Google Referrals 2.0: You Can’t Do Business the Way Business is Not Done

The sign says turn around

Let me tell a story on a related theme first …

Listening to one entrepreneur’s business plan as an advisor a couple years ago, I really liked what I was hearing. He was a great pitchman and he had a solid skillset for developing corporate identities; websites, business cards, advertising, etc.

And then he said something that blew it all out of the water. He’d been burned a couple times and had his design work ripped off by customers without being paid. His solution was to collect a fee from potential customers … before he showed them anything.

This is not how business is done. At least, not in advertising. In advertising, you have to make a presentation first. There are other ways to protect yourself, but trying to collect a fee before a company can see if you even understand who they are or what their brand means is a tough sell for a small and new company.

Luckily, he understood what we were saying and we helped him structure a better solution.

Google Referrals 2.0 is Crashing Hard

Google has opened up an interesting door with their referrals 2.0 program. The possibilities for publishers and advertisers with this affiliate sales platform are huge. The platform is a lot like AdSense …

And that’s the problem.

When it comes to affiliate sales, this is not how business is done. And although the problems are being viewed by some as “technical issues”, they’re not. They’re systemic. The system doesn’t work the way an affiliate platform should work.

Let’s look at the main issue:

Advertisers can specify a budget. Just like in AdWords. When their budget runs out for the day, Google starts showing other ads from other referral advertisers.

Affiliate sales are all about the landing page. If you build a landing page around a deal you’re promoting and some other offer is showing up, or nothing shows up, it completely destroys the whole process for publishers and users. And it sure doesn’t help the advertisers look very good either.

The solution?

Google and the advertisers they bring into the referral program have to understand that CPA means Cost-Per-Action. And that action has to be able to support the cost of acquisition (paying the affiliate).

There can’t be a “daily budget”. When a publisher chooses an ad, that ad has to be served for as long as the advertiser is running the program and the advertisers landing page has to be built with one goal; getting the action that pays the affiliate.

Or else there won’t be any.

Innovation is important. It’s necessary for success. But you still have to do business the way business is done.

4 thoughts on “Google Referrals 2.0: You Can’t Do Business the Way Business is Not Done”

  1. Hi Shane,

    A couple of thoughts:

    – Great points about the Google referrals system. I’ve tried setting it up a couple of times (on another site) and can’t even get it to just show the referral products I want to see – it ends up filling up with ‘Trade Forex’ ads. At the very least, we should be able to completely control which ads ‘could’ show up.

    – You really have some great articles here at Zoomstart. Just read your ebook, and it’s good as well. What I’m trying to say is you deserve more traffic than you currently have. Keep it up.

  2. Hey Jeremy,

    I’ve been playing with the system on another site recently. CPA traffic has to be a lot more targeted than CPC traffic. You have to have motivated buyers, and so gearing a page to really “sell” a great affiliate offer is completely useless if Google shows other offers on your page instead.

    Referrals 2.0 is a great idea. It’s just very broken right now.

    Thanks for your comments. Traffic here is good, and growing – I really haven’t had the time to promote the site as much as I should, but it’s a long haul venture. I enjoy writing it. And for Zoomstart, that’s what matters most.

  3. I agree 100%. My brother and I were trying out some of the referrals Google was offering and they didn’t perform at all. It’s all about the landing page and getting the user to opt into the offer. I don’t even think that many of the offers are worth it (quality wise).

    For now, we’re looking at other CPA programs.

  4. Hey Greg,

    I tried it out a bit. I found that referrals 2.0 performs a lot worse than AdSense. You never know what ad or offer will show, and then you’ve got the barrier of CPA to get over. It’s just a bad idea.

    I’m playing around with some LinkShare offers right now. They look like they might have some real potential.

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