A move by Tesco may provide some hints about the state of affiliate marketing and its future.
Earlier this month, Tesco sent the 150 developers who have been working with Tesco.com's Grocery API an email detailing that the company was opening up its database to them and giving them the ability to build applications that could potentially generate lifelong affiliate commissions.
How wide is Tesco's database being opened? Pretty wide. Developers will have access to databases for products, detailed product data (eg. nutrition information), favorites, previously ordered products and ratings. And once Tesco figures out how to maintain PCI compliance via some sort of stored card approach, there will also be limited checkout facilities that enable applications to process orders without the customer ever leaving the application.
Tesco is not placing any restrictions on the number of API calls that can be made and overall, the limitations are pretty minimal:
All we won't let you do is portray Tesco in a bad way politically, nor store private info without customers permission, nor sell insight on to competitors from customers using your applications, nor use Tesco branded images other than those that will be provided to you, nor attempt any form of denial of service.
What's in it for developers? Tesco is opening up its affiliate program to developers. So in essence, it's giving developers the opportunity to situate themselves between Tesco and the consumer. For developers who create appealing experiences, the reward is the potential of earning a commission for the lifetime of a consumer's use of the app.
The obvious question is: why? Why would Tesco allow third parties to insert themselves into Tesco's relationship with consumers? Does Tesco believe that third-party developers are better capable of creating rich experiences than it is itself?
The answer may be that affiliate marketing is less successful for affiliate program operators than we'd like to believe. Perhaps for some companies it's even stagnating. One person I spoke to about the move voiced the opinion that "many firms can count on one hand the number of affiliates that matter to them". Tesco's affiliate program is standard fare: send traffic to the retailer and earn a commission if it converts. But such standard affiliate programs don't always breed the type of affiliate and customer relationships that deliver results over the long haul.
By offering up a robust API to developer affiliates, Tesco is almost certainly hoping to encourage far more investment in its affiliate program. Developer affiliates are given a greater incentive to build attractive user experiences that can attract loyal users (and in turn 'lifetime' commissions) and customers get the choice to conduct business with Tesco through a variety of user experiences that may be more desirable than those currently offered by Tesco itself. In theory, it's a win-win-win.
Of course, affiliate programs that offer the potential for lifetime commissions aren't new. Such programs are standard with betting sites, and Amazon and eBay have offered APIs that affiliates can use for some time. Earlier this year, US electronics retailer Best Buy opened up its Remix API, which developer affiliates can take advantage of.
I think it was a sign of things to come and increasingly, expect more moves like Tesco's. Affiliate program operators may not be able to change the fact that the number of affiliates that matter is relatively small, but by giving the most dedicated affiliates the ability to build their own customer experiences and to invest more of themselves in the affiliate programs they participate in seems like the natural thing to do.
Photo credit: Terinea IT Support via Flickr.