Chris Kay and Blue Global Media DominateWritten by Pace Lattin
January 31, 2012 # 8:35 am # CEO Interviews, Specials # 5 Comments
The Payday Loan market has received a lot of negative press lately, with FTC lawsuits up the wazoo and articles written about all the scams out there. Despite this, there are a few companies out there making a killing in suprime and payday loans, and doing it right. Chris Kay saw an opportunity to enter the market, take it over and make a real name for himself with Blue Global Media. They become the dominate force in this area of the performance marketing industry and are moving forwarding with branching out. We had the opportunity to sit down with him, pose a few questions and learn what Blue Global Media is doing, what markets they are going to conquer and how he’s making millions in our industry.
In your opinion, where is the affiliate marketing industry headed?
I think it’s still headed for growth, between 20 to 40% a year. There is an endless supply of businesses that want to promote their products and services online, and an increase in attention given to traffic on the web as it drifts away from other media like TV and radio.
So affiliate marketing is probably headed in a nice upward direction for a long time. I see some consolidation in the industry. I think some of the fraud controls are going to get better and better and some of the bad actors in the industry will not be able to game the system as they used too. Affiliate marketing is here to stay.
As a network reaching out to other countries, what does this mean for your affiliates and advertisers?
I think for the English speaking countries like the UK, Australia and Canada, it means that our affiliates will have more markets to go after and build their business and expand their efforts. For advertisers, what it means is that they will be able to access new markets.
That’s very important because of course we all know that the growth in the world now is in the emerging markets, specifically in the countries like the BRICI countries – Brazil, Indonesia, Asian markets, Russia, Turkey and India. Since there is so much growth there and the internet penetration rate is currently so low, the amount of business that advertisers can build is pretty amazing.
As far as affiliates operating in those non-English speaking countries, I think they will have a harder time. They will have to reach out and make new partnerships with people that are on the ground internationally and that will allow them to expand their reach as well. I think that it’s something that advertisers will find more valuable in the long run.
How will Blue Global Media’s success impact how well you operate internationally?
We’ve been one of the fastest growing affiliate networks, we’ve been doing great, growing tremendously, and that’s provided us with the means to expand internationally, and it will impact how we operate in many ways.
When it comes to doing business in other countries, you’re talking about different cultures, legal rules, regulations and taxes. We’re just going to have to navigate through all of those and it will make us a little bit more innovative than we are currently. It won’t necessarily challenge our technology because a lot of the partnerships that we’re making in some of these countries, their technology is, quite frankly, a few years behind compared to what we’ve been doing.
Lead generation campaigns in a lot of these emerging markets are just simply a web form that emails to an office manager somewhere and they sort the leads in a call center. So operating on an international scale will help us have a more innovative operations department.
What are the benefits and the risks of extending affiliate marketing overseas? What are the privacy and tracking issues that we do not face in the US?
The benefits are obviously the new markets and helping other businesses abroad enjoy the amazing experience of performance marketing – it’s the most effective form of advertising anywhere. The risks are there’s a lot of fraud. There’s a lot of fraud in India, there’s a lot of fraud in China, and in Russia and in many other countries and you have to have that part together. You must understand the market, you have to work with trusted partners on both sides of the aisle, and make sure that those risks are taken care of.
There are also regulatory risks, especially in countries like China, a country in which we operate. You have to have a strong transparent connection with Beijing and with the government. Similarly, in the European Union, which is a huge $500 million consumer market also, those regulations that include things like Safe Harbor and so on are pretty tight, and it’s kind of tough to do internet business in the European Union right now. So, you’ve got to make sure you’re following the rules because the government agencies over there are certainly not shy about correcting you with any sort of non compliant behavior on the side of the advertiser or the affiliate.
As far as privacy and tracking issues, obviously the privacy rules and regulations in the European Union are much tighter than they are here in the US and it’s hard to navigate those issues. In Asia, in particularly China, it’s different as well, but in China of course you’re dealing with the great firewall and that sets up a whole new set of privacy challenges.
Affiliate marketing is more interactive than ever. How do you plan on engaging and relating to other countries in order to be successful in international affiliate marketing?
It depends on the culture. Take Brazil for example. Our research shows that Brazil is the number one country for social media. It might not surprise anyone because Brazilians are very social and festive. So in Brazil you’ve got to engage with consumers on a personal level and you have to be very active in social media and you have to create a relationship between the brand and the consumer a little more than you probably have to do in the United States or some other countries.
There needs to be an emotional connection, and that sort of interactive feedback, or interactive exchange is very important. Of course, all countries are different, so I think you have to take it on a culture-by-culture basis.
How could other countries change the U.S. affiliate marketing industry?
The first thing that could happen is that the affiliate margins could be squeezed by international competition. You have these people who don’t have the same cost of living in Hyderabad, India than they do in Manhattan so they are willing to entertain a much smaller margin if they’re an affiliate. Maybe they’re willing to make just a couple cents a click if they’re a PPC affiliate whereas affiliates in the US have more of a need for a higher payout.
The other thing that could happen is new advertisers could jump into the fold to produce new products – foreign advertisers in the United States. Anyone who’s traveled abroad has probably noticed that there are all kinds of different products that are interesting and you always wonder why aren’t those products available in the US? With the global marketplace, this will allow leveraging affiliate marketing to bring all those products within reach. It’s going to open up new markets for all of the new advertisers out there.
I think another way it’s going to change US affiliate marketing is that the US is going to remain the innovator in this space. Everyone’s going to look to the US companies to have the technology and the processing and the service models down, and I’m excited about that because we can become a leader in this industry and continue to build it out.
Where do you think the most lucrative international opportunities exist?
I would say the BRICI countries are the long term international opportunities that are going to prosper very well. Blue Global Media operates in Asia, we have been testing in Latin America for years and we obviously feel that those are the two areas we should focus on. I think as far as an emerging market, there’s probably none better than Brazil at this particular time in the affiliate marketing industry.
Why consider the international affiliate marketing industry when Internet use in foreign countries is significantly less than in the U.S.?
The reason is that the internet penetration growth in the emerging markets is absolutely staggering. In China there’s 80 million people every year that become newly engaged internet users. In Brazil, around 24 to 25 million people come online for the first time. The percentage of people that use the internet in China is in the twentieth percentile right now, imagine when it gets into the eighties as it is in the United States. Similarly, in Brazil, it’s in the thirties; imagine when that’s at 80%.
Growth will occur because the opportunities to expand internationally, with the right platform, and the right talent of people on the ground are pretty good right now. It’s a little early to go into any of these markets right now, but if you’re there you can be testing and playing around and in 2014 when you’ve got another billion people online across the word, you’ll be able to start making some major play.
What advice do you have for affiliates just getting started in the industry?
Make sure that you understand basic marketing fundamentals, read as much as you can, and make sure that you understand the basic technology fundamentals that run the industry. There’s lots of good blogs and resources that you can turn to, but I would just do what I did when I started and basically read every possible book you can, go to every conference you can, listen to every person that you can, and ask as many questions as you can. Understanding the basic marketing fundamentals is very important. This business is not run on technology alone. People have to understand why an offer works, why an affiliate program works, and how it works marketing wise before they can be successful in this industry.
How do you think the changing financial service laws and regulations in the United States could help or hinder your chance at building that vertical out internationally?
Financial service laws are going to come and they’re always going to be there. This space is still in its infancy, we’re trying to normalize what the best practices are going to be, and the government’s trying to come in and decide what should happen. I think the regulations in the long term are going to be good. There will be some short term disruptions, but I think in the long run everything will settle down and work out fine.
I think the only bad thing about it is we’ll raise the bar and the barrier of entry a little bit high for some new affiliates that are starting out. They’re really going to have to understand the legal and compliance implications, which we’ll be taking care of later on, but I don’t find that to be a good thing. All big affiliates started out tiny at one point and most of them started out as a single person, just like me – singing up as an affiliate running traffic.
That’s my only fear. Don’t crush the little guy who’s just starting out because a lot of those little guys become medium sized guys, and then big guys. We have to be very careful that we don’t crush the entrepreneurial spirit of this industry by over regulating what’s going on. I think in general, regulations will be good domestically. Internationally, there are regulations too, but the emerging markets aren’t as mature and a lot of them don’t have formal regulations yet, which is always a challenge.
I think that there may be some companies that when these sweeping regulations come in will focus on these other markets that are heating up. They might just go ahead and work solely on the overseas markets. We’ve actually seen a couple of networks do this now, I know some networks personally that are only focused on international stuff because of the laws and regulations, affiliate taxes and other financial regulations.
If you could pitch Virgin Atlantic with a performance marketing campaign, how would you do that?
Well first of all, you’d have to get in and try to talk to Richard Branson, and he lives in the Caribbean, and he’s an aviation enthusiast. So, I would invite Mr. Branson on some sort of aviation excursion. Maybe we’d fly up to the edge of space or parachute out of a plane or something like that. Virgin Atlantic is a unique brand. It’s a great brand. So their performance marketing campaign would have to be fun and sexy, and cutting edge.
I think that what you would do is some sort of young, cool, incentivized campaign with a famous recording artist with a branded type of campaign that you could run off an affiliate network. But, because of the brand, you would be able to do a nice full scale service campaign with Virgin, possibly a membership type deal because some of these travel offers kind of get squeezed with the margins, especially the affiliates.
I would do some kind of program where you have your famous artist. People could win a chance to be on a party plane, flying from west coast to east coast with Nelly or whatever the hell’s going on, and some sort of package where there’s a membership charged every week with the option to buy tickets in a Groupon-like fashion. This would help Virgin fill up any extra seats that they would need to and create lots of viral buzz. You could also do a name your price seating model in conjunction with a Groupon-like promotion.
What is your dream car?
I am one of the fortunate individuals to own my dream car. My dream car is a Tesla Roadster. It’s a 100% electric car, and that’s the car I usually drive to work every morning. I never have to put gas in it, and it’s fast ladies and gentlemen! It’s nice to have an electric solar powered vehicle here in Arizona, it makes a lot of sense and I pay about $17 a month to charge the vehicle.