I was just looking through some things I wrote in the Affiliate Metrix report, which was a precursor to the AffStat Reports.
The Affiliate Metrix report was written in late 2000 and came out in early 2001. Below are five predictions I made way back when.
Shift of Power
The most popular model in affiliate marketing is the Pay Per Sale model, and that will remain unchanged. However, by 2003, the Pay Per Click model will be extinct, and the Pay Per Lead model will play a much larger role in the industry, as community and content sites awaken to the potential of membership recruitment through affiliate programs.
This one is pretty spot on, as far as the per click affiliate programs of old, which fell out of favor due to rampant fraud. Of course, Google AdSense come along and gave the model a new life.
Downsizing Affiliate Networks
Affiliate programs will be shifting more towards the manual approval of new affiliates, and it will not be uncommon for programs to place caps on membership. This will result in far higher active affiliate rates.
Bear in mind, nearly everybody was on auto-approval of affiliate applications back then. Times have definitely changed – manual approval is the chosen course for 77% of affiliate programs these days, according to data I collected for the latest AffStat report.
The caps on membership seem to be increasingly popular, too. While folks used to strive for 100,000 affiliates back in the 90s, many affiliate managers tout their lean and mean approach of limiting their program to hundreds to a couple thousand affiliates.
Boutique Affiliate Solution Providers
The realization that affiliate marketing operates on the 95/5 rule (95 percent of activity is generated by five percent of the affiliates) will result in the creation of specialized affiliate solution providers that cater more to super affiliate recruiting.
This sort of describes what Performics is doing, and the new CJ Performer program is similar to this concept. And I think it could well describe the more selective CPA networks.
Outsourcing in the Future
Only sixteen percent of affiliate programs were outsourced in 2000. This number will increase by two-fold by the end of 2002 as companies determine that they are unable to locate and afford the specialized skills needed to properly manage and affiliate program.
Not quite the growth I anticipated, but as stated in the latest AffStat report, 25% of affiliate programs are now outsourced.
Affiliate Solution Provider Consolidation
This industry does not need more than three big players. 2001 will be a year of mergers and acquisitions, and one of the prominent affiliate solution providers may be absorbed before the end of the year.
OK, so it wasn’t until early 2002 that ValueClick acquired Be Free. But the Big Four did later become the Big Three when ValueClick also picked up CJ. Then again, the filed is getting more crowded by acquisition too, as KowaBunga Technologies is primed to make a run at the big fish after getting acquired by Think Partnerships.
Also, a handful of CPA networks have been snapped up in the past year. The landscape is changing for sure.
What does the future hold for affiliate marketing? Tune in here daily to keep up on the emerging trends. 😉