TechCrunch: “Commission Junction & LinkShare Are Screwed”

21 March 2007 Written By: Jim KukralComments: Comments

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In case you missed it, Google officially launched into the affiliate marketing business yesterday. Michael Arrington of TechCrunch says…

Affiliate marketing networks like Commission Junction and LinkShare are screwed. These networks also operate on a cost-per-action basis, mostly with online retailers. Even though some of them have scale, they will not have the ability to compete with Google on sheer size of network. Advertisers flock to volume, which drives average pricing up. When prices increase, publishers flock to the new platform because they’ll earn more. Look for serious publisher leakage from the big affiliate networks over time as this new product scales up. If you want to argue this point, note what happened to the stock price of Commission Junction’s parent company, ValueClick, today. And that’s even though the market has largely adjusted for this news already – this move to add PPA ads has been rumored for some time.

So is he right? Check out the Valueclick stock price dropping yesterday afternoon.

vc_stock.jpg

You thought maybe Mike wasn’t sure about his belief? Later, in the comments he says…

Google is going to eat them alive.

I’ll reserve my opinion and default to much smarter people.

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  • Geat post. I really thing Mike rushed on this one!
  • * Google and the affiliate networks can and will co-exist.  The  
    affiliate market is completely different than simply PPC or PPA models.
    Lifetime for subscriptions, Views, etc in addition to the creative possibilities...
    so it is by no means obvious that Google will be a serious challenger here - or that  
    it even wants to.
    * Google's PPA offering is great for smaller publishers who are  
    already using AdSense right now anyway.
    * Larger advertisers want much more control and support than Google is  
    offering.  That's where affiliate networks excel and are clearly superior.
    * Making affiliate marketing successful is about more than technology  
    - it takes hard work and a hands-on approach, and that's not Google's  
    style.
    * Speaking of technology though, affiliate networks have developed  
    highly sophisticated tracking systems that cover the vast majority of  
    possible scenarios to make sure that partners/affiliates get paid for every  
    qualified lead, sale, or whatever the commission model might be.  
    Does Google have this level of sophistication in its  
    tracking?
    * Another point here is the scalability of various channels called multi-channel marketing. The today's sophistication of networs enables some players to manage all possible online marketing partnerships. This alone differs significantly from Google's overal objectives. Here I see them indeed making a pitch for an affiliate network, not only to get the horizontal reach but also to benefit from their overal know how.
  • Well as we all know google has many products with varying success. They are no guarantee to win in this space, I have a feeling they are about to be distracted with litagation for awhile thanks to youtube.
  • I'm still waiting to see if this plays out, but, if Google does get this ramped up in the future it will put a world of hurt on Linkshare for sure.
  • Google has a long way to go towards breaking into affiliate marketing.
  • There is one thing that may not have been considered and that is who Google approves as a publisher. I actually tried to sign up with Google a couple weeks ago and was declined. I was kind of suprised by that because I do well with Commission Junction and Azoogle Ads on many different sites and other marketing campaigns. It definitely added new appreciation to my existing affiliate marketing networks.
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