Recess Is Over

Back-to-School promotions can lead to big bucks if online marketers start early.

Back to school is a big deal for affiliates – it kicks off the part of the season between June and January where many earn the majority of their annual revenue. The overall “back to school” season refers not just to shopping for kids in grades K through 12, but other spending periods including “back to college,” new fall wardrobe, family vacations and sending the kids off to camp. Many affiliates find it second only to the holiday season in terms of sales.

Traditionally, many people consider the back-to-school (BTS) shopping season as a week or two before school starts in August and September. But according to a July 2005 National Retail Federation (NRF) report, 16 percent of consumers start their back-to-school shopping at least two months before school begins and 45 percent begin shopping between three weeks and a month before school starts. With school start times creeping back to mid-August and even earlier in some states (such as Hawaii), it would benefit merchants and affiliates to start their back-to-school efforts as early as May or June.

Chris Henger, vice president of affiliate marketing for Performics, suggests, “Merchants should initiate programs in early June – that is when placements should be secured.”

Irv’s Luggage, which sells backpacks and bags for back to school, starts its season in June. Mary Beth Padian, senior director of Upromise, an affiliate that is partnered with over 430 online retailers, says “most of the merchants we work with start their BTS promotions during the first and second weeks of July.” For example, OfficeMax starts its BTS season in July and Payless Shoes starts their efforts off-line and online in mid-July.

Overall Market

In August 2005, the retail researcher NPD Group predicted overall back-to-school spending would rise 1.4 percent over 2004. They estimated consumers were planning to spend $372 per child this year, up from $367 last year.

The NRF had a higher prediction. The August 2005 Back-to-School Consumer Intentions and Action Survey, conducted by Ohio-based market intelligence firm BIGresearch, found that families with school-aged children would spend an average of $443.77 on back-to-school items. It estimated that for K-12 students, back-to-school spending would see sales of $13.4 billion.

The NRF 2005 Back-to-College Consumer Intentions and Actions Survey, also conducted by BIGresearch in August 2005, predicted that college students and their parents were planning to spend 33.8 percent more in 2005 than in 2004 – a whopping $34.4 billion on returning to campus this year.

The $47.8 billion combined predicted spending on back-to-school and back-tocollege merchandise falls behind the Christmas/winter holiday in terms of seasonal sales. Total consumer spending for the 2005 holiday season was $438.6 billion, according to the NRF.

School Supplies

What items are included in back-toschool shopping? In August 2005, NPD Group predicted that the best-selling items would be apparel, school supplies and footwear. According to the chief industry analyst of NPD Group, Marshal Cohen, denim would top the list of mostpurchased apparel item.

For back-to-college merchandise, BIGresearch predicted that spending would rise in all tracked categories; they forecasted that parents and students will spend $11.9 billion on textbooks, $8.2 billion on electronics, $3.0 billion on school supplies, $5.7 billion on clothing and $2.0 billion on shoes.

Shopping Online

So how much of back-to-school shopping occurs online? The 2005 NRF survey found that 32 percent of back-to-school shoppers plan to shop online and that number is expected to grow. One of the main reasons, explains Phil Rist, vice president of strategy for BIGresearch, is that “many store-based retailers are expanding their online offerings ” in many cases, creating broader selection online than they carry in their stores.”

The 2005 “Back to School Shopping Survey” from AOL’s InStore, conducted by Digital Marketing Services, reported higher online spending than the NRF. Parents anticipate spending nearly half of their back-to-school shopping budgets online; 53 percent say online shopping makes back-to-school purchasing easier. The survey also found that most shoppers (58 percent) prefer to research their purchases in advance, as opposed to making impulse buys (42 percent).

Targeting Teens

With the projected growth of back-to-school shopping online, online merchants and affiliates should prepare accordingly. Given teens’ growing number and purchasing power, it makes sense for merchants and affiliates to reach out to them online.

In fact, Web merchants, responding to a June 2005 survey sponsored by the online trade publication Internet Retailer, found that the third most frequently cited growth driver was the growing buying power of today’s Web-savvy teens and young adults.

Jeffrey Grau, senior analyst for eMarketer and author of February 2006’s “Retail E-Commerce: Future Trends” reports that, “Credit goes to a cadre of digitally literate young adults who are replacing older Internet shoppers in the e-commerce marketplace.”

A 2005 report by Pew Internet & American Life Project detailing a survey conducted in 2004 found that 87 percent of American teens age 12 to 17 used the Internet, up from 73 percent in 2000, and found that 43 percent of teens who go online purchase items.

One opportunity to reach teen and young adult consumers is for marketers to take advantage of their inclination for using consumer electronics and entertainment devices and for visiting websites about gaming (see story page 74). According to a 2005 Forrester Research report, over 90 percent of consumers age 12 to 21 in the U.S. and Canada own a gaming device and 75 percent play online and off-line games on their PC – marketers could integrate ads about back to school into the games themselves.

In addition, marketers would be wise to advertise about back-to-school shopping on a variety of websites. Young consumers spend more hours per week on the Net than adults, and Forrester found that almost 80 percent of teens visit game sites, almost 50 percent visit movie sites, and over one-third visit music sites.

Social networking sites are another opportunity for merchants to reach teens and young adults. Debra Aho Williamson, senior analyst for eMarketer, says, “Teens are the consummate word-of-mouth consumers; they discuss their likes and dislikes in blogs, text messages and posts on social networking sites. There are two caveats, however. The atmosphere is freewheeling and merchants may need to cede some control over their brand image. The other caveat is that teens feel no qualms about exposing a company if their motives seem suspect.”

Of course, another core audience for back-to-school promotions is the parents of school-age children. AOL’s InStore’s Back to School Shopping Survey found that parents plan to spend 47 percent of their back-to-school shopping budget online.

Affiliates may want to reach out to men in their 30s and 40s (fathers of school-age children) because AOL’s InStore’s survey found that fathers plan to spend nearly 25 percent more money on back-to-school shopping than mothers – an average of $336 compared to $270. It also found that fathers are more lenient, allowing their children more freedom to shop on their own and influence final purchases. The survey also found that dads expect to do more than two-thirds (68 percent) of their back-to-school shopping online compared to 42 percent of moms.

Be the Teacher’s Pet

Merchants are finding that in addition to parents and teens, teachers make a good target for back-to-school shopping promotions. According to a 2004 study conducted by Quality Education Data, each year, teachers in the U.S. spend more than $1 billion of their own money on classroom supplies. The study found that only 40 percent of the money spent on classroom supplies in this country is provided by school districts; 60 percent of those supplies are purchased by individual teachers for their own classrooms.

John Serpa, president of Maps.com, says, “Maps.com’s product mix has found that teachers are the core back-to-school audience. It has been reported that teachers spend an average of $458 per year of their own money to purchase bulletin board and other classroom-type materials, so our promotions are geared toward teachers.” It seems to be working, as Maps.com has realized a 38 percent increase in sales in August 2005 over August 2004.

Sally Graham, senior manager of ecommerce for OfficeMax, says “teachers and those who are college age are seeing OfficeMax as the place to shop for back to school.”

What Sells

According to Craig Cassata, president of Mr. Rebates, “There is a whole multitude of back-to-school items that are top sellers such as the obvious products like school supplies (pens, paper, etc.) but we’ve seen a marked increase in laptop sales before school as well as a good amount of apparel and clothing sales too.”

Although eMarketer’s Jeffrey Grau does not have the numbers to quantify it (because merchants tend to only break down their Christmas holiday numbers), he believes that the apparel and accessories category makes up the lion’s share of BTS shopping. A February 2006 comScore Networks report found that sales for apparel grew 41 percent in 2005 from 2004. According to a June 2005 survey by Internet Retailer, 23 percent of respondents believed that the apparel and accessories product area would see the greatest growth in online sales in the next five years.

AOL’s InStore’s Back to School Shopping Survey found that the No. 1 backto- school item parents plan to purchase online for their children is apparel, followed by books, with accessories and computer equipment tied for the No. 3 position.

However, it seems consumers still have doubts about buying apparel online. An August 2005 Gallup poll, which surveyed 7,000 adults, found that over threequarters prefer to buy clothes in stores rather than online – only 9 percent said they preferred to shop online for clothes rather than in stores for reasons such as concerns about the fit and shipping costs.

Affiliates who sell apparel might do well selling items that are trendy for fall and/or are “hard to find.” Michelle Madhok’s SheFinds.com is an affiliate site for fashion and shopping whose audience skews toward younger women including college students. She says her site has “an advantage over the magazines of being able to jump on the trends – if there is something that is really hot – we will bubble it to the top so people can get it before it is gone.”

Examples of apparel that can be hard to find or are very trendy are specific brands of jeans. Right now, Angelina Jolie is making JBrand jeans very popular but they can be hard to find in Peoria. So people tend to buy denim online, and for this reason, SheFinds.com puts out a denim guide in time for fall fashions. “We don’t do as well with stores [merchants] that have an off-line presence. For example, I have heard that people print us out and go to the Gap off-line,” Madhok says.

Another potentially lucrative back-toschool area for affiliates is selling electronics to teens and college students. According to NRF’s Back to College survey, the average freshman, moving away from home for the first time, plans to spend $1,151.68, with a big chunk of that ($540.35) on electronics.

“There are three items no self-respecting 21st-century teen wants to be seen without: a mobile phone, an iPod and a computer. Back-to-school shopping lists will no doubt include these items,” says eMarketer’s Williamson.

In August 2005, the NRF predicted that although 44 percent of consumers plan to purchase electronics for back to school, the average spend was expected to fall to $68.08, compared with $101.03 in 2004. However, in October 2005, market researcher IDC found that strong back-to-school sales helped boost sales of mid-tier vendors, including Apple, Gateway and others. In June 2005, HP introduced a new back-to-school PC and monitor with new features, lower price and one full year of technical support.

Additional evidence that suggests electronic sellers are doing well: Circuit City reported that results from their second quarter of 2005, which includes June, July and August, were up 7.1 percent to $2.42 billion from $2.26 billion in 2004. (Circuit City does not break out off-line and online sales.)

Textbooks are another strong online shopping area, particularly for students heading off to college in the fall. “Parents who once browsed the shelves of a used bookstore will definitely be able to find the same great deals online,” says Williamson.

The National Association of College Stores Foundation sponsored a Student Watch’s study of 16,000 students at 21 campuses. It reported that 23 percent of textbooks college students purchased are through the Internet, up from 16 percent in 2004. The study showed that 61 percent of students who shop online chose that route because they could find books at bargain prices.

Dustin Rideout, manager of online marketing for AbeBooks.com, says, “The market has rapidly developed in the last few years. August and September plus January have become the peak seasons for book sales ” period. All of that is driven by the increased sales of textbooks on our website.”

Getting on the BTS Bandwagon

Making the most of the narrow promotional window for back to school is crucial. Performics’ Henger explains that the first step in planning back-to-school promotions is to make sure that marketing messages are coherent – he says that merchants need to keep creative and messaging consistent from a branding perspective. “A multichannel marketer like Sears has a back-to-school marketing strategy that permeates all channels. There is a consistent theme in all advertising channels – free-standing inserts (FSIs), television and online advertising.”

Stacy Ferguson of affiliate Upromise says, “Starting in early July we combine a unique and customized mix of on-site, in the form of a BTS page and themed banners; offsite, which includes direct mail to a million members with children under 12; and weekly and monthly BTSthemed emails. These are personalized to reflect our members’ personal preferences and interests.”

AbeBooks.com’s Rideout explains, “We work hand in hand with the marketing department and have developed other offline promotions solely focused to the student demographic. We employ large on-campus direct marketing campaigns, which includes street teams, collateral, contests, etc. We also have a dedicated student area called Textbook Central, which includes lots of other resources and information for the student textbook buyer. The majority of our campaigns focus on promoting this micro area of our website.”

Some savvy merchants set up ad groups specifically for back to school, according to Renee Silverman, marketing director of Irv’s Luggage.

“We set up, with ad copy that has our ‘back to school’ offer in it,” Silverman says. “The keywords that we associate with these ad groups are given special source codes that identify which ad group they are from. When the sale is made, we can easily see from the source code which keyword and ad group the sale came from. We keep track of this closely so that we can determine when to raise or lower bids on certain keywords, based on their performance. It’s a bit tricky because the average order is smaller for ‘back to school,’ so the spend can easily surpass revenue (and lead to a diminished ROI) if we don’t monitor closely.”

Mr. Rebates’ Cassata, one of Irv’s Luggage’s top affiliates, says, “Usually, a merchant like Irv’s would highlight their best sellers for a seasonal marketing opportunity within their affiliate email newsletters. For example, they would give the creative and linking code for a Jansport backpack so that it is easy for an affiliate to place onto their site or into their content management system.”

“We send out a newsletter with tips, trends and promotional opportunities to our affiliate network,” says Maps.com’s Serpa. “We communicate every month via email and phone with our top affiliates, identifying targeted link and promotion opportunities.”

And if that’s not enough, there are always incentives, according to Henger. “As a way to boost affiliate sales during the back-to-school season, retailers consider exclusive offers for the affiliate channel; for example, making a promotional code only available to affiliates and not using that code in other channels. Obviously affiliates love these types of promotions as it gives them edge in converting sales – it gives shoppers a reason to buy through the affiliate site.”

Henger suggests retailers consider “incenting” top producers through a special bonus or commission, noting that many super-affiliates warrant premium pricing because of the high volume they drive. For example, a retailer might have a 5 percent commission rate (revenue share) for their affiliates but they may pay some top producers an extra 1 percent. Some large affiliates have slotting fees or other premiums available to merchants who want to optimize sales during the back-to-school season.

OfficeMax runs an affiliate program that rewards its top affiliates. Megan O’Donnell of OfficeMax says “with some publishers we may provide additional cash back during this time frame or additional bonus miles or bonus points for the loyalty sites.”

No Excuses

Given the range in products and audiences, there is no excuse why the majority of affiliates don’t tap in to the more-than $40 billion back-to-school market. Over the past year, studies have found that there has been an increase in the amount of money spent on back-toschool shopping and more parents are shopping online for back-to-school items. Affiliates that cater to teens, college students, mothers of nursery school kids, fathers of elementary school kids, and teachers can all get a piece of the action selling items that vary from fall fashions to the latest computers.

Because retailers are launching more products specifically for the audience and time of year, the value of affiliates will increase as online merchants look to their affiliates as one of their core strategies for sales. But affiliates do need to start as early as June to maximize their returns and prepare their promotions accordingly. Communication with affiliate managers is imperative to take advantage of relevant product promotions and to ensure that they are receiving maximum payment, if warranted.

ALEXANDRA WHARTON is an editor at Montgomery Research Inc., Revenue’s parent company. During her four years at MRI, she’s edited publications about CRM, supply chain, human performance and healthcare technology. Previously she worked at Internet consulting firm marchFIRST (formerly USWeb/CKS).

Summer Reading Extravaganza

Forget about what Oprah’s recommending. Put away the latest from Philip Roth and that potboiler from James Patterson. It’s summertime and what’s really sizzling is online marketing. So, now’s the time to catch up on your reading about a variety of hot topics including affiliate marketing, performance marketing, online advertising, search optimization and more. And there’s no shortage of choices. Heck, there are currently more than 200 books for sale on Amazon with the word Google in the title. Here are some books that sound like great reading for the beach, the vacation home or the patio. Don’t forget the sunblock.

Buzz Marketing with Blogs for Dummies


Susannah Gardner (For Dummies) | 360 pages | $24.99


Another entry in the popular and wildly useful “for dummies” series, this one’s specifically on how to get blogs to do the buzz marketing for you. As we all know by now blogs have become an essential part of selling on the Web and this volume helps you get your head around the blog space – such as what a blog is going to do for your product, how it can change the way people think of your product and how the exchange of ideas that is essential to blogging can help you sell.

Newbies also get a pretty good tutorial on blogs – how to set them up, maintain them and what you should say on them. The book also covers, to a lesser degree, the legal issues, design for a better- looking blog and how to get your blog noticed.

Farce to Force:
Building Pro E-Commerce Strategies


Sarah McCue (South-Western Educational Pub) | 240 pages | $27.95


Need an e-commerce strategy? McCue walks you through the best ways to formulate a strategy and even gives you some useful templates to overlay your business model on. She outlines marketing techniques that work well and how to build programs from the ground up. Although the title is a little jokey, the author is well-versed in online marketing.

Go BIG or Go HOME


Wil Schroter (Go BIG Media) | 276 pages | $24.95


Serial entrepreneur Schroter takes a look behind the veil at companies such as Google, Skype and PayPal. He examines what these companies are doing right and what they haven’t done. Having launched nine start-ups makes him a kind of perfect spokesperson for entrepreneurship. He is currently CEO of SwapAlease.com, an auto-leasing marketplace. The companies he started include Blue Diesel, an interactive marketing agency; Kelltech Internet Services, a technology consultancy; and Atomica, a nonprofit arts organization.

Google Advertising Tools:
Cashing in with AdSense, AdWords, and the Google APIs


Harold Davis (O’Reilly Media, Inc.) | 366 Pages | $29.99


Like “Winning Results with Google AdWords” this O’Reilly book takes a stab at making sense (and dollars) from Google’s AdWords. Davis talks about the different associate programs in addition to Google, which provides great context. Topics include how to read AdSense metrics, managing AdWords campaigns, as well as hints on optimization.

Google’s PageRank and Beyond:
The Science of Search Engine Rankings


Amy N. Langville, Carl D. Meyer (Princeton University Press) | 234 pages | $35


This provides a different take on the search dilemma by answering the questions about what goes on behind the Google curtain. This book won’t tell you how to optimize or raise your rankings but will tell you the technical aspects of search. This can be valuable to the geek in us all. The author covers: How do those other Web pages that don’t have your name in them always appear at the top? What creates these powerful rankings?

The reason this book is even on this list is that the early chapters are very accessible and it is only in the later chapters that the hard, mathematical, geeky stuff is discussed. Even so, the authors say there is something for the hardcore audience and the casual one.

Internet Marketing and e-Commerce


Ward Hanson (South-Western College Pub) | 496 pages | $113.95


Even though this is written by an academic, expect ?reworks. “Rigor instead of hype” is how the book wants to be known, illustrating practices that leading companies use, showing how research results can be used to support conclusions and, of course, pointing out the unique qualities of online marketing.

No one is shortchanged here. Hanson looks at Internet marketing from the point of view of large and small business and online startups. It’s a great study in the balance of power that is even now continuing to shift in retail markets as the Web gets more powerful.

The Irresistible Offer:
How to Sell Your Product or Service in 3 Seconds or Less


Mark Joyner (Wiley) | 240 pages | $21.95


Using examples of companies such as FedEx, Columbia House Records and Domino’s Pizza, Joyner explains how to create an “irresistible offer.” As the former CEO of Aesop Marketing Corp., he has seen what kind of marketing works from the trenches. He uses real case studies to make it easy to apply it to your own business. The book is a kind of how-to that shows you how to manipulate your offer so that customers find it more attractive.

Maximum Marketing, Minimum Dollars: The Top 50 Ways to Grow Your Small Business


Kim T. Gordon (Kaplan Business) | 240 pages | $18.95


While not specifically about Internet marketing, any small-business owner can learn from someone on staff at Entrepreneur magazine. Among Gordon’s advice is how to stay on budget but still use expensive-looking marketing; how to tell which niches are right for you; and how to use technology (email lists, websites, etc.) and traditional marketing venues (trade papers, radio, TV, etc.).

Online Marketing that Works!


Catherine Seda (McGraw-Hill) | 256 pages | $21.95


This book hits the shelves on August 1, 2006 and exuberantly wants to introduce you to “cutting- edge Internet technologies” that mean low-cost, high-performance marketing opportunities for ventures of any size. Seda points out the effective online marketing strategies and shows how to get results for little or no cost. Seda has her own marketing consulting firm and is also the author of Search Engine Advertising

Pay-Per-Click Search Engine Marketing Handbook: Low Cost Strategies to Attracting New Customers
Using Google, Yahoo & Other Search Engines


Boris Mordkovich, Eugene Mordkovich (Lulu Press) | 196 pages | $22.95


The mouthful of a title pretty much says it all. This book attempts to crack open the genie’s bottle on getting new customers through search, and illustrates just how it can be done at a cost of only pennies to you. Along the way the book outlines basic concepts, like how pay-per-click works and why it is effective. It also has some advice on how to design a campaign, how to determine what works and how to maximize your return on investment. It also tells you about must-do’s such as get- ting listed on thousands of websites without paying a penny, targeting a specific local area through search engines and how to prevent click fraud.

The book also offers reviews of over 20 search engines, and includes tips on how to get the most out of each one. Experts in the industry also weigh in with their advice on how you can improve your search engine advertising efforts.

Put Your Business Online: How to create and promote a successful, low-cost Website


Al Kernek (Lulu Press) | 172 pages | $19.95


This book is truly for the newbie who wants to get all the nuts and bolts in one place. What you get is everything you need to know in a step-by-step structure designed to leave you at the end of the day with “a low-cost website and some affordable traffic generators that target your specific audience.” This book is written in very straightforward language and is not overloaded with “tech talk.” The “real world” tips and information can also help those who already have a Web presence.

High Performance Affiliate Marketing


by Jeremy Palmer | $49.95


This e-book is unique because the author – a 2005 Commission Junction Horizon Award Winner – updates it constantly. He covers how to find profitable products and services to promote; strategies for keywords; rankings secrets; and how to spend less money for the most traffic. In addition to the e-book, you get access to an exclusive members’ area with original content. He says all over the website that he made more than $1 million in commissions last year, so he must be doing something right.

search analytics: A Guide to Analyzing and Optimizing Website Search Engines


Hurol Inan (BookSurge Publishing) | 56 pages | $19.99


For those of you who plan a very short beach vacation, this lean and mean e-book can probably be read in just a couple of hours. It “explains how and why people search, provides detailed guidelines on analyzing the behavior of search users, and offers valuable search-related marketing insights.” The author interviewed many industry experts and website managers and presents detailed metrics and the required tools to get you started.

Search Engine Marketing, Inc.: Driving Search Traffic to Your Company’s Web Site


Mike Moran, Bill Hunt (IBM Press) | 592 pages | $49.99


This heavy tome has just about everything to do with search marketing in it. There are chapters on how search engines work, developing your search marketing program, measuring your website’s success, defining your search market strategy, how to get your site indexed, choosing keywords, how to attract links to your site and other must-have/must-know stuff. In addition, the book tells you about what people are looking for when they search, how best to sell to the kinds of visitors you’ll get and what to avoid in the way of questionable methods to get better rankings.

Search Marketing Strategies:
A Marketer’s Guide to Objective-Driven Success from Search Engines


James Colborn (Butterworth-Heinemann) | 208 pages | $37.95


Concentrating on the strategic and not the procedural approach, this book goes through all the search standbys: paid search, site side optimization and analytics. Then it talks about branding, sales and customer acquisition. The focus is on marketing strategy and not just on optimization.

Winning Results with Google AdWords


Andrew Goodman (McGraw-Hill Osborne Media) | 376 pages | $24.99


This is a title that should really get most readers’ hearts pounding. Goodman outlines some great strategies for “writing successful ads, selecting and grouping specific keywords, increasing conversion rates and maximizing online sales.” He goes over advice such as “ways to expand ad distribution, why testing ad effectiveness is crucial and how to effectively track results.” Goodman is founder of Page Zero Media, provider of search engine marketing services and strategic advice to companies seeking an online presence. He also co-founded Traffick.com.

Going Out Is In

Companies are outsourcing affiliate managers to fuel online marketing programs.

Former London-based freelance writer Rob Palmer knew he was on to something when he launched the affiliate program for his FreelanceWorkExchange.com subscription site. For several years he ran the program in-house; revenues were decent, affiliate applications were steady, but “there simply weren’t enough hours in the week for me to manage the program and deal with all the other management issues which required attention,” says Palmer from his new home in Australia. Plus, “the freelance market is massive and growing fast, but most affiliates hadn’t realized this can be a very lucrative source of commissions. I felt there was huge potential in the affiliate sector that we were not making the most of.”

His solution? Like the employers that use his site to outsource writing, programming, design and other freelance functions, he set out to find an external source of his own: an outsourced affiliate manager. Palmer found it with affiliate-turned-OAM Greg Rice.

Outsourcing isn’t new. Companies have done this for years, primarily to – according to a Dun & Bradstreet study – maintain competitive edge, focus on core business and improve service quality.

“But it’s new in comparison to the overall market that we’re in,” says Andy Rodriguez, an OAM and affiliate management consultant who will host a third OAM training conference in Chicago this August. “There just aren’t that many [OAMs] around. In the past, a lot of merchants hired a manager and said, ‘Here’s the affiliate program.’ Then they discovered what they really needed was someone that can lead a virtual salesforce, managing a large group of people by phone, by email and by instant messaging, who has a background in technology and knows how the Web works. That’s why so many merchants are now correcting their mistake of just hiring anyone in-house, and going out and hiring the best [OAM].”

Industry watchers informally estimate there to be a few hundred OAMs – either on their own or as part of an OAM agency – worldwide. And that number seems to be on the rise.

“The demand for OAM is large,” says Linda Woods, former Commission Junction affiliate manager and founder of the six year- old OAM agency PartnerCentric in Santa Barbara, Calif. “Our biggest challenge over the past year has been to find top-quality, experienced AMs.”

Others agree.

“Outsourced affiliate program management is a very new and, hence, an extremely exciting sphere to be working in these days,” Evgenii “Geno” Prussakov, a St. Petersburg, Russia-based OAM who manages programs for such U.S. clients as RussianLegacy.com and FantasyJewelryBox.com, says. “Many online businesses are in need of good affiliate program management, yet the number of experienced [OAMs] around the world is very limited. The competition between [OAM] firms is certainly growing, but the market is still very new and fresh.”

PartnerCentric’s OAMs hail from affiliate teams at Orbitz.com, Gap.com, 1800flowers.com and other “upper echelon” merchants; each having at least one year of full-time AM experience.

Even the term “outsourced affiliate manager” is somewhat nebulous. Few OAMs operate on their own; many have staffs of three or more assisting with new clients. “To find one person with a blend of all the skill sets needed is pretty rare: recruiting, selling ability, keywords, optimization,” says Peter Figueredo, CEO and co-founder of NETexponent, a NYC agency running affiliate programs for NYTimes.com, FinancialTimes.com, PuritansPride.com and others. (He has 13 on staff, and is hiring more “online media managers” to fit the OAM bill.) “We approach it as a team, bringing different people with different skill sets together to work with our client accounts.”

That’s the case with OAM agency PartnerCentric.

“Very few [merchants] have the internal expertise to run an affiliate program to the level that it needs to be run today,” says Woods. “It’s incredibly complex now because of all the new issues involved: fraud, spyware, conversion rates, EPC, competition. Two years ago, there were one or two furniture companies with affiliate programs. Now there are 40. Affiliates used to have a few hundred merchants to choose from in a network; now it’s a few thousand. The tracking has become more complex. And there’s even competition for clients from OAMs, especially if a merchant feels one AM can give them more exposure. That’s the kind of complexity we face every day, so managers have to really know what’s going on.”

In April, PartnerCentric acquired AMWSO, a Thailand-based OAM agency led by Bangkok-based Chris Sanderson. “By being able to work with a U.S.-based OAM agency, we can benefit our team here,” says Sanderson, pointing to programs his team already runs for Shopster.com, WesternUnion.com and 18 other international merchants. “That’s the personal touch we wanted.”

PartnerCentric manages affiliate programs for about 50 merchants, including TheCompanyStore.com catalog company, NationalGeographic.com, DigitalRiver.com (a half-billion-dollar e-commerce software company) and recently ClubMom.com. It’s had 300-percent-per-year revenue growth for the past three years, and Woods expects to double its revenue in 2006. PartnerCentric now has 20 on its team, plus eight other staffers; a move Woods says is “definitely moving towards the big boys.”

Some affiliates, however, are often going it alone until they’ve built up enough business to start adding staff.

For instance, the new outsourced program manager for FreelanceWorkExchange.com, Greg Rice, was once a superaffiliate for TigerDirect.com. He’d been an affiliate for seven years running a shopping mall site, and made the switch after going through Rodriguez’s mid-2005 OPM training. Currently, Rice owns CommerceMC.com and manages four programs, including ITHeadhunter.net.

“Working as an affiliate, you have contact with a lot of affiliate managers,” Rice says. “You get to see firsthand what works and what doesn’t work – and you get to see firsthand the opportunities that exist because most AMs don’t have a clue other than putting links up there and walking away from it.”

Another affiliate who’s going the OAM route is Kevin Webster, owner of outsourced B2B affiliate marketing agency OPMWeb.com, near Rochester, NY. For five years he ran a site called CorporateLeverage.com, stocked with his own articles on business-to-business sales and affiliate links to relevant products. In late 2005, he left his day job selling Cingular and Verizon cell phone plans to businesses, sold his affiliate content “for a scant $1,500” and launched OPMWeb.com.

“The rumor is that this industry is underpopulated,” Webster says. “It’s my intent to grow this organization slowly and smartly, ensuring that each new client receives all the focus their program deserves. That’s critically important at the launch of an affiliate program, and never really changes.”

Webster’s first client is SimpleGuardian.com, a notification security and medical alarm company targeting real estate agencies and arenas; two other contracts are in the works, he says.

“Simple Guardian had a very traditional brick-and-mortar sales model before this point,” Webster says. The company is very new to e-commerce, so this is a real test of a lot of things. Our main focus is B2B, which in my opinion has only been done with limited success up until this point. Plus, the merchant uses a content management system where I’m able to log in on the back end to tweak things for those landing pages. They’ve given me access to basically their entire organization – I can pick up the phone or send an email to just about anyone, from their database guy to their graphics department to their sales team. Not all merchants are going to be like that.”

While some OAMs fulfill otherwise-disregarded fundamentals, others are using technology as their edge. From a home office with a DSL connection, AvantLink co-founder Gary Marcoccia works with three other home-based OAMs in the Salt Lake City area to distribute data feeds from 16 merchants to several hundred affiliates. They do it all thanks to an integrated “deep-linking tool center” supported by Web service technology, RSS publication of affiliate ads and content and a simplified management interface. New merchants include ToolKing.com, Altrec.com and CampSaver.com; tools are free for affiliates to use, and merchants pay a flat $1,200 for its “start-up package.”

“Merchants really warm up to the start-up package,” Marcoccia says. “Once they realize that they really do need someone to manage the affiliate channel, it can be somewhat terrifying. Unless someone has deep pockets to justify hiring us as an [OAM] at $3,000 per month, it’s daunting. A start-up package should get them off the ground.”

The package includes program detail pages that are searchengine- optimized to be crawled and indexed; “buzz” on AvantLink’s AbestWeb.com’s forum; program announcements to AvantLink’s affiliate opt-in list; a few hand-picked “quality affiliates” to start; and, soon, a press release on the merchant’s new program sent through one of the PR news wires.

“We have tools that are pretty advanced,” Marcoccia says. “We’ve identified effective conversion methods, and kind of promise them five quality affiliates that will get going with the program, use the tools effectively and get the program running. That’s a pretty powerful service to offer a company that’s in limbo. We solve that catch-22; these merchants are interested in starting an affiliate program, they have a good niche but they don’t have to pay an in-house AM $10,000 per month to get the program off the ground.”

Technology is also the foundation for San Rafael, Calif.- based WatchDog Affiliate Managers, which runs programs for such merchants as InteriorExpress.com, Yoox.com and MadisonAvenueMall.com.

“Lately, we’ve been writing contracts starting at around $2,100 for the smaller guys that we think have a product that will grow and where the affiliates will be attracted to because the commission is good,” co-founder Christina Lund says. “For that low of a rate though, we would ask for a little bit more in commission; maybe 1 or 2 percent more than the 2 to 5 percent we usually charge.”

This bare-bones package includes all of its full-service offerings: recruitment of program-specific affiliates; newsletter writing and distribution; use of a WatchDog-branded administrative software system that allows advertisers to make changes to creatives that are automatically fed to all of their affiliates in real time; XML-based coupon feed so affiliates automatically get up-to-date offers; plus its “Merchant Express” multilingual data feed software, which uploads up to 2,000 product descriptions and photos and feeds the results in real time to affiliate-tuned storefronts with only the types of products that affiliate wants.

“It’s a whole store in one line of Java script,” says Cory Lund, WatchDog’s vice president of product development. “The whole part of this game is to really nurture these affiliates, and make their job a lot easier. With technology, we can offer everything in the big package, but the hours are shaved a bit ” it may be 20 hours per week for an OAM to manage instead of full time.”

WatchDog has nine freelance OAMs in its fold – spread out in San Francisco; Ventura, Calif.; Minnesota; and Kansas City, Missouri.

With technology being a selling point in the OAM world, it makes sense that some of the networks are jumping on the OAM wagon. Six-year-old affiliate network ShareASale, which is historically a place where merchants run “self-serve” programs, recently started managing the programs for clients. On its OAM to-do list: day-to-day administrative management, including affiliate approval and review; coupon and promotion distribution; newsletter creation and distribution; regular traffic and sales reporting; assistance with product data feeds and basic banner creation and management; and providing unique content, keyword lists and custom merchandised storefronts for the merchant’s top affiliates.

“Management of programs is only a small part of what we offer; ours does require membership in the ShareASale network, and is really more of an ‘add-on’ to our basic service, as opposed to a true outsourced solution,” says Brian Littleton, president and CEO of ShareASale.com. “But for small-to-medium- sized business, where ShareASale concentrates their efforts, [our OAM] services can be extremely helpful in allowing merchants to focus on their best practices, while allowing the [OAM] to assign best practices to the affiliate channel based on their expertise.” Though Littleton won’t divulge the total number of accessible affiliates in ShareASale’s network, Littleton says they’ll “often research categories for merchants who inquire about joining the network in order to give them rough ideas as to what to expect.”

Meanwhile, at LinkShare, “we really go out to market with our account management and client services,” says Liane Dietrich, vice president of merchant services for LinkShare. “Most of our merchants are working with in-house AMs or outsource their program management to LinkShare.”

Still, for Chris Henger at affiliate network Performics, outsourcing is a loaded word. “We prefer to look at it as an extension of the merchant’s marketing team. ” Yes, clients rely on their Performics’ program manager to administer the program, negotiate with affiliates, field inquiries and optimize the program,” Henger says, “but we don’t view our approach as outsourcing. The advertiser maintains control and still has to make critical decisions, particularly in regards to promotions and customer quality.”

The addition of network outsourcing of affiliate program management is an interesting hurdle for OAMs.

“A lot of people go directly to the networks because they don’t realize there’s a whole region of independent managers out there that can manage their program independently as well, if not better,” says OAM Shawn Collins, who runs affiliate programs for PaylessShoeSource.com and Snapfish.com. “Yet I get a lot of calls from headhunters wanting affiliate managers to run a program inhouse, and they’re just not around. The in-house talent pool has been moving to the agency side – because they can manage multiple programs which can potentially be more lucrative.”

Which brings up the subject of money. OAM firms usually work on monthly retainers of anywhere from $2,000 to $7,000 for only a few products, and up to $35,000 for rollouts of a big-merchant range of affiliate-sold products. Remember, however, that the retainer could be funding the cost of several managers and, in the case of NetExponent, even OAM health benefits.

While the numbers may seem large, merchants are recouping that several times over from affiliate sales. The highest-paid OAMs also often come with the most to offer: “All that money that was spent in the dot-com blowup went toward educating a lot of staff people,” says former BarnesAndNoble.com AM Stephanie Agresta, who’s now an OAM at Commerce360, a Pennsylvania-based agency that guides merchants through the LinkShare platform. “You can’t replicate that just anywhere, for any price. If you live in Kansas, you may be able to find someone who can work for $30,000 per year – but in areas with lower labor cost, there’s more of a chance you won’t be able to find the expertise. At a minimum, we’re talking salaries of $60,000 to $100,000. For that same amount of money you can buy an OAM solution that comes with expertise and relationships.”

For now, costs continue to climb, as the existing OAMs in greatest demand gain more experience and more relationships with super-affiliates that they’ll bring in tow, observers say. In time, costs are likely to level out as more OAMs enter the market.

No need to fear, says Prussakov. “Competition only benefits the industry. It constantly makes OPMs think of new ‘outside the box’ ideas to enhance affiliate performance and draw more quality affiliates to their programs.”

The advent of aggressive outsourced program managers brings certain advantages to affiliates, namely the ability to work directly with managers who’ve once been affiliates themselves.

“It’s absolutely imperative to have affiliate experience,” Rodriguez says. “You cannot help someone build a house unless you’ve built a house before. You can’t help someone ride a bike unless you’ve ridden a bike before. At the same time, in no case should an affiliate manager compete in the same business as their affiliates. They have access to very sensitive information, and this is a trust industry.”

Given recent flap over affiliate managers at the big networks leveraging affiliate strategies to start competing affiliate sites, this is a fair warning. If you’re concerned, simply ask your OAM to add a noncompete clause to your contract. Many already include it. Some avoid even the appearance of a conflict of interest by working with only one client in each type of industry. Others count their expertise with multiple, similar programs as their strength. The choice is yours. Meanwhile, the lure of the money that can be made from the OAM price tag is already leading to some problems, as a few OAMs overload their plates and end up shortchanging everyone.

“You need two people full time, or four people half time to fully service one affiliate program,” Figueredo says. “The quality of work required to have a really robust and aggressive program comes out to that amount of work, at least.”

For FreelanceWorkExchange.com, adding one more was the perfect number. “Greg [Rice] has done a great job of taking on all the important tasks that had been neglected in the past, from liaising closely with affiliates and managing bonus schemes, to writing our affiliate newsletter and recruiting new affiliates,” says FreelanceWorkExchange.com’s Palmer. “The hardest part of the process was making the decision to let an outside party handle such an integral part of our business. But once that decision had been made, the only issue was choosing the right consultancy for the job. I didn’t want to find myself paying high fees to a company that just delegated our account to a junior with little experience. We were looking for someone who could deliver high-level expertise at a reasonable cost, and that’s what we found with CommerceMC. In every other respect, it has been pluses all the way – we now have a more professional and more efficient program that is attracting new affiliates daily.”

JENNIFER D. MEACHAM is a freelance writer who has worked for The Seattle Times, The Columbian, Vancouver Business Journal and Emerging Business magazine. She lives in Portland, Ore.