Originally published on October 15, 2009:
This is one way social media has changed the sales process.
Traditional corporate sales forces are hired for their industry expertise. A product or service that targets the hospitality industry will seek account executives with that background. But suppose the company realizes that its service is a better fit for the financial industry. The problem is the domain expertise and social networks of hospitality industry AEs won’t transition to banks. That, in essence, is why corporations can’t react swiftly. Shifting sales and marketing focus is a common problem for companies big and small, especially internet companies. And the key to transaction execution is the direct channel between the AE and the client.
Social media has changed the sales process so that the key to the transaction may not reside in the AE / client channel, it’s finding the special intermediaries who can facilitate the transaction. Before social media, those intermediaries were hidden inside industry tubes that outsiders couldn’t penetrate. Social media (think LinkedIn and Twitter) opened these tubes. Moreover, the ideal intermediary can put together the deal more efficiently, collect a fee, and continue with their day job. They will have the domain expertise to know what they are doing, and they don’t necessarily need to be trained extensively. And most important, they will do this because the recession changed their mindset towards being more entrepreneurial to seek these kinds of opportunities.
So, what’s more profitable? A national company that has 100 full time sales staff, or a few founders working together with 100 affiliates who are found and contracted to complete the transaction for a fee? Figure in the HR costs of hiring.
What’s the moral to this observation? The recession together with social media has created a multi-tasking worker who is independent and looking to leverage themselves in as many profitable ways as possible. That’s why we see all these affiliate marketers out there plugging various teeth whitening and insurance products, but they are doing it wrong. Why? True affiliate marketing entails a highly pinpointed strategy to create transaction opportunities; very few will meet qualifications based on very specific domain expertise. Most of today’s affiliate marketers are unqualified so they spam out MLM systems that try to hook in the masses.
Affiliate marketing, although a dirty word now, is evolving online together with social media to create a new and profound business development paradigm that can be applied to enterprises. At Domus Consulting Group, we have developed operating examples of this new business model that work, and they have nothing in common with spamming or MLM.
{ 4 comments… read them below or add one }
So Pat, you think affiliate marketing is a dirty word? You say most affiliate marketers spam out mlm systems to hook the masses?
Pat, this is total nonsense. That stuff you describe happens from the smallest fraction of the affiliate population, and really mlm has nothing to do with affiliate marketing at all. The two things are usually not related in any way.
Mainstream affiliate marketing is content driven, with good affiliate publishers who follow all the rules, and seek to raise the bar on interent behavior and standards.
Most of us subscribe to the highest standards and belong to professional associations such as the Performance Marketing Alliance. Affiliate Marketing is a big worldwide business model started over 12 years ago with programs like the Amazon Associate Program.
I attend several conferences every year, such as the Affiliate Summit and the Affiliate Convention. MLM and other similar subjects are rarely even discussed. Every convention has a section for legal compliance and ethical conduct.
I hate to see stuff like this in an article that appears to be factual. You obviously do not know anything about our industry. I have been in this business for 12 years, and I do not know anything about teeth whitening or mlm. I operate through top rated high integrity networks, and some in-house affiliate programs.
I think your article shows a lack of knowledge more than anything. I recommend you get more information before writing such articles.
Read more carefully Franklin. I am a big fan of affiliate marketing (we employ variants of it ourselves) and believe that affiliate marketing will continue to evolve to become more powerful as an enterprise marketing vehicle. I am saying enterprises need to embrace affiliate marketing because it works on many levels (which I will leave for another article) and they should build these channels specifically so they don’t appear spam-like.
I am saying that from the consumers’ standpoint (and I talk with a lot of consumers who have told me that affiliate marketing is becoming an MLM-like word), the industry is tainted by high profile spammers. You can’t deny that… Admittedly my message may not have been clear about the promise of affiliate marketing, but your pitbull comment is too defensive. I also attend a number of affiliate conferences too, you misinterpreted my article. I’d love to see this industry cleaned up by the minority who give it a bad name so it will become a more accepted transactional vehicle for the masses.
Yes they are the minority, and thank goodness for that. You say that you talk to consumers? Millions of consumers perform buys online through affiliate sites and never know it. Most of them have no idea of the site ownership, but found the product they were looking for. If the job is done well, that is how it works. No email is collected, no cookies set, just a pass through via optimized product display content.
Affiliate Marketing is not a dirty word in the eyes of consumers. What consumers are you talking to? Most consumers have no earthly idea what it is in the first place. There may be some high tech demographic groups that are recognizing affiliate sites, but they are also in the minority at this point.
Consumers have been accepting affiliate marketing as a transactional vehicle for several years. You are suggesting they suddenly have changed their minds? If a good affiliate creates a good online store in a specific niche, the consumer finds it in search (for me this is not ppc) and clicks through, then a certain percentage buy. I have seen this for years
I have very few charge-backs ever. These people have not been duped or spammed. They found a good affiliate website by searching on Google, Yahoo or Bing and made a purchase. They were happy and so was I, and the merchant I represented was happy too. This scenario repeats itself daily millions of times through good professional affiliate sites.
This recognition of affiliate marketing you talk about is probably better defined as recognition of dishonest spammers pushing garbage through illegal email spam. These people are loosely called affiliates, but not by me and not by the industry itself. I guess they also spam the search engines, but they are much more successful with email.
This industry IS tainted by high profile spammers, but it is not Dominated by them. I do agree that they have to be dealt with, but the social media marketing standards that are now being defined should squeeze them out. We all detest that type of stuff. Now if only merchants would do exactly the same, and not employ them.
Problem it that there are some very bad CPA companies out there who like the money these jerks generate for them. They look the other way to make money, and that makes these companies just as bad as the spammers.
I guess I agree about most of the points you make except for the notion that affiliate marketing is somehow perceived as bad by consumers. I do not see this at all. I have not done studies however, so do you have one? I would be happy to give this point over if you have proof somewhere.
I can tell there’s no way you can even imagine affiliate marketing being thought poorly by anybody. I think it’s simply the term “affiliate marketing” that is getting poor connotations (see the Twitter examples when searching people using the term “affiliate marketing” and tell me your impression).
I certainly agree that consumers buy through affiliate marketing all the time without knowing it. Hey, I’m on your side… the better the perception of the business, the more acceptance to a new way of marketing that leverages relationships for transactions over the older advertising model.