Google Ventures began contributing venture capital funds in June 2009 to VigLink, a company that offers automated affiliate marketing services, but plans to add detailed analytics to its suite of products that help marketers monetize outbound links.
VigLink CEO Oliver Roup said the company is working in private beta with less than 10 companies to serve new links through an insertion tool, as well as optimize the links and identify the ones driving the most revenue. For example, the tools will allow publishers that opt-in to insert new links automatically into their content, rather them finding the links themselves. That's the first step in building tools for affiliate marketing similar to functions offered in display ads that drive yield optimization.
Today, a dashboard serves up data on links, but providing tips on actions to take to increase revenue will become the next step in building out the platform. "We know the products that sell and can make suggestions on the type of items blog posts might want to detail," Roup said.
Apparently there is money to be had in affiliate marketing. In fact, Google Ventures appears to be so positive about the trend that Google's VC arm participated in all three funding rounds, contributing an undisclosed amount to VigLink -- the total $7.4 million -- not something I would have expected from the No. 1 search engine.
Roup said one of the biggest misconceptions that marketers have begins with Google's disapproval of the affiliate marketing model. Google does not have an issue with affiliate marketing, but rather, with marketers trying to buy page rank -- or links that are paid but try to fool the consumer and appear as unpaid, Roup explains. "Our links are financially motivated, so they don't convert page rank, but neither do any other affiliate links," he said. "There's been negative preconceptions around affiliate marketing because there have been sketchy products promoted such as diet pills."
Amazon and Wal-Mart use affiliate marketing extensively. In aggregate, affiliate marketing is big business. Roup estimates $2.5 billion is paid out in affiliate marketing fees in the United States annually. He cites Forrester Research reports published in September 2009 that suggest U.S. companies will spend $4 billion annually by 2014, increasing at a compound annual growth rate (CAGR) of 16% from 2009.
VigLink makes it easy for publishers to write and publish and post a book review with a link for readers to buy it through Amazon, which pays a commission on the sale. Most publishers believe the task is labor-intensive, so Roup made it easy by managing the program for the brand or company through affiliate marketing. He said the clicks already send the site visitor to another domain, so why not capitalize on the traffic that leaves if it converts?
For smaller publishers, affiliate marketing can augment Google AdSense. Beyond that, selling data to companies like BlueKai or eXelate will pay for aggregate information about site visitors to better understand specific audiences. VigLink supports billions of pages monthly from thousands of publishers. The company also supplies relevant data about customer purchase behavior. The product is installed by simply adding a few lines of code to a page template.