Winning the Seasonal Race

Managing a seasonal program is akin to drag racing – lots of hard work goes into the preparation, the light turns green, then it’s over.

For a seasonal program to be successful, it’s crucial for its managers to think like affiliates. If you were a top affiliate looking for a program, where would you go and what would you want to hear? If you can get into the head of an affiliate, you can gain the perspective of a top performer, understand the tools necessary for success and learn how to win.

Attracting Valuable Affiliates

All of your affiliates are valuable, but the top performers will give you the highest return on investment. Forget the 80/20 rule (80 percent of revenue comes from 20 percent of affiliates). In 2005, for example, only 1 percent of TaxBrain.com’s affiliates generated 80 percent of affiliate revenue. Obviously some affiliates were better prepared before the season began. They most likely used the following steps to success.

Find the best program. Check out resources such as search engines, affiliate networks, directories, forums, events and other networking opportunities. Within these, look for the most compelling stories on potential earnings in terms of conversion rates, clicks per sale and commission structures.

Use the right keywords. Your program’s online presence begins by building affiliate pages optimized for keywords in your niche. Online marketing success means ranking high in the search results for your particular niche (such as "tax affiliate program"). Searching on Google for "affiliate program" yields 134 million organic results as opposed to 74 million for "top affiliate program." Paid search has a decent ROI, but you can also achieve meaningful results by site-targeting popular affiliate and webmaster hangouts, as well as home businesses and small-business portals.

Spread the word. Take advantage of communication opportunities available through your affiliate network. These include multiple category listings, newsletters, conferences and email marketing. Top-performing seasonal programs are often overlooked by the Big 3 affiliate networks (Commission Junction, LinkShare and Performics). This is because their indicators are heavily weighted with off-season trends. To overcome this, capture your performance results when it’s your time of the year and trumpet that information all year long.

Get listed. Affiliate directories work well, so get listed in as many as possible and pay those that are worthwhile. Often, reciprocating links are all you need to offer. To attract the best performers, talk payouts, highlight impressive stats or try catchy headlines like "Top Affiliate Earned Enough Last Season to Take Rest of Year Off!" Most directories don’t offer much listing space, so make your sales pitch count.

Use the forums. Forums are a beautiful thing – think of them as the eBay feedback mechanism of affiliate marketing. They allow you to monitor affiliate concerns and provide an excellent opportunity to market your program. Buzz around the forums, abide by the rules, post when appropriate and be sure that your signature promotes your affiliate program.

Make it personal. Personal relationships with affiliates often begin at trade shows and other industry networking events through direct contact. When online, you can gather contact information by using freebies and give-aways as motivation. For example, offer T-shirts or publications in exchange for direct contact information.

Optimizing Your Program

With thousands of seasonal programs all claiming to be the best and attempting to clear obstacles such as being overlooked by network indicators, it’s imperative that awareness of your program rises above the noise. For a seasonal program to be a winner, it must be well-tuned. To achieve maximum performance, managers can use the following ideas:

  1. Evaluate all existing affiliate communications from sign-up to acceptance. Review and revise your program listing to sell the opportunity, not just the product. Adjust your welcome letter and carefully craft your first message so they are appealing.
  2. Review competition in and out of your own network. Sign up as an affiliate and join your competition’s programs. Examine messaging and compensation within those programs for strengths and weakness. Implement strategies to exploit the weaknesses of your competition. Use the information to increase the appeal of your program while reducing your competition.
  3. Determine the lifetime value of a customer and create the highest commission structure in your niche. Pay more and pay faster. Pay your best affiliates the most. Provide additional strategic information and offer customization. PPC players don’t have much time to test a seasonal program, so you can accelerate their acceptance and understanding by releasing specific ROI stats from your own PPC performance.
  4. Create program offers that are appropriate for differing business models. Loyalty, incentive, shopping and content sites may have different needs than those of email marketers. To help accelerate sales during the season, create tiered offers that reward affiliates with additional commissions when well-defined revenue targets are achieved. Be sure your reward structure is attainable and measurable.
  5. Assess and build compelling creative. Ensure that initial messaging and associated landing pages match for consistency. Eliminate extra clicks or distractions at registration and preserve the initial click through messaging throughout the experience to checkout.

With your engine tuned for best performance, it’s time to put team dynamics into play.

School Your Affiliates

Once you have affiliates, you must teach these new business partners how to sell your product effectively. They have the ability to generate traffic, but you have to show them how to deliver it for maximum conversion. Here are some helpful tips to get the job done.

Organize your approach into complete campaigns – define targets, duration and exact message, using your affiliate Web pages for emphasis. Produce a matching keyword list. Promote each campaign individually.

Separate affiliates into meaningful groups to quickly spot trends. Create "watch" groups so you can track performance and monitor activity. Consider grouping by like business models or by special promotion. Continue to reorganize and regroup as business conditions change.

Communicate specific selling opportunities and develop a messaging strategy around each campaign. Start a blog enabled with RSS, in lieu of an emailed newsletter, to keep affiliates informed. Give your affiliates sufficient notice to put a new campaign into play (some need up to a month’s lead time).

Motivate your affiliates. Contests make things fun, but more importantly they help keep your program top of mind all season. For maximum exposure, create a contest that anyone can win. Have a daily prize throughout the selling season.

Try to identify demographic shifts or new trends that might be happening, then communicate this new information quickly. As an example, Hurricane Katrina created new government initiatives that benefit survivors, which could affect the way consumers search for tax products. This made new keyword combinations such as "hurricane tax," "katrina tax relief" and "hurricane katrina tax forms" valuable.

When managing a seasonal affiliate program, remember it’s the off-season that’s critical to next year’s success. That’s when you should learn from the experience, evaluate performance, incorporate new technologies and make all necessary changes. Recruit, optimize and communicate – these are the keys for managing a topperforming seasonal program.

 

TODD TAYLOR manages business development for TaxBrain.com from Petz Enterprises in Tracy, Calif. He is a technology veteran and entrepreneur with more than 20 years in the industry. He studied economics at Carleton University and is a graduate of computing from St. Lawrence College.

Managing a seasonal program is akin to drag racing – lots of hard work goes into the preparation, the light turns green, then it’s over.

For a seasonal program to be successful, it’s crucial for its managers to think like affiliates. If you were a top affiliate looking for a program, where would you go and what would you want to hear? If you can get into the head of an affiliate, you can gain the perspective of a top performer, understand the tools necessary for success and learn how to win.

Attracting Valuable Affiliates

All of your affiliates are valuable, but the top performers will give you the highest return on investment. Forget the 80/20 rule (80 percent of revenue comes from 20 percent of affiliates). In 2005, for example, only 1 percent of TaxBrain.com’s affiliates generated 80 percent of affiliate revenue. Obviously some affiliates were better prepared before the season began. They most likely used the following steps to success.

Find the best program. Check out resources such as search engines, affiliate networks, directories, forums, events and other networking opportunities. Within these, look for the most compelling stories on potential earnings in terms of conversion rates, clicks per sale and commission structures.

Use the right keywords. Your program’s online presence begins by building affiliate pages optimized for keywords in your niche. Online marketing success means ranking high in the search results for your particular niche (such as "tax affiliate program"). Searching on Google for "affiliate program" yields 134 million organic results as opposed to 74 million for "top affiliate program." Paid search has a decent ROI, but you can also achieve meaningful results by site-targeting popular affiliate and webmaster hangouts, as well as home businesses and small-business portals.

Spread the word. Take advantage of communication opportunities available through your affiliate network. These include multiple category listings, newsletters, conferences and email marketing. Top-performing seasonal programs are often overlooked by the Big 3 affiliate networks (Commission Junction, LinkShare and Performics). This is because their indicators are heavily weighted with off-season trends. To overcome this, capture your performance results when it’s your time of the year and trumpet that information all year long.

Get listed. Affiliate directories work well, so get listed in as many as possible and pay those that are worthwhile. Often, reciprocating links are all you need to offer. To attract the best performers, talk payouts, highlight impressive stats or try catchy headlines like "Top Affiliate Earned Enough Last Season to Take Rest of Year Off!" Most directories don’t offer much listing space, so make your sales pitch count.

Use the forums. Forums are a beautiful thing – think of them as the eBay feedback mechanism of affiliate marketing. They allow you to monitor affiliate concerns and provide an excellent opportunity to market your program. Buzz around the forums, abide by the rules, post when appropriate and be sure that your signature promotes your affiliate program.

Make it personal. Personal relationships with affiliates often begin at trade shows and other industry networking events through direct contact. When online, you can gather contact information by using freebies and give-aways as motivation. For example, offer T-shirts or publications in exchange for direct contact information.

Optimizing Your Program

With thousands of seasonal programs all claiming to be the best and attempting to clear obstacles such as being overlooked by network indicators, it’s imperative that awareness of your program rises above the noise. For a seasonal program to be a winner, it must be well-tuned. To achieve maximum performance, managers can use the following ideas:

  1. Evaluate all existing affiliate communications from sign-up to acceptance. Review and revise your program listing to sell the opportunity, not just the product. Adjust your welcome letter and carefully craft your first message so they are appealing.
  2. Review competition in and out of your own network. Sign up as an affiliate and join your competition’s programs. Examine messaging and compensation within those programs for strengths and weakness. Implement strategies to exploit the weaknesses of your competition. Use the information to increase the appeal of your program while reducing your competition.
  3. Determine the lifetime value of a customer and create the highest commission structure in your niche. Pay more and pay faster. Pay your best affiliates the most. Provide additional strategic information and offer customization. PPC players don’t have much time to test a seasonal program, so you can accelerate their acceptance and understanding by releasing specific ROI stats from your own PPC performance.
  4. Create program offers that are appropriate for differing business models. Loyalty, incentive, shopping and content sites may have different needs than those of email marketers. To help accelerate sales during the season, create tiered offers that reward affiliates with additional commissions when well-defined revenue targets are achieved. Be sure your reward structure is attainable and measurable.
  5. Assess and build compelling creative. Ensure that initial messaging and associated landing pages match for consistency. Eliminate extra clicks or distractions at registration and preserve the initial click through messaging throughout the experience to checkout.

With your engine tuned for best performance, it’s time to put team dynamics into play.

School Your Affiliates

Once you have affiliates, you must teach these new business partners how to sell your product effectively. They have the ability to generate traffic, but you have to show them how to deliver it for maximum conversion. Here are some helpful tips to get the job done.

Organize your approach into complete campaigns – define targets, duration and exact message, using your affiliate Web pages for emphasis. Produce a matching keyword list. Promote each campaign individually.

Separate affiliates into meaningful groups to quickly spot trends. Create "watch" groups so you can track performance and monitor activity. Consider grouping by like business models or by special promotion. Continue to reorganize and regroup as business conditions change.

Communicate specific selling opportunities and develop a messaging strategy around each campaign. Start a blog enabled with RSS, in lieu of an emailed newsletter, to keep affiliates informed. Give your affiliates sufficient notice to put a new campaign into play (some need up to a month’s lead time).

Motivate your affiliates. Contests make things fun, but more importantly they help keep your program top of mind all season. For maximum exposure, create a contest that anyone can win. Have a daily prize throughout the selling season.

Try to identify demographic shifts or new trends that might be happening, then communicate this new information quickly. As an example, Hurricane Katrina created new government initiatives that benefit survivors, which could affect the way consumers search for tax products. This made new keyword combinations such as "hurricane tax," "katrina tax relief" and "hurricane katrina tax forms" valuable.

When managing a seasonal affiliate program, remember it’s the off-season that’s critical to next year’s success. That’s when you should learn from the experience, evaluate performance, incorporate new technologies and make all necessary changes. Recruit, optimize and communicate – these are the keys for managing a topperforming seasonal program.

 

TODD TAYLOR manages business development for TaxBrain.com from Petz Enterprises in Tracy, Calif. He is a technology veteran and entrepreneur with more than 20 years in the industry. He studied economics at Carleton University and is a graduate of computing from St. Lawrence College.

The Best Intentions

Effective self-marketing is the quickest path to success.

Whether you know it or not, you’re marketing yourself every day – to lots of people. You’re marketing yourself in a quest to make a sale, warm up a relationship, get a job, get connected, get something you deserve. You’re always sending messages about yourself.

Guerrillas control the messages that they send. It’s all about intention. Guerrillas live intentionally. Non-guerrillas send unintentional messages, even if those messages sabotage their overall goals in life. They want to close a sale for a consulting contract, but their inability to make eye contact or their confusing email message turns off the prospect.

Avoid Unintentional Messages

Unintentional messages erect an insurmountable barrier. Your job is to be sure there is no barrier. There are really two people within you – your accidental self and your intentional self. Most people are able to conduct about 95 percent of their lives by intent. But that’s not enough.

It’s the other 5 percent that can get you in trouble – or in clover. I’m not talking about phoniness here. The idea is for you to be who you are and not who you aren’t – to be aware of what you’re doing, aware of whether or not your actions communicate ideas that will help you get what you truly deserve.

Who do you market to without even realizing it? Employees. Customers. Prospects. Teachers. Parents. Children. Bosses. Prospective employers. Mates. Prospective mates. Friends. Sellers. Landlords. Neighbors. Professionals. Members of the community. The police. Service people. Family. Bankers. These people can help you or stop you from getting what you deserve. You can influence them with how you market yourself.

To market yourself properly, answer these three questions:

  1. Who are you now – if friends described you, what would they say? Be honest.
  2. What do you want out of life? Be specific for the best results.
  3. How will you know when you’ve reached your goals?

If you can’t answer these questions, you’re doomed to accidental marketing and spending your life reacting instead of responding, and the odds will be against you reaching your goals.

How do you send messages and market yourself right now? With your appearance, to be sure. You also market with your eye contact and body language, your habits, your speech patterns. You market yourself in print with your letters, email, website, notes, faxes, brochures and other printed material. You also market yourself with your attitude and ethics.

Again, you may not be aware of it, but people are constantly judging and assessing you by noticing many things. You must be sure your marketing message doesn’t conflict with your dreams. What are people using to base their opinions, to make their decisions about you? I’ve come up with more than 30 variables, but here are the top 10:

  1. Clothing
  2. Enthusiasm
  3. Neatness
  4. Tone of voice
  5. Energy level
  6. Eye contact
  7. Writing ability
  8. Spelling
  9. Business card
  10. Availability

You’re fully aware of your intentional marketing, and you invest time, energy and imagination into it, not to mention money. But you may be undermining that investment if you’re not paying attention to things that matter to others even more than what you say. These are things such as keeping promises, punctuality, honesty, demeanor, respect, gratitude, sincerity, feedback, initiative and reliability. People also notice passion – or the absence of it. They notice how well you listen to them.

How to Market Yourself

Now that you know these things, what should you do? Ben Franklin said that three of the hardest things in the world are diamonds, steel and knowing yourself. Here’s a three-step plan to get you started on the road to self-awareness and self-marketing acumen.

  1. Write a positioning statement about yourself. Identify just who you are and the positive things that stand out most about you.
  2. Identify your goals. Put into writing the three things you’d most like to achieve during the next three months, three years and 10 years.
  3. State your measuring stick. Write the details of how you will know when you’ve achieved your goals. Be brief and specific.

To guerrilla market yourself, simply be aware of and in control of the messages you send. Do so and your goals will be a lot easier to attain.

Look at your policies, procedures and daily management practices. What behaviors are you measuring and rewarding? Examine your purchasing and pricing practices – these impact your brand far more than anything you might say in your ads. Finally, look at your website through the eyes of your customers – you’ll begin to glimpse the truth of your brand.

Taking Action

Examine the soul of your company through your daily actions, not your beliefs, and you’ll soon be able to write branding ads that will ring like a bell. Behold the keys to successful brand writing:

Truth in advertising. Bad ads are filled with phrases you like to say about yourself. Good ads are filled with what your customers say about you when you’re not around. To be successful, your branding ads must sharply echo the word on the street about your company. Jeff Bezos, CEO of Amazon.com, got it right when he said, "It has always seemed to me that your brand is formed primarily not by what your company says about itself, but what the company does." You’ll discover the truth behind your brand when you can explain why customers come back.

Overstatement is passé. Offer proof to back up what you say, even if it lies only in your customers’ experience or assumptions. Branding isn’t just about the facts: People buy brands with their hearts as well as their heads. Brand loyalty is built on the fact that our purchases remind us – and tell the world around us – who we are.

Search for evocative words. Sniff out overused phrases. Stimulate customers’ minds with thoughts more interesting than the ones they were previously thinking.

Be consistent. The consistent use of the same colors and fonts is often called "branding." Your brand should remain constant in all communications from your company, including your website, email, brochures, business cards and so on.

Brands are built on consistency, the roots of which are patience and attention to detail. It’s going to take a lot longer to build your brand than you feel it should. Here’s the bottom line: If you think you’re going to be able to measure brand progress at the end of 12 short months, you’re dreaming. Brand development isn’t measured in months, but in years. Good luck with your brand.

Remember always that you are your own brand, and that if you’re not guerrilla marketing yourself, you are falling short of what you ought to be doing.

 

JAY CONRAD LEVINSON is the acknowledged father of guerrilla marketing with more than 14 million books sold in his Guerrilla Marketing series, now in 41 languages. His websites can be found at www.gmarketing.com and www.guerrillamarketingassociation.com.

Scrutiny on the Bounty

As every good bounty hunter knows, capturing your target requires exacting execution of a well-designed plan. But unlike intrepid fugitive hunters such as reality television star “Dog” Chapman, earning sizable rewards by corralling customers online doesn’t require risking life or limb.

Instead of offering commissions paid in nickels and dimes, bounty programs attract a growing number of publishers by handing out dollar rewards of tens and twenties. Programs offering substantial bounties for acquiring customers and qualified leads are now among the most lucrative opportunities for publishers. However, the increasing competition among bounty programs requires publishers to rigorously scrutinize leads and to be more aggressive in pursuing consumers.

“The biggest money in affiliate marketing is bounty programs,” says Beth Kirsch, group manager of affiliate programs at LowerMyBills.com. Kirsch, who says publishers can earn up to $75 for delivering a credit card customer, says bounties provide the greatest opportunity for rapidly increasing revenue “without going for porn or gambling.”

Companies on the hunt for consumers will pay hefty premiums “because advertisers are willing to pay up front for the lifetime value of the customer,” Kirsch says. Unlike retail sites that focus on capturing a single transaction, the companies paying bounties are looking to build an ongoing relationship with a customer. The most popular industries utilizing bounty programs include real estate, personal finance (such as credit cards and loans) and subscription services, according to Kirsch.

Kirsch says that while most bounty programs pay commissions after a transaction is completed, companies such as Netflix and Audible.com will pay out merely for getting people to sign up for free trials. “The amount of money flowing through [bounty programs] is amazing,” she says.

Leading to Search

The prospect of earning lucrative commissions is prompting companies to increase their online advertising as well as the incentives offered to attract consumers. Sites such as FreeiPods.com that are relying on search marketing to acquire new customers now make up 6 percent of total online advertising revenue, according to the Internet Advertising Bureau. During the first half of 2005, online advertising revenues for lead generation and customer acquisition rose by more than 200 percent over the prior year to $347 million.

“Paid search is a focus for customer acquisition,” says Shar VanBoskirk, a consulting analyst with Forrester Research. VanBoskirk says that search marketing is an effective tool for bounty sites in industries such as travel because it “captures a person at their point of interest.” The increased spending is raising the cost of keywords and encouraging companies to become smarter at search marketing, she says.

To earn these bounties, publishers are aggressively pursuing consumers by promising cash incentives and free popular electronic devices such as iPod music players and Xbox 360 game consoles to those who will fill out a credit application or subscribe to a publication or service. These sites have found that consumers are willing to provide personal information as well as refer several friends in order to receive a device worth up to $400.

However, VanBoskirk says that while some marketers do not seem to be concerned with how their publishing partners attract an audience for their subscription or financial service, they may be putting their customer relationships at risk. “You could turn away a loyal customer if you were associated with a bad brand or screwed-up message,” says VanBoskirk, who recommends that marketers retain some control over the incentive process.

Service and subscription companies looking to acquire customers are among the top individual Internet advertisers. According to Nielsen//NetRatings AdRelevance advertising data for November 2005, telephony company Vonage spent more than any other company in online advertising, while LowerMyBills.com, BellSouth Corp., Netflix, Verizon and QuinStreet were also in the top 10.

Interest in bounty programs has spurred the development of specialty performance networks, such as QuinStreet, Adteractive, AzoogleAds and MetaReward, that are focused on customer acquisition and lead generation. These networks are bypassing the largest networks and offer generous bounties to publishers who can funnel traffic to their clients.

“To the extent that you can deliver more quality leads, advertisers are willing to pay for them,” says J.B. Orecchia, president of MetaReward.

Detailing the Demographics

Orecchia says the increasing competition among bounty programs is prompting marketers to collect more extensive demographic and lifestyle information so that they can match consumers with advertisers. MetaReward collects date of birth, gender and address information as part of their registration process. The company, which along with Lower MyBills.com and PriceGrabber.com are subsidiaries of Experian Interactive, analyzes the information and delivers targeted advertisements for its advertising clients.

“Deriving positive return on investment from cost-per-lead/account programs relies on the marketer’s ability to match the consumer profile with the type of customer the advertiser is looking for,” according to Orecchia. “It all comes down to yield management,” he says. “Marketers must identify the characteristics of the programs that maximize the quality of the leads.”

Orecchia says his clients do not want to filter out bad data themselves, so publishers must scrub the lead data at the same time it is being collected. MetaReward relies on technology developed by parent company Experian to verify the authenticity of address information as well as remove duplicate leads in real time so that the consumer experience is not disrupted.

Publishers need to be diligent in filtering consumer data because consumers are being more creative in trying to scam companies out of free goods, according to Greg Morey, executive vice president at marketing consulting firm GR Wyse. “The free iPod generation prompted people to [find new ways] to beat the system.”

Morey says despite improvements in screening submissions, there is “still a high amount of bad data” being submitted to lead-generation sites. He says the additional techniques for weeding out spurious information, including email verification, double opt-in steps and survey questionnaires, are increasing the cost of processing leads. In recent years the cost to publishers of verifying a lead has risen from approximately 50 cents to more than $2.

Data verification companies such as TARGUS info use multiple databases to check the authenticity of information in real time. These databases not only verify that the phone numbers and addresses are valid, but also that they match the names of the person filling out the form, Morey says. After a form is submitted, TARGUS info checks the data and, if it is valid, consumers are sent to a landing page from the advertiser.

Morey says competitive verticals such as travel companies, vitamin supplements and mortgage lenders are willing to pay the additional cost to reduce the number of bogus leads.

Media Get Their Share

Publishers and broadcasters are also receiving bounties by converting audience members into leads. Technology from LiveDeal enables newspapers and radio stations to host classifieds on their websites and receive commissions for leads, according to Steve Harmon, vice president of corporate development at LiveDeal.

Harmon says publishers that are losing revenue from classifieds to companies such as Monster.com and Craigslist can earn between $10 and $30 for a lead on a vehicle, and between $30 and $300 for a real estate lead. LiveDeal partnered with radio and advertising giant Clear Channel Communications to create classified site SFBayAuto.com. ClearChannel promotes the classifieds on its six San Francisco Bay area radio stations, and the media companies receive a bounty when someone clicks on a vehicle listing and then fills out a form with her contact information.

LiveDeal provides all of the technology, including the classified listings, e-commerce and images of the items for sale, according to Harmon. The lead-generation service, which went online in 2005, enables media companies, which already collect extensive demographic information about their audience, to connect their fans with products that are likely to be of interest.

Turning Leads to Clicks

Performance network Kanoodle has developed a program for niche publishers who can earn small bounties by sharing information about their site’s visitors with larger publishers. BrightAds, which became available in December 2005, is a third-party cookie program that uses information collected on a website to generate relevant ads on another, according to Doug Perlson, Kanoodle’s chief operating officer.

For example, a golf blog or enthusiast site will install BrightAds software, which places cookies on consumers’ computers to record their activities while on the site. Should that consumer then go to a Kanoodle partner site such as MSNBC.com to check the weather, the cookie information would be retrieved, and they would be shown a golf-related advertisement.

“Third-party cookies are going to be the lifeblood of publications that offer free content,” Perlson says.

When a consumer clicks on an ad, Kanoodle gives 5 percent of the revenue from the publisher to the referring web- site, according to Perlson. Because BrightAds has no exclusivity requirements and does not conflict with existing advertising programs, publishers can earn additional revenue without having to modify their current relationships, he says. And while getting a sliver of the PPC commission (Perlson says the money comes from Kanoodle’s share, not the publisher’s) may not sound like much, third-party cookies can be delivered to all consumers who don’t actively block them.

This “stealth” referral program leverages the information collected by niche sites with dedicated audiences to deliver ads to general interest sites, according to Perlson, who expects consumers to become more comfortable with third- party cookies as they realize the benefits of being exposed to more targeted ads. To address privacy concerns, Kanoodle deletes the cookie information after a maximum of 30 days, and sometimes in less than a week.

Forrester’s VanBoskirk says that while BrightAds helps larger publishers to optimize the yields from the ad programs by targeting customers, some consumers may be concerned when they realize that behavioral information is being shared among sites. Consumers are gradually learning that visiting sites utilizing cookies can provide a better experience, but the cookie placement has to be made known to consumers. “Responsible publishers will want to explain that they are collecting cookies,” VanBoskirk says.

She also notes that some small publishers may have reservations that participating in third-party cookie programs could help competitors. “The biggest concern is that a third party will be selling data to another advertiser,” she says.

Going Offline

Publishers in industries that are completed by offline transactions have been limited to pay-per-lead programs, but new technology allows bounties also to be paid on a pending-sale basis. Because advertisers control the offline sales process, fraud is a concern for publishers, according to Jackie Bates, Web marketing director for affiliate network LinkConnector.

LinkConnector’s pending-sale technology enables publishers to follow a campaign’s performance by tracking the progress of the consumer-seller activity until it is completed, Bates says. LinkConnector monitors the progress when leads become pending sales, such as vacation packages or jewelry where sales representatives are often needed to close the deal, she adds.

LinkConnector passes a completed call form from the publisher to the seller, which initiates the monitoring process. The network provides publishers with status reports and processes the payments to guarantee that publishers are compensated, according to Bates.

Bates says the technology gives merchants that do not have online shopping carts more flexibility in setting commission structures. LinkConnector “enables more merchants to come into the affiliate marketing game,” Bates says.

Bounty programs are popular with publishers because of the substantially higher commissions offered for capturing new customers. New tools that clean up lead data and collect more extensive demographic information will make them more useful both to advertisers and consumers.

JOHN GARTNER is a freelance writer in Portland, Ore. He is a former editor at Wired News and CMP. His articles regularly appear on Wired.com, AlterNet.org and MIT’s TechnologyReview.com.

Power Tools

Sometimes even the simplest tasks can only be performed using the right tools. There’s no point in using a chain saw when a paring knife will do the job.

These are not reviews, ratings or recommendations. It’s just a collection of software, services and tools that we’ve come across and wanted to share with you. Here they are in no specific order.

T3Report.com

CyData Services Inc., based in Austin, Texas, has taken its competitive analysis reports that detail the linking relationships of websites, previously sold exclusively to the online adult industry, and adapted them for the affiliate and performance marketing space.

Called T3Report.com, the subscription service performs its own spidering of the Web to gather data from more than 100,000 Web pages. The service can offer its subscribers competitive market analysis about who rivals are linking to and who is linking to them. It would allow affiliate managers with merchants to see the affiliates of their competitors. And the idea is to then target those affiliates to also join their programs or possibly emulate the strategy of competitors, according to officials at CyData.

The company claims all of the data gathered is publicly available, but previously it was hard to obtain – mostly because other services such as Google and Alexa go through only the first 1,000 pages of relevant data, leaving much data untouched.

There is a full-featured version as well as a light one of the offering, which can be subscribed to on a quarterly basis. Users pay to access the T3Report.com online system, which the company claims can be easily navigated by even novices after a brief tutorial.

The pricing is based on the number of domains in the report. For detailed analysis of less than 500 domains, the price is $2,700 per quarter. Pricing goes up for more than 500 domains.

The full version gives subscribers three levels of domain-linking information. For example, users would be able to find out who Walmart.com links to, who is linking to Walmart.com and then who links to those linking to Walmart.com. The light version does not delve as deep and offers only the first two levels of linking information for the user.

The company claims that, given an affiliate network link, the product can map that to the merchant, basically revealing what is in the “black box” with the affiliate network. This works because networks use LinkSynergy.com as the linking domain by affiliates, and then they redirect to the merchant. T3Report.com has more than 650,000 LinkSynergy links in its database, with more than 5 million added each day.

For each domain, the product can show how many unique domains link to it as well as the number of links. These statistics can reveal how many websites are promoting a specific merchant.

Company officials claim that they can spot all the websites that belong to a specific affiliate and track which products they are promoting. And given the same product on two networks, they can show which is doing better as far as promotions by affiliates.

ReturnOnAffiliate.com

These days communication is a big issue for online marketers. Return on Affiliate, an online affiliate marketing meeting space, is attempting to bridge the gaps of this industry and bring affiliate marketers, managers and associates together in a single place to communicate.

ReturnOnAffiliate.com is a community that includes message boards, instant messaging, private messaging, the ability to link to other members, invite friends and colleagues (like LinkedIn) into your circle, as well as the ability to create blogs. It’s free to set up an account, and members have access to searchable profiles of Return on Affiliate members.

Just one month after launching at the start of 2006, the site had more than 700 members. The groups include all types of affiliates, merchants and industry types. Everyone from working moms to Overstock.com executives are members. The site is attempting to use the popular social-networking concept to make managers, community leaders and even CEOs accessible to affiliates.

SimpleFeed Version 2.6

SimpleFeed (www.SimpleFeed.com), based in Palo Alto, Calif., unveiled an updated version of its SimpleFeed RSS service.

The new release (Version 2.6) rolled out in February builds off the company’s most recent major upgrade (Version 2.0), which came out in November. That edition was aimed at giving marketing departments more options for personalized content and increased control over the management, measurement and branding of RSS feeds by using templates as the basis for creating collateral to communicate with customers. By using templates, users are able to publish RSS feed that look like their websites, including the same images, colors, fonts and the like that customers use.

SimpleFeed Version 2.6 includes a handful of new features and functionality such as secure feeds and the ability to automatically import content as well as a light version of the product.

Like the previous release, SimpleFeed continues to publish RSS feeds through a URL that is unique to each subscriber. Version 2.6 now offers content creators the option to require a security code or authentication. Those feeds are also sent out over a secure SSL link. If a specific Web portal doesn’t support such authentication, such as Yahoo, then only a summary of the feed, not the actual feed content, will be sent. The next version of Windows – called Vista – along with Microsoft’s forthcoming upgrade to Explorer, will both support passwords and authentication.

The product’s new Web Import feature also allows content creators to put together RSS feeds another way. Users can choose a specific page number or a page range and the SimpleFeed software will automatically spider the user’s website to pull out the correct content. That content will then be queued up to be published on the site and then subsequently pushed out in an RSS feed. This functionality enables content creators to skip the step of putting together RSS feeds manually or with templates.

SimpleFeed is also offering a light version of the product, which gives users less reporting functionality. (Users get eight reports rather than the 48 that are included in the full-featured Enterprise version.) Users of the light version do not get a fully templated RSS feed. The feed is in a template, but it cannot be changed or fully customized. Company logos can be added to feeds, however. Company officials say the light version is a good way for smaller businesses to evaluate the technology at a reasonable price ($100 per month per feed).

The product also builds on capabilities from the previous version, including SimpleTag, a personalization technology that enables customers and prospects to subscribe to content categories using checkboxes on an uncluttered subscription page. The product’s Measurement and Analytics Suite sports 48 customizable reports providing insight on key RSS statistics such as subscribers, content views and clickthroughs. Feed Publishing and Management is a Web-based tool that allows feeds to be created and managed without any prior technical knowledge. New privileges provide companies with granular control of users and workflow and can readily comply with corporate communication policies.

The Affiliate AIM List

Here’s another way to facilitate communication via a very simple concept. Affiliate AIM List (AffAimList.com) is a list of the AOL Instant Messenger handles of people in the industry. Members opt to sign up and are then added to the buddy lists of all other members. That allows everyone on the list to see who is offline or logged into IM and then contact them directly.

The Affiliate AIM List was created by affiliate Adam Viener to facilitate communication among the many different parties comprising the affiliate community. Viener, president of search marketing affiliate IMWave, is a fan of AOL Instant Messenger from way back and thought the communication tool would be a great way to foster better and more frequent communication between people. The list is not a money-making vehicle but more of a community service, Viener says.

To date, it’s been well-received, and the ever-growing list boasts some high-profile industry leaders from top companies including Circuit City, Commission Junction, eBay, Fat Wallet, HomeGain, KowaBunga, LinkShare, Performics and PrimeQ. Viener says that while he’s getting lots of requests to be added to the list, only two users have asked to be removed.

SmallPalace.com

VentureDirect Worldwide recently launched its newest online lead-generation portal, SmallPalace.com, which is aimed at the home finance and home services markets.

Mortgage refinancing has exploded into one of the fastest-growing sectors of the financial services industry. In 2005, one-third of all homeowners used cash- out mortgages to refinance their homes, and more consumers are planning to divert discretionary spending to home improvements.

SmallPalace.com focuses on delivering Web-based, category-specific leads that are generated from applicants actively seeking information on new home purchases, mortgages, refinancing or a variety of home services categories such as home security and contractors.

The SmallPalace portal joins other online lead-generation sites developed by VentureDirect Worldwide, including Direct Degree (www.DirectDegree.com) for online education, Let’s Franchise (www.LetsFranchise.com) for franchise opportunities, and The Free Forum Network (www.FreeForum.com), a co-registration site.

Pic2Vid for Marketers

Sister Technologies, which provides applications and hosted services for the automated creation and management of multimedia marketing content for online retail and mobile environments, recently released its Pic2Vid for Marketers solution suite.

Pic2Vid is a Web-based solution that automatically generates streaming video content with voiceovers from digital photos and text, enabling online marketers to enhance each product and listing with attention-grabbing video clips.

The Pic2Vid for Marketers solution suite consists of two parts: Pic2Vid Hosted and Pic2Vid Enterprise.

Pic2Vid Hosted is a fully hosted, Web- based solution aimed at auction-site power sellers, small and mid-size retailers and service providers, and online marketers and affiliates. The company’s Pic2Vid Enterprise is a turnkey, scalable hardware/software solution for large brick-and-mortar retailers with significant online businesses, including auction sites, shopping sites and industry portals, as well as resellers such as aggregators, service providers, Web publishers and creative agencies. A demo of the Pic2Vid Consumer version can be found at Pic2Vid.com.

Sister Technologies is also working on a new tool, based on the Pic2Vid and “M- Plat” online editing platforms that will enable advertisers to create short video clips that would appear alongside organic search engine listings.

There are only a handful of steps involved in creating a video, and within approximately two minutes a user can create a 15-second clip that could appear beside their organic search listing or as part of a paid listing. Pricing is about 1 cent per minute of broadcast. A one- minute clip that receives a thousand views would cost the advertiser $10.

Affiliate Market Maturing

The affiliate space is getting more sophisticated and complex, according to the findings of the AffStat 2006 Report, an annual study examining the state of the affiliate marketing industry.

Released earlier this year by Shawn Collins Consulting, the survey polled nearly 200 affiliate managers from a cross section of the industry on their overall statistics, as well as a number of issues about their affiliate marketing channels, such as staffing, recruiting and management.

Of those surveyed, 77 percent were pay-per-sale, 19 percent pay-per-lead and 4 percent bounty affiliate programs, which is almost exactly in line with the report’s 2005 breakout of how companies paid out commissions.

Over the last year, however, the size of pay-per-sale programs seems to have shifted. The latest report shows an increase in the number of affiliates in the midrange, with 23 percent of this year’s respondents reporting 5,001 to 10,000 affiliates compared to 13 percent a year ago, yet 18 percent said they had too many affiliates to manage effectively.

The trend toward smaller programs is also on the rise. A year ago, 16 percent of respondents had between 2,001 and 5,000 affiliates. The latest figure jumped 7 percent for 2006. Last year, however, 26 percent of respondents had 5,000 or more affiliates and rose just 3 percent for 2006.

Part of moving to small programs is that merchants are giving more scrutiny to the affiliate approval process. And while 17 percent still approve affiliates manually, that is down from 23 percent for the previous year.

Another interesting finding from the survey: Nearly two-thirds of in-house affiliate managers earn $40,000 to $80,000 a year. In the pay-per-sale programs, 71 percent had dedicated affiliate managers; 24 percent had fewer than 500 affiliates; 22 percent had 501 to 2,000 affiliates; 23 percent had between 2,001 and 5,000 affiliates; 15 percent had 5,001 to 10,000; and 14 percent had more than 10,000 affiliates.

Commission Junction continued to lead the pack when it came to which affiliate networks, solution providers or software solutions were being used to track affiliate programs. CJ had 31 percent of the total survey respondents, up from 26 percent in 2005. Some of that gain is likely from Be Free, which is owned by Commission Junction. Be Free dropped 2 percent to comprise 6 percent of this year’s total for respondents.

The use of homegrown tracking solutions rose to 22 percent from 17 percent in 2005. LinkShare moved up 2 percent from last year, to account for 11 percent in 2006. Performics also gained some ground; up to 3 percent from 2 percent in 2005, while ShareASale.com inched up 1 percent to reach 6 percent overall for 2006.

Still, some lost ground. My Affiliate Program//KowaBunga dropped to 8 percent from 13 percent for 2005. Direct Track dipped to 8 percent from 9 percent in 2005, while the response for “other” dipped to 5 percent from 9 percent in 2005.

There was virtually no change in attitude from 2005 to 2006 in responses to the question, “Do you permit your affiliates to bid on your trademark name in pay-per-click search engines?” Fifty-nine percent responded no; 29 percent said yes; 7 percent said yes, but with restrictions; and 5 percent did not know.

As for blogging, of those surveyed, 21 percent had a blog, compared to 15 percent last year.

And the biggest challenge for affiliate marketing for 2006, according to the report, continues to be recruiting new affiliates. This year 31 percent cited it as the largest challenge, compared with 24 percent in 2005.

The entire report can be found at http://www.affstat.com/products.shtml.

Lost in Translation

Ten years ago, Jaime lived outside Managua, Nicaragua, worked in a shoe factory and took college classes. The then-35-year-old did not own a car and shared a house, a TV and a stereo with his parents, along with his brother and sister- in-law. Both Jaime and his brother helped his parents pay the rent, and the rest of Jaime’s paycheck went toward saving for a move to the United States.

Now Jaime lives in Daly City, Calif. He works as a bookkeeper in San Francisco and rents a house with his girlfriend, Aura, and her 12-year-old son, Juan. Together they share a car, own a TV, a computer, a stereo and cell phones.

They got on the Internet five years ago and Jaime spends about two hours a day online, surfing the Web and doing email. Aura has difficulty reading and does not use the computer at all, but her son spends about an hour a day playing computer games.

Jaime reads news about Nicaragua at the La Prensa website and reads U.S. national and local news in Spanish at the Univision and StarMedia sites. He also regularly reads the Latino Channel on AOL, especially for entertainment and sports news.

The La Prensa site also helps keep him up to date with his favorite baseball team, El Boer, as well as delivering news about his other hobbies – following the Brazilian soccer team and seeing what’s happening in the boxing arena. To follow news about his new local sports teams – the San Francisco Giants and the 49ers, he watches TV. He also uses the Spanish version of Western Union’s website, geared for U.S.- based Hispanics, to check exchange rates, but he goes to the physical location to send money back home.

For his past two trips to Nicaragua, Jaime bought plane tickets at Expedia.com, a site he visits often to check prices. As time passes, he says he feels more comfortable with the security of purchasing online, but he has only bought plane tickets from the Web so far because he likes the experience of shopping in a brick-and-mortar store so he can check the quality of products and walk around.

Because of the financial opportunities in the United States, many of Jaime’s relatives also now live here. Jaime feels that he is living the American dream. He does not know that he is quickly becoming a marketer’s dream. As a 45-year-old bilingual male with a combined household income of more than $50,000 – 8 percent of it disposable – Jaime and his household are part of a U.S. demographic with a purchasing power that dwarfs all other minority groups.

By 2007, the Selig Center for Economic Growth projects that disposable income in the Hispanic market will approach $1 trillion, which represents 9.4 percent of all disposable income in the United States.

Hispanics in America

Understanding the untapped opportunity of Hispanics online requires knowing more about the U.S. Hispanic population. And these days, there is no shortage of research, reports and studies examining this group.

In 2002 the U.S. Census Bureau announced that Hispanics are the largest minority in the United States with 13.4 percent of the population – or 38.8 million people. By 2020, Latinos are projected to be 21 percent of the population, and a third of them will be under age 18, which is another highly desirable segment for marketers.

But it’s not just the size of this group, it’s how much money they are making and where they are spending it. Hispanics are increasingly the major driving force behind revenue growth in consumer product and service markets, a $690 billion market that has attracted the attention of online marketers and retailers.

And while the median income for American households increased just 6 percent between 1996 and 2001, the median income of Hispanic households rose by 20 percent, from $27,977 to $33,565, during the same period. As of 2002, 31 percent of U.S. Hispanic households had an income of $50,000 or more, according to Scarborough Research and Arbitron.

So, as the Hispanic population is making more money, larger numbers of Hispanics are also getting online. Market researcher Centris found that the number of Hispanic online households in 2003 was 5.5 million.

A study by AOL/Roper reported that Hispanics go online 13.8 hours per week at work and 9.5 hours at home, compared with 8.4 hours at home for the general online population.

Hispanics Internet users tend to be younger than the overall population. Research from comScore Media Metrix shows that 60 percent of Hispanics online were 34 years old or younger, compared to 50 percent of the total Internet user population.

As Hispanics get greater Internet access, they are also starting to shop online more. According to Scarborough Research and Arbitron, 33 percent of online Hispanic adults made at least one purchase in 2002. Although that is significantly lower than the 56 percent of all Internet users who bought something online in 2002, as estimated by eMarketer, it is still increasing year-over-year. Still, according to Scarborough Research and Arbitron, only 13 percent of Hispanics purchased something online 10 or more times.

When U.S. Hispanic adults get involved in e-commerce it’s typically travel and banking, according to the AOL/Roper U.S. Hispanic Cyberstudy. Also, Hispanics tend to consume more types of entertainment, including purchasing tickets, than Internet users overall.

The study also found that Hispanics engage in online communications and other forms of communications at a high rate. A study by the UCLA Center for Communication Policy reports that substantially more Hispanic users than non-Hispanics consider the Internet an extremely important source of information – 44 percent versus 32 percent.

An Untapped Market

Considering the growing purchasing power of Hispanics, the higher-than-average amount of time they spend online and the categories that they spend in, there is a surprising lack of affiliate programs aimed at Hispanics.

Geoffrey Gonzalez, president of Ahorre Marketing, a Hispanic marketing services company, agrees. “I think it is a tremendous opportunity,” he says, but adds that the programs are “pretty much nonexistent.”

In September 2000, affiliate consultant Shawn Collins wrote about the potential of the affiliate marketing industry for Hispanics in Latin America in an article on ClickZ.com, “Brave New Affiliate World.”

Collins admits that the market has not taken off as he projected. “I thought it was about to explode five years ago, but it never happened,” Collins says. “The Hispanic market is a very under-served area for sure.”

Linda Woods, president and CEO of Partner Centric, agrees. “We have been waiting for this to happen; I think a lot of money is being left on the table,” she says.

There are many theories as to why the online marketing community has yet to seize this seemingly huge opportunity. Some believe the merchants need to lead the effort, while others claim it is the affiliate networks that need to act first to facilitate the opportunity. Still others say that the affiliates need to create demand in order for programs to take off.

Language Barrier

However, most agreed it is a language issue and that the expense and commitment associated with developing a Spanish language infrastructure is deterring the merchants and the networks from moving first.

Spanish language is very important to 67 percent of Hispanic Web users, according to the AOL/Roper U.S. Hispanic Cyberstudy, which reports that 40 percent of all Hispanics consider themselves bilingual, 40 percent consider themselves Spanish-dominant and 20 percent are English-dominant. For those who are bilingual, their preference for English or Spanish depends on if they are native- or foreign-born.

Some experts say there cannot be affiliate programs aimed at Hispanics until there are complete Spanish-language versions of major merchant websites. Many company websites, such as Target.com, offer a bit of Spanish, but pages of merchandise, site navigation and the shopping cart are in English.

“Some companies have a landing page in Spanish, and then the rest of the site is only in English,” Collins says. “What kind of ridiculous user experience is that?”

Most major e-commerce sites, such as Sears.com and Wal-Mart.com, do not even have Spanish landing pages. AOL offers channels such as news, entertainment and sports channels in Spanish, but their e-commerce channel, called Shopping, is in English only.

“A merchant company can create a great conversion engine, but when Hispanics get to the shopping cart, all of the instructions are in English and the customer support is in English,” says Matias Perel, CEO of Miami-based interactive agency Latin3. “If an affiliate brings the 20 percent [of the Spanish-dominant Hispanics] to the site, it’s going to be hard for the affiliate to see a positive return on investment.”

Brian Littleton, president of affiliate network ShareASale.com, agrees. “The merchants have to be the first people to step on board. If they determine that it is a market that is available and should be targeted, then that is the basic first step in selling. Obviously the network platform and the affiliates need to be there, but that is down the road. E-commerce came before affiliate marketing.”

Some industry watchers wonder if merchants are worried that focusing on one group will have other growing ethnic groups feeling left out. “Perhaps merchants think it is a slippery slope where if they create a site for Spanish-speaking Hispanics, they will need to create a site for many other ethnic groups and languages,” says Kathryn Finney of TheBudgetFashionista.com.

What About the Networks?

Another theory suggests it’s possible that merchants are waiting for demand from the affiliate networks and publishers before they go through the expense and commitment of building Spanish-language capabilities.

“It’s something of a chicken-and-egg thing,” Collins says. “Why go through the trouble and expense to convert everything if there is not a network to bring you down there? They need Commission Junction, LinkShare, etc., to invest there. Affiliates haven’t gone there because there are no programs to promote.”

In addition, the traditional networks, such as Commission Junction and LinkShare, are not set up to accommodate Spanish-dominant affiliates.

For example, at Commission Junction, when a publisher searches on “Hispanics” for programs to promote, the search yields several programs including Amigos.com, Date.com, FriendFinder.com, SpanishToys.com and Yahoo Personals. But like many of the shopping carts at big online retailers, the interface is in English only; Spanish-dominant affiliates cannot sign up if they can’t navigate the English-only site.

Many merchants describe their affiliate program, or “programa de afiliados,” in Spanish but switch to English once the user reaches the enrollment pages.

Ahorre.com’s Gonzalez points out, “You can’t walk a user through in Spanish until page 9 and then switch to English when it gets to page 10. It’s misleading. It’s very similar to mortgages. You can promote, market, talk, speak and write everything in Spanish for mortgages, but the bottom line is that the contract is in English, and that hasn’t been changed by our laws.”

For example, the bookseller Ofertón de Libros has two complete versions of its site and two complete descriptions of its affiliate program, as well as contracts for both. However, the affiliate contract on the Spanish site is non-binding, but links to the English contract, meaning that the user needs to sign the contract in English to join.

A Spanish-language interface at the networks’ sites would facilitate the enrollment of Spanish-speaking affiliates into Spanish-language affiliate programs. But if the affiliates can’t sign up, the networks can’t know that the demand is there.

“The affiliates who can’t speak English would not know how to join,” says Linda Buquet of 5 Star Affiliate Programs. “My guess is that the networks won’t do it until they know the affiliates are there.”

To date, none of the major affiliate networks (Commission Junction, LinkShare, Performics or ShareASale.com) offer outreach in Spanish. ShareASale’s Littleton says, “These things are definitely in the plans for companies like ourselves and, I am sure, other networks as well.”

Affiliate Demand

Each group seems to be looking at the other to get the ball rolling. From the networks’ view there is also concern about whether there will be demand from affiliates to make a program successful, according to Partner Centric’s Woods.

“I think a lot has to happen before affiliates get into it,” she says.

Littleton agrees. “It is hard to put a lot of resources and work behind a product when the majority of affiliates are not ready and the majority of merchants are not ready,” he says. “All of the pieces are needed for a successful push into any market, whether it is Hispanic or European or Asian.”

Latin3’s Perel says, “The last thing you want to do is build an affiliate program directed to Hispanics and then find that you fail on the transaction part.”

A Need for Content

An affiliate program cannot work if there is not enough relevant content. So, the key to a successful affiliate program is to recruit affiliates with contextually relevant sites that have a proven track record for driving traffic, according to Buquet.

“Until they know the relevant content is there, the networks won’t do it,” she says. Page views are up 30 percent in the U.S. Hispanic market, but they’re up only 6 percent in the U.S. general market, according to comScore Media Metrix. Some point to this as proof that Hispanics are spending more time on the same sites because there is a lack of good Spanish content on the Web.

According to the AOL/Roper study, more than half of all offline Hispanics (56 percent) cite lack of Spanish content as a reason for not going online at home. About half (49 percent) also say it is because there aren’t enough sites and activities online that would interest Hispanics.

It’s in the Works

Regardless of whom you speak to – merchant, network or affiliate – there is a sense that the development will happen with time. But there is trepidation expressed as well as optimism by all parties.

“Everyone knows that Hispanics are a vast audience, but I don’t think that anyone is doing it well yet,” says John Ardis, vice president of business strategy at ValueClick. “Everyone is still scratching their head. There is no shining example to point to. There is a paralysis about when to step forward. It is not just a translation job; whole concepts have to be translated to do it right. It can affect the offline merchandise – if we build it online, do we have to have duplicative merchandise in our offline world?”

Joseph Anthony of Vital Marketing says, “In time, with the proper commitment and appropriate research, these brands will find a lot for them to target. They just can’t sit back and keep doing what they are doing.”

Mark Lopez, publisher of AOL’s Latino, agrees. “As the market develops and companies see the potential of this market and see the Internet as a really mass medium to reach these audiences, I think there’s going to be more investment in the back end to make sure the whole interactive product is in the same language.”

Targeting Hispanics

The research and the online experts say the opportunity to reach the Hispanic market is huge and the development is in the works. Meanwhile, affiliates are scratching their heads about how to tap into this market.

Language is the first concern for any potential affiliate. Other advice from experts in the field includes translating concepts, not just words; being culturally sensitive to the target audience (realize that Mexicans are different than Cubans); targeting the appropriate products with appropriate price points; and testing and retesting the market.

Some experts claim that companies may be wrongly assuming that if customers have an Internet connection and a credit card, they can understand English well enough to make a transaction. A Feedback Research study found that 79 percent of Spanish-speaking Hispanics who have used the Internet for five years or less are already highly engaged in online activities.

There is evidence that it is important to reach out in Spanish even if the user is bilingual. comScore Media Metrix found that 49 percent of the 12.6 million U.S. Hispanic Internet users prefer sites that are either in Spanish or bilingual. “While English content can and does reach large numbers of Hispanics, marketers must also provide relevant Spanish-language content to fully reach U.S. online Hispanics,” the report stated.

There are programs that do target the 20 percent Spanish-dominant U.S. Hispanic market. For example, 21st Century Insurance supplies its affiliates with creative in Spanish for car insurance deals. Partner Centric’s Dan Fink, who manages 21st Century, says the “Spanish creatives represent about 15 percent of our creative content and do bring in a good amount of quotes as well.”

Pedro Sostre of Sostre & Associates is a design consultant and an affiliate who owns several sites that provide creatives to affiliates in Spanish. Sostre’s FreeBookClubs.com promotes two Spanish-language book clubs – Mosaico and Circulo.

“The Spanish-language clubs are on par with some of the other niche clubs,” says Sostre, who also notes that his book club targeted to the African-American market does extremely well, as does the Large Print book club (aimed at the older market).

In addition, Sostre helps run the affiliate program for ServerPronto.com, which also provides its creative in Spanish. Most of the affiliates that use those creatives are targeting a South American audience. Because the company serves clients internationally, ServerPronto’s Spanish-language website and marketing are not specifically geared for U.S. Hispanics.

Be Bilingual

While there are many sites, including Mexgrocer.com and Amigos.com, that also offer some Spanish-language pages, some claim the experience does not need to be entirely in Spanish – it is sufficient to reach out with a bilingual message that leads the user to a Spanish-language page at an English-language site.

Many companies are targeting Hispanics with bilingual messages. Ahorre.com advertises its Household MasterCard credit card in English and Spanish on the same page. Target.com has banners on its Spanish landing page that mixes languages to say “Nuestra Gente – Hispanic Heritage. Discover the Cultura and Tradicion.”

Reebok used this “Spanglish” this year in its much-hyped BarrioRBK campaign, which was produced specifically for the U.S. Hispanic youth market. The site is marked with Spanish and English tag lines as well as Spanglish tags directing visitors to “Volver a Home” or “Return to the Home Page.”

Latin3’s Perel, who designed the site, explains, “We created this website in Spanglish because we realized that young Latinos are bilingual or, because they came here very early, they are English dominant. Because we want to connect with them, we give it a Spanish flavor, so the key here was to have copy writers who have a clear understanding of when to use English and when to use Spanish.”

But there are other reasons not to reach out solely in Spanish. Research firm Cultural Access Group found that Hispanic youths prefer English-language television and radio programming over Spanish-language fare by a margin of nearly two to one, and overwhelmingly prefer English-language Internet sites.

“I think a lot of younger Hispanics are more comfortable in English,” says Sostre. “I am in my 20s, and if I see a site that is completely in Spanish, I think it is targeted at my mom or my grandmother.”

He warns that you might risk insulting a potential user if you communicate with them only in Spanish. “A lot of Hispanics find it offensive if you assume that they don’t speak English.”

A Question of Culture

Affiliates may find that language is less important than culture. Lopez, the AOL Latino publisher, says “the Hispanic audience definitely has cultural dimensions that are really different than the general market.”

For example, Reebok’s BarrioRBK site features a Reggaeton dance game, a music area that includes the top 10 Latino artists, and information about famed Mexican soccer team Chivas.

Because Hispanics online skew younger, Ahorre’s Gonzalez claims affiliates might also do well to target them with lower-priced items. “The growth in Hispanics online is in the youth market, and the youth market is into music – they are into iPods and they are into CDs. Try to sell reasonable price points; if you target up to $99 you should do well.”

Not everyone agrees that low-price items are the way to go. According to Lopez, Hispanic demographics tend to be younger than the general market, but he adds that their buying power is increasing year to year. “Hispanics are becoming more sophisticated just like the general market.”

Nacho Hernandez, president of iHispanic Marketing Group, says, “U.S. Hispanics spent $5.6 billion in 2003 purchasing on the Web.” In fact, Sharper Image, which is known for its high-end electronic goods, has a Spanish-language version of its website targeted at Hispanics in the U.S. and has a “programa de afiliado.”

But some argue that the current research and demographics don’t tell the whole story. Many claim the Hispanic market is not that distinct and will become less distinct over time – much like the offline world where Hispanics become acclimated to American lifestyles and habits.

“In recent years, there has been a shift in online advertising – less of a focus on demographics and more of a focus on psychographics or behavior,” wrote Barry Parr in his MediaSavvy blog. “Demographics are usually the wrong way to target online advertising. You may believe that the most likely user for your products is a woman between the ages of 25 to 44, but what you’re really looking for is anyone who might want to use your product. ” On the Web, you can target users by context and behavior. That’s a lot more powerful than demographics. “”

Vital Marketing’s Anthony concurs. “I think that marketers may be overanalyzing the Hispanic market in terms of feeling that Hispanics are only going to go to sites that are relevant to Hispanic cultural content or contain some type of concentrated cultural information,” he says.

The debate continues about how to target this growing Hispanic group, but for now many agree that for affiliates to succeed, they need to recognize that the Hispanic segment is one with unique requirements – including differences in language, culture and spending habits. Reaching out with cultural references that appeal to Hispanics, and experimenting with Spanish, bilingual and Spanglish messages, are some of the ways to get started. Programs will have better conversion rates if they can demonstrate that they have considered the wants and needs of Hispanic shoppers.

The best way for affiliates to determine the appropriate way to drive traffic is through experimentation. “Top affiliates must be committed and continually test, measure results, make adjustments and retest the market,” Hernandez says.

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

Have You Heard the Word?

Tell a friend: Word of mouth rocks. It’s how many people find a dentist, a plumber, a pediatrician and a realtor, even a shrink. You tend to trust your friends. So when one of your close pals swears by her hairstylist, raving about what a “shear” delight he is, you are apt to give him a shot rather than thumbing through the phone book and blindly calling random barbers. Then you’ll tell your friends. “

Small wonder this type of hype is highly coveted.

Now countless companies are trying to glean lessons from the phenomenon of friend-given recommendations. It’s increasingly difficult to cut through the advertising clutter, as consumers gain more and more control over the messages they receive in this world of DVRs and video on demand. Thus, companies invest an estimated $100 million to $150 million a year on word-of-mouth or buzz marketing.

Intelliseek’s “2005 Consumer-Generated Media and Engagement Study” polled 660 online consumers and explored attitudes and opinions across key consumer-generated media venues – including Internet message boards, forums, blogs, direct company feedback and offline conversation. The study found that, compared to traditional advertising, word-of-mouth behavior continues to grow in importance in consumer awareness, trial and purchase of new products.

Consumers are 50 percent more likely to be influenced by recommendations from peers than by radio or TV ads, which is a slightly higher level of influence and trust than found in a 2004 study coauthored by Intelliseek and Forrester.

Yes, everyone knows that good word of mouth can do wonders for a company’s reputation and its bottom line. Of course, the flip side is that the masses can also bad-mouth you and ruin your chances at future fame and fortune. The reality is that, while everyone wants to get good word-of-mouth buzz, not many companies understand how to garner that much sought-after street cred and high regard.

If you’re an affiliate, buzz marketing is an affordable way to generate interest and develop traffic. Even the smallest of affiliate sites can engage customers in this way. It takes strategic thinking but not an ad budget to rival Coke or Pepsi. What is required, however, is some dedication to spreading an idea, a few passionate people and a willingness to talk. A lot. The payoff is that you’ll encourage some folks to check you out online. And you might even earn better commissions as a result.

But currently, word-of-mouth marketing appears to be a fickle business, but if marketers apply some strategy, they are sure to be singing its praises. Whether you tell your friends your secrets or not is up to you.

Take a Bite From Apple’s Book

Apple Computer is one of the best-loved brands around. Even though it claims less than 5 percent of the PC market, fans are rabid about its products. And take a look down the street – see any white ear buds? The prolific iPod phenomenon is proof of how Apple is transforming the music business through good buzz.

One reason Apple got to be so popular in the first place can be traced to Guy Kawasaki, best known for his former role as chief evangelist at Apple; he helped spread the company’s Macintosh operating system through word of mouth. Soon after, other tech firms like Microsoft hired their own evangelists. Kawasaki has authored eight books on marketing, and he thinks that today’s high tech changes will make it easier to spread the word.

“The ubiquity and freedom of broadband are absolutely changing the world, making it easier to build brands, not harder. You used to have to have $3 million to buy a Super Bowl ad,” Kawasaki says. “MySpace and Facebook have been able to build great products and use word-of-mouth and guerrilla marketing to build amazing brands. Nowadays, blogging and podcasting are considerably more powerful means of word of mouth than people simply spreading the word by, well, word of mouth.”

Kawasaki’s advice to marketers hoping to build buzz is to first create a great product and then let customers try it out, let them test-drive. And maybe, just maybe, they’ll spread the good word.

G’head, Squeeze the Charmin

A couple of marketers are taking Kawasaki’s advice and letting the public experience their products in a very hands-on way in the form of “pop up” stores. It’s tough to cut through the clutter, so some brands are renting space on a short-term basis to let consumers experience their goods and generate buzz.

Kodak and Illy Caffè both wanted to let consumers see and experience their products in a hands-on environment. So each opened brief “art exhibits” at their self-created temporary galleries. Kodak’s galleries, which were open during the month of November in New York City and San Francisco, didn’t have merchandise for sale, just photos on the walls and new cameras for gallery-goers to check out.

“The vision behind the Kodak Gallery is to invite consumers in to experience photography and to feel and touch the products. It is much more about the learning experience and getting immersed in the digital experience,” says Kate Imwalle, who helped put together the Kodak Gallery in San Francisco’s Cow Hollow neighborhood. “This gallery is about the power of photographs and celebrating community.”

Kodak promoted the gallery and encouraged foot traffic, but a key component of the experiment was the lack of outright product-pushing. That way, gallery-goers could relax and enjoy the environment.

Galleria Illy at 382 West Broadway in New York had a coffeehouse vibe and tons of art events – acclaimed painter Julian Schnabel created coffee mugs, and NYU film students shot a series of films – to get American consumers hip to its brand. The rental was short term in the high-priced SoHo neighborhood; it opened Sept. 15 and closed Dec. 15. The idea was to give people a chance to experience the brand in the artsy milieu of a coffeehouse/art gallery.

“The galleria was a physical manifestation of our brand. It was like our business card,” says Greg Fea, president and CEO of Illy Caffè North America. “People got to experience Illy and education and culture. They had a full immersion experience with the brand. It was received really well. We’ve been extremely pleased. We had events around art and culture, because culture is a big part of coffee. ” People in New York got to know us better. We served 20,000 coffees, like 300 to 400 on weekend days, and 200 a day during the week.”

Kodak and Illy both advertised without being overt about it. Instead, they created places where people gather and could talk about photographs or coffee. They created communities.

Create Community

Communities happen online, too. A perfect example of how rock bands have used word of mouth to gain recognition for their songs and gigs is found at MySpace.com. Basically, MySpace combined the Internet Underground Music Archive’s song-posting service with Friendster.com’s meet-your-buddies’-buddies community model while ditching that site’s control-freakish attitude on how members can and can’t use the service.

More than 42 million members have joined MySpace.com since its inception in 2003. Rupert Murdoch’s News Corp. bought the website for $583 million last summer.

“Our band has been a part of MySpace since 2003, and we have like a million friends now,” say Pete Wentz, lyricist and bassist of Fall Out Boy, a punk/pop band that will be featured on a MySpace record compilation. “There’s a whole group of kids who are disenfranchised. So you’ve got to go to sites like MySpace.com to reach those people.”

MySpace.com founder Chris DeWolfe says that his company will remain true to user-generated, not corporate-dictated content. “Music labels now understand word of mouth. It happens in an organic manner on MySpace.”

Viral Videos

Now that broadband is a reality, videos can get passed around virally. Spending on online video advertising is anticipated to triple in the next two years, according to research firm eMarketer. Spending will reach $640 million in 2007, up from $225 million 2005. Advertisers will spend at least $1.5 billion or more by the end of the decade.

Coffee company Illy has video podcasts to immerse people in the brand. And Nike has a stealth video campaign out, too. In it, Brazilian soccer sensation Ronaldinho sits on the grass. Someone hands him a metal box. He takes out new cleats, laces them up, then juggles a ball and kicks it into the crossbar four times in succession. A swoosh is subtle but clearly visible through the 2-minute, 44- second commercial. And no, this isn’t a Nike spot on TV.

This “Touch of Gold” video was viewed at a nascent website called YouTube.com an astonishing 1.9 million times after being up on the site for only a month. Nike, a pro at underground publicity, creates under-the-radar campaigns that spread like wildfire – and doesn’t shell out millions to do so.

Nike’s latest play-for-no-pay stunt also includes “Dance with the Ball” and “Don’t Tread on Me: Manifesto.”

“If you want to talk to U.S. soccer fans, you have to go online,” says Nike spokesperson Dean Stoyer. “Soccer is a huge initiative for Nike, and the soccer community lives online. We’re always looking for new ways to be on the cutting edge.”

A few weeks ago, YouTube.com was just two guys – Chad Hurley and Steve Chen, CEO and CTO, respectively (both early employees of PayPal). Currently, YouTube uploads 10,000 videos per day, moving 12 terabytes of video daily – an entire Blockbuster store and a half worth of footage.

The site highlights the most-viewed videos and who’s linking to each clip. MySpace, BlogSpot.com and Friendster all helped steer traffic to Touch of Gold. The best part: YouTube is like photo-hosting site Flickr.com, only for videos – and it’s free. People can upload and share clips with the world.

Beware the Backlash

A word of caution to any would-be word-of-mouth marketers: Be careful what you wish for. For example, take Sony, which recently hired graffiti artists in various cities to paint comics on outdoor surfaces (it paid local merchants for the right to do so). The artwork showed kids playing with various toys with dazed, expressionless faces and hypnotized eyes. Upon closer inspection, the toys they are playing with aren’t rocking horses, marionettes or skateboards, but Sony PSP (PlayStation Portable) game devices.

The ads never mention the company or the product. The concept behind the campaign was that people would see the graffiti, recognize the PSP, think they were cool and tell others to check it out.

The only problem was that in locations like San Francisco, real artists tagged the work “Fony” and wrote scathing manifestos telling the electronics giant to leave city sidewalks alone. This is a perfect example of attempted word of mouth gone terribly wrong. Sony got plenty of buzz, but it also branded itself a poseur in the indie art community.

Likewise, the Intelliseek study found strong negative reaction to shill marketing or artificial buzz, in which consumers are paid or offered incentives to recommend products or brands. One-third of respondents said they would be disappointed if a trusted contact did not fully disclose a paid or incentive-based relationship; 26 percent said they would never trust the opinion of that friend again; and 30 percent said they would be less likely to buy a product or service.

“Trust is the currency of effective advertising,” says Pete Blackshaw, Intelliseek’s chief marketing officer who oversaw the study. “But it’s highly fragile.”

Boston-based BzzAgent has clients like Lee Jeans, Penguin Books and Ralph Lauren. Its “agents” are regular people who volunteer to receive products and plug them. Technically, disclosure is encouraged, but it’s left up to the individual. Tremor, Procter & Gamble’s four-year-old word-of-mouth division, has a group of selected “cool” teens to help hype products. Both firms have gotten a lot of buzz for the buzz they create for clients. But not all the buzz is bueno.

In October, nonprofit advocacy group Commercial Alert sent a letter to the Federal Trade Commission urging a thorough investigation of P&G’s Tremor, which has enlisted about 250,000 teenagers in its buzz marketing salesforce. Commercial Alert charges that Tremor targets teens with deceptive advertising.

“The Commission should carefully examine the targeting of minors by buzz marketing, because children and teenagers tend to be more impressionable and easy to deceive,” says Gary Ruskin, Commercial Alert’s executive director. “The Commission should do this, at a minimum, by issuing subpoenas to executives at Procter & Gamble’s Tremor and other buzz marketers that target children and teenagers, to determine whether their endorsers are disclosing that they are paid marketers.”

DIANE ANDERSON is an editor at Brandweek. She previously worked for the Industry Standard, HotWired and Wired News.

Community Commerce

Until now online shopping has been a lonely endeavor. Think Sandra Bullock in “The Net,” the 1995 film where she works from home, orders everything online and has few friends outside of cyberspace. Even 10 years later most people still shop online alone, sneaking it in during work hours or squeezing it in after everyone’s in bed.

“If you look at the first 10 years of e-commerce, it was solitary, not social,” says Rob Solomon, vice president of the Yahoo Shopping Group. “Yet, if you look at the pre-e-commerce world, that’s all shopping was; e-commerce changed that. E-commerce isn’t going to be a solitary thing that much longer.”

That’s because social networking is having its third rebirth online, and this time experts think it will stick.

“E-commerce will be much more than 5 percent [of retail revenue] three years from now,” Solomon says, “because this will change the landscape of it.”

As such, affiliate sites are building loyal fan bases and gaining steady clickthroughs by encouraging buyers to bring their offline friends along for the shopping experience.

“Consumers looking for the best of the best, the first of the first, the most relevant of the relevant increasingly don’t connect to ‘just any other consumer’ anymore,” according to TrendWatching.com, a report focused on spotting new trends. “They are hooking up with (and listening to) their taste ‘twins’; fellow consumers somewhere in the world who think, react, enjoy and consume the way they do.”

To tap this trend, the best-selling affiliates are adding social networking elements outside the norm. They’re offering ways for buddies to view each other’s potential purchases, give and get advice in any form they want, pay each other’s bills and even get cash for recommending something their buddy ultimately buys.

Influencing Others’ Potential Purchases

Forrester Research found that consumers who buy fashion online are more likely to interact socially by sending product links to friends. With more than 40 million – mostly young, higher-income females – having purchased clothing online to date, this market is ripe for affiliate-site options that seamlessly allow second opinions.

Take eDressMe.com, run by Tango dress designer Joanne Stoner, who uses Yahoo’s storefront to offer her dresses alongside more than 1,000 others from New York designers. The site conference calls in mothers and daughters with its personal shoppers to look at online dress options together and reach an agreement.

“It’s just the right forum because the daughter is around to shop, the mother is around to pay for it and the personal shopper will be the one who decides whether the outfit is appropriate or not,” Stoner says. The result? eDressMe.com gets about 6 million unique visitors per month and has been No. 1 in most natural search rankings for “cocktail dresses” and “evening dresses” for three years running.

While online buddy shoppers can’t actually see the other person’s outfit on, they now have options like My Virtual Model, an animated model sized to a customer’s exact measurements and customized with faces, hairstyles and builds. Merchants like Adidas.com, LandsEnd.com, LLBean.com, Sears.com and iVillage.com (20 percent commission) all offer the virtual model for “trying on” clothing as part of their affiliate offerings. The saved model can be used at all participating merchants, with final outfits “imailed” to buddies for feedback. Shoppers using My Virtual Model reportedly spend more, buy more and return fewer items.

Buddy emails and conference calls are just two of the many new ways shoppers will soon be able to provide pre-purchase feedback through shopping sites. “There is so much more you can do with IP communications if you tailor it for the e-commerce experience,” says Rob Seaver, CEO of website-embedded IP communications provider Vivox.com. “What if you could talk to people who recently purchased the same item? What if you could see into other people’s shopping carts? What if you’re considering a purchase of the ‘Desperate Housewives’ DVD collection, and while you’re looking at that there’s an ad that says, Join five people in a small affinity group talking about ‘Desperate Housewives’? By bringing the social networking aspect and e-commerce together, you can increase interaction on a site and, consequently, increase sales.”

For example, in conjunction with Friendster.com allowing users to post Amazon.com affiliate links, it now offers Net Zero.com’s free computer-to-computer calling with a banner ad on its log-in page. Buddies only need a USB headset and microphone to bring the offline experience online.

Give Advice, Get Advice

Amazon.com is a leader in product reviews with more than 6 million entered by its users. And in November, Amazon patented how its reviews are conducted.

According to Amazon’s lead engineers, “The click through and conversion rates of recommendations based on collaborative filtering vastly exceed those of untargeted content such as banner advertisements and top-seller lists.”

Still most others claim it’s a non-issue. “All the major sites have product and user reviews,” says Martin Levy at eDeals.com, which posts reviews alongside merchant, auction and coupon results for product searches on one page.

The Pew Internet & American Life Project found that 33 million American Internet users have reviewed or rated someone or something online. And Forrester Research found that, in Europe, more than 50 percent of online consumer electronics buyers check product reviews from other customers, 30 percent purchased something online based on someone else’s online rating and 15 percent wrote a review themselves.

TrendWatching.com cataloged these results in its late-2005 “twinsumer” report.

“The twinsumer phenomenon is turning millions of reviews, ratings and recommendations into truly valuable results fitting one person’s very particular preferences or even lifestyle – whether it’s a one-off twinsumer union or an ongoing relationship. Twinsumer therefore isn’t about access to reviews or ratings or even trust in general (those are fast becoming hygiene), but about relevance.”

The name of online mall Yub.com says it all. It’s “buy” written backward. The company, launched in February 2005 and snapped up by Buy.com, is all about consumers recommending products to other consumers. Offering nearly 5 million affiliate-fed products, Yub.com provides a place where people sign up to meet (and give Yub valuable consumer data), hang out and get merchant-negotiated cash-back rates of up to 25 percent for free members and up to 34 percent for “premium” members, paying $24.95 per year. Users also get 1 percent when their buddies buy something endorsed in their profile.

“The voice of our members is an incredible resource for both merchants and online shoppers,” said Jared Morgenstern, president of Yub.com, in a launch release. “Merchants receive the benefit of satisfied customers who become product evangelists, and online shoppers learn the latest in trends from the most reliable source – their friends. It’s a win-win situation for everyone involved.”

Insiders are finding that the best way to help “product evangelists” refer other shoppers is by giving them the communication tools they’re most apt to use. They may want chat, email, instant message, text messages, on-demand cell phone or land-based phone calls, calls to other computers with headsets, photo or video uploads or live webcam communication.

“One of the things people don’t like doing online is not having any sort of interaction when they’re picking out, say, a dress,” says Karen Hoskins, Logitech’s webcam PR specialist. The addition of webcam communication “is a more personal element to shopping online.” Sellers on eBay now can even upload pre-shot Webcam footage for 99 cents per video listing (first upload free).

“But to make it more like real life,” Vivox.com’s Seaver says, “the next step will be to have the real-time interaction among users.” Vivox has a managed IP service that integrates all of the various real-time IP-based communication methods. It costs a few hundred to several thousand dollars per month, so sites usually roll costs into membership fees charged to users.

For sites wanting to add their own social network, Vivox already powers WorldFriends Networks’ (WFN) new WorldFriends Phone service. Buddies can view personal hot lists, identify members online and escalate interpersonal interactions from IM – regardless of the branded IM service they may currently use – to voice to video with one click. All of these services can be private-labeled: WFN customizes and operates the personals service, combining profiles from more than 150 sites in 18 countries viewable in up to five languages.

“There is no up-front cost to join our network and avail of our service,” says Dominic Penaloza, in sales partner for Meta4-Group.com, WorldFriends Network’s parent company. “However, we do have a modest set up fee that is payable from the user-fee revenue share.” Partners get a “generous” share of all user fees, which run $24.99 per month or one year for $99.99 ($8.33 per month).

And don’t forget the forums for tapping into buddy-type recommendations.

“There is an amazing amount of discussion on everything – from digital cameras to professional chef knives – on all of the specialized user forums out there,” says Michael Tchong, founder of Trend Setters.com and UberCool.com. “That’s shopping engineering at its best.”

Pay Each Other’s Bills

eDressMe.com is just one example of sites using social networking to have one person find an item and another person pay for it. Gift card revenues have exploded to $55 billion dollars, according to Tchong. “That inherently includes the social element – because you buy a gift card to give to someone else.”

BarnesandNoble.com’s new shopping cart software builds on its social features (blog-like back-and-forth reviews and posts of a reviewer’s other recommended reads) by including pop-up reminders to “send an online gift certificate” now.

Getting Paid for Social Networking

“When consumers rally around a specific topic, recommendations are instantly relevant, as long as they don’t stray too far from the topic at hand,” TrendWatching .com reports. “No wonder virtual communities are fertile breeding grounds for meeting one’s twinsumer.”

Perhaps the most affiliate-friendly virtual community to date is Squidoo.com, launched in early December by Internet marketing guru Seth Godin, author of New York Times best-sellers Permission Marketing and Purple Cow.

Users create profiles and build a topic-specific reference Web page known as a lens. Fifty percent of net revenue from a lens, whether from automated Google AdSense ads or affiliate sales for Squidoo’s 500 merchant partners, go back to the lensmaster.

“Squidoo lets online entrepreneurs sell thousands of products without signing up for different affiliate programs or building and hosting a website,” Godin says. “In just a few minutes, they can present a thoughtful collection of items – and then spend their time promoting the site.”

The bonus for adding yourself to social commerce sites like this can be immense. Relevant content garners higher Google PageRanks and can highlight your best blog posts, point to the products and services you write about, autofeed with RSS news when you’re out of town, track your site’s name mention on other blogs and promote upcoming podcasts and offline events.

Gather.com is another social commerce site now in beta testing. All of its members are bloggers, an area ripe for commercialization. Bloggers, some of whom simply repost blog entries or newsletter content from their own site, are paid out of revenue generated from Gather.com’s in-house ad network, where affiliate ads are welcome. Ads appear based on interests specified in a user’s profile.

“Because we’ve got just a few dozen advertisers since [our Nov. 15] launch, they’re getting prices that are much better than what they’re getting at Google or Overture,” says Gather.com founder and CEO Tom Gerace, the brains behind BeFree’s affiliate network (it sold for more than $100 million to ValueClick in 2003). “Plus they’re able to target an audience – membership is 5,500 and growing – that’s already loyal to coming back to our site.”

Then there’s Yahoo’s Shoposphere beta, which launched Nov. 14. It aggregates and sorts Pick Lists created by Yahoo Shopping’s community, allowing users to “search, view, read about and purchase specific products recommended by people they know and trust, experts they’ve never met, and everyone in between.” Affiliates can use Yahoo’s Open Web Service APIs, which include shopping search, price compare, reviews and product specifications.

“This creates a whole new value chain that allows those people who were only consumers in the past to become sellers,” says Yahoo’s Solomon. “Not too many other people can execute on this like we can. Amazon.com is positioned, but without the social networking all ready they’re really at a disadvantage.” Yahoo won’t roll out revenue sharing with Shopospherekeepers, however, until later in 2006.

All in all, tapping into this social networking trend boils down to making your online shopper’s experience more like one they’d have on land.

“One of the affiliate managers I work with said he was so tired of seeing stores that looked alike, and wanted to see different things in online shopping like capturing the social experience,” says John Gilhooly, publisher of mallDTS.com, which launched in October 2005. “Malls have always been a great social experience for people, so we get a little more of that online to make it seem like they’re actually engaged in offline shopping, online.” He’s made the experience so authentic, he says, that “two people actually called recently and asked for directions to the mall.”

Sources like TrendSpotting.com are predicting this is just the beginning.

“The twinsumer trend is part of an all-encompassing trend changing who and what consumers rely on when making purchase decisions, both need- and impulse-driven,” the report states.

But will the business model work, or will content-based sites crash like revenue-share Themestream.com did in 2001? The tagline for the 1995 movie “Mallrats” hints at the perils of crossing your fingers for commerce in a social environment: “They’re not there to shop. They’re not there to work. They’re just there.”

But industry insiders say that, thanks to the buddy factor, consumers are ready to come online and actually buy this time. “Instead of getting the lowest price and leaving, shoppers are staying on the site and getting some value for that,” eDeals.com’s Levy says. “Then they’re there when a merchant comes out with a special offer and they can take advantage of that. That’s what eDeals is doing ” something very similar to Yahoo. And if Yahoo is doing this, then you can see that this is where the market is heading.”

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 and writes in Portland, Ore.

Data Double Duty

Website publishers are up in arms about the potential threat posed by employees at companies, who have access to their crucial data that could be used to compete with them.

Insiders have nicknamed the situation “Triple Jangro,” after the catchy title of a blog post on Revenews.com by David Lewis, CEO of 77Blue. The title refers to ex-BeFree/Commission Junction product manager Scott Jangro, who left the affiliate network several months ago to become a full-time affiliate.

The crux of the recent situation revolves around the threat of perceived or potential conflict of interest. Observers claim many employees of search engine companies and affiliate networks are infringing on the data privacy rights of their clients by using data from affiliates and merchants to enhance their own affiliate sites, or to go to networks and buy traffic based on inside information these employees receive from clients.

While many say they have suspected this practice for years, news of the situation came to a head at the LinkShare Partnership Summit 2006 in January. A few former Commission Junction employees attended the event as affiliates and revealed that three CJ staffers resigned after the company recently put a policy in place prohibiting employees from also being publishers.

“In the early days of affiliate marketing and affiliate networks – especially CJ – there were a lot of entrants into the space who came to us being program managers or some were publishers and gravitated toward this space,” Jeff Pullen, COO of ValueClick, says. “Over the years they have operated websites of their own on weekends and evenings and in the past we have not discouraged that. It was a good way for people to know the business. We always had a code of conduct and we are aware of the proprietary nature of the information we handle. Because we consider ourselves a leader in networking quality, we wanted to eliminate any potential appearance of a conflict of interest.”

To that end, an email was sent to everyone at ValueClick and its subsidiaries, clarifying that publicly-held ValueClick would no longer allow any employees to be publishers and violators of that policy would be subject to disciplinary action, up to and including termination/dismissal, according to Pullen. He says the change was spelled out and included in an updated restatement of another policy related to the issue of confidentiality.

“It really is easier, from an operational stand point, rather than to have to try and implement policies to monitor the issue, to just eliminate the practice altogether and not be concerned,” says Pullen, who noted that the new policy was not prompted by any wrongdoing nor was there any evidence of any improprieties.

Still, the new policy resulted in the departure of three employees – Chad Darling, an account representative for many of search affiliates; Andy Powell, who didn’t work with publishers but was part of the search management team; and Don Batsford, a CJ employee, who joined the company when it acquired BeFree.

“The people that left took a look at two different business opportunities. These are entrepreneurially focused publishers that chose to pursue that route. We hope they continue to do well. But they can not do both things.”

It’s unclear if these ex-CJ employees were running affiliate sites or doing arbitrage. Commission Junction officials declined to provide any details.

Regardless, the situation has angered many affiliates, who claim network staffers are supposed to be helping affiliate partners, not helping themselves. Despite their outrage, many affiliates, network representatives and industry watchers say the overall issue is so politically charged, they declined to have statements attributed to them and spoke only on the condition of anonymity.

The issue also sparked a lot of heated discussion on the affiliate forums and generated plenty of fodder for bloggers, many of whom admitted to posting comments on a variety of industry blogs under pseudonyms.

“The networks have been very quiet on this issue and are reluctant to make any public comments. This lack of communication is causing an increasing concern of potential wrongdoing at the networks. When the networks have to talk to their lawyers before commenting, nobody feels comfortable,” says Adam Viener, president of IM Wave, a Virginia-based search affiliate. Darling was Viener’s account manager.

Here is a typical post. “Let me get this straight, top affiliates shared their secrets with account managers at a network only to find out those account managers were their competition and using those hard-earned secrets – I’d be fuming. So much for a trusted third party.”

One angry – and anonymous – affiliate tried to put a positive spin on things. “If they quit their day jobs at the network, they were obviously making more money as an affiliate and that certainly bodes well for the state of affiliate marketing as a very lucrative career.”

Cause for Concern

Viener says he alerted Commission junction to the potentially problematic issue.

“I had a conversation with Todd Crawford [Commission Junction’s vice president of sales] about this issue at Affiliate Summit [2006], after talking with some top search affiliates who were concerned that CJ employees were looking at HTTP referrer data to determine exactly which keywords they were bidding on were converting to sales. They seemed to have some internal evidence that showed that when they identified new keyword niches with no competition, that almost immediately after there was a conversion on those terms, new affiliates popped up advertising on those terms,” Viener says.

Both Crawford and other CJ executives insist that calls to that specific database are tracked and protected. In some case only two to three people at the network have access to that sensitive information.

“To be an effective account manager we certainly have access to operational data. We have to do that job in a good and helpful way and that means seeing a variety of data,” Pullen says. “There is no scrutiny that we can’t withstand, and we encourage and hope others can say the same.”

One CJ super affiliate, who asked not be identified, says that on more than one occasion, within days of launching a new campaign, he would also see competition. “No one knows we are running the keywords, so in theory, no one should pick it up. That led to some speculation how it got started and I went away thinking that I should speak to the network about my concerns regarding who has information about keywords and referring URLs. I’m concerned about who has access to keyword data as well as what is converting and what is not converting.”

Vinny Lingham, founder of IncuBeta, poses a possible scenario:

“CJ has about 2,000 merchants, and it takes a lot of time and effort to evaluate, negotiate, research and run test campaigns. Say that one in every 10 campaigns we test out becomes a full-blown campaign, which is both scalable and profitable. We don’t focus on small campaigns, so typically we’re looking for merchants who can do a lot of volume and has great conversion rates.

“An average test campaign costs us anywhere from $5,000 to $25,000 before we even see a daily profit. Can you imagine our frustration when we take a program on CJ with a network earnings of 2 or 3 and turn it into a 5 overnight, only see other affiliates jumping onto the bandwagon – almost as if they had inside information.

“If I worked at CJ or any other network and I knew who the top affiliates were, I would just wait for them to test out all the merchants for conversion rates, etc, and then run only the successful campaigns – why bother running test campaigns myself? Even worse, imagine after all our testing, the network employee gains access to the keywords we’re bidding on and the conversion rates?”

Steve Denton, recently appointed president of LinkShare, says that as employers you can have policies in place but that “ultimately you’re not going to control what people don’t do at work.”

As for LinkShare, the company encourages its employees, especially those in customer-facing jobs, to set up to affiliate accounts as part of their training, according to Denton. “We see it as a value-add. It allows our employees to know what is going on in the space from the point of view of the affiliates as well as the merchants,” he says.

However, LinkShare has a variety of controls in place to ensure the security, confidentiality and privacy of the data related to merchants and affiliates. All LinkShare employees are required to sign a confidentiality agreement and a non-compete agreement.

“Those agreements are reflective of the fact that we deal with a lot of sensitive data and they make all employees contractually aware of what they can do with any of that data,” Denton says.

LinkShare also controls the access to data by limiting certain pieces of information only to specific jobs titles as well as by workers’ roles and responsibilities, he says.

In addition, through the company’s Athena registration and affiliate validation system, LinkShare monitors which employees have affiliate accounts and what they are earnings via their social security number, Denton says.

Like CJ, affiliate network Performics has a policy in place prohibiting employees from being affiliates.

Still, observers suggest it’s not about having a policy, but more about enforcement and direct communication to affiliates about who has access to what specific data.

Lack of Communication

Some chided Commission Junction for not addressing the “Triple Jangro” issue directly with affiliates, most of whom found out about the situation only by reading online reports with sketchy details, inflamed blog comments from other publishers or after being informed via email that their own account representative had left Commission Junction. Many complained there was no official comment from CJ on the details or any attempt to reassure or placate affiliates.

“CJ did a poor job of communicating this problem to the affiliate community,” Viener says. “By not disclosing what was happening, even if there is no evidence of wrongdoing, it makes me feel uneasy. That’s wrong. I don’t feel like I have the facts; I’m not comforted because there has been no communication from the company. I need to hear what happened. There needs to be more communication,” says Viener.

“The networks should take a hard look at these e-affiliates and communicate with the top affiliates they had contact with about what programs they are running, what sites they have, and give top affiliates a chance to determine if their business practices have been compromised,” says Steve Shubitz, who operates stopscum.com.

“I don’t know if that step was necessary. There was no evidence of wrongdoing, so it was not an issue,” Pullen says. “If an individual publisher was concerned and wanted to ask any question of their account manager, that would be fine. I don’t see these as us needing to be proactive. We manage account relationships all the time and information is held in strict confidence,” Pullen says. “It was not identified as an issue in the past five or six years. The existence of the relationship has always been positive with no controversy or issues. There were no improprieties so that would be explaining a negative. Why would we explain something that is not an issue?”

Others think Commission Junction acted appropriately in dealing with the situation.

“The issue of staffers being publishers at CJ has been simmering for a long time and it’s great to see CJ take a leadership role and be protective,” Beth Kirsch, group manager, affiliate programs at LowerMyBills.com, says. “This challenges other networks with even stickier ethical issues to address the same concern. The affiliate marketing industry is maturing and focusing on these issues is part of that process. Personally, I think this is a great step.”

Putting up Your Guard

Meanwhile, the situation has left many affiliates skittish about revealing information – even to their own account managers.

“I’ve got to be a bodyguard in the future,” Viener says. “I can’t say or have conversations in the future about my business. It’s a catch-22. Because if you are secretive, people assume you are cheating.”

Some caution against disclosing many crucial data points with account managers at the networks.

“I would tell my account manager my payout terms with merchants, what keywords are converting, referring URLs or most anything else. I have the right to privacy, confidentiality and transparency with the networks, but since I’m not 100 percent sure that’s happening, I’ll opt to just keep my mouth shut,” says one affiliate, who asked not to be named.

Shubitz offers this advice: “Webmasters and publishers should assume that every single network engaged in the CPA/CPL does in fact have current employees who are stealing their data and using it to make money.”

He encourages affiliates to “Wash/obfuscate your HTTP referral code and never disclose any details about your marketing procedures, media buys, other sites you own or your site’s demographics to your network.” He goes on to note, “Immediately complain to senior management in writing if you suspect that your procedures have been compromised and in fact are being used by current network employees to make money. Continue to be a friendly ‘partner’ but don’t disclose any data that a network employee could use to steal money from you.”

Nature of the Beast

Many claim the entrepreneurial nature of online marketing breeds this type of behavior.

“People tend to be entrepreneurial and opportunistic, and you cannot fault anyone for that – it’s human nature.” Lingham says. “The difference between this and other businesses is that traditionally you just couldn’t start a business that easily, but online marketing efforts can be started with virtually zero cost,” 77Blue’s Lewis says.

Jeff Molander, president of Molander & Associates, an affiliate marketing consultancy, is surprised that it took this long for the issue to be raised. And while Molander agrees that most employers need to have policies in place to ensure the privacy of affiliate data, he says “insights and knowledge” are gained simply by virtue of job duties, daily work experiences and continually expanding knowledge of the market space. He also claims that much of what affiliates do is plainly seen in search engines.

While other industries have laws governing use and disclosure of sensitive information (lawyer/client privilege, doctor/ patient confidentiality); there is nothing like that for performance marketing, which has sparked talk of legal intervention.

“A class-action suit would damage the industry’s reputation and create unnecessary long-term distractions in our core businesses of building a sustainable and long-term industry,” Lingham says. “We need self-regulation. The government takes too long to get things done. It should be the stakeholders making these decisions.”

Instead, Lingham suggests that super affiliates and representatives from both the networks and search engines, should have a round-table meeting to discuss the issues about enforcing both data privacy and non-competes with their staff with respect to all their clients.

Most say it’s in the best interest of the networks to nip this in the bud and take a leadership role.

“The networks are in a precarious position here. Their business model only works because of the trust established with the merchants and the affiliates. If the networks aren’t open, ethical and forthcoming about these types of issues, then their role in this industry will be diminished,” says Shubitz.

Linkshare Shuffle

In early February, just six months after LinkShare agreed to be acquired by Japan-based e-commerce portal giant Rakuten for $425 million, the founders of the affiliate network have decided to step aside.

The resignations of Chairman and CEO Stephen Messer and President and COO Heidi Messer, who founded LinkShare in 1996, were not surprising according to industry watchers, but definitely signaled changing times in the performance marketing and affiliate marketing space.

Beth Kirsch, a long-time affiliate manager, who is now group manager of affiliate programs at LowerMyBills.com, called it “the end of an era.”

LinkShare was one of the last big affiliate and performance marketing networks to finally be swallowed up by a big conglomerate. LinkShare rival Commission Junction was bought for $58 million in cash and stock by ValueClick in October 2003; ValueClick previously purchased affiliate network BeFree in March 2002 for $128 million in stock. Performics was acquired by DoubleClick in a cash deal estimated at $58 million (plus an earn-out of up to $7 million) in May 2004; DoubleClick was acquired in July 2005 by Click Holding Corp. in a deal valued at $1.1 billion. The new era of performance marketing will feature Steve Denton, most recently LinkShare’s senior vice president of client development and distribution services, who has been tapped to head LinkShare. As president, Denton, a six-year LinkShare veteran, will lead all day-to-day operations. As part of those duties he will continue to oversee all sales efforts, as well as affiliate services and support. His new duties will include responsibility for account services, the search team, marketing and technical sales consultants.

Denton will report to John J-H Kim, CEO of Rakuten USA and executive vice president of international business headquarters, who will handle LinkShare’s legal, technical and finance functions.

“It’s very much like how Heidi and Steve split up their duties within the organization,” Denton says.

With the departure of the company’s founders, LinkShare faces some new challenges. The biggest, according to Denton, is to “move from an organization that was a privately-held New York-based affiliate network into a global role that it was intended to play, while still being the leader in affiliate and performance marketing.”

Rakuten, a public company with a market capitalization of $10 billion, bought LinkShare because it was looking to break into the U.S. market and wanted to establish an immediate presence. Founded in 1997, Rakuten has several divisions and is involved in e-commerce, media, travel and financial services, and owns a baseball team in Japan (the Tohoku Rakuten Golden Eagles).

“Heidi and I have taken LinkShare to a great place, but now it needs to become a Rakuten company. This is the best timing – the fourth quarter is over; Valentine’s is almost over and now LinkShare has all summer to beat Google and Yahoo,” Steve Messer says.

Timing is everything. Denton says that by putting all the pieces in place during the spring time frame gives LinkShare “a runway to get on track with new initiatives, new leadership teams and the company’s continued global expansion efforts, in time for the critical back-toschool period and the hectic fourth quarter” – a time when LinkShare historically generates a hefty chunk of its revenue.

LinkShare is on track, according to Denton, to expand into the U.K. and China sometime in 2006. However, he declined to disclose specifics.

LinkShare and Rakuten also have an integration team of executives, including Denton and Kim, to deal with the merger of the two companies, which includes establishing best practices, as well as streamlining financial reporting and human resource services such as employee benefits.

Denton is vehement that integration is not a euphemism for “consolidation,” which is then often translated to “elimination” as in downsizing when a smaller company is acquired by a huge conglomerate. “Rakuten bought LinkShare for its leadership in technology and the affiliate marketing space, not to rip the company apart,” Denton says.

But there is plenty of change happening. Steve Messer says that he and Heidi needed to move on in order to facilitate that growth. Consultant Shawn Collins says the transition should be smooth.

“It might affect the culture. Denton has a different personality, but it’s not like bringing in a stranger. Everyone is familiar and comfortable with him. And people are really excited.” Messer called his departure a continuation of the global expansion plan that he and Heidi had envisioned when they sold the company to Rakuten.

Messer says that during his tenure, he increasingly saw LinkShare’s main competitors less as the other affiliate networks (Commission Junction and Performics) and more like the major search and portal players such as Google and Yahoo.

“We think that Rakuten is doing a whole lot more to be competitive in the U.S. and we can help them go head-to-head with Google and Yahoo, while the partnership with Rakuten is going to help LinkShare’s presence in markets outside the U.S,” Messer says. “Rakuten has a huge appetite going forward. I think in a few years people will be talking about how they own the whole market. The strategy we put in place will prove itself out.”

Still, Messer says leaving is not easy. “I imagine it’s like the bittersweet feeling a parent has when their children go to college. You’re proud you’ve given them the skills to survive and do well, but you’re sort of sad that they no longer need you to get along.”

He claims his first taste of this occurred when he and Heidi spent most of 2005 in Japan negotiating a deal with Rakuten and he realized that “we had built such a great company and we were gone for nearly a year and the company did phenomenally well. They really didn’t need us.”

As for what’s next for Messer, he says that after 10 years in the bustling performance marketing space, he’s looking forward to a little “breather” and anticipates being “back in the game in the summer.” He declined to disclose any specific plans, noting he’s “still thinking about what I want to do.”

However, during his time off, he says he plans to more fully formulate some new business ideas – all while sitting at the beach and doing some kite boarding. And of course, any new venture will include LinkShare co-founder Heidi Messer. “We are a team,” he says.

Sources close to LinkShare claim it’s no surprise that Steve and Heidi are leaving the company after each received a hefty payout from the September 2005 all-cash sale to Rakuten. Although LinkShare had investors at the time of the sale (including Mitsui & Co, Ltd., Mitsui & Co. (U.S.A); Internet Capital Group; and Comcast Interactive Capital, an affiliate of Comcast Corp.), Steve Messer reportedly owned 20 percent of LinkShare, while Heidi owned 11 percent. Steve’s proceeds from the sale were said to be approximately $100 million, while Heidi got over $51 million, according to sources close to the company.

“I think it’s obviously a good transaction for Heidi and I and the team,” Messer says.

“Steve and Heidi should be proud of the wonderful company they built, the leadership position they established and the vision they had,” Denton says. “All of us feel fortunate to have worked with them and we look forward to all the new challenges.”