4 ms·

Fred Wilson: Affiliate Marketing Undervalues The Link

18 points by stakent 17y ago

Brushfire 17y ago
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.
- mahmud 17y ago
  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.
  - Brushfire 17y ago
    Yep, I agree. Thats what I meant by the 'Above The Line' reference. http://en.wikipedia.org/wiki/Below_the_line_(advertising) http://en.wikipedia.org/wiki/Below_the_line_(advertising)
zackattack 17y ago
I think that $25 for posting a link one time is a reasonable rate.
- mahmud 17y ago
  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.
chrischen 17y ago
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.
fnid 17y ago
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.
- cwan 17y ago
  We all tend to be hypocrites in one way or another and whether Fred Wilson is one, to me at least, isn't relevant. You've just posted a completely ad hominem attack while completely overlooking the premise of an interesting post (granted, "interesting" is a subjective statement). I also don't think it's terribly surprising that he would promote/give a platform for his portfolio companies - that's almost expected. As for affiliate marketing - why wouldn't he? Aside from a smaller argument that every penny counts, it would seem like it's a useful little experiment which broadly speaking ,suggests a significant opportunity in ecommerce given what he's saying is that it's a mispriced asset. Whether or not it's a mispriced asset that can be monetized is what should be up for debate.
  - fnid 17y ago
    I think in this case, ad hominem is appropriate. He is arguing about mispriced assets while investing in companies that sells more virtual tractors than John Deere. He's saying, in effect, Amazon isn't paying you enough to waste your time posting links to their books, while making other people pay good money to waste their time growing virtual gardens. Rationale like that doesn't work well for him.
    - fredwilson 17y ago
gyardley 17y ago
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.
leviathant 17y ago
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.
kadavy 17y ago
This will all correct eventually, and it will be huge for those who are currently getting themselves in position to reap the benefits.
il 17y ago
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.

18 points by stakent 17y ago

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.

mahmud 17y ago
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.
- Brushfire 17y ago
  Yep, I agree. Thats what I meant by the 'Above The Line' reference. http://en.wikipedia.org/wiki/Below_the_line_(advertising) http://en.wikipedia.org/wiki/Below_the_line_(advertising)

zackattack 17y ago

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

mahmud 17y ago
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.

chrischen 17y ago

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.

fnid 17y ago

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.

cwan 17y ago
We all tend to be hypocrites in one way or another and whether Fred Wilson is one, to me at least, isn't relevant. You've just posted a completely ad hominem attack while completely overlooking the premise of an interesting post (granted, "interesting" is a subjective statement). I also don't think it's terribly surprising that he would promote/give a platform for his portfolio companies - that's almost expected. As for affiliate marketing - why wouldn't he? Aside from a smaller argument that every penny counts, it would seem like it's a useful little experiment which broadly speaking ,suggests a significant opportunity in ecommerce given what he's saying is that it's a mispriced asset. Whether or not it's a mispriced asset that can be monetized is what should be up for debate.
- fnid 17y ago
  I think in this case, ad hominem is appropriate. He is arguing about mispriced assets while investing in companies that sells more virtual tractors than John Deere. He's saying, in effect, Amazon isn't paying you enough to waste your time posting links to their books, while making other people pay good money to waste their time growing virtual gardens. Rationale like that doesn't work well for him.
  - fredwilson 17y ago

gyardley 17y ago

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.

leviathant 17y ago

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.

kadavy 17y ago

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

il 17y ago

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.