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The Future of Affiliate Marketing is not Written Yet

Dec 21, 2007
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Jeff Molander was writing a post titled “The Ironic Future of Affiliate Marketing: MLM” at his blog about how Mike Moran, an IBM Product Manager and author of the book “Do It Wrong Quickly: How the Web Changes the Old Marketing Rules”, Scott Karp of Publishing 2.0. and him see where the developments in social media, internet and affiliate marketing are maybe leading to.

Mike Moran said

“We’re all direct marketers now. The Web is one big direct marketing machine and everyone is invited to the party.”

Direct marketing is the correct word for the type of marketing that is growing and developing out of the social media stuff. What we see today is a baby that is crawling and trying to stand on its own feed, just to fall down again and again.

The Future
Nobody knows where the social media will lead the Internet too, but most are convinced that it is towards a better Internet, which will even go beyond the virtual realm and impact the physical world as well. People connect with others more than they ever did, not only locally, but globally. How far people open themselves or how much they follow the personal details of somebody else, is up to everybody himself.

Scott Karp said

“The game is now to manipulate consumers not only to click, but to take some further action. And I don’t use the word ‘manipulate’ arbitrarily.

This is about turning the web into one big pile of junk mail, aimed at getting you to sign up, buy, or commit to something that you hadn’t necessarily wanted.”

People did always let themselves manipulate, there is nothing new here. They will continue to have the choice (or not) to be manipulated to the extend they allow to happen.

The Definition of “Friend”
The social web has impact on people who are deeply involved in it already. Those are the minority at the moment, but all change starts with minorities. Discussions are happening already that talk about the meaning of “friend” in a virtual world that extends to the physical one. What we see evolving is a multi-layered structure for what we used to describe with a single word, “friendship”. The lower layers start with “very casual friends” and are topped by the layers of “deep personal friendship” with layers for everything else in between.

The German language already had two different words for those two different top and bottom layers; “Kumpel” to indicate that somebody is only a casual friend and “Friend” for a personal friend.

Jeff Molander said

“At what point does a “social networker” want to cross the line into “social marketer” and how — exactly — does trust (motivation behind recommendations) factor in when financial compensation is involved? Hmm… this makes me wonder does compensation need be cash-based?”

Layers of Trust
Each layer comes with its own amount of “trust” with the top layer having the most trust of all. This amount of trust has direct impact on possible direct influence in personal and professional decision making when it comes to sharing information and making recommendations. The higher the trust, the more weight a recommendation has.

Social marketers can only operate within the bottom layers of friendship and trust with a larger number of people, but that is already enough and infinite times more than a marketer has who does not engage into social marketing at all and continues to live in his own bubble. A very successful marketer is able to engage people in within the lower trust layer and convince them to an extent that they will become the messenger for the marketer to talk to the people that have higher trust in that person and people who the marketer could not reach yet, because he did not even gained the first level of trust with them yet (and in some cases will never gain).

Skewing the System
If this system will allow ruthless marketers to make false promises and lies heard and believed remains to be seen. Social media has a few safeguards to protect people better than before from false hopes and unrealistic and sometimes completely false advertisement that sells fake and fiction, a dream if you will, rather than correct, verified and highly targeted advertising that passed to a number of trusted filters for the majority of people.

Nobody can Predict the Future
It remains to be seen if this system is safe from severe manipulation or not. Only time will provide an answer to that question. If affiliate marketing will play a role between those recommendations, especially within the inner trust layers of a social networking community is also not sure yet, but if it does, then there is a vulnerability to the whole system, in cases where multi-tier referrals go hand in hand with multi-tier rewards and commissions. If the financial reward is great enough for everybody in the chain of trust to break through each layer and getting to the final consumer; the consumer at the end of the chain will end up doing the wrong decision based on trusted, but commercially motivated recommendations.

MLM the Future of Affiliate Marketing?
I am not that pessimistic though and believe that the chain will break in most cases before it even gets to the consumer at the end. You can have much greater and long term success if you are honest and prove time and again that you deserve the trust that you earned over time. I also do not see more than one or two “affiliate layers” in between to be more realistic. Social media will not make an affiliate marketer out of everybody, which would mean the decay to a MLM schema as Jeff pointed out correctly IMO.

Invitation to Discussion
My guess is as good as everybody else’s, so what is your guess? Feel free to share your thoughts and believes regarding the future development of affiliate marketing and social media in the comment area below.

Cheers!
Carsten Cumbrowski

Filed under: Affiliate Marketing + Internet Strategy + Social Media + Social Networks & Networking
  • http://www.cumbrowski.com/ Carsten Cumbrowski

    My background is not traditional marketing. My methology is to try to get people the best stuff they need when they are open to suggestions and not this over the head pusher marketing. In that case are all parties happy campers at the end and nothing beats a win-win situation, unless you are an egoist who wants everything for himself and leave everybody else back alone with the face in the dirt.

    I would hope that this type of marketing will make up the vast majority within the social web in the future. "Marketers do not have to be liars, unless the product they advertise sucks" (= reason to quit your job and find something else).

  • http://www.affiliate-software-review.com Peter Koning

    Good post Carsten.

    It reminds me of only recently in the life of the internet, when people started freaking out about blog monetization and how it would ruin us all.

    And here we are discussing a similar concern re social networking possibly being used for *gasp* marketing…

    … discussing it on a blog with ads plastered across the top :)

    Cheers,
    Peter

  • http://www.jeffmolander.com Jeff Molander

    Carsten…
    Whoops! You mis-quoted Mike. The 2nd quote is from Scott Karp of Publishing 2.0. I’ll offer more thoughts later but noticed this and wanted to let you know! Thanks for the thoughtful reaction to my thoughts.

  • http://www.affiliate-software-review.com Peter Koning

    I think we’re agreeing. I feel social networking will increase the transparency. Back to the topic – since you mentioned affiliate marketing and mlm we’ll hopefully see more truth in that as well.

    This can only be good for the affiliate marketing industry – as more transparency and truth will increase trust, and that can increase the transactions. Or is that being too philosophical?

  • http://www.cumbrowski.com/ Carsten Cumbrowski

    Thanks Jeff, I corrected the post.

    Okay, now what do you think? :)

  • http://www.jeffmolander.com Jeff Molander

    Great points throughout, Carsten.

    Re: layers of trust and influence… you make excellent points (and yes, it seems that most European languages have multiple words for different layers/levels!). We see safeguards emerging and applications being built to see to it that those safeguards make their way onto the digital Web. As an example, “rating the raters” (something that Amazon seemed to pioneer) is common. “Was this review helpful?” is also being complimented by reviews of COMMENTERS! Wow — now that’s helpful but will people participate? I suggest, yes they will as they’ll be able to “group filter” relevant comments to the top and un-useful and/or overly commercial comments downward. DMNews.com recently implemented a VERY interesting system that I’ve begun to play with here.

    “People did always let themselves manipulate, there is nothing new here. They will continue to have the choice (or not) to be manipulated to the extend they allow to happen.”

    A point worth considering! Direct TV, radio ads and the biggie in my opinion, direct mail… there are a LOT of manipulative marketing ploys out there — many highly effective. The Web is simply new social engineering turf. This, in fact, is the subject of a book I’m working on. I find it fascinating.

  • http://www.cumbrowski.com/ Carsten Cumbrowski

    Jeff said: "Direct TV, radio ads and the biggie in my opinion, direct mail… there are a LOT of manipulative marketing ploys out there — many highly effective."

    Hi Jeff,

    Do you know the 4 part documentary by the BBC called "The Century of the Self"? If not, I suggest to watch it. It's available on Google Video. Just <a href="http://video.google.com/videosearch?q=%22The+Century+of+the+Self%22++%22of+4%22&quot; rel="nofollow">search for it here. It's very interesting and exactly about manipulation in marketing.

    Cheers! and Happy Holidays!

    Carsten

  • http://www.jimlillig.com Jim Lillig

    The future of affiliate/performance marketing is and will be determined by how responsive consumers are to their attempts to "engage" the visitor and how that translates into increased sales.

    The web is only one piece of a well orchestrated marketing plan. Nothing more and nothing less. The fact that it encompasses all forms of media inputs (print, audio, pictures, and video) it allows for a greater explanation (and thus greater engagement we would hope) of the product or service than other stand alone media channels.

    What makes the web the one to watch for gaining share of marketing spend is its inherent interactivity and measurement features. Direct marketers will continue to spend where ROI makes sense. This is the ingredient that will determine what becomes the next phase of this very young art, internet marketing that is.

    Social media will continue to explore all paths that can lead to profits. Those consumers who have and will adopt social media to their daily lifestyle, will, as it was pointed out in Carsten's post, gravitate towards choices that they are able to see agreement from others on (i.e. feel as if they have done their sufficient due diligence to support their buying decision to be a sound and justified action).

    As with eBay and other social selling or recommendation sites, users rely on the candidness of others that have only their experience with a product, service or seller in common. Consumers sharing their thoughts and experiences is the social connection for marketers. How well direct marketers can deliver the goods to the satisfaction of their target audiences as well as manage public opinion will determine the future success of social marketing.

    Overall, it is my opinion that social networking is an environment that can be a platform for sales, but it has to be integrated with the merchants entire business model and not just a passing marketing scheme to be tested and then discarded upon 1 or 2 quarters worth of results. It is my suspicion, having done a little social network marketing to get an idea of the audience, (see <a href="http://www.jimlillig.com” target=”_blank”>www.jimlillig.com for results) that social networking and viral campaigns take time to develop. That long term marketing support needs to have financial and personnel commitments to ensure that campaigns are using feedback loops and transparent measurement to adjust and adapt to the changing landscape. The future should be bright for the near term as the "buzz" in marketing now is focused on making a social network model pay off financially, but once the buzz has died down it will still come down to measurable results and that is something that only the internet, and in particular, affiliate marketing, has the ability to really deliver on.

  • http://www.cumbrowski.com/ Carsten Cumbrowski

    Hi Jim, thanks for your detailed comment (uh, I got competition ;) ).

    I agree with what you are saying and actually believe that this will be something like a homecoming to traditional affiliate marketing how it was intended. Affiliate Networks love the few large affiliates that drive millions in revenue for them every month and consider the small affiliates who are making barely the $25 in minimum commission to get a check like an unwanted, but necessary evil.

    The problem is, that networks were originally created to help merchants with the problem of the consolidation of many small affiliates that generate volume as a whole and not as individual affiliate. Just as display advertising networks do with their Ad inventory that is sold in bulk but actually spread across various publishers.

    Well, affiliate marketing is a different animal and the networks seem to want to forget this from time to time. Networks were supposed to create the technological platform for the distribution and also the general administration (such as payment) of affiliates due to overall volume of merchants and affiliates and the existing cross relationships that emerge from that.

    What they did instead is turn into advertising agencies who spun of into other more lucrative territory, such as paid search and nurturing of incentive and loyalty sites etc.

    The current developments should be a reminder for them what their actual job and purpose was once a long time ago and go back to their own roots to do their job or get replaced by somebody else who will do it for them.