Performance Marketing Prognostication

November/December 2006 Issue: Page 96

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It's that time of year again when we ask industry movers and shakers to look back at the past 12 months and forward to the next year in performance marketing. Here's what those in the know have to say.

Looking back, what do you think were among the most significant themes to emerge in 2006 in the performance marketing space?

"There has been a huge shift in traffic sources – with two main groups – the first being PPC, which has been a major source of affiliate traffic in 2006 and has brought with it significant issues such as "Brand Bidding." The second being blogs, which I believe will be a major driving force in the coming years."
- Brian Littleton, founder and CEO, ShareASale

"When the situation calls for it, affiliates and affiliate managers can band together and stand their ground on an issue."
- Scott Hazard, president, Brightside Media

"No truly new themes emerged. We saw click fraud penetrate the consciousness of the mainstream media at the same time there is a growing sense of animosity (possibly jealousy?) towards Google inside and outside our industry. Some merchants are reviewing their trademark bidding terms and looking to accommodate affiliates. Finally, you did see a lot of affiliates publicly say they were moving away from black hat and toward white hat activities."
- Brook Schaaf, principal, Schaaf Consulting

"The desire to achieve better scale (less overhead, more revenue) drove every major corporate merger as well as CJ's failed LMI project. It's what makes Adwords attractive and successful."
- Jeff Molander, CEO, Molander & Associates

"Just how vibrant and powerful the performance marketing community is. This can be seen in the response to LMI, the upward trend in budgets for performance marketing by advertisers and the growth in publications, events and forums serving the community."
- John Grosshandler, event director, eComXpo

"The re-emergence of brand as an important part of the marketing equation after years of focus on ROI and search."
- John Battelle, founder and chairman, Federated Media Publishing

"Google actively trying to squash privatelabel PPC arbitrage affiliates in the name of 'better user search experience.'"
- Tim Ash, president, SiteTuners.com

"Cooperation. 2006 displayed greater willingness by merchants, publishers and networks alike to adopt 'cooperative selling' strategies."
- Kurt Lohse, founder and CEO, KeyCode.com

"New trends such as the use of video and advertainment continued to grow in 2006 but pose challenges for strict ROI/CPA advertisers."
- Joshua Sloan, director of online marketing, 1and1.com

"Search is a bigger part of affiliate marketing than many people thought."
- David Lewis, president, 77 Blue

"Clearly 2006 will be marked by what some are calling 'The Affiliate Massacre of 2006' where Google updated their quality score rankings in Adwords and started placing penalties on affiliate landing pages. In many cases this caused minimum cost-per-click fees to go from 10 cents to $5 or $10 on many keywords. This effectively shut down PPC advertising for many affiliate landing pages. This change is causing many merchant advertisers to rethink their policies for PPC marketing since publishers who were running largescale campaigns and linking directly to the merchant's site using the merchant display URL and an affiliate link were largely unaffected by the recent change."
- Adam Viener, president, imwave.com

"A few years ago, you could quickly tell whether or not an online marketer 'got' affiliate marketing by discussing affiliates. Those that 'got it' conveyed respect for the affiliates. Those that didn't, well, they tended to use adjectives like 'little' or 'questionable' when describing their role in the model. In 2006 the performance marketing community witnessed affiliates asserting their right to be treated respectfully. It is no longer acceptable to be a participant in this space and not get it."
- Lisa Riolo, online marketing professional

"Affiliates/publishers are in the driver's seat now, not merchants/advertisers. Affiliates have money, power and traffic and their requirements; business practices and needs dominate the relationship. Merchants need them more than they need merchants who are unable to comply or cooperate with terms. They can deliver the goods; can merchants respond adequately to their demands? If not, NEXT!"
- Linda Woods, president, PartnerCentric

"Behavior targeting seemed to be a popular buzzword but I never heard too many real success stories. Online marketers are actually getting comfortable with the basics and are now casting an eye toward testing and optimization to squeeze out better results."
- Greg Schraff, director of strategy and business development, Brooks Bell Interactive

What will be the 'big thing' that we can expect to happen in 2007 in online marketing?

"A return to the importance of new-traffic- generating affiliate marketers."
- Brian Littleton, founder and CEO, ShareASale

"Yahoo and Microsoft will debut new products to compete with Google."
- John Battelle, founder and chairman, Federated Media Publishing

"I expect to see many more super-affiliates stepping up to the plate and saying, look, we need to take responsibility for engaging in upright business practices. You'll see them become open to educating newcomers in the industry. It won't be about cutting out your competition, but developing a bigger and more powerful affiliate workforce. And I expect to see managers becoming excited about the possibilities of capturing the loyalty of those affiliates by becoming truly affiliate-friendly."
- Anik Singal, CEO, Affiliate Classroom

"Performance models such as CPO and CPA are the main driver. Advertisers as well as networks/providers realize that success-based commission models are king and key for success. Globalization is the most important issue. Globalize or die."
- Holger Kamin, executive account director, Zanox

"There is no doubt in my mind that usergenerated content will really start to take fire – especially around video. Still, merchants will have to be innovative to get beyond the sheer volume of media – music, podcasts, pictures and now video in circulation."
- Wayne Porter, senior director special research, Facetime Security Labs

"User-generated content such as short online videos will proliferate at an even larger scale and pace and show that it can convert as advertisements."
- Jim Kukral, publisher, ReveNews

"Video ads will continue to grow in popularity as traditional marketing agencies attempt to maintain their grip on 'their' industry as they gripe all the way to Congress."
- Todd Taylor, manager business development, TaxBrain.com

"2007 will bring far more practical offline marketing applications online. Continued on Page 2...

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