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The Death of Affiliate Marketing?

I hate to say this, but the days of Affiliate Marketing are numbered. With it’s popularity over the past 10 years, this once giant player of the industry is now being overshadowed by increased SEM budgets, smarter marketers and search engine giants such as Google are taking away from the Affiliate budgets of many businesses  It’s just another stage in the "evolution" of online marketing. This is a sign that businesses are catching on to the latest trends and services such as Google Adwords are increasing the competition and forcing companies to reach deeper into their pockets to compete for their spot in the online marketplace.

Google, once again, is changing the  way online marketers do business. As companies continue to grow online, Affiliate services such as Linkshare and Commission Junction are losing advertising dollars to Google, Yahoo and MSN and business owners know this. They are seeing their advertising budgets increasing  and any additional fees that do not give them something in return does not make sense to them anymore. Businesses are  realizing that instead of paying commissions and costly monthly fees for branding and customer acquisition, they can get more bang for their buck if they spent more of their money on SEM services such as Google Adwords, where they can track ROAS, conversions, promote branding and drive new business ALL at the same time.

In fact, the emergence of analytics, and conversion tracking is more of a "no-brainer" to them than relying on affiiliate services where they pay the same monthly fees, regardless of how well the program does.  In fact, some businesses are going as far as to creating their own Affiliate partnerships where they are contacting websites personally and negotiating commission structures and at the same time, eliminating those monthly fees and actually having some control over the partner’s marketing tactics. This is especially important with paid search and bidding on their Trademarks.

Let’s discuss the following trends that are taking place today. I have seen first hand, how companies are reacting to the shift in the Affililate channel:

  • Removing the affiliate channel altogether.
  • Building exclusive partnerships with select websites.
  • Creating their own internal affiliate network.
  • Hiring "in-house" SEM and utilizing Google Site Targeting (banner networks)

Why are they doing this? Money, of course. Why waste the advertising budget on costly monthly fees and commissions, when you could use that money on achieving a similar result with one of the suggestions above. In my humble opinion, as Google continues it’s dominance of the online advertising arena, companies are getting smarter with all of the tools available to them. Would you spend your $1000 in monthly fees for a service that is already taking commissions off the top, or would you spend that $1000 getting 15,000 additional targeted visitors to your website  where you don’t have to take 5%-20% commission off the top?

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3 Responses to "The Death of Affiliate Marketing?"

  1. Let’s say, for example that your main niche of business is online pharmacy. An affiliate should have all the necessary knowledge and information pertaining to the field. Lack of healthcare cover is driving million of Americans to self help medication. This is propelling the growth of online drug stores as a lucrative internet affiliate program.

  2. Good information… i need that!!!

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