Mention the phrase "affiliate marketing" in a crowd of Web professionals and even the hobbyists light up. By placing ads on their pages that typically produce a commission if a click results in a sale or a lead, affiliate marketing has become a viable means for content sites of all sizes to nickel and dime their way to profitability.
That's why ValueClick's (NASDAQ:VCLK) announcement that it would be buying Commission Junction over the weekend created more than a stir in the webmaster teapot. While a company like Amazon (NASDAQ:AMZN) can run its massive Associates program itself, most companies are forced to outsource their affiliate marketing campaigns.
That's where Commission Junction comes in. By managing the affiliate marketing for everyone from obscure startups to well-knowns like eBay (NASDAQ:EBAY) and Microsoft's (NASDAQ:MSFT) MSN.com, Commission Junction serves billions of ad impressions every month on its vast network of publishers.
Relatively speaking, ValueClick looks like it's getting a bargain. The $58 million price is half of what the company paid in last year's stock acquisition of rival Be Free. By owning two of the largest players in pay-for-performance affiliate marketing, ValueClick takes another major step towards becoming an online advertising powerhouse.
Yes, Be Free has attracted quality merchants like Best Buy (NYSE:BBY) and Staples (NASDAQ:SPLS), but Commission Junction is simply more popular. And while advertisers may be lured to competing networks like LinkShare, Websponsors, and Shareasale, the publishing side loves Commission Junction.
Unlike other programs that only pay webmasters when certain minimums are met for individual sponsors, Commission Junction lumps them all together to get even the smallest site owner paid quickly. Commission Junction also provides a lot of statistical conversion data so publishers can pick out the more productive affiliates in the entire network.
So while ValueClick's capital appreciation may have priced much of the bargain value out of the stock, the case for growth is becoming more compelling.
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