Mike Mallazzo, writer of the reliably excellent Zero Clicks newsletter from Martech Record and a veteran of digital publishing and marketing, joined me on The Rebooting Show to discuss the state of affiliate and what to expect in the category in 2025. The hopeful view: The efforts to stamp out affiliate arbitrage  will ultimately reward those who put in the work to create high-quality content that’s actually useful, as opposed to churning out affiliate content to arbitrage their brand’s high ranking in the search results pages. As Mike points out, "Without huge arbitrage opportunities, affiliate is a bad business model... We had a 10-year golden era of arbitrage that made affiliate a great business model.” 

Welcome to the rebooting show.

I am Brian Morrissey.

This is the first show of the year after a nice break.

hope you all enjoyed it.

I want to evolve this podcast in 2025, particularly with adding guests who are part of what I call the information space.

I mean, media isn't dying.

It's just changing.

so I want to focus, on the On those running established media brands, but also add in newcomers.

And, I'd love your input, on candidates.

I want to talk to new people, and learn new things.

my email for any ideas you have is bmorrissey@therebooting.Com.

also just send me a note with any feedback you have.

this week I am kicking off, a mini series that will run through January, of sort of year in preview episodes.

I plan on talking to an expert in various critical areas, for the year ahead.

And to kick things off, I am joined this week by Mike Malazzo, a veteran

of media and commerce, who writes the excellent Zero Clicks newsletter.

I will include a link to it in the show notes.

I highly recommend you checking it out.

Um, Mike is immersed in the details of affiliate, AKA commerce media.

which became a critical part of many publisher revenue models over the last few years.

that is until Google decided it would stop turning a blind eye to the, shall

we say, expansive license many publishers took in their affiliate operations.

why can't I discuss?

Who will emerge as winners and who will end up as losers as the chaos continues to rule the Serp.

And whether this means an end to a very nice arbitrage scheme at a

time when publishers could really use low effort, high margin revenue.

I really enjoyed this conversation.

before we get to it, I want to tell you a little bit about the Rebooting Show's sponsor.

EX.co.

this episode is brought to you by EX.co, the machine learning video platform trusted by leading media groups like

Advanced Local, The Arena Group, Hearst Newspapers, NASDAQ News Corp and more.

EX.co recently partnered with Rebooting to create a new industry

report, that is called the State of Video Publishing Strategies.

This explores the results of a survey in which we interviewed, 50 media

company executives about their video strategies and approaches to monetization.

they were, really forthcoming and, I thought the results were, really fascinating.

of course I'm a little biased.

so if you want to know what is shaping the future of video publishing in 2025, Go and access the report today from therebooting.

com, and to learn more about how EX.co is helping publishers maximize yield and engage audiences with video, visit EX.co.

That is E X dot C O.

Thank you to my friends at EX.co.

Now on to my conversation with Mike.

Mike, thank you so much for, for joining me here.

Thanks so much, Brian.

Great to be here.

Zero Clicks is, is one of my favorite newsletters to get, you're a good writer, you know exactly

what you're talking about and that combination is, is lethal, so please

take it.

I'm having fun doing it.

So I think that's what that's what counts.

And I love talking with people who know way more about shit than I do.

And so, I really want to go into what is happening right now in, in the world of like commerce media.

I'm going to use a lot of air quotes that people can't see because it's a podcast.

But it's also known as affiliate.

And, to me, the rise of affiliates been, been fascinating because I've been

covering this industry for too frigging long, to be honest with you, Mike.

And like affiliate was always just the sketchiest, like part of the, this industry, there was like, there'd be

like affiliate cruises that were filled with, with all kinds of people who had

like one foot out the door and were often based, in unfashionable parts of Florida.

It's how you knew they had some kind of scammy business.

I mean, anyone who walked the floor of the ad tech conference, that's ad, and then the colon tech, that still had like booth

babes well into the like late 2010s, you know, the affiliate section was always the, the sort of grimey as part, right?

And of course, this being digital media, it's incredibly lucrative because the more grotesque you get, the better it is.

And, and publishers notice that.

I mean, this is the affiliate is a true internet native business model.

And, you know, publishers in recent years really went hard into affiliate.

And to me, it usually comes down to the fact that it's the, it's the weakness of the ad.

ecosystem.

Programmatic was a disaster for publishers.

I think we're allowed to say that now.

and, and so they're looking for different ways to make money.

They, they hate the fact that they don't control over their business and like affiliate seems like great.

We've got these brands.

we can adapt the same processes and some of them made it.

but Google in the last year is basically, Changing the bargain, right?

So give me just your overview of what is happening with Google and

the fundamental bargain that that had always sort of undergirded the internet.

of course.

1st off, it's funny.

You mentioned the, the sort of late 2010s booth girls.

I was invited to speak in affiliate conference for the 1st time about 6 years ago.

I walked in the door and within maybe 45 seconds, the 1st person that approached me was selling mesothelioma lawsuit leads

Oh, yeah, those are always the most expensive.

The mesolithemia like keyword was like

they got me like right at the front door of this hotel and the 2nd person was selling some kind of a Trump ICO project

in like 2018, 2019, 2 years after those things have kind of gone out of vogue.

I wonder if he held that coin.

I wonder how it's doing now, but, yeah, all kind of sketchy conferences aside, I think it's interesting if you

think about what Google has done, but taking even a bigger step back, I think people treat affiliate marketing and

commerce media or whatever vernacular you want to use as if it's some sort

of really complex esoteric thing in its own sort of channeled siloed world.

When it's really not.

All affiliate is is a payment model and as a payment model, it's the least

publisher friendly and most advertiser friendly payment model that exists, right?

Publishers are only paid a very small percentage of driving a transaction.

Advertisers get to

No risk for the advertiser.

risk for the advertiser, pennies on the dollar, everybody wins.

Why the

Customer vending machine?

I would love it.

I'll feed quarters into a customer vending machine all day.

So I think the, the sort of operative question is, is why the hell did publishers get into

this space and get into this kind of racket in the first place?

And the answer is, is the great advantage that affiliate and commerce media afforded publishers for a time

is you could sort of sidestep the whole adventure of having to build a brand and

having to build reader loyalty because it was so no regrets for an advertiser.

You could spin up a publication overnight.

If you were good at arbitrage, you could start generating hundreds of

thousands to millions of dollars in a very, very short period

Well, how many mattress review sites that were there at the peak?

Right.

The, I think 2017 fast company called, the war to sell you a mattress, an internet nightmare.

And it only got bigger for the next five or six years until, Google algo changes.

So I think that's the really interesting thing is, is in an era of mass scale

and an era of mass arbitrage, affiliate was the quickest way to make money.

And both very scrappy independent publishers and, you know, some of the biggest media conglomerates

under the sun, gravitated towards it because I think, you know, because of the sort of quick win potential.

The other thing, as you alluded to was, you know, what I wrote about in zero clicks is I think Google sort

of had an unwritten bargain that they made with publishers, which is.

Hey, we essentially upended the very fabric of this business that existed throughout the 20th century.

As a result, we're going to give you some pennies back on the dollar and ignore some of the sort of SEO and

growth hacky schemes that existed on the margin around things like newspapers hosting coupon sites, around things

like people reviewing mattresses that they had never slept on, right?

Google was kind of like, you know what, it's fine.

We're a monopoly.

It's not going to hurt our business.

You'll make a little bit of money back.

but the way I see it is, is Google is feeling existential fear for the first time.

They're feeling that those very quiet footsteps of competition.

And as a result, they want to close some of the loopholes that have existed in this space.

and as kind of mafia esque as their old terms with publishers were, where they were willing to.

Kind of let publishers make a few million dollars doing affiliate arbitrage to

replace tens of millions of dollars in classifieds and advertising revenue.

Even that is off the table now, if in Google's view, it hurts the user experience, and in Google's view

makes it, you know, kind of introduces arbitrary friction into the process.

I will confess to, to many publishers listening, that's a very, Google friendly way of describing what's going on.

But I'm just trying to get in the beast's head a little bit, to try to

understand why Google would suddenly nerf an ecosystem that has existed for

Well, I mean, let's face it.

Like, I've always said this, like, Google had a really difficult job.

I mean, look, being a monopolist is difficult.

It's hard.

because you got a lot of constituencies.

I mean, it doesn't really matter because you don't have to answer to anyone.

But like, you got a lot of constituencies that you're trying to keep in some kind of uneasy equilibrium.

Right.

And so the reality is publishers, you know, I remember anytime I'd get on the phone as a reporter, like as a cub

reporter with some Google product manager, you know, it always have like 23 minutes they would spend, they would waste like

15 minutes with a preamble about how everything they do is looking out for the users, the advertisers and publishers.

And I thought that order was very interesting because it never, it was always.

Publishers are always last, and let's be real, they're always going to be last.

I mean, that's why I like the, the name of your, newsletter.

It's because zero clicks is like, you know, the fact that Google has increasingly, increased the

number of searches that do not result in a click, because it's not necessarily in their interest.

But they're always trying to so keep publishers unhappy enough.

But like, they have to keep producing the stuff.

And so they're going to turn a blind eye to all of the kind of like shortcut hacky stuff that publishers, you

know, did, you know, what time is the Super Bowl start crap and whatnot.

but the problem is the incentives were such that it started to really affect the core Google product, right?

I mean, like anyone who has used search has seen its utility, go down.

I mean, the fact that people have to put Reddit on the end of searches.

It is, is a testament to it.

That is like the, the, the skip to recipe button.

That's a sign that something is wrong.

yeah, and I think so.

I mean, it's funny.

You mentioned that Google product managers would say the ranking was users, advertisers, and then publishers, any

user of the product would have said the ranking was advertisers all the

way at the top of the stratosphere.

And then somewhere at the very bottom of the mountain users, or

maybe 1 step above publishers, again to Google's very modest credit.

It does feel like, in their own sort of mind, there is a major move to course correct some of that.

Now, it's limited to a degree, right?

Your first page of search is still mostly AdWords with the odd AI overview above it, right?

There's only so much kind of financial risk that, you know, Google is going to take, but, I think one of the, you

know, in Google's mind, very obvious poor user experiences were again, some of these sort of arbitrary friction,

experiences that got introduced into commerce media, whether it be, you know, again, coupons that, publishers

would, would kind of publish lists of, whether it be, brands doing wildly illogical brand extensions, right?

you know,

this is the Forbes,

publishers.

Yeah, this is exactly

I was on that page.

I clicked on that.

I'm going to be followed around forever now.

Thanks, Mike.

Yeah.

No, you know, it is what it is.

but again, I think the most important sort of concept at the heart of this whole discussion is that

without huge arbitrage opportunities affiliate is a bad business model.

And I think we're in this really interesting lull in the ecosystem where there just isn't a lot of arbitrage left.

whether that arbitrage comes from organic traffic or buying search and

social traffic for less money than you can make on affiliate commissions.

We had sort of a 10 year golden era of arbitrage that made affiliate a great business model.

I'm sure we'll have it again in 5 to 10 years.

Like, the growth hackers always find a way.

Yeah, I my, my money is always on ARB.

I don't know.

Like I, maybe it's getting older.

but we're in a lull there.

You know, it's the economics of the Internet or such right now that that the obvious arbitrage opportunities are hard.

And that makes affiliate businesses that were built on, on those opportunities less valuable.

Conversely though, I actually think it makes the creme de la

creme of commerce media businesses far more valuable than ever.

so explain explain that because like I always think like when we talk about commerce That's why I use the

air quotes because I have a joke It's like when people mean commerce, they really mean affiliate and when people

say affiliate they really mean SEO and like, you know, it's like we put a lot of like names on these things and I

think You know, when people say commerce media, I think of like Wirecutter, right?

People go back to Wirecutter and you know, it's now been almost like a decade that the New York Times like bought it.

It was only 30 million, which is kind of and it was treated as this massive win for Brian Lamb, which, you know, was because

he bootstrapped it, but still, it's way more, it was way more valuable than that.

but the reality is the incentives Are such that it always goes to arbitrage, right?

Like it's, do you really want to build like some kind of testing facility or, or whatnot, or do you want to take your brand

and you've established a lot of authority to it and the incentives are such to, to, to see how elastic that brand is.

And, and next thing, you know, you're, you're, you're like me and you're, you're clicking on a link in

your newsletter and you ended up on a Forbes erectile dysfunction page.

Yeah, maybe, that's, that's potentially a myopic way of thinking about it.

Like, I actually, if, if I were at the New York Times, I would absolutely love the position that Wirecutter is in right now.

Because, Wirecutter has established quite a bit of trust with its readers over the course of, you know, the several years

it was independent and now eight or nine years of New York Times ownership.

They extended the brand probably a little bit further than maybe they should have in terms of some of what

they reviewed, but they remained relatively true to their core.

a lot of the publishers that were mostly, to your point, SEO shops that were

competing against them have decreased in viability over the last several years.

and Wirecutter and Consumer Reports and, and the sort of elite commerce publisher's share of direct traffic

has gone up quite a bit as, you know, people actually try to seek out what they

Right.

Well, I guess what I meant was, was, was not, was that those publications

that are, are, I think one of the things is the incentives, right?

And like, Google sets the incentives and it's really difficult to set the right incentives.

Right?

And it seems to me, like, the incentives clearly were like, most of

digital media to take the shortcut, like, is to look for the short term.

I mean, otherwise we wouldn't have had all those mattress review sites

Well, and I guess maybe I'm trying to put on rose colored glasses here, but I think the, the

silver lining here is I think the incentive structure is better, right?

Imagine you are An executive at Wirecutter today.

Is it more valuable to drive a couple of additional affiliate commissions where you might make 10 to 20 percent of 100

sale, or is it more valuable to hook in a really sort of wealthy yuppie reader from Greenpoint with a consumer product

review that you can potentially upsell into a New York Times bundle recipes and games by making that person a really loyal

reader of Wirecutter, which now exists as a tab from the New York Times home screen.

So, you know, I think whereas, you know, three to five years ago, the incentives might have been, let's try to milk a

little bit more performance marketing or affiliate money out of a commerce media property, the incentives are starting to

kind of move towards how can this be a way to really kind of delight readers that gets monetized in far more lucrative ways.

Not every company has that luxury, right?

Not every company is the New York Times.

Not every company has a massive subscription business like Consumer

Reports, which is a nonprofit that effectively prints cash.

you know, not every product review business ladders up to something bigger.

But if I, if you think about where this industry is headed, you know, if I were on the corp dev or M and a team

at a large retailer, and there was a publisher that always wrote in depth

reviews of my products, like I'll use blows or home depot as an example.

If there was a publisher that reviewed.

Esoteric HVAC equipment or lumber or semi gloss paint that had had a nice

little affiliate business one to two years ago that got hurt by Google.

I'd potentially be really interested in picking something like that up

as a, as an acquisition vehicle from my retailer or brand.

But if that company was doing weird performance marketing arbitrage schemes, they have no value to me, right?

They only have value if they were kind of creating truly world class commerce media.

So I think the nice thing about what Google has done somewhat inadvertently and probably accidentally is they've

actually in this sort of perverse and weird way rewarded the somewhat small echelon of creators and publishers

in the space that do great work and might not be as good as the arbitrage games at some of the other shops.

So that's interesting you say that because like I try to follow, you know, winners and losers in this,

and it seems like it's like the quote unquote small mom and pop, right?

You know, they claim that they're getting like, you know, wiped out

in favor of, you know, You know, the dot dash Meredith's right.

And then, you know, I talk with dot dash Meredith and they're like, these, these are, these are scammers, these, these

are, these are the low, you know, this is not mom and pop, like, you know, they're not testing the product, et cetera.

And I think it's, it's a really difficult to, to understand.

First of all, who the winners and losers are and, and why the people are winning are winning.

Yeah, it is multi faceted, right?

Because you have a number of indie publishers that have essentially been eviscerated by Google changes.

You have all of the businesses that use third party content marketplaces

and freelancers that have been, in some cases, borderline delisted.

and then most of the large enterprise commerce content businesses are down.

So it's, it's a little bit of this, like who is actually winning.

I mean, Quora and Reddit are winning, right?

That that's obvious.

Yeah.

Random bullshit is winning, asinine crap is winning, but I think

that's a sort of bug in the machine that will start to get filtered

We would, what is the random bullshit,

I mean, you have, I mean, the, the most egregious example I think that I saw recently was a, an LSU

sports fan community, um, ranking for, for personal finance, right?

You have just some of these like old, old,

just seemed like a, a, a

Yeah, but it's happening in more places than it should be.

It's not, it's a little bigger than a rounding error right now.

but yeah, I mean, to, to, to what we've been talking about again, what

I think is losing is, commerce media as a standalone business model, right?

Because it was dependent to a large degree on an arbitrage window.

That is temporarily closed, who I do kind of feel will win in the, in the, in the long term, given the return of

M and a activity, given the pickup and retail media networks at some point

of retail media wants to be media, they're going to have to have content.

But like real content, like, I guess the part, like maybe a hopeful view of what you're saying, at least

the way I understand it is that, look, the incentives were there.

This was a side hustle for a lot of, let's just say, stick with the big publishers, right?

A lot of big publishers.

It was a side hustle.

It was like, I've never.

In my time of covering this industry, I've never met like, the most dangerous place is to be standing between like a publisher

and and some promise of incremental revenue because they will run through you over you, whatever, in order to get at

that incremental revenue, particularly, particularly, and this is important.

They don't have to do a lot of work to get it.

and, you know, the, the promise of a lot of the way affiliate was done was this is an incremental revenue play.

And we're gonna we'll, we'll even outsource the actual content, you know, making of the content.

Like, there's other people who are better at this.

Our journalists are not going to be reviewing vacuum cleaners.

They would turn in some sort of, like, you know, weird inverted pyramid story.

So we're gonna allow experts.

You can see that.

but then it became just.

You're just hanging your brand on and this is where, you know, look, Forbes gets a

lot of grief, but I think you could make the case that Forbes is just responsive.

The most responsive to the market.

you know, you get, you get the force brand on all kinds of different things.

And it's not just Forbes.

It's lots of different, publishers that have done this.

And I think coupons are a good example, right?

Like, on the 1 hand, you could look at every newspaper.

You know, was carrying coupons as part of their bundle.

They didn't make the freaking coupons.

They didn't, they didn't go out and source them.

It's a third party.

Well, but if you get, if you go back historically enough, right, coupons were in the physical newspaper, right?

And I think that's kind of, you know, that business was incredibly lucrative.

The version of a coupon business that came to digital media was wildly less

lucrative, but it was again, almost sort of the least that Google could do.

And that's gone away.

I think there's a, there's a 3rd constituency in the market that we haven't yet talked about that I think

is very interesting in this space and probably less known to a lot of folks.

And that's the people who are really, really good at, some of the paid media arbitrage and some of the schemes.

these are publications like Buyer's Guide and Brain Jolt Media and love to know that most listeners here will probably have

never heard from, but I guarantee have almost certainly bought a product after

clicking on 1 of their recommendations, either in a search ad or social app.

those entities, I think, will continue to do really well, because as the sort of.

Navigating the Google machine gets harder and harder, the 0.

1 percent of people that are great at it, get a larger share of the reward.

Those companies I think will do well.

Again, I've talked at length about why I think the wire cutters and consumer reports and folks that

do actually test products and go in depth will do very well.

Everybody that's in the middle, it's a really arduous path forward.

I think for publishers that might have reviewed some products, relied on freelancers or 3rd parties

to review other products, relied obviously on Google for traffic.

Played around a little bit in buying paid media via Google and Facebook, but never really committed to Elaine I think

that whole sort of middle of commerce media He's going to fold and and the, you know, sort of top echelon of content

producers, and then the top echelon of growth hackers will will get much bigger and win a lot more of the market.

Well, it sounds like it's like dabbling is going to be out.

Like, you can't like dabble as like, you know, what?

It's like, oh, this is our 11th.

You know, revenue line that we just keep trying to fill the hole that, you know, advertising is left and

we'll, we'll do, we'll do whatever it takes and commerce is hot.

So like, yeah, we'll, we'll spin up some affiliate, and you know,

that, that gets harder because that was like an arbitrage play.

It gets harder there may be a couple last corners of it specifically in cases where where media is owned by private

equity firms, where an incremental, you know, 10 or 20Million dollars of revenue could make the difference between.

Those firms getting a reward during their whole period, or, or having a less favorable outcome, but.

yeah, the middle, you know, because I think the implied point that that you've made that a lot of other people in the

space have made is like, even if they're super world class, how many mattress reviews do you actually need to read?

Right?

Like, when does it become just a counter valuable paradox of choice for the consumer?

probably need to read 1 or 2 more and more.

I think that traffic will come from from folks going to a brand

directly or, you know , bypassing search and some interface.

but at the same time, quite a bit of that traffic will come from people being targeted by again, the 0.

1 percent of the most sophisticated media buyers in the space.

Who, when everybody else gets washed out can still kind of do their thing

and in whatever world Google and the rest of, of search marketing takes on.

Yeah, but it seems like, I mean, Google is sending more traffic directly to brand sites.

They're sending more traffic to Reddit in particular.

I mean, I think that's obviously well known and Quora and the rest.

And there's that, that intermediate layer that publishers have occupied.

it became known, I believe, or maybe this is just a part of it as Parasite SEO.

Can you define for people what exactly is Parasite SEO?

Yeah.

So Parasite SEO, and there are folks like, like Lars Lofgren who wrote the sort of viral Forbes posts that are, that

are deeper on the technical side of this than I am, but it's essentially the, the practice of using a well known domain.

And partnering or spinning up third party content that is produced by an outside party that gets

published under that domain to kind of piggyback off the authority that that domain has with Google,

right?

and Forbes is Forbes is the go to

Yeah, this is how

I don't like I have nothing against Forbes or anything because I do believe you can make the case that

of all publishers, Forbes has been the most responsive to marketplace changes of any publisher throughout its history.

It has been incredibly responsive.

And in some cases, the results of that responsiveness have caused some of us to clutch our pearls.

But like a.

Yeah.

I mean, even the contributor network, as flawed as it was, right, 10 years later with the kind of, you know,

rise of whatever you want to call it, UGC, citizen journalism, whatever is happening in Elon Musk's world looks

a little bit more prudent than you might've thought it did a few years ago.

Yeah.

Now Forbes is a special case because they've got this relationship with marketplace, right?

Like, I mean, and they, they own, I think 50 percent of it.

And I think that there's when Google tried to disentangle all of this parasite SEO, because to me, like

parasite SEO, It's kind of like made for advertising websites.

It's which is also similar to me.

It's like pornography.

It's like kind of, you know, when you see it kind of thing.

It's really difficult to adjudicate.

yeah.

The interesting thing about, I think Parasite SEO, when it's done well.

Might actually pass the the porn test quote unquote, it's when you know It gets really really egregious and you

start having again We've harped on this example that forbes ranking for erectile dysfunction and cbd gummies that it all

kind of falls apart a little bit I'm sure defenders of the model would argue that

there's still value being created here if the content is good in a way that doesn't

Yeah, it's just what what who is to say who is the, you know, expert on anything.

I mean, like, what?

Who's like LSU fan site might be an expert on a high yield savings account.

And, you know, Forbes might be, know a lot about CBD gummies.

Who, who, who are we to decide?

Yeah, that's a tough, that's a tough intellectual road, I think, to go down.

You start to get to nihilism pretty quick, I think, if you go too, too deep down that path.

But I think, you know, you said something a couple minutes ago that I, I think is very relevant here, and that's Google

sending traffic directly to brand websites for some of these queries.

Because look, I mean, who knows if the love affair with Reddit will last, right?

Like Reddit is still, I think, in Google's mind, kind of like a cute up and comer,

even though it's almost 20 years old and has been through a ton of ownership.

the stock has, has risen a lot, but it's still only like a 30 billion market cap company, and they're still

kind of a viable partner for, for Google right now, there's still a

quarter of an app loving, as I like to say, is, is Reddit scale right now.

but if Reddit continues on this trajectory that they're on, and starts to become something of a true

search destination themselves, I think Google's gonna start to have some, some pretty large questions about the

kind of monster that they created, so who knows where that partnership goes, but Google's sending more traffic to

brand websites directly, like, that's a change that's going to endure.

I think I said in my newsletter, which is Latin for the die has been cast.

Apologies for the pretentiousness, but that that is a much more significant

change to me than the sort of sudden love affair with forums, because.

Sending traffic to mediocre brand blogs at the expense of publisher

middlemen is a very hard line in the sand that Google is drawing, right?

The only reason they, but Google is basically doing is they're saying, we are going to send you to a worst and

inherently biased source for a given query, because we think it gets you a

little bit closer to the point of purchase or the point of transaction, That, right.

If you think about it,

Some friction is okay.

Like, I think like, you know, like that, this is the sort of thing is I always think like there's, there's this idea,

particularly in tech, that all friction is bad and all friction must be removed.

And, you know, I can understand, I think truly on people versus algorithms said like that, Google started to see, you

know, publisher affiliate content pages as, as an invasive species and search that needs to be ripped out, root, root,

Roots first,

mean, if there was one thing that I think would make the entire tech media and commerce ecosystem a better place,

it would be somebody in the sort of Silicon Valley zeitgeist agreeing to the concept that some friction is okay

because I can understand if you're, if you believe that like

friction is horrible, there's no way these intermediary pages should exist.

Right.

but the reality is your alternative is to send people directly to like the brand site to transact.

And I understand why Google would want to do that, but like, I don't know if that's a better user

it's, it's the same sort of twisted ethos that's driving Google's decision making that's driving something like

Amazon haul where you can buy meaningless shit you don't need direct from China.

In 9 days, right for 20 or less.

It's the same idea that's causing Facebook to suddenly put AI bots and other things on the platform so

that you instantly kind of get this dopamine hit without having to actually

go through the hard work of creating content that people want to react to.

It's this idea that it has to be as easy and as friction free as possible.

That's breaking media.

Commerce and tech.

And I think in our world, it sometimes gets too myopically covered that, that Google is some sort of, you

know, uniquely evil beast when they really are just an extension of an

ethos that for better or worse is kind of one in, in our whole business.

and I think folks like us have to respectfully push back at,

but also, like, it's interesting because, like, you know, people have long complained about Google's monopoly

position again, whether it's de facto de jure, leave it to the courts, but we're doing more Latin in this podcast,

there we

but, You know, the reality is, be careful what you wish for, I always say, because Google is under more

pressure than it's ever been, leave aside its stock price, doesn't seem like it's under too much pressure, but

like, it is under pressure, you know, because of how polluted it's, it's core search product has, has become, who's

ever fault that is, and because of the specter of AI being the first real challenge to the 10 blue links era.

And, and Google really enjoyed the 10 blue links here.

And I used to, you know, poke and prod at, at Neil, Vogel from

dot dash Meredith about his, you know, reliance on this algorithm.

He would always tell me, well, it's the most reliable algorithm ever existed.

And the reason it was reliable is because you don't mess with, don't fix what is broken.

Google never had to give guidance for a reason.

Because they could tune it wherever they wanted.

I mean, like, that doesn't, they're coming up short, just put a few more ads on a few Mesolithema pages.

Like, it's, like, it's fine.

but now that they're under pressure, they have to make a lot of changes.

And when you are, when you are that big, and you are, you know, the nervous system of, of an entire massive, ecosystem, any

change that you make is gonna, like, be an extinction level event for some people.

And you wonder who really knows how the beast works.

Like, I think one of the things that's been really telling about how Google has brought some of

these quote unquote helpful content updates and core updates to life is.

These changes they have made, which to, to your point, have been existential to the ecosystem and upended entire businesses.

It seems like it gets published far and wide to folks like us because we follow a lot of people in the

space, but it's buried on like a sub page of Google Search Console.

And the author of, of, Some of these blog posts around helpful content updates is like a fairly shockingly junior person

giving the given the importance of Some of these changes to the ecosystem and it's it begs a couple questions

One is does Google not realize the gravitas is the other possibility like?

Senior brass, this would be a very like Ed Zitrone argument, right?

Senior brass at Google just doesn't know how the beast works,

they're management consultants or whatever and in, in tech clothing.

it's, it's this like little subtle thing, but the fact that you have sort of these mid level managers writing 300 word blog

posts that upend entire multi hundred million dollar markets and livelihoods is.

Just this really interesting kind of substory in, in this whole, in this whole thing.

And I think it speaks a lot to, to, to where Google is falling short.

the, the ask, I think that would be reasonable from the sort of

media affiliate, whatever you want to call it, community to Google.

It's just for more media literacy.

Like I joked on my blog that like, Google should just hire Lars, whatever it costs, right?

The guy who wrote the Forbes, the charge article.

If it cost him 800 grand to hire alarms, that's our, I mean, I have no idea

if he would go work there, but that's a rounding error in Google's budget.

And the amount of institutional knowledge that he would bring on this space, I think

outweighs a hundred product managers that Google has working on, on search and, and

So I'm going to, I'm going to date myself a little bit, but

I mean, Google sort of did this before by, by hiring Danny Sullivan,

Yeah.

He,

Danny was

the

ambassador to that, to that world.

was more of a public editor kind of ombudsman role, right?

Or was it more of

Well, I mean, to me, I mean, those that don't know Danny Sullivan started, search engine watch, which was a, really

sort of pivotal, Publication in the rise of like search, nobody was doing it.

And like Danny did, I think he was like living in England at the time.

And, you know, he became the center of this emerging community of, of people who were engaged in SEO at the time.

And then it became SEM to, built, it was actually a really interesting early example of someone who built,

like, I guess what we call now, like a creator independent business.

I mean, it became part of, of, of what was then, what was then He was a colleague for a brief time, early in my career.

but then he got hired by Google cause he had the central role in the ecosystem and everyone knew Danny and he was the

way for the Borg to communicate because like Google was hiding, hiding, but they were hiding behind this algorithm as if

they're like, well, we're just kind of like, you know, we don't know exactly what happens, the algorithms making

all the decisions and like, you can't really, and it was always kind of like.

Ridiculous because I'm like, you built this thing.

What are you talking about?

You're not Frankenstein.

but like, you know, now I think what's interesting is, you know, when

you talk about the helpful content updates, they're doing manual actions.

Right.

It's they've almost dropped the illusion that the algorithm can figure this out.

And in a way that's refreshing, right?

There's like a little bit of honesty here,

Yeah.

Finally, you know, the, the curtain is back.

Yes.

There's a guy, it's a little disappointing with the guy, but like,

The wizard's back there with his projector.

And to me, that's like, that's a defensible position that Google could have if they actually had Some,

I mean, forget about affiliate in commerce, just some semblance of, of media literacy to begin with.

and it's, you know, I mean, I think Danny's role is interesting, but it's almost like you want folks like him closer

to product and engineering, where if manual actions are going to be taken, you know, this would be super, super manual

arduous work where people from deep within the ecosystem would basically have to

look at some of the, the companies that have large share of voice on the SERP.

And using their sort of institutional knowledge, actually say this is a company that truly reviews products,

this is a company that is getting quality traffic, this is a company that, converts at a high rate when people

click on their, on their links, they're likely to buy, like there are people in our world that know these things.

I think I know enough to be dangerous.

And there are people that know the specifics of this 50 to 100 times.

that I do, and, and Google seems to want to kind of keep these people at arm's length with a 39 and a half foot pole.

that's I think where the, the criticism is, is probably the most valid, which is you're taking manual actions and you

have people that don't even understand the one on one level of this ecosystem.

on the keys of those manual actions.

and look, I mean, maybe I'm wrong with all of this, but, but if so, Google needs better comms people to write some of

these helpful update blog posts, because it, it's coming across that people that have a very surface level understanding

of, of commerce and affiliate SERPs are, wielding an inordinate amount of power

right now and, and who gets traffic and, and the results aren't great.

So I like in the newsletter, I'm, I'm somewhat of a defender of Google's broader ethos and the way that they're

actually trying to react to competition far more than most people in the space.

but I'm a very, you know, sort of harsh critic of some of the tactical

Yeah, well, it's hard because you have to look at it from a long term perspective because again anything that

any action that Google is going to take in this regard is going to have a bunch of people who are losers and they're

going to be very vocal about it and it is going to be to some degree ham handed.

Like, it's kind of like how, you know, anytime a big company does

layoffs, there's immediately like, oh, they handled it terribly.

And I'm like, okay, but literally every single big company that has done layoffs has been like, has done it terribly.

So I almost think like, this is just how I expect it to be done terribly.

doesn't make it any better, but long term.

You know, it's, it's hard to say because one, I think clearly, no

matter whose fault it was, the search results have become less useful.

Like, I think it doesn't, you don't have to be an expert.

You just have to have two eyes to understand that search is less useful than it is.

Secondly, like you want to get to the point where, whereas Google's interests are aligned.

And they don't want people going to perplexity.

They don't want to keep people going to search GPT.

They don't, they want people to be finding value still in the search results.

Absolutely.

Are they going to direct more traffic to their own property?

Yeah, of course, man.

No,

it's another one of these things, right?

Like there aren't too many, Regular internet users taking to the, to the streets to, you know, defend large

commerce publishers.

There's a lot of well

no local protests here.

right there.

And like, if, you know, maybe if you really think about this deeply, there probably are some people that are

upset by some of the very, very good niche communities that have been hurt.

And some of the very good niche commerce publishers, I think there'd be a good set of people that are, you

know, that would be upset if, if, you know, wire cutter got significantly

The air purifier site.

I

Um, but yeah, I mean, I think that, you know, one thing that is important to remember about Google or any platform

is like a lot of in shitification is a demand side problem, right?

We treat it like it's all supply side, right?

Greedy monopolies, capitalists, robber barons, make changes to platforms to make them worse, to, to make more money.

But the reality is execs at these companies see all sorts of data points

about people's true preferences, not their stated preferences, right?

They see what people actually do with their little keyboard fingers and, and.

and mice and they know what users to some degree actually want.

and unfortunately I think in, in, in many ways it is, it is shittier user experiences.

So unless companies are willing to be bold enough to cut against the grain.

I think a fair amount of, of what is hurting commerce media and stuff right now is, you know, when given the opportunity

to get information quicker, you know, users are gravitating towards that and to some degree, Google was reacting to that.

right.

This, this line of thinking extended too far gets dangerous, right?

You just get faster horses and no cars.

but it is, I think, a valid part of the conversation that gets lost sometimes, which is, you know, people don't

necessarily want to wade through, you know, a ton of middlemen, but how do you sort of balance that with the fact that

a lot of, you know, companies that do review products and services add value?

It's, it's a hard problem.

yeah.

And it's also it's a subsidy, right?

I mean, just like the classifieds, subsidize the quote, unquote, hard news, and your food section subsidize.

It's not like the Baghdad Bureau like paid for itself.

you know, this is.

And a lot of, and I think this is the hard part because I think one of the big losers are, you know, news

publishers that use this as a subsidy for less profitable core business lines.

Right?

I mean, there's the meme that the New York Times is now like a games

company because people are spending more time on games and food and

a lifestyle bundle for yuppies, Brian, is my

Yeah, it's for the upper west side as a mindset.

Yeah, I get that.

And like, you know, but that is like, it's a little bit of, you know, what's what's new is what's old is new again, et cetera.

I think one of the hard parts is like, when we talk about parasite SEO is,

you know, yeah, nobody needs to like 9000 like mattress, review site under.

You know, some old magazine brand, but there are a lot of, you know, people who are, you know, trying to

support a part of the business that I think is societally important, that because of keyword blocking and a

lot of just, you know, the way the ad system has gone is, it's almost not an economically viable business on its own.

Yeah, and there's a big question of like, Let's say that we're sort of both right in this sort of like

middle of the sort of commerce media ecosystem is going to get hollowed out.

There's a question of, does Google have some moral responsibility to protect that ecosystem, which it created through

the incentives that it offered over the last, call it 10 to 15 years , right?

Like even if I'm correct and wire cutter consumer reports will do great.

Some sort of smaller niche media companies will get bought by retailers

and brands directly as a sort of content marketing and media play.

and growth hackers will do very well.

You still have these massive, you know, relatively speaking commerce media operations at Hearst, Dot Dash

Meredith, Conde Nast, Red Ventures, as well as all the indie publications that employ a lot of people, employ

a lot of freelancers, and yeah, to your point, do act as a subsidy for,

you know, harder journalism that is rarely, if ever, going to be profitable.

does Google have a responsibility to protect that right?

Should publishers be just that ever a little bit higher in the ranking order?

Because if a certain amount of quality journalism sort of disappears

as so does, you know, search and information on a long enough timeline.

that's a question that I hope people kind of grapple with a little bit.

That even if some of these commerce media operations don't always add the most kind of immediate value if they subsidize.

lower margin media products, should there be some move to protect them?

I think it's a really, really interesting question.

And I think over the last 10 years, there was a little bit of an implied agreement to what we've been talking

about for 40 minutes from Google that, that, that balance should exist.

But only when Google was such an unchallenged monopoly that it was convenient at the first sign of

kind of difficulty, they've, they've seemingly run from that position, which has negative externalities.

Yeah.

it's to me, it reminds me of like, you know, marketers with their agencies, right?

I mean, they, they crunched down their margins, like zero.

And like, yeah, of course, they're going to turn a blind eye to them, like having some form of kickbacks that

they'll disguise as not being kickbacks, because like, everyone's got to eat.

Like, I mean, Like, I think that's why I'm like, Oh, no, you know, markers are getting ripped off.

My media agency is being principals and trans.

I'm like, give me a break.

You're not paying them for their services.

So they're going to make money somehow.

So you get what you, you, you deserve.

I want to talk really quickly before you go about app loving.

because it's like an interesting, I've always found, you know, this, there's so many different pockets

of like digital media and the app download people have, have always been like almost like separate.

There's been like the, the app ad tech.

Ecosystem and there's been the ad tech, ad tech ecosystem.

One is West, one is East, Bloods, Crips.

I don't know, but like App, App Lovin is like a company that for people who are not in the gaming space,

like, you know, it was probably not central, you know, they're not, they would think about trade desk.

They wouldn't think about App Lovin.

but App.

Lovin is, is, is, has become either like a fascinating example of

a bubble or, or this is like an incredibly interesting, company.

Give us the download on Applovin.

that are less familiar, like just to sort of throw out some stats on Apple ovens run, the stock is something like

something like 10 X over the last year and change, it is, more than twice the size of the trade desk by market cap.

It's bigger than Pinterest snap and a Reddit combined.

And it's more than three times the market cap of this combined IPG Omnicom sort of mega agency

they drive downloads of

And they drive downloads of games.

It is in a sort of, I mean, this is, this is pretty crass.

And Kathy at Apploven, if you're listening, don't, don't hate me for this.

Right.

But it's basically the 15 second video spot that you, that kind

of hijacks your screen when you try to level up in Candy Crush,

I doubt they market it that way, Mike.

mostly historically it's been, it's, it's been a successful business, 3 billion plus in revenue in 2023, but what's

driving a lot of the surge in their stock price here in 2024 is they've started.

selling their advertising services to high growth DTC and other e

commerce brands and the initial sort of row as has been pretty good.

There's some early signs that it's sort of an incremental.

Channel for advertisers, but I think the operative question that

probably a lot of people that don't come from the space have is like.

Okay.

How is that driving 120 billion company?

and here's my perspective on it.

So for, for, you know, my background is actually my day job is on the demand side.

I run growth for a conglomerate of CPG brands.

So I both directly and indirectly manage quite a bit of advertising spend.

And one of the things about sort of the DTC CPG e commerce industry.

is it's wildly uncomfortable how much the vibes of our space are tied to Meta's algorithm performance, right?

You talk about like aggregate spend of D2C brands over Q4 of last year.

It was like 70 percent on Meta, and a fair amount on Amazon PPC too.

So when Facebook's algorithm or Meta's algorithm is working well,

The vibes in like DTC, LinkedIn, and Advertiser Twitter are fantastic.

When there's an election.

When there are weird bugs in the machine as they start to pivot towards their AI future.

It feels like a mortuary in our business.

Applovin is the first glimmer of hope, I would say, in seven to ten

years that there might be a net new incremental channel, that pops up, right?

It's the, it potentially dwarfs the scale.

I mean, for most, like, fast growth D2C brands, Reddit is still a rounding error.

Twitter CPMs are low, but they're not really performing.

Connected TV is becoming a thing.

Retail media is viable, but only for omni channel brands that are in a lot of retailers.

you know, for a lot of, you know, sort of up and coming e commerce brands, you live and die by Facebook,

and if it breaks, everything else is, again, almost a rounding error.

Applovin, if they continue to build at this rate, Potentially, is a true sort of second fiddle player.

And I think the sheer sort of optimism of that narrative, has, you know, driven the stock to almost unfathomable highs,

it's almost valued as much as Shopify is, this'll be the year we find out if,

if the company can actually deliver on that promise, but like, that's the sort

but they're an ad network basically for mobile

They are an ad network for mobile

They don't own any inventory.

They don't.

And so they're, I mean, for ad networks, you either need like.

A unique, you either need like unique inventory, you need performant, like ad units, like special ad unit, some kind

of like special data that can like, what exactly is it's it, what exactly is,

well, I think, the, I think, so there's a few arguments that folks would make here.

Here's the one that I'll make, is what I think AppLovin has that doesn't really exist, are access to

consumers that have opted out of a lot of the rest of the digital world.

Even the most tinfoil hat folks on the planet, I think, are playing Words with Friends and Candy Crush, and this is

kind of a crass way and cynical way of saying it, but, there aren't too many consumers, particularly older consumers,

particularly some older higher household income consumers that aren't playing some amount of mobile games, and this

is an audience that in theory, and we'll see if this, this plays out in practice, is, is pretty hard to reach elsewhere.

what will determine App 11's success over the next sort of year is whether or not the, the customers are truly incremental

and truly discovering these brands for the first time when they get the ads on mobile games, or if they've seen ads

for these companies on Facebook, out on billboards, et cetera, et cetera, and then are just sort of purchasing at the 11th

hour when they play a mobile game, that'll take 12 to 18 months, I think, for that data to sort of come out into the world.

but even if, you know, they don't have quote unquote unique inventory.

I think a lot of the optimism is being driven by this hypothesis and theory that they do have access to

a very unique customer that is very, very hard to reach through both traditional and digital channels.

And if that's true, it could justify this sort of meteoric valuation.

And that is, that's the incrementality that, that everyone looks for.

And, and that just means like you're getting something additional because a lot

of the ecosystem is about trying to take credit for a transaction at the end of it

And

to, like everybody else in the space, very, very aggressively trying to do

that,

no, everyone does it because

are pockets of data that suggests that they might be, you know, helping companies actually tap into new audiences

in a way that hasn't been seen in any advertising in any nascent advertising channel since I've been in the business.

What I think is good is, like I said, it'll be sometime by Q2, Q3 of this year, there'll be enough data to know if this

hypothesis actually plays out or if this is going to be a pretty large bubble.

right.

And, and final thing is around, around the AI answer engines.

Right.

how do you see there that changing?

You know, the, the, the world of, of commerce media, because there's going to be, it would seem to be very clear with

the AI overviews that the, the amount of traffic going out is going to be less, and that's another sort of pressure point.

It doesn't mean no traffic, it's going to go to zero, right?

But I would imagine there's going to be less traffic as people use, I don't know about you, but

like, I mean, the more I use like perplexity, the less I use Google.

I mean, there's only so much

Perplexity Shopping is a great product.

Like, it's, it's a, it's kind of an interesting controlled environment.

Some of the things they're doing on the back end to make it possible for you to sort of one click purchase from

merchants like Best Buy and stuff on Perplexity, unclear, you know, how sustainable some of that will be,

but as a sheer sort of like commerce experience, it kind of feels right.

Like I was fairly bearish on a lot of the LLM commerce deployments until

I saw perplexity because, you know, voice has been tried, has failed.

Chatbots in some form have existed, you know, for quite some time, have never sort of gained critical mass.

Like this idea that Converse was going to become sort of a more conversational transaction.

I was, I was skeptical of, I, it was one of these things where I'm like, people have voted with their feet and they want

rectangle search bars and square product pages that they can buy from and we should optimize the margin, basically.

but seeing perplexity shopping experience, seeing how aggressively Amazon has been willing adopt Rufus.

obviously they hired our friend Shereen there too, which is kind of,

kind of a fun little, kind of a fun little wrinkle in, in that process.

But, you know, if you think about Amazon adopting something like

Rufus, they're giving up a lot of ad inventory to do that, right?

Because a conventional commerce search can show four or five ads that

they can charge advertisers on an auction for, and then product pages.

Rufus might be able to show you one.

If it he she is lucky.

so this is going to be the year again, whether it's these large companies, be it Google perplexity.

Amazon have sort of done their homework and they realize that the LTV of of showing shoppers.

These kind of driven experiences is better.

or whether they're just trying to kind of brute force it into being because the narrative is so friendly like.

We'll know, I think by the end of 2025, if LLMs will become a somewhat dominant infrastructure for commerce or not, which

is why like, there's so much speculation in the space right now, but I'm kind of like, we'll have the data in six to 12

months.

Um, like this is not going to be a long burn.

Like the thing to watch, like perplexity is going to be hard because there's such a nascent product and you know,

they still have such a fraction of market share relative to Google.

But the thing that I think will actually determine perplexity and a lot of people's fate.

is I would watch what Amazon does with their LLM experience.

If it continues to get deployed to a larger percent of traffic, continues to become more prominent

in your Amazon app and home screen, it means they're seeing things that

suggest that AI is more lucrative for them than conventional search.

If you see Amazon start to roll back Rufus in a big way, that is really bearish, I think, for the, for the entire

going to hold my fire on that.

I can, I, I got excited for A9 back in the day when, when Amazon was, was built, was going to build its own search engine.

And I got, I got burned on

Yeah, that was not, that was a big operation within Amazon and, you know, and,

yeah, I mean, they, they put a lot against that and it didn't, you know, forget about the fire phone.

but my, my fear with it all right now is like, I, I think a lot of these, something like perplexity, and I'm

thinking about this from a commerce lens, because that's the business I work in, but I think it might be the same for search.

I think it might be this kind of experience that someone like me says they like better, but they

actually buy less stuff when they go to it, which is not what large tech companies are going to roll.

If my average revenue per visitor or my, especially my lifetime value is lower.

Then Rufus gets taken out back.

exactly.

So my thought is I might prefer perplexity commerce, but I

probably buy more shit when I do a conventional product search on Google.

And that's going to be a really interesting sort of dichotomy.

If, if my hypothesis is correct, that that plays out at scale.

that'll lead to some really interesting sort of developments in the space.

All right, Mike.

We'll leave it on the the buy more shit like litmus test, which is always the litmus test All right.

Thank you so much.

This is really fun.

I really appreciate you doing it

Yeah, I had a good time.

keep reading.

I'll keep reading, keep linking to my stuff and I'll do the same.

Thank you