I haven’t talked as much about affiliate networks and our investment in buy.at as I expected when I started this blog, but I’m going to re-dress that balance slightly today.
As a refresher affiliate networks provide internet marketing services that are analogous to real world below the line direct marketing – i.e. they are more about driving transactions than building brand. They operate on a cost per action (CPA) model and act as a broker between merchants who want to drive sales by offering a commission per transaction and affliates who can find those sales for them. Mobile network operator ‘3’ is one of buy.at’s biggest clients at the moment and they pay up to £70 for each new subscriber our affiliates find for them. The £70 is paid to the affiliate and an additional over-ride is paid to us (the network). Many of buy.at’s clients and the deals they offer are listed here.
This is a CPA model because ‘3’ only pay when there is an action – a customer is acquired.
It’s a great model for merchants because it is a no-lose deal. They only pay if they get new customers.
That has made it a great and fast growing market.
So far though it is only wired-web and static page based. As I wrote yesterday mobile is a hot new area for advertising, and online video advertising is also opening up. So far these have been purely on CPM deals – advertisers pay per impression. This is standard for new media – it is easier to experiment with CPM and the owners of the limited inventory are able to get high CPMs without worrying too much about downstream conversions. As these markets mature CPA will become a large part of the mix – it is a better deal for advertisers and owners of high quality inventory often get better returns this way too. We have seen this move on static wired web pages and so it will be with mobile and video.
But it won’t necessarily be straight forward. The CPA affiliate model works on the wired web because people can click through to sites and complete transactions. That is still difficult on mobiles – tracking innovations will be required or the mobile internet experience will need to improve to make this work. CPA/affiliate ads round the edge of video needn’t be complicated, but if the real action turns out to be in in-stream ads then enabling and stimulating click throughs will be the next challenge.
Answers to these questions on a postcard…..