It's time to take another look at affiliate marketing -- Shawn Collins Consulting's CEO outlines the new evolution.

The genesis of mainstream affiliate marketing was the CDnow buyweb program back in 1994, by most accounts. Back then, CDnow was focused on “looking for small sites to link to (them),” according to The CDnow Story.

What a difference a decade makes. In those early days of affiliate marketing, it was a simpler channel, or perhaps more difficult, depending on how you look at it.

There was less technology, less affiliates and less competition to recruit them.

In the beginning…

Back in the fall of 1997, I joined a startup called Medsite. I was focused on their MedBookStore.com division, which sought to emulate the business model of Amazon, but for the medical book sector.

Of course, that meant having an affiliate program. In those days, I was not aware of any ASPs that provided affiliate tracking, and we had a home-grown version.

From what I recall, we had only 468x60 banners and they linked to the homepage. No data feeds or web services or RSS or anything.

Affiliate recruiting was a real trick back then, because pretty much every potential affiliate needed to first be educated in affiliate marketing, and then sold on why it made sense for them to be an affiliate.

Like most folks back then, managing the affiliate program was one of many responsibilities I had. This was most assuredly Affiliate Marketing 1.0.

Give the people what they want

There was a panel at the AffiliateFORCE 2000 conference in Miami of the “leading solution providers” at the time. The list included CJ and LinkShare, which still hold claim to the titles of leading solution providers.

Also on the panel were some companies that were apparently ahead of their time. Two of those companies were ePod and Yo.com.

According to the old ePod site, “The ePod showcase is like a mini-website within a web page. Put this ePod showcase on your site. Visitors can browse through the merchandise without leaving your site.”

Back at the turn of the century, Yo.com’s site read, “YO! acts like your best friend, accompanying you around the web, pointing out products, services and information that will interest you.”

Chitika, anybody?

Affiliate networks are going the niche route, too. Traditionally, affiliate networks have had merchants from a couple dozen different categories. But Digital River has proven that focusing on one area can be very lucrative. The Digital River oneNetwork Affiliate Program specializes in vendors selling software.

Communication, not community, is king

The prevailing thought for many years was that an affiliate program should have a forum to communicate with their affiliates. Back in 2000, when I was writing “Successful Affiliate Marketing for Merchants,” I dedicated part of Chapter 12 (Communicating with Your Affiliates) to encouraging affiliate managers to setup a forum for their affiliate program.

Then again, I also told affiliate managers to create a webring back then, so cut me some slack. I’ve evolved.

In the years since touting forums as a community and communications mechanism for affiliate programs, I’ve become enlightened. Unless they are heavily moderated with strict ground rules, affiliate marketing forums have tended to have a signal to noise ratio of about 25:75.

As forum content quality and participation have waned, affiliate marketing blogs have been promulgated by affiliate marketing leaders as the de rigueur affiliate program component.

Not only do the blogs enable an affiliate manager to have better control over the conversation, in order to curtail the ad hominem statements and misinformation that thrive on the forums, but blogs also afford a more efficient means to reach the affiliates: RSS feeds. 

The science of affiliate management

Once regarded as something of a second-tier marketing channel, affiliate programs are now commanding greater respect in companies. One testament to that is the increase in full-time affiliate managers.

In 2003, 33 percent of respondents to the AffStat survey indicated that their sole function was manager of the affiliate program. Two years later, the number of dedicated affiliate managers had climbed to 51 percent.

As affiliate programs have experienced more hands-on management, the techniques used to run the affiliate programs have evolved, too.

Frustrated affiliate managers used to complain to one another that their email solicitations to potential affiliates had a poor response. That didn’t deter them from continually trying to recruit by email.

However, in the past year or two, affiliate managers have been experimenting more with good, old fashioned direct mail. Given the challenges of spam filters, CAN-SPAM compliance, and cluttered inboxes, affiliate recruiting postcards  are the new way to bring on targeted affiliates to an affiliate program.

Another progression in the affiliate management landscape has been the selection of an affiliate manager. It used to be that the person with the least seniority in the marketing department would be anointed as the affiliate manager.

When CMOs began realizing that their affiliate programs could generate leads and sales more efficiently than pretty much any other channel, the type of candidate they sought for an affiliate manager changed.

Nowadays, if a qualified affiliate manager cannot be found, it’s increasingly more common to hire on an OPM. According to the AffStat 2005 study, 25 percent of affiliate programs were being outsourced.

Effective fraud fighting

There was a time a million years ago when lots of affiliate programs paid on a per-click basis. Over time, most of these programs went extinct due to fraud. Due to a lack of detection and prevention, it was easy for scammers to assemble rooms of people to click ads or use programs that would mimic human behavior and regularly click on commissionable links.

Google restored commissionable clicks to the affiliate world with AdSense. With the success of AdSense, the per-click business is flourishing. The only difference now is that the right parties are being compensated.

Another issue that has plagued affiliates and affiliate managers in the past has been adware and the reported instances when affiliates using various applications were redirecting affiliate links.

This problem has been addressed by FusionQuest, KowaBunga Technologies and Link Connector. All three companies have developed technologies that enable affiliates to link directly to a company’s website. This takes away the opportunity for a redirect or rewriting cookies.

Bad leads are always a concern for per-lead affiliate programs. Just as the bad guys figured out ways to fake clicks in the past, it was also easy enough for them to manufacture tons of bad leads for some affiliate programs.

One company that takes validating affiliate leads very seriously is TARGUSinfo.  They’ve got a system called On-Demand Lead Verification. TARGUSinfo goes beyond verifying leads, as they can enhance and add missing information such as complete names, phone numbers and mail-deliverable addresses. Don’t accept leads blindly anymore, because you now have options.

Affiliate Marketing 2.0 is the next generation of affiliate marketing tactics and technologies. Below is a chart of some examples of affiliate marketing the way it was done yesterday versus the way it’s going to be executed in the future:

Shawn Collins is CEO of Shawn Collins Consulting, an affiliate program management agency; and co-founder of the Affiliate Summit conference -- taking place January 8-10 at Bally’s Las Vegas. He authored the book Successful Affiliate Marketing for Merchants and the AffStat affiliate marketing benchmark reports.