Performance-based marketing remains wildly popular with savvy Web marketers — and merchants are increasingly taking note.

 Research released in December 2011 by the Interactive Advertising Bureau (IAB-UK) states that affiliate marketing growth is expected to continue over the next 12 months. The survey revealed that 77 percent of respondents believe that marketing spend for affiliates has grown in the past year, and that 71 percent expect it to grow even more in 2012.

According to Helen Southgate, chairperson of the IAB’s Affiliate Marketing Council, “Nearly 20 percent of respondents said they spent over [$200,000] in affiliate commissions per month, and more than a quarter of them said that affiliates account for more than 20 percent of online budgets. This indicates that affiliates are a significant channel in these brands’ marketing mix.”

But affiliate marketing is also under fire — from a greater focus on taxing online purchases to a more heavy-handed treatment of “thinner” affiliate sites by search engines. Today, the only affiliates who will be successful are those that master the necessary technical skills, utilize the myriad available tools and resources, leverage their natural social propensities, ideate and innovate in the face of emerging trends, and somehow also manage to explore new offers and opportunities.

Performance-based marketing may not be for everyone, despite what many gurus say. The reason? Affiliate marketers, just like all human beings, are flawed — cursed with vanity, laziness, greed and a host of other virtual sins that prevent the fulfillment or actualization of themselves and their ultimate objective, which is profit.

The Website Magazine community can do better. If you could change your “affiliate” nature to become the best version of yourself, what would be possible? More accurately, what would not be possible?

To become the fullest version of ourselves, and, of course, the ultimate affiliate marketer in the process, it is imperative to set forth a few requirements that will direct our development.

Let’s take it piece by piece...
 

AFFILIATE MARKETING GLOSSARY

Affiliate marketing is a complicated and often confusing practice for those just getting started — and even for some seasoned professionals. For many, the hardest part is simply learning all of the jargon. With a vocabulary that encompasses every thing from traditional digital marketing terms to completely new industry-specific words, it can be a bit overwhelming to try to figure it all out at once. In order to help both interested newbies and seasoned veterans try to make sense of it all, Website Magazine has compiled an affiliate marketing glossary of the most important terms to know in order to achieve successin the industry. Access the Website Magazine affiliate marketing glossary.

The Brain

In the world of performance-based marketing, those that “know more” are positioned to outperform the competition. In Website Magazine’s October special issue on lifestyle marketing, readers were privy to a powerful insight — that only those with a unique view of the industry in which they were participating would be able to compete effectively.

The Web of today rewards those with expertise and authority. Those that feign familiarity will be revealed, and those that foster community are positioned to create substantial revenues in the future. So, how can affiliate marketers capitalize on their existing insights and experience? Look no further than the excitement surrounding ebooks.

The term “disruption” is what defines the traditional publishing market of today. A recent report from Juniper Research found that there will be continued strong growth in the dedicated e-reader market, allied to an upsurge in usage across tablet devices. This will push annual revenues from ebooks delivered by these portable devices to $9.7 billion in 2016, up from $3.2 billion in 2011.

Hard to deny the opportunity, right?

The report (Mobile Publishing: eBooks, eMagazines & eNewspapers for Smart Devices) found that the increasing demand for tablets means these devices will account for nearly 30 percent of all ebook downloads by 2016. Brand bookstore applications, including Apple’s iBookstore and Amazon’s Kindle, are leading the way. But yesterday’s ebook is most certainly not the same one that is available today.

The digital world of ebooks is about to get a lot more visually attractive and engaging for users. Amazon recently announced that several new features, namely HTML5 support, will be arriving in Kindle Format 8 (KF8) — the upcoming file format that will replace Mobi 7. Folks, gone are the days of the black and white ebook.

KF8, which will roll out to Amazon’s latest generation of ereaders and reading apps in the next few months, provides publishers the ability to develop digital publications that require rich formatting and design functionality. The file format will be an ideal fit for children’s books, comics, graphic novels, cookbooks and even technical and engineering books. The KF8 format adds approximately 150 new formatting capabilities such as fixed layouts, nested tables, callouts, sidebars, Scalable Vector Graphics (SCG) and more.

For those that aren’t ready to enter the white-hot ebook publishing market as a means to drive revenue or build awareness and community, and prefer to stick with promoting more traditional advertising offers, networks are taking steps to improve the “knowledge” they share with their affiliates in hopes that more informed affiliates are more effective — and profitable.

Lead-generation network Neverblue, for example, recently launched day-parting reports in its affiliate interface. The feature will enable affiliates to optimize campaigns by understanding how clicks and conversions occur by hour of the day, day of the week, week of the month, and month of the year.

“Our affiliates expressed interest in having the ability to pinpoint exact times of increased traffic,” says Breen Liblong, Neverblue’s director of technology. “We value our partners’ feedback and decided to create day-parting reporting that easily integrates into our current affiliate interface.”

Neverblue’s day-parting technology offers filtering options that include the ability to filter based by country and region. Additionally, day-parting reports have the capability to be set to match the time zone of an affiliate’s location. The reports are easily accessed through export files, including CSV and XLS, for deeper analysis.

When affiliates have a better understanding of what an audience will react to and when that audience reacts, they are better positioned to minimize waste and maximize profit. But there’s much more detail necessary to build our ultimate affiliate.

AFFILIATE FRAUD INDEX

Affiliate fraud prevention company Fraudlogix has launched an affiliate fraud index. The Fraudlogix Index provides companies with an indicator of fraud levels that the average advertiser is experiencing. “Up until now there has been an overall lack of hard statistics and research data surrounding affiliate fraud,” says Fraudlogix CEO Hagai Shechter. “The industry as a whole needs clarity and visibility in terms of the severity of the problem and the extent to which it affects the online marketing industry.” Fraudlogix dynamically monitors transactions, detecting fraud that is occurring on advertisers and networks within its ecosystem. When new traffic sources are monitored, the initial fraud that is detected is calculated as a percentage of total traffic volume. The index is a culmination of these percentages reported as an average.

 
Eyes and Ears

Neither search engine optimization nor paid-search advertising carry the opportunity that social media does in its ability to costeffectively and resource-efficiently help affiliate marketers drive website visits and conversions. The term “social”, however, can be misleading, defined differently by nearly everyone that affiliates encounter on the Web. So what is social today in relation to performance-based marketing?

While participation in traditionally themed social networks such as Facebook and Twitter (along with new entrants such as Google+ and perhaps even the Tumblr ecosystem) continue on an upward trend, other less well-known social destinations are keeping pace, to say the least. Website Magazine’s Big List of Social Media Sites (http://wsm.co/sEVObe) shows a variety of niche providers that affiliate marketers should consider exploring to leverage their social nature. While many of these destinations provide more quality than quantity in terms of interactions and results, the opportunity is most definitely present.

Social in many respects is what consumers want it to be — and that is increasingly the communal nature of video consumption. Video has dramatically changed the makeup of Web content. Online video solutions provider Invodo released data about the use of video on retail sites during the extended Thanksgiving weekend in the U.S., reporting a 337-percent increase in Black Friday video views over the previous year, and a whopping 897-percent increase in overall video views for the year. Consumers are seeking out video content and that presents a meaningful opportunity for performance-based (affiliate) marketers.

For the most naturally social, video should present the next big channel to explore. YouTube’s recent redesign has social baked into video in a very big way. The new design offers a homepage experience for users that integrates deeply with Google+ and other third-party providers such as Twitter and Facebook; emphasizes “channels” — likely in an effort to be the Internet TV provider of the future, and showcases users’ existing subscriptions to reveal new and related content in the process. This can only benefit affiliates that take video seriously — and it gets better.

The homepage features a user-activity stream that includes video uploads, likes, favorites and comments, as well as announcements. With this improved personalization, YouTube hopes to improve upon the 200 million people that already visit the homepage every day — which are often one-and-done visitors who arrive from destinations such as Facebook and Twitter. Users can browse categories, preview a channel’s content, subscribe to channels and see the activity from all of their subscriptions.

What does this have to do with affiliate marketing? Quite a bit, actually. With a powerful recommendation platform at their disposal, affiliate marketers that adopt an information-heavy, community-focused video content approach are those that will stand out from the crowd — and start to really drive up profits. Even if it’s one video per week, over time affiliates will find that the multiplying and viral effect of a social/video content mix might just provide a solution to the complex problem of performance marketing.

There are, of course, many other ways that affiliates can leverage social outside of just generating awareness. For example, wouldn’t it be nice to get paid for the conversion that results from your next Facebook or Twitter update? Well, it is possible, in fact.

Performance marketing solution provider Direct Response Technologies announced that it has added a “social media engagement payout model” within its affiliate management platform. The feature will allow both merchants and networks to track and pay affiliates when a referred user interacts with a brand through a social network.

Social activities that can be monetized using the DirectTrack social media engagement feature include Facebook’s “Like,” Google’s “+1,” and Twitter’s “Follow.” In addition to broadening affiliates’ earning potential, the feature can increase merchants’ abilities to remarket to social followers and expand brand exposure. Consider this further proof, in addition to the aforementioned IAB research, that merchants will invest more in performance marketing in 2012.

“Five years ago, few companies dedicated a line item to social media within the marketing budget, but today most understand the value of the medium,” says Direct Response Technologies general manager George Bordo. “DirectTrack’s social media engagement capabilities incent affiliates to drive visitors to social media sites and give advertisers the data they need to measure and optimize the success of their social media investment.”

Digital River’s social media payouts are part of the company’s commission configuration suite that supports the recruitment of affiliates as well as influencing motivation and perhaps even performance.

Armed with an affiliate-focused mind, and with eyes and ears tuned into “the next big thing”, know that’s there are even more requirements to building the ultimate affiliate.

FOLLOW THE MONEY WITH PPV ADVERTISING

One of the Web’s most underused advertising programs is the pay-per-view (PPV) method. Even though it’s been around for a few years, it hasn’t quite caught on the way PPC or CPM advertising has. The method is largely misunderstood by the uninitiated, partly because many people have preconceived notions about the term “pay-per-view”. Read more about PPV advertising.

 
The Body

One definitely needs to have a certain level of knowledge in order to become a subject-matter expert, and hopefully you are already actively socializing. Even more important to the ultimate affiliate, however, will be their understanding of the marketplace — and, more specifically, how consumers are using the Web. While reading Website Magazine will certainly keep you up to date on the latest trends, those with the gut instincts will be able to act more quickly to capitalize on offers and opportunities.

The software industry has undergone significant shifts in the way solutions are developed, distributed and consumed in the past several years. Analysts predict that the online delivery of software, whether downloaded or SaaS, will grow from 30 percent in 2010 to over 70 percent in 2014, forcing independent software vendors (ISVs) to expand to new channels and explore new licensing models. Many are rethinking their reseller and distributor strategy altogether — channels that today still represent over 50 percent of how software is sold worldwide.

Ecommerce platform Avangate, which provides its services exclusively to software and SaaS companies, has launched Sky- Commerce, a software suite that integrates with Avangate’s ecommerce and channel management SaaS-based modules to enable software vendors to grow both online and offline sales and accelerate their time to market.

The SkyCommerce suite consists of three modules for the Avangate Commerce Platform. The Sky ecommerce module offers tools for independent software vendors to sell software online, to do so on the local level across the world, and, most importantly, manage the customer lifecycle —from activation to upgrades, renewals and subscriptions.

The Sky Channel Manager module provides channel management and automation for partner and reseller orders, along with visibility into and control over revenue management across multiple channels. And finally, the Sky Affiliate module provides management and promotional tools for software vendors to plug into the Avangate Affiliate Network of over 26,000 software-specific affiliates.

“The top 40 application vendors have leveraged their distribution power to control over half of the software market revenue,” says Avangate CEO Carl Theobald. “Our customers see a huge opportunity to break from last century’s hegemony in software with the democratization of how software gets distributed. Now is the time for the other 99.5 percent of the world’s ISVs to redefine how software gets to customers. Our mission is to provide software companies a scalable, cloud-based, distribution solution for selling their products globally.”

To make its body work efficiently, our ultimate affiliate will need to feed itself on the most innovative offerings. Avangate is positioned well in the current market to do so, but there’s much more that needs to support the world’s most effective performance- based marketer.

Arms and Legs

In our knowledge-based economy, there are many opportunities to profit from performance-based marketing – not just continuing to publish information. Those who are the most savvy in regards to technology are undoubtedly those that will be best positioned to drive top-line revenue growth. To date, the technology that most affiliates have been drawn towards is that of XML data feeds, and they are turning to solutions including PopShops, datafeedr, FeedShare and GoldenCan. Networks are turning to these providers in greater volume as well in order to differentiate their services

and product lineups. Performance marketing network Buy.at, for example, recently partnered with GoldenCan to offer a variety of data feed services such as store, coupon and search, enabling affiliates to incorporate millions of products, thousands of coupons and information on price drops directly within their applications.

But affiliate marketers that are looking towards using data feeds to drive revenue may be late to the game. Shifting consumer usage patterns point to mobile and, fortunately, there is no shortage of opportunities to turn a profit.

The growth of the mobile Web has also spurred the recent growth of visual search. Superfish, a company that develops visual search technology, is looking to capitalize on this industry growth and has recently concluded the beta testing and general availability of Superfish Visual Search for the Web. The resource is intended for developers who want to add consumer-product comparison functionality to their browser add-ons, extensions or toolbars. The technology analyzes an image algorithmically in order to deliver similar and identical images in real-time without requiring text tags.

Following the beta testing, the company released case studies of the various test participants (there were 12 total), including Surf Canyon, a browser add-on that adds an intelligence layer on top of Google, Bing or other SERPs, and FastestFox, another add-on that increases user efficiency and makes “common Web browsing tasks” more convenient.

The solution from Superfish is easily integrated into addons, extensions and toolbars with a simple, single line of Javascript code. Superfish Visual Search for the Web will then help display similar and identical product results whenever a user scrolls over any product image on any Web page. The results are aggregated from a listing that contains over 150 million products from retailers such as Amazon, Walmart, Target, Best Buy, Macy’s, eBay, Toys ’R’ Us and many more.

“We previously relied on Amazon affiliate links to monetize FastestFox,” says FastestFox CEO Yongqian Li. “Superfish provides a new avenue for monetization. The financial benefits are great, but I am especially pleased with the way it has helped me deliver even more value to my users.”

Piecing It All Together

There’s simply no blueprint for building the ultimate affiliate marketer. No matter how hard you try, there are always new platforms to explore (ebooks and apps, for example). There will always be the next popular channel in which to involve oneself (i.e. Facebook, Twitter and YouTube), and there will always be innovative and exciting new ways to monetize content and community. Only with a formal understanding of your audiences needs and wants, a dedication to developing community around knowledge and expertise, and a willingness to push forward despite the many obstacles and challenges in the marketplace today, will you be able to realize the fullest version of your affiliate self.