LinkShare 2008 Preview - Part 1 of the Revenews 2008 Affiliate Network Preview Series

As part of the Revenews 2008 Affiliate Network Preview Series, I interviewed representatives from the four major networks to get a sense of their plans and goals for 2008. Today's interview is with Stephen R. Denton, President, LinkShare Corporation.

What challenges are currently facing the affiliate industry?

"The affiliate industry is growing, but taking advantage of that growth is challenging advertisers and publishers in different ways," said Steve. He feels that the challenge from the advertiser's perspective stems from the diverse array of options publishers today have to monetize their sites. Advertisers need to use this challenge as a way to differentiate themselves from the marketplace and within their vertical.

"In order for advertisers to get front and center attention from today's publishers they should focus on providing better marketing and merchandising tools," explained Steve. "Advertisers need to take advantage of tools that enable publishers to make smarter decisions quickly and that helps them convert their affiliate traffic at a rate that's in line or better than other monetization opportunities."

Networks, of course, have a key role in providing those tools.

"The question we need to ask is: how do we help advertisers be more effective and have a bigger impact with the publisher base? Because publishers have a lot more options today than they did previously. I think that challenge is just a great testament to the growth of the industry and it's a challenge that we continue to work on all the time."

From the publisher perspective, Steve feels one of the largest challenges is accessing and utilizing data feeds effectively. This challenge becomes even more daunting when a publisher looks at the task of having to sort through tons of data feeds with hundreds of thousands, or even millions, of SKUs in order to be able to extract the content they need.

"With improved content coming from advertisers, there is an opportunity to provide richer feeds to publishers," Steve explained. "Since the data feed is the pipeline for products, you need to be able to allow publishers to optimize and take better advantage of that pipeline. That's true whether you are doing things like providing richer data, more product information, or better standardization of data. I think the data feed piece is a challenge that a lot of people are working on because it is a critical component of ad inventory."

Key to this is enabling publishers to make quicker and more informed decisions. Publishers are deluged with a wide array of offers and inventory to sort through, making it difficult to assess which offer is right for their audience and what is the best use of their ad space.

"Right now if you are a publisher in a network you have to sort through a lot of offers to figure out what works well for you. You pick up a link and then hope it converts," Steve continued. "I think from a network standpoint we could be doing a better job of focusing on technology and services that allow publishers to make better decisions about what it takes to convert their advertising inventory."

What about the annual proclamation of the affiliate industry's demise?

"It's simply not true," said Steve. "Every year someone is posting something that announces the death of affiliate marketing. You remember when a certain large search engine (Steve is referring to LookSmart) was going to kill affiliate marketing because they changed their business model? Many people said when they changed their model it was going to kill affiliate marketing, but it didn't. Again, when all the adware and spyware issues first surfaced several years ago others predicted that was going to kill affiliate marketing. But it didn't. As an industry I think everyone works hard to resolve the issues that exist. I think we continue to demonstrate it is a proven, valuable channel."

How do you feel about the affiliate industry's health overall?

"Obviously affiliate marketing is just one of many channels and places of execution where as an online merchant you are able to move the needle," Steve explained. "People do SEO, paid search, media buys, house list emails, business development deals, as well as affiliate marketing. At LinkShare we have been doing affiliate marketing since 1997 and for the last decade this channel has thrived. Just look at the advertisers that are in the Internet Retailer 500. Most have affiliate programs. That's because it is a successful, proven and growing business. We're not having trouble convincing people it is a smart thing to do. Year in and year out this channel continues to deliver. Affiliate marketing is a robust channel that can't be ignored, especially as part of a multi-channel strategy."

In what ways is LinkShare addressing industry challenges and needs?

As a network, one of LinkShare's top priorities is being able to help publishers make more informed decisions when it comes to ad inventory. According to Steve, LinkShare has been working closely this year with publishers to develop improved functionality within the publisher interface. During the first quarter of 2008, the company plans to roll out a comprehensive redesign of that interface.

In addition, LinkShare is tweaking its Merchandiser data feed product. Merchandiser will have new features making it easier to use and more intuitive, and allow publishers to extract products more efficiently. One such feature is LinkShare's Merchandiser Query Tool that works through an API allowing publishers to sort through Merchandiser to find specific products.

"One of our goals is to help our advertisers really monetize the long tail," said Steve. "Improving the Merchandiser product feed offering is part of that goal. Doing so will really make Merchandiser a smarter and richer product. The improvements will enable small publishers to utilize it as a pipeline to merchants' products that fit their niche, allowing them to extract those products and get them up on their sites quickly."

There was some rumbling among certain affiliate forums around concerns about LinkShare's acquisition of Traffic Strategies as possibly being competition to affiliates. What was the impetus behind the acquisition of Traffic Strategies and the development of LeadAdvantage?

Speculation that LinkShare would be competing with publishers, Steve felt, was erroneous. The acquisition of Traffic Strategies was part of LinkShare's continued goal to expand distribution and bolster its lead generation services.

"Acquiring Traffic Strategies was critical for LinkShare because we wanted to continue building out the discipline around lead-gen and be able to expand our distribution," continued Steve. "With the Traffic Strategies acquisition we were able to integrate this great group of people into our organization. It was strategic for us because when you look at our business, some publishers work with the bounty-form-based advertisers, and others focus on the percent-of-sales retail clients. In both cases, publishers and advertisers have different types of needs, so we created another network within LinkShare called LinkShare Lead Advantage. This network is governed by a different set of rules but it is specifically designed for offers that are lead gen oriented and for publishers who want to specifically pick lead gen programs and offers. We continue to invest in it and expect really big things from it in 2008 and beyond."

What are LinkShare's plans and goals for 2008?

"You can get a sense of LinkShare in 2008 by taking a look at what we released over the last few months," replied Steve.

LinkShare's recent focus has been to improve distribution through technology with releases including Flex Links, which enable video, widgets and virtually every other form of rich media and a new Mobile link type that permits mobile CPA tracking.

"We want to open the door and allow publishers and advertisers to partner together in new and unique ways," said Steve. "We think there is a lot of opportunity to monetize video inventory. We also think there is a great opportunity in the mobile space although still nascent."

LinkShare's parent company, Rakuten, has tons of experience with mobile commerce, especially through their large shopping portal, the Rakuten Ichiba Mall. LinkShare Japan has been tracking mobile sales as well since 2003. But there are still barriers to the US market being ready for mobile commerce on same scale as the Japanese market.

"I think we are positioned really well to take advantage of that opportunity in the US as it presents itself," said Steve. "I think the challenge right now within the US is mobile distribution. Outside the carrier decks mobile distribution is still new. You are starting to see some interesting things begin to occur in that market place but mobile distribution hasn't developed to the extent you see in Japan. LinkShare has the technology in place and our experience in Japan gives us a strategic insight into what is possible in the US."

In 2008 LinkShare will continue to expand its distribution by taking advantage of new technology like Flex Links and mobile. They will focus on improving the ease with which publishers interact with the LinkShare interface, LinkShare support, as well as their ability to access data within Merchandiser. Finally, LinkShare will continue its global expansion.

"This year we will continue down the road with our geographic expansion," said Steve. "As you know we opened LinkShare UK. It has been wonderful for us over there so we will continue to expand our business on a worldwide basis."

I want to thank Steve Denton for taking time out during this busy holiday season to take part in our 2008 Affiliate Network Preview Series. Stay tuned for the next installment.