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Home Podcast Episode One: The Evolution of Affiliate By Gen3 Marketing Posted on Jul 27, 2023

Actionable Insights – July 27, 2023

Episode One: The Evolution of Affiliate

In the first episode, Kerry uncovers the ‘Evolution of Affiliate’ with special guests Michael McNerney, founder of Martech Record and Adam Weiss, former SVP of the Rakuten Affiliate Network. Listen or watch it below.

Transcription

 

Kerry Curran:

Hello, and welcome to the very first recording of the Gen3 podcast, Actionable Insights, where we explore learnings and thought leadership to improve your affiliate marketing programs. My name is Kerry Curran. I am the Chief Growth Officer for Gen3 marketing.

We are the leading performance marketing agency specializing in affiliate marketing. We are over 16 years old and service clients of all sizes across the globe. And we’re going to get it kicked off with the first episode of Actionable Insights.

Today we’re here to talk about the evolution of affiliate and Mike and Adam have tons of experience and insight to share with us. So, with that, Adam, do you want to introduce yourself? 

Adam Weiss:

Sure, thanks for having me, Kerry. It’s nice to see you. Good to see you, Mike. My name’s Adam Weiss. I’ve been in the affiliate space for probably, I think just about 20 years. Spent a long time working at Rakuten, running the North American affiliate business, among other things. And for the last five years, I’ve been doing some strategic consulting and advising in the affiliate space, specifically on the publisher and technology side of the business. 

Kerry Curran:

So, Adam, how do you explain the industry to your friends or your mom? 

Adam Weiss:

It’s tough. You know, it’s funny. That reminds me, when you mentioned my mom, who this podcast hopefully isn’t all about, but years ago at Rakuten when we were doing events, we asked the same question and we kind of recorded videos of… our employees’ parents explaining what affiliate marketing was. And I wish I had the video, if anyone I know that was there is listening, I would love to dig that up. Um, but, uh, I remember my mom did a pretty good job explaining it, which is, you know, if I have a website and want to sell other people’s products and get paid for it, I will use affiliate marketing. And then she probably said that I’m doing a great job and to keep it up or something. 

Kerry Curran:

Amazing, amazing. And Mike, how about you tell us a bit about your experience and why should anyone listen to you today? 

Michael McNerney:

Well, I’m not sure anyone should but I’m Mike McNerney. I am the founder and publisher of Martech record Martech records an independent trade publication that covers the affiliate marketing space And I have a lot less experience than Adam in the space.

I got into it about six seven years ago now when I joined a company called partner eyes, which is one of the affiliate marketing platforms and learned quickly that it was difficult to find information about affiliate marketing platforms, about strategies, about services. And the background I had, which was a lot more significant than affiliate, was in trade publishing. I’d worked for McGraw-Hill for a long time in their trade publishing business, running their digital media business. And I realized that this was a great market for a trade publishing company. And the reason was it was clear that there was a lot of growth to be had. It was clear that there were several new entrants into the market. It was clear that there wasn’t a lot of clarity around what the products, the technology, the services did or how you’d buy it.

And so that makes for a good recipe for a trade publisher to come in and provide some clarity to the market. And so… My expertise is really finding other experts and getting them to talk about the market. I try to tell whoever will listen that I am not an expert in running an affiliate marketing campaign, but I am an expert in bringing together smart people who do know what they’re talking about, which often is Adam, by the way. So, I’m just going to lean on him for most of the conversation. 

Kerry Curran:

As we’ve gotten to know each other a little bit, we’ve shared a lot of insights around what’s hot in your minds, your research, what you’re hearing from your friends in the industry. So obviously wanted to get you together so kind of pick your brains and share a bit about how you’ve seen the industry evolve and where you think it’s going.

It’s indisputable that the industry really has evolved exponentially over the last decade. Talk about what you’ve seen in that time. Adam, you’ve been in it since Mike, and I were probably in grade school. So, tell us a bit of what you’ve seen? 

Adam Weiss:

Yeah, I mean, listen, there’s a lot of ways to probably answer that question. Yes, the industry has evolved. The industry has matured. And I think that’s a good thing. I think we’ve seen evolution in terms of my sort of lens on the world is often from the publisher side. And we’ve seen a lot of maturity and growth there in many ways in terms of technology, in terms of how they drive traffic, in terms of interest from an investment standpoint. And then, I think just overall, we’ve, you know, we’ve seen the expertise needed to manage a program, evolve as well, which, Kerry, I’m sure you know firsthand, you know, running an agency.

I think we’ve seen a lot of growth. And then lastly, just in terms of even our ability to measure ourselves and understanding what the value of the industry is and putting numbers against that was something when I started, we had no idea. I think that there’s been a lot of growth and maturity there. I think it’s a positive thing for our ecosystem. 

Kerry Curran:

When do you think the measurement started? 

Adam Weiss:

I guess formally, I mean, from my angle in 2016, I was still working at Rakuten and there was a research paper we commissioned with Forrester. And I forget the numbers off the top of my head back then, but that was the first time, we put a number to affiliate marketing. And I remember competitors reaching out saying can we use this, and we were like sure because we wanted to get the word out there and then I think a year or so ago the PMA picked it updated it

So, from 2016 till a year or so ago. There’s been growth in the space in terms of the value of our industry 

Kerry Curran:

Mike, what have you seen in your space or from your perspective? 

Michael McNerney:

Yeah, I think from my perspective, the biggest change since I kind of joined the industry in 2017 has been the number of different types of content providers employing the affiliate tactic, you that is kind of being paid to influence a sale in one way or another. I joined at the tail end of what would be the beginning of affiliate marketing, really being used as a driver for… Coupon cash back loyalty in the very beginning of a stage where anyone who wanted to have a diverse revenue stream would employ affiliate in one way or another.

We’ve seen this explosion over the last five or six years of content providers or commerce content, however you want to find that, using affiliate and making it a significant portion of their revenue, influencers entering the market and leveraging affiliate. New content providers making this part of their revenue stream. So that’s the overarching theme, I think, where there’s been the most change. And I think the data that back that up is kind of twofold. One is, anytime you see an earnings report now from a publicly traded, media company, they refer to affiliate. Now they don’t always use the word affiliate, which I’m sure we’ll get into kind of the nomenclature and how that is, chaotic. But you’ll see transactional media or commerce content or all sorts of things that they use. But what they really mean is affiliate and it’s driving huge portions of the revenue and the valuations they’re getting because of that is increasing from the investment side as Adam said.

The second thing that I think is evidence of this is you’re just seeing a huge demand for talent in the industry. At Martech Record, we have a jobs board. We also have a Slack channel where people list jobs for free. And it’s a pretty good metric of the demand for talent. And what I’d see is kind of a gap in the talent pool. We’re at the point where I think we’re getting 40 to 50 job listings a month in the industry. There’s a lot of confusion around where the industry is going and whether we’re in this recession or not. But what’s clear is there’s a gap between talent that we need and talent that we have just based on what we’re seeing at Martech Record. 

Kerry Curran:

I can see that based on the volume that you’re talking about from the job listings and the other kind of businesses getting into the space. I’ve heard that a lot of PR agencies are now reaching out to the networks to say we want to, we want to be doing this too. 

Michael McNerney:

Absolutely. You’re seeing, PR and affiliate are now generally talking to the same people, right? Which are editors and editorial editors are getting more into the commerce space and vice versa. So, you’re seeing this collision in the space. 

Kerry Curran:

Thinking back Mike, when you started Martech Record, obviously you predicted some growth, but are you surprised of where it’s gone? 

Michael McNerney:

I don’t think I’m surprised. I think what I saw was two things. One, the affiliate model or tool or tactic being adopted by more and more content providers. And it was very clear to me that would happen because the barrier wasn’t technology or process, it was really culture. And eventually money wins out over culture almost every time, right? So that was clear some of these cultural taboos that had restricted publishers from adopting an affiliate model would be broken down.

The second thing that was clear to me is if you just look at e-commerce, the clear trend no matter what, no matter the economy going up or down, is that people are going to buy more things online and those things are going to continue to be more expensive and more complicated to buy. You never would have thought you’d buy a mattress online 10 years ago and now it’s probably, I don’t know the actual data, but I’m guessing most mattresses are sold online. Healthcare is now something you buy online. The complexity of the purchase is increasing on the price point. And as that happens, more and more brands will sell things online and more and more publishers will write about these things. 

Kerry Curran:

I want to circle back to your taboo comment, but first I want to ask Adam, how has it evolved from what you thought it would or predicted? 

Adam Weiss:

I agree with what Mike said. I think I even look at it from the lens of e-commerce growing, the complexity of purchases, and the publishers in the ecosystem have evolved to help consumers make these purchases. Mikes heard me say this a million times, but I did buy a mattress online and I bought it because of what the Wirecutter recommended. They built a brand, they, in my opinion do good reviews, among other sites as well. Publishers in our space are solving problems for consumers and providing third-party validation when you’re making a purchase, which is what I think is really, important. 

Kerry Curran:

It sounds like across the evolution, it’s been a change for both advertisers and publishers and the networks. But who do you think it’s changed for the most and how? 

Adam Weiss:

I think it’s changed across the board. I again think the publishers have evolved over time which changes how the advertisers look at their programs, which changes how the networks must think about tracking and reporting and attribution and things like that. Publishers get more sophisticated, the ability to target and personalize and deliver the right message to the right customer at the right time. And now, from an advertiser perspective, you’re starting to look at this as what levers do I pull where in my portfolio?

I always used to say, you’re not just throwing out the lasso and rounding up publishers and pulling them into your program. Each one, no matter how big or small, it’s a very strategic partner for you if managed the right way, which then, again, forces the evolution on the agency side and how you think about managing programs. And then again, the networks as well, you need to get more sophisticated in terms of technology and then other third-party peripheral technology that exists and tying data together and data feeds and coupons and things like that. Overall, I think, changes happened across the board and it’s almost like a domino effect. 

Kerry Curran:

With that domino effect, Mike, how do you think the publishers are managing it and what else needs to happen? 

Michael McNerney:

To answer your original question, to me, I think it’s no question that the publishers have had to change the most, especially the legacy publishers, because it’s a fundamental change to their business model. I think I referenced that a little bit before, but what I mean by that is that for a century, the sales side as a way of creating trust in their readers. And there’s nothing inherent in affiliate that means you’re not being truthful about what you’re writing about, but the consumers have kind of been trained to believe that if there’s an ad or some sort of commercial relationship stuck in content, that there must be bias. And the reality is that’s just not true.

Like the old model was just as susceptible, except that they built walls between the editorial and the sales side, which helped create that trust. There must be a total change in the culture, which comes along with change in processes and technology. And I like to say without much exaggeration that if I had recommended an affiliate model while I was at McGraw Hill, I would have walked out the door the same day. McGraw-Hill was built on this premise of separating the two and creating trust.

I think there’s a huge amount of change there and only some of it is technology or even processes. And a lot of it is just buy-in from the top and making sure that the editorial teams are bought in, and you have sales teams that are incentivized correctly.

I think if you look at the… advertiser side, it’s not to minimize the change there too. But if you look at kind PR and affiliate, these are on this collision course we talked about. If you’re a PR person, even just five years ago, your job was to find an editor and tell them a story, right? And hope that they wrote about it, and you weren’t measured, all that much other than they wrote the story, or they didn’t. And then the affiliate teams were out to just, hey, how do I get as much revenue as possible, not think too hard about the publishers I’m working with. If it’s driving revenue, there isn’t a ton of fraud, right? And those things are colliding. Affiliate teams are having to get a lot better about thinking about the brand, how the brand fits with a publisher, how to talk to an editor and tell a story. And on the flip side, these PR teams have got to get a lot better at figuring out how to use these affiliate platforms, how to measure themselves in terms of revenue.

I think there’s a lot of change. And then I think where there’s still a lot of challenge is connecting buyers and sellers. And I think you had asked a question earlier about what would you have expected? And one of the things I would have expected seven or eight years ago is that the connection between buyers and sellers would have become a lot more efficient by this point. But I think it’s quite the opposite. I think because there’s been so many more entrants into the market on the content side and on the advertiser side, the level of complexity in terms of connecting the buyer and seller has gotten exponential. which has made it even harder despite better technology. 

Kerry Curran:

As you’re seeing this increased adoption, I want to go back to what you’re saying about the concept of it being taboo and connotations around the nomenclature of the affiliate channel. So how do you think the perception has evolved and does it have more evolution to go? 

Adam Weiss:

I have a couple of thoughts on that. I think one, we call it a channel. I see it more as a platform. And I think that is part of how we need to be thinking about it. It’s a platform that allows us to track and to pay and to manage inventory and manage economics and reporting and analytics. But I think in terms of how it’s perceived, which I think was your question. Like anything, there’s always room for improvement. Sometimes I think it’s almost an unnecessary discussion around what we call ourselves.

We were talking about this a little bit earlier; the space has matured and maybe if I could make Mike blush a little bit, but I think Martek Record has done a great job in terms of elevating the conversation. I’m biased, obviously, but I think that bringing in more senior folks into the conversation, bringing in the investment community into the conversation has really elevated our channel. We have a lot of room for growth when you look at the numbers. Again, I don’t know offhand, but we’re like at 9 billion as an industry, but search and social I think are… Exponential orders of magnitude larger than us.

We have room for growth there. The commerce players that we were talking about, have helped eliminate a little bit of that negative connotation. I think we also can’t sleep on the fact that, honey got acquired for $4 billion. That’s an affiliate play at the end of the day. That’s amazing to me. And there have been other sites as well that have had exits that are significant, which to me shows how people ultimately view the space in terms of where they’re putting their dollars. 

Michael McNerney:

I think to Adam’s point, you look at the honey acquisition for $4 billion, you look at dot dashes acquisition of Meredith with a large portion of that being justified by the potential for what they call transactional, media. I think the Buzzfeed story is a little deflated now, but at some point, there was huge evaluations around that. There’s no question that it’s kind of a mainstream conversation, at least among the investor, community.

That said, I think if you go back 10 years, affiliate was seen as a very effective channel, the one that was ridden with a lot of fraud and was considered bottom funnel. I think today the fraud question’s kind of gone away. There’s fraud, but I don’t think it’s greater than any other digital channel, which also struggles with these issues. But I don’t think it’s considered to be a channel with a lot of fraud. I think the conversation has been elevated. I think that it remains somewhat stigmatized as bottom of the funnel and for some good reasons. Bottom of the funnel doesn’t mean bad, by the way. I think that the result of that is people trying to rename affiliate when it’s used at different portions of the funnel.

You see these branding exercises by all sorts of different people from the commerce content players, as they call themselves, or transactional commerce or performance PR or partnership marketing. This is all, I think, an effort to play at different parts of the funnel, where there’s different markets to be had. And so, on some level, it’s a little confusing. On another level, it’s a good marketing exercise to get into these different areas. But to me, it’s a good sign. It’s a sign that the tactic is something that everyone at all levels of the funnel is seeing and I’m sure you’re going to see Performance TV soon and it’s just going to be affiliate marketing. 

Adam Weiss:

There was fraud in the past, but I also do think there was a level of one just, misunderstanding in terms of how things work, right? When people find the opportunity to send emails or bid on certain keywords or trademarks and there’s no real kind of parameters around it, yes, there are going to be parties that take advantage. But as the industry evolves and the technology starts to develop that allows us to see what’s happening a level deeper, right? And then put some controls around it.

That’s where I think some of the, the maturation in the space happens. And I also think, the nice thing about our industry, it’s maybe some of the kind of the fluffy stuff, but most of the people who you meet have been in it for a long time and they’ve sort of elevated in their careers. And hence, you know, that stigma of affiliates starts to get removed when people who are managing the day-to-day at one point are now in charge of a budget or an entire marketing organization. I think that’s a positive step for the industry. 

Kerry Curran:

Yes, I agree with you both and being newer to the industry myself, it’s when I talk about what we do, I do include more of the coupon and cash back sites and people nod. Then when I say, oh, and Wirecutter. Oh, and then when you buy something that you see on Vogue, and then they lean in, and it gets more exciting to them.

I think I told you guys I had a friend in in the digital marketing industry that asks, can you call it something else? Because what you’re doing is cool. So, do you think that helps for the CMOs or other decision makers that aren’t as clear to the value that there’s more of that mass media? 

Michael McNerney:

I think it helps when you use names like the New York Times or the Wall Street Journal. I think that’s what helps. There’s no question that I think what’s interesting is how it gets translated to the CMO. I suspect that what happens a lot of times is you have an affiliate marketing manager who reports to a digital media or e-commerce VP or whatever and they say, hey, we got written about in Wirecutter and the Buy Side. then the VP of digital turns to the CMO and says, oh, we got written about in the New York Times, the Wall Street Journal. And I think a lot of times it does not get translated as that was an affiliate marketing deal whatsoever, because people want to keep their jobs and people want to look good in their jobs.

These are prestige brands and people like to talk about prestige brands. And I think just to your point about talking to your friends, you try to explain affiliate, maybe if they haven’t used Honey or Rakuten Rewards, they look at you, although they probably have given that, half of America has. But if they haven’t, they go, I don’t know what you’re talking about. Then you go, when you just read the strategist and they go, oh yeah, I just bought that dress and they, then they get it right. And so, it just helps the conversation. It’s a, it’s a little bit of a lubricant to, to talking about. 

Kerry Curran:

So, do you think that the mass media involvement is going to help elevate the platform further? 

Michael McNerney:

Well, I think there’s no question that it’s going to grow and already has grown affiliate marketing. The question is who benefits from that. And I don’t think it’s obvious that the current state or the kind of traditional affiliate players will benefit. I think they should, and they can, but once it gets into the mass market, once it gets into television, it’s anyone’s game, any other channel can pick this up, make it their own, name it what they want and control the budget. If I’m an affiliate marketing manager or an agency like you guys, it’s trying to figure out how to have influence once the genie is out of the bottle, which it kind of is. 

Adam Weiss:

I think the mass media publishers have helped elevate the industry. I really do. Couldn’t agree more there. But again, on the flip side, maybe it’s just because I’m a little bit old school. But as well as that, again, I go back to Mike mentioned Honey and Rakuten. And they fundamentally change how people shop online. And I think that that’s important. And even the coupon sites, say what you want, but you’re helping someone find a discount on a product, you’re fundamentally changing their behaviours when they are making e-commerce purchases. And again, what was just said, you can’t put the genie back in the bottle. I think we need to acknowledge that. And then you see, Rakuten Rewards is advertising on the Super Bowl. There’s no reason why someone wouldn’t want to say also, hey, we’re in the New York Times or the Strategist, but we’re also partnered with these guys who are advertising during the Super Bowl. 

Michael McNerney:

It’s also worth mentioning that coupons were a significant source of revenue for mass media publishers before the internet. If you had a good publication 30 years ago, that included coupons, classifieds, display dollars, subscription, and then those got all blown up and separated and siloed by the internet. And they’re starting to pull back together into one place, which I think is a good thing. 

Adam Weiss:

I think also when you think about the different publishers that you’re working with and that we talked about earlier the different value propositions, the other thing to consider is one of the things even deal sites which are different than coupon sites, but deal sites right can help you move inventory as well and that’s how you got to start thinking about different levers that you can pull.

I think all of these, when you look at it the right way, through the right lens with the right strategy and the right team, everything really should be elevated and how we’re looking at the industry from distribution, perspective for all these advertisers. 

Michael McNerney:

One thing you said that really resonates is we try to, at Martech Record, we try to think about affiliate as distribution. And what I mean by that is if you’re a brand marketer, your job, and you oversee a brand, you oversee pricing that brand, you’re in charge of branding. You’re in charge of making sure the product meets consumer needs, and you’re in charge of making sure it shows up in the right spot on the right shelf. And in the modern day, that shelf is your publisher’s website. And that must be strategic. It must fit the brand you’ve created, the price you’ve created. So, if you’re launching a new premium brand, you’re going to go find publishers that match that brand. And if you are liquidating your brand, you’re going to find publishers that are going to help you with discounting and distribution on liquidation. That’s where I think affiliates getting a lot more interesting as a distribution tool rather than a singular discount channel. 

Adam Weiss:

They have affiliates reach. At the end of the day, the founder of LinkShare way back in the day, I remember him saying, the distribution or the publishers in your program are essentially acting as salespeople who are finding customers that you didn’t know you could have or that existed out there. And that is something I think that’s super valuable. as an advertiser thinking about, I want to, like Mike said, I’m entering a market. So here are some publishers with enormous reach or I’m looking to push a particular product line or private label products or whatever it is. How do I pull the right levers with the publishers in my program to help me find customers who ultimately are going to buy this and then hopefully become loyal customers as well. 

Kerry Curran:

To kind of tease our next podcast, we are launching our original research at the end of next week. And one of the key findings that I found so interesting was that the opportunity to draw a new customer in by reintroducing your brand at the, or consumers are open to new brands at that time of purchase. They’re looking at the affiliate channels to consider switching brands, introduce to a new brand, be reminded of a brand that they’ve already been loyal to. It does create that, to your point, that opportunity to find those new customers that maybe you have a product like your competitor. It gives them that extra nudge to go purchase your product. And I think to your point, it does fulfil that sales need. 

Michael McNerney:

it’s a funny notion that affiliate is not connected to branding, like affiliate is where you make the purchase and that’s where all your branding should be reinforced. You read a bunch of reviews and you’re not just buying the one that has the perfect review. You’re combining that with, I kind of know this brand’s good and maybe I’ve bought it before, or my friend bought it, or I saw a commercial. And so, these things are intertwined. 

Adam Weiss:

I don’t have data to back this up, but I think as a consumer, there are certain things that you are very brand loyal to. For example, maybe you only wear Nike shoes, but when it comes to buying TVs or laptops, you don’t care so much about the brand, but you’re looking at things like reputation. price third party recommendations. And I think for both really, that’s where affiliate comes in and can play an interesting role. 

Michael McNerney:

Yeah, I mean, I just bought a new TV. Look, I read all the reviews on the buy side and on Wirecutter and on Reviewed. And no matter what they said, I wasn’t going to buy a brand of TV I’d never heard of. But I was going to still take their advice, if that makes sense. 

Kerry Curran:

And so how did you ultimately make that purchase? 

Michael McNerney:

I was happy that they recommended Samsung because I like Samsung, so I read it and said, okay, they and me feel the same way. And my guess is if I really liked LGs, I could find a review in there that would make me feel like I was making the right choice there too. So, it’s complicated, right? 

Kerry Curran:

So, there was the opportunity for a publisher to introduce a different brand at that moment of purchase. 

Michael McNerney:

Yeah, absolutely. 

Adam Weiss:

It’s not binary either, Mike’s scenario is one way, but there are other people who are, shoppers who are sophisticated and maybe they read the reviews and then they go look at like, is there a coupon out there and who’s giving me, the most amount of cash back and sort of triangulating. And I know that creates issues from an attribution perspective, but at the end of the day, you look at all the pieces of the puzzle that affiliate is really solving for a consumer to decide, it’s great. 

Kerry Curran:

One of the, my favorite aspect of affiliate is the full funnel aspect. And you both brought the budgets that go to other performance media channels and how affiliate is still just a fraction of that. It’s an area for growth. There’s so much potential there. It’s where we’re all hoping that this evolution and elevation helps grow the industry. So, knowing that the two of you tend to have your finger on the pulse of the industry and are kind of the VIPs at all the affiliate conferences, what are you hearing? 

Adam Weiss:

A couple of things, I guess. And again, it’s sort of, it depends on who you’re talking to and what lens they look at the industry through. I think there’s still a lot of interest in content and the evolution there. But to Mike’s point earlier, there’s a line of sight into those businesses now where, how are they going to… continue to grow over time and manage margins and things like that. I think there’s a lot of discussion too about how to manage it and as it becomes saturated is the right word, but there’s a lot of it out there.

And how do you manage it? How do you allocate budget to who and where? And I think the other big thing would be with the sort of advent now, we hear about AI all the time. I guess, do I win the prize for mentioning AI first on the podcast? There is going to be some fundamental changes, I think, to how consumers shop like we were just talking about and source information and results.

And on top of that, the search engine results pages on Google, the inventory there is becoming thinner and thinner outside sites, if you will. So, I think all of that is something that people are thinking about and trying to get ahead of in terms of how it shakes out, because that ultimately is going to drive strategy around traffic generation and keeping consumers loyal to a brand. And that’s the last thing I’d say is the branding piece. I think the publishers, as they think about traffic, there’s a lot of discussion about thinking about building brands as a publisher. I mean, a lot of them have, they’ve done a great job. Some of them are these historical brands and some of them are newer ones like Honey. But nonetheless, I think that some of the publishers are going to need to be thinking about in terms of kind of… creating awareness and stickiness with consumers. 

Michael McNerney:

I think the thing that doesn’t get talked about publicly, but does internally a little bit is at the end of the day, affiliate is a channel, to use the term we both agreed we didn’t want to use, that still requires a degree of scale. It’s expensive to set up. It’s expensive to go find. dozens if not hundreds of publishers to sign them up. It’s expensive to maintain those relationships, right? And it’s more expensive than it is in search and social, for example, when you have essentially singular platforms that make this a very efficient process.

On the flip side, it’s great for a brand or an agency that’s good at it because there’s still arbitrage opportunities, but it doesn’t take away the fact that you need a… a reasonable amount of scale to make the cost of acquisition for a customer equivalent or cheaper than competitive channels. So, I think a lot of the conversation from the investment community or from CMOs who do think about this stuff is, how do you connect the buyer and the seller in a more efficient way? And that’s something the platforms and the networks are obviously working hard at. I think that they’ve done a good job on the on the advertiser side. I mean, because that’s who traditionally pays these platforms, but haven’t done as good of a job on the publisher side. I think there’s a lot of work to be done to create tools for publishers that allow them to more efficiently connect with, the buy side of the equation.

It’s not getting any easier as more and more people enter the market. But I think that’s probably the thing that’s not talked about that much, which is, hey, no matter how you slice this apple, it’s still costly to do a lot of the services. That’s why Gen 3 exists, right? It’s because it’s hard and you got to find people who are experts to do this or your cost of acquiring a customer gets more expensive and you need more scale to make it work. So,So,I think that’s a big thing. that’s kind of not talked about as much but probably should be is that it’s a great channel unless you can’t get that scale and then it becomes a very challenging channel. Whereas if you’re advertising on social, literally it’s like high frequency trading. You can be a tiny little DDC brand plug-in, dial in your demographic and what you want to pay and generate sales. That’s becoming expensive, which creates an opening for affiliate. But that challenge… hasn’t gotten any easier, I do not think. 

Kerry Curran:

For the publishers trying to kind of get more sophisticated, if only there was like a consultant or someone who could help them with that.

Adam Weiss:

hashtag sponsored advertising. In all honesty, I always tell people, when I spoke to sort of maybe heard my story. I just always felt even from the beginning of my career, it was just, Mike hit it on the head. For an advertiser, there’s sort of this one, usually just one sort of doorway into affiliate. You pick a network; you have your agency, and everything is on that one platform. publishers, I mean, think about how many platforms, the networks and platforms, the sub networks, all the other peripheral stuff that goes with it. It is a lot of dots to connect and yes, it has provided an opportunity for me. So, but we are getting there, we are making improvements, I think, in the industry from a technology standpoint and it certainly keeps me interested. 

Kerry Curran:

One of the things too, that Mike, you had brought up was influencers. Do you want to expand on that? 

Michael McNerney:

Well, I think the challenges I just described for to scale, just get amplified with influencers, right? There’s even more of them and there are even more ways to work with them. And the commercial arrangements are even more confusing. And to add to that, that they are controlled by the platforms they’re working on. So, I just think that provides. I don’t see the channel as making much sense unless you’re an influencer who becomes a media company. I’m meaning you have a bunch of different distribution channels. and a bunch of different platforms that you work with. So, I just look at all those challenges for affiliate and they all get totally amplified when you apply an influencer. And so maybe there’s something I’m missing, but I find that a difficult channel to see working long-term. 

Kerry Curran:

Any other favorite topics that you’d like to cover that we haven’t covered today? 

Adam Weiss:

Kerry, I think in general, we work in a great industry. We are fortunate to work with great people, like everyone on this call. And everyone who is listening, of course. But I think, I have always really loved it for the innovation that we see, especially on the publisher side, some of the things that we talked about already, but publishers sort of innovating how people shop online. Every conversation I have, with technology as publishers, et cetera. I find to be interesting because people are thinking about how to push the envelope a little bit, how to innovate, how to change, right? And doing so aligning with what brands and retailers and advertisers of all kinds want, which is what I really think makes the industry exciting to work in. 

Kerry Curran:

Yeah, I agree. And so, do you have any last kind of parting advice for either brand or publisher that needs to kind of ramp up their efforts? 

Michael McNerney:

If I’m a brand or an agency, I’m trying to figure out how to work with different channels and different content types and be a little more diverse in the skill set because I think those different content types and brands are figuring out how to employ affiliate across a spectrum that we’re only just starting to understand. 

Adam Weiss:

Yeah, I think advice that I would give, I have given it before, I will say it again. It is simple and tactical, but talk to as many people as you can, even if it is something that is not a direct fit for your program, if you are an account manager, even if it is an advertiser who does not have budget if you are a publisher. Having these conversations or what sort of keep you on the forefront of what is happening in the space. Cause at some point, your client is going to say to you, what is new, what should we do next? Or, candidly, you might change jobs and must, have a sense of, who to put in your program one way or the other. So, I just always think it’s valuable to sort of, have conversations, to listen to what… different publishers are doing, even if it’s not something for tomorrow or the next day. But sometimes you’d be surprised at what you could figure out when you dig in a little bit. 

Kerry Curran:

No, I agree. And keeping your finger on the pulse of what’s coming and an important aspect of the of account relationship strategy. So, I love that. Great. So, gentlemen, I know that you do have some VIP parties to get to. So, with that, for the common folk that won’t be behind the velvet rope, how… How can they find you and your content and join your newsletters? 

Michael McNerney:

Yeah, just go to martechrecord.com and you should be able to subscribe right there. And I encourage everyone to do so if you want to be invited to our events or, connect to our Slack channel. 

Adam Weiss:

Yeah, and you can find me on LinkedIn or, you know, shoot me an email, adam@weissdigitalconsulting.com or I do have like a quarterly update I send out. I am far from scaled or set up like Mike. I don’t even know. I think I have a public link for it, but just reach out. I’m happy to help you to figure, help you figure it out.