JJ McCarthy Talks Mindshare, Loyalty and Reputation at ad:tech

jj adtech Last week our very own JJ McCarthy, Head of the eBay Partner Network, spoke at ad:tech about the importance of competing for affiliates mindshare and loyalty. He boiled the crux of his presentation down to one central question: what are we doing at eBay to differentiate the experience for our affiliates? What followed was JJ’s explanation of a three-pillar philosophy his team has since developed called f(REE).

f(REE) = Reputation + Ease of Use + Earnings

“FREE” is our operating framework that simply says that our success is a function of three things: our reputation, ease of use, and the earnings opportunity that we provide to our partners.

Besides being a unique take on the way many organizations choose to work with their partners, JJ believes the strength of this model is rooted in the fact that every facet is customer-centric. In fact, he says everything eBay Partner Network does can be mapped to these three pillars.

Why is Reputation Important?

When thinking about affiliates, you have to recognize the broad spectrum of affiliates that exist today. At one end you have huge consumer destinations like Yahoo! and AOL, and on the other you have one or two person operations working tirelessly on their entrepreneurial dream. We estimate that 85% of affiliates are 1-2 person outfits. So while it may be easy to identify and reach out to bigger companies, building a relationship with thousands of mid and long-tail sites can be a daunting task.

JJ's vision is that publishers will consider eBay to be the premier and obvious choice when choosing a monetization partner in online marketing. Because most publishers are single person entities they have a finite amount of time to stay on top of the current crop of programs in the marketplace. JJ believes that most publishers ideally want a small number of monetization partners, and that eBay should be chief among them .

Making it Happen

In order to continue to build the reputation of eBay's program we need to shape our culture around customer centricity - celebrate our publishers and continue to make quality customer service a priority. This includes ongoing participation and dialogue in the community through communication channels like this blog and by attendance at industry events like Blogworld. At the end of the day, happy publishers are loyal ones and hopefully that translates to an endorsement of eBay Partner Network to others.

Ease of Use

Another area that JJ believes ePN distinguishes itself from the masses is the unique availability of data to its publishers via easy-to-use tools. With over 70 million products on site at any given time, eBay has inventory for any occasion or consumer experience.

ePN is proud of all the valuable tools we offer our publishers, but the one that JJ is most excited about is Custom Banner - an HTML or flash widget that sits on top of our API and can be configured in an infinite number of ways to match the relevance of the page it's being served on. To quote his ad:tech session: "It's a game-changer."

Pricing Improves Earnings

In 2009 ePN went rogue and launched Quality Click Pricing (QCP). This, as it turns out, was a total game-changer as well. JJ noted that while nearly everyone else in the industry structures their pricing on Cost-Per-Action (CPA), ePN went to Cost-Per-Click (CPC). Whereas the standard is to pay a commission rate with higher tiers for volume, we decided that volume was a worthless predictor of total value. Additionally, where everyone else is paying a share of revenue, ePN looked at all of the value a partner brings in the way of brand value, new users, and sales revenue. This leads to payment that encompasses a more complete share of the value partners are creating for us. Most importantly, we’re leveraging the principal of de-averaging so that partners get custom CPCs in a way that’s scalable for us to administer.

Defining Success

JJ wrapped up his presentation in a simple, but concise way, saying, "When every blogger is giving us word of mouth praise... When every partner is able to use our data with tremendous ease... When Quality Click Pricing is able to accurately price every click from any source... That's my definition of success. That's my challenge to my own team."

We'd love to get your take. Were you ad:tech? Did you see JJ's talk? What did you think - is JJ's vision on-point? We'd love to get your relevant and constructive comments below.

Celebrating Innovation at the Affiliate Awards

Last week the eBay Partner Network team gathered at the W Hotel in San Francisco to attend the Affiliate Awards and cheer on some of the best and brightest companies in our industry. We had been nominated for "Best Merchant Innovation" and were excited and honored when we won! affawardspic

The innovation that helped us win this award is centered around Quality Click Pricing (QCP). Many of you are aware of what QCP is and eBay's rationale for implementing it. For those that may be new to ePN, we thought you might appreciate little backstory.

As we know, affiliate programs are designed to pay affiliates for leads and sales, and payouts reflect an assumption that all leads and sales are valued the same. Little attention has historically been paid to the quality of a lead and its lifetime value to the merchant. However, when eBay brought its affiliate program in house, the company gained access to detailed performance information and, along with it, important insight into the value affiliates were actually delivering to eBay.

When the eBay Partner Network team analyzed the data, it became clear that the existing Cost-Per-Action (CPA) payment structure was not optimal for either eBay or many of its best affiliates. As is the case with most other CPA payment models, eBay rewarded affiliates for the quantity, rather than the quality, of their traffic. The tiered payout structure meant larger affiliates earned more per sale or lead than smaller affiliates, despite the fact that affiliates with small niche content sites often drove the highest quality traffic. One of the reasons for this is that people are typically more engaged with and interested in a particular product when they are on a site dedicated to that product, as opposed to a site that reviews or discusses hundreds or thousands of different products.

In addition, eBay found that the amount paid to an affiliate for each new user generated was not necessarily aligned with the long-term value of that user. In many cases, the company was overpaying affiliates who were bringing in low quality new users and underpaying affiliates who were bringing highly engaged eBay shoppers.

Understanding these issues, the eBay Partner Network team saw the need to radically change its compensation structure in order to both accurately reflect the true value affiliates generated for the site, and to reward affiliates fairly for valuable traffic. The result was Quality Click Pricing.

We're excited and honored to be recognized for our innovation in the affiliate marketing space, and we look forward to another year of growth and prosperity for all of our valued partners.