Affiliate Network’s aversion to MLM

Multilevel Marketing (MLM) has a long and somewhat colorful history in Japan. There was a time that Amway could brag that 1% of the Japanese population was selling Amway products. And as in other countries, you have good MLM and naughty MLM companies offering to make you rich or skinny with little effort. My company, MetaFlo, is actively involved in lead acquisition for several MLM organizations. We utilize the media reach of various small web and mobile affiliate networks to drive traffic to our lead gathering sites and resell our leads to MLM distributors. We take extra care to ensure that all leads are qualified, opt-in and that our buyers are established and respected MLM firms. That being said, we still find our lead programs getting rejected by the larger affiliate networks. Why so? The most common reason is that the networks have a non-written rule of not accepting MLM merchants. There have been many stories of overly aggressive MLM sales tactics and some of the large networks (especially the publicly listed ones) prefer to limit their exposure to negative PR backlashes. Unlike online gambling which is illegal in Japan, MLM is perfectly legal yet their channels for online advertising is shrinking due to the general ban among the bigger networks. The situation could be viewed as an opportunity for niche affiliate network players to focus on the MLM category.

What a difference a year makes!

A little over a year ago, I started looking closely at the Japanese affiliate industry in terms of growth and progress. Initially our research showed a market that was both growing at a fast clip and hitting the usual pot holes that any industry encounters in the early stages of development. Back then we counted 30 affiliate networks in Japan with about 10% devoted to the mobile space. A year later we now count 80 networks and about 50% covering mobile media. The growth in the Japanese affiliate industry is impressive in light of the fact that the UK counts only 20 networks in total (Source: AffiliateSummit UK). How far will the Japanese affiliate market grow? It’s hard to say, we’re still seeing continued growth in the mobile area and no consolidation of the kind witnessed in the USA a few years ago. The mobile affiliate networks still have plenty of room for expansion. The average number of merchants running programs on a typical mobile network is about 100 (compared to 1000 merchants on a typical web network). The biggest challenge the mobile networks have is finding the media for their client programs. This I believe will become less of a problem as the Japanese mobile space continues to develop with more attractive content.

Adways and Itochu tie up

Adways (owners of the smart-c mobile affiliate network) has recently announced a tie-up with the Itochu Corporation in an effort to expand their business internationally. Itochu is one of the world’s largest general trading corporations with over 1,000 subsidiaries and associated companies in over 80 countries. Likely Adways will leverage Itochu’s international reach to help break into overseas mobile markets. As part of the deal, Itochu will take on 11,600 shares(15% stake) of Adways stock.

SecondBuzz Seminar

Mobile Factory,  a Japan based mobile affiliate network, has recently announced the re-opening of their advertising and consulting service seminar called SecondBuzz. The seminar will focus on effective solutions for promoting your company to consumers within the Second Life virtual environment. The Seminar will be held on July 13th and the 27th. I’m an infrequent user of Second Life. Though I still consider myself something of a novice in the hugely popular 3D virtual world, I have seen some companies take advantage of the many opportunities for promotions as well as for recruiting virtual affiliates. I’ve even seen savvy SecondLifers rent billboard space to place ads and affiliate links. How effective this new medium will be in the affiliate marketing space remains to be seen.