At Pubcon I got into a conversation about affiliate marketing. I hold the position that affiliate marketing is a temporary opportunity, and not one for long-term investment. By my read, an affiliate is useful for only as long as the more traditional sales process is unable to satisfy consumer demand. As soon as a more traditional sales model catches up and is able to satisfy demand, the affiliate is an unnecessary middleman and should be “disintermediated”.

The attraction of affiliate marketing to buyers is largely based on convenience. I can sell without handling product, and do it using technology that I happen to control rather easily. The attraction of affiliate marketing to  sellers has largely been based on technology. An affiliate is able to use technology to reach customers (such as through SEO tactics) at a lower cost than the seller or her traditional distributors.

I also don’t enjoy getting ripped off, and I believe (based on experience) that the affiliate game is ripe with rip offs. Affiliate networks and upstream affiliates running sub-affiliate programs can “skim” with little if any accountability. Much like traditional industry turns to “monetize the channel” when end-user profits get squeezed (to make money off of the distribution and sales channel…often at higher profit rates that the product sale itself), the affiliate programs are monetizing affiliates as well as vendors. As vendor profits get squeezed by the market, the affiliates represent an opportunity for additional profits.

Those of us who run test purchases through vendors and affiliate programs know they often fail to track, thus failing to pay commission. We usually can’t know exactly why that happens.

So when I read of yet another cookie washing scheme by an affiliate system seller, I was reminded of that conversation. Here’s the summary of it (discussed in detail at abestweb forum):

First you, as affiliate, signed a contract with the seller regarding terms of the business partnership. You will refer traffic to their ecommerce solution, and they will provide a means for tracking that referral (by a browser cookie) and crediting you with the sale. The cookie term is very important, because the longer the cookie term, the longer you have to capture a sale that may take time to close. If a visitor takes a look today but doesn’t buy, your cookie persists in their browser. If they return to buy at a later date, and it is within your cookie term, you still get the sales commission.

In the case reported at abestweb, the selling company also contracted another business (besides you) to work on “abandoned shopping carts”. When a shopper carts an item and then doesn’t buy it, the ecommerce website knows (by the cookie) enough information to follow up with that potential customer if desired. This third-party to your affiliate arrangement sends a follow up e-mail to the potential customer and tries to induce them to come back and actually buy. In this case, free shipping was offered as an inducement. As you can imagine, it has a high success rate. They are able to “convert” a large percentage of abandoned shopping carts.

And they provide this service to the seller for “free”.

How can that be? Well, they overwrite the existing cookie (yours) with their own (they, too act as an affiliate) and thus get the commission on the sale. And since abandoned carts can really only be converted right away (at the buying opportunity) this is done within YOUR contracted cookie term. In effect, the seller has contracted out the same commission twice, and you will lose. Twice. Here’s why.

First, you spent the cost of acquiring the customer. The cookie-washing company was handed the customer’s data for free as part of the shopping cart abandonment process. Second, you don’t get the commission. So that’s a double whammy on your bottom line.

Think this  is outright theft? Well, I doubt the intent is there. I doubt the seller actually knows what is going on, because the cookie washing is integrated into the shopping cart software. Legally, however, of course it is a problem for the seller who has violated her contract with you (and probably her contract with that cookie-washing system vendor). But it’s only a problem if the affiliate pursues it.

I think the affiliate game is a mess in progress or a mess about to happen, depending on where you sit. It exists as an industry because of a technology opportunity, but that technology has now advanced considerably. If your technology has not similarly advanced, so that you can detect, counter, or avoid additional threats like the one mentioned, then you will be the target of the “channel monetization”. Your productivity will be funding the system, as it sells product for minimal margin and the other players live off the profits drawn from your contributed “free” efforts.  That’s not my idea of a winning business strategy. How about you?

If I had to project forward and make predictions about the online ecommerce affiliate future (and of course I have to do that because I am an affiliate) I would expect that the affiliate model would now become much more HIGH PROFILE, promoted more heavily by vendors and affiliate networks. You will see more “make money as an affiliate” activity than ever before as this problem increases and affiliate profits are trimmed back. Networks and vendors will provide more advanced (and thus simple) programs, with javascript links and “easy” accounting. The reason is simple - as it gets easier to be an affiliate (have a computer? Work from home!), and harder to keep savvy affiliate marketers in the program (who wants to lose money to cookie washing?) the sellers/networks will need many more, less-savvy affiliate marketers to maintain sales.

The vendors/networks can say “let those who understand the process choose to work elsewhere”, with no need to apologize, and then induce an army of naive affiliate marketers to join and refer traffic. I expect it to get to the point where those who understand the game will consider it “ridiculous” to be an affiliate, and yet still the sellers will enjoy a steady stream of new affiliates signing up looking for the chance to make money the easy way. It won’t change until the system crashes under the weight of maintenance of that large volume of low-producing affiliates. Everybody knows it’s the Super Affiliates who drive sales, and Super Affiliates won’t suffer the cookie-washing and other cheats. They will find another way to earn their commissions.

Looking back on the Pubcon conversation, is this the wrong time to become an affiliate marketer? Not at all. But as has always been the case, things are not as they seem. You will have to innovate and work hard and pay attention. You will have to ptimize your business before someone else optimizes the profits they pay you. In general, it is not easy money, and won’t be getting any easier. But while the opportunity that comes to you is not likely to be a good one, it may be what you need to get into the game. But if you are just joining the game, I do think you need to achieve Super Affiliate status as fast as you can, so you can achieve a position of influence with vendors, and avoid getting eaten alive by the scams.

I noticed a high percentage of SEOs at Pubcon openly proclaiming a commitment to “white hat” SEO. These were not just wanna-be’s either. In discussion, they were very knowledgable of SEO and plenty experienced/successful as competitive web masters. Many of them loved Google’s webmaster tools, sitemap, analytics, and *gasp* even toolbar.
The Google Kool-Aide is mighty tasty to many folks. I’m calling it Goolaide™

“Who Moved My Cheese” is a best selling book about change. It is a hideous read. When I first saw it, I am not sure which made my stomach turn harder - trying to read it, accepting that someone had paid money for it, or accepting that someone in upper management believed that everyone below him needed to read it.

But I was reminded of it when I read this:

Change is hard.

That is an excerpt from a leaked internal Yahoo! memo from Yahoo! Senior Vice President Brad Garlinghouse, as published on Search Engine Journal. Garlinghouse is calling for big changes at Yahoo!, and among my favorite parts are:

We have lost our passion to win…

Existing business owners must be held accountable for where we find ourselves today - heads must roll…

We need to fundamentally rethink how we organize to win…

There was some discussion about Yahoo! on ThreadWatch last week, and I suggested that maybe when mid-level executives leave Yahoo! for start-ups it is a reflection of their desire to be in on a startup, or a reflection of their lack of commitment to Yahoo! (desire to be somewhere else) and not necesarily a sign of problems at Yahoo. Now it is clear that change is coming down from the top.

Problems at Yahoo? Maybe. I’m not qualified to say. Perhaps the big change came after those mid-level people jumped ship. But that memo is a good read. You didn’t see one like that from Xerox or Digital back in the past, right?

To me, things look very promising for Yahoo when someone sends a memo like that.

Back from Las Vegas already, but no blogging on johnon.com? Well, my Thinkpad died on day 2 of Pubcon, interrupting my normal daily evening online activities. I sent it off via IBM Ezcare for servicing (after learning that the local Thinkpad depot service in Vegas did not have the parts and would actually take longer). There’s also the MGM Grand/DHL/other vegas hotel package pick up epic saga I’ll refrain from relating to save you some yawns.

On the positive side I won an amazing Nintendo DS Lite from the Amazing Opera Browser company at the show, so I got myself online the last day via wifi and the Opera Nintendo browser. It’s way-cool and I will definitely post a picture and comment soon. This little white toy kicks butt when it comes to wifi convenience.

Also in the works are several SEO posts prompted by the activities of Pubcon, competitive notes from sessions (not many, but some) and some additional observations about the people that make Pubcon Pubcon.

Here’s a little PubCon SEO card game I’m playing when I get to Vegas. I have red SEO business cards for my SEO consulting. I will be using them as my business card this trip, handing them out on request and (hopefully) trading them for your business card. The unique part is, this time each one of my red SEO cards has a unique serial number on the back.  I have already picked a certain number of cards and listed them as “winners” on a sheet of paper. I shuffled them back into the deck, and will be taking them with me to Pubcon.

During Pubcon, look for my red SEO card and be sure and ask for one. During and after Pubcon, more than 20 times I will publish a winning number on this blog at http://www.johnon.com/. If you have in your posession a card with that number on the back, you win! What do you win? Well, how about a back link? A kind mention of your pet project on this blog? Some free PR?

It’s a good will game, that’s all. So make sure you take a card and check the site if you care to win. One win per person, of course, but feel free to take an extra card to pass along to a friend ;-)

Courtesy of IncrediBill, who wanted me to marvel at how some underemployed graduate school drop out had admired Bill’s work on bot-blocking, I found this quote about people who completed all of the requirements of the Ph.D. (including passing the qualifiers and completing all coursework) but did not complete a dissertation / pass a dissertation defense. A venture capital guy was commenting on how much he likes “ABD people (all-but-dissertation)”:

“They clearly have intellectual curiosity, technical competency, and an ability to focus, which makes them useful in startups. But they also have enough economic sense to ignore sunk costs and exit something before its net present value goes negative. They’re entrepreneurs!”

Well said! That bit about the sunk cost effect syndrome is ne’er recognized and extremely relevant. I believe it is lacking in the business world, but then given the way we as a society seem to reward political maneuvers and ignore factual reality whenever it is “sub optimal” for our own egos, I am not surprised.

While someone in the comments of that post suggested that merely being in grad school and dropping out defined “ABD - all but degree” that is not the case at all. There is a big difference between completing your quals and course requirements and dropping out as ABD vs. simply having matriculated and dropped out. Let’s not get greedy, ok?

I would add a few additional character traits to the ABD as entrepreneur. Of course I refer to those who went all the way and for what had to have been a very good reason, quit the challenge before completing the dissertation defense:

• The ABD may know when he’s being taken for a ride, and have the independent skills to not only recognize that but do something about it…against all odds.
• The ABD may not have infinite tolerance for a legendary respect-driven hierarchy that matters little in a rapidly-advancing technological world. Interpret that to mean the ABD may not have the political skills needed to successfully navigate the opposite of a meritocracy.
• The ABD won’t do “whatever it takes” to get what he wants. Even at the very end, with 110% invested, if the price is too high, the ABD would rather walk than go against his ideals. The Mafia doesn’t like ABD’s much because, well, when it comes time to “shut up and do the job” they might not go along.

Given all the malarchy I heard from profs and administrators back then about how one had to “stick it out” and “pay the price” etc., it’s nice to see some real-world rational thought. Good products sell themselves and don’t need all that rationalization to justify their costs.

If you have a Ph.D. congratulations but beyond that, I’m performance driven thank-you-very-much.

In reviewing my notes from an old PubCon, I found the few notes I did make were spot on good ones. Every person in the audience holds a different belief system, and it is our belief systems which enable us to “hear”. Mine is skewed towards competitive angles and skepticism, based on quite a bit of “been there, done that” experience. So when I listen to someone speak, I have to skip much of the filler that is important to others, and I may latch on to those small things which stand out — against my own listening backdrop — as “curious”. Often it’s “I wonder, why did he say it that way” more than what he might have said. Let’s face it: no human can stand in front of an audience and not reveal, via verbal and non-verbal clues, intent or unstated acknowledgements of the existence of additional concerns or constraints.

Which is wy I like PubCon. It is also why I dislike PubCon.

PubCon publishes an “agenda” and puts it out front for all to see. The problem is, in my view that agenda reads like the cover of a popular magazine. There’s not much depth, and an effort to present “something for everyone”. if you were to collect 6 past issues of Cosmopolitan and place them cover up, side by side, you would get the impression that every month Cosmopolitan covers the exact same topics. In reality, that is done in order to sell single copies off the news stand. If the cover appeals to more people, you can sell more single copies at full retail price. Covers don’t sell subscriptions…covers sell single copies.

And the PubCon agenda sells registrations.

But now that I am registered, what about content? Let’s look at the Local Search session as an example. Here’s the description from the session grid:

If you have any interest at all in local search (and you should), then this is a session you cannot miss. Our expert panelists in this session will look at current issues surrounding local search engines, including yellow pages and other local search opportunities. Note, panelists are from local search engines and are invited to freely talk about what features and options set them apart from other engines.

Well, that basically says “if you are in local, this is your session” but the problem is, it’s a concurrent session. Concurrent with “Contextual Advertising Optimization” and also “What every webmaster should know”. That makes it tough to pick one, doesn’t it? I am very much into local search, so while that may - to the newbie - suggest I can’t miss the Local Search session, it actually means that I can afford to miss the local search session unless it has some of that curious stuff I mentioned earlier. If it’s a broad-swipe at local to appease the common web master, I can indeed and should miss it. What to do?

My notes suggest that Justin Sanger is a worthy of an audience when it comes to Local Search. BUT, those are old notes, and Justin was making a name for himself back then. Recently he sold his Local Launch business to BigMedia. What now? Hard to guess…I sure wish there was more detail in the PubCon Agenda.

So I have decided I will try and post notes of the Pubcon sessions I attend to this blog, sticking with my style of notes; the ones that flow from a competitive perspective. They won’t replace your own experience for sure, and they won’t “cover” the session for those missing out on attending. In fact, I suspect they will do little for anyone except someone just like me: someone bringing a varied background and expertise to PubCon where most sessions are more elementary than informative, yet at which there are people who know far more than they are revealing. People with more experience than their presentation may suggest, and who, as humans, are likely to stumble, hesitate, and defer their best judgements according to the level of the general audience than the experts or critics in the crowd.

Maybe you’d like to play along at home. If you attend a session and note a “glitch in the matrix“, drop a comment here. It might be fun.

Go figure, independent me has to attend to a schedule during PubCon. Well, at least a few webex/phone conferences… and one of them early morning (ouch).

I’m skipping Day 1 for other priorities, arriving Tuesday night some time, but I am staying over Friday night to make up for it. As these things go, I am not well known, don’t wear yellow shoes or SPAM costumes, don’t flash the bling-bling and generally play things pretty stealth so if you want to meet up or form a crowd for dinner that includes me please do ring me on the cell. If you don’t have that, you can get it from my blog contact form’s autoresponder.

I tend to sit through even the most banal seminars if there is nothing better to do, because I learn all-the-time.

Well my good friend Matt Cutts (who appears to have personally intervened in the banning of this blog from Google - thanks Matt!) posted to his blog today that Googlers are into Roller Hockey in a big way. That’s great news, because it was several years ago that Matt himself cautiously approached this new-thing-called-roller-hockey as a fitness activity, and I am very glad to see it stuck. Roller Hockey is a great sport. Back in Joisey we had a local rink that, although sadly in need of repairs and a good floor cleaning, was a great place to let off steam. Roller hockey is like ice hockey without the cold, the backwards skating, and most of the falls. It’s faster than floor hockey, with less sweat (due to the breeze keeping you cooler) and more bruises.

Speaking of bruises, did you know Las Vegas is home of one of the most active Roller Hockey rinks in the country? Not the best, but the home of the National Championships, and I believe it is the recipient of increased committment for investment now that a few championships have proven so successful. So we have Roller Hockey right there in vegas… right there where PubCon is….right there where Matt Cutts is and many of us Roller-Hockey playing SEOs and search people! What a concept! RollerCon!

Come on Matt, you were able to intevene on a total ban of my blog, surely you can push for a Roller Hockey game at the next Vegas PubCon! Search Engines vs. SEOs in the rink! Full protective gear, of course.