The Death of Affiliate Marketing on Google

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Yesterday on a teleconference Amit Mehta announced the death of affiliate marketing as we know it, on Google.

The days of “thin affiliates” brokering clicks on the Big G are over.

Amit has made millions of dollars as an affiliate marketer over the last 4 years and he’s one of the sharpest guys I know. He created “PPC Classroom” to train affiliates, very successfully, and he’s got a lot riding on this.

Nonetheless, yesterday he unflinchingly stated that “recess is over.” Google is slashing and burning affiliate accounts.

He pointed out that as of today, in some categories, the number of advertisers has gone from 50 to 5. The land has been cleared for people who create original products. A lucrative opportunity for content creators.

After the call I had a micro-panic attack: “Dang, does this make our Ultimate Guide to Google AdWords obsolete already?”

I quickly checked.

Sigh of relief. Uh, no. Not obsolete at all.

I remembered that what I’ve taught people about Affiliate Marketing and Google AdWords is NO different today than it was 7 years ago.

Which is:

If all you’re doing is slinging bits, you’re living on borrowed time.

If you don’t have a Unique Selling Proposition on the Internet, you’re roadkill sooner or later. It’s just a question of when.

Amit said: “If you’re a thin affiliate with no content of your own, you can hide, but they WILL find you sooner or later.”

I think Google’s “position” regarding affiliates is essentially the same as mine. Allow me to illustrate with a few stories:

1. Not long ago a woman manufactures a physical product that is very affiliate-compatible, and came to a 4-Man Intensive. She was considering a very lucrative offer from a “Super Affiliate” Maestro to launch her product into the affiliate stratosphere.

Upside: She could probably make about $10 million in the next year or so, if it goes well, and in my opinion it probably would go well.

Downside: The tsunami of affiliate activity, including spammers, quality score problems and false claims made by overzealous affiliates, would trash her brand. The gravy train would come to an end in 6-18 months.

And she’d be on the slag heap of rich people who have to start over from scratch if they want to have a long-term business.

I advised her against it. Take the high road, I said.

As of the last 60 days, Google may have saved her from considering the fast-burn plan.

I am NOT NOT NOT saying that affiliates are *inherently* bad or that affiliate marketing itself is obsolete. Affiliate Marketing will ALWAYS exist and skilled marketers will ALWAYS make money from it.

But Jonathan Mizel put it this way: “An affiliate promotion is not a career. It’s a test!”

2. A 20-something surfer dude named Chris Carpenter put Google AdWords on the map. You’ll never read about this in the Wall Street Journal…. but it is my professional opinion that “Google Cash” in 2003 and the firestorm of affiliate activity in the lowly “bizop world” was THE tipping point for Google AdWords. Suddenly every imaginable keyword was being bought up by affiliates and Google ads started multiplying like rabbits in Australia.

Every single vendor of virtually everything began to see that somebody else was advertising on their keywords. The gold rush began in earnest. This propelled Google past Yahoo/Overture and put billions in their coffers.

This only goes to show the enormous power of affiliate marketing. It’s here to stay. But the only way you can survive as an affiliate on Google now is to have a website with a lot of great, original content, and an email list.

If you’re gonna do that…. you might as well have original products too :^>

3. When Chris Carpenter’s Google Cash came out in 2003, I thought it was both the most ingenious and the most insane thing I’d ever heard of.

What is "80" and what is "20" for your business right now? Take my 2-minute quiz and I'll show you where you'll get the highest compound interest on your time and money!

“Insane” was my first reaction.

It was an inherently unstable, easy-to-drone-and-clone business model. But later it occurred to me that it’s infinitely easier to switch affiliate products than to write and re-write a sales page for your own product – so maybe it wasn’t so dumb after all. Yes, Mr. Carpenter, it IS ingenious!

But shortly after that I recorded a now-famous MP3 called “Jet Fuel for Google Cash” in which I described how to go from foot-hold to toe-hold to strangle-hold, evolving from thin affiliate to thick product supplier.

In my opinion that’s the only stable path.

4. I never flogged my own affiliate program like I could have. I naturally resist making things sound easier than they actually are. I’ve never regretted that.

In many ways, affiliates put ME on the map and I’m grateful for that. But it happened naturally, because I had the best Value Per Visitor in my space. Not because I told people the way to make millions of dollars was to flog my products.

5. The other day on a Mastermind Call, a guy says to me, “I’ve got a day job. I’ve played around with a number of affiliate offers, I’ve built a bunch of Google campaigns and I’m pretty good at this. I want to go full time this year. What should I do?”

I said, “Drive across town to some rubber gasket manufacturer. Have lunch with the marketing manager and work out a deal with them where you generate leads for them and they pay you $25 per lead. What you will have created is your own private CPA program with zero competition. And you’ll never get Google Slapped. Put together 3-4 deals like that and you can easily quit your day job.”

Just this week, a guy named Kevin posted this comment on my blog:

“For the past 2 1/2 years, I’ve been writing copy and have been a PPC/SEO specialist for a local ad agency. I’ve passionately been tearing through your materials, learning direct response copywriting/marketing, joined PPC Classroom 2.0 (great program. I learned a ton, but got my google account shut off and really don’t have the budget to start off with PPC affiliate markeitng right now. Creative ad agencies pay crap.)

“I’ve had it. I’m fed up working at a creative ad agency where there’s no accountability. I’m the only one who can reduce my job to numbers. Nobody in creative thinks about generating leads(and like you said, we get clients by having a lady cold call all day!)

“Anyways, I’m now starting off as a local internet marketing consultant. It’s really amazing once you get out there and talk to some people. EVERY BUSINESS OWNER I TALK TO IS INTERESTED IN MY SERVICES! They don’t all buy, but everyone is interested. Business’s need help now! If you have these skills, and need to get going, then you’re doing a disservice by not getting out there and helping business owners.”

Amen, Kevin.

If you’ve got well-honed Google AdWords chops, you’ll NEVER go hungry. Amit will tell you that, Howie Jacobson will tell you that, and I’m telling you that.

Goals are in concrete, plans are in sand.

Major change of plans for some people, as of today. But the end result is the same:

If you’re original, if you have a great USP, if you know how to buy and convert traffic, the buyers of world will love you and you can write your own ticket. Students who’ve taken my advice on this have stable, secure businesses and comfortable incomes.

What are you waiting for?

Perry Marshall

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About the Author

Perry Marshall has launched two revolutions in sales and marketing. In Pay-Per-Click advertising, he pioneered best practices and wrote the world's best selling book on Google advertising. And he's driven the 80/20 Principle deeper than any other author, creating a new movement in business.

He is referenced across the Internet and by Harvard Business Review, The New York Times, INC and Forbes Magazine.

100 Comments on “The Death of Affiliate Marketing on Google”

  1. Hi,
    Agreed, people who know what they’re doing will always sell affiliate products. Most successful affiliate business is done through mailing lists and not Adwords anyhow.
    Ultimately, having your own niche products is more advantageous. Still, having traffic and a great product is only part of the equation. You still need to convert that traffic and relying on your own non-replicated sales page is another link in the chain where most people fail.

  2. When professionals write, mediocre marketers should lay low. Perry Marshall is a seasoned consultant in the world of Google advertising. Sir,more ink to your pen. You are a blessing to our world!

  3. hi, Perry

    Do you think we can build a list with adwords without a product? (a list so we can promote affiliate products)

    Can a nice design site providing free and helpful info to the searchers, and have a opt-in form at the end of each articles so visitors can join the newsletter if they are interested in, be advertised on adwords?

    Thanks

  4. Thanks for the great info. I haven’t yet tried Adwords for my affiliate marketing websites as I have my own offline SEO company for small businesses and have been relying on purely SEO. I also have heard of numerous affiliate marketers getting their Adwords accounts banned and it made me nervous so I was doing some research on it and arrived here.

    It seems as though it is a fine line you ride with Google Adwords if you are going to go that route. I am going to test the waters and see what happens and will certainly use this advice as well as your book that I purchased earlier this year. I think if you can deliver good content for the user that also contains an affiliate link which is not required for them to use to get what they were looking for, you should be ok, rather than just push an offer directly without any value to the user.

    I would definitely agree with the excerpt you mentioned from Kevin that being an internet marketing consultant for small businesses is much easier and more profitable. Nearly all small business owners agree that they need my services even though they can’t all afford them.

    My affiliate marketing websites are just a side income and I am glad that I don’t have to live off of them.

  5. very good blog and very interesting to me articuli been very helpful thank you for all sure that I return to visit you greetings

  6. It seems like Google is taking this action to protect their reputation. As a business, I still think it’s important to focus on building a community around your product through strong content.

    Louis Slade
    Email Marketing Company

  7. I have to say, the link bait worked well. I don’t believe that you believe the title, but I will say that I agree with many points of the article.

    Too many Affiliate Marketers have gotten caught up in the CPA hype and their AM’s have been pumping up offers like a Stock Broker with stock. Most of the offers were known to be shady offers and these “reputable” Networks still worked with these ‘companies’ to fool the consumer and practically robbed them blind. You still hear affiliates claim that they ‘should have read the fine print.’ I’m positive they wouldn’t feel that way if their grandmother was one of those people, but perhaps a minority of those people would.

    The industry will be around for many years, but using Google isn’t going to be an option for all of these affiliates. It’s not that Google hates affiliates, but rather – Google hates certain products and the way they’re promoted on their network.

    I do see a major change developing in this industry, and Branding will be a major stepping stone for those who crave long-term success.

  8. ‘Devil’s Advocate’

    Perry – I would like to play Devil’s Advocate with you here on Adwords.

    I am not attacking you, but I have to say I am skeptical that any money can be made from adwords – especially after one’s own billable time / the cost of a pro is taken into account.

    Aren’t people just plain fed up with being sold when they click adwords – and being trained into blinkering themselves solely to organic search?

    Research shows that less people are looking at words now as a percentage of all search.

    I cannot remember the last ime i clicked on google ad and i am sure many people feel the same way.

    I want ‘no axe to grind’ CONTENT – not a pitch fest when I click!

    After all – it is effectively highest bidder pays, and the ONLY way they can justify that spend is to squeeze page / special offer / upsell you otherwise they will just bail out OR ramp up the hyperbole.

    It seems to me it is a self levelling playing field and that as soon as ten ads fill up page one, it then becomes impossible to make money as google have caused the advertisers to reach a cost ceiling.

    I think it MAY be possible to make money with a tiny niche like mine where I have physical / e products with no real competitors – I have a strong USP and reputation in my market.

    But for anyone else I simply do not see how it is possible. Makbe you can prove me wrong with some hyperbole free real results from anyone bigger than a tiny sub niche – or is adwords only FOR tiny sub niches?

    And I certainly do NOT agree that you should be suggesting people run their own ad campaigns – it is such a sensitive, huge, complex control panel that it cannot in my view be operated part time.

    I think this is akin to encouraging people to waste their own time and money – something you have a moral obligation to guard against in my opinion.

    Like playing the violin, you would sound awful if you dabbled at it, and I would do my accounts awfully and with so many costly mistakes if I did them myself – that’s what we pay professionals for.

    So the question is – can a tiny sub niche make enough money to hire a pro, and can even a pro crack the profit combination to a competitive adword even with a great product/service.

    And if so, how many weeks before they are priced out of that profit opportunity and go back to zero again?

    Your thoughts, sir?

    1. Nic,

      you said: “I have to say I am skeptical that any money can be made from adwords – especially after one’s own billable time / the cost of a pro is taken into account.”

      If that’s true, then why don’t you go ask some people who got banned from AdWords why they’re so mad.

      AdWords is a $20+ billion business. It’s not that big because it’s smoke and mirrors.

      Like ALL advertising media, its costs more or less rise to the level of whatever advertisers are willing to pay for it. It is fundamentally no different than print ads or newspaper or radio or TV or anything else. 80% of advertisers lose money, 20% make some money, 5% / 1% make a lot of money.

      The size of the niche makes no difference to these percentages.

      I have never advocated “dabbling.” I have always advocated being way better than the average bear. Read my AdWords sales letter. It says 3% of the advertisers get 50% of the traffic. I’ve never given people a rose colored sunglasses view of any of this.

      In a tiny sub niche no there is not enough money to hire a pro.

      If you want to make money in ANY business then you should expect to have pro-level chops in at least some of the functions of the business. Otherwise you don’t deserve to be in business and you probably won’t stay in business.

      There is a pervasive attitude in affiliate marketing that people ought to be able to just show up, buy some clicks and make money. Unfortunately the world doesn’t work that way. It’s a bunch of bull.

      If you have sufficient skill, you can ALWAYS make good money in MOST (not all) markets. Some markets are almost impossible to make money in. For some it’s because there’s no money there in the first place. For some it’s because the competition is all Green Berets. In all the rest of the “normal” markets, you alone decide whether you’re willing to develop the skills.

      1. I buy in to what Nic Barrow said, however your response got me thinking. “AdWords is a $20+ billion business. It’s not that big because it’s smoke and mirrors.” Is Google taking a revenue hit by its decision to “slash and burn” affiliate accounts? If the impact is minor, this suggests that the contribution from these accounts is not a large part of the whole pie. Or am I missing something here?

        1. Google values user experience over revenue. They also will avoid legal issues with product claims at all costs. Most of these issues are in specific niches and I doubt this affects more than 5% of Google’s revenue. Plus there’s always more advertisers waiting in line.

  9. Perry,

    I may be wrong, but my feeling is that PPC has never been a good alternative to list-marketing of affiliate products. Folks buy from those they have a feeling of trust in. Always seemed a bit cold bouncing from an adwords ad directly to a sales page! Hell, the vendor could have been an axe murderer! lol

    Taking the time to build a solid relationship with subscribers will yield results for a long time….and nobody will cancel your account!

    1. An email list with a good relationship with the source is THE highest quality traffic source online, period. PPC traffic doesn’t even come close. A great email list is the holy grail – it’s what you should attempt to build with PPC. People with a relationship are literally 100X more likely to buy than those with none.

  10. David,

    Google started thier “affiliate thinning” becauase they were CYA’s from litigation resulting from people using Google’s name in thier affiliate products.

    The FTC is on a Marxist path and is looking to regulate every aspect of life, so they can’t stand that all this money is changing hands over the internet and they aren’t getting a piece of it. THAT is why THEY are regulating it.

    I will give you one point, in that, Google is about quality experience for thier end user (the searcher) which is why they got firm with the whole affiliate duplication concept. That isn’t a good experiecne for a searcher and they first and foremost are in the business of providing quality searches.

    But as far as you premise on changing sales and distribution models, I’m sorry, your explanations just aren’t compelling.

    My background (from college) is as a molecular biologist and in science there is a phrase used called Occam’s razor: http://en.wikipedia.org/wiki/Occam's_razor

    Your premise doesn’t observe Occam’s razor.

  11. Kevin and Mario, why do you think Google, Twitter et al are slashing and burning thin affiliates? Why do you think the FTC ramping up their legislative efforts to stamp out deceptive practices?

    I know the simple answer is to weed out the bad apples. But it is more than that. All affiliate selling practices that are making solid money are based on withholding information and manipulating desires. It is about making a sale rather than providing information to make an informed purchase decision.

    If it was otherwise, every affiliate landing page would be exactly like the product description page of the provider.

    The game is up. Research is showing that people are increasingly becoming vocal about deceptive selling practices, they are ignoring advertising and hounding governments. This is why Google etc. are panicking because it undermines their business model which is based on delivering solid information. If it was otherwise they would love to have all those affiliate landing pages on their front page.

    I know there are bloggers who do provide solid information and make a little money on the side through affiliate programs. They, unfortunately, will be caught in the crossfire.

    The other nail in the coffin of affiliate marketing is the growing complexity. Amazon recently closed all Colorado Associate accounts because of a tax law. This may be a one-off, may be not but I suspect this is a glimpse of the future of affiliate marketing – a simple email saying your account has been closed, bugger off.

    So in summary – Deceptive sales practices will no longer be tolerated. How do you define a deceptive sales practice? In reality, it is a fine line so Google etc will simply tar the whole of affiliate marketing with the same brush. Affiliate managers have to weigh up the cost of maintaining affiliate programs against the threat of being hounded by the FTC because of just ONE rogue affiliate. They will also have increasingly deal with governments desperately seeking tax revenue. I suspect they are just going to conclude, as Amazon has done in Colorado, it is just too hard.

    And coming back to my original point – this creates demand for a new distribution channel and a new model which connects consumers with suppliers more directly. This model will emerge and, to be frank, I am not sure how affiliates will fit into this model but it will not be as it currently stands. This model is dead as a dodo.

  12. David,

    It’s not painful, because I can’t even come close to buying your premise.

    Mom & Pop stores are still out there doing well. It was more of the middle size that got sucked in by the big discount stores. But the big discount stores are not nimble, they cannot react as quickly to market demand…They will only carry something once the product is past the growth phase and into the plateau phase.

    Also, last time I checked both Walmart and Costco offer affiliate commissions…what? LOL…

    Here’s the bottom line. Human nature. If a company can pay someone to make a sale for them that they would not make on thier own, and they can even make a little profit, they’re going to do it.

    There will always be room for an affiliate marketer or sales person. Costco and Wallmart actually depend on it. If there were no growth phase, both Coscto and Wallmart would have no products to sell. You don’t buy in giant lot sizes unless you know you’re going to move the product, and you don’t move the product unless there is demand, and there isn’t demand if sales people and affiliates to create it. EVEN with the I-stuff. However, I will concede that Apple spends A LOT of money in house on advertising.

    Also, you mentioned that people would blog about a new product…yes, some will, but I believe if you check out all the blogs, you will find a HUGE majority of them are reviewing the product for the purpose of selling it. Take away the incentive for them to earn money reviewing it and the reviews die, then sales die. No grwoth phase, no plateau phase.

    It’s really just common sense.

  13. Kevin,

    Crazy marxist, never been called that before. I can assure you that I am a card-carrying capitalist, enjoy a good cigar with cognac and dream of one day upgrading my Porsche to a Lamborghini. LOL.

    I understand what I am suggesting is painful to hear and yes sounding even crazy, particularly if you have been building an online business, had some success and banking on more of the same.

    Think of what happened to all the Mom & Pop stores after Cosco and Walmart came along and streamlined supply and distribution. Same thing here.

    It’s simple economics. It will be cheaper, easier and safer (think of FTC regulation) for product suppliers to go through direct channels than try and chase customers through indirect channels. For instance, a supplier who is paying 40%-70% of the purchase price as commission will have to compete with a supplier who is paying just a fraction of that for a more efficient form of distribution.

    Demand is not going to come from copywriters. This worked when the suppliers controlled both the media and the message. Consumers are now in control and the iPAD is a good example of how demand will arise naturally and, to some extent, spontaneously. Bloggers review a product, social networks spread the message and potential customers will go to a direct channel to purchase.

    How is this different from how things happen now? Below is a good, if a little simplistic, summary.

    http://www.customersatisfactionmonitor.com/index.php?p=stat&node=crm-evolution

    In terms of push vs pull check out. Although I believe that their definition of “pull” is not quite right.

    http://www.customerthink.com/forum/push_vs_pull_crm

    Bottom line there is a major shift coming, just about everyone acknowledges this to be the case. Of course, it is almost impossible to try and predict how it will all come together. But now is the time to the thinking, the planning and preparing for the new opportunities. To think it will be more of the same is plain crazy. (Sorry couldn’t resist.)

  14. Kevin,

    I have to agree with you. Sorry David, what you say has nothing to do with affiliate marketing as such but the way you market the product you’re affiliated with. This is a big difference.

    Affiliation means that you connect with another organization or become a member of it.

    So even if you would be a freelancer specialized in selling cars and you connect with a certain brand, then you would be an affiliate. If you good at it you sell cars and get your cut. Period. This would be affiliate marketing as well.

    The longer I think about it the more BS I think it is to say that affiliate marketing is death.

    There may be some ways of promoting that are death ends, but anyway affiliate marketing is just selling stuff on commission base. It isn’t death and never will be. Otherwise you would state that there are no commission based sales anymore anywhere.

    Sorry for any typos I’m far from native.

  15. David,

    You are flat out crazy. Those terms are just semantics. What or who creates “demand” copywriters. This sounds like marxist propaganda.

  16. Sorry to be the bearer of bad news but affiliate marketing, as it currently exists, is dying and will be dead before long.

    The reason is not Google or Twitter slaps but more fundamental. Affiliate marketing is an integral part of the sales-push economy which is being replaced by the demand-pull economy. This transition is accelerating.

    What is sales-push? It is the idea that the best way to sell is to target the right customers, at the right time with the right products. I know it sounds almost ludicrous to think that somehow this fundamental marketing premise will cease to apply. But that is exactly what is going to happen, is happening right now.

    So what is demand-pull? Until recently this was hard to understand. But it is about creating channels where consumers and suppliers exchange information on equal terms without the distortions of sales copy or advertising.

    A good example of such a direct channel is called the Customer Satisfaction Monitor – http://www.customersatisfactionmonitor.com

    Check out their affiliate program which is probably indicative of how affiliate marketing fits in the demand-pull economy.

  17. The idea behind search “trends” and search “predictions” has a fatal flaw. Most authors just look at “demand” side and fail to look at the supply side of prediction or trend. Without looking at the supply, or “results” side, predictions are just guesses or throwing darts at a board. We study search demand/supply trends from around the world to find profitable niches and products, and the main problem with predictions is that no one looks at the “supply” side to these predictions. A niche, or hot predictions, is not just a demand side issue, but a supply/demand curve. If you predict IPHONE apps will take off, and there are already 100,000 aps, then you aren’t going to hit that one. If you see that demand for cell phone radiation shields is going nuts and there are only two suppliers, then you can be pretty sure that it will be a good year for those 2 supplies. The software at http://www.TheInternetTimeMachine.com studies both the demand (search volume) and supply (think “results” in Google). The Google Phone is generating much more buzz right now then say the Apple Tablet.
    Cheers,
    Curt
    Here is a video on what I mean.. http://bit.ly/SupplyDemandCurves

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