Google Affiliate Network Shutdown: Who Profits?

google-affiliate-networkThe closure of Google Affiliate Network (GAN) will create a lot of work for affiliate marketers. But Google's exit is good news for competitive affiliate networks and affiliate program management companies, which have leapt to snap up the business dropped by Googliath.

Ultimately, getting kicked off GAN may be better for affiliates, too.

The Google Affiliate Network let advertisers buy and track affiliate ads on a cost-per-conversion basis. Publishers could quickly post the ads and get paid via AdSense when a user clicked through and converted.

On Tuesday, Google announced it would wind down the network over the next few months. In a blog post, J.J. Hirschle, head of Google Affiliate Network, cited the rapid evolution of CPA advertising and said the company would focus on newer CPA tools like Product Listing Ads, remarketing, and Conversion Optimizer.

Businesses that depend on affiliates to drive traffic and sales will need to first find a new network to manage their accounts and then notify affiliates of the new network, so that affiliates can sign up. Affiliates, for their part, will need to keep track of where their merchants have moved, sign up, and then replace all the affiliate links in their sites.

Says Tricia Meyer, who operates 12 affiliate sites including SunshineRewards.com, and averages $25 million in annual sales, says that while larger affiliate sites may be run off a database and need to replace a single link per merchant in that database, "If you're a blogger, every time you write a blog post about a merchant, you pull a link from Google. So you might have to replace every link in five years of blog posts."

Acceleration Partners is one of the many affiliate program management companies that has offered free evaluations and help in migrating from GAN.

"A lot of people want to look at their programs, but it's a lot of work to change. It's a good time [for a merchant] to look at the whole affiliate program, like clearing house before you move," says Bob Glazer, co-founder and managing director. "Google is encouraging everyone to get off the network quickly, and we think we'll benefit from people seeking strategic advice."

GAN was likely not a priority for Google, according to Glazer.

"It was something they inherited through their acquisition of DoubleClick, and it doesn't fit into their model," he said.

A June 2012 report by Forrester for affiliate marketing platform Rakuten LinkShare found that affiliates are profitable for advertisers, drawing new customers, often triggering reconsideration and closing the sale. Moreover, affiliates attract consumers who tend to spend more than the average online shopper.

By 2016, affiliate marketing will represent slightly less than 16 percent of the total spent on paid search, Forrester said, while total affiliate spending will reach nearly $4.5 billion that year.

More important was channel conflict, as Google began to compete directly with affiliate marketers via its product listings, which usually appear at the top of product search results.

Glazer said that many in the affiliate marketing industry still need to fear Google, despite its shutdown of GAN.

"What is Google's take on affiliate marketing?" he asks. "Will they make it harder for other people to operate in it? Some fear they will potentially impose their will to make it easier to do advertising directly with Google. With Google getting out of conflict of interest with the affiliate industry, they may be looking to direct more advertising dollars to their other platforms."

Google Product Listings not only compete with affiliate marketers, they will continue to take a bite out of affiliates' profits, says Meyer. But those who suffer worst will be those who relied on Google for their traffic.

"It depends on how you do your own marketing," Meyer said. Affiliates with loyalists who come to them directly, and those who market directly to those loyalists via email, Facebook, and other channels will likely see little effect, she thinks. "But if you rely on search engines to drive affiliate traffic, you will be hurt by it."

In fact, Meyer says, the closing of the Google Affiliate Network could be the best thing that happened to the latter group. They may have begun with GAN because it's a well-known brand and never looked at the offerings of other affiliate networks that have more robust technologies, will bells and whistles like widgets and pay-per-call.

"When these merchants actually start looking at different networks," Meyer says, "they'll realize that they're getting networks that are actually better. They think Google does everything right, but it didn't do affiliate marketing that well."

This article was originally published on ClickZ.