Performance marketing is experiencing a growth spurt, but a few players would like to see it remain in diapers. As with any industry, maturity takes discipline and a consortium of players to self regulate and set standards by which the industry can agree upon as rules of engagement. This doesn’t mean to stifle innovation and creativity, but rather as a way to ensure that certain standards are agreed upon as a gateway to growth.
The recently updated FTC guidelines concerning online marketing campaigns are a good start to see where this industry is headed. Campaigns, and more to the point, the advertisers’ themselves and the networks that run the offers that are compliant with the guidelines, have seen gains of 15% or more in conversions. In addition, internet retailers have seen their customer service costs drop and their Transaction Processing partners steadily increase their credit processing limits.
Compliance is NOT a dirty word. In fact it is actually saving the industry from having greater oversight and regulation from the US government. As with any industry, automobiles, technology, pharmaceuticals, consumer & business services, consumer packaged goods and just about any vertical that does billions of dollars in revenue, they have pulled together to create industry groups that frequently release their own guidelines concerning how business in their industry should be conducted. In the performance marketing industry it has been the Wild Wild West since the day DirectTrack was introduced into the market.
Performance Marketing is by its nature one of the most lucrative channels an advertiser can choose to use to sell their product or generate leads. Lucrative because the advertiser pays only for what they want, sales and leads. The spillover is a lot of free advertising and brand awareness that unlike CPM or PPC costs them nothing until a sale or lead is generated.
But there is also little or no transparency for the advertiser to know who or where their campaigns are being run. They must rely on the network they are playing with, or worse the network’s cross publishing partners, to duly certify that the publisher is in fact legitimate as well as the traffic they are sending is real. It is no secret that many of the larger networks had left their “doors open” for many years, allowing almost anyone to sign up and then retroactively kicking them out when fraud or low quality traffic appeared from them.
For the networks this is a tedious and time consuming (and often frivolous) exercise, as only 5% to 10% get approval from the major networks. In addition, because there are very few publicly available negative databases for fraudulent affiliates, most networks are on their own as to whether or not their due diligence is complete. That is, they have no way of knowing if another network has denied a particular publisher. If the network runs the DirectTrack platform, there is a tool that does allow networks to warn others that a particular affiliate has been terminated by other DT backed networks, but the system is subjective and fraught with “personal” terminations rather than for actual fraud or lower quality traffic.
In my opinion, what needs to be established is a Certification for publishers. Just as a homeowner feels more secure when they have a licensed and certified (by state agencies and/or unions) electrician or plumber do work on their home, an Advertiser (and the network they run on) could be assured that a Certified publisher has gone through a rigorous set of criteria and background checks to assure that the person and the traffic they are sending is real. Without such certification the performance marketing industry will have a hard time shedding its diapers.
Certification is a necessity in other industry’s for several reasons, not the least of which is rogue operators. These are the players who would purport to have the proper credentials, but in reality has no formal training, nor does any independent trusted source endorse them as a legitimate business. As in the homeowner example, licensed and bonded union tradesman have undergone training and certification that can be documented. In the present state of performance marketing, these rogue affiliates can simply get denied and then apply at the next network, and eventually they get good at fooling them.
If Advertiser’s were smarter, they would demand that some standard be adhered to and that there be an independent voice that is performing due diligence for all publishers who have access to their campaign(s). This would go a long way towards making the performance marketing space more attractive and less of the Wild Wild West it has been since Amazon opened up the first truly large affiliate program in 1998.
AffiliCert.com is taking on just such a challenge. Adhering to a strict protocol for approving publisher applicants, the service allows for publishers to align themselves with a reputable organization who can vouch for the legitimacy of their business. (Yes I said business). It also allows the publisher to be able to say to any network, “Yes, there is someone else out there that you can trust who can show you I am legitimate.” For the publisher, it also allows them direct entry to many networks who are already using this as their ad hoc publisher screening tool, such as RexTopia, XY7, and UniqueLeads.
For the Internet retailer or online merchant who wants to play in the performance marketing space, AffiliCert adds another layer of security for them to participate in this space with confidence. Like the certified contractor working in your home, the certified publisher has undergone the scrutiny that allows online advertisers the confidence to allow them to run their campaigns without worrying if their traffic will be completely filled with fraud. I see a day where internet retailers will actually only accept certified publishers to run their campaigns. Particularly Tier 1 advertisers who have resisted the siren’s song of performance marketing because they could not trust the traffic that was generated.
As AffiliCert’s explosive growth (over 200 publishers have applied in just the last 2 weeks alone) has shown, networks appreciate having a trusted third party to outsource the task of screening their new publishers. In addition, they are also interested in seeing a “bench” appear. Just like the way union contractors use a “bench” to choose certified tradesman for a job, Networks can use their AffiliCert membership to seek out affiliates who have certain types of traffic and then solicit them with higher payouts. So if a network has a campaign from an advertiser that is looking for US email traffic only, or UK only banner advertisement or Search traffic primarily focused on dating, they can use their AffiliCert membership to seek out just those publishers who specialize in those types of traffic. In essence, turning the funnel upside down to make their Affiliate Managers much more effective.
So when will performance marketing grow up and decide that they need to join the ranks of most other legitimate industries? No one can say, but certification is a step in the right direction for all the players involved.