Google is expanding… rounding out its online advertising payment menu (CPM, CPC, CPA), yes, at the possible expense of Valueclick (VCLK) but not at the expense of an already embattled “traditional affiliate marketing” industry—specifically, VCLK’s Commission Junction unit which (like BeFree) was acquired to, ultimately, secure strong advertiser relationships and re-purpose them across scalable advertising opportunities.  Google has decided to cut VCLK off at the pass by trumping its relatively small advertiser base—offering a cost-per-acquisition (CPA)/commission based payment option to their much larger customer base.  They now offer neapolitan, not what is known as a “traditional affiliate network” (a relative dinosaur).

Seeking Alpha’s David Jackson set off the usual firestorm of comments as traditional affiliate marketing folk rushed to downplay Almighty Google’s supposed (key word) entry into the affiliate marketing space.  What has ensued is a semantical mish-mosh that, in the end, doesn’t serve to provide clear perspective on what this really means… so much as it tries to separate “traditional affiliate marketing” Commission Junction (et al) style from what Jackson describes.  That’s key here but not the total story.

Why the freak-out by traditional affiliate managers and executives as Google enters the space?  One word: Scale.  It’s a word that, to many, is not comfortable in a realm that is dominated by relationships (those nasty little things that don’t scale!).  The concepts of transparent (you know who, what, how, when you’re dealing with) advertising and opaque (you have less of an idea) are central as the former offers less scale, the latter more.  As time goes on (competition for advertisers heats up) making performance-based ad buying frictionless is becoming more important.  Hence, “traditional” (relationship-oriented, transparent, high maintenance) affiliate programs become more focused (coupon and loyalty shopping sites) and receive less attention (as they require more people power to scale).

Valueclick is taking the friction out of affiliate marketing through its Link Management Initiative.  Now Google (currently, King of frictionless online advertising) is moving in and offering publishers (many of whom are “traditional affiliates") yet another flavor of advertising payment.  They’re now complete: CPA (cost per acquisition), CPC (cost per click) and CPM (cost per thousand impressions).  Traditional affiliate marketing’s response?  “It’s about the relationships -- no really, it is!” Indeed it is but such affiliates are a shrinking number, fit into limited categories (coupon sites, loyalty/cash/rewards shopping) and offer less scale.  Advertisers have been there, done that and are looking for scale more than they are looking to hire more affiliate managers.

The convergence affiliate marketing (limited to a commission and bounty-based payment model) and “performance advertising” (CPC, CPA) cannot be denied and describing how we get to the integrated performance ad world is challenging.  We will continue to be challenged unless there’s a move to separate retail and service based performance marketing when analyzing the market.  Problem is, neither Valueclick nor Google help.  It’s not in their interest!

Jay Weintraub asks THE questions.

Is the Content Referral Network (CRN) a sandbox for accepting CPA on their search inventory? Is CRN a future replacement for AdSense, for content which works for some but has serious quality / click fraud issues? Is it a means to compete with eBay’s new network by having a future version showing optimized, merchant driven ads? Perhaps this new network has something to do with the new Google payment system so that the company can own the whole process, from click to conversion to payment?