As part of the ReveNews 2010 Affiliate Industry Preview Series, I interviewed industry leaders to get a sense of their plans and goals for 2010. Today’s interview is with Kerri Pollard, General Manager of Commission Junction.
How do you feel about the affiliate industry’s current health overall?
With the recession the new key phrase in ’09 was “flat is the new up”. Obviously it was a difficult time for anybody whose business was tied to consumer spending. Being a performance based online marketing business, we absolutely were impacted.
But with that said I’ve been very pleased in terms of how the year has been rounded out. We’ve been very satisfied with the holiday shopping numbers that were much better than 2008, and not just for Cyber Monday and Black Friday but actually the holiday shopping season overall. What we saw in 2008 was that Cyber Monday and Black Friday was pretty great but the rest of the holiday season was pretty lackluster. So it was wonderful to see both those key days, as well as the entire holiday shopping season, perform extremely well.
Out of all the different online marketing channels, there is no place I’d rather be than the affiliate marketing. Having been in the affiliate industry myself for over 10 years, I have experienced firsthand the adaptability, flexibility and strength of performance based advertising which is the core of affiliate marketing. I think the health of the channel is always good as long as the ROI and the results are there for our clients; which they continue to be.
It’s really exciting to see some of the other online marketing channels, like display and email actually come our way in terms of working deals on a CPA and performance basis and kind of moving away to a certain extent from some of the traditional impression based and click-based buying they are used to. I think we’re in a great position going into 2010.
How has the affiliate industry evolved?
The affiliate industry has evolved is in sync with how the consumer has evolved in terms of where they transact online. When I started back in 1999 affiliate marketing was about these small content sites that were very niche-focused. Today we have somewhat come full circle as niche sites are key again. Search wasn’t even in the equation until early 2000-2001 when we started to see that promotional vertical really start to expand. The coupon vertical has always been a strong point and has done extremely well in 2009 as more consumers not only shopped online but also brought certain expectations in terms of looking for a deal before making any purchase. According to the Center for Media Research 62% of all online adults that shop online now seek out a deal or a coupon prior to making a final purchase; so our coupon publishers have thrived in the tough economic climate.
Here at Commission Junction we see our responsibility as making sure we enable our advertisers and publishers with the tools that they need reach the consumer as they evolve. Maybe through search, maybe around coupons or around a niche-site how they reach the consumer is going to evolve continually.
Going into 2010 we expect opportunity in terms of social media and mobile, which I know for the last three years has been touted as the year of mobile but I really do think based on recent activity and acquisitions with the iPhone and other smart phones we’ll gain a heck of a lot more traction than in years past.
You talked a bit about mobile. Do you see video picking up as an acquisition channel in 2010?
I think people are still trying to figure video out. I think that social media is still somewhat having a similar challenge but they’re going to figure it out a hell of a lot quicker than video. The challenge is that the advertising aspect of both those vehicles are so disruptive to the consumer and such a distraction today in terms of the overall experience, verses being better integrated into it.
So, right now as a consumer you go to a social media platform, whether it is Facebook or MySpace or any of the others, and you have an objective. Maybe it is to catch up with friends or family, maybe look at photos and all of the sudden you have this ad pop up, which is completely not in your frame of reference. Same thing happens with video, you go there and watch a movie or video clip and all of the sudden you have this ad disrupt the video. It’s like forcing you to change your mindset and change your behavior at that exact moment when you went there for completely different objective.
Either the consumer has to evolve and start going to these vehicles for different objectives beyond just catching up with friends or watching a video; or the platforms themselves have to adapt and better integrate the advertising model in a way that is not so disruptive and that’s more so in line with the consumers interest. Right now, with video especially that’s still what the platforms are struggling with.
What do you think the biggest lessons the affiliate industry learned in the last decade?
The entrepreneurial spirit for our industry has really been on display over the years in terms of how affiliates: adapted to the consumer, reached out to the consumer, and have constantly reinvented themselves. I know some contacts that I’ve had over the last 10 or 11 years started as one type of publisher and now they’re a completely evolved into a different kind of publisher or they’ve widely diversified themselves.
On the other hand I think the entrepreneurial spirit is has also occasionally resulted in instances of “hey, if it seems too good to be true and it probably is”. I have seen promotional tactics over the years that were very shortsighted and are no longer around because the overall quality of the transaction just wasn’t there in terms of the long term value or life time value for the advertisers.
What do you think the biggest changes will be for the affiliate industry in 2010?
2010 is going to be really interesting. I think 2009 was just about holding on, to be honest. I think that was true for all of us in the industry and our competitors in other online marketing channels. For those of us that have hung on I’m looking forward to 2010 in terms of taking this business to the next level
I think what we’ve understand well here at Commission Junction is that services and relationships are a critical part of the overall success of our business. At the same time I think there’s a lot of opportunity for us to make it easier for new advertisers and new publishers to work within the affiliate model. We’re going to focus on technology more then we have in the past in order to create more automation, develop new tools and create more optimization within the network.
Currently none of the networks have made it simple enough for new publishers or advertisers to enter the space. There are a lot of hurdles and there’s a lot of heavy lifting involved. Our goal is to try and make it easier for anybody to become a publisher and definitely open new channels for advertiser as well. Especially in terms of getting helping advertisers get into different verticals that we haven’t necessarily worked with in the past like taking things offline which we’ve already somewhat done with our pay-per-call initiative.
I think you’re going to see a lot more diversification in the industry. If I look at our core business which is obliviously centers around retail, travel, and financial I think we’re going to be diversify on both sides of the fence. Of course we will remain true to our core by supporting our core businesses because that is our bread and butter. But at the same time we will attempt to diversify our distribution on the publisher’s side and the type of publisher that we work with, making it easier for them to work with us which will naturally extend to the advertiser’s side as well.
What prompted the launch of the pay-per-call?
That’s a good question. In terms of how that conversation all began, we work with a partner based out of Santa Barbara called RingRevenue. They were actually started by a couple of former employees from CallWave which has been a client of Commission Junction for a long time. So being that Santa Barbara is a small town, the conversation started easily through our connections. We knew how CallWave would work with our platform already so it started here as a local idea and then has expanded now nationally with our advertisers and with the other networks as well.
How are you seeing adoption among advertisers?
There is a lot of excitement around pay-per-call. It’s different though since you’re now trying to integrate performance based advertising into an industry that’s new to the model. So I think there’s been some education, but honestly I feel that we’re finally beyond the education point and we’re getting a lot more traction and adoption with pay-per-call. And we’re actually going to be investing more into developing pay-per-call further on both the resource and technology front.
I know this next question played a kind of personal role for you Kerri. Last year was a big year in the fight against the so-called Amazon Tax in California, and all the craziness that happened there. Like the subsequent veto by Governor Arnold Schwarzenegger and his crazy speech to Overstock of all things. How did all that impact you personally and how did that impact CJ directly?
Yeah, I think still the bigger question was what would have happened if it had passed? I think there was a ton of speculation in terms of what would have happened. At the end of the day it comes down to how many advertisers, like Overstock, would have terminated their California based publishers, and again, that’s assuming that that advertiser is not already collecting sales tax. I think that the majority, believe it or not, do already collect sales tax in California because they have some sort of other presence based here in the state. Ultimately understanding what that the number of actual advertisers who don’t already collect sales tax is and understanding what their ultimate decision would be is key to gauging the impact.
In the role of the advertiser maybe I don’t currently collect sales tax in California am I going to terminate those relationships with affiliates. Or maybe am I going to go ahead and collect it the sales tax. These are decisions based on business reasons that are hard to determine before an event. So I don’t know if we ever will really know what the ultimate impact was of the veto because we don’t know what would have happened if it had passed.
Well, it definitely seemed like a big game of chicken
Yeah, it did (Laughs). And it’s not over.
Everybody’s been kind of out of commission here for the last couple months so we’re definitely ready and prepared now in January. Currently we are hearing that California Assembly Member Nancy Skinner has a hearing date set for this week regarding AB-178. The question is – “will she move forward or not”.
But you know because Arnold called so much attention and visibility to this last year, I can’t see him waffling. Then again, he’s also going to be up for re-election next November, so yeah, anything can happen.
Eidtor’s Note: At this point Ashley DeVan the Director of Marketing for Commission Junction, who was also on the call contributes: I think there’s been a lot of education. I think we’re in a different place than we were in New York. Nobody knew what to do, then and now we’re learned some lessons.
Do you feel that one of the primary objectives is educating legislators on about the affiliate channel and online marketing as a whole?
Ashley: There was a lot of effort. There were multiple trips that the Performance Marketing Association has made last year and as did members of the Commission Junction team to Sacramento to meet with different legislators. I think in California they finally get it that our industry is kind of being the fall guys as targets of the Amazon Tax.
Kerri: I think the biggest question we always come back to is, “Well if we don’t do this we still need the money, then what”?
I love Cashbaq President and Co-Founder David Lewis’s response to that, “Hey, we’re not legislators you are, you guys are. Figure it this out. It’s why we elected you into the office.”
Since New York passed the initial law how have you seen that play out in CJ as far as New York affiliates and those that want to advertise in New York?
Kerri: We definitely did some analysis when it first went down, and as Ashley mentioned I think all of us were taken by surprise. And reacted with, and made some, knee-jerk decisions as it relates to New York and working with New York publishers. When we looked at the publisher revenue of New York-based publishers that were impacted it was definitely in the area of double digits.
I hope that if another state does go down that path, as we’ve had several smaller states do, where not as many publishers are based, that decisions that are made are no longer knee-jerk reactions because there’s been a lot more education.
What are Commission Junction’s goals in 2010?
Kerri: The key words for us going into 2010 are distribution and diversification. Being able to find or grow the opportunities for our advertisers and publishers, whether it be offline with advertising agencies or working with different kinds of publishers that we haven’t worked with in the past online. Also, increasing that distribution through different types of channels and especially more so on the technology side we’re going to be able to do that in terms of optimization and automation.
We’ll continue, as we always have, by listening to our clients. In 2009 we implemented the Net Promoter Score which we call “the Loop” here, internally and externally with our clients. “The Loop” is a feedback mechanism that asks the question: On a scale of 1 to 10 how likely would you be to recommend this to a colleague or a friend? But it’s not just about the one simple question. It’s about how did they respond and then for us to be able to follow up on that feedback.
I, myself, make personal phone calls to clients as part of the Loop. Somebody ranks us a two or three, or even if they ranked us a nine or ten, we call to let them know we want to learn more about what they need. Do you like that we’re doing? What do you not like that we’re doing? It really helps out on the services side and it’s really an important initiative for the entire leadership team at CJ and working with our clients.
Ashley: It’s not so much the number but it’s the explanation of why they gave the number where we’ve gotten so much insight and I will say that I have seen other organizations that have used NPS but I’ve never seen a organization who follows up on each and every response like CJ’s does. So I think that’s where we’ve done a really great job getting the conversation going more and more.
Kerri: Investments like the Net Promoter Score shows our commitment to services and to gaining feedback from our clients in areas we need to make improvements. We will continue to invest in service; it is definitely one of our key strengths and one of our key differentiators as well. We feel that being successful will require a strong balance of technology with services and relationships. We will continue to invest in both in 2010 and beyond.
I want to thank Shawn Collins for taking time out during his busy schedule to take part in our 2010 Affiliate Industry Preview Series. Stay tuned for our next conversation with Jonathan Levine, Co-President of LinkShare.
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2010 Affiliate Industry Preview Series: Interview with Kerri Pollard of Commission Junction
