Nearly six months ago, affiliate marketing specialist VigLink sought to redefine the way businesses pay publishers for in-content links by launching an exchange product to make link bidding — or “link optimization” — more competitive.
Unlike most general exchange operators, VigLink is squarely aligned with publishers. By opening an affiliate link to be bid upon by marketers, instead of a first-come, first-served basis, publishers stand to make more money than they otherwise would.
"When a person who mentions a product and inserts a link to that seller, they probably randomly choose one of the many potential merchants they might link out to," said VigLink CEO Oliver Roup. He called links an “illiquid commodity,” since there’s no real competition for in-content affiliate links.
After all, once a link is inserted into a piece of content, Roup said, “a publisher is not going to go back and edit the link to point to a different merchant, even if that merchant offers a little more money. That's the dynamic we're trying to change."
After beta testing the exchange with two otherwise unspecified "large ecommerce players," the company has been putting clicks up for bid on more than 10 million page views per day. Although those page views represent just a single-digit percentage of San Francisco-based VigLink's total inventory, these "exchanged-optimized" clicks are already selling for more than three times the price for the ones outside the bidding system.
Huddler, an operator of a community sites around subjects like audio equipment and golf, is one of the publishers in VigLink's network. "We're excited about their efforts to create an auction where merchants can bid to have their links shown in the right content and context," said Huddler CEO Dan Gill. "We think this is an important step in creating a symbiotic relationship between publishers and e-tailers where both sides are properly incentivized."
VigLink itself is particularly incentivized, as link bidding enhances the company's revenue-share business model.
"We take a revenue share from the publishers," Roup said. "Typically, in our convert product, we take 25% of the revenue we help generate, while we take more in our insert product. It aligns us with the publisher, because if they don't make money, we don't make money."
So what took the company so long to adopt the auction model for affiliate links?
"You need enough volume that will give you clear pricing information and that merchants care enough to participate," Roup said, adding that the company represents thousands of publishers, half of whom are outside the US. "You need data to be able to say to that one URL linking to merchant and another URL linking to another are selling the same product. If you change a link to point to a different product, people will get upset. It has to happen very quickly."
Ultimately, the opening of an exchange for affiliate links reflects the wider influence of RTB on all parts of the digital space. Roup compared what's happening in affiliate links to what happened in display.
"In the past, a publisher would state a price for their banner ads and that would be that," Roup said. "Our vision is to make every link as intelligent and valuable as possible and to recognize that as the platform where site-to-site clicks are priced, bought and sold. We've been selling clicks before, but there was no competition; the buyer decided what they were going to pay and that was that."