Network Insights

The performance marketing industry has gone through dramatic changes in the six months since we last published the Blue Book Top 20. We asked senior feature writer, Lisa Morgan, to talk to some leading networks to find out what they think about three important drivers of change: fraud, campaign management and social media advertising.

 

Fraud has been a problem in the performance marketing industry from the beginning. The concern of many is that despite numerous industry initiatives, the situation doesn’t seem to be getting any better. Networks have developed various fraud prevention technologies, created databases of fraudulent affiliates, enforced strict compliance policies and do their best to encourage best practices, but advertisers and their agencies say much more needs to be done.

“Fraud is a significant problem and an unfortunate reality,” says Keith Kochberg, CEO of iMarketing, a leading, full service, online marketing agency. “Even if you catch some fraudulent publishers, there may still be problems with the ones remaining.”

 

Given the constant threat, Kochberg says his agency has been forced to become proactive as well as reactive, in order to stop problems getting out of hand. When a problem does arise, he observes that while most networks are quick to react, the large affiliate networks like Commission Junction and LinkShare tend to do a better job than the CPA networks.

 

The point he makes is that just because networks have compliance policies does not guarantee they will enforce them, and without enforcement they are meaningless. In some cases, there’s a question mark about how networks balance the interests of their publishers against those of advertisers.

“The networks [that fail to enforce] policies are usually the ones that are publisher focused,” said Dianna Koltz, director of Best Practices at Adperio.

 

Network transparency is important because it allows advertisers to more effectively monitor fraud themselves, she said. Additional layers of security like credit checks and authentication also help.

 

Some advertisers consider even double-digit percentages of fraud a cost of doing business, but most feel a hard line is more appropriate. Fosina Marketing developed its own anti-fraud system as an added layer of protection. Its CEO, Jim Fosina, refuses to do business with any network or advertiser who isn’t dedicated to the same level of integrity. Fosina constantly monitors networks and publishers, and will occasionally penalize those who fail to comply with the agency’s policies.

 

Fosina speaks highly of Hydra’s approach to weeding out shady publishers but he is keen to stress that networks shouldn’t be expected to deal with the problem on their own.

 

“Advertisers need to take as much responsibility as the folks generating traffic,” he said.

 

Some businesses are more affected by fraud than others given the nature of their products. Free offers, weight loss products, and dating services are commonly abused but hotel stays and event ticketing services seem to be less attractive targets.

 

Leading hotel and hospitality group, Marriott, says it does not have a huge problem with fraud. One reason is the company pays for stays, not bookings. Nevertheless, eCommerce Manager Lena Huang thinks networks need to be more selective about the publishers they accept.

 

“Advertisers have to monitor their own programs because you can’t rely on the networks,” she said. “If you’re paying on leads you need to monitor IP addresses because often you’ll find multiple leads coming from the same email address.”

Ticketmaster also does not have a significant problem with fraud. Senior Director of Business Development, Eric Hom, said it may have to do with nature of the product since a specific seat at a particular event on a certain day can only be sold once. The company nevertheless has tight fraud controls in place.

 

“Our network has a publisher blacklist and they’re proactive about coming to us with issues,” he said. ”Generally speaking, networks need to do a better job of educating merchants about fraudulent practices.”

 

Fraud is still a constant threat for advertisers, networks, and honest publishers, but not everyone in the value chain is taking responsibility. Almost all networks have compliance policies in place but not all networks are enforcing those policies effectively. As a result, advertisers must also put systems and resources in place to protect themselves, as a second line of defense.

 

Networks are providing increasingly sophisticated campaign management tools so advertisers can monitor and optimize the success of their programs. Not all advertisers use the tools but the ones who do are more confident about having transparency into their campaigns and this translates into greater satisfaction with the service provided by the network.

 

Keith Kochberg, CEO of iMarketing said most of his affiliates are part of Commission Junction’s network so he uses its tools regularly. “We use all the tools they offer to the greatest extent possible because they’re very helpful,” he said. “We often use them for member messaging and network communications.”

 

Kochberg said that in comparison, many CPA networks lack the tools he needs to run his business. In an effort to better support clients his agency has developed its own technology that monitors performance and and fraud using subID tracking.

 

“CJ [enables us to communicate directly with affiliates] and it allows us to conduct meaningful analyses on a 1:1 level,” he said. “The CPA networks won’t let us talk to affiliates so if we have a problem we have to contact the rep to help us troubleshoot and then hope they come through.” Jim Fosina, CEO of Fosina Marketing, sees it as his job to keep clients apprised of a variety of performance metrics and so views campaign management capabilities as critical.

 

“Agencies should make sure the network they’re bringing to their client is high quality,” he said. “We’ve established long-term relationships with networks that are responsive to us and our brands.”

 

He stresses that responsiveness, testing, campaign management tools and transparency are what he needs as an agency when selecting a network. Agencies need reliable partners that will help to maintain the agency’s service levels to the advertiser.

 

Tools Save Time
Lena Huang, ecommerce manager at Marriott International, also uses campaign management tools provided by her affiliate network.

 

“Tools are important because you need to be able to run reports on performance,” she said. “the network provides different overviews like 12-month trends, click-through rates, sales by product, etc. For us, completed stays are important because we pay our affiliates on completed stays, not bookings.”

 

One feature she’s particularly happy with is the ability to manage multiple accounts from a single screen.

“We now have a single login for the US and the UK and we can see the metrics for both,” she said. “We can compare sales, leads, clicks, and balances on accounts.”

 

Huang would also like to see some other features that save time like the ability to copy and paste creative links.

“If you’re an advertiser there’s no way to monitor everything so it’s important to set rules to ensure bad apples don’t get in your network and if they do they’re removed promptly,” she said. “It’s your job to decide whether you’re going to allow SEO, trademark bidding, or paid search and the networks need to be able to support your rules.”

 

With rules and monitoring in place, it’s easier to optimize programs, so the more sophisticated the tools provided by the network, the easier it is for the advertiser to achieve success with its program.

 

Campaign management tools are enormously helpful to advertisers if they are used wisely. Networks that are able to offer sophisticated tools and appropriate training have a real competitive advantage, especially as advertisers gain experience and demand more control and transparency.

 

It’s no secret that Facebook is seeing massive growth and that over the last year publishers and CPA networks have experienced the best of times and the worst of times as Facebook has built out its advertising systems. Facebook is an incredible source of traffic due to its enormous popularity combined with the demographic targeting it enables.

During the early part of 2009, Facebook was regarded as a goldmine by many, as a result of very low rates for advertising that facilitated broadly targeted rebill and continuity offers. As Facebook tightened up its advertising guidelines and ad rates increased, so campaign profitability dropped to the point that many have ceased advertising on Facebook altogether.

 

George Torres, a senior media buyer at Quotewizard.com said his company got a lot of traction from Facebook advertising before Facebook changed its policies.

 

“We’d previously done business with MySpace and had a lot of clicks but no conversions because it was the wrong audience,” he said. “Starting in Q4 [2009] we started getting amazing volume from Facebook but because of [new Facebook policies] that all changed. We spent a million bucks over a few months and are spending none now.”

 

Quotewizard also used Facebook games to promote its service but agents complained too many leads were low quality and had signed up to offers simply to earn in-game credits. This illustrates the fact that the different advertising opportunities on Facebook do not all convert in the same way for all offers. Free products, for example, that do not require a lot of personal information or a credit card can be very susceptible to low-interest respondents because the barriers to offer completion are so low.

 

In contrast, Adperio’s agency clients have had good success with virtual games on Facebook in terms of brand awareness and conversion. They have also had good returns on contextual ads and display ad remnant space, according to Brian Fox, senior director of business development.

 

“Facebook is great for international reach and it’s also a great communications channel for our clients,” he said.

But advertising is not the only opportunity to find traffic that Facebook offers. Joe Mulvihill, SEO manager at PlattForm Advertising, said he sees the results of his clients’ social media efforts reflected in the traffic to their publisher sites. He recommends that clients are active on Facebook as well as Twitter and YouTube, though they must avoid the mistake of setting up a social media presence but not maintaining it.

 

“Social media is about authenticity and engagement,” he said. “You can’t just set up a page and forget it because if you’re not using it, you’re not engaging with your customers, and you’re not providing any added value. it’s not going to be beneficial to you.”

 

Facebook has captured a lot of attention over the last twelve months because of the opportunities offered by it’s early-launch advertising system and the cheap traffic that was available. Now it has matured, the opportunity is still huge but to take advantage, advertisers need to create more sustained, value-added content and build long-term relationships and communities.