ValueClick, DoubleClick, Linkshare: Growing CPA Affiliate Marketing by Force

ValueClick’s (VCLK) Commission Junction is finally firing back at rivals PerformicsDoubleClick (soon to be acquired by Google (GOOG)) and Rakuten’s Linkshare Corporation.

Firing back? That’s right, firing back in a war that has gone largely un-noticed but is quite serious considering it’s a battle for industry dominance in a market segment (cost-per-acquisition affiliate marketing) that is too small to house 3 big players, let alone a company like ThinkPartnership (THK). This segment of online advertising, unlike search, has been stagnant for years now with many advertisers taking a “what have you done for us lately?” attitude toward networks like CJ. How to grow it?

BUY the competition’s distribution and simultaneously suggest that “The Grass Really IS Greener” inside your publisher network—one that is known to be highly duplicative in terms of distribution available to advertisers.

CJ is firing back with… well, with its standard sales pitch. Zzzzz. BUT bet on the company touting its new acquisition (MeziMedia) AND using it as a billy club against rivals PerformicsDoubleClick (busy using technology as a billy club against CJ for months now) and Linkshare (busy buying distribution as well).

Meanwhile, back on the Google farm, the industry’s biggest player is actively moving to bring its advertisers toward a solution—one that Linkshare, CJ and PerformicsDoubleClick have failed to provide after many years of trying. Easily accessible, widely distributed, “risk free” advertising on a “cost-per” (Pay-Per-Action) basis.

So who wins? Commission Junction/Valueclick through brute force (telling the market “it’s nicer over here, and oh bye the way we own a big piece of the distribution you now have via our competitors") or PerformicsDoubleClick (telling the market “we pretty much have that entire search thing licked, being Google and all, and can offer you a better overall search strategy via CPA affiliate links that search engines index / ‘score’ as your own")? What about Linkshare who has, we can only assume, some kind of mobile CPA affiliate play in mind?

Cost-per-acquisition [CPA] affiliate marketing is not only ”not sexy“ but boring in terms of revenue growth curves as well. Sure, you can mask actual growth for a while through running search arbitrage for advertisers, buying opaque networks of CPA-based ‘search-spammy’ sites or buying inkjet companies but in the end what’s a company like ValueClick’s Commission Junction, Rakuten’s Linkshare Corp. or DoubleClickPerformics to do? Simple: Buy the distribution and force competitors out. That’s exactly what we’re seeing behind the scenes.

CPA affiliate marketing’s biggest conundrum is scale. Relationship-based marketing just doesn’t scale easily. While I haven’t gone as far as calling affiliate publishers lazy pigs when it comes to trying to leverage social media and such, I have pointed out how and why scale is such a serious problem for the likes of Google’s PerformicsDoubleClick division and ValueClick’s Commission Junction. Yet suddenly we’re moving beyond fighting over scale (a battle lost by ValueClick) and fighting for the market itself—advertisers.