Affiliate Marketing "Affiliates are kids with guns": A look inside the industry by Sevak Petrosyan from GOST.Agency

A look inside the affiliate marketing industry by Sevak Petrosyan from GOST.Agency
Affiliate Valley Affiliate Valley 5 months ago 0 88695 12 min

I met my interviewee at one of the first events that I attended in the role of the Affiliate Valley’s editor back in April’21. By the standards of our industry, the night was young, but we were the only sober people smoking at 3 am outside the venue’s front door. As the rest of the attendees were filling up on free liquor and looking for clues on the show girls’ body-arted bodies, we exchanged business cards and agreed to chat about affiliate marketing in a quieter place during the actual business hours. 

The office I was invited to is located in the historic center of Saint-Petersburg, one of the eastern affiliate marketing capitals of the world. Attic floor, no elevator, old furniture, top notch laptops — the place looked like a mancave from which the famous startups of the past age rose to power.

AV: Can you tell us a little bit about yourself, your team, and how you joined it?

Sevak: Hi, sure. My name is Sevak, but I go by Seva. You can also find me online by my telegram nick, @sevakode. Our team is called GOST.Agency. We’ve been in business for about three years, I think. I joined them a year ago as a technical specialist or a programmer, if you will. 

Initially, for me, it was not immediately clear what media buying was about. A year ago I had heard something in passing, but had no idea what it actually was. 

Now, I have more or less understood the subject and can describe it as advertising a high-margin, low-quality product at scale.  

AV: That’s an interesting description (laughing). Maybe we can use a broader term, like CPA marketing? 

Sevak: Yes, sure, that’s the broader term. 

AV: How do you describe what your team does?

Sevak: We provide virtual pre-paid accounts for affiliate marketers so that they can link them to Facebook for buying traffic. Plus we have many other projects, I alone have application development, payment services, payment gateways, and media buying.

Also, we formed a service of conducting analysis, auditing campaigns, sites and funnels, and providing infrastructure to affiliates, from Telegram bots to PSMs. 

AV: How do customers find you? 

Sevak: Community and word of mouth. Your network brings you lots of valuable contracts. We work in good faith, we do not let people down, and they always recommend us. So, there’s a strong referral component there (laughing).

Now we are forming a full-service digital agency that works with affiliates of all sorts. As far as we know, there are no such agencies in the affiliate industry yet, and we need one now more than ever. Before, there weren't as many technical problems in media buying and now to start out you need a really complicated infrastructure.

AV: That’s super interesting. But let’s come back to that in a bit. Tell me, do you think that every product advertised through CPA marketing is of low quality? That doesn’t sound too ethical, does it? 

Sevak: Ethics has its limits. Like, if we talk about the methods of acquiring traffic, for example, spamming is certainly unethical. But if we’re talking about the products that are commonly advertised here — casinos, betting, adult sites etc. — this is a much grayer area. That’s people’s choice, and it will always be there. So it’s just stupid not to capitalize on that.

AV: Is that what your team does? 

Sevak: Apart from other things, yes. 

AV: What are the most doubtful niches that your team acquired traffic for? 

Sevak: I’d rather not say (laughing). Well, not for the record. But it’s related to the Adult world. 

AV: So, the ethical compound of the job is not your responsibility? 

Sevak: Definitely not (laughing). That’s above my paygrade. 

AV: Alright, and what is your personal involvement in the process? What tasks are you responsible for in the team?

Sevak: I started my journey in CPA marketing in gambling. I used to set up the technical part, accounting and everything else. All in all, a jack of all trades. 

Advertising gambling platforms and casinos bears a significant amount of risks and limitations due to legal restrictions in certain countries. Apart from actually buying traffic, affiliate teams who work with gambling offers need to be proficient in setting up a complete infrastructure for the process that includes domains, hosting, trackers, cloak solutions etc.

AV: And how many people do you have in your team now?

Sevak: There are only 7 people in the office, but there are also a lot of people in Belarus and Ukraine. There are guys who work remotely on a full-time basis. For example, there is a person in Belarus — he’s our media-buying guru. We provide him with the infrastructure and the budget, and he drives traffic to the offers we choose. All in all, we have pretty good conditions for independent media-buyers.

AV: Define good.

Sevak: Our buyers work for a fix and a percentage of what they make. The fix part is rather small, but the percentage can be huge, which motivates them to push through. You have to show real results, then you’ll earn big money.

Once we grow to the point that we need protocols, SOPs, regulations and all, it will get harder to earn that much. But for now we operate in a startup environment, and share all the spoils with the team, so to speak (laughing). 

AV: So, your team is geographically distributed.Do you find it convenient? 

Sevak: Many teams have employees who work remotely. We are more comfortable working in the office when everyone is together. Each affiliate team finds an offer and tries to make money on it. We, for example, have found what we make money on, but we keep trying new directions.

I think it’s a way that has been tried before by many teams, and it’s working. You rent a space, you bring people in. But it all depends on the scale at which you operate. And how successful you get at what you do.

AV: And how many starting media-buyers actually get successful? Well, let’s say, relatively successful in what they do? 

It all depends on the person. There is nothing complicated about media buying itself, it's in a way like a casino. You can run cold and waste your budget, or you can find a successful niche and start making big money.

You see, there’s no way to know for sure. There is no end-to-end analytics in the industry. Everybody sits tight on their stats because they don’t want to draw attention to their media-buying strategies. If all affiliates got together and collected mass analytics instead of just pumping money into tests, we could have at least some insights. For now, we don’t. And there’s no way to know for sure how things are really going. 

AV: And who has this information? Platforms that own big data? Affiliate networks, traffic source platforms?

Sevak: Yes, they do have it. But not just them.

I think all affiliate teams should be collecting this data, but they are not. We work with a huge audience, which means we can understand the demographic data, what people's sentiment is, what interest they have, and mark the creatives by country and region — each country and region has its own specifics. 

But this is all very abstract information. You can collect deeper data and automate it. For example, creatives. There are opportunities for automation - there is the GTP3 machine learning network, and it does fantastic things. You could use it to automate everything for tests.

But the buyers don't do anything logical, they do mechanical stuff. If tests were systematized and then the results were recorded, we wouldn’t need human media buyers. We could just replace them with algorithms. Some teams are coming to that. Why they haven't finally arrived is because the market isn't static. 

AV: That seems to be not what you expected, right? What were your expectations when you came to CPA marketing versus what you ended up doing?

Sevak: To be honest, when I entered this business, I expected much more, higher requirements and competences (laughing). But I grasped everything pretty quickly as a programmer.

The main thing that I noticed is this: there is almost no marketing in media buying. We solve technical issues, we create infrastructures, but we don’t really care about the audience. For example, if you’re driving traffic to a website of an offline store, you analyze who goes there, you check their interests, their demographics. In CPA marketing the only specific is the specific of the vertical itself. So no traditional marketing techniques are used at all, everything is done on tests and hypotheses.

AV: Can you give me an example?

Well, for example, in my company we're going the long-term route: we focus on e-commerce, LTV (Life Time Value - a metric indicating how much revenue one user generates for the company during the period that it stays with the company), it's a move towards customer demand and working with it. And sadly, it’s not what most affiliates do. Usually they just overwhelm the audience with their ads, take what’s there to take and move on. After me comes the flood, kinda. 

AV: From this follows the contradiction: all the ad networks, and others, write in their blogs: "Figure out how to communicate with the user.” 

Sevak: Nah, that’s all bullshit. Let’s look at gambling, for example, or betting. How do you work there? You have no influence on the product, you get a ready-to-use offer. You can’t do anything about the site of the casino. You can’t check out best practices for advertising gambling sites — by the time you learn about them they become obsolete. 

Everything gets out of date too quickly, so you have to make up something of your own. And the information is scarce. For example, Facebook is one of the best traffic sources for gambling, but officially you can’t advertise it there. So you need a complete infrastructure to masquerade the offer to look legit. Facebook fights against such ads viciously, it adds new policies and all, so the techniques that worked yesterday won’t work today.

There's no way to stabilize this work. Nothing is static, the rules of the game are constantly changing. 

AV: That doesn’t sound like too stable of a job. How did you start in media buying anyway? 

Sevak: Oh, that’s funny. I started with spam. Yes, guilty. But that’s the easiest way to generate traffic, and it’s free of charge. There are technical aspects to overcome, for sure, but media buyers manage. 

The main qualities of an affiliate, a media buyer is the desire to make money and ingenuity. If you want to make money, you will figure out all the intricacies of work. The most useful skill here is, I’d say, the ability to find information, and sources of this information differ between verticals. 

AV: So that’s an essential skill for an affiliate. And what’s essential for an affiliate team? What can't a media buying team live without?

Sevak: You need a techie. For sure. If you don't want to work with the offer alone, you need an integrator, a technician. And an accountant to track payments and help with the legal stuff.

There are different levels of affiliate marketing, media buying in particular. At low levels, it is enough to register in a CPA network and start driving traffic through an ad platform. Without tracking or anything like that. Now, teams are driving traffic through apps, social platforms like Facebook or Tiktok, finding new solutions, new ways, and new sources of traffic every day. 

AV: Speaking of offers, where does your team take their offers? 

Sevak: Through networking. This person knows someone, who knows someone who has a cool offer to promote. We work like this. Beginners, yes, they know only one way: registering in a CPA network and finding an offer there. But once you know enough people in the industry, you start getting offers through your network. 

AV: If the internet goes down tomorrow, what will you do?

Sevak: You can't shut down the Internet completely — the wires are still there. But okay, hypothetically speaking, I would encourage people to create their own infrastructure. We will go deeper underground, create Internet 2.0, with blackjack and all (laughing). 

The thing is, no one understands the volume of the affiliate market yet. Not entirely. We don’t have any end-to-end analytics, we are just disparate teams. As the volume and visibility of this business increases, especially here, in Russia, it will definitely draw the attention of the government. And it actually might come and claim its share of the pie. We’ll probably have to start paying taxes… Just kidding, we already do. 

AV: And what happens if the Internet remains, but they make like a second Great Chinese Firewall in Russia?

Sevak: The community is not big enough to create a massive media hype or resist. I think Russian affiliate teams will move their business to other countries. There will be nothing to take from them here. Affiliates will always find ways to survive. We’re like roaches, in a good way, we can survive a nuclear blast. The business will move to the West, to other CIS countries.

Independent media buying will probably evolve into some big marketing companies. 

AV: How many famous arbitration teams do you know?

Sevak: When I was more into the development side of things, I didn't understand the size of the industry. But even now it is difficult to estimate the scale of different niches. 

So every other affiliate can call themselves a team. I’d say I know about 10 big team, including ours — in terms of staff and various functions in the team. Although, as you know, there are more media-trendy teams, the ones that get all the buzz. 

AV: How much do the teams overlap with each other?

Sevak: There is definitenly a community. There are no special rules of conduct there, or anything. I’d say the community is forming, working out its principles as it goes. At the last meetup, I talked to people about working with the user base, educating users, finding new tools, and making new funnels, like, together, within the community.

AV: And how did it go? How was your idea accepted in general? 

Sevak: Rather skeptical, I’d say (laughing). Here, no one wants to share information. But we do, my team does. We believe that it's easier to grow together. In the long run, isolation doesn't work.

I guess not everyone has this mindset. The ultimate goal here is to make money.  But I still believe that competent cooperation is good for everyone.

We believe in interaction, because affiliates, especially beginners, are just kids with guns. They grow up and turn into marketers.

AV: How do you think affiliate marketing will develop further on?

Sevak: It is hard to predict what will happen next. Tomorrow traffic sources may become obsolete, new players may appear. There are a lot of technical problems right now, and because of them it may not be clear where to go next. 

There are, of course, options — for example, to move into big commerce, direct advertising contracts. Affiliate marketing itself is unstable. I guess, it’s a more sustainable way to find big clients, do marketing and development for them, and make a stable income.

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