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Mahalo’s Missing DNA back at you Jason Calacanis
Affiliate Marketing Needs to Grow Up
Yes- true shock and awe over the number of attendees. I go on record that I am not an affiliate. Merchants are my affiliates. I am into experimental media. Often performance relationships are the best I can get because this industry does NOT reward niche, long tail economics and certainly not new ideas. You are rewarded for mass. Only have 500 users and can generate a handful of transactions a month? You are at the bottom of the food chain.
There is only one potential cure for the system gaming which pollutes the Net- and some gaming is good- it forces innovation. The real cure is to remove the incentive from the system. Ponder that…if so there will be collateral damage. There are many good publishers, analytics people (who can do PPCSE via arbitrage much better than merchants) and community builders. Please-all of you- stop thinking of yourselves as “affiliates”.
You are not the bottom of the food chain- you are part of an ecosystem.
The Problems
Attitudes: Most don’t understand it, the successes stay hidden out of fear, and everybody loves the failures. Watch the news…In general, because of the deal structure you take, meaning all of the risk, you are devalued. “bottom of the food chain”.
Merchants promised ROI: They like to pay as little as possible and move on. You are expendable, primarily because merchants don’t get the change that is going on. It is a radical one. Search will decline as social web takes over. I don’t need to search…but ask my trusted network.
Penalized for Due Diligence: This has improved but Program Managers are held to hard numbers, and they are penalized if they don’t look the other way. Yes I know- find another job and most try. Their kids come first.
Disconnect with Executives: Who knows more about the Web than those who work with it hands on? Expectations are out of alignment. Competition leads to some, not all, making claims that are not achievable. The higher up you go, the less tactical people tend to be. They think strategic. If they get false information or rely on faulty metrics or fail to calibrate for them, strategy will be off.
Penalized for Innovating: Remember paid search? Overture? “Affiliates” were out trying it first when large brands considered it slum advertising. They are always first- they have to be. Then merchants are trained, they gain knowledge. They realize that coupons are changing behavior, so they take them away and then we see some who just take any coupon to gamethe system. They realize incentive sites transfer brand equity and alter behavior. The users are growing wise.
No Support for Innovation: I have been working on a theory for quite some time. A proof to scale dense, high immersion content. A famous scientist I knew quite well gave me the story, the real story of his success one evening. To boil it down he told me to challenge everything- especially the status quo or norm. Expect people to scoff and not to “get it”. Expect them to resist new ideas or spending time trying out “new things” with no expectations beyond having determined it was or was not possible. Lucky for us he did- without that automated blood analysis, the artificial kidney, angio-tenson renin cycle and thus ACE inhibitors would not have been ushered into the world. What he did was kind of simple, it was breaking out of the accepted school of thought and do it that was important and hard.
I might be able to really push and get a little special treatment, but this “legend” is starting on something new and in context- pretty laughable at times- I don’t count on it. I presented this concept, which I further finalized talking with Lisa Riolo, a good sounding board as well as two merchants who got it right off. She understood me so I know it has clarity. I need merchants with API’s or Web Services, I need a larger commission and a special offer. Why? I am innovating, doing something really difficult, but if I succeed it should generate more press for doing it. It would be prototypical. R&D is where breakthroughs occur. Sometimes you miss, but fail to try and you will get no further than incremental product improvements. Networks and Merchants where are you incubation programs for Innovation? Where have you innovated? What risks are you taking? “Affiliates” take them everyday- so much risk- they start to hedge against it in a manner that is unhealthy.
On Jason Calacanis
I did not attend the session, but the summaries I received are good. Affiliate marketing is bullshit was the phrase of contention…does that invalidate all the CPS or CPA structured deals that major portals and some very large sites do Jason? It is performance so it is the same deal structure- affiliate. Sites that are much larger and older than your latest attempt to compensate for “affiliate pollution”- which is fine- it passed my malware test. However, that IS affiliate marketing and CPS plus perhaps a slotting fee is a standard hybrid. The difference is size and thus respect. In reality it is lack of foresight. Lack of understanding the shifts that are coming. Where “quality” is relative and smaller means engagement. People ignore advertising, but they enjoy a conversation or being engaged and entertained. Need an example? Try studying this project of cross media engagement- a security company could engage people on a whole new level here and it travels naturally. ROI is hard to measure, but when the economy is bad, that is where the importance of brand equity is understood.
Measuring Success
As I said yesterday, business success does not have to be all about “money”. That is one of the problems with many VC backed and especially publicly traded firms. Some of Silicon Valley, to me, is like swimming in a pool of meth addicted barracudas with whacked out piranhas on crack. Unhealthy silos, cultures with, I think, skewed values, and work cycles that detract from the overall well being of people. Think bigger? I always have, I was hatched in an industry that knows how to make do with little and some often do massive things. I will qualify that by saying that I prefer to think- prototypically.
In some cultures, like my home- rural “Silicon Hillbilly” culture of West Virginia, money is 4th or 5th on the totem pole of importance…Community is number one and that is easy, because it is homogeneous and that holds it back in some ways. West Virginians have to get past the silly stereotypes of Silicon Valley types, but hey- let’s not forget Cisco System’s CEO, Mr. Chambers, was from Charleston. Hillbillies, by nature, are hard workers, extremely creative, rich in story telling tradition and learned to do a lot with little. Why? Primarily because Appalachians were immigrants and the exploitive money machines (coal companies) provided all- housing, food, company store complete with scrip. As a culture cut off by terrain Appalachians never really developed infrastructure or the DNA for entrepreneurship not to mention our quaint dialect. Which is actually more rich in metaphor and simile.
Where is the Mahalo Community?
While I am on community let me comment I think Mahalo is nice concept and all, reminds me of the The Mining Company, except I think you pay up front, but where is the community? Community is important, community means scale, and new ideas if you can get past the limitations of the human neocortex and form massive ones- Tim Storm- a Legend no less- has a huge and loyal community- one of those “affiliates” though. Community makes one resistant to environmental change and fans are really evangelists. I hate the world consumer. They are people, not locusts. Building a community is very hard work and takes special skills.
Social Media, a misnomer as people are social and media is just media, has caught the eyes of executives at major companies. Once it was fear of cross scripting attacks of MySql injections (still a problem) now it is all about “information leakage”. Read the privacy policies, realize that two disparate data sets without PII information can be combined and tuned to a degree of accuracy and you can be pinpointed and identified- all through complex algorithms. How to monetize everyone asks? Frankly, the logical and most efficacious path would be to sell data. Sell footprints.
Then again worry about a business model later right Jason?
There are trade offs when you get that funding and I feel the pain of self-funding my own R&D…as for Twitter, and you can ask Ev as he might remember that I was injecting Unicode into the stream and this got his “attention”. I think attention is really what it is all about, that is why “advertising” sucks. We have settled for beating people over the head, instead of engaging them, this is because of how we measure things.
Jason cited ads in feeds, ads in SMS, and a paid service. I would pay in a heartbeat- no ads and no tracking or data mining. Maybe even a compressed, cuneiform like script that uses symbols to compress expression. I have asked for a middle finger one because I can’t find one in Uni-code and it would save me so much time…
Let’s try some other models…
a) Enterprise version, sans data leakage, to break down silos and create social social propitiation in distributed hi-tech or creative companies. Any company for that matter. All kinds of ways to play with this. Some are using the push of SOX and e-discovery regulations to mine data and conversations for knowledge lost. However, micro-chunked info that you have to think about before typing. Changes signal.
b) Twitter Sphere- Here you arrange your network by trust. Not everyone is a “friend”- love how that word has morphed. Seamonkeys - friends- just add water. We can’t invest the social grooming time- Dunbar…
c) I still like games, and we are working with TwackJack in our spare time. Nothing like taking a completely viable communication channel and creatively subverting it.
I can go and on. Twitter is obvious. It is mastication of information into sizes that are manageable and crosses terrain and mixes around via APIs.
Of course this is all predicated on mass. The social web is predicated on scaling to serve that mass. What about quality?
I shall answer a few of Jason’s quips, provided by Sam Harrelson.
10:08am “We’re polluting the pond. Are we going to pollute it so bad that we destroy it, like Usenet?”
I have been saying something like “don’t blame when you come down with a disease later for several years” just read the archives of years ago…The net was designed as a system of trust. Mathematically, once you get enough mass, you are going to get enough jerks to abuse the system. What qualifies as pollution varies. Some people feel 1×1 tracking beacon is pollution. Where do you draw the line?
10:10am “Why does Squidoo even exists? It exists to pollute the internet. There is nothing of value there.”
Probably because their is no sense of ownership? People are there so there is something of value, it is the deal structure. You do all the work and maybe you will get paid. There are a lot of poor people out there. Damn the Internet, their life sucks. It exists as better than doing nothing.
10:13am “Anyone here from PayPerPost? You need to kill yourself. I’m kidding. Well, I wouldn’t mind it if you did.”
No comment.
10:15am “Affiliate people doing spam can abuse these systems only so much before they collapse.”
No- SPAMMERS are abusing the system. The deal structure is immaterial. Often these “affiliate people” are micro-sized merchants, or criminal organizations playing the affiliate mule game. The patsy. Blame the affiliate, because they have lost respect.
10:15am “We’re tolerant of these people polluting the web. Affiliate companies are enabling the polluters of the well and turning a blind eye.”
I am not tolerant of any of it. Actually I took an active stance on it a few years ago- where were you when the Department of Dark Arts was making it rough on advocates? Let us not forget search engines as Pay Per Click abuse, the easiest to game, because it is rampant. Affiliate companies took a stance against that circa 2000. Why? They could NOT control it and they knew it. Just like rogue agents and web crawlers (has been studying them for awhile) are all over. Even the so called good guys, brand reputation management spiders, are spoofing their user agent to invade and evade. What is the line?
10:25am Sam Writes: Calacanis explaining how Engadget’s hard work and content cultivation led to their success instead of trying to game the system or use SEO. Gives example of how they ranked higher than companies they were reporting on.
Forget SEO. Architect good sites, focus on fans and community and you have a new discipline and new thought- CSO - Community Search Optimization.
10:27am “The semantic web is a way to confuse people by making them feel as if they are too stupid to build good sites.”
Sites? You mean websites? When I do my analysis I see all kinds of chunks of heterogeneous media in the SERPS which seems to be your preoccupation. Some of it so new (digital worlds) that many don’t know what to do with it. People can laugh at Second Life, but look across the border and you see the shift coming. It is a big one and it is coming fast.
10:28am “Gamers are getting smarter and smarter.”
I agree, the last case (Posted here at Revenews- winfixer), a triple obfuscated ActionScript, that was using geo targeting to evade detection, injected into big brand name banners to look legitimate got into the system and bit Microsoft. They are actually pretty good about stewardship yet got nailed twice. It was cheap ROS inventory- worthless almost, and that means sprawl. Sprawl means increased risk. They are getting smarter. I know. The question is who are “they”? Why has this persisted for so long?
10:28am “You guys think small. Holding up a 6 figure check is just pathetic. That’s your industry’s biggest success? Really?“
No. It isn’t. But when you pop up as a success- the very enablers of the relationship replicate and eradicate. It is called “Search Services” and affiliate is now- search by proxy and redundant. There are bad examples, there are in EVERY system, and that is what you hear about. I don’t believe in building a business on an algorithm you cannot control. I see how vast Google is and how they have multiple indexes and where it is going. They are getting saturated by certain limits- and they will take action because brand equity has carried them through trials that would have smashed other companies.
Notes: Try analyzing your metrics by “network class” coupled with keyword to get a feel for influence…or does quality count?
10:29am “SEO’s and affiliate gamers are some of the smartest, most resourceful people on the web.”
Yes. They have to be. The system has been constructed to reward gaming and punish stewardship. Changing the system, as I posted on your piece, means we need you- influencer- to realize just how large the system is and work on solutions, not just you- but a collaboration- get involved- don’t lump everyone into a boat because they are “small”. I don’t have your social capital and I am really worn out. So while your building your next empire you might set aside some time to get involved and I ask you to remember diversity is good and it takes all sizes. Yahoo! was once a page of links. Microsoft was once Bill Gates pitching IBM, and Google- two guys working on a problem.
10:31am “What should affiliates do? Stay the course. Keep polluting the web. Increase the complexity of your gaming. Find new ways to covertly advertise. Be more creative in the use of malware and adware.”
What should they do?
Collaborate.
Hit the niches and engage them.
Form direct relationships.
Demand respect.
Make the problems known and get others involved.
Realize the deal structure changes everything because it puts all the risk on the smartest people.
Realize we NEED small companies and niche sites. This is diversity and I value it.
Quality IS relative. Like video. You might find the Bus Uncle meme idiotic and low quality, but Hong Kong didn’t. Your aesthetic is not mine.
Call attention to good examples.
Networks must change how they operate and take a hard look at the pain of change.
Search engines are no different- and being public makes it harder.
This is our world. We share it. This is not Star Trek where I can replicate food.
Google Stock Slumps on CPC News… it is all over the news- I won’t link to it. What does this mean? We know the economy is in the gutter…we know CPC has problems. Monkey off their back.
Microsoft announces new “engagement” metric.
REDMOND, Wash. — Feb. 25, 2008 — Microsoft Corp. today announced Engagement Mapping, a new approach to managing and measuring the effectiveness of online campaigns that goes beyond the current “last ad clicked” standard. For the last decade, virtually all ad campaign reporting methodologies associate sales, leads and Web traffic simply to the last click or ad exposure. Engagement Mapping takes into account for the first time all the various online touchpoints and interactions a consumer experiences before an eventual sale.
“The ‘last ad clicked’ is an outdated and flawed approach because it essentially ignores all prior interactions the consumer has with a marketer’s message,” said Brian McAndrews, senior vice president of the Advertiser & Publisher Solutions (APS) Division at Microsoft. “Our Engagement Mapping approach conveys how each ad exposure — whether display, rich media or search, seen multiple times on multiple sites and across many channels — influenced an eventual purchase. We believe it represents a quantum leap for advertisers and publishers who are seeking to maximize their online spends.”
Announcement of the Engagement ROI beta coincided with a keynote speech, “Advertising Ecosystem 2.0,” by McAndrews at the Interactive Advertising Bureau’s (IAB) Annual Meeting in Phoenix today.
The Engagement ROI is a fully integrated reporting capability within the Atlas Media Console currently available through Microsoft. Value is assigned and measured on a real-time basis and takes into account the impact that recency, frequency, size and ad format (such as rich media and video) have on a consumer’s online path to action. Engagement ROI is designed to allow advertisers and publishers to manage their campaigns with greater insight and control than previously available through third-party ad serving
Recall that clicks aren’t so great… I believe we do need new metrics- Engagement, Tone, Curiosity…and their engagement thinking process IS NOT new. I recall discussing it years ago with a CPA deal structure. We called it an “assist”, because often many properties contribute to the cycle, but the one rewarded is the last. This means innovate. Make better systems and take out some of the risk.
Second Life Insights
O.K. I know people here, or most, really don’t get virtual worlds and most didn’t like Second Life- and while I am on a rant I might as well keep on it. That is OK- SL haters were not indoctrinated because of scale- you might go out and take a look at the amount dollars flowing into these environments…as well as VC. It is global and it will create a schism as immersion is now natural for a young generation. Here is what I have been doing aside from looking at security aspects:
- Studying behavior in “high immersion” environments. e.g. engagement and formation of social networks. (In Second Life “Friend” means just that- not just someone you click and insta-pal.)
- Wanted to see if the renegotiation of social networks was similar to Facebook that targeted college kids during that period.
- Studying Micro Transactions. Built a proprietary virtual merchant-partner system to vend and develop new metrics. (In progress)
- Using the terrain for rapid prototyping. Basically Research and Development. Many companies do not put enough time into R&D and that is a shame. If you do not then you are condemned to making incremental product improvements and not innovating.
Summary and Patterns
The interesting point for Revenews readers- Second Life merchants, for the most part, do not have any of the skill sets of an advanced marketer. There is a pattern here. Their world looks much like the world of performance marketing circa 1998. Wild west, no standards and most are amateurs who had a passion and revenue grew around them. One big takeaway there is the most sustainable builds are communities with history…yet even they are in danger for many reasons…but they are ready to eject and replant. After months of experiments, I finally have a prototype for a solution- I have no idea if it will work, but it makes sense. I will see if it works, I hope I can get incubation support.
Sadly, I know there are few if any from the community here at large. Second Life’s failure has been the inability (and a complex GUI, physics engine, etc) to scale against the tremendous tide of new residents. Most don’t stay- those that do put up with growing pains severe. It is a process of indoctrination and acclimation. If you go into a new world alone, with different rules and languages, you will be bored and probably lonely. Understand this and you understand the difference in traveling from low immersion to high immersion environments is important. Websites are just a piece of terrain.
Is there money there? Yes-of course. Money is one way to measure interest. I find great interest in people exchanging money to adorn their “digital lives”. What does this mean? There are books I pointed too long ago that will tell you exactly what it means. I leave you Jason, with no ill will at all, but I don’t need a sermon. I believe, by virtue of experience, I may know the state of things better than you do- I don’t know as we have not exchanged even the lowest form of social grooming (speech) but the dialog has started. Thanks for coming- what does a thought shaper do now? Tell small, diverse and creative companies to commit suicide or offer up some solutions that are sustainable? Because it is your problem- we share this world.
Value of Community
- Fans lead to Community
- Community Develops an Identity
- Sharing of experiences creates a History
- Sustainability is the outcome…
ADDENDUM: Jason, you say you are the bad guy. Sorry- I am- if you need more links- no problem. I want to see the system change- I don’t even like the word “affiliate”. If it has to die- fine. However, you can set example by action, you wield that authority. You don’t have too and why should you care? Because if you are really a change agent, and willing to wear the mantle of leadership you know talk is talk- your actions will set a positive example and define you. Don’t let it stop with one conversation. That would be a sermon- and I have done that for years. It does not work. Don’t paint me with a broad brush or others and you realize how big the problem is- so define yourself for me. Make me an evangelist.
I think Wayne is spot on.
Jason preaches WEB 2.0, but Mahalo argues that some of the Web 1.0 elements were too early (mining co).
I think that curation is HALF the equation. It’s community curation that wins.
And Jason hasn’t been a community builder.
I’d be interested in his take on this - can Mahalo succeed if the only ‘filter’ is paid staff?
Well So happens my experiment is focused on a group of “curators”. Niche. Steampunk…I think I could charge Jason for what I have learned about fan curation…yes Steve- Jason has half the equasion…defend through content quality. But tomorrow they expect engagement.
[…] makers. Sam Harrelson notes the challenges and I simply say Jason- don’t forget community. Community is content. It might be hard to grok, but you have my digits now- happy to explain what I discovered. I […]
[…] Mahalo’s Missing DNA back at you Jason Calcanis […]
[…] Wayne porter on affiliate marketing - Mahalo’s Missing DNA back at you Jason Calacanis […]
Wayne,
As usual this looks very cool. I get a sense, from reading post at your personal site and the other posts, that you either feel no need to thank Jason for pointing out the obvious or probably blame yourself for not going to influencers to help with the problem. Don’t blame yourself. I know what you did and accomplished and if I never said thanks I am now. Thanks for pushing the boundaries, thinking ahead and hitting the bad guys head on. What Jason does is up to him. You are saying this “Caledon” is a prototype for curation and community. Jason should heed your advice. It is easy to look back through Revenews and find you dead on. As usual, way ahead of the game. Is that your pattern recognition?
David
[…] Mahalo’s Missing DNA back at you Jason Calacanis Wayne @ Revenews […]
“Search will decline as social web takes over. I don’t need to search…but ask my trusted network.”
Two thoughts for you here…
I’ve heard that phrase “trusted network” before. I see tools where your friends will be compensated in some ways to refer you to stuff. The same factors apply to that behavior as it did to the earlier folks I was supposed to trust. Largely, they became untrustworthy. The term friends may hold a future linked to trackless communications, which in itself, would have an impact on social web’s viability, at least regarding it’s investors and remoras.
And really, your friends influence all you buy or most of it or even a big chunk of it, even absent rewards? No way, you’re a thinking man who likes to discover at least some things on your own - or those in your social network surely do - social web limits extend nearer than search’s limits. To decline, I assert it must be less active than it is today - perhaps you’d turn to people more often through the convenience of your social webs, but that assumes the decline in per capita use can’t be overcome by ever growing capita. I guess that’s a relative decline in any case, so I won’t argue with you much here.
We might discuss how search will indeed crawl over the borders and integrate with the social pieces, monetizing the social web is all about search related functions and as such, is even still experimental. People won’t stop looking for new things and more information bits (which are new things themselves) about those things that interest them. So before we drive a nail into search, we might ask if the social web is financially feasible if search, as an activity, actually did decline overall… or of we consider search and social to be different worlds.
On a side note, proud to be an affiliate and to call myself one, but it’s been a long, long time since I remotely considered myself anywhere near the bottom of the food chain. I’ve never considered affiliate to adequately describe myself or my peers who use it themselves… in nature, both real and virtual, when someone says “I’m an affiliate”, the usual thought/reply is “what kind?”… affiliate is more a synonym for “i don’t own a store/cart, but i sell things online for money”, beyond that, it’s a poor descriptor and everyone already knows that.
The folks I consider at the bottom of the food chain are those who don’t produce things in the environment - things can be tangible (like products) or actions (like sales). Those who watch and talk about it aren’t inputters, they’re commentators. That phrase “those who can’t, teach” comes to mind - everyone knows that statement’s absurb, but switch it to “those who can’t, observe” and you’ve got a winner. And I’d say that it’d be even more obviously intuitive if it were “those who can’t, object”. Mahalo’s will come and go, so will affiliates (including me eventually), but the blow hard observers along the way aren’t the judges of what’s happening, they are the wind chimes of affiliate marketing… and when the activity on the field is furious, along the sidelines, the dangling clatterers are cacophonous.
David- thank you. Yes part of it is that Jason went and said the same message I have been blaring for a long time. However, perhaps that was why it was praised. AM is a homogeneous community, and very resistant to change, even though they are very exploration oriented.
Pat: As usual many great thoughts, and perhaps I should have said search will not decline- it will change radically.
This leads me to a new thought…I may try.
Thank you both.
[…] In this one, Wayne begs us to stop referring to ourselves as “affiliates”. I’ve been in this space for a long time, and that term is burned in my brain as much as my own name. It’s hard to drop it. I even refused the change over to “publisher” when my employment changed over to Commission Junction (who uses the term publisher instead of affiliate) for a short time due to an acquisition. Not all affiliates are publishers. […]
[…] Coverage: Live Blogging the Jason Calacanis Keynote at Affiliate Summit | Mahalo’s Missing DNA Back at You Jason Calacanis | Calacanis and the Real Hurdles of Affiliate Marketing | Four Thoughts from Affiliate Summit […]
[…] the world fell into a few camps. The “offended” ones; the defiant ones; and the grateful ones. I’ll save my feedback for them for their blog comments (everyone […]
[…] Coverage: Live Blogging the Jason Calacanis Keynote at Affiliate Summit | Mahalo’s Missing DNA Back at You Jason Calacanis | Calacanis and the Real Hurdles of Affiliate Marketing | Four Thoughts from Affiliate Summit […]