Part 3 : The future of the site and industry

You have discussion forums as well. What was the thinking behind that and have things turned out as expected?
Affiliates need a place where they can learn from other affiliates, post their own tips, post complaints about companies which aren't paying, and so on. The message board provides that.

My first message board was frozen by a hacker. I couldn't gain access to delete ads for sex sites which someone - the hacker I presume - had posted on it. That was terribly embarrassing.

I'm now using a Discus message board, which apparently is hacker-proof. Some people like it and some don't. It's a complex system which allows a large number of topics to be covered, but some visitors say it's too complex and they can't understand it. In hindsight, it probably wasn't the best choice.

And what are your plans for the future of the site?
We've been working behind the scenes for about eight months on what I hope most people will see as an improvement. It's going to be a bit controversial and ruffle a few feathers. I expect affiliates will like it, but some of the merchants are going to be upset. We'll make that improvement public soon, with a very quiet, soft launch and watch how news spreads by word of mouse. You'll see a major change at the site soon.

Well, we'll look forward to seeing that! Let's talk about affiliate programs now. 1999 was the Year of the Affiliate, but 2000 has seen some cracks appear. Many of the companies behind popular programs are seeing their stock prices collapse and a number are expected to run out of cash soon. Is the affiliate program here to stay and, if so, what form will it take?
Affiliate programs are definitely here to stay because they're such a cost-effective form of marketing. Your sales force attracts highly targeted traffic for you, and you pay only on results. The crashing and burning dot-coms could learn a lot from a company such as SiteSell.com - which is based almost entirely on the power of affiliate marketing.

As for the future... Many affiliate merchants are doing things which I believe are foolish and shortsighted. These include giving affiliates banners which appear to be aiming more for brand awareness than getting the click. Another tactic is skimming affiliate profits in various ways, such as using pop-ups which divert affiliate traffic to a product on which the affiliate does not earn a commission.

has a weasel clause which denies its affiliates the full commissions they deserve. Most affiliate programs fail to recognize the lifetime value of a customer - I launched LifetimeCustomers.com to draw attention to two programs which do.

Using affiliates as cannon fodder is shortsighted because as more and more programs are launched, affiliates will easily switch to merchants who genuinely have the affiliates' interests in mind. That's best for the merchants in the long run, anyway.

It's inevitable that affiliates will keep switching until they find the programs which have high conversion rates and produce the best revenue. Merchants are going to have to work harder and harder to create better programs if they want to attract good affiliates. Just as the Internet changed retailing and empowered the buyer, affiliate marketing empowers the affiliate. Some merchants don't seem to understand that yet.

The affiliate industry is still in its infancy. I presume we'll see new models and combinations of models which no one has thought of yet.

What separates the top performing affiliate from the also-rans?
Top performers build a serious business, and treat it as a business. They learn about pre-selling, getting the visitor warmed up and in the mood for buying before reaching the merchant's site. They learn how to attract plenty of traffic, and they have an interesting, useful website which is worth visiting again and again, so that they can get repeat sales. In nearly all cases, they will also have their own opt-in e-mail lists. They often build teams of sub-associates and help them succeed.

Continued...