As a Marketing Manager working for both large and small organizations for the last 13 years, I have experienced first hand the evolution of the e-Commerce marketing space. I have seen the rise and fall of impression based banner advertising, the onset and continued evolution of search engine marketing which includes bid management tools and the rise and fall of affiliate programs/partnership programs which do not provide adequate ROI due to "black hat" marketing practices.

The Case for Pay-Per-Click
In my experience, I have found the internal (pay-per-click) PPC channel is proving to be the channel of choice for many organizations to acquire and retain customers for it provides a better customer experience, higher ROI and improved overall branding which is of utmost importance in the increasingly competitive landscape of comparative shopping portals, affiliate and start up sites.

Organizations who have gained experience in this space have a better understanding of their competition, are able to benchmark their performance, set strict goals and objectives for their e-Commerce marketing channel managers, incorporate SEM bid strategies, hold affiliates to agreed upon guidelines, improve internal "white hat" SEO tactics and have begun to budget e-Marketing spend wisely moving budgets to the appropriate channels (those which provide the best ROI). These organizations are performing cost benefit and life time value analysis of their e-Marketing channels and are realizing their internal paid search channels out-perform others based on both internal and external data.

Affiliate Marketing Re-discovered
With rising CPC rates, and "black hat" marketing tactics by both competitors and affiliates, organizations have taken a serious look at their inflated PPC and Affiliate budgets and have realized the affiliate channel is no longer an acquisition channel but merely a portal in which their portfolio customers are using to obtain free shipping, coupons and special discounts. This being said, I envision organizations scaling down their affiliate channels to a handful of top performers if not discontinuing the channel all together and moving affiliate budgets to internal PPC channels.

I am not stating the Affiliate channel is not a profitable channel for many organizations nor will it cease to exist; merely stating this acquisition channel over the last several years has led many organizations questioning the value due to affiliates finding new ways to work around or defy the guidelines in which smart organizations have clearly defined in the initial sign up process. One of the major concerns being, the labor intensive process of policing affiliates and their "black hat" SEM and SEO tactics of driving traffic and/or stealing traffic from other affiliates. This is in no way saying all affiliates are "bad or unethical" but a handful of the bad apples in a portfolio can make an organization question the affiliate channel as a whole.

Affiliate Network Concerns
Another major concern with the affiliate marketing channel has to do with the networks themselves. When organizations hire networks with a revenue share model, they have an understanding their network is looking out for their best interests. In many instances this is not the case. With the rev share network model, both affiliates and networks are earning commissions based on referrals and/or conversions, therefore, is it really in the network's best interest to police affiliates on the behalf of the organization which has trusted them to do so? I think not... The responsibility of policing is being placed on the shoulders of the internal affiliate marketing manager who should be focusing their attention on providing affiliates with the most up to date banners, promotions, and offers to assist the affiliate in doing their job; which is to driving converting traffic and increasing online acquisitions.

What's Next?
In my experience and observations, organizations are becoming cost savvy with respect to their channels and hiring internal experienced e-Commerce managers who are proving to management they can provide a better ROI and improved branding via internal means.

Kelly Cuva, President of Cuva Consulting, holds 13 years online/offline marketing experience, an MBA in e-Business and a Bachelor degree in Marketing.

She has worked for both large and small organizations such as AT&T Universal Card Services, Citibank, Home Shopping Network, Venus USA and Odimo Inc. and has held positions in Internet Marketing, New Business Development, Marketing Communications and Advertising.

Posted by Editor on May 18, 2006 10:29 AM

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