Google Storefront Will Bring Affiliate Marketing to the Masses

Via Battellemedia, Cnet says that Google settlement or not, click fraud won’t go away:

some click auditing companies still claim that between 20 percent and 35 percent of clicks on Net advertisements are fraudulent.

Despite those figures, click fraud is not deterring spending on search marketing, which JupiterResearch predicts will rise from $4.2 billion in 2005 to $7.5 billion in 2010.

Indeed, clickfraud will continue to grow. Soon, more than 2 out of every 3 will be done by sophisticated bots and tunneling or people working for a few hundred dollars a month clicking adds. Clickfraud is going to reach a point where it will almost completely kill PPC.

However, there will still be a place for it on the right hand of Google’s search results. The only clickfraud there is done to increase the cost per acquisition for one’s competitors. However, throughout the content network, I think it’s much more ominous. As long as it’s so easy for crooks to steal, it’s just going to create more and more crooks doing it on a bigger and bigger scale. It won’t be long before the system collapses.

The Solution to Clickfraud

The solution to the clickfraud problem is PPA (Pay Per Acquisition) affiliate marketing. In this model, which was pioneered in adult, advertisers pay only for the leads that turn into sales. This is the route that Google must go to solve the clickfraud problem and steady their relationship with advertisers. Which brings me to:

Google Storefront

I’m gonna pull a Cringley and make some predictions. Google is going to get into affiliate marketing management like Commission Junction and Azoogle. However, they are going to do to affiliate marketing what they did to blogging with Blogspot – make it simple for the masses. Within the next 2 years, they will launch Google Storefront.

With Google Storefront, anyone will be able to sell almost any good or service (except Porn and Guns) with an affiliate program managed by Google. All the credit card processing, all the management software, and all the analytics will be provided by Google. The software will be free and Google will take a piece of every transaction. They will cycle the best converting and highest paying ads to the top of what is now google adsense.

Google Storefront will combine the best aspects of contextual advertising with affiliate marketing. Instead of advertisers picking the Keywords they want, Google’s massive user date will algorythmically determine which ads to place on which sites. Your Ads CTR, how well your site converts, and what your are selling will determine how often and where your ad is placed. There won’t be any advertising budget concerns, because Google will take the advertising fee directly out of the sale.

I predict that Google will do this first, and may therefore eventually win in the affiliate marketing space if they execute correctly.

However . . .

It’s Still Anyone’s Ball GAMEY

Anyone of GAMEY (Google, Amazon, Microsoft, EBay, Yahoo) could still win in affiliate marketing advertising space. Whoever is the first to do it right (the Google Storefront for the Masses model), will have a huge advantage.

Yahoo’s been a little bit slow lately, but they could take back the initiative in a major way by beating Google to the punch with “Yahoo Storefront”. If they got in the game 9 months before Google, and did it right, they could get entrenched in the marketplace and possible even win. But what are the odds of Jeremy Zawodny and crew taking advice from a black hat?

We have seen a lot of innovation out of Amazon lately. Plus, they have e-commerce expertise. So it would make sense for them to get into helping other people manage their affiliates. Their user review system could help people pick the right affiliates and we know their affiliate tracking system is already best in class. The only question is whether they would see this as potentially cannibalizing their own business. This is, of course a short sited view of potential market, but we haven’t heard much from Jeff Bezos since that first internet Bubble.

EBay already has personal eBay storefronts, but this differs from the Google Storefront model I described. They own paypal and it would therefore seem easy for them to start helping people to manage affiliates and processing. Maybe they’ll buy Commission Junction, but that’s not quite the easy, turnkey solution for the masses that Google Storefront could be.

Microsoft; don’t count them out yet. If “Live Store”, is launched correctly and well before the others, they could get the head start they need to win. However, M$ has not big on the innovation front lately. I predict they will launch about 2 months after Google Storefront – enough time for Google to have already recruited 10,000+ affiliates and become firmly entrenched in the marketplace.

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2 Responses to “Google Storefront Will Bring Affiliate Marketing to the Masses”

  1. Dan says:

    You nailed it with your predictions RE Google Storefront. That’s been my opinion ever since they announced their payment system and Google Base. And this is just what Google needs to diversify their profits out of pay per click a bit.

  2. […] Es musste ja so kommen… Die logische Konsequenz aus mangelnder Zielkonformität von PPC-Anzeigen, der Unausweichlichkeit von Klickbetrug und der optimalen Steuerbarkeit von Affiliate-Marketing scheint Realität zu werden. Auf seekingalpha.com ist nachzulesen, dass Google einzelne Publisher einlädt “cost-per-action” zu testen. Durch den Einstieg ins Affiliate-Marketing könnte Google natürlich die Streuverluste im Content-Netzwerk erheblich reduzieren. PPC-Ads in den Suchergebnissen und CPO/PPS im Content-Netzwerk könnte einige Bedenken über Clickfraud und die Effizienz von Keyword-Marketing via Google zerstreuen und Google das volle Potential seiner AdSense-Reichweite ausnutzen lassen, ohne das Advertiser befürchten müssen 3/4 ihrer Etats in die Kassen von Agenturen und Klickbetrügern zu spülen. Quadzilla hat sich übrigens schon vor 2 Monaten mal genauere Gedanken dazu gemacht. Das ValueClick (CJ.com), Zanox und TradeDoubler sich jetzt sorgen müssen denke ich trotzdem nicht. Die klassischen Affiliate-Netzwerke haben durch den klaren Focus und ihre in der Regel einwandfrei Betreuung einen Wettbewerbsvoteil. Ich bin gespannt wie Google das Support-Problem anpacken will. Affiliate-Marketing über FAQ und Kontaktformulare kann ich mir schlecht vorstellen bzw. würde ich als Advertiser nicht die üblichen 30% an Google abdrücken, wenn ich und die Affiliate nicht optimal betreut werden. […]