Why affiliate marketing needs a serious overhaul

On Venturebeat last year, two articles appeared about affiliate marketing.The first was a negative look at affiliate marketing entitled The big ugly affiliate scam and the other was a positive story called  Sorry, affiliate marketing actually isnt a scam. Sometimes it’s hard to tell which is correct, as the lines are blurred and the reality lies somewhere in between.

Affiliate marketing has a dirty reputation and can hurt your business if you fail to make something out of it. However, it’s probably one of the best and cheapest ways to grow your business when it gets used effectively. Plus, if you’re following a heavy growth strategy as a merchant, you simply can’t ignore it.

Also people tend to forget it’s also a great way for startups to get a business going in ‘after work’ hours, and it could help you grow a small site into a huge business without the need for funding. Affiliate marketing has actually kick-started many online startups that have become huge success stories. Think: Skimlinks, Retailmenot, Ebates.com, etc.

The Naming Problem

The term “affiliate marketing” covers partner programs of high quality online giants like Amazon, Apple, and Zappos, but it also covers weight loss pill subscriptions, online dating, casino tools and “how to get rich quick” schemes. As a result the term has a mixed reputation.

We’re seeing markets respond in different ways to this problem.

In the U.S., affiliate marketing continues to be pitched as a way to “make money online.” If you check out the largest affiliate networks, you’ll see that pitch on all of their websites. From a merchant’s perspective, though, that approach has little to do with quality and added value. So we’re seeing that big brands don’t want to work anymore with people who are brought in solely on the promise of making money.

But in Europe the market is forcing affiliate networks to move towards a name change. The larger European affiliate networks are getting rid of the “make money online” pitch and are moving away from the title of affiliate network towards the title of performance agency or network. However, this move sometimes seems like a desperate attempt to take power back from the rise of performance-based display advertising.

Everywhere you look, though, there is some doubt about where to go to next. The affiliate name carries a lot of weight with it. In my eyes the best move for all markets is to get rid of the poorly branded affiliate market and change both the name and the way of thinking. It’s the merchants who are in control, and if you can’t provide them with true partners instead of moneymakers, you’ll be out of business in 2015.

On board level it’s already been decided

Affiliate networks are still figuring out a way to deal with problems like what should we call it then? Is this the time to change? Is last cookie counts still the best model out there? And do we delete this semi-fraudster or do we keep him in the program? But while the networks struggle with those questions, online brands have already decided: More performance display, more native advertising, fine. But affiliate marketing just isn’t hot at the moment — so why are we spending so much on these guys?

And this truly hurts affiliate marketing, one of the greatest startup engines and online marketing machines out there.

Time to bring the performance back

A name change to something like “performance marketing” or “partner marketing” would be a good first step. But it isn’t the real step the networks have to make to stay top of mind for the online merchants the next few years.

What the networks need to do is kill the low quality/damaging publishers, get more quality control in place, and embrace the (working) attribution models and new optimization technologies out there. In other words, give advertisers what they want and what they are willing to pay for — true performance from their partners.

The networks need to educate the merchants about their business models to reach this goal, not education that benefits short-term deals or quick cash but that has a long-term focus.

It’s not easy to get this all done, and changes like this go very slow. But when merchants have “performance marketing” working for them, it can be the strongest marketing channel out there. Most of the successful and thriving businesses out there use it over and over again. But it has to work well to actually work.

Jochem Vroom (@jochemvroom) is cofounder and managing director of Imbull. He is currently working on the global couponing site Flipit.com, and has seven years of experience within the affiliate sector as a manager, blogger, publisher, and speaker.