The Affiliate Marketer’s Journal

I guess it’s a month late, but here’s my prediction for 2006: By the end of the year Google will make a full-fledged venture into affiliate marketing, directly competing with established networks like Commission Junction and LinkShare. The signs are all there. This “Google Affiliate” product will be an extension to Google Adsense, which lets webmasters get paid for showing ads on their site. But instead of simply getting paid a few cents when someone clicks an ad on their site, the webmaster would be paid a much more handsome amount if that click converts into a sale.

The most important reason for Google to enter the affiliate marketing arena is simply diversification. Right now alarm bells are going off with their investors since 99% of the company’s revenue comes from pay per click advertising, which is wrought with fraud. Indeed in latest 10-Q report, Google says if it can’t control click fraud they “could lose the confidence of its advertisers.” A recent report by Wired Magazine was more pessimistic, saying that click fraud could “crash the entire online economy.” Such fraud is virtually non-existent when dealing with affiliate marketing because advertisers pay only if an action is taken, be it someone purchases a product, signs up for a service, etc. In truth the problem of fraud actually switches from someone dishonestly clicking a link to a company that dishonestly forgets to report a sale to the network and pay a commission and transaction fee. The solution, however is simple for Google since they can simply require all merchants to use their newly acquired Analytics product which already tracks ecommerce transactions. In fact there are reports that Google is already using such conversion information to compensate Adsense webmasters that drive more sales with higher pay rates.

The transition to pay for performance from pay per click will be a natural one for Google. Currently they already offer a few in-house affiliate programs that deal with their own services. For example if you refer a webmaster to Adsense via a button (like the one on the right) and they make $100 in sales within 90 days then you make a $100 bonus as well. Similarly if you can get someone to download Firefox with the Google toolbar they’ll pay you $1 in commission. [ Interestingly enough they don’t pay for clicks, an admission, I believe, that they are well aware of the amount of fraud involved in pay per click advertising and they simply don’t want to deal with it. ] Google is also very interested in spreading into other aspects of advertising, having recently made forays into both radio and print. They are also constant experimenting with their online advertisements, first by introducing graphic ads and most recently by allowing advertisers to use dynamic rich media ads.

So when would this “Google Affiliate” network be released? Only time will tell. However being late to the market hurt them in the instant messaging field so I expect it to be within the next few quarters. They will probably also merge it into Adsense and Adwords thereby having a large network of affiliates and merchants nearly overnight. I for one, can’t wait to see how this could turn out.

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In my last posting I talked about a new pay per click ad called service called eMiniMalls by Chitika. At the time I raved about how much money I was earning from their clicks compared to other ad services such as Google Adsense. However in the last paragraph I wrote:

As I haven’t been paid by Chitika yet I am not sure how many (if any) of my clicks will be reversed.

Well I was finally paid for October earnings yesterday and I was quite shocked by the auditing they did to my earnings. Apparently 36% of my targeted clicks were deemed invalid meaning that they were from non-supported countries or duplicate clicks. When I look at untargeted clicks it’s even worse. One day my earnings dropped from $65.02 to just $39.44. Apparently others have had similar results. According to a posting on Jensense one person lost 90% of their revenue due to the auditing. Pretty dramatic results. And worse we have to wait up to two months to see the results. That’s just not right. Coming from a programming background I know that it wouldn’t be that difficult for them to determine where a clicker is located in the world and credit the click only if they are in a supported country. And filtering duplicate clicks is even easier! Give me half an hour and I could code it.

To add insult to injury they recently reduced the clickable area in their ads to stop ‘curiosity clicks’. This has dropped my click through ratio a lot. And they implemented the change in a terrible way. Now some of the text looks like a link but not isn’t clickable. Way to confuse our visitors. On the plus side they said they will give us all a 10% bonus for November’s earnings.

Despite the disappointing results I have decided to keep running eMiniMalls for the time being. I am averaging $0.69 per targeted click, which is a little higher than Google is paying me. Plus they have posted a message on their blog indicating that they have released an alternate URL feature for unsupported visitors and are working on doing the auditing in near real-time. I suppose I should give them a break as it’s still pretty new technology.

Postscript - Determine Which Clicks Are Most Profitable
Here’s a quick way of see what clicks are earning you the most money with eMiniMalls. Add the following code after the line “ch_query = ” in the JavaScript block:

ch_sid = ch_query;

Then you’ll be able to see what your click through ratio is for each keyword and how much each keyword’s click earns you. It’s very useful information, especially if you are using eMiniMalls on untargeted traffic using their random keyword code.

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Last month I began to hear about a new pay per click advertising method called eMiniMalls by a company named Chitika. The ads, a sample of which can be seen below, allow customers to comparison shop products from a page on your web site. They can operate in contextual mode (where the product displayed is determined by the keywords on your site) or you can specify one or more product keywords. If you want to use Google Adsense on the same page as a Chitika eMiniMall then you need to disable the contextual advertising mode and supply it keywords yourself.

I began to experiment with eMiniMalls a short time ago. I put one on a site’s pages just above an Adsense banner. So far the results have been fantastic. In the first three days I made more money with the eMiniMall on that site than I had the whole previous month with Adsense. Clicks are paying on average $1 each. Plus as I kept the Google Adsense banner below I am still earning a decent amount from it as well. In fact as both ads are 468×60 in size and compliment each other nicely, I think my Adsense click through ratio will increase since the eMiniMalls shows a product graphic and a well known trick to increase Adsense click through ratios is to have a graphic above the banner.

One major problem to note about Chitika eMiniMalls is that they audit the clicks at the end of the month to remove duplicate clicks, clicks from India, etc. As I haven’t been paid by Chitika yet I am not sure how many (if any) of my clicks will be reversed. Still, I think that if you have any pages about products and are using Adsense right now, then you should rush to sign up for eMiniMalls as soon as possible. Your visitors probably haven’t been exposed to them before so click through ratios are going to be very, very high for the next few months and your potential to earn a lot is great.

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More and more I am seeing the trend of merchants offering “private label” or “template” web sites. Private labels appear to be a full fledged e-commerce site, complete with product pages, shipping policies, etc. When customers opt to buy something from the template site, however, they are actually directed to a shopping cart on the merchant’s site. Most of the time the customer is totally unaware that they are actually buying from the merchant’s site instead of the private label site that they had been browsing. Template sites have several advantages as well as a few disadvantages which I’ll quickly go over.

The first advantage is customer retention. Since they spend their time at the template site they they’ll think they are actually ordering from you. Repeat orders are much more common as you effectively own the customer and have a cookie of infinite duration. In contrast, when using simple affiliate marketing it is much more difficult to get the customer to return to the affiliate site compared to the merchant site the customer was sent to. As well, most private labels often allow you to set the prices for products, letting you set your own commission rate and undercut the competition. Finally, since template sites give you static HTML product pages on your server, you can fully optimize them to rank highly on the search engines. This is essential since there will be template sites with the same content and Google’s duplicate content filter will rank unchanged template sites very poorly. An example this can be seen by searching Google for “And, our state-of-the-art vacuum sealing” (an excerpt from a page supplied with a PriorityClick template site).

There is one major disadvantage to template sites: the legal implications. When using typical affiliate marketing the customer is fully aware that they are ordering from a given company, and if they have any problems or complaints they will deal with the merchant and not you (at least the vast majority of the time). However as private labels hide the merchant from the equation, customers may come after you to deal with problems, refunds, etc. Indeed you may even be liable for damages caused the product. A good legal disclaimer should be present on template sites to protect you.

To get started with template sites, here are a few companies who offer them for free to their affiliates:

• PriorityClick - Offers sites for both printer ink and diabetic supplies.
• AllZines - Free private label site for selling magazine subscriptions.
• X10.com - Template site for security & home automation products.

Have you used a private label affiliate marketing site before? If so then please leave a comment below with more details on your experience.

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