Affiliate Marketing Money Still There, but There Are Fewer Players

Stephen Yagielowicz

Lately I have been considering the current state of the adult affiliate market, which once presented a robust economic opportunity for participants of all levels of ability, commitment, and knowledge, with an extremely low barrier to entry, and the potential for nearly unlimited growth.

In 2015, however, this arena has become an extremely unlevel playing field, which due to a wide variety of factors, squelched a significant opportunity for all but the largest players, a few hardy survivors — and for those who have yet to let go.

The situation is not all doom and gloom, however, as recent high-profile affiliate program launches and revamps illustrate; while new opportunities exist for affiliates that are willing to master media buying — and for those who embrace ad networks as a channel for monetizing their free sites and other sources.

It is important at the outset to note that most of these following points concern old-school affiliates, many of whom were porn fans that turned to the easy-money affiliate space to profit from their passion, and who were then steamrollered out of business — echoing how local shops succumbed to Wal-Mart.

One example of this profound shift in affiliate’s success is seen at adult trade events, which a decade ago might have attracted thousands of active and wannabe porn promoters to Las Vegas’ sultry strip.

Those glory days have long since passed, with a seminal moment recently evidenced at XBIZ Miami 2015 — the industry’s top summer show, which offered free admission to adult affiliates in an effort to make this executive event (noted as the province of company owners and other decision makers) accessible to players at all levels.

During one of the educational sessions, “Cam Mania: Making Money Selling Live Entertainment,” which featured the top companies in the burgeoning live cam business, Chaturbate’s Shirley Lara asked the standing-room-only audience for a show of hands to indicate how many attendees were self-identified as traditional affiliates. Despite the room full of participants, only two or three hands rose in response.

It was not that these people were all in the wrong room; it was a matter of them representing the new breed of affiliate. Rather than lone wolf operators using traditional adult marketing techniques, such as blog and gallery posts, organic search engine marketing and other methods, these attendees identify as media buyers, cam studio operators and representatives of established adult companies interested in cross sales, traffic trades, joint ventures and other higher-level deals.

The opportunities for adult affiliates have not ended, but the market has transitioned away from the days of easy fortunes accumulated by dumb luck to an era of professionalism where few of yesteryear’s success stories can compete. Much of the money is still there, but it is now shared by far fewer people, and in different ways, than it once was.

The reasons why this happened are less important than understanding the reality of today’s situation, where paysite operators and affiliates alike have had to modify their business plans. For example, where some networks used to rely solely on affiliates for traffic acquisition, many have shifted their efforts in-house, or now offer invitation-only affiliate programs.

Some programs have flipped their strategies from an 80/20 reliance on affiliates vs. in-house efforts to a 20/80 approach, while other programs merely study the methods used by their top affiliates, then seek to do an end run around them, using marketing muscle to acquire and dominate their affiliate’s most productive traffic sources and promo methods.

Elevated X CEO AJ Hall touched on this in his “Paysite Power” column in the April 2015 issue of XBIZ World, where he questioned the viability of the affiliate model and advised paysite operators to target no more than 20 percent of their revenues from traditional affiliates.

“If you have affiliates earning heavily,” Hall offers, “evaluate the possibility of hiring them, acquiring them or partnering with them,” as an easy way to bring one of your most important resources in-house.

Even without the changes implemented by sponsors, affiliates face numerous challenges to their ability to direct traffic — with Google’s clampdown on duplicate content and thin content sites drying up many once-reliable traffic sources, and an increasing percentage of savvy surfers using ad-blocking software to provide a less cluttered Internet experience.

These factors will increase as Google continues to clean up the web and make it more mobile friendly — a transition that relatively few affiliates have embraced — while Apple, Firefox, Google, Microsoft, ISPs and others are increasingly integrating ad-blockers and ad restrictions into their products and services.

From a sponsor’s perspective, offloading affiliate management (and the need for affiliate managers) to an advertising network, which itself aggregates and cleanses the traffic of numerous smaller publishers, may provide a more predictable and profitable traffic flow.

Sponsors can then focus on optimizing their campaigns, creatives and offers, rather than expending precious resources handholding inexperienced or unproductive affiliates. Even when operating exclusively on a revenue-sharing basis, program owners may find it more lucrative to pay in-house staff members to perform many typical affiliate tasks, such as gallery and tube clip submissions. This is often more profitable than paying commissions of 50 percent or more to an affiliate — or having to pay high per-sale fees that may not be made up on the backend in today’s environment.

From an independent affiliate’s perspective, sponsor programs running on autopilot, including those that offer outdated promo tools (such as Flash banners) and stale creatives are a waste of time and a risk to promote. This is especially true when unexpected terms of service modifications (such as raising minimum payout levels to unrealistic amounts) or simply closing shop or terminating accounts without paying affiliates, makes this entire field of endeavor more of a hobby than a business. Indeed, few old-school adult affiliates can rely on their affiliate earnings as their sole source of income today.

The situation is not all doom and gloom, however, as recent high-profile affiliate program launches and revamps illustrate; while new opportunities exist for affiliates that are willing to master media buying — and for those who embrace ad networks as a channel for monetizing their free sites and other sources.

The adult affiliate game is far from over today, but it is a vastly different game than it started out as — with the riches going to those who were willing to evolve, rather than discount the call to “adapt or die.