Affiliate versus
publisher applies solely to inventory sources. Where they get their ads is at
the heart of this week’s article, and it rounds out the picture by dealing with
the advertiser component. Just as inventory can be thought of along multiple
axes, so too can the places from which they obtain their ads. In the advertiser
world, it’s not affiliate versus publisher but ad network versus affiliate
program.
To further complicate
matters, affiliate programs are either individual offers such as signing up to
be an affiliate for Sharper Image or they are what is referred to in the
affiliate world as “hubs.” The latter aggregates multiple programs and makes
them available to affiliates/publishers in a single place. This article deals
with ad networks as they compare to “hubs.” Similar to the inventory discussion
on affiliates and publishers, whether a company calls itself an ad network or an
affiliate program largely depends on the company, but certain objective
differences exist. The differences between the two
distill down to their take on exclusivity, brand, technology, and
positioning.
As it pertains to our
world, ad networks and affiliate programs both focus on pay for performance
advertising. Outside of both paying out publishers an amount per action, the
similarities end there. The first major distinction is exclusivity. Ad networks
accept the commodity nature of the business. The barrier to entry for affiliates
to switch from one network to the next almost does not exist. As a result,
traffic providers jump from one network to the next in order to find the best
payout for a particular offer. If they can get an offer for $18.50 on one but
only $18.00 on the other, they have no qualms about going for the extra $.50.
Affiliate programs on the other hand do their best to avoid offering similar
offers that can be found both on other affiliate hubs and/or on the ad networks.
They often will lock a particular merchant into an exclusive arrangement whereby
that offer only exists on affiliate hub “a.” Want Apple iTunes for instance?
Traffic providers can only run it from one place. The exclusivity leverage, while
helpful, often goes counter to the ad network operating model.
The second major
difference between ad networks and affiliate hubs deals with brand. Similar to
the discussion on the inventory side of the fence. On the advertiser side,
affiliate hubs place a much greater focus on offering brands for their traffic
providers. Ad networks tend to take a much more pragmatic approach making sure
the offers they feature convert. They tend to leverage brands inside of their
offers, e.g. coreg paths but do not focus on signing up brands directly.
Whether the DVD rental company starts with a “B” an “N” or any of the remaining
letters concerns them not. The eCPC and eCPM – those are the metrics that matter
to an ad network. Having already determined that the typical traffic source for
an ad network could care less whether the company they promote has a strong brand
explains their rather laissez-faire attitude towards having brands available for
promotion. Affiliate hubs will maintain poor converting offers from big name
brands to put on fancy power point presentations but not the ad networks.
Besides exclusivity
and brand, affiliate hubs and the ad networks also differ with respect to their
technology. In many cases, the affiliate hubs rely on their traffic sources for
targeting. They rely on their inventory partners to create the correct
opportunity in which to display an ad. The affiliate hubs' approach is rather
static. If they offer a means to host and dynamically serve ads, that technology
generally takes few variables into account. By contrast, ad networks tend to
invest more money into ad serving and optimization. They rely less on the
traffic partner to provide the targeting and pick creative; instead, they often
ask the traffic partner to allocate a certain size or real-estate so that they,
the ad network, can serve in the ad in which they deem best for that inventory.
Ad networks have evolved by taking advantage of any opportunity that exists, by
always trying to squeeze out a few extra pennies at a time.
The last dimension in
which ad networks and affiliate hubs tend to materially differ is with regards
to positioning. The affiliate hub often pitches itself as a technology solution.
They will speak directly to a potential advertiser, and prefer talking to advertisers that
have no experience in internet advertising. The affiliate hubs offer a
technology-driven service by which any advertiser can “sign up” affiliates to
have them promote their products. The affiliate hubs do not promise traffic,
rather a means for potential traffic to help the advertiser spread the word. Ad
networks on the other hand, often exclude advertisers with no experience online
and those that have not spent time testing and perfecting their acquisition
process. Ad networks, often due to their assumption of more risk, will filter out
non-converting advertisers, offering a lower number of products to promote but
generally much higher conversions across the board. They pitch their value add
to the advertisers in terms of additional reach, not as a technology solution to
enable an advertiser to have affiliates.
Both affiliate hubs
and ad networks play a vital role in our space. As is the case with affiliate
versus publisher, the two terms while subjective do not imply
mutual-exclusivity. A site can both be an ad network and affiliate hub, but as
it is often hard to do the two well, that leaves plenty of room for growth in
both. Just as the publisher barrier to entry almost doesn’t exist, so too is
the advertiser barrier to entry almost nonexistent when it comes to ad networks.
That is why companies often start out as ad networks, with new ones seeming to pop up
daily. Affiliate hubs arguable occupy the larger role but their platform of
exclusivity makes running them often not desirable. Ad networks take risk and do
their best to make up for their weaknesses in brands and exclusivity by
providing other value-adding services. When affiliate hubs learn to do the same,
they will represent a difficult force with which to compete and live up to the
enormous market size placed on affiliate marketing.
Jay Weintraub
