Welcome to another edition of the Always Be Testing podcast with your
host, Ty De Grange. Get a guided tour of the world of growth, performance
marketing, customer acquisition, paid media, and affiliate marketing.
We talk with industry experts and discuss experiments and their learnings in growth,
marketing, and life. Time to nerd out, check your biases at the door, and
have some fun talking about data driven growth and lessons learned.
Hello. Welcome to another episode of the Always Be Testing podcast. I'm your
host, Ty DeGrange, and with me today is Brooke Schaff.
We're hosted by capital factory here in Austin, Texas. And, they've been so gracious to give us
their green screen for the day. So it's gonna be fun. I'm excited to have Brook on
today. He has an amazing affiliate veteran background. Ready to
dive in. He's got started off in Zappos. He
got into building his own agency, which he built up in crew and sold to
acquisition, which is amazing. And now he's building FMTC. It's pretty
awesome. Thank you. Glad to be here. Thanks for having me. Absolutely.
Maybe give us a little bit more color on the background and, and, and kind of your,
your story. For those of you, you don't know. I know a lot of the affiliate folks are very familiar with you, but
tell us a little bit more. Yeah. So I have been in affiliate management sorry. Affiliate marketing, I
should say, for pretty much my whole career. Right out of college, I I jumped into a young Zappos dot
com, worked in house at a couple of, other companies, one retail,
one lead, stumbled into agency life. I had the agency
for many years, sold it six years ago because I didn't want to have to compete with Ty
after he got in. And then along the way, we started FMTC, which is a deal
and product distribution platform in the affiliate space. We're a b to b company. So we power
enterprise sites, enterprise affiliate sites in particular, coupon deal, rewards, some commerce content
guys. And we've had FMDC since the, very end of two thousand seven.
That's awesome. So we're full steam ahead to build the tools to help everybody make more money in
the affiliate space. I love it. Servicing so many is pretty exciting, and
there's not a lot of folks that are doing really what you do at FMTC. Is that right? There's a very
there's a pretty small pool of I think you could call them tech vendors in the affiliate space, and fewer
of them are independent. So you also had companies like Trackonomics
and Affluent, which, of course, are both acquired by Impact dot com. Yep. You've got a lot of
compliance guys. They're kind of you know, they float around the outskirts of the retail space where we play
because they're mostly, with lead stuff. Yeah. And then you've got some other
players like, the conversion optimization guys Mhmm. You know, Upsellit,
Revlifter, Unikoto, Intently, and, they sort of
operate more as kinda kinda like affiliates. Mhmm. And then some other players floating around
like, Affiliate. They did they're sort of a competitor of Trackonomics, other reporting guys out
there. But there's just really not that many. You know? It's it's probably numbered in the low dozens
as opposed to hundreds of thousands of affiliates, hundreds of agencies Yep. Dozens
of networks. But the networks, of course, are much bigger companies. Getting closer to that zero to
one strategy, which I think is a smart one. Good zero to one strategy? Good on you. Yeah. The the book
by Peter Thiel, it's a good good one if you haven't read it. No. I haven't read it. What does he say?
Basically, it's, if you can kind of create a pseudo monopoly and have an
innovation and be one of one or one of two, one of three, a
lot better than being one of a hundred, a little bit more difficult inherently, regardless of
how great you are at all the things. It's a kind of a cool lesson. Hard to pull
off, but when if you can build up that mode and you you know, FMTC in some ways is kind of
trying to do that a little bit, which I think is cool. There's not a lot of not a lot of competitors. Yeah.
We are in a special market position. If you want to provide good quality
coupon content using your own relationships Yep. You're either using FMTC
in practical terms or you're doing it yourself. So you don't have to provide good quality
content. Some sites make money going that route, and you can do it
yourself. But if you do it yourself, your costs are going to be higher Yeah. Because of the fees that we charge,
and the quality might not be as good. Yeah. That's awesome. Saving a ton of
time. What is that? Does that, like, require developers? I'm curious to know what the do it
yourself structure looks like at a high level just just to kind of educate people at
home at a at the broad strokes. Yeah. That might be a good segue to AI, which we were talking about
earlier today. Yep. You know, so right now, it's it's a pretty messy process because we integrate with
about twenty thousand merchants, and the merchants, it should also be mentioned, are kind of going online and offline, at
least the smaller ones are. Mhmm. And this is across all the major players, the players being the tracking
platforms in the English speaking markets around the world. So that's Canada, United States, United
Kingdom, and Australia. At least couple dozen data sources with the tracking,
platforms, many of which have, like, like, more than one API you're tapping into, stuff just
breaks all the time. Yeah. And what that means is that you need
somebody to repair that. So that's technical resources right there. When it breaks, you've got to,
Sounds expensive. Yeah. Obviously, you gotta fix it. But then the bigger issue is you have to deal with all the data that's
coming into the system, which is, you know, for us, thousands of new deals every day. So deal is broadly
defined as a coupon, a category sale, buy one get one, get with purchase,
anything in that direction. And for us, it's, very important to get that data out as
quickly as possible in as high quality as possible to our subscribers, and then they get it
out to their, to their end users who are the customers who click through on the affiliate sites,
make the purchase on the retailer, and then the affiliate site gets the commission. And so a big part of the
infrastructure is making sure you have the correct links, and then the correct links are married to the correct content. And
that's what FMTC does. So it requires you know, we have dozens of people doing this all
day every day, and then we also have a a full developer team. And
then to keep up the relationships, we have our our business development team for the network integrations,
the merchant integrations, and so on. That's awesome. So it's Pretty good. Yeah. It's it's it's a
legit operation. Yeah. For sure. For sure. And Brooke has been you know, you've
been such a senior sound expert voice in the affiliate
space from building your career, managing Zappos to building out an
agency, seeing all the players, and working with some great enterprise brands.
Now building out FMTC, You've got your, you know, regular newsletters that are
kinda educating the community, and I think that your insights are always very interesting
and helpful. So I think that kind of excited to kind of dive into some of those today and and share
those. And for those who aren't, following Brooke or subscribing to his,
regular information through the FMTC blog, highly recommend. So important, yeah,
call out, I think. Speaking of that, what are you kind of seeing as
the, you know, biggest kind of misnomer around coupon and deal? There's there's a few
of them out there and varying opinions about the topic, but what is kind of your thoughts
around the notion of coupon and deal as it relates to the affiliate marketing space? Yeah. Great question and
probably too much to tackle in any one podcast. Yeah. But I think the short of the long is that
customers love deals. Who doesn't? And customers are very much trained to look for
deals. Not all customers, you know, you have very much your market segments. Yep. But by all the studies I've
ever seen, the ones who are especially tuned into looking for the deals, the
coupons, etcetera, they are the frequent shoppers, the high household income shoppers Yeah.
The ones that you wanna get. And so if you are a merchant, you are probably competing
with Amazon. You know, they get close to half of the dollars in the US for
online retail right now. And if you want to woo shoppers away from there
or, you know, to to try your side out, for the first time, a coupon or some sort of
special offer is practically day rigor. Right? So anytime you go to a Shopify store, you're very
likely to see a little pop up that says, hey. Ten percent off for for first customers. Very standard
thing. Yeah. Well, the the thought that we have at FMDC is that all merchants
should really be doing that. Indeed, that there should be a basket of coupons that they offer. For example,
your new customer discount, typically a discount on a very high average order size, higher than
you would typically see. You can also do discounts with companies like Sheer ID that we're partnered
with that validate if you are a special category, like a first responder or a teacher
or a firefighter, that kind of thing. And, if you have this basket,
then there might be some other stuff, like certain products are discounted. It becomes very attractive to customers,
and those customers are going to find you on the coupon sites. Now to sort of grab the bull by the
horns that the pattern that people are concerned about is the customer's on the the site looking for a
deal or, sorry, they're in the the checkout looking for a deal, but then they come back. And so the
concern is that that that sort of, been paying a commission for, you know, an order that would have
happened anyway. Yeah. And that's a, a reasonable concern as an important thing to sort of talk
about. But I think that what happens too often is in the space, people say, well, that's that's just a pattern,
but there's many other patterns that could sort of go along with that. Mhmm. For example, there was
a case study with a software product called Fuze plugged into a, Google Analytics.
And when they looked at so and this is strictly Google Analytics data. Right? So it's nothing to do with the
affiliate networks tracking. When they were looking at the sort of highest value
customers brought, the winner was buy now, pay later, for new
merchants, in terms of bringing in new customers and then frequency purchase and things like that.
And then second, was sort of coupon sizes and something like that might surprise a lot of people
For sure. But but it comports well with, like, the the surveys that I've sort of mentioned. And
do you think that was based off, like, cart size or LTV or just generally? Do you I mean,
that sounds pretty compelling. Yeah. It was pretty compelling. You know, Google Analytics has their anonymous,
mysterious, you know, user identity. You know, you're in there and I'm in there, and everybody listening to this podcast is probably
in there. And then they then they could see if the customer goes to the merchant, and then
they can if they're new and then they they with Google Analytics, the transaction events are recorded. So this is the first time
a customer's had a transaction event. And so, yeah, to your point, I think that that is very
compelling. And it it's not easy. Like, so if you're the merchant, you have to come up with your own
strategy. What's my discounting strategy? And some retailers are very,
limited strategy, but everybody has something. So for example, Apple, not considered a discount
brand, will go around Black Friday. You will see, cashback offers, you know, buy
buy some stuff, get a hundred dollar gift card. That's you wouldn't think of that as a coupon, but we would
consider it within our sort of our wheelhouse, the things that we would offer because it's an offer that makes something
it makes it more attractive for a customer to buy something. And just about every retailer
out there does something of that nature. You know, they have clearance items. They're going to do some fancy gift
with purchase, maybe a cash gift. Yeah. And so our thought is that if customers
are looking for those, you want to meet the customers where they are, and where they are is just not always
going to be your site. So that same study that I referenced also found that email
was the merchant's own email, is certainly in the mix, but, like, not doing a lot for the
generation of new customers, which is no surprise. Right? Because they typically get on that email list by
buying something. Yeah. Yeah. They might they might sign up. So the coupon sites, which come in a lot
of different flavors. Right? You got your browser extensions. You got this sort of old school, listings
companies, huge number of reward sites, some are cash back, some are reward. The might not pay
later guys are in the mix there. Mhmm. And the commerce content guys show content sometimes. Mhmm. So
the ideal thing, I think, for a merchant would be to say, hey. This is my strategy. I've looked at my metrics very closely, and
then this is the kind of strategy that I wanna go out and bring to the market. And then when you when
you do that, there's frankly a lot of work involved in it because there's a lot of sites you're working with, and it's hard to get the deals and
offers out to all those sites. And that's exactly where FNDC can help. And so we think
that the the coupon sites get, kicked around unfairly, quite frankly, and without
the reward sites as well. But they Yeah. They have been and they remain the backbone of
affiliate marketing, and those are those are profitable customer relationships for the
merchants working with those sites. Yeah. And I would also add on the other other side of things, if you look at,
like, how they're compensated, the merchants have tremendous amount of control in terms of what the commission rates
are, what the commission terms are, etcetera. And then with the advanced technologies that the tracking platforms
have now, you can really dial it into pay exactly as you want to. Yeah. We
have a similar approach. You know, a lot of advertiser clients come to us with
concerns, questions, hesitation around that group of partner types when you've
got influencers exploding, commerce content exploding, a lot of options
in the space now. And I think that those concerns, you know, still are here. In some
cases, they're higher. And I think there's an opportunity to really assess,
look at appropriate attribution like you've talked about, and really, you know, measure where
those, partners come into play. Sometimes it's a little surprising. Right? So I think
there's a notion of, like, checking some of those historical judgments at the door
a little bit and using kind of the data and cohort analysis and the right attribution models to really
make better decisioning. And you can price them really precisely. You can reward
effectively. And I think there's that's something that I think a lot of people don't always realize that let's
leverage these great tools to make better decisions. And it's easy to say that, but it's surprising how many
people just maybe are not there yet, no matter how innovative or techie or smart
they are. It's just not, it's just not there yet. So it's fun to kind of collaborate with people to try to do that like you
alluded to. It's a lot of work. It's a good reason to have a a good agency. Yeah.
For sure. Something else came up that kinda jumped out at me was, like, I forget
who coined this. Someone talked about how they like to use deals and coupons to
the consumer if they're a brand, let's say consumer in this example. And, like, it's on a
pendulum or a spectrum where you might not be offering a coupon initially.
But as maybe that buyer becomes less engaged
or retained in your ecosystem, you can kind of use levers various
levers, micro levers throughout it. And I think that's where there's a really compelling
case that, like, these are not going anywhere. They're used constantly. They're
requested and demanded and expected by the consumer. So I think it's an interesting I forget
who came up with that framework or pendulum. There's I'm sure people have talked about it a lot, but I think it's a
complaint case to, you know, plug in and and kinda think about what is your strategy. Do you
have one that's very, specific to your brand and your data and your consumer as opposed to
just we don't do x or we always do y or you know? Yeah. And just
a simple question. You you know, whatever strategy you have, even if it's very modest, it doesn't carry over to affiliate
Because all the time so FMDC is all by permission. Right? So it's the affiliates, the deals that are entered into the
affiliate networks. And often we see because we're we're constantly going out to the sites
and we test the coupons and things like that. There's often deals that are on the home page, on the
landing page of the website that's not posted to Affiliate. Totally available. Which I think is crazy because
if you had that offer, why would you not get that offer out there? Yeah. For sure. That's a
great, framework in thinking about, like, ways people to kind of think through coupon
deal, where FMTC fits into the ecosystem. Maybe it would be interesting to hear a little bit more
about maybe some of the other aspects of affiliate marketing you've seen. You've seen a ton of
change in the last, you know, twenty five years, probably. What are you kind of noticing at a
macro trend level? Especially, you're publishing these learnings regularly. You're reading a ton. You're
talking to great practitioners at conferences and on calls daily. Like,
what are some maybe themes that you're seeing in the space out maybe even outside of coupon a
deal that are very interesting to you? Yeah. So Mike McNerney of MarTech
Record picked up a few really good ones, with panels and fireside chats actually last
week, in New York. One of them, I think, is gonna be the seller networks largely around the
Amazon ecosystem. Commerce content, I guess, has has gotten quite a bit of,
discussion, but it's still growing, which is very exciting. And another is going to be, I
think, the margin. Where does the commission payout come from? Are you paying out of a portion of your margin, or is it
sort of considered more like these branding dollars? And then something else that's been on my mind recently
that has not been as discussed is affiliate versus programmatic, which we were chatting about earlier.
Mhmm. So if you run through those, you know, start with the seller networks. Well, actually,
sorry. Where would you like to start? There's a lot there. That's a juicy, it's a list. Let's
do let's go seller networks. Yeah. It would just just happen with a great panel out in New York. Let's
keep rolling with that. Yeah. It's pretty interesting. And so for those who are not familiar, seller networks, which are sort of
formerly known as shadow networks, are paying a a seller on a marketplace, typically
Amazon, but can work on any marketplace. They can pay out a commission directly to the affiliate.
And this is really big news because it's kind of, like, not known in the larger ecosystem, but you
have probably hundreds of agencies that specialize in helping
sellers on Amazon sell through. Amazon's like an ecosystem unto itself.
And here here to now or here to recently, you've only been able to
stand by as as the Amazon Associates program pays out whatever commissions it pays out, which are normally pretty
healthy, especially because it's this halo effect Yeah. Where, you know, somebody goes and buy a pair of scissors and they
buy a TV and you get the commission on the TV. Velocity. You got all kinds of great factors. All the high conversion
rates. And so I think Publisher Expansion a few years ago might have been the first one, and they did
this sort of, had an unusual, tracking mechanism. And they're still around.
But then there was sort of a second generation that came where they would take the agency
ID. So the affiliate tracking solution, the seller network, and they were called sort of shadow network
because it sort of operate in the shadows of the Amazon ecosystem. But then Sounds ominous. Yeah. It touches.
Yeah. Because it it was sort of played in a gray area from what I understand. Yeah. Then with the seller network,
they become the advertiser of record, like, the advertiser is their agency record for the seller. And what that means is
that they can create a link with parameters, and and they can see the report on the back end. So if you're buying, like, a Facebook
campaign or Google campaign or something else, you can see how that performed. Well, you can just you can do the same
thing, give a link to anybody, basically the same as a regular affiliate tracking link.
And so it's been a really interesting race with these guys because
Refersion made big waves when they announced theirs, but then Refersion had pretty
massive layoffs late at the end of last year. And then they were bought by a
company called Fantastic, which, from my understanding, shut down their seller
network. And so they were sort of like the head of the pack, and then they, poof, went away.
The earlier this year, you had a company called Movanta launch, and those are the principles out of GroVia,
which is, you know, an agency that got acquired. We specialize, I think, in affiliate outreach. And
so these guys announced profitability after six months, which is, you know, not
bad, especially for, you know, a tech company, which has to be tech, investments. And then
also, in the mix of forgiving them and weaving people out, Benfog got publisher
expansion, part of AdVon as as I understand it. And forgive me if I'm mangling anything here. And then he
launched Maverick X, which has that that next generation sort of tracking solution. And
then you've also got one called Archer. There's another one I've spoken with called Costingtons, and I think
you'll see many more kind of come out because it's kind of a big land grab. You know, the sellers are
currently getting a kickback from Amazon, if kickback is the best word, of about ten percent.
So if you're paying an affiliate ten percent, it sort of, like, washes out from a cost perspective if you're getting a ten
percent from Amazon. And so there's a very big opportunity for these guys, and I actually just
blurted about this this week. It's great for affiliates because they potentially have a different revenue stream.
Although, it looks like they're going to have to choose. They're going to have to choose between
the associates program commission and they're going to or the seller network commission.
You can double dip. So, like, I think what you currently can do is you can take the associates link and
then deep link with, the seller network link or, sorry, maybe it's the other
way around. And that's been considered to kind of be a gray area, but it is getting scared up on
the panel is I I think it's basically a way to be disallowed. That's what it looks like. It's more
sense. Now correct me if I'm wrong, but the seller networks are often touting,
generally speaking, a higher commission rate than what Amazon Associates has historically
charged, like apples to apples. Is that correct? That's my understanding. Amazon's gotten away
with pretty low commission rates Yeah. Compared to competitors in the same category.
Yeah. And so one of the principals was talking about a commission rate of three to four
x on a in the same category. So it's sort of like, do I give up do I get three or four
x higher going to a specific product page? It's probably gonna convert pretty well, but give up the
halo effect. There seems to be a use case for it, and it can be a specific link. Right? So if you write a
listicle, you can go specifically to that seller, maybe a paid placement's negotiated.
So I think that that's going to continue to be attractive, and going to continue to grow.
Except the other thing to note is that I think they call it greater connections is that Amazon launched
basically their own solution. It doesn't seem to have as much traction yet based on
what people I've talked to, who are knowledgeable, are observing, and that could lead to
everybody getting killed. Right? Because, you know, it could just be for forbidden. Yeah. And they could also get
rid of the kickback. So the sort of damocles is is kinda hanging over those guys' heads as they as they
raise ahead into what could be a huge, huge land grab. Yeah. I wonder if there's a way I
was debating this with someone, I think, on my team and maybe out in New York at the panel, but
it seems like there's maybe a way where Amazon benefits from the seller
networks. Is there a path there where Amazon sees that value? Because it's always
that risk that Amazon shuts down XOR. Yeah. They they killed the on-site publisher
program earlier this year. Yeah. So I I don't know. Is that a path that you
think that they could thread the needle on where there's mutual value in
that case, or do you think that that's gonna end up as Amazon kinda
steers the the traffic back to its own owned and operated ecosystem
more so? Even though they're technically benefiting from these seller networks doing what they're doing in some
capacity. Right? So it's a great question and your guess is as good as
mine. But I have heard rumors that Amazon associates program is, a
bit separate from other stuff inside the Amazon ecosystem. Yeah. And so there's possibility
of sort of, like, split incentives inside the company. And so, collectively and this
actually Jeff Bezos is pretty famous for this. It's in the book, The Everything Store Store. You know,
he, pulled off a trick that eBay couldn't where he forced everything on the same buy page, whether it was
Amazon operated or, a third party seller. And that was apparently
over great protests of the internal buyers. Because if the buyer, you don't wanna be competing against some random person
from outside the company. But he made it happen, and it's been hugely successful for Amazon, which I
I believe has most of its volume from the third party sellers and has for many
years. I believe so. I believe so. So if you have that split, then, you know, there could be sort of,
like, turf protection inside the company. But then even without that, if you're Amazon
and you're getting traffic from off of Amazon, and in a sense, you're not paying for it because the kickback
is purportedly related to a competitive guard against, Shopify. You know,
again, rumors and hearsay, so take it with a grain of salt, but it it makes logical sense. It makes so so much
sense. So they would keep potentially keep that up, and then also it could suck the oxygen
out of the room. So, you know, if this stuff really kinda continues to take off,
it's a little bit of a threat to the competitors of Amazon and then to tracking platforms that
support them, like, you know, CJ and Rakuten and Impact, but an opportunity for the
affiliates and potentially for you as well as an agency. Right? Because you guys can start to play this Amazon game
and work with all the DTC guys who have the Shopify store and sell on Amazon. Some of them are pretty
big. Yeah. Absolutely. We're we're doing a lot of, collaboration with a number of
players like Lavanta and others, and we feel like there's just tons of opportunity
there. Just similar to us doing you know, having a handle on Google and Meta and TikTok,
we also need to have some acumen around the, Amazon ad buying game, which is slightly different
but but related, which I think I don't know. I kind of predict that there
that desire to retain those those sellers and those advertisers is
really the play for them. And and I that I feel like, not to get too much into
conjecture because we don't know, but I would think that despite there being some conflict with Amazon
Associates, I would think they would be really highly incentivized to maintain the the
grip of the, ecosystem and want that, in my in my limited
knowledge speculation. And I think that the Shopify's of the world, even to some extent, the
TikToks of the world are are clamoring for that and wanting that. I don't know how you feel about that too.
But do you feel No. I agree with that prediction, or do you think that's a I agree with you. They
do need to service the sellers. And, you know, going back to, I think it was around twenty fifteen, they made a pretty aggressive
push to get a lot more of the the China based sellers on board, which was
Yep. Which was covered in, I think I think it was twenty seventeen. Brad
Stone, the guy who wrote the everything store, wrote another book called, I think, Amazon Unbound. And he talked about this
conflict where the the buyer is still one of these cheaper Chinese no name goods. So in a way,
it makes the marketplace more valuable, but I think in a way, it also might make Amazon a little bit more vulnerable. For example,
Xi'an and Taimu, again, out of China Mhmm. Are making, Xi'an in particular, I
think are making is making big moves to woo those sellers for its own marketplace.
And so there's a little bit of the innovator's dilemma kind of nipping at Amazon's heels. Right? Basically, they wanna have the
low cost sort of China game, which, you know, a certain customer segment is totally tuned into.
Then you can sort of service that market, but then, like, there's a higher end of the brand name stuff, which you
also wanna service for your buyers, it might be a difficult balancing act. You know?
Absolutely. There it certainly seems to be on their minds. And so whatever else they're doing, if they can say, hey.
Listen. We'll accommodate you sending traffic to to us that we're not necessarily even
paying for, it would seem logical that they would continue to allow that. Yeah. Absolutely.
Sure. They're pleased. They have a lot of, users locked in their psychological habit
of one click shopping and ease and prime and all that. Yeah.
And it's more, more searches start on Amazon now than on Google, correct? I believe so.
More shopping searches. Shopping based searches. Yeah. It's amazing. That that's amazing,
knowledge drop. And I think there's just a lot to watch in that space. You've obviously touched on a number
of other trends. So I guess the question of where do we want to go next? We need to take some questions from the
audience, even though we don't have a live audience right now. Maybe we should soon for our next show.
One of the things we've talked about also is around you touched on it as part
of that kind of hit list of topics, but one was this programmatic industry
and kind of where affiliate sits into that. Like, what are your thoughts on
you know, you kinda recently shared that it's quite a lot of fraud, quite a lot of issues in the programmatic
space. Not to say that it doesn't exist in a lot of different digital channels, but what are your thoughts
on that piece that you wrote and kind of some of the discussions you've had around programmatic and fraud and
and maybe with affiliate? This is a drum I think that we in the channel really need to be
beaten on. I know not everyone thinks of affiliate as as a channel, so bear with
me. Channel channels. That actually came up with the MarTech thing too.
So whatever you, you know, whatever you call it, the the space that we're in, you know, we're very much, I think,
scrutinized and we're very, critical and self critical, which I think is a really good thing about affiliate. And
I would also point out that out of that criticism, there really are a lot of tools that have emerged
to give complete control or or a tremendous degree of control to the
merchants and agencies that manage merchant programs. And what
vexes me sometimes is that if you look at it as sort of a budgetary game, affiliate
kinda gets the short end of the stick where I think we have a lot more value to to offer. And
so the Association of National Advertisers in the which I think is US based,
they did a study of open web programmatic advertising. It gets a little confusing. Right? Because it's not the closed garden stuff,
but it's, I think they rounded up to about ninety billion dollars and this is
a global number. And they, by their study Ninety or ninety, nine zero
billion globally on an annual basis. And they found that there were there's these
things they call made for advertising sites, clickbait, AI fits in with very naturally with
that stuff, but it totally predates AI. Low quality content. Low quality content, which probably doesn't
attract a sort of a buyer with any real intention. And they
found that they were getting, I think, twenty percent of the, traffic and about an estimated fifteen
percent of the dollars. And so, you know, call that in the thirteen sort of billion dollar
range. And and, again, it is a little bit apples and oranges because the global number, but affiliate in the
US is is lower than that. Right? From an angle basis, it might be, you know, it might be right around to,
like, not known, but, you know, maybe it's, like, twelve billion dollars or something. Mhmm.
And so if we, as a channel, are are are smaller
than, you know, sort of like a fraud of value for the channel, it sounds it that tells
me that something is just really mismatched and off balance. Yeah. A hundred percent agree. You know, with the the
programmatic stuff, you also have all the bot fraud, right, because it's an impression and half
the traffic out there is bots. Yep. And so with affiliate, there definitely are concerns in the lead
space because people can can sell in traffic and fake leads all day long. And there's definitely
concerns around the margin stuff, with the retail space. But if you're
validating your leads and you can't help but validate your retail sales, right, because if it's fraud, you're you're
gonna like, if it's credit card fraud, which is actually pretty uncommon, you'll you're gonna get charged back.
Those are real sales, and those are generally very profitable sales. The studies, I
think, over the years, it it typically is the most profitable way to market
after your own email list. Now some things might be more profitable, like your own
keywords. Right? But that's probably not fair because the volume is whatever it is, and that's just Almost the
same. To find you anyway. Yeah. Hundred percent. So I think that's generally
pretty true because, again, the the merchants control the cost very well and and the mechanisms and all that. And then
there's you just don't get the same exact kind of bidding war that you get with Google Ads, that you get with
Facebook. And those companies are very good at getting your money from you and expanding your advertising and
stuff like that. And then programmatic is too. So to me, it seems like a very big challenge that we have,
and this is one that FTC aims to help solve, is making it easier to deploy
dollars and get positive returns in the affiliate space. You know, it's really easy to
work with one affiliate, three, five affiliates. When you start to get to the point where you're
working with even just dozens, you really need that technical infrastructure to be in place. And it clearly
is for tracking purposes, but it's a little bit trickier for the content distribution purposes
because, you know, first, the content is is bad. Mhmm. You know? So we deal with the deal feeds. We deal with product
feeds. You have to clean that stuff up. There's no way there's no way around it. Mhmm. So you might
say, well, why don't the networks do the cleanup? And it's a little bit tricky because if they did it for one merchant, they'd
have to probably do it for all of them. Mhmm. And then they're also getting paid by the by the merchant, so it's
a little bit of a political challenge for them. So FMDC is a very natural spot that we fit in there.
And our thought is that we should make it very easy for the merchants through the networks to get those those
tracking links out there to the point of display on the publisher properties, be it, you know, an app or or
website or whatever, so that you can access with new content like a deal, for
example, or a coupon that's expiring soon. You can get out to hundreds and even thousands of partners
in a very timely manner, and then you'll pay out accordingly, which, again, will probably
be very positive ROI for you. And you can feel a lot more comfortable shifting
your investment dollars from very dubious programmatic spends to,
long term profitable defensible, because you have a relationship, affiliate spends.
I love that thought of defensible because I've talked a lot about how affiliate
is most misunderstood, most underrated. And in
some ways, it can have an even better moat than and more defensive than a lot
of other channels. If if Google wants to shut you down or if Meta wants to shut you down, granted, it's
often unlikely for most brands, but they can and they will. Whereas with affiliate,
you have, you know, dozens, hundreds, maybe even thousands of relationships,
some very close personal relationships, some more disconnected.
But that's, by nature, a more diversified defensible
position to be in than having all your eggs in one basket that can be shut off by an API.
Absolutely. You can reach places you couldn't reach otherwise. And, you know, for some kinds of
merchants, you can also advertise where you can't advertise on Google. So, you know, Google doesn't do gun
advertisements. Mhmm. And this publisher site called, I think it's Pew Pew Pew Pew
Tactical, and, you know, it's all affiliate programs that they make revenue off of. It makes a lot of
sense. Niche communities, and, that makes sense. The other thing that
kinda came up when you were sharing that was kind of like the in house team method and
how affiliate is not really a channel, but more of a channel. The channels are a lever. And in
a lot of ways, it it behaves multichannel. You can access Google, Meta, TikTok. You
can it's more of a methodology almost. I'm wondering if there's a world where, you
know, the affiliate manager in in house at a big brand can be a little
bit more, I'm guessing I'm speculating that if
affiliate was looked through from a different lens internally and we we need to kinda educate and
talk to people about that, it might get better outcomes. It's not to say that affiliate
account managers internally or affiliate experts at a brand are not savvy and smart and
have connections and know what levers to pull. But my hypothesis is that, you know,
the VP of marketing, the CMO, the head of growth can kind of, ride shotgun
with that affiliate account manager and maybe think of it more of, okay. We we need to pay for
outcomes. We need it to be multichannel. We wanna we can even weave stories with this lever
that's called affiliate or influencer marketing. Do you have any comment on that or any thought?
I'm kind of going off on a little bit of a soapbox here, but I feel like there's an opportunity to kind
of pair the two more and and have it less live in a silo because
it's so multichannel and it's because tech and all these great tools are kind of letting this
happen more so than they, they did before. I don't know if you have any comment on that or,
or thought, but it feels like an opportunity for the industry. Yeah. That's been affiliates,
long slog. And if you listen to somebody like Todd Crawford, you know, the, formerly of CJ and
cofounder of Impact Mhmm. You know, they always talk about getting more budget and being in the suite with
the CMO. And I think it's really true because and then that goes to the back to the resource thing too. You know, the investment is
not just like, oh, you know, we'll spend a million dollars over here instead of over there. It's like, you know, we'll spend a million
dollars on programmers, to do the technical implementations that are necessary.
And I think that the, the channel has to prove itself more than other channels do, which is a
little bit mysterious. It's a little bit odd, frankly. And it even seems irrational to
me. But for whatever reason, that does seem to be the case. And maybe it's just
because it's more work. Yeah. It takes more time to understand, takes more time to manage those relationships.
But for that, again, you know, you've got a lot of spaces you're not gonna get to otherwise. And you'll
also receive feedback, and you'll enable collaborations that you can't do otherwise. That's why I feel I
think affiliate has such this, really natural blend with the influencer stuff. It's kinda funny because
influencer's bigger bigger already. Right? I came you know, affiliate was around more
than ten years longer, and then influencer came along, blew up bigger than affiliate. I think that
was probably, like, last year or the year before. And then there was a study that went around predicting a hundred billion
dollars in influencer global income, I think, by twenty thirty or
something. Wow. Yeah. So massively bigger than the affiliate, projections.
And but the challenge is, like, you know, it's very easy to flush your money down the toilet with the influencer stuff because
they want this paid placement. Pseudo celebrity. No. No. Totally. And then also, you know, they
might be they might be gone next year. My wife sees this with her business. She buys, like, she had a
really good run with podcast ads, and then a lot of these podcast ads started going with the agencies. And
then it makes things worse because she loses the relationship, the ads are read more poorly, the prices
go up, and then that tips the ROI into the negative direction. She has to stop advertising with them. I think you hit
something so powerful. There's that And something that I've always loved about
affiliate is that when you're setting up a deal, you're negotiating, there's a, there's a
relationship. Yes. You're looking at the data as well, but there's a feedback loop there. And
there's so much kind of goodness that comes back to the brand around, especially for, you
know, your top ten partners. They're gonna be highly incentivized to give you
essentially coaching at times to be like, how do we optimize this? I found this to work really
well. Not to say that you don't have some of those chops internally, but nine
times out of ten, that feedback loop yields value and revenue if you're
listening and you're using it
and David Givano, the CEO of Impact, he had a podcast a while ago with an influencer, and
they were talking about, you know, paint placements. And she's like, look, you know, we have to charge paint placement because we allow the
brands to repurpose our content for their purposes. And you all it's it's sort of
different, but you see the same thing with, like, companies such as Wirecutter, where where they do the the product
reviews, and they'll license out those product reviews back to the manufacturers. So
it's like this, sort of, like, ancillary value this gets created and then get get gets
harvested and has to be paid for one way or another, but everybody involved in the value chain is is
winning. And so I think affiliate pairs well with that. It's kinda funny. It's like the dog chasing
the bus now because, you know, we have the tracking stuff in place. The networks have the merchant
relationships in place, which the influencers networks can do struggle with more. Like, you know, they get the influencers,
but then the the anchor really is with the merchants, which I think explains all the collaborations between
the affiliate networks and these influencer networks and couple of the acquisitions too. Absolutely. Like, you know,
CreatorIQ, I think, works I think Awin and CJ, I believe.
Double check that. But there's a lot of relationships like that. And so I think it's really good
because you can do a lot of hybrid deals. Again, that requires more more time. You gotta be coordinating with people.
But if you figure out the template, then that can can scale pretty pretty reasonably well. You can get, like, the links
out to those creators Yeah. And then Yeah. Really do some some neat
campaigns that reach a very large audience. Yeah. It's, it's pretty, it's, I think become pretty
powerful and there was an article on social proof. I'm gonna kind of the topic for the
next newsletter that I'm excited to dive into that. I think it feeds into what you just shared. It's like,
right, people wanna hear from, you know, other friends, family, influencers
about their experience with other brands. It's just inherently psychologically compelling, whereas,
you know, the brand speaking to you has lost its luster that it had 10:20, thirty,
forty years ago. And I think brands can still do that, of course, but we do it very it's
harder to rise above the noise. And I think it just that social proof is something we're all kind of seeking
right now, in the brand and marketing space. This has been some amazing knowledge
drops. I'd love to hear maybe as we wind down here, just talking a little
bit more about, you know, where you see the vision for FMTC, what big things you have in
mind. I know you've kind of explored a number of partnerships. You're building some awesome things.
Maybe give us a sneak peek of what's ahead. Maybe share what you're building towards,
without divulging anything confidential, but we'd love to hear more. Yeah. Thank you. The,
I think FMDC's big vision is to participate in in affiliate as affiliate continues to
expand. And the vision for affiliate is very exciting. You basically
have anything that's a commercially relevant link could typically be an
affiliate link. And in the past, I think that a lot of publishers have been afraid to monetize those links.
So for example, there was I think it was, like, ten or twelve years ago now Yeah. There's a big kerfuffle with Pinterest
and SkimLinks. Yeah. And it's interesting because Pinterest just engaged
in this similar partnership, not quite the exact same, but similar with Amazon where stuff goes to Amazon and you can
buy it. And to me, that's the most natural partnership in the world. And the natural concern there would
be, you know, editorial versus advertising, but those two can be parsed. You know, they can be separate
teams. The ad advertising can kinda come along later. The advertising can be automated. Mhmm.
And you have some huge, huge, huge volume out there of links that are not monetized but
could be monetized. It would really support any number of publishers that have, you know, a freemium,
access. Right? So you can just see the whole site for free, or it's like some kind of software tool that you're,
you know, sort of a free user of. So the the opportunity for brands or the, you know,
that these advertisers to reach new audiences and all sorts of niches, on the Internet is
is incredible. And FMDC hopes to help participate in that by having the
merchants index at the ready. So if you're the publisher, you would know who you can work with.
We provide you with your own link. We also have a a sub affiliate network that's owned by FTC called
Freshreach. So if you don't if you're not integrating with a particular tracking platform, we can provide you
a ready access link because, you know, it naturally evolves toward those those key
partnerships. There's sort of like a long tail. Right? Yep. And so if you're the publisher, you can take advantage
of of the full monetization opportunities. You can display all the relevant content that should, be
there. So for us, obviously, it would be deal content Mhmm. Also the product contents, and who knows what
else there might be in the future. Yep. So we can index that all. We can provide it all. The publishers
can call that on an API basis and then really enhance the value of to their users
with with these convenience features and optimize their own operations for generating revenue.
I love that. What that just reminded me of is can't recall if it was Connie
Chen of, Andreessen Horowitz. She's very strong on
APAC and mobile, if if I recall correctly. But she talked a lot about micropayments
and how that's very large in Asia. And we think you kinda touched on, like, gated content
and paywalls and how that's such a terrible experience as is seeing a ton of
irrelevant ads as privacy and cookie deprecation have come so important. And I
feel like there's an opportunity where affiliate as a mechanism, if you will,
or channel channels can play a a part there and kind of bringing about a
better monetizable user experience for people across the entire web. I mean, it
just seems like there's so much more to be done there to kind of make those
paywalls and those friction points and the the user experience that's kinda clunky and and friction
improve and and get even better. So I think that would be exciting place to take the industry.
Yeah. Absolutely. And it's even becoming a some something of a center of gravity. You know, The Wall Street
Journal celebrated the one year anniversary earlier this summer of their buy side. They're I think they're sort of a
more conservative entity in terms of their operations. So it might be just too much
for a lot of these publishers to resist, and then you just gotta manage all the all the
data and information. Yeah. I mean, you got a brand right there with that's collecting massive
amounts of money in subscription volume, and then they turn to that as another monetization
arm. It's it's pretty good validation for the affiliate industry, as you said.
Very cool. I guess, what else? I I know you got, the
farm, thriving in in Texas. Any any comments or updates for the
audience? We got the bees. We got the goats. The chickens are laying again. We went
through a bit of a dirt there. I don't think the heat helped. Yeah. And, we're nearly done with our
little renovations. Well, congratulations. And the boys are learning to swim. Oh, that's
music to my ears. Love to see it. Yes. Tell your wife. I'll let her know.
I'll let her know if they need a refresher. Former, bring her over. A water probably player. Right? That's
right. That's right. Yeah. She likes to tell that when parents are a little hesitant to
bring their kids, little, little ones to her, to learn how to swim. So now it's crucial, crucial service
Right? Absolutely. For their safety. Absolutely. Well, so appreciate you have having the chat and
being on the on the conversation here live in Austin at the the Capital Factory where
they're so gracious to set us up in their in their green room. Thanks, Brooke. Thank
you. Come by anytime. Appreciate it. Great to see you. Bye, everyone.