The writing’s been on the wall for some time – merchants and affiliates need to up their game if they’re to stay relevant, especially as the market gets more sophisticated.

Just take a look at the signs of the times:

• Implementation of stricter quality measure (eg Google Quality Score) to clamp down on “thin” sites. Especially hit hard are single page landing sites.
• The noose tightens. You can get somewhat around the QS issue with an about us, contact, privacy page and sitemap. But you can be sure that the quality control noose will continue to tighten.
• Expansion of the PPC and Affiliate market: Just like in the dotcom days, you’ll have fools rushing in, especially as PPC and affiliate marketing start to go prime time. Already, the “pseudo gurus” have shifted from pimping “Adsense in a Box” products to “CPA in a Box” products. [I’ve looked at a number of these products and the only person making anything from them, is the guy who sold it to you].

So is some “guru” out there going to exploit this market by issuing a free “Death of Affiliate Marketing” report?

If so, stay as far away as you can, because most expensive advice you will ever get is “free advice”.

I was reading Jim Lillig’s post “Performance Marketing Makes Sense” especially the part where he says:

“I believe engagement is to blame. The final frontier of advertising is to connect a product (and ultimately a brand) with truly interested consumers in a relevant, meaningful andlasting way at a time when they have the propensity to purchase or consider a purchase.“

In my opinion, it’s very much a “chicken and egg” issue.

If you’re promoting $1 or $2 zip or email submit offers, you’d be wondering what level of “engagement” you can work on, especially if you’re running at a 30 – 50% margin at best (or $0.30 to $0.50).

Granted some of us have the priviledge of getting Super Affiliate payouts which are double, triple or even higher than the posted rate, but what about the average affiliate?

You have a couple of options, and both aren’t exactly easy to take action on.

The first is to promote higher value offers in the $20 – $100 range. It’s typical to see something like a $1 zip have an EPC of $50 on the affiliate networks ($50 average commission per 1,000 clicks or 100 clicks depending on the network), while a debt consolidation/mortgage offer with a $100 payout has a $5 EPC.

Huh?

What I believe is happening is that affiliates are sending PPC or other traffic through a thin content site or scraped content site to the affiliate offer.

While a crappy content page might make a zip submit campaign viable (simply because the lure of a free Xbox360 or iPod makes the content redundant), you’re going to get killed with a high payout offer.

With a more sophisticated offer like debt consolidation or a high payout biz op offer, you’d need to construct a focused content page, and pre-selling may involve educating the prospect and motivating them to take action, rather than send them direct to the landing page.

So the first option is to promote higher value offers (and more importantly, understand the mechanics of closing the sale.

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The second option is to go beyond the pay-per-view or pay-per-lead business models, and instead focus on business models which have a built-in incentive to continually engage your customer.

I understand that a number of CPM business models are coming into vogue again, and having operated web properties at one of Asia’s largest online content networks, have to say that it’s viable only if you have:

• A strong brand (prefably within the top 3 in your niche)
• Access to lots of cheap traffic in huge quantities

I’d probably stay away from CPM business models simply because I prefer the high value market, rather than the mass market.

So what business models are on the table?

Continuity-based business models, the likes of which marketers like Kirt Christensen and Ryan Deiss have developed. Membership-based models like my friend Rachel Rofe have introduced like her YayFood weight management membership site.

If you’re spending the bulk of your time building up the relationship in the beginning and putting in an incremental effort to maintain that relationship (and collect a monthly subscription fee), it gives you the resources to engage your customers.