When companies like Google, Amazon and eBay rolled out their affiliate marketing programs in the early web 2.0 days, making money off your web page was too easy for webmasters to resist. Individual web sites could just plug web advertisements into their site and immediately begin converting sales and cashing in 7-15 percent commissions on piles of money that had been sitting there untapped.
Those piles of money are still sitting out there for webmasters and vendors. But the business has become more difficult and riskier than ever. Increasing government regulations, fraud and an overall very crowded market make affiliate marketing a substantially more difficult game than ever to master.
But the masters of the game were on hand at the ad:tech San Francisco conference, explaining how to negotiate a digital marketing sector that's become vastly more difficult to succeed in this year.
AdRevolution Chief Revenue Officer John Engler pointed out the example of Amazon, who last year cut off their affiliate programs to thousands of California vendors in a sales tax dispute. Amazon's ban has since been lifted but the uncertainty remains.
The threat of fraudulent sellers exists as well. Dodgy affiliates can set up hundreds of accounts, then give these fraudulent accounts fake clicks through different IP addresses to inflate their ads' click-thru rates. "A guy on Pinterest has 200-some-odd accounts," Mr. Engler noted. "As consumers, how do we know if it's legitimate?"
The coupon craze is spreading among affiliate marketers at quite a clip. "Coupon use is on fire," said co-presenter Brook Schaaf, founder of Schaaf PartnerCentric. "(Vendors) love the volume, but they hate the cannibalization" - the drawback wherein deal hunters take the deal but don't remain long term customers.
The affiliate ad market is hotter than ever, but the drawbacks a more severe than ever. The industry pros on hand recommend affiliates align themselves with the Performance Marketing Association, an affiliate ad advocacy group.
This article is part of Allvoices’ series on ad:tech, the largest digital marketing and technology conferences and expositions. Check out allvoices.com/adtech for more of Allvoices’ ad:tech San Francisco event coverage. This series is supported by ad:tech.