janvier 2007 - Teorem's Blog

It seems to be the thesis developped by Brian Smith in this post: Why I'm at Affiliate Summit 2007.

The conversion rate is obviously very important for merchants, it's the true indicator of the effectivness of the money spent in online avertising and define clearly the ROI (return on investment). And the revenue shared model ensures the merchants that what they are paying is really providing them more earnings.

From my point of view, the main problem in such a model is the trust you can have in the partners.

With the CPC model, it's quite easy for both, the merchant and the shopping engines, to record the traffic sent and received, and then have analysis done and resolve conflicts.

With a shared revenue model, the traffic sender is more or less at the mercy of the guy receiving the traffic. So, when we are talking about the affiliates of Google AdSense or Yahoo Search Marketing, it's not really a problem: the big guys (G and Y) won't cheat on the small guys (the affiliates). On the contrary, they have to put in place means to avoid the small guys cheating on them by sending fake traffic.

But putting in place means to verify that revenue has to be shared because of the traffic sent to a "small guy" would be difficult if not impossible because once the user is on the website, the small guy has complete control of what the user browser can do: for instance, it can avoid to put in place the beacons allowing mechanisms like tradedoubler to record that a sell did take place.

Thus, the intermediary (the shopping engine) must trust the traffic receiver (the merchant) with regards to the numbers of sells, thus on how much the merchant must pay.

I'm wondering how well the investors have trust in business models based on the faithfulness of human beings in general.