2 Comments

New Option for Affiliates: Sell Out

Jun 28, 2005
by

If you’ve been in the business long you know that “traditional affiliates” (the small business owners, not major publishers) fall into two flavors – those who can, through some means, produce significant sales/leads/transactions for advertisers and those who cannot or who are in this to generate a few thousand dollars a year to supplement their income. While in London 2 years ago I met a few; here, Stateside, I’ve gotten into similar conversations with affiliates that really know how to ring it up… specifically on the CPA/lead side of the business. After realizing that search engine marketing (paid and “organic”) is the leading tool of choice for these affiliates I asked them, “so why not get on the cluetrain and do this for advertisers as a direct, dedicated contractor or employee?” The answer has always been preceded by laughter. They can make 10 to 20 times the money as an affiliate.

It’s been this way for years and very recently Wayne Porter and I were discussing this phenomenon. Why haven’t advertisers been wise enough to figure out a means to bring all that search talent (so easily identified and accessible) into their realm… for them to leverage exclusively?

The answer, as I see it, is simple. The qualitative aspects of having an internal expertise in search marketing would quantitatively “devastate their affiliate program” (affiliate solution provider-supported silo mentality at its finest). Again, there are lots of barriers to actually pulling it off:


* Affiliates who know better (who enjoy making well into the six figures versus a salaried position with a glass ceiling)

* Affiliate solution providers / networks scare tactics

So what’s left for an affiliate to do? How might an affiliate cash in their chips without losing their entrepreneurial sense of Independence? They might hire someone to put them in touch with ValueClick’s M&A team but this would require things like suits and Powerpoint presentations. For some affiliates this is an option but for most, they’ll pass and opt to sell out via an anonymous eBay listing. If multi-million dollar companies can do it via eBay… well, so can they!

Let’s look at how this affiliate, OnlineCreditCatalog.com, describes his business via an eBay auction. I’m left both shaking and scratching my head. Can you guess which way it’s shaking?

First… some data. This site has a ZERO ranking for Link Popularity. Here’s the skinny on search engine penetration.

Seems odd to me but I’ll let Connie Berg explain if she has the time and interest.

From the affiliate’s/business owner’s eBay listing:


SEARCH ENGINE SUBMITTED!! THIS WEBSITE IS LISTED IN THE TOP 500 SEARCH ENGINES!

Hmmm. So? Heck, I don’t even think there are 500 search engines out there!


Will I need to know any scripting or HTML before I buy this site?

No. THIS SITE COMPLETELY RUNS ITSELF. You just sit back and reap the rewards. The only thing you will be responsible for is promoting the site. We will gladly give tips and suggestions upon purchase of this site.

What about the awesome plot of land in Florida?


Please read my feedback. We do practice good business ethics and we strive for nothing but customer satisfaction. Go ahead, ask the people that have bought from us :-)

I suppose the smiley makes potential bidders forget that they can’t actually do what the affiliate is suggesting?

I’m all ears on this one from the community at large. Thanks in advance.

Filed under: Affiliate Marketing
  • http://advanta.com patrice

    astounding. just…astounding.

  • http://www.travelsites.com brian harniman

    Jeff,

    I'm going off on a tangent that doesn't address your real question above… sorry.

    Folks that run their business like a business should be okay. It's the affiliate that counts up the pennies at the end of each month to determine if they've actually made any money that gives the industry a black eye. After all, it's about profit and not revenue. I can't tell you how many sites continue to throw good money after bad in the engines without any tracking to determine what actually works. If that's the way you're running the shop, you should by all means sell!

    The professionals who test and market well should look to cash out of their assets for 2 to 3 times net income, as the market seems to indicate this is a fair number for publisher services. The tricky aspect is when all the affiliate site has is the ability to be a "frieght-forwarder" that moves paid traffic from the engines to a supplier. In these cases where there is no brand value or differentiated services offered, the affiliate might not be able to sell for fair value, as the independent middle man is the only way they can monetize at their current rate.

    My .02.

    BH