The Google Affiliate Network Conspiracy

by Jonathan Goodman on May 11, 2013

This is the first episode of The World of Internet Marketing podcast. I delve into my career and history and then talk about what I believe might be the reason why Google pulled out of the Affiliate Marketing community and closed the GAN Google Affiliate Network.

Hi, this is Jonathan Goodman and welcome to the very first episode of The World of Internet Marketing. This is the podcast for the work that I do in the Internet marketing industry. I’m going to start off by telling you a little bit about myself then we are going to talk about what the podcast is going to be and what my hopes for the future of the podcast are. The name of this specific podcast today is The Google Affiliate Network Conspiracy.  We will get into a little bit about what I think is really going on with Google and their decision to close their affiliate network. Then we will talk a little more about the projects I am currently working on and where I am speaking next.

Let’s get started. Again, my name is Jonathan Goodman. This is the first podcast for The World of Internet Marketing and my background; I’ve been in the internet marketing industry for over 10 years; nope closer to 15 years. I don’t want to date myself though. I started off at MicroWarehouse even before there were any dot.com databases or things like that. Then I went on to EarthWeb. They went public during the dot.com boom and then everything crashed during the dot.com bust. I worked for Suburban Propane and built their e-commerce system. For each company I was building an e-commerce system for them. Now I run Halyard Consulting and that’s an Internet marketing company where small and large companies work with me and I assist them building out their site, exclusively using WordPress and I help them to get ranked. We will go into that in a later episode where I go into how we get our clients to gain the best momentum in the search engines.

Let’s talk about what I want this podcast to be. Obviously, every one and their mother is Podcasting. So what do I want to do for you? I want to particularly provide great information, both news and a resource with my historical knowledgebase. I think that’s critically important and as this grows I’d like to bring on various interviewees and talk to them about the industry and other aspects of what’s out there. Like affiliate marketing, pay per click, areas that I might not have an expertise in but I know people within the industry that really do and they really do a great job on what they are focused on.

Now let’s get to the heart of this episode. Google made an announcement this week that really shook the ground underneath a lot of affiliate marketers and if you are not sure what affiliate marketing is well I’m certainly very green to that industry too.  I’m just stepping my big toe into the pond of that type of work… but what it basically is, is I’ll have a website and I’ll be talking about specific products or writing articles and content in an attempt to get you the visitor to come to the site and make a purchase.

Hopefully if I’m ranking for the right keywords you are already coming to the site because you want specific data or information, whether they be reviews or content on the site, videos, things like that. You feel good enough about the content that the website is providing and you actually make a purchase. That purchase by clicking through on either a banner or going into the shopping cart is actually linked into the major product.

So, take for example, iPhones. If I created a website that talked about the iPhone5 and that was the whole website. It gave reviews about the iPhone 5 or it talked about the specific apps, if you liked the article about the app and you click through for more information it would put a cookie on your browser for that app and if you decided 30, 60, 90 days after that you wanted to make that purchase, you don’t have to make the purchase from the website immediately, of course, that helps but. You are all probably doing this and don’t even realize it when you are going to read a review off of Amazon away from Amazon on a separate site. Or you’ve done a search and you’ve gotten information and then linked over to Amazon or another website that specifically has the information. Then you come back and you make that purchase, the affiliate marketer is going to make a percentage of that sale.

I do apologize.  Let me just stop for a second, I know that this is a powerful mic and if you hear behind me snoring that would be my dog, Max. I have two fantastic dogs and one of them, Max, likes to sit in the area right behind me and he is very quiet all day long until I either get on the phone or I am doing some type of voiceover like this. I love Max dearly but it is an interesting part of his personality and he is snoring right now. So if that’s rather loud I will adjust in the post afterwards.

So getting back to what affiliate marketing really is, you are enticing a visitor to click through to the merchant and in doing so you are gaining a percentage of that sale and depending upon the type of relationship that affiliate marketer has with that merchant it could be a continuous sale for multiple products if you then come in at a later time. It could be just the one off. It could be promotionals that he is running and only those promotionals that actually result in sales. There’s a myriad of various different ways that affiliate marketing works. Again, I’m not an affiliate marketer.  I’m starting to get interested in it but it is kind of a side hobby to the actual internet marketing company that I run.

So, Google being Google, how gigantic they actually are, came into the industry and built out an affiliate network site that included hundreds of thousands of merchant and affiliate relationships. This week they came out with an email and essentially said it all ends in June. They are going to stop taking on new partners and by the end of October they will have paid out the last of the affiliate marketers.  This is really, you know, one of those things that kind of makes you cringe about Google. You know, they put millions of dollars into a service, and they’ve done this with other software and other things like Google Reader. A perfect example, right?

For years and years Google Reader was something that people used, not too many people used and obviously not enough people used because there they were again making an announcement that they were going to stop Google Reader. This left SEOmoz to say “You know what, if Google is getting rid of Google Reader we will build our own Google Reader, our SEOmoz reader, and we’ll go ahead and anybody who was using Google Reader can now use our service.” It’s really a smart thing to do and it was fairly easy for them to do it. It doesn’t take that much resources and time from really big genius people.

So, they did this again with Google Affiliate Network. They built up a brand and they created an aspect of the industry that really had tremendous momentum. There are some people that are saying that on a yearly basis Google made 500 million dollars. There are other people that are saying that it was so huge that it was 150 million dollars but in a billion dollar industry that is Google, 150 million dollars doesn’t I guess qualify or quantify to have them keep it open.

Now you ask any other affiliate network if they would like 150 million dollars the answer is undoubtedly yes. It’s just when you’re dealing with a large corporation that’s working in the billions, 150 million dollars doesn’t really do anything for them. So, there is this kind of debate going on in the industry, what’s this going to mean.

You have a hundred thousand merchants out there; they have to find a place to go. They will go to Commission Junction or they’ll go to Impact Radius or to something like that.

What I’d like to add to the conversation is the why. Why might Google, aside for 150 million dollars not being large enough, why might they go ahead and stop this whole affiliate network? I’m going to go down the path of conspiracy theory. I am not a conspiracy theorist. I think things happen; JFK happened, the moon happened, all these different things happened, but sometimes when a corporation, that is a very frenetic kind of, psychopathic entity into itself, right? It’s got all these different people with different ideas. They are all talking up to the head of the fish. They are all saying turn left, turn right, turn left, turn right and the fish doesn’t know where to go. That’s a great representation of what a corporation really is.  But sometimes, things are done where we are left, certainly Google is never going to make an announcement and say, “This is the reason why we are pulling out of the affiliate network business.” So, there are very smart people that are then saying “Oh it must be because it was only 150 million dollars and Google is a business model of a billion dollars.” But there is also another very interesting possibility.

Adwords, which is where the majority of Google’s revenue comes from. It’s the way that they make their revenue, right?  So, is it possible that somebody was about to release a report that showed that the departments running Google Adwords were giving preferential treatment to the affiliate marketers? Now of course, complete speculation here. But that in and of itself, right? Google has been caught in the past where they have given preferential treatment within Adwords. Of course, they will deny that running Google Analytics and running Google AdSense and all these different things but, you know, I don’t know enough about this subject but I just think that it’s very interesting that the potential to do harm and in this case doing harm is actually Google providing a bigger influence for their affiliate marketers than the average Joe who is trying to run their Adwords?

Think about it this way, if I gave my affiliate network a little bit of an uptick in the fact that they do business with Google and I’m Google and then they get that little bit of preferential treatment within Adwords and then they are able to generate revenue from that by running Adwords for affiliate campaigns. Who gets the money at the end of that? Well, the affiliates themselves get a percentage of the sale but Google is able to say, “Hey you know what, that leads them to more and more clients that are coming on with Google Affiliate network. So, if you wanted to skew the numbers, the way to skew the numbers for the merchants that are potentially going to come in and use your services is to show the transactions from the affiliates.”

Completely hypothetical, completely conspiracy, but not so far fetched, right? When you think about what is the motivation of Google?  It is to sell more AdWords. And in the case of Google Affiliate Network, what were affiliates doing? They were purchasing AdWords. You give them a little bit of the preferential treatment or a little skewed tick up for a cheaper cost to get to the number one ranking; well you are going to produce more sales. Those sales are then going to lead to both more AdWords and more revenue from the affiliate network. So, that is my conspiracy theory of the week. I assure you next week there definitely will not be more conspiracy.

There is a lot of other things that I want to talk about.  There’s a lot of news always going on in this industry and I certainly don’t want to bash Google. I think Google, for the most part, does a really good job. I think that they would do well with a really, really great competitor and unfortunately all they have in the market that’s even remotely close to them is Bing and Bing just can’t get its act together. You know I was at Search Marketing Expo. I spoke there in I believe October and the last session was a panel that included somebody high up in Bing and he asked where is search now compared to radio to television is it radio, black and white television, color is it HDTV?  I was the only one in the entire room that felt that search was equivalent to radio.

I think that it’s interesting that I got bashed for that. Oh, there’s that guy that thinks search is equivalent to radio. Well it’s certainly not HD. It’s certainly not color. I think that Google is making strides and getting it to the point where it’s going towards black and white television but it’s just not. It’s still at the radio stage. I think that 10 years from now search will be so incredibly comprehensive with schema, and we will have an episode on here talking about schema and metadata and all of that. But what I look at it where I started from the internet, building out a website using standard HTML, break and bold and all these simplified code, you have to kind of say, well that was 15 years ago and now we are generating dynamic HTML, we are pulling from the database, we have WordPress, there’s so much in there. Look at the leap. Look at the timeline leap and you take Google and how old Google is and you build that out 20 years, 30 years, 40 years. Yeah we are still at radio. It’s nowhere near where color TV would be.

Judging from that conversation with the Bing guy on that panel, I realized that Microsoft is just never going to win this search war and I really hope that somebody does come around where they are able to at least put an edge, you know, twist the arm of Google to make them even better than what they are today. To give them a little bit of a challenge. Of course you can always have the Microsoft issue, which is “Let’s not innovate. Let’s just buy up companies that are smarter than us.” And that’s, not going to help Google at all.

Okay, anyway, let’s go ahead and wrap this up. This was the first episode. I think that it will get smoother as we go along and I would really appreciate you helping me to build my audience and letting people know. I am sure that there will be a lot less ‘ums’ and ‘ands’ and I’m sure that my personality will come out a lot more in the next iteration of this. I know I told you a little bit about who I am but let me just tell you where I am going to be. I speak at a lot of conferences every year.

So first of all, I just recently wrote a book called The World of Internet Marketing, which is obviously what this podcast is focused on. You can find it on Amazon. And I am going to be speaking at SFIMA in Florida; Davey, Florida. The dates for that are May 14 in Nova Southeastern Campus in Davey, Florida.

I’ll be talking about schema so we are definitely going to talk about schema a little bit more on this podcast. I’m also going to be speaking at Affiliate Summit East which is taking place in Philadelphia and let’s see when is that happening. That is in August 18th – 20th at Pennsylvania Convention Center in Philadelphia, PA. It’s a three day conference that really focuses in on affiliate marketing. Which is really going to be interesting to me. I’m going to speak about schema and I am going to talk about the future of search but for me to kind of meet all these affiliate marketers and to think about all this and to get an idea of what they are really doing on a day to day basis is really going to be exciting.

Then I’m affiliated with the School of Internet Marketing. You can look that up online. I’m currently in the process of creating…it’s an online school and I’m doing the course on Google Analytics and then I’ll be doing the course on Google Adwords and I think Google Webmaster Tools. I think that’s the third one that I’m doing. So that’s it. I really appreciate you. If you made it through this podcast I really appreciate that. You can take a look at my company. It’s HalyardConsulting.com and feel free to tweet me at Halyard Consult or Facebook me at Facebook.com/Halyardconsulting. Thanks so much. This has been great and I’ll see you next week on Friday. We are going to try to do this every Friday. Okay, take care.

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