Behavioral Targeting and Affiliate Marketing

Behavioral Targeting (BT) provides a great opportunity for Affiliate Marketers and Networks to reach right customer and increase the conversion.

What is Affiliate Marketing?

Affiliate Marketing is way for advertisers to reach potential customers and only pay when a visitor takes some predefined action. Predefined actions range from a sale to registration. Recently Pay Per Click has also been added to affiliate programs. Generally, the website (publisher) places an advertisements on their site and when a predefined action results by a visitors referred (clicked) by that ad, the advertiser pays the publisher a % or a fixed amount. I won’t go into further details of affiliate marketing but you get the idea.

As you know now that one of the major benefits of Affiliate programs is that an advertiser gets an inventory on publisher’s site without paying anything. Advertiser only pays when a visitor becomes a lead or a customer. This is like sales people on commission only program.

However there is even bigger benefit than just getting free inventory. The ability to put an ad serving (and tracking) code on these affiliate sites (publishers). Just think about how many sites Amazon, eBay, commission junction, linkshare etc. have their codes on. Amazon was the one of the early advertiser who realized the power of Affiliate programs. Google, not matter how you look at it is also a type of affiliate program, in most case advertisers get free inventory and only pay when a click happens (and now Google has pay-per-action program which is true affiliate program).

The widespread tracking code on the internet provides a huge opportunity for affiliate networks and advertisers (like eBay, Amazon) to engage in behavioral targeting and reach potential customer with the right message at the right time.
Let’s take a look at a scenario to further understand how this can work.
A user visits eBay and looks at certain products and bids on a camera but lost the bid. Next day eBay gets another seller who is selling the same camera. How can eBay reach the user who lost the bid? Well one way is they can send her an email (She might not be actively checking my email). Second is tell the about that camera when she come back to eBay (that might be too late). Third is they can use their affiliate site to put that camera offer right in front of her if she happens to visit any of the affiliate site (and there are a lot of them). She has shown interest in the camera so why not use your affiliate code to put the right offer in front of her. The code is right there make use of it. Some might argue this is crossing the privacy line but that is whole another issue to discuss.
Amazon already does similar targeting by its Omakase links but it is not true behavioral targeting. They use the keywords or browsing history which goes back since they day they were born. I see offers from Amazon that are not even relevant to me anymore, they were at one time but Amazon still thinks I am interested even though I have not clicked on those products in years.

Affiliate networks like Commission Junction and Link Share are in great position (eBay uses Commission Junction). They know what kind of sites a visitor (or customer) visits, what kind of products/offers he/she is interested in by looking at their click or purchase behavior. Can’t they just automatically put offer s/products in front of customers?

The way most of the affiliate networks work today is not very efficient for any of the parties involved. They need to step it up a bit. Here are my thoughts on all parties involved how Behavioral Targeting (BT) can help them.

Publishers: A publisher has to decide what advertisers they want to sign up for, this is their guess on what will work. I have spent months trying to figure out what will work for my customers. Also then the link generation process is so difficult. Say a publishers sign up as an affiliate for Resaturant.com (check out SeattleIndian.com, it has restaurant.com banner), now the publisher has to go find the products that are relevant to their customers if they want to target with right banners. In this case maybe it is restaurants in Seattle. It is such a pain that majority of publishers don’t want to deal with it and just put a generic banner. Won’t it be nice if CJ or Restaurant.com in this case was able to put the right offer based on Geography and other browsing behaviors on either CJ network or Restaurant.com site itself?

Customers (visitors): Customers (Visitors) don’t have time, they will only click on ad which will be relevant to them. A generic message from Resturant.com or eBay or Amazon is not enough. Show them a message which will make them click right away. If a customer has already been to Restaurant.com and looked for Indian Restaurants in Seattle and now when the customer is in Seattle (Geo location) surfing on this affiliate site, why show her a generic message? Why not show her offers for Indian Restaurants?

Advertisers: Even if advertisers are getting free inventory now, it is not going to last. Inventory is limited, publishers are going to replace their banner with something that will make them money (AdSense has replaced several affiliates). So grab this opportunity. Put relevant message, gone are the days when generic message would have worked (did they ever worked though). Use the browsing behavior on your site (or a behavioral ad network, your affiliate network will have to offer behavioral targeting soon) to target the right messages.

Affiliate Networks: Why are they still operating using the old model where they make the publisher s guess what products or offers will work for them (Google is following this model too with their pay-per-action model). Why can’t you let publisher put some generic code on their site and then serve ads based on user behaviors? I have seen a lot ads sitting on a publisher site not generating any sales, few clicks, who is benefitting from all this? Not the affiliate network. Not the publisher. Advertiser? May be. Visitor? May be. Now if you had placed a right message (determined from user past behavior) then chances are that all of the parties involved will benefit. It is worth trying. Test it. Use the data you collect, the data from advertisers' site, the data from publishers' site. It is not going to be easy but it is doable. Acquire a behavioral targeting company, use their technology and network too.

Affiliate marketers and networks have a huge opportunity to cash in using Behavioral Targeting. They just have to move fast.

Comments, Questions?

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