November 12, 2010
Ok. I think I might have to take that back, considering I used to work for the affiliate industry for a couple of years. What I mean by saying this, is that making money on social media is not about traffic, but about billing relationships. Naturally, affiliates have no other billing relationship but the one with the client paying for the traffic.
This blog post is perhaps more about how affiliates have to adjust their business models to fit the social media landscape. Most of them have been spoiled by the simplicity of working in an SEO friendly world, however as SEO is becoming increasingly dependent upon social interactions with users, the affiliates who wish to have a lasting life, might just want to read further.
1. Owning the customer relationship
As most affiliates are design to funnel traffic, to who ever pays for top spot in their lists or best words in their recommendations, they are very seldomly focused on building a customer relationship. This is a good thing in many aspects.
First of all they don’t have to deal with customer complaints as they do not have the responsibility for the products and services. Secondly it is a quite easy task to optimize as you promote who pays. Third, they don’t have to think about product development, other than perhaps the development of your own website to increase conversion rates.
The downside of this, is that the world of social media sort of requires that you build a relationship with some customer. It is actually dependent upon that you deliver a promise that you keep. Especially if your focus is on making money.
Thus, short term, traffic funneling business models that aim to push responsibility on deliverance onto someone elses shoulders isn’t a very profitable one. In order for affiliates to own the relationship they have to begin working with:
- CRM both in social networks and on their own membership websites
- Develop win back campaigns through e-mail and notifications
- Give added value in one form or another that requires some kind of sign-up or membership
They then need to think in terms of “owning the market”. Once they have build a sufficient following, the established relationships, with their website members, can be used to direct huge portions of traffic from service operator to service operator. Almost working like a union, or perhaps, like the mafia.
One website doing this very successfully these days is the Expedia owned website tripadvisor.com.
2. Product ownership
If there is one thing which has proven successful in attracting both business and buzz through social media, it is when companies give in to its users. As affiliates own no product, they cannot develop it, and thus they cannot change the experience for their users, into a better one.
Now, some of you might want to argue that the affiliates do have their websites. And yes, the websites are in a way their product. But if the products that the websites are promoting are crap, then it won’t matter how good of a website it is.
The biggest affiliate of them all – Google – should have taught everyone a lesson about this by now. They work with relevance and micro payments rather than high CPO and quality referrals. Although they are working on the latter one, it is more important for them to deliver relevant search results than it is to deliver buying traffic to the media buyers. As I said, they are working on it, but they still have a long way to go, and they are still very much dependent upon the quality of the landing page they are sending the traffic to. Just like any other affiliate.
What affiliates should do in order to gain ownership of product:
- Create product development groups with the service providers
- Stop tweaking their toplists and banner areas and let the users decide
- Increase the comments and review functionality on their websites increasing transparency of intentions
Most affiliates simply don’t care. I’ve presented cases and business propositions for affiliates so many times I think it is written on my forehead.
The main problem I face when talking about social media is that they all care about the last two slides. Ie. where I start talking about making the money. I’ve actually heard, many times, that I “should have skipped to the last two slides right away”.
And that’s really what makes me tic. When people are too ignorant to pay notice to what takes you to the winning circle, and when they only cares about the party they see from a far. They are not willing to put in the investment, but they are willing to drink the champagne. That is what most affiliates do.
And we’re not talking about a huge investment. It is the concept of having to divert attention from the money pile to the future that is the challenge here.
The successful ones, such as Google, put their focus on quality and relevance. This is what most affiliates forget and that is why they aren’t suited to operate in social media. If you want to stay good at what you do, then don’t listen to me. But if you want to become great, then you probably should. Any company can become the next Google. It is just that some neither care or set their bar high enough.