Narrativ marries affiliate links with real-time auctions

The basic model for affiliate links is fairly straightforward.

Inside or near an article, a link allows a reader to buy a related product. An article about the best new digital cameras, for instance, might contain a link — perhaps with an image — to buy a specific Casio camera mentioned in the story.

If a reader clicks that link and makes the purchase, the publisher of the story gets a commission. Otherwise, the publisher gets nothing.

New York City-based startup Narrativ is now updating that model, by turning affiliate links into programmatically bidded ads. CEO Shirley Chen told me that her company is “the first to apply programmatic bidding to in-content product links.”

When the page is loaded, the links to product sales on that page are made available for programmatic bidding through Narrativ’s own real-time exchange. The real-time auction can also be conducted when the link is clicked, depending on the publisher’s choice.

The product, such as a Casio camera, might be sold through multiple online retailers, each of which can bid to have any click on the link directed to their store.

The winning bid from the real-time auction might pay, say, between $.75 and $2.00 for each click on the link. The publisher gets paid for each click but gets nothing if the reader buys the item.

The linked item is also connected to a Google product feed from the bidding retailers, so it is only directed to an online store where there is product inventory. No user will click on the Casio camera link, only to find it’s out of stock or that it goes to a “not found” page.

The Narrativ’s SmartLink AI platform has been in a closed beta for about 18 months with selected publishers like Allure, GQ and New York Magazine and with more than 500 retailers, including Ulta, Neiman Marcus and DermStore. It has recently been launched into general release.

CEO Shirley Chen told me that an advertising retailer like DermStore, owned by Target, saw a 685 percent increase in revenue with her company’s platform, compared to standard affiliate links. While DermStore pays by the click and not by the sale, it can also direct more traffic to its store by continually winning the auction.

On the publisher side, she pointed to New York Magazine, which saw a 250 percent revenue lift compared to affiliate links. Obviously, with a CPC model instead of a commission basis, publishers make something on each click. Although calling an ad server for the link destination, the auctioned ad is not hampered by ad blockers because they see it as editorial content.

Chen prefers to use the term “in-content links,” because affiliate links generally go to one destination and have one pricing model — a commission-based cost-per-action.

Also, she pointed out, those links often go to Amazon, but Narrativ’s real-time auction can allow another retailer to grab the traffic instead.

“Don’t you want to take link traffic from Amazon?” she asked rhetorically.