For as long as I remember the affiliate and performance marketing industry has been attempting to create a trade organization to represent the industry. Every time they tried, it failed miserably without exception — until the Performance Marketing Association came along. At first most of the industry universally panned the idea of another organization, thinking it would be no more than a loose fraternity that allowed a few CPA network owners to drink scotch together once a year. However, with the leadership of Rebecca Madigan, the Executive Director of the PMA, the organization has become a force in the industry, fighting for the industry as a whole and providing much needed leadership. If you ask anyone who is involved with the PMA, they will tell you that one of the main reasons for its success is Rebecca and without her the industry might already just be a footnote. I sat down with her this week and asked her some difficult questions about the PMA, industry as a whole and learned that she dreams of jet planes.
How did you get involved with this industry initially? I joined CJ in early 2005 in product management. I have extensive background in product management for technology products, including broadband, telecom and wireless/mobile. I was the product manager for the first ‘voip’ product called Web Talk, a browser based Internet phone (back in 1994). When I was in wireless and mobile, I was really involved in industry and standards organizations (founding member of the Bluetooth SIG, for example), and saw first hand the benefits of a unified voice dealing with public policy (buying of spectrum) and standards (wireless LAN, GSM, CDMA, etc). It struck me as odd and limiting, along with many people, that the affiliate space didn’t have any industry organization.
Why do you think the industry needs a separate organization for “Performance Marketing?” The industry needs AN organization for performance marketing, there is no other organization serving this business model. We tried to get others like the IAB, ERA and DMA to pay more attention to performance marketing, but those groups aren’t chartered to do so, and haven’t had an interest.
What would you say to those who argue that separating ourselves from the IAB just hurts us? Why not join the IAB? The IAB has been disinterested in performance marketing, in the US anyway. In the UK they do have an affiliate group, but nowhere else. And the IAB is structured for very large companies, or that was the case when the PMA formed. There wasn’t a long tail membership until recently. But most importantly, they aren’t chartered around the performance business model, nor do they even embrace affiliate marketing. We’re still the ‘red headed stepchild’ to them.
As we’ve talked before, the PMA represents both networks and merchants. Isn’t this combining two different groups with different goals? How can they really work together? Actually, the PMA represents the entire ecosystem of performance marketing. We have more affiliates as members than any other segment (>25%), and advertisers are represented the least (14%). We also represent networks, solution providers, agencies, and investors. The way for this industry to mature is for us ALL to work together to drive growth, change, innovation, and trust. I would argue the thing that has held this industry back is the fragmented nature, business segments unable or uninterested in sitting down together to solve problems.
Isn’t having Dell, Amazon, Google and other major players dilutes the influence and ability of smaller players and networks to make changes? As I mentioned, we have more affiliates as members than any other segment, including our top level, platinum. Publishers like FatWallet, Offers.com, RetailMeNot, and Fabulous Savings, are platinum members.
Additionally, the way we’re structured is to allow for smaller companies, specifically affiliates, to be involved, participate in working groups, take leadership roles, vote on initiatives, etc. We all feel very strongly that this industry is only as strong as the entire ecosystem, and in particular, we all need affiliates to thrive for everyone else to thrive.
Lastly, though, I’ll add that we’re an organization that is chartered with doing a lot of things. Our biggest activity to date has been fighting the affiliate nexus legislation, which directly targets affiliates. We’re also developing standards and best practices to improve quality and effectiveness, and stimulate growth (let’s make it easier where we can so companies can spend more time on the important things). All these things take enormous time, resources and money. Where does that money come from to fund these initiatives? Membership dues. The PMA is non-profit and we’re only as strong as our members and our ability to raise money.
What do you think about the growing trend of “gurus” in the industry? My main concern is that they perpetuate the concept of ‘get rich quick’, which doesn’t help our industry. Being successful takes a lot of time, patience, perseverance, talent and a little luck. We believe the way to grow this industry is to focus on long-term growth, not the quick buck.
Affiliate Summit was highly attended but there was almost no mainstream media coverage for some reason. What are we doing wrong in getting that coverage? Good question. It’s an event for industry insiders, the topics of discussion assume a certain level of knowledge (you won’t learn about what performance marketing is at the show). You might ask Missy and Shawn about that, did they invite the press?
Are we the affiliate marketing industry, or the performance marketing industry? Is there a difference? We opted to use the broader term ‘performance marketing’ for a couple of reasons. First of all, the performance model (ads being paid based on results) is bigger than just online. It has been around on television and radio for a long time. We see tremendous growth and opportunity in looking at where experts in the performance model can take it into new channels, like mobile for example. And ‘affiliate’ means something different in those channels, like a TV station or wireless carrier partner.
Secondly, for right or wrong, ‘affiliate marketing’ has a reputation burdened with lack of trust, the ‘wild west’, if you will. We’re an industry maturing into one with very professional companies, and we don’t’ want to be held back by an old reputation.
Thirdly, on the legislative front, the term ‘affiliate’ has come to mean agent or distributor or subsidiary, causing laws to be created that damage our industry. Our ‘affiliates’ are simply websites that earn revenue from advertising, they have no other relationship or level of ownership by merchants.
What is happening on the Affiliate Tax Front? Does this really affect the “average” affiliate or just the large companies like Amazon? The unfortunate thing about this legislation is that it’s been called the Amazon tax and people think it impacts only them. The affiliates, large or small, are the unintended victims in this. The law basically says that if an out-of-state merchant has an affiliate in the state, the out-of-state merchant must then collect sales tax. So merchants simply terminate their affiliates to avoid collecting sales tax. Not only have Amazon and Overstock terminated, but hundreds of other merchants. It’s passed in NY, NC and RI, but we’ve prevented it from being passed in 15 other states. The way we’ve stopped it is through affiliate involvement – putting faces and success stories behind the name.
This is going to be a bad year, it’s already shown up in more states than this time last year (IL, SC, MS, CT, CA). States are still desperate for budget dollars and they think this is a quick fix. So we go to every state, recruit affiliates to help, and we slowly but surely convince legislators it’s a bad idea.
Aren’t you just pissing off the people in power by filling suits against the state and making the performance marketing industry look greedy? We haven’t filed a single suite against any state. What are you talking about? (BTW, we’re way too small of an association to file a suit of any kind, even if a reason arose – which it hasn’t).
What can we do as individuals to stop this trend of states taxing affiliate sales? Get involved when it hits your state. We have up-to-date information on our website.
Get to know your personal legislators. They’re very approachable and really want to learn about their constituents. If they learn about you now, and understand what you do and how this will impact you, you can build support to block progress. We’ve had this happen with affiliates in VA, IL, CA, CT, GA, TX and PA just this year. These affiliates are learning more than the lobbyists!
What is the PMA’s position on the FTC as a whole? Do you think the FTC recognizes that unique status of affiliate marketers as being different from $100M companies? What do you think the FTC will do in 2011 that might affect our industry negatively or positively? The FTC has a charter of protecting consumers from false or misleading advertising – and we support that charter completely. It’s a tricky balance between having an effective government-run regulatory agency and letting an industry self-regulate. This industry has done an awful job self-regulating, and it’s no suprise the FTC is stepping up its scope and authority.
The FTC recently published a proposal nicknamed the “Do Not Track” proposal, essentially suggesting consumers should have more say and control over how their Internet activity is tracked, and how and where personally identifiable information is used. In theory that seems fine but as we know in our industry, tracking of a user is extremely complex but also delivers the great targeted online experiences consumers come to expect.
There’s been some speculation as to why the FTC put out this proposal. My belief, and I’m not alone, is that it is a challenge to all advertising industries to step up the game in self-regulation. And we completely support that goal.
The PMA is preparing our own response to the FTC, so that we’re sure the unique perspectives of our industry are heard. The submission deadline is February 18th, and we have a volunteer member group crafting the response.
What is your dream car? I work at home and travel a lot. I no longer dream of cars but I could really use a private jet, like a G4.
Read Another Great Interview Mike Krongel of COPEAC