
Fred Wilson: Affiliate Marketing Undervalues The Link - stakent
http://www.avc.com/a_vc/2010/01/affiliate-marketing-undervalues-the-click.html
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chrischen
Perhaps, but then the value of that link is driven down by the fact that
anyone can post it, and that it's no special resource that you have. The value
is based on how easy it is to get 500 clicks, not on the potential of those
500 clicks.

Hey I could refer someone to popular store, but if they're popular eventually
someone else would come by and refer them if I don't. The store's ability to
monetize the customer is not largely dependent on my specific referral.
Perhaps that conversion at that specific _time_ was, but converting the
customer is a commodity in general.

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leviathant
Some programs undervalue links more than others. I am avtualy quite cool with
Amazon's system, but recently got burned really, really badly by eBay. They
don't allow you to post affiliate links on Twitter, but we ran Twitter posts
about the NIN eBay auctions that drove hundreds of thousands of viewers to
eBay. I was lined up to make nearly $2k in commission when I got a notice that
all my commissions were canceled because we used Twitter.

I don't understand why that means I shouldn't earn commission for the traffic
I drove.

Additionally, I am banned from ever joining again.

Unfortunately the revocation and ban happened while I was (and still am) on
vacation to Egypt, so I don't really have time to deal with it.

Yes, affiliate programs take advantage of you. You have to decide how
comfortable you are with that, and at what level. It's still better than no
affiliation at all.

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gyardley
Affiliate programs generally try to account for click-now buy-later behavior
by setting a tracking cookie on the user's browser that lasts for a period of
time - 30 days is pretty typical. Provided the user doesn't click another
affiliate link (since credit is generally only given to the last affiliate
clicked), Fred should eventually get credit for those future purchases. (Edit:
I looked into it and Amazon only gives credit for purchases made 24 hours
after the click. Ouch! This is abysmally bad for an affiliate program.)

What affiliate programs (and all performance-based advertising, really)
_actually_ undervalue is the view. Fred spent all that time talking about that
product, but he gets no credit for it unless the link is clicked. That's why
publishers with market power sell ad space by the view, not the click, and why
the rates brand advertisers are willing to pay are much higher than the number
of clicks the ads generate would justify.

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il
Affiliate marketing is more than Amazon and eBay. The vast majority of the
industry is built on continuity models that pay closer to $40 for a purchase
of a free trial, which usually results in making $2-$3 per click.

Very few people have actually made serious money with Amazon. Successful
affiliates get much better payouts. If anything, I think affiliate marketing
OVERvalues the link. When you're making $2-$3 a click, you end up raising PPC
bid prices significantly, which ends up forcing out anyone other than
affiliates.

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fnid
I've gotten tired of Fred's blog. I really don't like seeing requests made
from my browser every other second. I don't like how slow it is because he has
every social hook in there, many to his own companies.

He's a venture capitalist, why is he wasting his time with affiliate
marketing? In the amount of time it takes him to build the link to amazon, he
should have been working on closing a million dollar deal or doing research
into companies or finding a better justification for supporting web fraud
companies like zynga who make the internet worse like a lot of his
investments, bit.ly to name just one more.

I also find him to be a bit hypocritical. He blasts conferences, then blogs
all about having gone to them. He's lost a lot of credibility in my book. I
don't think he or his investments make the web better.

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fredwilson
i am "wasting my time with affiliate marketing" because i want to understand
this stuff and possibly make it better.

and zynga is far from a fraud. it's the most successful social gaming company
on the web, it has innovated on the virtual goods model and proven that you
can build a very large business with that model.

i don't like to go to big splashy conferences and that's what i blogged about.
i do like to go to niche conferences where i can meet real people and
entrepreneurs.

i'd like to understand why you think the investments we make don't make the
web better.

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thafman
Fred, as someone who felt your wrath earlier today all I can say is that we
(the loosely dev/hacker community) feel that Zynga, playfish,et al. peed in
the pool by having bad offers in the first place and made it much harder for
the rest of us.

We also placed lots of stock in you personally as the older, wiser voice on
the Web, and then the shitstorm broke out over "scamville" and you were
nowhere to be found on this subject. It hurt to see someone we looked up too
as a "grown-up who gets it" not say what you were clearly thinking.

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fredwilson
i think you need to understand the limitations of what i can say when our
companies get in the news. i can't talk about stuff twitter is doing without
clearing it with them first. i can't talk about stuff zynga is doing without
clearing it with them first. i can't talk about stuff that etsy is doing
without clearing it with them first. etc, etc.

and my wrath is not at you, it's at all the misinformation out there, spread
by blogs who did not work and just repeated the misinformation about zynga

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kadavy
This will all correct eventually, and it will be huge for those who are
currently getting themselves in position to reap the benefits.

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Brushfire
This seems obviously correct. But how do we really measure this? More
importantly, how do we value it? What if I click through a link to the book,
having heard about it before, and then hear from a friend about the book. It
seems like the same problem that valuating billboard traffic - its above the
line at some level.

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mahmud
Ads are not only used for conversion, they are also good vehicles for building
brand awareness. Sometimes they're just fancy "Spite Fences"; look at the
harbour skyline of any major city like NYC, Hong Kong or Sydney; you will see
a row of giant buildings, each with an electronic manufacturer's name (Sony,
Samsung, Panasonic, Hitachi, LG, etc.) They have the appearance of "head
quarters", but look close .. it's most likely a rented spot. Why do they all
congregate at that corner? why not spread somewhere else?

A good chunk of advertising, specially billboards, is actually "defensive" in
nature.

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Brushfire
Yep, I agree. Thats what I meant by the 'Above The Line' reference.

<http://en.wikipedia.org/wiki/Below_the_line_(advertising)>

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zackattack
I think that $25 for posting a link one time is a reasonable rate.

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mahmud
For Fred Wilson? No it's not. I don't know why he chooses to use Amazon
affiliates, but the man's personal brand, the quality of his traffic, and his
stature in the "community" allow him to negotiate directly with advertisers in
an endorsement model.

His readership is the most coveted in all of the industry. Educated and
affluent 30+s. Ignoring the personal brand for a minute, if Amazon wanted to
compensate quality publishers with bonuses, it wouldn't cost them anything to
see him in their matrices immediately. 40 purchases is _very_ high. He would
make bank pushing financial products, even more if he stooped low to gambling.

