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  1. #1
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    IMHO affiliate marketing as most of us currently know it is a failing business model.

    Networks skim more from the transaction than the value they are adding.

    Direct (non-network) programs generally lack the reporting and controls needed to make them viable business partners.

    Merchants, being pressed by higher alternative online advertising costs and lower revenues, are chipping away at their online affiliate's revenues, a nickel and a dime at time, which adds up to big dollars over time.

    Parasites slither in to grab chunks of the affilates revenues, in amounts that are hard to measure.

    Search engines, a big source of commercial traffic, are relentless in channeling income from affiliate marketers coffers into their own, by smothering their 'free' search results under a rapidly expanding blanket of paid results.

    The pool of Internet surfers is not growing at a never-ending pace. The pool of surfers that need introduction to the affiliates' merchants is not infinite and is eroding away as repeat surfers go directly to the merchants that the affiliates introducted them to.

    My experience shows that affilite program revenues from established content decay at a rate of about 50% every six months. We cannot build revenue-generating affiliate program web content and expect it to keep generating revenue for long ... we have to build content at an ever-increasing rate just to maintain revenues and a level is reached where maintenance of that content consumes the bulk of our energies and limits building new content.

    I was one of the pioneers in the affiliate marketing business, and now I'm once again looking beyond the horizon for the evolution of online marketing.

    How about it folks ... where do we go from here??

  2. #2
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    What???
    Affiliate marketing is still in its infancy and continues to grow. Each year more people shop online for the first time and continue to do so. Every day people are buying their first computer. Online spending continues to grow and grow. Andy from Tiger posted some info on this. This is more competition now, but thats business. I see nothing but good things for affiliate marketing.

    "Nothing focuses the mind better than the constant sight of a competitor who wants to wipe you off the map."
    --Wayne Calloway

  3. #3
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    <BLOCKQUOTE class="ip-ubbcode-quote"><font size="-1">quote:</font><HR> How about it folks ... where do we go from here??<HR></BLOCKQUOTE>Hence my slogan: Get while the getting's good

    Brian
    aka Cyclone

    Get while the getting's good

  4. #4
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    TrustNo1 , Lets face the reality ...I dont think AM will continue to flourish even after 4 years , atleast those who rely on Free SE traffic...

    People having sites with loyal following ( type-in/bookmark ecommerce traffic ) like price comparison or deal sites may survive but others will slowly decay ...

    Also it will become difficult to compete in PPC as merchants will outbid affiliates simply because they have a greater margin/repeat sales than affs ...

    And Also hi-margin industries like phramacy or casinos will be banned or tightly controlled by Uncle SAM closing that lucarative route too...

    So earn as much you can now and when things become tough jump into the next level of the ecommerce food chain ... become a merchant ... I think with a Yahoo store and some drop ship arrangement its not that hard ..

    "The Future belongs to those who believe in the beauty of their Dreams."

  5. #5
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    KoGo the reality is affiliate marketing will grow and will be around as long as there are merchants selling their stuff on the internet. New merchants come online each week, the compete just like affiliates. Each week new affiliate programs are being launched. There will always be merchants out there that want more traffic, more sales, more avenues to revenue. Some affiliates get better rankings for keywords then the merchants they are promoting. These posts about affliate marketing dying out have been around for years but yet it grows. Online spending increases each year and will double within the decade. I never went the casino, pharmacy route, so i don't know about that. As affiliate marketing grows so do affiliates, and you change the way the market requires. Try new things, find a niche, get better than the competition. I will be here 4 years from now writing the same stuff, when someone else makes a post "Affiliate Marketing is Dying"

    "Nothing focuses the mind better than the constant sight of a competitor who wants to wipe you off the map."
    --Wayne Calloway

  6. #6
    ABW Ambassador Andy's Avatar
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    Whiznot wrote:
    <BLOCKQUOTE class="ip-ubbcode-quote"><font size="-1">quote:</font><HR> Search engines, a big source of commercial traffic, are relentless in channeling income from affiliate marketers coffers into their own, by smothering their 'free' search results under a rapidly expanding blanket of paid results. <HR></BLOCKQUOTE>
    I've heard this before, and I disagree. Search engines are all about relevance. When you type in a search word or term, if the sites it serves you hit the mark, you'll go back.

    But when you get served a lot of paid inclusion sites, which may or may not be what you were looking for, you'll find another search engine that gives you more dependable results on a consistent basis. Competition among the SEs will make them strive for more relevancy and better results, to keep them ahead of the competition.

    I think that's why Google got so big so quickly. It truly provided more relevant results than the others. Now that people have learned how to manipulate Google, you find more and more sites that spam the results. Which is why Google keeps changing the way it indexes sites, to keep a step ahead of the spammers.

    Google's last couple of updates have allowed a lot more spam to float to the top, including a few pretty blatant sites with lots of hidden text. I predict Google will address this within the next few updates to correct the problem.

    I do still believe that content will play a greater role for sites to rank well in the future. I know there are many who disagree with me, but I do think that's the direction things are headed.

    Affiliate marketing will have to evolve, and I believe there will be government regulation of the industry eventually. The drive by installs and link diversions won't be tolerated forever, as more people figure out that's why their computers act up and freeze, and start demanding their representatives do something to stop it from happening.

    Andy

    MERCHANTS! Ask yourselves: "What's in my affiliate program that makes it worthwhile to publishers?" Hint: if you have one day cookies, or if the cookie is deleted after the first sale, or if you reverse legitimate transactions, you have nothing to offer.

  7. #7
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    TrustNo1 , the main avenue of traffic for most affiliates that is free SE listings will dry up in 4 years ... Most of the top 10 listings for money kw's will be filled with sponsored listings or PFI type ones ...believe me it will eventually happen ...

    So the only way to get targetted traffic is to jump into PPC ... But since merchants make more money in a sale and also because of the repeat order factor they will always be in a position to outbid affiliates ...

    "The Future belongs to those who believe in the beauty of their Dreams."

  8. #8
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    I disagree with that. First of all there will always be free SE listings for the simple fact most search engines crawl and the results are based on algorithm. The web grows by thousands and thousands of pages each day and this is the only way to do it. I can't see a search engine based solely on paid listings, too many many hours, bad results. Take Google for example, the reason they grew so big is because of their search results. Relevant search results, thats what users want. Not to mention the search results are based on algorithm. If all the se's started to do what you say, one will pop and provide relevant search results and the others will fade. When someone does a search they don't want to see a bunch of paid listings thrown in their face. The way Google does it on the side works pretty good. As far as PPC, i do some of that and if all the se's went the way you said, affiliates would just have to adapt. As long as your're making more than you're paying per click you're in good shape. Good affiliates will find different ways to get traffic, you should never have all your eggs in one basket.

    "Nothing focuses the mind better than the constant sight of a competitor who wants to wipe you off the map."
    --Wayne Calloway

  9. #9
    Affiliate Marketing Consultant Andy Rodriguez's Avatar
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    Interesting thread.....

    Andy Rodriguez,
    Online Advertising / Affiliate Marketing Manager

    TigerDirect.com
    P: (305) 415-2313
    E: andy.rodriguez@tigerdirect.com
    ICQ: 175010
    AIM: miamitigercub

  10. #10
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    think positive and get big fast

  11. #11
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    TrustNo1 , SE's will continue to crawl and index pages but PPC listings will dominate commercial terms ...Since only like 20-30% of searches are commercial people will not notice or mind it much ...

    Dont you think google will increase the top 2 premium listings from 2 to 5 or may be 8 in 3 or 4 years ( especially after its IPO ) and also make it less recogonizable as paid listings !! ( as a side note CPM based premium will soon be replaced by PPC based adwords thus more money for google ) ...

    "The Future belongs to those who believe in the beauty of their Dreams."

  12. #12
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    I don't think Google will go too far from what it is now, 2 premium at the top and the adwords on the side, only time will tell. I think they will keep it CLEAR between paid listings and the regular search results like they have now. All paid listings have "Sponsored Links" besides them. They would be wise to keep it this way if they want to stay on top and i don't think they'll stray too much. SEs have tried in the past(looksmart) only to screw themselves. Google got to be this big because of their relevant results, pure and simple. It would be wise for them to stay on this path and from reading what GoogleGuy says over at webmasterworld i think they will stay on the right track, if not there could always be an up and coming SE to vill their void. Google started out small and grew because of their results.

    As far as affiliate marketing, affiliates help merchants get sales. If a merchant doesn't have a web presence now, they will in the future. So competition between merchants will be fierce too. Having a good affiliate program where they treat affiliates as partners will help. Imagine thousands of affiliates fighting for good SE position for them. No suprise one of the biggest if not biggest merchant online with the biggest affiliate program and inhouse/independent at that: Amazon.com
    There will always be room for affiliates because there will always be merchants, big brand name, mom and pops, who want more traffic to their site and more sales.

    "Nothing focuses the mind better than the constant sight of a competitor who wants to wipe you off the map."
    --Wayne Calloway

    [This message was edited by TrustNo1® on April 15, 2003 at 03:47 PM.]

  13. #13
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    Only time will tell ... Whatever the outcome its not in our control so its unwise to argue about it...

    So the best strategy would be to make as much money as you can now ...this way if aff industry disappears after 3-4 years you wont regret that you missed a great oppurtunity .

    Also never plan you personal life-style expenses based on what you make in AM now ...if possible save as much as 60-70% of what you make and invest in solid funds/realestate ( forget sharemarket !!) ...

    i have seen so many people who assume things will be rosy forever

    "The Future belongs to those who believe in the beauty of their Dreams."

  14. #14
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    Thats good advice, everything i make now goes straight into the bank. Affiliate marketing is kinda like the Wild Wild West, who knows what could happen. Some think AM is on its last leg and a dying business model, i think its still learning to walk and only will grow. Time will tell, and theres a lot more competition out there, but i try to stay positive knowing there will always be merchants out there that need affiliate help.

    "Nothing focuses the mind better than the constant sight of a competitor who wants to wipe you off the map."
    --Wayne Calloway

  15. #15
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    I recently had one merchant who was asking me to promote them say "we have affiliates making over a thousand dollars a month".

    Well, jeeeezzz, can you build a business on revenues of $12,000 a year that takes a lot of hustling? Even if you had ten of these fine merchants paying you $12,000 a year (and finding ten good merchants is a lofty goal) could you really build a solid online business on that? A house of cards, yes! I solid sustaining business ... I don't think so.

    Maybe one answer would be to re-define affiliate marketing as being the equivalent of a manufacturer's rep. You run the online store and your supplier fills the orders.

    Kogo, care to elaborate on your Yahoo store suggestion?

  16. #16
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    whiznot
    key to success is positive thinking.
    people used to tell me i'd never make any money on the web, they're still doing their boring office jobs.
    if you don't think this is a solid business it simply never will be.. for you.
    harsh but true

  17. #17
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    I'm a very positive thinker about Internet marketing, spacewar, but after four years of working 14-16 hours a day seven days a week at affiliate marketing and treading water at best the past two years, I'm starting to look for greener online marketing pastures ... and evolution really.

    I think I have a good grasp on what's going on in this business and have earned the right to speak about it, but welcome disagreement.

    I was looking for an entrepreneurial discussion when I started this thread. Any more takers?

  18. #18
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    Whiznot , You are wrong ... AM is real hot now and still there is a lot of space for new players...

    Its not that hard to build a 200k/year AM business ... but the question is can you sustain the same level of earnings after 2-3 years .... it may or may not be possible ....

    But there is no point in worrying about the future ...just make as much as you can when things are hot and save it for the rainy day

    As a side note dump those merchants who say their affs are making $1000 per month ... If the top affiliate in a industry is not making atleast 10k/month then its not worth to promote ...just my 2 cents

    "The Future belongs to those who believe in the beauty of their Dreams."

  19. #19
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    A 200K/year AM business built on one or two hot merchants and one or two traffic techniques probably wouldn't last 2-3 years. Without broad diversification, the business is just a house of cards and can't be sustained.

    You can luck a couple times but not forever.

    I've already read the house of cards chapter. Been there and done that and earned a pile for a short time. Saw feast and famine! For the past year I've been designing for the more sustainable business and that means diversification and with diversification comes higher maintenance and lower revenues converging on the true realities of the affiliate market. That's where the wakeup call comes. That's when I start asking "where do we go from here?" And if I hadn't asked that question many times before, I would still be working a boring office job.

  20. #20
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    IMO, I think AM will evolve that those that provide good content will prosper in the long term. Try to differentiate from the crowd and make your site the best in its niche.

    This way we can attract repeat visitors and buyers.

    I think affiliate sites that all look similar, promoting the same merchants, sites that offer no repeat value to the surfer...I think those sites days are numbered as it becomes harder now to gain top results in SEs bec. of more competition.

  21. #21
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    Whiznot , Diversification is good but the only diversificaion we can do as of now is promoting different industries/merchants... Most of the traffic should still come from Google or the portals powered by it ...

    So true diversification is not possible atleast for now ...

    Sometimes thinking about this scares me ... I heard about many people (including JadaKiss here) whoose overall traffic depended on Yahoo ... and suddenly they got a big blow when yahoo decided to dump its directory in its SERPS ...

    "The Future belongs to those who believe in the beauty of their Dreams."

  22. #22
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    I use affiliate marketing as a fundraising tool.
    Starting offline businesses in India is costly, but that's not the case when your funds come in US dollars.

    50-60% of the money I make from AM is kept for investment into my offline businesses which tend to look more stable than affiliate marketing. Success of an offline business also depends on various factors unlike affiliate marketing where most of the time, your success depends on your google ranking.

    ---
    "The tongue like a sharp knife... Kills without drawing blood."~ The Tathagata

  23. #23
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    <BLOCKQUOTE class="ip-ubbcode-quote"><font size="-1">quote:</font><HR> IMO, I think AM will evolve that those that provide good content will prosper in the long term. Try to differentiate from the crowd and make your site the best in its niche.<HR></BLOCKQUOTE>

    Actually, one of the things I don't like about c*ntent is that it's NOT differentiation!

    When I got into this business, everybody and their brother was doing c*ntent. So I didn't. Among other things I don't like about c*ntent (which I've mentioned many times in other posts)--c*ntent sites don't stand out from the crowd enough!

    There are still way too many content sites on the Net and most of them have absolutely nothing special about them. Anyone who knows beans about anything, or has an opinion, seems to have a site about it! So what's another c*ntent site but just that--another *YAWN* content site...

    But now there are rafts of Sales sites out there as well! What used to stand out doesn't any more.

    Comparison shopping irritants--erm, sites--all serve the same purpose and have nothing to differentiate on. And if they all use the same feeds they'll all be comparing the same merchants, which leads right back to the same Search Engine Lotto that standard affiliate sites deal with. (They are "irritants", IMO, because if I'm shopping on price, what's the point of me even looking at the other 5 or 6 listings on a comparison shopping site's results that are more expensive? Just give me The Cheapest One!) I think these'll end up like regular search engines, with a couple huge ones being superpowers and the others barely eking out hosting fees.

    And browser apps (avoiding the P-word) are already showing themselves to be simply permutations of each other. Other issues aside, there's nothing special about them to the *consumer*--they all do basically the same thing (promise some kind of discount or donation). Such nondifferentiation won't keep raking in the dough even with all their tricks!

    So where DO we go from here?

    Basically, somewhere that the rest of the marketing side of the Net isn't headed for, hasn't been yet, and not too many (if any) have already thought of. Unfortunately, I don't know just what that'll be yet...

    -I've been a king, and I've been a pauper, and everything there is in between ~fairly old country song

  24. #24
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    Well, naturally there's a few quality merchants I deal with that I'll maintain a conventional and hopefully long-term affiliate relationship with, and I'll continue to try a few new ones, but I'm going to set my sights on going the online store route and build direct relationships with suppliers. That does seem like the next level up on the food chain.

    I'll be the front end and the supplier will be the middle and the back end. That means I'll operate an online store but when visitors place an order, it'll be with the supplier who will handle collecting payment, customer service, fullfillment and returns. Merchant/suppliers who can work this way may be a rare breed, but then I can sell anything so I can hopefully find some merchants who are open to relationships of this kind, or develop such a relationship with entrepreneurial suppliers. There will be lots of kinks to work out, like how to record sales and handle chargebacks and returns, but I'll be looking for real-world retailer discounts on the products, not a 5 or 8% affiliate commission on the few initial sales that are recorded and retained. Hey, maybe I'll even be able to afford advertising on the PPC search engines, or &lt;gasp&gt; offline advertising, both which are out of ROI reach for my affiliate program relationships.

    Customers will normally return to my store for future purchases so the issue of affiliate return cookies goes away. Repeat sales will become a reality and justify my building sticky content into the store. Parasites will have no way of hijacking my affiliate code because there won't be an afffiliate program open to the parasites. I won't have to whine to networks begging them to manage, not just administer, because there won't be a network in these new relationships. Personal, long-term, real-world, one-on-one business relationships of mutual benefit and trust will be built.

    Sound like a pipe dream? So did affiliate marketing just a few years ago! Still sound like a pipe dream? This is the way business relationships operated in real world long before the wild, wild west of the internet came along. It's not "brick and mortar", it's not "brick and click" it's not "dot-com", it's "brick dot com" lol!

  25. #25
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    What you're talking about sounds like a co-branded store, which a lot of affiliates do now.

    "Nothing focuses the mind better than the constant sight of a competitor who wants to wipe you off the map."
    --Wayne Calloway

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