Better?
There we go...
Technical difficulties.
Okay.
Like I said, Alex, great looking hat.
I wanna give a shout-out first of all to... number one, to the STM team
for putting on a fantastic event.
It's the best show I've ever been to in this industry.
And I also wanna give a special thanks to the staff and the crew from the hotel
who have made us all feel so welcome... a big hand please.
<i>[applause]</i>
So, first, some background on me... as Alex said,
I've only ever worked in affiliate marketing. My whole career
has been in this industry... over 10 years,
and I love this business there's nothing else I would rather do.
My education is in Math and Economics so I totally geek out on this sh*t.
I mean, this is... I feel like this industry was specifically made for me.
I co-founded Jumbleberry in 2009 with my partner Danny.
And before that, I was an affiliate manager at a small affiliate program.
So, I pretty much done every job there is to do at Jumbleberry...
biz dev, affiliate manager, campaign manager, collections, accountant...
I think I was the janitor at some point.
But that's what you do when you're a startup
and I suppose that all of those things prepared me for my role
that I'm in today as Chief Innovation Officer.
And I hope that today's talk will give some insight as to why at Jumbleberry,
we feel it's so important to invest in something like innovation.
But to keep it simple, let's just say that I'm the head problem solver.
If you have a problem or an opportunity that needs a unique solution? I'm your guy.
As Alex said, I also have a beard.
Now, as you can see from this study,
people trust men with beards twice as much as men without beards. This is an actual scientific study.
So, please, in addition to my passion and experience, factor that in as you listen today.
So, besides me and my beard,
you might be asking yourself, "Okay, why do I wanna hear what a network has to say?
Isn't a network just a necessary evil whose only purpose is to make sure that I get paid?"
And I get it, networks typically suck. I would agree with you.
But let me frame it up this way for you.
Most of you here are affiliates who buy traffic. So, you understand the power in aggregating data.
As a network, we're in a great position to aggregate a lot of data.
Not just about traffic but about the actions and behaviors of thousands of affiliates and advertisers.
In addition, we play the role of universal translator in between.
So, we've really developed a great understanding of the business from both sides.
So, we see the forest for the trees and we have unbiased opinions that are backed up by data.
Over the past 6 years, Jumbleberry has racked up the following stats:
75 million clicks, 6 million CPA conversion... we've worked with over 2,000 affiliates, 2500 offers
and we've had over 40,000 hours of conversation with affiliates and advertisers.
Only to have one too many meetings that end up like this,
Now, we never set out to become some corporate think tank or industry thought leaders.
Danny and I founded this company to make a lot of money
which is I'm sure what everyone in here is trying to do as well.
But over the years, through all the hours of conversation,
we'd gathered all this information, thoughts, ideas, behaviors, actions
and we have this great opportunity to share that so we figured why not.
Now, I've gotta tell you, the past 10 years has been pretty exciting.
Like I said, there's no business I'd rather work in.
It's been a great run. In fact, last year was Jumbleberry's best year ever.
Over 100% growth and I'm wondering in the crowd,
who here had their best year ever last year in affiliate marketing?
Don't be shy. Okay, lots of people. The rest of you are lying.
We all know you're pushing huge volume.
So, that's phenomenal, right? It's been a great year for everyone. We've had a great run
and I hope everyone has enjoyed this great run as much as I have.
Because we're all going out of business.
I'd like to start by sharing a couple of business stories with you.
The first one is about a too-big-to-fail financial institution founded in 1858
that grew into one of Wall Street's largest players. Over 19 billion dollars in revenue,
4 billion dollars in annual profits and 700 billion dollars in assets.
I'd like to put up some quotes from the 2007 annual report of this company.
And I'm gonna highlight a couple of them.
The first one is, I may paraphrase, but we benefited from our senior level focus
on risk management and our culture of risk management.
And the second one, record net revenues, profit and earnings per share.
In 2007, Lehman was coming off its best year ever. They thought they were at the top of their game.
Even though cracks started to appear in the subprime
mortgage business that they were heavily involved in.
They had on their books over 110 billion dollars in securities related to subprime mortgages
and they will leverage that 31 times.
This means that a movement of less than 4%
would cause those securities to become worthless.
We all know that the market moved a lot more than 4%.
Lehman Brothers existed on the edge of a knife with very little margin for error.
And on September 15, 2008, Lehman Brothers filed the largest corporate bankruptcy in history.
It didn't have to be this way.
How could it happen that such a large company could seemingly go out of business overnight?
I like to highlight some of the blind spots that Lehman had.
You had a country where they were building a whole bunch of houses
and not enough people to buy them.
And the people who were buying the houses had no income and no jobs.
Not a great recipe for success.
You had ratings agencies giving worthless securities triple-A ratings.
You had an entire industry operating in the shadows, no regulation,
no best practices, everyone making it up as they go along.
And because companies played both sides you had interconnected liability,
effectively a house of cards that was ready to fall.
So, how could this be?
How could a company so large and an industry so large
have these blind spots that were so devastating?
And there's a couple key reasons.
Number one, the competition for profits meant that the players in the industry
had no incentive to share information and work together.
There was no incentive to collaborate.
They couldn't see the toxic assets that were on their balance sheet.
They were all mixed together... triple-A with triple-A.
So, they didn't even realize that they were 4% away from being completely insolvent.
They succumb to groupthink. They figured, "Hey everyone else is doing it,
so it must be totally fine."
and they really believe that.
And in that 2007 annual report, they downplayed and under reacted to the crisis
that was already well underway that year.
They had investors that they didn't want to spook.
Now the scary part is they were probably drinking their own Kool-Aid
and they literally believed that everything was totally fine.
Now, we all know what happens as a result of the subprime mortgage crisis.
We had the great recession. And like I said, it didn't have to be that way.
The threats that were in front of this industry, everyone could see them.
And yet, the players in the business did nothing about it.
On to the second story...
This story's about us...
about the affiliate marketing industry.
We're one of the fastest-growing industries in the world, 16%...
16% compound annual growth rate
over the past five years.
We are outgrowing traditional retail like quite a wide margin
and we're growing 3 times faster than online retail.
So, affiliate marketing is like e-commerce on steroids.
The size of the industry's about 5 billion dollars in the US and over 15 billion dollars globally.
It really is an amazing business story.
Now, a few minutes ago a bunch of us put up our hands
and said, "You know, we just had our best year ever in this business."
And you have to ask yourself, "Are there threats?"
"Are there things facing us that could potentially put us out of business?"
And the answer is absolutely yes.
First ad blocking and ad blindness. Now we talked a bit... talked about this a bit yesterday.
It's not that there's a lack of banner inventory.
It's that people hate the ads and they don't click on them. Average banner CTR is at 0.06%.
It's the lowest it's ever been and declining.
We have the rise of these close platforms like Facebook and Pinterest
and Snapchat and LinkedIn and Twitter.
And these closed ecosystems make their own rules. The web is dying.
If Facebook or Twitter or Snapchat wants to change the rules on how you advertise,
they can do that.
So, it's a serious threat.
We have shifting consumer preferences whether it's apps versus web, mobile versus desktop...
shifting expectations in terms of value
that the consumer is going to receive.
It's a difficult thing to pin down.
We have regulatory compliance. Regulators move really slow but they carry a big stick.
So, entire sectors of our industry could become regulated, crush profit margins
and make all those campaigns you run not profitable anymore for anyone.
And we also have deceptive marketing.
Those ads that your competitors are running that no one is clicking on is bad for your business.
There's one thing to be an aggressive and clever marketer...
there's another thing to be outright deceptive.
And the worst players in the business make it bad for everyone.
Now, I'd like to pause for one second and ask a question.
Has anyone ever heard the story of the boiled frog?
We got a couple. Okay, Jumbleberry guys, they know.
It goes like this, so if you toss a frog into boiling water, it will jump out and save itself. No harm, No foul.
But if you place a frog in cool water and very gradually increase the temperature,
that frog will boil to death without even realizing it.
So, the point is, let's not be boiled frogs in the face of the threats to our industry.
Now, you might be asking yourself, "Is this a fair comparison?"
You might say, "You know, our industry is fine.
We're rolling right along and all the threats you're mentioning, that's not affecting me.
This doesn't affect my business. It's something that's out there in the future."
Well guess what, if you ask Lehman brothers in 2007 what they thought,
they would say the exact same thing.
Now, I get it. Chicken little stories in affiliate marketing are nothing new.
Every year, since I've been in this business, there has been something
that is gonna come along and put us out of business.
But the fact is, the sky does fall all the time in this industry whether it's a Facebook slap or Google slap
or some regulatory sweep that comes along...
or, you know, the shift from desktop to mobile, some consumer preference thing.
All of these things happen all the time and
dozens or hundreds or thousands of people are put out of business in an instant.
So, the sky does fall in our business. But the difference is the rate of innovation
and hustle that we have as an industry, outpaces
the rate of relevance brought on by these changes.
So, we must not underestimate the threats that are facing our industry.
There are serious long-term implications to the things that we've identified here.
In our industry, the rule is to innovate. You either innovate or you die.
So, having witnessed a bunch of cycles of destruction and creation, of watching affiliates come and go,
watching these changes affect the industry and put people out of business,
there's really 4 themes that have consistently popped up that separate the winners from losers
from the affiliates who are always around at the top of the leaderboard
and make it through all of this upheaval
and those that simply disappear and go out of business.
Now, we got 4 tips that can help you be just like those great affiliates.
To do the things that they do to survive
through all of these... all of these threats and changes.
So, are you guys ready?
This is the big... this is what we've all been waiting for, the 4 tips.
You wanna see them? Yeah? All right.
<i>[applause]</i>
Here we go.
Number one, collaborate.
Number two, know your instruments.
Number three, find your edge,
and number four, act as if.
Now, let's go through these in some detail.
Collaboration, so what does that mean?
Collaboration is simply the sharing of skills and ideas to move towards
some kind of mutually beneficial outcome.
It's deeper than just networking. It's about really working together.
It's about sharing and it's about not being isolated.
When most affiliate start off in this industry
they're full of more questions than answers
they're seeking out mentors and they're on...
they join forums like STM and they're looking for someone to take them under their wing
and you know, "Teach me, oh wise One."
But what happens over time is, you know, maybe they figure something out
and they're starting a little confident.
Maybe they even get arrogant and they stop learning and stop asking those questions
and that's a recipe for failure in this business.
To succeed over the long term, you need to embrace your inner noob.
Another thing, I can tell you that all of the top affiliates are on a network
that are consistently over the years the top of the leader board.
They always work in a group, always.
I don't know if you guys have noticed this but affiliates always seem to travel in packs.
And you guys probably have a crew of your own
and I can tell you that it is not just a social thing.
It is absolutely a business thing. Each person in that group is bringing something to the table
particular skill, a way of thinking, you got your idea guy...
each one of those people's bring something to the table
for the mutual benefit of the entire group.
Now, I know that it can sometimes be hard to share ideas.
In fact, how many people here have ever had an idea that didn't wanna share
because someone was gonna steal it?
I think we've all been there, you know...
"I'm not gonna tell this guy my ideas. He's gonna steal it."
But there's actually two really good reasons to share ideas.
The first reason is you might get some really good feedback that can make your idea better.
And the second thing is you may get some feedback that says, "Wow! That idea is really terrible...
You should stop wasting your time doing that. That's awful."
Both of which are good things
but the important point is you may inspire someone else to share their idea with you
and that's the real power because when people share ideas
those ideas get mashed up and they all become better
and that's why working in a group... that's the powerful part of it,
it's sharing ideas, making those ideas better and then, everyone in that group is better off.
So, trade your nickels for dimes. There's huge, huge power
in information and sharing ideas is a fantastic way to get it
Now, there is one caution and think back to the Lehman example, and that's groupthink.
If every idea is a good one and if everyone is thinking the same way
you have potential for some problems.
So, don't allow yourself to become stale
sometimes you need to go outside of your main group
and talk to some other people, apply tip number one.
Go meet someone new and maybe get a second opinion
just to check again, to make sure okay...
make sure you're not under a spell within your little group. Don't fall into groupthink.
The bottom line is that winners know the power in collaboration,
they benefit from the experience of others.
Number two, know your instruments... so, data, data, big data, small data,
sideways data, data, data, data, it's all about data.
You know, these days, we get it, right?
People need to shut up about data, you need to have data.
The cool thing about affiliate marketing is we've been a data-driven business since day one.
So, we're way ahead of the curve on this.
So, the trick is two-fold. Number one, in the face of all this data,
you need to look at the right data, have the right instruments
and secondly, you need to be objective.
You need to be able to interpret those instruments without bias.
Now, I won't bore you with specific metrics you should be looking at
because you all know it's about maximizing your daily profit.
But you can't just look at your campaign data.
You need to be looking at outside data sources as well.
That's data about the industry as a whole,
data about the markets that you're selling into,
data about what your competition is doing
to really see the whole picture...
because when you put things in perspective
you may have a different outlook and you may make a different business decision.
So, the second part is about being objective,
being objective about the data that you see.
So, to be objective, you need to be unbiased
and this is easier said than done. Bias is a natural human instinct
and it's heavily driven by emotion so it's not easy to do.
The suggestion is, is to learn about the common types of bias
that everyone is prone to and no one is immune from
and by learning about these biases, you're able to be mindful of them
and then, check yourself against them or better yet, apply tip number one
and go talk to someone else and get a second opinion.
And there's really 5 major types of bias.
There's confirmation bias, hindsight bias,
over-and-under confidence, over and under reacting,
and fallacy in paradox.
Now, I won't go into detail here.
You can go to the website you see on the slides where I go into deeper detail
about each of these so you can check that out.
But the key point is the first step into preventing bias decisions
is understanding the types of bias that you may be prone to .
So, making decisions from bad data
or decisions that aren't objective is a great way to put yourself out of business.
I mean, it's a great way to self-destruct
and the biggest and best affiliates, they know this.
They look at all their data. They look at their campaign data
and their outside data
and they have a disciplined approach to how they interpret that data.
They are aware of the biases and they make objective decisions.
If math isn't your strong suit, maybe this business isn't for you.
But hey, you can just go and hire some math guru or something
but either way, don't fly blind
and avoid the common pitfalls that are associated with bias.
On to number 3, find your edge.
So, this is the term that's been thrown a lot over the past couple of days.
I'll give you my thoughts on edge,
so what is it?
Edge of the thing that you win on.
It's what separates you from the competition.
It's your secret sauce.
Now, over the long term, if you don't add unique value,
your business simply won't survive.
Winners have an edge and they know what it is
and they do it on purpose. Their success is intentional.
Now, there are lots of different kinds of edge that you can have...
I've attempted to categorize them here, you could have a technology edge.
Maybe you've developed and an internal tool that automates a part of your business
that gives you an advantage over the competition.
Maybe you have a source edge.
You're consistently the first-mover on new traffic sources, new countries,
new geos, new verticals.
Maybe you have a scale edge,
maybe you simply have more cash flow
and more spend than the competition
and you're able to exploit that.
You're able to test more and/or simply outbid and squeeze out your competition.
And finally, you may have a marketing edge
maybe you have a method of designing ads that always pull more clicks
than the competitor's ads
or you're able to build bridge pages that just always convert like fire.
So, that's all well and good but what's the tip?
So, the tip is this, if you wanna have an edge, you need to go out and find out what it is.
Now, it's not really that hard to do. The first thing you wanna do is take inventory
of all the things that you do that could potentially be your edge.
So, it's gonna take some time to think about what are the things that I do
that I could potentially be winning on.
Then, what you're gonna do is go apply tip number one
and talk to a whole bunch of people. It's kind of like playing affiliate's categories.
You're gonna talk to a bunch of people
and you're gonna cross those things off your list that someone else is doing it.
If someone else is doing the same thing as you in the same way,
that can't possibly be your edge
and at the end of it, you're gonna end up with a list.
Hopefully you haven't crossed everything off
and those are gonna be the candidates for your edge.
Those are gonna be the things that only you do
that are candidates for your edge that you're gonna wanna
drill into a little bit and learn more.
So now, some of you might be thinking, "Yeah, well... you know what, I'm actually doing the same
as everyone else and I'm doing totally fine. I'm making all kinds of money."
And maybe that's true.
But what happens when something changes tomorrow?
Are you in a position to adapt to what the industry is going to throw at you?
This is a very unique business in literally what you're doing today
may not work tomorrow.
So, you better be in a position to do something different if you have to.
So, when it comes to finding your edge, be humble,
be objective and be relentless in exploiting it.
But don't be complacent. Winning affiliates know that their edge can disappear in an instant.
So, part of their time is gonna be spent refining the edge that they have
or out there discovering some new kind of advantage.
Last but not least, act as if.
So, everyone in here is an entrepreneur and
being an entrepreneur, it's very easy to become isolated
and we've already talked about how becoming isolated can lead to failure.
Affiliate marketing also requires a lot of decisions to be made quickly.
So, it really lends itself to emotional decision making
and without a structured and formal approach,
the natural tendency is toward that gut feeling that you have.
So, we talked about the importance of data and metrics
but that's really just the first step.
If you really want to build in resistance to emotional decision making,
you need to build some structure in your business so that's the next step.
So, what does it mean to build structure in your business?
Well, it's not sexy.
It's doing things like hiring employees to take care of the administrative work in your business.
It's about hiring a lawyer and being proactive about your legal risk.
So, when you get a C&D or a letter from a regulator
you don't freak out. You're prepared for it.
It's about hiring an accountant and being proactive about your finances
and taxation and it's about applying tips 1, 2 and 3.
So, when people get scared, they tend to make fight-or-flight decisions.
These are typically short-term decisions that are motivated by self-preservation
and definitely not around innovation.
So, your business needs to become emotionless
but you wanna be able to harness emotion...
to harness an emotion like fear
and then, use that in your business to drive constant change
and innovation.
Fear and anxiety can be some of the most powerful forces in business
when used in this way and I think back to a Ryan Holiday speech yesterday
talking about. "You can only control the things that you control."
So, you need to take the things that come at you
like these threats and then, turn them into an opportunity
and leverage that and make it a catalyst
for you to do something new and innovative in your business.
So, the affiliates that we've worked with have done all of these
really, really boring stuff and it's really an important point that's separating
these affiliates that are around for a long time
and those that don't make it.
So, all the things we've talked about today,
this isn't stuff that I made up. I'm certainly no industry guru.
I'm just an observer. We've worked with so many people
and we've been doing this for so long,
it's not that difficult for us to observe what all the best affiliates do
and kind of crowd source... that wisdom of the crowd and say,
"These are the things that the best affiliates consistently do
and it's what separates the guys who are just no longer
around the flash in the pan from the guys who are always there.
So, what did we learn today? In summary...
number one, beard equals trust.
Number two, Jumbleberry equals perspective.
Number three, Lehman fail.
Number four, you and me going out of business.
Number 5, embrace your inner noob,
and number six, innovate or die, collaborate,
know your instruments, find your edge, act as if.
Thank you very much.
<i>[applause] [music]</i>
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