Changes in 2005 will result from cogent business decisions, reaction to litigation and following trends.
As we bid farewell to this year’s model of affiliate marketing and embark upon 2005, I’ve got to wonder what sorts of changes we are in for next year.
2004 was something of a turbulent year for affiliate marketers. The year kicked off with nervous and confused affiliate marketers trying to cope with CAN-SPAM, and throughout the year, a number of issues became industry lightning rods.
There were sagas about everything from search arbitrage, whether adware is badware, cookie stuffing, the use of trademarked terms, and more.
That’s not to say it was a bad year by any means. According to data I’ve been gathering for the AffStat 2005 Report, affiliate metrics are on the upswing for most merchants (final data will be available in 2005 Q1).
And the recently released “Special Report: Affiliate Marketing 2005” from MarketingSherpa indicates a sustained, positive outlook as “Overall 91 percent of surveyed merchants and 82 percent of affiliates expect revenue growth in 2005.”
Additionally, the new JupiterResearch Affiliate Marketing Executive Survey also indicates growth in the space. Their recent survey revealed that 78 percent of respondents grew their affiliate programs (by number of affiliates) in 2004.
But what’s going to happen in affiliate marketing next year? In most industries, you’ll see some pundits offer up conjecture, and most of them are off by a mile.
Fortunately, there are a number of clairvoyants that are clued into the affiliate space. Below are the thoughts, predictions and derelictions for 2005 from the best visionaries this side of Nostradamus.
Gremlin of 2005: Click Fraud?
“After spam, spyware and phishing, the next questionable online tactic that is likely to draw interest from some lawmakers and regulators is click fraud," says Gary Kibel, Davis & Gilbert LLP. "During 2005, there may be an increase in the number of lawsuits, regulatory inquiries and perhaps state laws regarding various click fraud tactics that distort the numbers generated or reported by affiliates, marketers and affiliate networks.
"It is therefore incumbent upon all participants in affiliate marketing to ensure that reasonable technical controls are in place in an attempt to limit click fraud, and that sufficient legal terms and conditions have been affirmatively accepted by partners that clearly define impermissible activities so that remedial action can be taken against offenders.”
2004 Redux
“This is the first year where there are no easy predictions! The industry is murky because of impending spyware legislation, apparent bias against affiliate sites from search engines, and rumored changes about arbitrage bidding at Google," says Wayne Porter, Editor, Revenews.com.
"Merchants do not appear to be ready to embrace more sophisticated tracking to make informed decisions about their partnerships. While there are signs that decision makers are aware of industry issues like search engine spam, adware and spyware, and email spam there appears to be no concerted move to solve these problems. I expect 2005 to be very similar to 2004.”
PPC Affiliates Are So Yesterday
“The affiliate marketing world will be turned upside down and increase its role in many companies in 2005," says Chelsey Langan, Affiliate Manager, HomeGain.com, Inc. "The first force I foresee is the impending change to Google and the increase of SEO. Once Google makes the change to the policy of affiliate keyword bidding, the effect to the affiliate marketing community will be huge.
"Many large PPC affiliates make their living (and so do the merchants they promote) by driving traffic directly to a merchant's site, rather than through their own.
"I expect to see all affiliate programs take a dip in traffic and revenue for the first few months after the change. This will be corrected once those affiliates who weren't proactive build a landing page to run the traffic through.
"SEO is still hot and will continue to gain strength in 2005. I see many affiliates reducing their monthly spend on PPC and focusing on SEO once their sites are indexed and optimized. On the flip side, both Google's policy change and SEO will increase the user experience, in turn, giving the merchant higher quality leads or sales.
"Blogs and data/content feeds are the wave of the future. If you don't have one or both, your program will suffer. Affiliates are becoming more sophisticated each day and demand tools to help them sell or promote your product or service. Get those tech requests in now; we are in store for a big year in 2005!”
BHOs -- No Longer Big Time Operators?
Says Chris Sanderson, General Manager, Affiliate Marketing by Web Studio-1: “We'll see the first successful case of affiliates using BHO [http://www.adp-gmbh.ch/win/com/bho.html] (browser helper object) software being sued by merchants for trademark infringements. This will lead to a domino effect of multiple cases and a wholesale move by affiliates away from this software, undermining the whole BHO market, as merchants then start to sue other merchants for the same trademark bidding infringements. While the BHOs ultimately will be untouched in court, their revenue will dry up.
"Also, StopZilla will become the main stay of the home and business PC user’s defense against spyware, adware and the undesired effects of installed BHOs.”
Year of the Affiliate Program Blog
“I think the affiliate industry will receive a healthy dose of innovation as managers learn to rely less on widespread banner placement and search result page domination, and more on creative ways to distribute relevant content," says Carolyn Tang, Affiliate Manager, Orbitz. "For example, consumers and affiliates alike desire pre-filtered, pre-digested information at their fingertips.
"I believe that in 2005, the end-user (or affiliate) rather than the content provider (or merchant), will determine what is relevant to them. Consumers may no longer need to look for information, because they will already possess the information they need. Leading indicators of this mentality would include blogs and RSS feeds.
"In fact, one of my major goals for the Orbitz affiliate program in 2005 is to make sure that our affiliate partners receive all of our deals and promotions as soon as they are available. As it is now, fares and sales fluctuate so quickly that it is impractical for an affiliate to keep up. In the first quarter of 2005, we will offer a solution to this issue.”
Innovators Will Destroy Status Quo
"Being driven by the lack of accountability, adware, 'cookie-stuffing' and search fraud concerns associated with affiliate marketing, a few bold marketers will audit their performance-based programs. By mid-year, some will commit to a more meticulous approach to measuring effectiveness just as they do in non-Internet media," says Jeff Molander, CEO, Molander & Assoc. Inc.
"Who will they be? Direct marketers will lead... using rock-solid Web analytics to build and guide media planning and optimization decisions. Substantial changes in how marketers compensate affiliates and traffic partners will be announced. Solution providers that innovate and support stand to take all."
Happy New Year
There you have it -- the folks in the know have had their say. It looks like there will be lots of changes resulting from cogent business decisions, reactions to litigation and following trends. See you in 2005.
Shawn Collins is CEO of Shawn Collins Consulting, an affiliate program management agency; Webmaster of the AffiliateTip.com affiliate program directory; and a founder of both the Affiliate Summit conference and Affiliate Manager Boot Camp. He authored the book Successful Affiliate Marketing for Merchants and the AffStat affiliate marketing benchmark reports.