Cult of Personality

If you were to read the "Tough Questions" article also published this week, you could get the distinct impression that the sky is falling on certain parts of performance-based advertising. It’s not quite that dire. Instead, we look at it more like we reap what we sow. After several years of unsustainable practices, we’ve exploited the naturally fertile ground, and it’s proving more difficult to yield the same output on the same land. Output, as you guessed, refers to revenue and the land being the race to the bottom, say and do anything for a conversion arbitrage. Up until now, we’ve had little incentive to change. ­­Nothing like no longer being able to make money as a means for a different business strategy. Not to overdue the farming analogies, but we are starting to see the seeds of change. The weird thing about this "new" area of exploration is that it’s absolutely not new.

Those who can – do. Those who can’t – teach. That’s what students like to say when disparaging teachers or just about anyone looking for a reason to discount education. I remember hearing it from someone trying to make it big in MLM, said as some secret about earning that they discovered while the rest of us suckers learned skills from a subpar instructor, implying that our skills would not suffice and put us at an immediate disadvantage. The broader reading suggests that education as a whole is overvalued, with the rare business geniuses like Gates and now Zuckerberg used as examples. It’s an interesting train of thought that would make for a great but highly impractical philosophical discussion. What some have known for a while is that there is money in education, not the classic teaching environment per se but in education products or more broadly digital products.

An odd thing happened not that long ago. When diet flogs got booted, banner watchers will have noticed something interesting. Ads started appearing with the tagline made famous by the floggers, lines like "One trick for a tiny belly" and "1 Tip for weight loss." Except, these ads didn’t go to flogs. They went to landing pages that looked similar, but there was just something different about them. We’re seeing more and more ads now, and more importantly, we are experiencing two interesting trends. First, we are seeing a migration towards the running of the products, and more telling, we are seeing some of the performance marketing leaders become not just affiliates but creators of these products.

A few reasons why we haven’t taken notice of the digital goods landscape.

• A different culture – The world of digital goods / infotainment products has existed for almost as long if not longer than our brand of performance marketing. Walk around an ad:tech and if you really know what to look for, you might see a handful of the gurus in attendance. You won’t see any with booths or throwing parties. Like the world of adult, it’s an incredibly insular culture that has its own events, and its leader aren’t the networks as is the case in the mass market performance marketing world but the personalities who play combination luminary and product creator.

• Low to zero product cost – If we thought the acai pills cost little to produce, digital products at scale have even more attractive economics. Just ask Microsoft or Symantec. Each bottle of acai, no matter how inexpensive still has a production costs associated with the next bottle. Not so with digital goods, where after the initial production cost, there is virtually no additional cost to "produce" the next unit.

• Different funnel – For lack of a better description, the majority of landing pages are cheesy, and if those from our performance marketing world took notice, they would have written the pages and products off as amateur. People say the same thing about QVC and home shopping. An individual product doesn’t reach the size of a Tier A offer, but given the different economics, namely the lower overhead, a successful product still yields its owner several million in profit. Even the cheesiest take more time to create than the flogs. In addition, the funnels are slower, the pages longer, and they focus heavily on sample content with lots of audio overlay slides and free video libraries. And, instead of just focusing on a sale, they try equally hard to add you to the mailing list, not so they can sell your names but so they can try to convert you later.

• Credit card products – Digital goods mean credit card transactions. Click to sale has never done well in the classic arbitrage landscape, hence the rise of the flogs and general lack of credit card offers on networks. Add to that the generally cheesy (no better word) products, the 1999 style sites, over the top language, and let’s face it – we’re still talking about an ebook. None of these offers on face value would attract the attention of those in our space. That’s why, to generate interest, it’s often a direct sell from offer owner to publisher.

• Publisher / advertiser blur – It’s part of the culture, and it takes a little bit of getting used to, especially if you are used to running offers through networks. The cult of personality that is the infotainment space is simply foreign. And, the whole industry to a new outsider feels almost MLM in its structure. It’s not quite a downline, but one person will promote the next who promotes the next and so on. You need the communities buy-in, as each has their own list which may or may not have purchased their product, and if they like you, they will promote yours. It’s not conceptually different from an email list owner that mails other offers on their list so that other lists will mail theirs. Here though, instead of some generic list generated as part of an offer and sold multiple times, it’s more like a large group of followers. The more senior you are, the larger your follower list and the more times your offer gets promoted.

Our two worlds are closer than they have ever been, and they are getting closer. But, it might take one of our networks buying the major player in the digital goods space before we see more collaboration than our taglines showing up on their banners.