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Are the big retailers using Search Marketing to squeeze out affiliates?

I’ve been holding Wayne Porter’s Revenews article for some time now, thinking about the same question he contemplates.

His article starts with a reference to Jeff Molander’s ThoughtShapers blog where Jeff cites data that shows the big retailers are spending less on affiliate marketing and directing the money toward search engine marketing.

This is what I would call disintermediation, or basically squeezing out the affiliates by going after customers directly via search engine marketing. Jeff puts it this way:

Retailers are pro-actively shrinking their affiliate marketing programs while concurrently ratcheting up search marketing spending.

As always, I apply my smell test rule to that statement. It seems intuitively possible, right? But the statements have apparently elicited some seriously negative comments toward Jeff Molander. So along comes one of the best internet researchers around, Anne Holland of MarketingSherpa, and here’s what she says:

”… folks that were super, super heavy search marketers… tended to be spending a lot less on affiliate marketing. In fact, they were spending about half what the average marketer was spending on affiliate marketing.

So it seemed like if you ratcheted up your search marketing it sort meant you were taking away affiliate marketing from the affiliates. You were in a way taking it in-house. So that has real implications for the future of affiliate marketing.”

That’s a serious statement. Stefan Tornquist of MarketingSherpa adds more:

That retail marketers, especially while the model of a few years a go might have been to use their affiliates essentially as an outsourced search provider because so many affiliates are quite advanced in using search marketing so retailers were willing to allow them to use trademarked and branded terms.

And really with the incredible growth in search and so much research coming out on the efficacy. I think a lot of marketers saw those sales as really being redundant.

What does this all mean?

Well, for large, multi-channel retailers (Wal*Mart, Sears, etc), affiliates are becoming less important. So what.

Wayne Porter:

However, smaller or mid-sized businesses, or businesses in a highly specialized niche or businesses with a new concept or service can certainly benefit from affiliate programs. I speak from experience here. Also businesses who sell commodity items like inkjets where there is no true “market leader” or powerful brand equity benefit as well.

There are some ideas in there for those of you looking for niches. Commodity items, or businesses with a new concept or service over the Wal*Marts of the world. Sounds like Capitalism to me.

Wayne also brings up the same thing that went through my mind as I was reading that Wal*Mart thinks they can do it without us. When I’m looking for a product, I never go right to Wal*Mart or Sears or anyone else — I go to a comparison shopping engine like shopping.com and see who has the best price. Most of you probably do as well.

Wayne thinks we search marketers created that behavior. That statement also seems intuitively correct.

Does it seem like the big guys are trying to squeeze us out so they can do their own search marketing and customer acquisition? The evidence is there. Do I think this effects the future of affiliate programs in general? Maybe — but we will always be able to do it better than the behemoths, so I’m not all that worried about it.

It’s interesting to think about, though.

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