In addition to tag management, Tealium provides workflow management tools for multiple users and integrations with web analytics programs, such as Adobe Systems Inc.'s Site Catalyst, that Google's service does not.
Technology also helps retailers engaged in affiliate marketing protect their brands and contain marketing costs. Carolina Rustica, for instance, uses technology from BrandVerity to spot dishonest affiliates that bid on its brand name.
BrandVerity also helps companies combat what's often called "URL hijacking." Bike and parts e-retailer JensonUSA.com provides an example of the con. Some affiliates will copy Jenson's own paid search ad copy verbatim to make it look to consumers as if they are clicking on an ad Jenson placed that will take them directly to JensonUSA.com. In reality, those ads redirect consumers through a series of 10 or more web pages in an instant. To the consumer not staring at his URL bar, the ad does appear to take him right to JensonUSA.com.
However, one of those 10 pages is actually an affiliate page that will generate a commission from Jenson USA if that consumer makes a purchase. "They're hijacking my ads and are effectively printing money for themselves," says Jenson affiliate program manager Jared Saunders. BrandVerity's technology captures the site addresses that cycle through the hijacked ads, and uncovers the six-digit user ID number associated with the affiliate page in that mix. BrandVerity then sends clients an alert with the information so affiliate managers can take action against the offenders.
Saunders sends offenders an e-mail warning them to suspend the practice. If they don't comply, he resets their commission rate to 0%, which he says usually prompts them to drop out of the program fast.
All these technologies help retailers improve the returns from their affiliate marketing programs by generating more legitimate sales and paying less to unscrupulous affiliates. As long as the ROI arithmetic yields a positive result, many e-retailers will keep affiliates in their marketing mix.
The changing affiliate landscape
Retailers active in affiliate marketing today may find they are cutting commission checks to fewer vendors. Some of affiliate marketing's biggest players are consolidating and expanding the services they offer retailers.
In September, for instance, Rakuten LinkShare Corp., which also provides search marketing services—and which has 110 clients among the Internet Retailer Top 500—said it would buy mediaForge, a company that offers technology and services for building personalized online display ad campaigns. The deal will enable Rakuten LinkShare to provide online retailers and other advertisers better technology and services to measure the effectiveness of affiliate and other marketing campaigns. MediaForge places software tags on client retailers' web sites to monitor how shoppers are interacting with site content.
Global expansion is an aim of Rakuten LinkShare, a unit of Japan-based e-commerce company Rakuten. The Linkshare unit announced in late October plans to launch an affiliate network in Australia.
On the coupon side, WhaleShark Media Inc.—which counts Google Inc.'s venture capital arm as an investor—has raised approximately $300 million since its 2009 launch. The company operates such coupon and deal sites as Deals.com, CouponSeven.com and CouponShare.com. It has made several international acquisitions, including the May purchase of France-based coupon and cash-back provider Miwin, and the late 2010 purchase of Australia-based coupon site RetailMeNot.com.