Season 03 / Episode 006
Affiliate publisher extensions, budgets, and Google Analytics with Choots Humphries
With Choots Humphries - CEO and Co-Founder, LinkConnector
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Join Jamie as he engages in a captivating conversation with Choots Humphries, the CEO and Co-Founder of LinkConnector. Jamie’s longstanding partnership with Choots and the LinkConnector team, spanning over a decade, has been nothing short of exceptional. Together, they’ve harnessed remarkable innovations and cutting-edge technologies in the affiliate marketing space.
In this episode, Choots and Jamie delve into browser extensions. They explore the historical evolution of these digital tools, unraveling the reasons behind their current ubiquity. Discover how advertisers can effectively manage browser extensions and, more significantly, how they play a pivotal role in the ongoing attribution discussion.
The concept of attribution, both within and beyond the affiliate marketing sphere, takes center stage in this discussion. If you’re new to affiliate marketing or seeking insights into the intricacies of attribution, this episode promises an “Inception”-level journey through its nuances.
For CMOs and CFOs, this episode sheds light on their pivotal roles within the affiliate channel. Choots and Jamie untangle common misconceptions, share insights into the typical pitfalls, and outline the industry’s needs in supporting these key positions. They emphasize the significance of comprehending a variable budget system and the vital role of tracking and reporting on the affiliate channel’s progress towards achieving budgetary goals.
As a bonus, the discussion touches on the ever-relevant topic of Google Analytics and introduces the latest click tracking certification on the horizon. For more details on this certification, you can explore further here: Google Click Tracking Certification. Don’t miss this enlightening and insightful episode that explores the dynamic landscape of affiliate marketing.
About Our Guest
Choots Humphries, co-founder of LinkConnector, has been involved in the computer industry for two decades, most of which have been with the Internet as an entrepreneur co-founding and successfully operating two separate companies—LinkConnector Corporation and DotCom Corporation.
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[00:00:48] Jamie Birch (JB): Hey everybody. Welcome to the Profitable Performance Marketing Podcast. I am Jamie Birch, your host and founder of JEBCommerce, your award winning affiliate management agency. Welcome to season three of the Profitable Performance Marketing Podcast. I’m super excited to talk to you about. Our guest today I have Choots Humphries.
[00:01:12] He is the CEO and co founder of LinkConnector. LinkConnector is one of our favorite networks. They do a phenomenal job and since their inception they have been focused on really unique ways to commission. To report and really to enable the affiliate community advertisers, managers, and affiliates to do some really great things.
[00:01:35] So I’m really excited. And, and Choots is our first, second time guest on our show. He was on in season one, a really good friend of mine, one of my favorite people in the space. And today we talk about a lot of great things. Before I go into what we discuss, if you are looking for help in 2023 and 2024 and beyond for your affiliate program, and you’re struggling with how do we bring in new customers?
[00:02:01] How do we bring in new affiliates? How do we optimize? How does this channel play well with Public relations and SEM and all those things, and you need help. Please let us know. You can email us at firstname.lastname@example.org. We’ll get out to you right away and set up a free half hour consultation to talk about your program, what you want to do, your goals and then help you figure out the best way forward.
[00:02:26] So just email us at email@example.com. Today, Choots and I talk about browser extensions. And we really dive into the history of them why they’re so ubiquitous right now and what to do with them. And we transition into a good conversation about chief marketing officers and chief financial officers and what, how they view the channel, what they need from the channel and what we can do be doing better as an industry.
[00:02:55] One of the unique things we talk about is variable budgeting and really recognizing. That there’s a problem when an affiliate program grows beyond expectations. It creates more revenue, but it also creates a demand for more budget. And a lot of times that can be focused solely, or the focus on that is where am I going to get that budget?
[00:03:16] And not on, Ooh, the whole pie grew. So we talk about variable budgeting. We talk about how to deal with that. In the affiliate channel, we talk about a big change coming with Google analytics and their one redirect. Issue that’s going on. So toots is incredibly knowledgeable. LinkConnector is celebrating, we’ll be celebrating their 20th anniversary here in just a few months.
[00:03:38] And it is a pleasure and an honor to have my good friend on the podcast again. So I’m just going to get out of the way now. I’ve talked about them enough. Take a listen and enjoy my conversation with Choots Humphries.
[00:03:51] All right, there we go Choots, thank you for joining me. You are a very first two time guest on the Profitable…
[00:03:57] Choots Humphries (CH): Nice. Very nice. Honored.
[00:04:00] JB: Thanks for joining us. You guys have been doing a ton of travel. I’ve been following along. How’s that been going this…
[00:04:07] CH: Yeah, it’s been good. It’s nice to get back out there, for sure. I wish the destinations were a little bit more varied than Las Vegas and New York. I get sick of those spots, but… but yeah, it’s good. It’s great to be out there and to talk to people and share ideas and thoughts and stuff like that.
[00:04:29] JB: Yeah, we’ve been to Vegas, I think four times already this year. And it’s a lot. I don’t think we’ve actually been anywhere else this year, but Vegas when we leave. But…
[00:04:41] CH: I actually passed on my annual boys trip to Vegas because I was so tired of going to Vegas, so…
[00:04:47] JB: You can only see so many shows and walk the strips so much. But that’s great. So introduce yourself to our listeners. We won’t do as deep of a dive as we did the first time ’cause they can go back and listen to season one. One of our first episodes, but for those who don’t know you introduce yourself and little background.
[00:05:05] CH: Yeah, so I’m Choots Humphries. I’m the one of the co-founders and currently the CEO of LinkConnector affiliate marketing network. I’ve been in the performance marketing industry now for over 20 years. Almost we’re coming up in about a half a year on LinkConnector’s 20th anniversary. I started in this industry, had about three or four years experience mostly on the affiliate side, but somewhat on the merchant side.
[00:05:31] When I came up with the thought of doing things a little differently than the networks were doing at the time. So that’s when I was one of the founders that started link connector and I’ve been doing it ever since. So really enjoy it a lot. Love the industry.
[00:05:44] JB: That’s great. And tell, we actually started our companies the same year. So October of next year will be our 29th. Yeah, so we’re about to hit…
[00:05:53] CH: Yeah, that is close. Yeah, we cheated a little bit, we count our incorporation date in March, but we really didn’t go to our first show until the September/ October time frame, so I guess that’s really what we launched.
[00:06:05] JB: I think I counted the day my wife looked at me and said, what are you doing? That’s the day that we count. I was I think October 10th is when I…
[00:06:15] CH: That moment happened for me when my wife was three months pregnant in 1999. That’s when I got the you’re doing what?
[00:06:23] JB: Yeah, is it, do you ever look back, and I do this a lot in my prep calls I look back on some of those decisions and think, how in the hell did I do that?
[00:06:33] CH: Yeah. Yeah. Especially for us in an industry that was so young and so wild west and undefined. And, I look back and I’m really happy I’ve been in it for that long and been a part of how the industry is shaped even if just a little bit had been able to affect that. But yeah I certainly didn’t go to MBA school with the thought that I would ever be an entrepreneur.
[00:07:01] I think I was an entrepreneur, ended up being an entrepreneur not because I strove for it, but because I was left no choice. I really wasn’t happy with what I was doing. I wasn’t happy with things, how things were happening, and my only choice was to take the personal risk and do it on my own.
[00:07:19] So I’m very happy with that decision. But as owning and running a business is exhausting, especially over decades.
[00:07:25] JB: It can be, yeah. A mutual…
[00:07:27] CH: I used to more hair. I used to have a lot more hair. I used to have more hair than you have now.
[00:07:33] JB: I’ve had the good fortune of keeping up on that. I can’t grow anything any facial hair, but it is definitely graying a lot more. Everyone said when I was younger that I’d enjoy the baby face at some point and they were right.
[00:07:45] CH: Yeah I’m with you. I’m with you on that.
[00:07:48] JB: You, one of the questions I always ask my staff, ” Hey I’m interviewing this person today. What questions do you have?” And one kind of goes to what you mentioned earlier, how things change and shift in that timeframe, and especially like the last year or so, what have you seen change in the landscape? As far as maybe technologies or focus or type of advertisers, what have you seen shift the most?
[00:08:16] CH: How… I would say if I’m limited to just in the last year there’s a lot of change and focus and a lot of attention being paid to browser extensions and how various affiliate models are adapting or incorporating browser extensions into it. I think, on the affiliate side or the publisher side, it’s a natural direction to go.
[00:08:43] Especially in the industry that we’ve seen over the past half decade or so offer more attribution options, you and I grew up in this industry where you know, and it’s one of the reasons I founded LinkConnector because it was the only choice with when last click is the only choice and every it’s a mad dash to who can get the last touch and that’s not always in a forthright and honest manner, which is why I think attribution there needs to be lots of choices for advertisers and you need to be able to adapt your attribution model within your network or software that you’re using to run your program to whatever your program goals are.
[00:09:25] And so now that’s happened, there’s a much more varied opportunity, and I think our industry, or at least the advertiser side of our industry, tends to judge those business models as they’re just trying to grab the last click and I don’t think it’s just that I think it goes way beyond that with browser extensions.
[00:09:45] I think we’re seeing a natural evolution of how our affiliate companies or publisher companies are interacting with the user base as technologies become more available and the natural evolution of, how do we provide a service, obviously, for free generally to the user, how do we add value to the user experience and then collect on the back end on a performance model with all of our advertiser relationships?
[00:10:13] So I, I think if again, if I’m just limited to the last 12 months, I’ve seen a lot of attention to that. There’s obviously some technological evolution. I think you and I, last time we talked a little bit about the fact that Google is once again, putting a strain on our industry with their click tracker certification program.
[00:10:36] And I think that for publishers that do anything in Google, parallel tracking that came about four or five years ago was challenging enough. Now on the parallel track Google’s ClickTracker certification program, that’s not a problem inherently. What is a problem is that program right now, as it’s designed to be piloted out at the end of this month for any new template ads, is theoretically, purported to only limit to one certified click tracker. From Google to the advertiser site. So that’s a problem. That’s a problem for people that use software to, to optimize their SEM programs, but also want to use a network. So we’re going to have to see how that affects…
[00:11:24] So that’s… unusual. But not unusual in the sense that, our industry is always having to evolve and adjust to what the powers to be, there’s just so many sources of traffic and so many ways to promote merchants that there’s always something that we have to consider and adjust to and adapt to.
[00:11:44] JB: Yeah. So I wrote down, I have a ton of questions. It’s some really, I think, nice segues into some of the areas we want to talk about extensions is super interesting to me just because I remember, I think in 2001, the industry had a major meeting of the minds in New York about these extensions. And if you had one, it was all about the consumer.
[00:12:09] If you didn’t, it was all about stealing other affiliates, commissions. And and then it went away for quite a long time. Any extension was bad. And then that shifted, I believe really with Honey that kind of came out of…
[00:12:22] CH: Yeah, I think Honey is exactly when it shifted, or at least shifted to, “Oh, it’s legitimate again.” In the minds of folks Honey was so successful at developing this functionality. It was a paradigm shift for users who no longer had to go hunt for coupons. Now you have all the coupon sites that are built.
[00:12:43] A huge user base scrambling to say maybe we need to be a loyalty and let’s shift our model. So yeah, Honey, definitely was the bell cow there that, that kind of legitimized it again. I do think there are concerns, whether you’re a technology affiliate that uses browser extensions or a loyalty platform or any kind of affiliate model, that’s trying to add that user experience.
[00:13:06] I do think there are some considerations and I think there’s a lot of room for industry standardization or at a minimum we can all agree that this is good, that’s bad. An example of my opinion on what’s good is that the user that’s interacting with that browser extension, there has to be some kind of affirmative click and the affirmative click I’m not talking about, the old days where, click here to reveal the coupon code per se.
[00:13:36] It’s, “I want to use this and this is important to me. I downloaded that.” The other thing is there’s an active download. It’s not, I’m trying to get this free utility that helps me with my day to day work activity. All of a sudden this browser extension that’s downloaded in the background and I’m not using that per se actively, it needs to be part of the user shopping experience.
[00:14:00] The third thing that I would say that I personally and LinkConnector personally thinks is important as it relates to browser extension is advertiser has to have flexibility on how attribution occurs with that specific type. Okay, advertiser A within a network should be able to say, “Hey, what’s most important to me are content affiliates.”
[00:14:24] So if there’s a content affiliate in the click stream or having interacted with this user prior and then, using Honey as an example, and then Honey comes in and offers this coupon, gets a positive click, all of those things, the interaction with the user, I still want to attribute back to that content guy because that’s what’s most important to me.
[00:14:44] I’m fine when Honey is the only one in the clickstream, but I don’t want them taken from this class or this type or any affiliates potentially. So you know, I think a lot of people are calling that standing down and that can be a conditional stand down or it can be just unconditionally stand down but networks ought to offer that ability for advertisers to make the decisions for that, that those particular publishers need to stand down when circumstances that are important to the advertiser.
[00:15:16] And the PMA, the Performance Marketing Association is currently working towards that. They’re doing a lot of polling and discussion and hoping to have something, some kind of standards recommendation moving forward. But obviously they’re a smaller organization that has limited resources.
[00:15:34] So really what’s going to drive the changes is the networks all kind of trying to differentiate themselves with what advertisers consider good practices and publishers. They’re equally important, I don’t mean to demean that.
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[00:16:47] In order to grow our clients programs substantially year over year and much much more. Now I want you to have access to these 100% for free simply because you’re a listener of this podcast. You can access these by going to jebcommerce.com/casestudies now back to our show.
[00:17:07] JB: We’ve worked with hundreds of clients and it always seems to be very different based on how they view the channel, how they view the extensions, and are they are they focused on the consumer journey or are they focused on profitability and it’s not necessarily the same.
[00:17:25] I think early on we had the Top Moxies and others who were automatically downloaded when you created an account and they were sneaking it in. That doesn’t seem to be much of the case anymore, but it’s… there seems to be a couple of things in my estimation to be concerned about.
[00:17:42] One, I think is attribution. First it’s the consumers want this. I think the reason, and you said it that, that these have been so prolific and they’re almost ubiquitous with, any type of affiliate now has an extension and a reward feature. So the consumers are driving that.
[00:18:02] And then how do you balance what the consumer is looking for with what you want as a channel manager or a marketing manager or a director of e-com how do you manage what you’re looking for against that? And then how do you, if you have a content partner that you’re doing a six month or year long campaign with, and they are the introducer of the consumer to your brand and then a Honey or another affiliate is getting credit. And how do you handle that? Because I think there’s a couple of different questions. So it’s one, what does the consumer want to do? If this is the way they want to shop, don’t CMOs and other others in the channel managers, don’t they want to optimize and maximize, follow the consumer.
[00:18:48] And then the attribution question there’s a question of attribution, then there’s a question of cost. And for, to me, they seem differently because you can have, okay, we’re going to attribute this sale to the content affiliate and it’s coming through and being closed by an affiliate with an extension.
[00:19:04] And so I want to take, I want both of those things to register. But I also don’t want to increase my costs. So I know with some of the advertisers we work with, we’ll do the stand down thing. If you come in at the end, but a content producer, content creator generated that consumer, the content creator is going to get credit for that.
[00:19:28] And they’re going to earn that commission, but then it creates a problem. So talk to me about the technology that enables you to do that. And have you seen other advertisers manage that kind of complexity to a point of satisfaction for all parties.
[00:19:43] CH: Yeah going back 4 or 5 years, the argument as it relates to attribution is you can’t really, and I don’t agree with this statement, but this was the primary argument that you are hearing from our competitor networks is you can’t really make an attribution decision on a transactional basis because there’s too much complexity and what program terms need to be and all those kinds of things.
[00:20:14] Let’s just all agree a user that expects their reward from Honey, because they use Honey as their loyalty platform is, and I’m continuing to use Honey for a reason here, because I think they were the first one to adapt to, to solve this problem that we’re getting ready to talk about, they expect their reward from their Honey Gold or reward or whatever it is. It’s been promised to them. You can’t. convince a user, “Oh you clicked on this content site, two weeks ago. So you don’t get that reward. So if you want your reward, you got to go to straight to Honey within 14 days, which is the cookie window, or… none of that.”
[00:20:54] JB: Consumers don’t want to hear any of that.
[00:20:56] CH: They don’t want to hear it. They don’t know what’s going on. All they know is they were promised a reward and Honey was the first to adapt to that. I think four or five years ago, the argument was you got to exclude loyalty. And what that does is it makes everybody want to go towards loyalty, right?
[00:21:15] It makes the WhaleSharks of the world say, “RetailMeNot is no longer a coupon site is now a loyalty platform. And we’re going to have a browser extension, and very successful model.” Why wouldn’t they go that direction?
[00:21:29] But more and more are being categorized in that closer environment as loyalty, and so you can’t exclude him from the attribution decision. You just have to make their models adapt and Honey proactively did it by saying you’re going to get three to six percent back when you purchase through this advertiser.
[00:21:52] Okay, so they’re not promising a specific dollar amount. They’re not even promising a specific percentage. They’re saying it’s going to be in this range. And what that accommodates is, Honey’s promoting an advertiser, they expect six percent commission or twelve percent if they’re giving half, but recognizing that some of the times they’re either going to have to split that commission with a content site that was the introducer or that some of the times they’re getting zero, that creates that range of what they expect from most transactions that they’re involved with.
[00:22:26] And now they can keep their promise to the user by saying, “listen, there’s a lot of factors in that three to six percent that you’re going to get. You’re gonna get somewhere in this range.” So they’ve set a lower bar of expectation. It’s not so absolute because none of this process is absolute.
[00:22:43] I think that’s the answer, and I think it’s important for advertisers to set it up so that, let’s say they’re not splitting the attribution, they’re not dividing the commission between two players in the clickstream. They’re actually saying it’s one or the other, depending on whether the other exists. That early example of the content was the introducer, we’re gonna ask Honey to stand down.
[00:23:05] Honey knows us up front and all that kind of stuff. If that happens, they have to stand down 20 percent of the time, Honey doesn’t care. But if Honey is standing down 90 percent of the time, they care and they’re no longer going to promote that advertiser.
[00:23:18] Those decisions and what the experience of that relationship produces all goes into whether you’re going to allow Honey to do it, whether you’re going, you know how you can set it up at your network, whether Honey is going to continue to promote. Is this a profitable endeavor?
[00:23:33] Is it too much of a pain for them and their users that are coming short of even that 3 percent because of how much you’re you as an advertiser of how much more you value content than what I can give you. So that’s just a two way relationship between those two parties, the affiliate and the advertiser.
[00:23:53] JB: And so for our listeners who may not have any idea what we’re necessarily talking about if we take a step back and we can dive really deep, but I, some of our listeners are relatively new we’re talking about is not your GA attribution. We’re talking about within the network, what affiliate gets credit and you…
[00:24:15] CH: When multiple ones are involved.
[00:24:17] JB: Multiple, so multiple affiliates touch the order, touch the transaction, an extension, an affiliate with an extension closes, they’re the last click. But there may be multiple affiliates along the way. Your platform allows you to say, if that’s the case, then here’s what to do with the commission and you can split it and say X amount of that commission goes to the content creator who introduced it and X amount goes to the closer, or you can have them stand down and that closer doesn’t get credit because someone had priority, essentially, someone was involved earlier and they get the priority. So if many advertisers, all they want is content creators and they want an affiliate channel that’s driving incremental acquisition and new customers, and so they’re very focused on that introducer in the chain, and they want to give all the credit there.
[00:25:13] There’s really good arguments for both. I love that you guys now and for a while have the ability to say this person was in the beginning, this affiliate touched them and introduced them. That was the first click. And that’s really important because nothing would have happened after that. So we’re going to… we’re going to give them something because in the old model, that introducer never got anything and they wouldn’t see a sale and they’d move on. And then you’d lose that pipeline for a long time. So that’s what we’re talking about is you can, and how…
[00:25:43] CH: By the way, we’re coming up on our 20 year anniversary of first or last click choice.
[00:25:48] JB: That has to be at least a decade before anybody else.
[00:25:52] CH: Anybody else. Actually, I’ve spent a lot of time on stage at various industry events, fighting about the merits of offering advertisers a choice and fighting with both networks and, my competitors, but also affiliates who had invested a lot of money into this last click model. That’s generally available everywhere.
[00:26:13] But what we’re trying to do is recognize that there should be a choice and every advertiser has different priorities. And one advertiser might value, and I think you’re right, most advertisers want that. I think that’s just the pendulum is swinging really hard and it’s going to go past center.
[00:26:32] And they’re throwing away a lot of the last click value that you can get from the closers and from anybody that’s also in the middle of that clickstream. It’s not just about introducers and closers, it’s about the folks that help them consider that purchase or consider against competition and stuff.
[00:26:49] So there’s lots of value in that clickstream. But, we wanted to recognize up front that every advertiser has a different goal and we need to be able to adapt our program to that goal to satisfy the advertiser so that they can build a sustainable program. So it’s a program that adds value and can compete against the other marketing channels in that advertiser.
[00:27:13] Because, as especially 20 years ago, affiliate marketing has always been the redheaded stepchild of online marketing.
[00:27:20] JB: Yeah, and that’s definitely something I do want to talk about. It seems to me the attribution that’s really following… the consumer has a behavior. We’re all chasing the consumer. They don’t typically get introduced to a brand and make a purchase during that same window without touching the brand in multiple areas.
[00:27:38] One of the standard marketing fundamentals is that customer has to see that message seven times for them to react. So seven times could be your paid search, a catalog, they drive by your store, affiliate one, two, three, and the closer. And if you’re not in those places, you’re not going to be, you’re not going to be considered.
[00:28:00] CH: Right, and if you aren’t paying to be in those places, you’re no longer going to be in those places. Whether you’re paying as one of your other online marketing channels or whether you’re paying through performance marketing, if you’re not rewarding those affiliates for that behavior, in the performance marketing channel, they’re going to stop doing it.
[00:28:18] They’re going to do something else that does pay them money, which is why you have to figure out what’s important to you, what you’re lacking, what you want to build up, where you want to invest your performance marketing dollars as an advertiser.
[00:28:31] JB: Yeah, and that leads to the next… I think a good segue to our next discussion is CMOs and how they view the channel. We’ve talked about a real focus on the user and the consumer, and that’s where you guys were coming from and we have the attribution capabilities of LinkConnector, but are CMOs looking at the channel like you and I are looking at the channel or what’s their biggest mistake when they’re dealing with some of these things?
[00:28:57] And usually what we’ve seen CMOs, CEOs get involved when it’s that last click person isn’t their ideal affiliate that they’re looking for. And then they will come back and say, ” this one’s just coming in at the end.” Yada yada yada.
[00:29:15] What do you think about, their very important part of this chain? They’re making decisions. What do you think their view of the channel is? And is that a correct view?
[00:29:26] CH: Yeah, I think even your newest members of the audience can grasp the fact that compared to some of the other online marketing channels, which are fairly single dimensional, affiliate marketing is all over the place, and it can mean so many different things to so many different people. Taking some technology affiliates, like companies out there like an UpSellit and Intently, where they’re adding a significant amount of value on helping advertisers to convert users that are on their site and keep them on their site and increase the conversion rate.
[00:30:07] There’s so many things that they’re doing that you would traditionally call it a decade ago or two decades ago, have to pay a lot of money up front for a long contract period, whether you’re getting value or not. These companies are within our industry doing it on a performance basis. And compare that to the really easy to understand coupon site that every CMO has visited.
[00:30:32] Compare that to Honey, who they might’ve saw an ad one time on Honey, or I think my kids are using that. And compare that to really easy back to the single dimensional SEM. ” I don’t need SEM affiliates. I have my own group that does SEM and I pay them to do that. Why do I want SEM in my affiliate channel?” You know the two polar extremes of affiliate marketing, content site, because I can go to that site and see the article that’s describing that, although once they see it, they really want to get into the weeds and say “why are they saying that about our product?”
[00:31:11] Or “how come we’re not listed number one” and all those kinds of things. So you try to keep your CMO away from the specific articles, but that is easy to touch and easy to understand. So is a coupon site, but beyond that it’s really hard to understand both all the various dimensions or aspects of what could be considered pay for performance, the service that the affiliate is doing in exchange for a chance at a commission.
[00:31:42] It’s hard to put that in it’s one dimensional, “okay, I know what this is.” And you compare that to your SEM channel, your display channel, all easy to explain, all easy to understand, all you can reach out onto your screen and touch. I see my brand there now. I’m seeing my brand pop up on Facebook when I go to Facebook for, my display group and stuff like that.
[00:32:06] So all of that is just so much more easy to understand that I think that’s why we haven’t graduated from the redheaded stepchild. It’s definitely become largely because of how much the industry has matured. Groups like the PMA who are out there promoting and educating about our industry, all the conferences that now have grown, it is becoming more understood and easier for a CMO to grasp, but I still think they want to put it in its own bucket where it’s walled off and it doesn’t overlap with the rest and it’s never going to not overlap with the rest unless all your channel is content.
[00:32:45] You don’t have… you know, you don’t have a biz dev team that’s going out and negotiating these placements, editorial placements, or anything like that. You’re just going to do all that in affiliate marketing. You’re not going to do anything else. And as anything that’s just content is going to take a very long time to grow into any kind of impactful channel.
[00:33:07] As you and I know, the great thing about this channel is for the assuming it’s primarily incremental which everything isn’t, but assuming the partnerships that you’ve aligned yourself with are, do provide income or incrementality, what’s great about it is not only are you not paying for this up-front with any kind of financial risk, you’re paying for it on the back end in a pay-per-sale environment with the user’s money. Usually with a one or two month delay with the user’s money.
[00:33:41] So there is no financial risk. You can go much more aggressive with that. The return on ad spend is significantly higher in the affiliate channel compared to any other marketing channel. So you’re going to get a lot more for every dollar you do spend.
[00:33:58] That’s the part that I think CMOs… and it’s not all their fault, they’re not dumb people. They’re not people that aren’t trying to understand. There is no real formal education out there. We’re only a 25 year old industry. It’s still not being taught more than maybe a single class in MBA schools and stuff, which are where our CMOs and CFOs are coming from.
[00:34:23] JB: None of our employees have ever come to us and said, “Hey I learned about affiliate marketing in school.”
[00:34:28] CH: It’s all on the job training. Yes, exactly.
[00:34:31] JB: Yeah, I think my answer to that question is there’s a bit of an inception if you remember that movie with Leonardo DiCaprio
[00:34:39] CH: I love that movie. I love that movie.
[00:34:41] JB: So you have attribution across channels, but within this one channel, you also have a deeper attribution across partners, categories of partners, sometimes networks and campaigns.
[00:34:54] So it can be difficult to get beyond that because you can’t… your first level is to look at your SEM, your paid media, and your affiliate channel and measure them on that level, and then you can get down to different ad campaigns in those other areas, and then you get down into affiliates and then categories of affiliates and then individual ones. And that to me is always a mistake made at a high level is grouping all those together because they’re so radically different. You have a loyalty site and you have an SEM affiliate and you have a media company like Hearst or any of the others that come in.
[00:35:33] They’re so dramatically different. And if you just look at them at the top, you’re going to, you’re going to make mistakes. You’re going to remove affiliates and partners that are driving really good incrementality.
[00:35:45] Like you said, we don’t have education as an industry on this. I think the way that affiliate managers come up can be problematic. I don’t actually have any that have worked with us for 20 years that I knew I wanted to do affiliate marketing.
[00:36:00] Let’s go do it. There’s always a different origination to it.
[00:36:03] CH: Just to get the other side of that, and not that it’s the other side, but to add to what you’re saying what’s great about the people that work in our industry is they are risk takers. They are have that entrepreneurial spirit. They’re willing to adjust to circumstances around them.
[00:36:20] They didn’t come up in a track. They’re having to figure it out on their own. So they’re good at research. They’re good at asking questions. All of those things lead to a channel of wicked smart people who are very adaptable and very attuned to a constantly and evolving, constantly changing and evolving industry.
[00:36:40] Which I think is why affiliate marketing, or performance marketing that, that arm has grown in popularity and has grown up in the CMO suite of, “okay, we’re definitely doing this. I just need to figure out how we’re going to wall it off.” Or when budgets come along, maybe thinking about those budgets a little differently than you’re thinking about in the SEM channel or on the display side where you’re all upfront financial risk. That’s the good news as it relates to our industry and, again, the ROAS. So the return on the ad spend is phenomenal as a group, right? You mentioned how diverse promotional types can be. And of course, it’s different within the different categories and what you’re going to get as a ROAS might be six, might be twelve, might be fourteen, depending on where you focus your growth of your affiliate channel. Are you focused primarily on content or are you focused primarily on loyalty and coupon? That’s going to all change that, but it is still a very affordable channel with no upfront financial risk.
[00:37:49] JB: I want to talk about that in a second, but first the complexity of the channel, I would imagine if I’m not doing this every day, I’m a CMO, I got multiple channels, I’m really focused on the consumer. Just when I get and grasp the concept of this type of affiliate, because the channel and the industry is so innovative and always chasing the consumer and trying to get ahead of their behaviors, it can be a lot to keep up with.
[00:38:15] “Wait, I thought we dealt with extensions. Didn’t know there were content partners, these big media companies coming in.” It can be quite a lot to keep up with how much the industry changes.
[00:38:26] So one of the things we talked about, and you just mentioned earlier, was the financial commitment. You talked to float essentially, we got the order and we incurred the revenue, but that was on the first of the month. I don’t get my invoice from the network or platform till the end of that month and it’s due possibly at the end of the following month.
[00:38:49] So I have an order that I realized the revenue, I didn’t actually have the cost for 60 days, potentially, and that can be a lot for a CFO and a CMO to manage that. So talk to me a little bit about the benefits of that. Maybe the complexities that lie in with that.
[00:39:10] CH: I think, obviously it’s beyond paying up front or paying on the back end, as you just described. But I think if you think about it, the easiest question For a CFO and CMO to understand is a radio spot, right? They’re going out and they’re buying a $10,000 radio spot for an ad to promote their company.
[00:39:32] There’s really a little bit of measurement on the backend that can help you attribute some of the benefit of that ad, but that’s easy for them to understand that you’re paying money upfront in hope for future revenue. In performance marketing, you’re making a contract up front in your program contract with your publishers and affiliates to promise them, I’m going to pay you 10 percent of every sale that you drive, as an example.
[00:40:01] But that money doesn’t come due until after the sale occurs. So you’ve collected on day zero, when the sale occurred from the user or the consumer, you’ve collected $100 from the consumer. You now owe, okay, and will accrue for that expense, that day, theoretically, that $10 to the publisher. The reality is, depending on how big your program is, and do you have to pay up front, or are you on a post-invoice basis, that money comes due sometime after, but I think from their perspectives, from the CMO, CFO perspective, they think about those two things differently, and the reason they have to, or should be thinking about those two things differently, the upfront financial risk and traditional ad spend where I’m going to try to measure and repeat the things that are giving me at least that much benefit from a ROAS perspective or the back end more like a cost of goods sold mentality where I’m just making a deal up front and then I’m rev sharing on the back end. I know budgets always come into play, but budgets mean more than expenses. Budgets also mean revenue. And theoretically, anybody in the C suite who submits their fiscal budget to their board or, the CEO or to their board whoever’s managing or approving that budget, they should recognize that predicting what your expense is going to be in the performance marketing channel is difficult sometimes based on it’s very dependent on how you structure the terms of that agreement and how talented your team or your network are for growing your program, but predicting how much revenue is going to come from that program and what the expense is are a lot harder to predict than, say, the upfront, November decision for next fiscal year. I’m going to spend $20,000 a month in SEM. That’s easy to predict, but so what I mean by that is by having that cost of goods sold mentality for a CFO or a CMO recognizing that I can continue to exceed my budgeted expense without necessarily stealing from other channels as long as I work into that budget, some kind of assuming my revenue is going up X fold faster than that expense from that channel than that. That is a more fluid budget. I’m not tied to that expense line. And I don’t have to go and say, “Oh, I gotta find budget somewhere else.” And I think that’s generally the CFO/CMO reaction is…
[00:42:46] JB: Where am I pulling it from?
[00:42:48] CH: Where am I pulling it from? Because they’re not considering the revenue and the revenue that’s attributed, whether it’s wholly attributed or partially attributed to these channels, they’re not tying those triggers. They’re not getting upfront permission to say, “I might exceed this. Or can I have permission to exceed this if my revenue is four fold or greater, from this channel than I budgeted.”
[00:43:13] So those are the kinds of things that CMOs and CFOs can do more proactively to not… to know that this is a cost of goods sold. I’m using the user money to pay for this. Why would I want to stop if it’s incremental growth?
[00:43:28] JB: And I think…
[00:43:29] CH: Assuming no inventory issues and stuff like that, right?
[00:43:32] JB: All things being equal, we can produce, and we can ship and all those.
[00:43:36] The mistake I’ve seen our channel do, and I think it comes from a lot of the track that a lot of affiliate managers take, which isn’t this is what I want to do. They may not have a good quant background but they’re very relational.
[00:43:51] That’s what our industry is, and so I’d say overall, we’re very relational. A response to that may not be as quantitative as it needs to be. There are clients who they understand the channel and there’s not a budget attached to it. They have a revenue goal and we have either a ROAS or a commission goal to hit and they let it run, but the ones that don’t, not only do we let them know, “Hey, your revenue is increasing, but we’re also sharing how that pie, this is what your overall margin is. And so now your money in the bank, your budget for this has also grown so that they have that data.”
[00:44:29] Cause I believe, when a CFO CMO sees that, they just see that cost increasing and like you said, where am I going to pull that extra five grand from. You don’t have to because we just grew, we grew the pie.
[00:44:43] CH: … Pocket that you sold last week, which is now in your revenue part of your P& L, or your gross profit part of your P& L. That’s right.
[00:44:51] JB: Yeah. That’s probably the, and I, so it’s reporting.
[00:44:54] CH: it’s not a cost of goods sold. Let’s just be clear. No marketing expense would ever go on a cost of goods sold line.
[00:45:01] So it’s not that, but I try to encourage them to think of it like a cost of goods sold, right? Those are dynamic expenses that depend on how much revenue you want to generate from that channel. And the two are very closely related. As revenue goes up, so does your expense.
[00:45:22] JB: Yeah. And I think a lot of it, the education we have for outside of the channel, people outside of our channel, I don’t think it’s fantastic. We focus a lot internally, but getting that kind of inception level attribution is an issue. And then how we report those numbers up, I think is a big deal.
[00:45:40] You talked earlier, and I didn’t actually know this until you sent it to me and we’ll include it in the show notes, of the Google analytics change coming up that I think people need to start looking at. And in layman’s terms. It’ll only allow one redirect. And if you’re listening to this and you’re like, “yeah, but I don’t redirect, what are you talking about?”
[00:46:01] All the networks, there’s one redirect. So you go from the affiliate site to the network. It redirects and sends, captures data, and sends to the advertiser site.
[00:46:13] CH: If your affiliate site starting point is Google, now you have a potential problem if you’re starting from Google. Yeah.
[00:46:20] JB: Yep. And even if you’re if you have an affiliate site and you use a redirect to then go grab that link, and then there’s another redirect, it’s not going to stop the commissioning, but it will if your database of record for your whole company is Google. It’s not going to show up as an affiliate sale because it’s not it’s beyond one click.
[00:46:44] Is that kind of how you understand it so far?
[00:46:45] CH: Yeah, so my understanding is if somebody, an SEM is easiest to understand, but an SEM affiliate, so search engine marketing affiliate who’s advertising on Google on behalf of a merchant partner currently today, they might work with two basic click trackers. The network.
[00:47:06] So as they do an ad on Google, that’s ultimately going to end up in a microsecond after the click on the advertiser site, if they use some kind of click tracker to optimize their keywords and which ones are converting better and all of those things. And of course, they’re using a network, the new rules and it’s not switching for everybody at the end of the month, it’s just Google is just starting out slow, applying it to new ads.
[00:47:39] So new ads that use this… these click trackers in the advertising templates on Google, any existing one should work for a while until Google decides to make this… proliferate it more but still for new ads: one, your click trackers have to be certified by Google.
[00:48:00] Two, only one can be, this is the current plan only one can be involved in the redirect. So in that example I gave, the SEM affiliate would only be able to redirect it through the network. They wouldn’t be able to use their third party service to optimize their ads any longer, and they’re going to either have to figure out a different way for the network to start the tracking process without that redirect so they can continue to use their keyword optimizer or program optimizer, or they’re going to have to drop their program optimizer and they won’t be as efficient and probably not as profitable and won’t be able to drive as much. So it’s definitely going to send some ripple waves just parallel tracking did four or five years ago.
[00:48:45] Networks are going to have to adapt. We’re already strategizing with our partners on different ways we can adapt to minimize the impact of this on our search affiliates and others that use Google as a starting point.
[00:48:59] JB: And if an affiliate manager isn’t aware of this, they’re going to walk into a meeting at some point in the future and they’re going to report numbers. And someone from the business intelligence team or the data team is going to say, “that’s not what you guys drove. You drove 10 percent of that because those affiliates are using either link trackers or there’s another redirect or it’s an unapproved one and it’s not getting in there.”
[00:49:22] And then so if you’re not aware of this and you’re not starting to work on it now, and then reaching out to teams like yourself and say, what are you guys doing? How can we help take care of this? You’re going to have some pretty uncomfortable meetings and people are going to make real or decisions on the channel.
[00:49:40] CH: Yeah, and it’s going to make it harder to drive revenue from the affiliate channel for a while as the industry adjusts, but that’s true of almost any change Google makes. The hard part of this change, I think, is to understand why it’s so important as an example. Yeah. This is the parallel track that’s doing that.
[00:49:58] So the user isn’t experiencing these redirects. They’re going straight to the user or to the advertiser site. So why does Google care that multiple certified click trackers are in the stream? Is this a resource problem? I can’t imagine Google cares about resources. Are they trying to eliminate a ton of bad actors that might be involved in their business model?
[00:50:21] Who knows what the reason for it is, but it’s hard to logically understand… the parallel tracking was easy to logically understand. We want the user experience to be instantaneous. And they click on a Google ad, we want them on the advertiser site right away where you were aiming all the other stuff that you’re doing that you need to do for your business model can happen behind the scenes that doesn’t involve the user.
[00:50:43] That’s logical, easy to understand. I personally don’t understand this change yet, but we’ll continue to try to.
[00:50:50] JB: It seems the browsers and Google in general, consistently working towards limiting what advertising can be tracked and privacy. And I don’t know…
[00:50:59] CH: Privacy. Yeah. Yeah.
[00:51:01] JB: I don’t know.
[00:51:02] CH: Probably a good guess is it has to do with privacy
[00:51:05] JB: Yeah, I don’t know exactly.
[00:51:07] CH: Limiting their exposure as it relates to privacy.
[00:51:08] JB: .
[00:51:08] Yeah. Yeah. Maybe that’s the tracking. Like I said earlier, always ask my team what questions they have for you and one of our staff asked, ” do you feel there are certain types and sizes of brands that are underserved in our space, whether it’s from affiliates or agencies, is there a type of advertiser type of brand that’s not getting the attention that that they should?”
[00:51:33] CH: Yeah, obviously new brands that are smaller that don’t have an audience performance marketing is hard for them, right? So it’s hard to convince affiliates to promote a brand that’s not well known or is just starting maybe hasn’t figured out the whole conversions when I get a user to my home page how do I get them to the shopping cart quickly?
[00:51:57] And all of those new to online marketing smaller online marketing brands even new to affiliate marketing because it is a very complex landscape. All of those, I think networks and agencies and I know this is important to JEB, finding the niche to serve those smaller brands and give them a primer, just give them enough support to allow them to help themselves, that’s where I think we could all do better. It’s hard.
[00:52:28] So from my standpoint, that’s a self-managed account that isn’t agency managed. And for somebody who’s new to affiliate marketing, they come into this world and go, where do I start? As a network, I can spend a lot more time doing, creating content like you are to, to really get the information out there, create guidelines, create better help, all of those things to allow people to help themselves more. Because it’s really not until a brand has the attention of medium to larger Affiliates where you’re getting more out of this model than you’re putting into it from a time and effort standpoint. And that’s where agencies get interested. That’s where networks get interested because generally we make our money on a performance basis as well.
[00:53:18] JB: Yeah. And that, that just helping them, it’s almost like just helping them build the runway to where they can take off from there.
[00:53:26] And it is hard. I think that’s one of the biggest misconceptions is affiliate marketing. You pay for performance, these sales come in and you pay for it. It’s all you got to do is go create your program and then let it go.
[00:53:37] The Field of Dreams build it and they will come kind of thing, and that just doesn’t happen for big brands, let alone the newer ones.
[00:53:45] CH: But big brands can afford the staff or the large agencies and all the help to really build something that’s solid and works and all of those kinds of things. And they can afford it through volume. And so that’s the real key in any kind of performance is volume.
[00:54:02] JB: Choots, thank you so much for your time…
[00:54:04] CH: Thank you, Jamie.
[00:54:05] JB: This is probably the podcast where we discussed affiliate marketing more than any other. And we talked about some really great stuff, the extensions, and CMOs and CFOs. These are really big issues that everyone’s tackling right now. Really thankful for your time and your partnership on many programs together and love what you guys are doing. I’ve always loved your approach and the technology you guys provide, but thank you so much for spending some time with me today.
[00:54:34] CH: Yeah, thank you for having me, Jamie.
[00:54:36] JB: Awesome. Now if a user wants to get ahold of you, or they want to find out more about LinkConnector and what you guys have available for them, advertiser or affiliate, what’s the best way to do that?
[00:54:49] CH: They can contact me. My name, I think, is being displayed, but it’s C H O O T S, so Choots. Humphries, H U M P H R I E S at LinkConnector dot com or they can just advertise it or affiliate send it to firstname.lastname@example.org, or visit our website. We have a way to submit questions on our website specific to departments, but anybody listening to this, feel free to reach out directly to me.
[00:55:16] JB: Awesome. Thank you Choots. Have a wonderful rest of your day.
[00:55:20] CH: Thanks, Jamie. You too.
[00:55:21] JB: Pleasure as always.
[00:55:22] CH: You too.
[00:55:24] JB: First of all Choots. Thank you so much for joining me today on the profitable performance marketing podcast. Really enjoyed our conversation. As always, I enjoy all of them. Anytime we get to spend together makes my day better. Really thank you. There’s a lot in this conversation, the discussion on attribution alone is a great primer.
[00:55:49] If you have no idea what we’re talking about as far as attribution, one thing that Choots said that really struck me, I’ve not heard anyone say this is: paraphrasing here, I think I’m close… You can’t make an attribution decision on a transactional basis. And that is so what so many of us want to do.
[00:56:10] Look at that single transaction and determine where it should go. There’s so much more involved consumer behavior, the type of affiliate, their behavior over their life, their interaction across channels, across partners and that user as a whole. And then we talked about the Google Analytics change that’s coming. Their click tracker certification. That can create a problem if you’re not aware of that now including a link in our show notes. Go check that out.
[00:56:40] We talked a lot about those extensions and how it’s important to follow what the consumer wants, but also manage your own needs in there as well.
[00:56:49] Really enjoyed the conversation about the CMOs and the CFOs and how they handle budget. And I think that’s one thing our industry can do better. I’ve not seen many affiliate managers report up and out within their organization on progress towards budget, and how revenue is impacting that. One of the things we do at JEBCommerce is when we have an advertiser, a client who manages towards a budget, they get a weekly report on how are we doing against that budget? And are we growing the pool that we get to pull the budget from?
[00:57:24] And that’s that concept of, the program, you blew it out of the water, but you need an extra $10,000 this month, and that’s $10,000 over your budget. Where am I pulling that from? As an industry, we’ve not done a really good job of answering that, because the answer is we’re pulling that from the consumer who bought more than we anticipated and put more money in our bank. So that pie, that availability, has increased the budget.
[00:57:49] This was a really good conversation that we definitely need to keep having. Choots, thank you so much for your partnership, your friendship, and for joining me today. I also came up with a couple ideas for a new solo podcast that I may record this week.
[00:58:04] Now If you made it this far, thank you so much. Really appreciate you listening. If you found this conversation helpful, please send it along to someone that would benefit from it. Share it on Facebook, X, and LinkedIn, share it on your socials. If you would like to be a guest on our podcast, or someone who should, please just let us know. You can email us at email@example.com. We’ll definitely take a look at that and see if they can fit in the season three.
[00:58:34] And if you need any help with your affiliate program, just email us at firstname.lastname@example.org and we will get right to it.
[00:58:42] I hope this conversation was informational to you and it really helped you manage your affiliate channel, interact with your affiliates, interact with your advertisers, and see what is available with different networks out there.
[00:58:57] This is one of our favorite teams to work with. Not only Choots, but everyone on his team. But anyway, I will leave you guys. Thank you for listening and we will see you in the next episode.