The Power of Aggregation
I found this piece pretty interesting. Affiliate marketing and keyword bidding is a hot topic as of late especially on the issue of trademarks. IR ran a piece that basically said merchants should allow affiliates to bid on trademarks. Of course this came from Linkshare’s CEO who has a vested interest in trademark bidding. Understandably LinkShare has no motivation to make the channel appear smaller. Fear-based network rhetoric aside I found some interesting and tested insights from Peter Figuerdo on the theories behind aggregation.
“Affiliates can do a lot of things that can’t normally be done by merchant,” Figueredo said. “We’ve seen search become really important for our clients. E-mail was a big factor in delivering volume for affiliate programs. Search has taken up where e-mail has left off, and affiliates doing search arbitrage are delivering the volume that e-mail used to deliver.”
Peter F. makes a very valid point. Affiliates CAN do what merchants cannot do with keywords due to the inherit advantages of aggregation. A colleague and I confirmed when talking with gambling site operators a couple of years ago. The term gambling is far to expensive for one lone merchant to bankroll. I didn’t think so at first because I assumed with larger margins any merchant could push around an affiliate’s budget.
Not so. A sharp affiliate can make money in the space because the consumer has some many new, branching choices. All the choices lead to one thing- revenue. This is why shopping aggregators like deal and coupon sites continue to thrive and why affiliate marketing, for the most part, is really a subset of search.
