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  1. #1
    Affiliate Marketing Consultant Andy Rodriguez's Avatar
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    Interesting article this morning on ClickZ Today - Friday, April 19, 2002

    eBay's Temporary Insanity at Affiliates' Expense


    Bad affiliate programs shouldn't be bad economics for those not responsible for them. But eBay is making others pay for its mistakes.

    eBay's affiliate program was launched with good intentions. It would pay affiliates that referred visitors who registered and/or bid on eBay.

    The program could have worked if eBay had hand-picked affiliate commerce sites with good customers. Instead, the online auction site made the fatal mistake of opening the program to every affiliate everywhere.

    No Way It Could Have Worked

    Countless affiliate programs are fully capable of trafficking millions of people to anyone's site, given the right (read: wrong) reason: the incentivized per-click game. It's a recipe for failure for all but a few savvy marketers (who all work in porn, anyway).

    eBay recently pulled the plug on reward-based affiliates, whose referrals were generating tens of thousands of dollars in bids per month. This because visitors some sent over were low-balling bids on eBay to earn incentive points for each bid. They had no intention of purchasing anything.

    Affiliates, of course, knew this would happen. Offer something for nothing, and there are always takers. For a short while, visitors sent from these affiliates' sites turned parts of eBay into a free-for-all. They bid with no intention of paying. They raced in and out of auctions, looked at everything, and placed even more bids.

    More bids, more points. That's what happens. Ask any affiliate consultant about CPC programs, and you'll hear laughter. This is no place for rookies or a naive belief in hard-working affiliates diligently qualifying customers. It's the real world. Incentivized affiliates did what they do. They sent tons of users who take tons of actions for tons of points. Period.

    When eBay figured out what was going on, the company notified some reward-based affiliates they wouldn't be paid commissions for their traffic.

    If programs make their affiliates pay for their own bad decisions, what's the value of Something does now, and eBay is trying to enforce the clause retroactively.

    Learn From the Past

    eBay didn't understand the most fundamental premise of affiliate marketing: You get the traffic you pay for. In performance marketing, it's your job to build performance into your affiliate program.

    Many of eBay's incentivized visitors weren't customers. They were folks rewarded for registering and bidding. The reward (incentive) was points for a CPC and cost-per-action (CPA) program. Anyone who has ever done any research on affiliate programs (or made a few phone calls to ask around) could tell you eBay's program would fail. It's not rocket science, just common sense.

    Mix CPC and CPA into an incentivized blend, and you have a recipe for disaster. Should affiliates pay for a program's ignorance? Nope. A company of eBay's stature has little excuse for ignorance.

    Extraordinary Delusions and the Mob Mentality

    The continuing naiveté of Internet marketers, especially in the affiliate/CPA space, is amazing. Doesn't anyone else remember the MyPoints deluge of unresponsive Internet traffic back in 1999, when dot-com craziness was at its peak? Who could forget the totally insane CPA affiliate programs in 2000, when companies would spend two dollars and more for a name and more-likely-than-not fraudulent address?

    It was the game of leads, and it burnt out quickly. CPC is a landmine. So is CPA, if not treated like a true reseller channel.

    Sift among the masses for qualified customers. That's your job as the affiliate program owner. The affiliate's job is to get people to take action, hopefully in a way that works for both of you. Often, it doesn't because your interests and their interests differ. You each have different definitions of success.

    Reward a user for taking action with no economic value (e.g., registering or bidding for points), and you get nothing in return. They're loyal to the reward.

    eBay should pay its incentivized affiliates what it owes. Next program, it should do its due diligence and not open the program to problems easily avoided.

    The fault lies not in its affiliates, but in itself. Paying for your own mistakes pays in the long run.

  2. #2
    Affiliate Marketing Consultant Andy Rodriguez's Avatar
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    Folks,

    This is why Tiger will not play the CPC game, we won't pay anyone "a per click".

    We are about deals and steals....write some pre-sell pages, feature our top deals and go to the bank...

  3. #3
    2005 Linkshare Golden Link Award Winner  ecomcity's Avatar
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    Ah! But will the tricks for clicks crowd listen to this sound advice. The general surfing public has no sense to realize that in 2002 they can't get something of VALUE for nothing. Amazing that those who should be in the know at eBay just got blindsided by their ignorance of quality traffic. They just looked at the sales pitch from the networks lauding the FREE branding and TRAFFIC ploys that so many of their merchants enjoy. Sure would be great to get the sale pitch phone guide at these networks underlining the diversion benefits and deferred payment rewards for joining up. Love their slips about it takes 9-10 months before the merchant actually has to payout more in coommissions than the basic network fee. In CJ's case many only have to worry about the 250.00 monhtly fee.

  4. #4
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    Andy's right up to a point.

    Rewards for taking actions like signing up for something or bidding for something are total waste of money for the merchants who allow these activities.

    On the otherhand paying CPC to get people to visit your site is another matter altogether.

    For example: Suppose someone pays 5 cents per click to people who visit your site thru a listing on PPC.

    Is that 5 cents advertising? Or is it an incentive to have the PPC search engine aggregate traffic thru paying a percentage of that 5 cents to affiliates, advertising their PPC searchengines etc.

    Someone has to aggregate traffic (eyeballs) so it can make the choice to go to one site or another.

    Now suppose someone 'incentivizes' the 5 cents and pays someone 3 cents to go to visit your site directly and keeps the 2 cents. How is this any different from the PPC deal?

    Answer PPC makes the money not the individual. The individual's only incentive is their personal desire to go there for whatever reason. But isn't the incentivized individual doing the same thing.

    The question is WHY should anyone visit any site? The answer is because he perceives the visit to have potential value.

    If the trip dosen't have perceived potential value, why click.

    CPA is the joke of the century on affiliates.
    For one reason - free traffic to merchants.

    We affiliates go ga-ga if we can make 5 cents per clickthru from CPA. Nowhere on the planet can you get people to come into a brick and mortar store for just 5 cents per person. Whys should it be different online?

    Andy has a 1 million person opt-in list thaqt he has assembled from customers who bought Tiger stuff, viewed the site and signed up direct from Tiger's advertising and from traffic sent there by affiliates.

    What do affiliates get for the traffic they send that signs up for Andy's newsletter?
    Answer ZIP.

    Yet Andy can spam the list at will for stuff and pocket all the sales because it's opt-in.

    If I want to spam Andy's list, I have to pay him some absurd per email fee and I then I get keep whatever I make.

    Isn't this fee Andy's incentive to sell the list? And what's the rate of sales per 100 from the list versus website traffic?

    The question isn't about incentivized anything, The question is about WHO gets the incentive.

    The reason B&M stores pay for advertising the way they do is that they have already worked out the 'what's fair' and what works problems long ago.

    Online marketers simply keep trying to plug square pegs into round holes.

    If as CJ says affiliates are PUBLISHERS then
    why shouldn't they be paid like publishers.

    Try to place an ad in the Wall Street Journal. One, they could care less if you sell anything from the ad you place. Two, they want the money up front or as close to an ironclad guarantee they will get it as possible. Three, they are not in the risk taking business.

    So why do all these merchants think we are in the risk taking business?

  5. #5
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    Hey Andy,

    What's your conversion rate in sales per total website traffic from all sources?

    Interested parties want to know.

  6. #6
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    That article makes eBay look like a bunch of crooks. Serves em right if they got taken by the incentive sites.

  7. #7
    Resident Genius and Staunch Capitalist Leader's Avatar
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    "We affiliates go ga-ga if we can make 5 cents per clickthru from CPA~Fred"

    There MUST be a typo in there.

    It should be, "We affiliates go Ha-Ha at 5c/clickthrough!!!"

    Come on, that's only a $5.00 EPC... on the low end of what's acceptable, and it's only acceptable for products in high enough demand that it's easy to make it up in volume. If it happens otherwise, it's a thorn in the side until the CR for the page is improved or the merchant is dumped.

    And Paid SE traffic is NOT incentivized, because the actual person coming is not paid to click!!!

    When the person is paid directly, they have accomplished their objective (which is to get the click fee) the second that click registers. But when people use a search engine that does *not* pay them, they have a different objective--to find the ITEM they are looking for!

    So when people use an SE, the site at the end of the last click is providing what the searcher is after. With incentivized traffic, the PAYER is the one actually providing what the clicker is after--and the site at the end is irrelevant!

  8. #8
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    Basically leader has sadi it all...merchant sites are irrelevant for the most part.

    If people were actually making $5 per click from a merchant, that would be most awesome.

    As for the 5 cents...that seems to be the dividing line on CJ as to who gets traffic and who dosen't.

    Actually, there are a couple of programs on CJ that approach $20 per click if you use offline traffic.

    And no I am not telling which ones.

  9. #9
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    I don't do any of this affiliate stuff so color me stupid if you want, but Ebay is giving out scratch cards for bids - make a bid, win a prize (maybe).

    Doesn't the end result there amount to the same? People bidding with no interest in purchasing?

    Looks to me like Ebay didn't learn anything from their rewards programs episode.

  10. #10
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    <BLOCKQUOTE class="ip-ubbcode-quote"><font size="-1">quote:</font><HR>Doesn't the end result there amount to the same? People bidding with no interest in purchasing?
    <HR></BLOCKQUOTE>

    It is very similar.

    In my opinion though, that is not necessarily a bad thing. As long as they are not the winning bidder nobody gets hurt, and eBay is able to introduce new people to its service.

    But with the affiliate deal, eBay pays $5 per new bidder, which s a waste of money in cases where the affiliate is sending incentivized traffic (eBay could do it a lot cheaper thru its own scratch card promo.

  11. #11
    Resident Genius and Staunch Capitalist Leader's Avatar
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    Hm, what I said came OUT straight, but someone has turned it into a pretzel [img]/infopop/emoticons/icon_wink.gif[/img]

    I SAID:

    <BLOCKQUOTE class="ip-ubbcode-quote"><font size="-1">quote:</font><HR>So when people use an SE, the site at the end of the last click is providing what the searcher is after. With incentivized traffic, the PAYER is the one actually providing what the clicker is after--and the site at the end is irrelevant!<HR></BLOCKQUOTE>

    But with NON-incentived traffic, the merchant site IS relevant, because they are the one providing the item which AFFILIATES have convinced them they want!

    Incentivized traffic:
    Searcher--->Email [Click this and get paid]--->Click [account credited]--->Close Browser Window

    NON INCENTIVEZED TRAFFIC:
    Searcher--->Paid SE [shows listings of sites]--->Affiliate Site [gives pitch which makes the person SURE he/she wants the item]--->Click Tracking Link--->Merchant site [buys item]

    Quite a difference! In the NON-incentivized scenario, the merchant site is NOT irrelevant!

  12. #12
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    Leader dahlink,

    If the merchant sites were really relevant they would all be making money hand over fist and need 100+ car freight trains to take the money to the bank. And us affiliate types would all be on easy street.

    When you add up all the costs, 95% of all merchant sites are losing money at the speed of stupid.

    But you are absolutely right that the real secret is to find that 5% that can actually convert eyeballs to sales in the haystack of total morons.

    The guys that are profitable are for the most part simply copying direct mail methods that are proven profitable.

    For example, if you can get 100 people per day to view some of the stuff offered on Roibot and Clickbank, you can make $5, $10 and $20 and more each day like clockwork everyday.

    If you apply the Claude Hopkins methods, which Don LaPre has parlayed into big bucks, you can make money.

    Test this and see if it works - run a classified ad for Mathew Lesko's Money For Online Entrepreneurs (Roibot) or the Ebay Secrets (Clickbank) in a local Pennysave type paper or the Nifty Nickel type deal.

    Two line classifed with the URL - and see what happens. 1 sale covers the ad cost in most of this type of publication.

    The only relevant merchant sites are the ones that actually sell their products.

    The question is 'relevant' for WHOM. If it's not relevant for the guy aggregating eyeballs and sending the traffic (i.e. puts money in his pocket) it's not relevant for consumers or merchants.

    Let the consumers find their own deals. Let the merchants get their own traffic.

    CPA is simply a way for merchats to get a type of FREE LUNCH. It might work for awhile but we are seeing the death of it as the formerly free eyeball aggregators start charging money to access their eyeballs.

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