Will We Survive
When thinking about the performance marketing sector, it amazes us that we have only used Charles Dickens’ famous line “It was the best of times. It was the worst of times,” only once before in the past five years. For at no point in our past have companies made as much money as they do today, but similarly, at no point in our past have we stood so precariously at the precipice of success and the abyss of failure as we do today. As we have written countless times before, no one doubts the value proposition that cost per acquisition marketers bring. More and more, though, companies start to doubt the value that cost per acquisition marketers bring. And, at risk of sounding like a broken record, it isn’t because the per acquisition marketers act as aggregators, and it isn’t because many of the aggregators act as arbitragers. It is because of a handful of aggregators and arbitragers.
The credo of the performance marketing space should read something similar to, “Enabling businesses to connect with users more effectively than on their own.” They do so by focusing on quality users to advertisers at controlled, i.e. desired volumes, by offering transparency into the marketplace, and by taking risk on behalf of advertisers without necessarily increasing the risk that advertisers take. More often than not, especially recently, the risk that marketers take on comes with equal if not greater risk on behalf of the end advertiser for whom the marketer drives conversions. The reasons have nothing to do with taking risk but what the marketers no longer do. They no longer insure that users understand the offering, provide access to a wider array of options, and/or simplify complex markets. Instead their actions follow a completely different credo. They no longer act as enablers for others. Instead, they “Ask not what the user can do for you, but how much the user can make you.” Ironically, some of the most prominent marketers today are anything but prominent. Forget the FTC, the FBI would have a hard time tracking down some of the more successful marketers. It’s not that arbitrage is inherently bad; it’s how people perform arbitrage today that is bad.
Coming back to the question that started it all, “Will we survive,” we not surprisingly find ourselves of two minds. At one level we think of course we will. It’s like asking whether cockroaches will live longer than humans. Put just slightly more eloquently, a group of survival specialists will figure out how to survive regardless. But the real question then is whether this is any way to live? Taking risk on behalf of others isn’t bad, nor is being paid on a conversion basis. But, if we think about the activity that drives those dollars today, is this really any way to live? The performance marketers driving the vast majority of the conversions today for so many of the networks are like cockroaches. They might be creative and making money, but they don’t want to be known. They know that the more visible they are, the more likely they are to be shut down, and they scurry about trying to avoid detection. Again, it isn’t arbitrage itself but how different people handle being paid on a per-conversion basis that leads to behavior detrimental to the entire online customer acquisition industry. And, for those who have followed our writing to any degree, that is what matters to us.
We aren’t trying to denigrate anyone. We also know that our “cockroaches” currently provide for quite a number of companies and people. It’s an ecosystem that if eradicated tomorrow would have some large ripples, and we certainly aren’t looking for that. We just want to see the evolution of performance marketing on a different track. Why do we have to operate in a way that continually draws both negative attention and the ire of the major traffic owners? We’re like the farmers who burn down the Amazon in order to plant short-term crops. Yes, we need to eat, but at the expense of land that can never be replaced? Looking at the way some perceive us, it feels as though we are that backwards culture, still valuing things that don’t matter, the ones that cut elephant tusks and kill endangered animals because we care more about ourselves than anyone else. In other words, though, at what point do we stop adding value with our approaches and become a detriment to the whole.
Thinking about the farmers, everyone has a right to survive, and no one wants to see farming go away. But at some point, the food produced adds less value to those consuming it than the costs for making it. We love the relatively low barriers to entry and how entrepreneurial our world is, the vast opportunities it creates for just about anyone with an idea and the willingness to try. We don’t want to see our world turn into the energy sector where entry means working for another company because the capital costs are too extensive for a group to enter. At some point though, entering has to become more about solving a problem than solving only for one’s wallet. It’s not just a shallow existence, but it’s the type of purely selfish existence that has lead us from being seen as problem solvers and innovators to at best a necessary evil and at worst worth exterminating. If you’re happy with that, so be it. We’re not.
So, now that we’re done bitching. Does anyone know where we can get a teeth whitening offer at better than $36? We built a killer flog.
