Dealing with the Heat

Much of our unique blend of performance marketing just happens. The offers don’t always follow any major cyclical trends or master plan. To illustrate what we mean, in the for-profit-education space, enrollments correlate closely to the change in unemployment. When the change in unemployment increases, so too do enrollments in universities. When unemployment drops, i.e., when the economy improves, fewer people tend to enroll in for-profit programs. This was one of the reasons why those specializing in education lead generation all understood that the past year and potentially the next several could see at the very best, slow growth, but more likely an overall dip year over year. Not so much with the often subscription / trial based efforts of performance marketers. People knew, for example, that acai might not last, but the reasons why had nothing to do with broader macro-economic trends.

Unless you are new to the performance marketing space as of today, you would have experienced a rather turbulent end to 2011. This chop was the result of a massive environment change not economic one. The leading offers started to feel pressure before the middle of last year, but that was primarily the result of inventory sources changing what ads they accepted. What they might have thought possible but never really expected is what happened – a crackdown by the FTC. That crackdown was for many the nail in a coffin already full of bad debt from advertisers who had earned immense terms which became the proverbial rope that let many networks hang themselves. Perhaps a little too strong, but the one-two punch of bad debt and fines was too much for many in the space to handle. While we always knew that consolidation should happen, no one wants to see it this way.

Now that the dust has settled somewhat, it’s time to look around and try to make sense of what has really happened to the landscape. Perhaps the biggest change or lack of change involves the fake blog / fake news article space. It isn’t dead. You would think they would be extinct, but that just isn’t the case. Instead, those who do it no longer live in countries with strict consumer protection laws. It’s not a perfect solution, especially for a US network who still has the end offers and wants to manage the balance between potential advertiser issues that may arise from funneling what is generally high-risk traffic. But, it’s a solution that allows those with advertisers to still make money. We aren’t lawyers, but networks too have at times found wells to maintain plausible deniability when working in farticle land so long as they don’t run any of their own traffic.

Let’s face it, the real reason that traffic from farticles to overpriced subscription based businesses still exists has nothing to do with anyone’s desire to cause deliberate harm. It’s because the method of advertising just works, and finding and tweaking paths that convert is what drives so many people who operate in this space. What about those who might have operated farticles – be it publishers or networks? Even if farticles aren’t dead, there is still a vacuum of traffic to offers that needs filling. So, what are people to do, i.e., either the just risk adverse enough or the geographically challenged. They turn the situation around. They know how to build great jump pages (which is what farticles really are). Instead of promoting to US based traffic, they have taken a much more keen interest globally. In some ways, we’ve almost wound back the clock. The top offers are similar to those that have worked in the past – mobile subscription and incentive based promotion offers. The difference is the evolution of the marketing – incorporating some of the better jumpers.

We tend to like times like these. We don’t like when good companies struggle, but we do like when the market has a void. Some will fill that void by running the tried and true. They will want to keep a certain level of cash flow going, so they will do what it takes – running the business from an international destination or running their business by focusing on international territories. Others, though, will use this time to try and innovate. They will see that now is a great time to get an offer tested. It might be the hardest time to commit to research and testing, but it’s not that different from buying in a depressed housing market. The money feels more expensive, but the returns are often the sweetest.