Why AOL should beware of invading the affiliate’s objectivity

Perhaps the most interesting aspect of the TradeDoubler/AOL deal was that the initial $900m (£457m) bid was deemed to be undervalued – a reflection of the perceived strength of the company, the market and the concept. TradeDoubler is undoubtedly impressive – it started out with significant funding and the added benefits of remaining private while technology and management development issues were resolved “behind closed doors”. It was therefore able to come to market “fully formed”, enhancing its attractiveness.

This acquisition vindicates the power and strength of online. As with recent changes at Google, the development is indicative of a general migration towards the CPA (click-per-acquisition model) – a result of the growing interest in the affiliate sector as advertisers become aware of the low risk aspects of the pricing model. And while the notion of affiliate marketing may eventually be redefined to be more about “CPA”, which can be applied across different online channels, for the time being affiliate marketing retains and reinforces its distinct identity as a key online channel. AOL’s move recognises the importance of affiliate marketing as a crucial element of the online marketing mix, and in this sense the acquisition was essential in adding this component to AOL’s offering, enabling it to become a complete cross-channel provider.

But therein lies a possible conflict/ AOL, like Google, is a media owner. The role of an affiliate network has always been to sit between advertisers and media owner, objectively representing the interests of both. This deal means that TradeDoubler is aligning with the media owner. The conflict may be more perceived than real, as TradeDoubler will no doubt retain its own brand identity and positioning, even though some analysts say it is logical that, in due course, TradeDoubler will be merged with AOL’s Advertising.com.

There will always be a need for professional, independent, consultancy-based services for advertisers and clients. Those companies with a broad experience and expertise in delivering across many channels with varied remuneration models – those best placed to deliver a “channel-neutral consultancy” that is willing and competent enough to examine and offer diverse media options – will be best placed to take advantage of the changes being driven by the market and reflected in recent Google and AOL moves.

Christian Panayi is head of marketing at Fuel Group

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