CPA Millionaire Part III: Future of the CPA Industry...my opinions
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If you haven’t read Part II, you can visit it by Clicking Here
I get a lot of private messages asking about CPA Marketing from a macro and long-term perspective, so I figured I would write a quick synopsis of my view on where the CPA industry is headed and the fate of different aspects within the CPA space.
Keep in mind that these are purely my opinions and are based on what I have seen, witnessed, heard, and of course, pure speculation. I am just a chump that works hard and does pretty well with CPA, but I am by no means an expert and there are much smarter people than I who have very different views. But for what it’s worth, from my experience this is how I feel the industry is shaping up…
First, it’s important to realize that CPA as an industry isn’t going anywhere. The essence of CPA is lead generation, which is the heart of most marketing campaigns for nearly every business on this planet. Lead generation has been around since the beginning of business and will continue to be around far into the future, perhaps forever!
As the Internet proliferated, businesses began looking to generate leads using the Internet instead of the traditional offline marketing vehicles that have been around forever. So, CPA isn’t something new, the only reason it took off and grew was because so did the Internet. It only makes sense for businesses and corporations to leverage the scale and scope of the Internet with their lead generation campaigns, and thus CPA took off.
So, CPA and lead generation is not going anywhere.
Some people argue that with software and as companies realize the potential of the Internet they will do all the lead generation on their own and therefore, although lead generation will still be around online, there won’t be a need for affiliates. Personally, I think this argument is hogwash. The Internet is so massive and so abundant that it’s virtually impossible for any company to penetrate even a fraction of it without the help of an army of affiliates. Even with an army, they still won’t even come close to penetrating the whole market. So, affiliate marketing isn’t going anywhere as well…there are way too many channels, to many outlets, to many traffic sources, and to many new mechanisms to get traffic that come out on a DAILY basis that it’s impossible to do this exclusively in-house.
Think about this. There is a massive amount of opportunity right now in the industry, and the Internet is still proliferating at a remarkable pace. We have still only penetrated just over a quarter of the world population. So, the good news is that CPA marketing will be prevalent and lucrative for the rest of our lifetimes. – if you know how to do it of course!
Now, everything isn’t all rainbows and sunshine. The industry has gone through some substantial changes recently and will undoubtedly get shaken up periodically into the future, but normally a good shakeup not only creates opportunity, but helps weed and prune out the nonsense in the industry to enable the industry as a whole to sustain and thrive for those marketers doing things the right way.
So, let me touch on a few different aspects of the industry that I think will change and I will give my personal opinions on what the change will likely involve.
Blue-Fart Will Become Tougher
At the end of the day, like any industry where you can make money (and a lot of money) online, there will always be players not following the rules, cheating, scamming, deceiving, and just plain farting around. Welcome to business and this will never entirely go away. There will always be people making a killing with fart methods and of course people who just fart around and still don’t make a lot.
But, it’s my personal opinion that scamming, fraud, and blue-fart activity within our industry will only decrease and I think it will be a moderate decrease. There are a few reasons for this. First, we will talk about the centralization of regulatory oversight of the Internet in a bit, but essentially as regulatory bodies become less fragmented and more powerful, there will be more liability on the affiliates end, which will be a dis-incentive for many people to go the deception or blue-fart route.
Right now, it’s still very much the Wild West out there on the Internet. People are setting up companies in one third world country with an offshore bank account in another, while physically working from a third country. From a regulatory and enforcement perspective, it’s way to hard, complicated, and costly to pursue theses marketers, but as things centralize more, more scammers will be caught with more severe legal action pursued against them. Think about the whole Nigerian scam nonsense. Authorities know that it happens and in many cases know and have set up stings to actually meet the people ring leading these scams, but they are still not able to enforce action against them. It’s sort of like maritime law in that it involves so many local, national, and global forces and jurisdictions that it’s hard to actually enforce anything at all.
But that’s a whole different discussion…
But things are changing slowly so that liability is being shifter to all layers of the supply chain, including affiliates, CPA networks, and merchants.
One of the most noticeable examples of this is with trial offers. Many of the trial offers that made a lot of people very rich were pure scams. But, as the threat of legal action and liability fell more and more on the CPA networks shoulders, they had to drop these offers to protect themselves from the liability consequences. This made access to these types of offers more difficult and therefore less people promoted them. Also, Google and many of the larger traffic sources are more aware of CPA, lead generation, affiliate marketing, and aware of the nonsense that goes on, so they are tightening the grips on promotion of these types of offers as well.
So, as traffic sources make it more difficult to promote ‘scammy’ and blue-fart offers and as liability increases on the affiliate end, there is a slight squeeze on blue fart tactics and offers. This is a good thing, as the industry has gotten a pretty bad reputation in recent history. Again, blue fart won’t go away, but I feel it will only get better, not worse.
Fate of PPC
As I briefly mentioned, the relationship between PPC and CPA has been undergoing some changes making it harder and harder to use this traffic channel to promote CPA offers…and many affiliate marketing campaigns for that matter. Sure, today PPC is still very lucrative and lots of people are still making money (including myself) but the big campaigns are getting more and more squeezed and I can see this continuing to squeeze over the next few years…at least for the large search engines.
Affiliate marketers always say “but Google makes so much money from us, why are they squeezing us out” The thing that some people don’t take into consideration is that the industry has changed substantially in the last 5-10 years.
5 and 10 years ago, a majority of the people who were promoting online were online marketers and affiliate marketers (and a few very large companies). I don’t know the exact numbers, but a good percentage of Google’s ad revenue came from PPC marketers and Affiliate marketers.
The guys at Google were smart. They knew they needed the money (and we collectively were giving them a lot) but they also knew the number one priority to grow the search engine would have to be maintaining a good user experience. When users went online for information and were bombarded with affiliates who were trying to squeeze their email to send them a gazillion spam emails or trying to promote offers that weren’t even relevant to what they were looking for, they were clearly unhappy. This isn’t a good search environment, so Google walked the balance of accepting affiliate marketers to earn income but trying to limit the negative user experience that came with it.
But the industry started to change…
PPC became more mainstream, there became more companies that promoted online, and now the main source of ad revenue didn’t need to be affiliate marketers from Google’s perspective. There were and still are plenty of huge corporations and small businesses that are aware of PPC and willing to provide Google with plenty of ad revenue.
So now Google can still get lots of revenue from PPC without relying on affiliate marketers. Of course as more companies go online, the ad revenue for particular keywords will plateau, so Google’s focus will therefore turn to creating the best user search experience possible without having to compromise to earn the ad revenue.
And we are starting to see that.
It’s important to realize that not all affiliate offers and campaigns are bad and not valuable. But many are and from a company like Google or any large corporation’s perspective, it’s hard to pick and choose what is good for users and what is bad, so they begin making blanket policies like “no squeeze pages”, “no splash pages” and no obvious affiliate promotions through reviews sites etc.
So what does this mean for us? Well, frankly, I think PPC on the major PPC search platforms will only get more difficult and less lucrative. More direct advertisers driving up click costs combined with a crackdown on affiliate landing pages will only squeeze us.
But not all is lost. I think, as the Internet gets larger, there will be plenty of other smaller PPC platforms that will emerge because it is lucrative from the platform’s perspective, and I think that will bring a ton of opportunity for us. I think larger sites will start adopting PPC platforms to take advantage of their massive traffic and I believe many niche sites will develop PPC platforms affiliate marketers can advertise on and do quite well. For example, dating sites are a great example of a niche specific PPC platform.
So PPC will change but I personally think there will be JUST AS MUCH OPPORTUNITY into the future, it will just be at smaller fragmented platforms!
The CPA Network
I have never owned nor do I wish to own a CPA network, so this is just speculation, but I think the CPA business from the network’s perspective will be tougher and tougher, but form the publisher’s perspective will be better and better. Here is why:
With the advent of software and commercial tracking platforms, starting a CPA network is easier now than ever before. It’s actually quite scary how easy it is. The barriers to entry have dissolved compared to years ago where the custom software and infrastructure provided a huge barrier to entry. So what does that mean? It means there are more entrants and this is quite apparent by the networks that pop up seemingly on a daily basis.
There are only so many offers out there and many of these new networks get offers that are brokered more than once, thereby diluting the payout a bit, but they also have less overhead so can work on a slightly slimmer margin. But the real issue is that with more and more networks, they need to differentiate themselves and provide more and more value to attract affiliates, like you would see in any industry where there is more and more competition. Networks can stand out by offering higher payouts or by offering other value additions like increased support and training centers. You see both happening now in the industry. More and more networks are offering support for affiliates. Coop’s Wolf Storm Media is a great example of how a network has to differentiate themselves from the crowd. Wolf has all kind of free training for their affiliates. Copeac started Copeac University recently as well. I haven’t had the chance to check out either training programs, but I’m sure they are both incredibly valuable.
So this is awesome news on the affiliate end. Free training, better support, and better payouts will be more prevalent into the future!
I also don’t think networks are going away any time soon. They may get squeezed but there is a need for them and they do play an important role in the supply chain.
There Will Always Be Opportunity
As a side note, I just wrote about this somewhere else, but people always ask me whether there will always be opportunity to make money with CPA. They think super affiliates and programmers can create software to dominate the industry. There is some validity to that, but in my opinion, software can only reach so far. And due to basic economics, there will always be opportunity.
I used this example to illustrate the point…
Let’s look at the Gold industry. There are huge gold mining and resource companies all over the US, Canada and the world. They have a crazy amount of resources and can dig pretty much anywhere they want. So many people may think there isn’t any opportunity to dig for gold themselves because the larger companies have way more resources at their disposal. But there are countless people who prospect gold every day in the mountains of California, including one of my good friends. Every weekend he prospects and he always comes home with gold.
The reason there is still plenty of opportunity for the small and medium gold prospectors and diggers is twofold:
1. There are gold deposits all over the place. It would be virtually impossible for any company no matter how large or how much money they had to dig everywhere.
2. It doesn’t make economic sense for the large gold company to mine the streams in the California mountains because there isn’t enough gold to be had to make it economically viable and worthwhile. Remember economic utility from economics 101!
Well, the same philosophy is true online. There are plenty of big marketers out there that are killing it and have software and plenty of money to do whatever they want, but like gold, there will always be small pockets of opportunity all over the place. There will always be countless opportunities that don’t make sense for these large marketers to pursue but do make sense for the smaller marketers. Let’s look at the two points again
1. There are a million different ways to market online. There are countless different traffic sources, web sites, media buy opportunities, software, traffic and social media platforms, it’s endless. Just like the gold company can’t mine everywhere, so to can’t the big Internet marketers penetrate everywhere….or even close to everywhere.
2. It doesn’t make economic sense. Let me give you an example . I used to do flyer marketing all the time. Sure, you can make a grand in a weekend if you work hard. For some people, like me a few years ago, it was worth the sweat, toil, time, and effort to put up a gazillion flyers for a grand. But today, due to economic utility it doesn’t make sense for me to pursue flyer marketing. So, big marketers will continue to move up into more competitive spaces, meaning there will always be the low hanging fruit available for everybody else. The person who makes $10,000 a day won’t even bother doing something that takes just as much time but makes them $500/day. But, there will always be other marketers who would love to earn $500/day for that amount of work.
So a bit of a tangent there, but hopefully it illustrated that there will ALWAYS be opportunity in the CPA space!
Small Media Buys
I will keep this section short…I’m working on 3.5 hours of sleep here and my eyes hurt!!! I think there is and will continue to be great opportunity in the small media buy space. Smaller web sites and portals without formulated monetization plans are all over the place and there is incredible potential here.
I have stumbled upon blogs and sites that get a boatload of traffic and the web site owner has no idea they can be monetizing at all, so you can literally offer them a peanut for a gold nugget worth of traffic! Of course these are the gems or pearls in the rough, but there is a whole middle market of sites that are excellent buy opportunities for CPA offers.
And the great thing about these sites is that many of them don’t give a rats tail how you market. Send visitors to a squeeze or splash page or a hard sell lander, so long as they are getting paid, they don’t care what sort of sales funnel you have. This is quite refreshing after trying to satisfy Google’s PPC policies!
Branding – Cross Platform Marketing
This is a little out of the scope of CPA per say, but I think it’s a trend that is very powerful for Internet Marketers, so I figured I would say a few words. Internet users are more experienced and more knowledgeable about the Internet than ever before.
For this reason, no matter what type of marketing you are doing, you should always be looking to brand your self, your site, product, or whatever. Branding is a different beast than regular marketing and I encourage everybody to do some research on branding because it’s very powerful
…and can be a great exit strategy, which most ventures should have in mind
One way to do this is to reach your customers across multiple mediums. For one, it’s a great way to get more traffic, but by doing so, you look more legitimate, credible, and therefore you are creating a stronger brand presence. This means penetrating multiple social media platforms, delivering content across multiple media forms, and so on.
Again, this isn’t applicable to everything, but if there is a way to turn whatever you are doing into a brand…it should definitely be considered.
I think going into the future, consumers are more aware of marketing online and will look for credibility and a branded product or service more than ever before.
This is gigantic opportunity going into the future. For CPA and beyond CPA, the international space is a huge goldmine. Remember when I said that the Internet is proliferating fast and still has only reached just over a quarter of the world, well in many countries, particularly the developing countries, the penetration is minimal and the growth is outstanding.
As for the CPA industry, because lead generation is fundamental to all business, my guess is that over the coming 3-5 years there will be a surge in CPA and online lead gen from international companies and non-English companies, services, and brands.
If this is the case, as pat of your business strategy, you should be asking yourself how you can take advantage of this when it does happen. Start testing now. If you know other languages, start building your empire now…the traffic will come, the offers will come, be prepared. If you don’t know another language, perhaps there is another way you can make money from the trend.
Going back to gold, who made the most money in the Gold Rush?? Levi Strauss did by selling jeans to the gold prospectors. Maybe there is a way to support the trend instead of participating in it…like Levi did!
A Cleaner Industry
Overall, the FTC and other bodies will become more centralized and organized in dealing with online garbage and I think this is only going to help our industry. Sure it puts more liability on us as marketers, but as long as we are playing between the posts and adding value in everything we do, we should walk away not only unscathed, but more successful and prosperous.
CPA will clean up over time. It won’t happen immediately and won’t even be fast, but it will happen.
Two More General Ideas To Consider as You Move Your Business Into The Future”
Use Software! If you haven’t read part two of this series about the Power of Numbers, just know that there is a LOT of money in replicating and duplicating. Software is cheaper to buy and develop than ever before, so find ways to use software and automation to fast track your business. Duplication and replication may not be sexy, but I would rather make lots of money than be super sexy.
Don’t Re-Invent the Wheel: You can literally piggyback off everybody else’s CPA campaigns and save a lot of money and time in testing. Copy-cat what others are doing. If others have a particular sales funnel that seems to be killing it, do it yourself. You don’t need to be different in everything you do. I know many CPA marketers that don’t do any of their own market research or testing beyond watching what the big boys are doing. The big boys are spending lots of money in their testing, so piggyback off that. By the way, piggybacking doesn’t mean breaking IP and copyright rules. It means getting ideas from other’s work, not stealing it!
Also, be sure to stick to the basics. Direct marketing hasn’t changed much in the last decades. Copywriting, split testing, tracking, all the philosophies are pretty much the same. Sure, things evolve, but the point is that it’s sometimes much better to follow the crowd “conceptually” than to re-invent the wheel. Sure, you will need to add a slight creative twist or work a bit harder than the other lemmings, but you don’t need to be doing the opposite of what the big marketers are doing.
Anyhow, those are just a few of the thoughts I have about the near future state of our industry. I am quite excited about it. I know things change fast online and it’s sometimes hard to prepare your online business beyond a year or two out because of the dynamic nature of online business, but you can still come up with a long-term plan that is resilient!
Hope you enjoyed my thoughts and remember, these are all my opinions. I’m just a twenty-something year old chump from Jersey…what do I know!!!