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  1. #1
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    Commission Split Between Channels vs. Last Click Gets The Sale
    "The existing network model of one cookie / last cookie takes all hasn't really worked for years, and many merchants are dumping their affiliate programs because the network software can't reconcile multi-channel / cannibalization issues."

    Which merchants are dumping their affiliate program? Not any more or less than any other year affiliate marketing has been around. Like I messaged Sam about, who was in the podcast, 9 out of the top 10 merchants have affiliate programs**. There are major brands who have had programs for years and more on the way.

    **top right - America's Top Ten Retail Businesses

    http://www.internetretailer.com/top500/list.asp

    9 out of the top 10. 8 of those for many years, Newegg, relatively new.

    And the last cookie gets the sale has worked in general. What I was listening to was discussed before and it won't work. Affiliates won't go for it and any merchant that tried that would lose their affiliate base. I understand what you're trying to do but if that is the direction you're heading, it's going to fail. Jeff, do a poll and ask affiliates if they would go for such a thing. It would be a landslide no.

  2. #2
    ABW Founder Haiko de Poel, Jr.'s Avatar
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    Jeff,

    WB, What do you want your username to be?
    Continued Success,

    Haiko
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  3. #3
    Resident Genius and Staunch Capitalist Leader's Avatar
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    What Trust said.

    In fact, there IS a recent poll to that effect around here somewhere.

    Edit: Here's that thread:

    http://forum.abestweb.com/showthread.php?t=88967

    35-5 in favor of the sale going to the last one in. Another way to put it is, 35-5 in favor of compensating the affiliate who got the former "site viewer" to make the move into the "actual buyer" category.
    There is no knowledge that is not power. ~Hemingway

  4. #4
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    Just to elaborate a little more as to what was being talked about in the podcast.

    An example. A merchant gets a sale, the visitor just came via my affiliate link from my site. They were talking about the other channels that might have helped in the sale or influenced it along the way. And trying to figure out what percentage each channel might have helped and pay accordingly. So not how it works now, last cookie gets the sale and all of it. But split up among all the different "channels".

    I just don't see anyway you can figure out what percentage each channel is responsible for the sale. And affiliates aren't going to trust that type of "trying to figure it out". I'd like to see a set rate and know last click gets the sale.

    Affiliates aren't going to go for it, no merchant in their right mind would go for it.

  5. #5
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    Haiko -- I may as well go with Jeff_Converseon if you can do that, thanks.

    Trust -- I agree with just about everything you're saying. And merchants aren't dumping their affiliate programs in noticeable numbers right now. My premise is that when the affiliate network model was first developed, some basic assumptions were built into it, and one of those was that it would be a fairly rare occurrence that a single customer would be driven to a conversion through more than one source of traffic. A lot of what has ailed aff marketing over the years was a result of this assumption -- cookie stuffing, spyware, loyalty and other types of traffic allowed into the affiliate channel, and more. Though the networks and affiliates have adjusted and/or fought off some of these problems to some degree, they still exist. Now that online marketing has started to really assert itself and marketers are becoming more savvy, they are growing more and more concerned about which channels are giving them good ROI and which might be costing them too much. Though affiliate marketing, if managed correctly, is actually the most cost-effective channel, many merchants are starting to worry that they're paying twice or three times for the same customer, and affiliate marketing -- because it's the most difficult channel to manage, the most expensive when a sale occurs, and has fraud issues that aren't easily blown off as "cost of doing business" (like ppc click fraud seems to be right now), will be the first casualty for any marketer that has to cut something.

    Now I agree that affiliates are not going to be happy with any system that bases commission on some sort of formula that takes into account their position in the final click stream that leads to a conversion. What I'm saying is that they may not have a choice at some point. Marketers are going to want to see this information (did a customer come from a paid click, view a CPM ad, and come through an affiliate). Once they see it, they're going to want to act on it. Because managing affiliates is harder than making a CPM buy or paying for clicks or just about anything else, it's the first place they're going to look to make cuts, especially because the basic premise of affiliate marketing is that an affiliate drove a new converting customer, while all other channels are much more about traffic, so there isn't this disconnect present in other channels.

    So, something needs to give. It will take a while, but I don't see how it can go any other way, especially for big brands. Smaller brands who need traffic will still be a sweet spot for a long time, and I think SAS is in the perfect position to grow based on that, Brian's dedication to a pure affiliate model, and their attention to technology.

  6. #6
    Analytics Dude Kevin's Avatar
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    Jeff:

    CMO's and Marketing Directors used to say (and perhaps still do) that "I know I'm wasting 1/2 of my advertising budget, I just don't know which half".

    There may be an unrealistic expectation on internet technology to make the above statement false. Clicking through a CPM ad is one thing, but viewing it is another.

    Until television commercials and radio spots can overwrite cookies, I don't think it's fair to be divying up commissions with the more passive online advertising channels either.
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  7. #7
    Lite On The Do, Heavy On The Nuts Donuts's Avatar
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    Jeff, beers are on me at Aff Summit, really look forward to seeing you there.

    As for your idea to give credit where it's due - I'm all for it, except for one really HUGE problem - you're expecting me to believe that the people who do the tracking (I mean in general here - merchants, networks, VPs of sales, etc) will figure out an algorithm of sorts, or at least systemic method, for allocating rewards to each respective channel according to their value contribution... if they can't identify that shitware (ebates, zango, clickbooth and more) are f**king them and me right now, why would you expect me to trust these same folks to figure out and implement more complicated channel allocation techniques?

    my point - systems handle volume, not decision making. if you automate something based on bad decisions, you just more efficient at f**king up, you haven't solved anything.

    lastly, just because an affiliate program publishes a fixed, flat rate or reward for affs, doesn't mean it does. custom rates for certain value-add affiliates are common. which brings me back to my point above - my experiences are that everyone considers volume, not value. if it was clear that merchants and networks could even properly observe value, i'd be interested in your systemic approach. but we both know how it really works. are you hoping your systemic idea will raise value awareness? with the current state of affairs, i'd say that's unrealistic optimism.

    so i think i'm saying... respect value, then sure, build systems around it... and you may be saying... let's build a value system to better respect value... we can talk about carts and horses, chicken and the egg, and other such schtuff over beers my friend!

  8. #8
    ShareASale President/CEO and ABW Veteran Brian - ShareASale's Avatar
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    This is actually a great conversation to have because it will have an effect on all of us going forward... I hereby recommend a "split" of this thread so we can all discuss it under a better title.

    Jeff - shoot me an email so I know how to find you.

    Food for thought (kinda along the lines of above) ....

    "When a online retailer receives an order that can't be fulfilled for whatever reason...do they go back across all of their PPC or CPM spends and attempt to reverse charges?"

    -Brian

  9. #9
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    I'm saying, this would be an LMI jr. type situation in that I don't see affiliates working with merchants with this type of system. And we can bump this thread next year, years from now, it'll still be the same system we have now. Last click gets the sale. First how would it work?

    Would you lower commissions up front or

    After a sale occurs, go back and reduce the affiliates commission accounting for other channels that might play a part?

    Both ways you're going to have problems. If a merchant lowers up front, competition will grab all those affiliates. If afterwards, I don't trust a system like that, I don't imagine most would.

    Now in the podcast and even a thread right on this forum from 2003, Jeff M. will cite a few merchants dropping their program and some sort of impending "thing" that's going to happen. Now if you actually look at facts, you'll find that every single month, merchants are dropping programs, merchants are starting them. Look at what I posted above, 9/10 top merchants have affiliate programs. Some with programs even before I started.

    The problem is not affiliate marketing, the problem is some merchants haven't figured out how to run a successful program.

    Now when talking about cookie stuffing, adware etc. -

    "Though the networks and affiliates have adjusted and/or fought off some of these problems to some degree,"

    Networks? The quickest reaction you'll ever see from a network is when a merchant drops an adware affiliate. Merchants have posted that here.

    One of the major problems are the networks themselves so they can't help the problem in anyway. The game is very simple. For them to get as much of a merchant's what otherwise would be free traffic into commissionable traffic. That's how they make their money. That's why networks are always promoting those type of affiliates. Is it really to the merchant's benefit? I say no.

    You're talking about wanting to get a handle on the metrics and if you look at some of the merchants who do drop or are having these issues you're talking about, most have adware affiliates. So when you have that, you'll never get a handle on anything. If merchants were actually serious about this, first step would be to drop those adware affiliates.

    Again, this is broken record time. With merchants with adware/toolbar affiliates and I have never had anyone give me a good reason, show me where there is value.

    A merchant does inhouse PPC. A shopper clicks on an ad, going to the merchants site. If that shopper has adware, pop. Maybe the adware affiliate gets the commission. You just paid twice.

    99% of merchants have newsletters. People sign up to get deals sent to them. A merchant sends out a newsletter to a customer. They read it, see a deal they like, click a link in the newsletter, off to the merchant. They have adware, pop. The merchant already had the customer. They signed up for a newletter, were on their way to the merchant site, they didn't need adware's help.

    Natural SERPS. Merchants are naturally the most relevant for products. Most have great SERPS. Free traffic. What's the point of having adware pop on your site?

    You see how this is screwing with the metrics? What value is there in what I just posted?

    Again with that type of thing, reward sites. Shop thru the site, not thru a toolbar. Someone could have a reward site where people shop thru the site and in the scenario above, it's not going to affect the merchant. There is no interference. That's how you do it.

    So if a merchant was truly concerned with their metrics, they need to look at that first. The problem is most are on networks and they have them in their ear.

  10. #10
    Lite On The Do, Heavy On The Nuts Donuts's Avatar
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    Quote Originally Posted by Trust
    So if a merchant was truly concerned with their metrics, they need to look at that first.
    Another horse first guy, like me. Put the cart before the horse and you've got a bigger problem.

    First step, be able to recognize value. Then find out how to measure it accurately and reliably. Then figure out how to collect, scale and analyze that data in volume. Then find creative ways to use those measurements to make decisions.

  11. #11
    Affiliate Manager Alan Hamilton's Avatar
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    Quote Originally Posted by Donuts
    Jeff, beers are on me at Aff Summit, really look forward to seeing you there.

    As for your idea to give credit where it's due - I'm all for it, except for one really HUGE problem - you're expecting me to believe that the people who do the tracking (I mean in general here - merchants, networks, VPs of sales, etc) will figure out an algorithm of sorts, or at least systemic method, for allocating rewards to each respective channel according to their value contribution... if they can't identify that shitware (ebates, zango, clickbooth and more) are f**king them and me right now, why would you expect me to trust these same folks to figure out and implement more complicated channel allocation techniques?

    my point - systems handle volume, not decision making. if you automate something based on bad decisions, you just more efficient at f**king up, you haven't solved anything.

    lastly, just because an affiliate program publishes a fixed, flat rate or reward for affs, doesn't mean it does. custom rates for certain value-add affiliates are common. which brings me back to my point above - my experiences are that everyone considers volume, not value. if it was clear that merchants and networks could even properly observe value, i'd be interested in your systemic approach. but we both know how it really works. are you hoping your systemic idea will raise value awareness? with the current state of affairs, i'd say that's unrealistic optimism.

    so i think i'm saying... respect value, then sure, build systems around it... and you may be saying... let's build a value system to better respect value... we can talk about carts and horses, chicken and the egg, and other such schtuff over beers my friend!
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  12. #12
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    Alan, what he's saying boils down to asking how, if current discrepancies and problem areas aren't being properly resolved with current capabilites, don't expect that technology at the current limited level will be able to handle compensation distributions far more complex.

    Very simply, if you're not riding a tricycle adequately yet, don't expect to use your current skill-set to fly a commercial jet. Ain't gonna happen.

  13. #13
    Affiliate Manager 1av8r's Avatar
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    So coke advertises on tv, billboards, tshirts etc...the guy walks into a corner store and buys a coke...I'm pretty sure that the Tshirt should get the sale don't you? Also, I'm seeing about 20% of my traffic being touched by more than 1 channel and there is a good chance that one of the touches was from our own SEM.
    Last edited by 1av8r; June 1st, 2007 at 03:02 PM. Reason: more details

  14. #14
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    Quote Originally Posted by Trust
    The problem is not affiliate marketing, the problem is some merchants haven't figured out how to run a successful program.
    Couldn't agree more.
    Quote Originally Posted by Trust
    One of the major problems are the networks themselves so they can't help the problem in anyway. The game is very simple. For them to get as much of a merchant's what otherwise would be free traffic into commissionable traffic. That's how they make their money. That's why networks are always promoting those type of affiliates. Is it really to the merchant's benefit? I say no.
    Again, I completely agree.

    And I totally agree that the solution to this is more messy now than the problem it's trying to solve, and it will rely on trusting a merchant or manager to come up with an algorithm that works and is fair which is a tall order. This is a messy issue altogether.

    I do think a system like the one I'm describing will eliminate adware, and show the true value of loyalty and other borderline "affiliates." Even a simple system would show a merchant that a customer arrived at their site via search or CPM ad/click and the adware cookied the user moments [i]after[/] they arrived at the site.

    But overall Donuts nailed it -- merchants see things through a volume lens instead of a value lens; that's because that's what they were taught to do when they took their marketing and business courses. But the internet is a different game and technology will allow us to measure more and more about each consumer as time goes on -- and we (well Google at least, and a few others) already know quite a bit. We need to, as D said, "build a value system to better respect value." I don't think the market is ready for it yet, but I don't see how it could go any other way. Much of what happens in online marketing right now is based in an ignorance economy, and those of us who understand how the game is really played (networks turning free traffic into commissionable traffic, etc) are simply ahead of the curve a bit. The rest of the market will follow, my fear is that affiliate marketing's big players aren't prepared for that change, and that could result in merchants (mostly big brands) shying away from AM.

    I agree with Brian that we could split this off into another thread; I already feel a little guilty posting so heavily on a board that talks about MYAP committing suicide.

  15. #15
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    "The rest of the market will follow, my fear is that affiliate marketing's big players aren't prepared for that change, and that could result in merchants (mostly big brands) shying away from AM."

    Now that part I disagree with. At this point, the facts don't bear that out with the examples I gave. And this kind of thing has been talked about before, years ago and I still don't see it happening. I understand what's trying to be done but I don't think what you're talking about is the solution. I understand with merchants trying to find the real value in their marketing efforts with affiliate marketing. That part I get, just don't agree with the solution that's being talked about. What you're talking about will have affiliates shying away from merchants. Like I said, don't take my word for it, start a poll, ask other affiliates. If this is something that is actually being considered, really start that poll. CJ should have done that with LMI. Open up the communication, if would have saved a lot of problems.

    What should be talked about more is some of the stuff I just posted. I listen to these podcasts and conversations elsewhere and it's like people are afraid to touch it. And I've asked the same question over the years about what is the value to the merchant in the scenarios I've posted above. What's the value in popping of a merchants free traffic via the SERPS, off their newsletter, off their PPC etc. Not once has anybody stepped up and given an answer to the value in that. And that kind of thing is going to skew anything you're trying to measure.

    That's something I think needs to be addressed before any of this. But it's not going to happen from the networks or those affiliates because they know how things work and it's in their best interest that merchants don't.

    Also to the question I asked above. When talking about this, how are you looking for it to work? Lowering commissions up front or adjusting after the sale? Still confused about that part. I don't think affiliates will be alright with that either way. What I picture is a merchant telling affiliates that's the direction they're heading and then the affiliates heading to that merchant's competition.
    Last edited by Trust; June 1st, 2007 at 04:07 PM.

  16. #16
    Affiliate Manager 1av8r's Avatar
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    BTW, I'm paying affs to send me "new customers" that I already paid them for, say like last year. Chalk some of that up to poor retention efforts on my part and I'm thankful I got the customer back through AM so-to-speak, but now my acquisition cost just went up.

  17. #17
    ABW Ambassador Sam Bay's Avatar
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    You pay Yahoo for everytime they "show" your ads. You don't with the affiliates.
    You pay Google for every click they send. You don't with affiliates.

    If you need to be "fair" to all channels, you will need to compensate them fairly as well.

  18. #18
    Life is Supposed to be Fun! Rexanne's Avatar
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    Bottom line is: Does the merchant want to run an affiliate friendly channel or not?

    It's about educating merchants on the issues, rewarding value add affiliates for what we do and not allowing scum suckers into their programs. Networks can jerk themselves around all day about parasitic affiliates but if the merchant doesn't allow bugs in the barrel, the program will stay true and work for affiliates and merchants just the way it's supposed to. The problem lies with the networks who push parasitic affiliates on their merchants. Trusted third party ... you bet
    Peace,

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  19. #19
    Lite On The Do, Heavy On The Nuts Donuts's Avatar
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    Quote Originally Posted by 1av8r
    So coke advertises on tv, billboards, tshirts etc...the guy walks into a corner store and buys a coke...I'm pretty sure that the Tshirt should get the sale don't you? Also, I'm seeing about 20% of my traffic being touched by more than 1 channel and there is a good chance that one of the touches was from our own SEM.
    First BHO I checked, UPromise, you're there. For that, I argue you're COMPLETELY unqualified to make value judgments. You have the authority and repsonsibility, but not the know-how.

    Allowing UPromise into your affiliate channel is the problem with touches.

    For fun, I checked a second one, you're in eBates as well.

    You said "there is a good chance that one of the touches was from our own SEM". Laughable! The way you've chosen your partners, without knowing how they produce "sales", is what has caused this problem. Until you understand that, and make appropriate value judgments based on that knowledge, you can't possibly automate anything but more laughs.

    Upromise and eBates are built specifically to touch your sem traffic, dope.

    And it's been your lack of understanding and decision making to date that has welcomed them to do it.

    We don't need an algorithm, we need you to educate yourself on how tracking works and how these partners magically kick ass in your sales reports.

  20. #20
    Influencer Marketing GravityFed's Avatar
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    A comment in response to Jeff's post No. 5: "..because it's the most difficult channel to manage, the most expensive when a sale occurs, and has fraud issues that aren't easily blown off as "cost of doing business" (like ppc click fraud seems to be right now), will be the first casualty for any marketer that has to cut something."

    Food for thought (kinda along the lines of above) ....

    "When a online retailer receives an order that can't be fulfilled for whatever reason...do they go back across all of their PPC or CPM spends and attempt to reverse charges?"

    -Brian
    Now that's good food for thought. How expensive overall is it to pay Affiliates when you look at the big picture? Plus...

    You don't hear much credit given to Affiliates in terms of customer acquisition value. A single occurrence of paying the Affiliate commission and the network for the sale can be expensive, but what about all the future sales you'll get from the new customer you've just acquired through an Affiliate? It's even possible for the merchant to have a new, loyal customer without ever paying an Affiliate after they initially sent the traffic (cookies cleared, short cookie duration, etc.).

    Oh and I really like what Rexanne said

    GBM

  21. #21
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    "BTW, I'm paying affs to send me "new customers" that I already paid them for, say like last year. Chalk some of that up to poor retention efforts on my part and I'm thankful I got the customer back through AM so-to-speak, but now my acquisition cost just went up."

    After I eat, have something about 'acquired customers'

    Before I eat the short version, as far as acquiring new customers.

    Customers are people. You can acquire stuff like a new watch, car, whatever. You paid for it, it's yours. I read a lot merchants not grasping that with people, you need to constantly acquire them. It's not like once you have a new customer they're yours. They can easily shop elsewhere next time. Your competition can easily get them. You have to constantly win them over, it's not a one shot deal.

  22. #22
    Affiliate Marketing Consultant Andy Rodriguez's Avatar
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    Quote Originally Posted by Rexanne
    Bottom line is: Does the merchant want to run an affiliate friendly channel or not?

    It's about educating merchants on the issues, rewarding value add affiliates for what we do and not allowing scum suckers into their programs. Networks can jerk themselves around all day about parasitic affiliates but if the merchant doesn't allow bugs in the barrel, the program will stay true and work for affiliates and merchants just the way it's supposed to.
    Spot on, proven time and time again. One of the main reasons we run our seminars targeted to merchants and affiliate managers. Merchant education is crucial and can't be done by the networks, it's simply against their buss model ...
    Andy Rodriguez Consulting, Affiliate Program Management and Consulting Services, Since 2001
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  23. #23
    Influencer Marketing GravityFed's Avatar
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    "..it's not a one shot deal."

    Yep. My post above assumes merchants that keep new customers coming back. If merchants retain a solid customer from an initial intro by one of their Affiliates, they're paying a small price...even if the merchant paid for a PPC click and an Affiliate commission.

  24. #24
    OPM and Moderator Chuck Hamrick's Avatar
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    As an OPM I am positioned between the merchant and the affiliate. Getting paid on the rev share also benefits getting the last cookie paid especially when it is a coupon that closed the sale from and affiliate.

    I didn't spend my education time on marketing nor business courses. I spent it in engineering, physics and some economics, lots of math and science. Learned the technology old school starting in 1985. So figuring this out is a passion!

    When you have a large brand there is lots of politics and VP's who have to justify their salaries. One pet peeve is that they prey on the affiliate channel because there are personalities associated with affiliates. An SEM agency has a sweet talking account manager and hidden techs. There is a lot of jealousy for affiliates especially the top ones.

    When we come out with a system that can track a visitor perpetually and show that an SEM agency is double dipping or a loyalty toolbar got commissioned for organic traffic then the VP heads will roll. I would love to see the Fortune 500 companies leave affiliate marketing and smaller players fill the space. Drive the market to SAS and AvantLink (shameless plug).

    With the 65 year sentence for the SPAM King I look forward to the 100 year sentence for the CEO and board for Zango. Scooter, working on your challenge to prove that Zango doesn't juke my links.

  25. #25
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    On a side note, I hope you stick around Jeff. Would be good for another view, whether people agree or disagree, we're talking about the business. Look around, we have affiliates big and small, merchants, affiliate managers, networks, etc. all facets of the business. And I mention that because I just finished listening to the latest podcast That one I'm saving. The other Jeff can come down too. Would love to go thru the first part of the podcast with him or anybody, here. Because a lot of the stuff is just off. Can apply facts/links/quotes to a lot of it. It's always good to question when somebody posts or talks about things on podcasts because you'll find that when you do, a lot of it doesn't hold up. And the conversation will stay on point.

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