Online Darwinism And The Evolution of Performance Marketing

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Marketers love to create new terms to explain their work. From “brand advocacy” to CPA, CPM, CPE and the myriad of acronyms that fill the digital marketing landscape, we’ll turn almost any new business practice into a marketable term.

What, then, to call the phenomenon of once beloved — or, at least, begrudgingly tolerated — affiliates being shunned by the very industry that fervently embraced them? As the performance marketing industry matures, and as brands seek more sophisticated and legitimate agencies and affiliates to manage their online marketing campaigns, are we entering a period of “Online Darwinism”?

I believe that is exactly what is occurring in performance marketing.

With apologies to Charles Darwin and his Theory of Evolution, my embrace of the Online Darwinism Theory, a concept I developed after watching so many affiliates drop like flies in recent months, encapsulates my views of the evolution of digital media and the revolution in digital media providers.

This theory reasons that reputable and ethical affiliate marketers will survive while unscrupulous ones will go the way of the dodo. There will be more business for great companies that evolve wisely based on clear, measurable objectives that meet clients’ digital-media challenges. Media pricing will become more realistic as delusional “get-rich-quick” companies continue to exit. All of which leads to more accurate and strategic planning for advertisers who have marketing dollars to spend. 

Dramatic changes have occurred over the last decade in the digital media and online marketing industries. From email and display advertising, the focus shifted to search and pop-ups; co-reg, incent and paid search got their due focus, and now, everyone’s mind (and marketing spend) is on social media. Encircling these changes was the evolution of smartphones, followed by the rise of the tablet.

The Digital Age forced marketers to slowly evolve to find people wherever they consume media. Increasingly, this has been within digital mediums and decreasingly via print, radio, TV and other offline channels.

Life has become a giant skip button. Marketers must engage the consumer precisely in the moment and at the right spot. 

Consider this for a moment: 10 years ago, an email submit had a cost-per-acquisition (CPA) of $0.40; high cost-per-click (CPC) bids on Google and Yahoo! were $0.25; and banners converted at 30%. Now email submits average $2 CPA; a highly searched insurance of medical term can carry a $100-plus CPC; and most banners convert at less than 1%.

Media costs are much higher, marketing regulations from media channels and governments around the world have become far more stringent and the marketplace is fragmented. This requires brands and marketers to carefully and judiciously select a handful of areas they want to focus on versus serving as an all-things-to-all-brands generalist.

Given the tougher regulations and market fragmentation, the individuals who have survived to the Digital Age have adapted to the changing markets. Certain characteristics stand out, including multiple streams of revenue, moving into new media channels and partnering with other companies to round out capabilities.

Those who have gone out of business continued to follow a path of risk-laden financial greed, noncompliance and specializing in one area, such as social or email marketing.

My belief in Online Darwinism stems from the excitement I get out of watching digital nature take its course. Despite working in an industry relatively far removed from science, it is clear to me that that basic tenets of Darwin’s Theory of Evolution hold true for performance and online marketing.

The good affiliates will thrive while the bad ones will die off. It’s as simple as that.

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2 comments on "Online Darwinism And The Evolution of Performance Marketing ".

1. Peter Rosenwald from Consult Partners
   

   commented on: September 9, 2012 at 11:31 a.m.
   A very good piece and Online Darwinism is certainly well launched. May I suggest that there is a constant metric that all companies need to employ. It is called the ACPO (Allowable Cost Per Order) and it required that the marketer determine how much he can afford to spend to reach a marketing objective after deducting from the discounted lifetime revenue to be generated, all the costs (except marketing) of product and service AND the profit he wishes to make. What's left is the amount he can spend. Having written a book about this (Accountable Marketing) I know it all boils down to this simple equation no matter what medium is being used. Want a model that does the math for you? e-mail me and ask for it at rosenwal@uol.com.br
2. Peter S. Klein from MediaWhiz
   

   commented on: September 10, 2012 at 3:23 p.m.
   I like the idea Peter, thanks for the feedback. Especially the word ACCOUNTABLE. The key to the model revolves around the advertiser knowing their KPIs/LTVs - do we think this exists in most places? I am having a tough time finding companie sthat can mine their own databases for a direct answer. That would help with predictive modeling as well.

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