The New Face of CJ: Q & A with Lisa Riolo

Commission Junction’s Lisa Riolo steps into a new role with some familiar responsibilities.

As Commission Junction’s senior vice president of business development, Lisa Riolo is responsible for driving revenue for the sales and business development teams. While she’s not technically filling Todd Crawford’s shoes, Riolo will be the new face of the affiliate network, taking on many of the same challenges as the former vice president of sales, who left in February.

Owned by ValueClick, CJ is based in Santa Barbara, Calif., and has tens of thousands of publishers in its global network. In the six years that Riolo has worked there, she has led the sales, client development, search and product management teams. In her new position, she manages the 25 people who make up the sales and performance optimization departments. Revenue Senior Editor Maria Sample recently interviewed Riolo about her company’s practices and plans for the future, as well as the affiliate marketing industry and the importance of understanding people.

Maria Sample Your predecessor was very active in the affiliate community (i.e., forums, message boards, etc.). Do you plan on continuing to be Commission Junction’s face in those arenas?
Lisa Riolo Actually, the organizational structure introduced by our general manager, Tom Vadnais, positions me in a role that hadn’t previously existed. So, fortunately, I’m not faced with the challenge of having to fill someone else’s shoes. I do recognize that, since its earliest days, Commission Junction has relied upon one or two individuals to convey most of its messages. In the future, I think the affiliate community will hear and see us take more of a team approach.

MS Todd Crawford (the former vice president of sales) was considered the public face of Commission Junction. The downside of that is that he often took the heat from angry and upset affiliates. Are you prepared for that? And how will you handle those sorts of public (and sometimes personal) attacks?
LR I believe passionately that Commission Junction achieved greatness because of the publishers. I’m very open and prepared to listen to them. It’s been part of my role for the past six years.

If I end up the target of discussion, that’s OK. I’ve found that frustrations expressed reveal great opportunities to learn and improve. I tend to worry more about silence than I do about rants.

MS Part of your responsibilities include increasing Commission Junction’s market share. What plans do you have to increase market share over the next 12 to 18 months?
LR Our vision has consistently included a global perspective, and in the last 18 months, we’ve expanded our European presence from the U.K. to Germany and France. In 2006, we plan to launch offices in more countries in Europe, and continue to leverage opportunities we have in Asia.

We’re also committed to improving our clients’ experience in the CJ Marketplace. As we make it easier for them to extract information and interact with our product offering, we’ll attract new participants to our business.

MS What about plans for driving new revenue?
LR Our current plans fall into three categories. Last year, we expanded our service offering to better meet the needs of our advertisers, especially those selecting the CJ Access service level. We see additional opportunities for services that benefit other segments with our client base. Next, we’re exploring opportunities for leveraging new distribution channels created by technology innovation. And finally, we’ve reaped great benefits by collaborating with other teams in the ValueClick family of brands and plan to continue to do so.

When you look at the ValueClick products and expertise, you’ll see we have a compelling story. When you look at the metrics from just a couple of our cross-divisional efforts, you see the type of incremental lift that generates real excitement on our part.

MS What threats, if any, does the sudden proliferation of ad networks present to Commission Junction?
LR Ad networks have existed for years, some of which we’ve had relationships with for a long time. We don’t see ad networks as a threat, per se. They offer value that complements what we do at Commission Junction. We see that from our collaboration with our teammates at ValueClick Media, who run the largest independent display ad network in the U.S. The more monetization opportunities we can offer our publishers, the happier they are and the more they want to work with us.

The fact is, as heard from several outstanding publishers, they go where they get the best return on investment [ROI]. Commission Junction must understand and optimize every component of the ROI equation, from payout to time spent in our member area.

MS Can you outline the risks and benefits of sub-affiliate networks?
LR From an advertiser’s perspective, the benefits are a) you’ve potentially improved your efficiency because you’ve outsourced part of your relationship management responsibilities, and b) the sub-affiliate network may generate significant volume and extend your reach. The two primary risks of working with subaffiliate networks are a) you’re typically paying a premium for “aggregated” transactions, and b) you often do not have good visibility into the promotional methods used by the “subaffiliates” which, in all likelihood, will challenge quality standards.

From a publisher’s perspective, the benefits offered include higher commissions and often, faster payouts. The downside is productive publishers that don’t have direct relationships limit their ability to demonstrate their value. Hence, negotiating exclusive offers or higher payouts is difficult. The other risk for publishers is that, often, the sub-affiliate networks are not only outsourcing to other affiliates, but also competing with them. How often does a subaffiliate’s transaction get attributed to the network or super-affiliate?

MS Andrew Jacob, Leadpile’s CEO, seems to think his company’s Centralized Online Lead Marketplace could take the place of Commission Junction. Recently, he referred to his offering as an alternative to “traditional, old-fashioned affiliate marketing programs like Commission Junction.”
LR Isn’t it fantastic to operate in an industry where someone references a company that hasn’t celebrated its 10th anniversary yet as “old-fashioned?” Anyway, my response in these situations is usually the same: I pay attention. I never dismiss the potential importance of a future or existing player in the space. If you’re still in business, the game never ends. You’re always competing and you always have to scout and monitor what else is out there – and why. You won’t catch me not paying attention.

I do look for potential issues with other networks. For example (and acknowledging that it’s still early on), Jacob hasn’t illustrated how he plans to manage quality and scalability from the advertiser perspective. If you can’t drive and manage large-scale results on a reliable basis, you can’t drive value for your network participants. And a bid-based pricing system alone doesn’t really resolve all of the issues around quality. Nor can he simply assert, “Our sellers provide high-quality leads” with no basis. Even if the prospective customers Leadpile provided to its past advertisers were of acceptable quality, it’s a completely different thing to build a quality network.

So, it’s about quality, efficiency and scale, and no one in the affiliate marketing industry has driven all three of these as well as Commission Junction.

MS What does Commission Junction have that the competition does not?
LR The first thing we have is market-leading scale. Commission Junction is a global leader in performance-based marketing, and is the No. 1 provider of affiliate marketing managed services. Second, our commitment to upholding quality standards within our network of advertisers and publishers is unparalleled. We are the only network that has a team dedicated to monitoring and enforcing our Code of Conduct and Service Agreements. We are a trusted third party that continually strives to build and retain our clients’ (and future clients’) trust and exceed their expectations.

Third, we provide more transparency than the competition. The CJ Marketplace is the only network that openly publishes the performance metrics of advertisers, publishers and ads, allowing for a results-driven environment.

Fourth, as part of ValueClick, we can introduce our advertisers and publishers to a broader set of solutions that help advertisers meet their various online marketing goals and publishers monetize their online presence.

MS Why does Commission Junction use the term “publisher” instead of “affiliate”?
LR When we made the change from “affiliate” to “publisher,” we introduced the CJ Marketplace with the intention of influencing online marketing beyond the affiliate world. So, we adopted terms more commonly used by the ad networks. We also switched from “merchant” to “advertiser.” The strategy worked well and we have caught the attention of a broader group of online marketers.

MS How often do you interact with publishers?
LR During the past six years, my primary responsibilities involved developing our clients – both the advertisers and the publishers. When it comes to personal interaction, client meetings reflect about a 70/30 split between advertisers and publishers. Typically, though, I spend more of my time in the publisher meetings. At our annual client-facing event, Commission Junction University (CJU) and other industry events, I focus my attention almost exclusively on publishers because I need more data points from that group to understand if, and what, trends exist.

MS What makes an affiliate/publisher a “super-affiliate” at Commission Junction?
LR There are several attributes, including commissions earned, that earn publishers a CJ Performer designation. Generally, I’ve found the highest performance levels represent the top 5 to 10 percent of a program or network’s participants.

MS What traits do super-affiliates/publishers possess that separate them from the others?
LR I almost always see a balanced blend of entrepreneurial spirit, technical ability and creativity among this type of publisher. They are goal-driven and usually set aggressive benchmarks. The one unique quality I see in those with a long track record of proven results is a greater focus on flexibility than massive scale.

MS What type of online advertisers/companies do you work with?
LR We work with 1,700 advertisers. There isn’t a specific type of advertiser that we work with – we attract a broad spectrum of advertisers from small, regional businesses to global brands and from all industries.

MS What rate of measurement works best for advertisers? Publishers?
LR ROI and ROI.

MS What do you think publishers could be doing better?
LR On the whole, publishers tend to focus on attracting consumers that have already progressed toward the decision-making phase in the purchasing cycle. I think they could improve their ability to effectively move a consumer through more of the earlier phases in the purchasing cycle.

MS What do you think online advertisers could be doing better?
LR Advertisers should focus on managing their spend and resource allocation across channels. Too often I hear the statement that affiliate marketing generates the best RoAS [Return on Ad Spend] coupled with the assertion that the channel isn’t capable of producing comparable “volume” to their other channels. Managed properly, as evidenced by a number of savvy advertisers in the industry, the affiliate channel can effectively outperform the alternatives – including search and portal deals.

MS What do you like about performance-based marketing?
LR Both the left and right sides of my brain get stimulated by this work. I love the analytics and seeing the big ideas unfold. You might think the accountability in performance-based marketing, with its focus on metrics, would discourage creativity. I think it’s quite the opposite. Driving results, on a pay-for-performance basis, forces a level of effectiveness that demands creativity. I think the publishers are often at the leading edge of change and innovation.

MS What do you dislike about performance-based marketing?
LR When you compare results across marketing channels – the standards set by performance-based marketing should prevail. Yet I still see advertiser clients having to fight, internally, for budgets and resources. If the team involved is properly monitoring for quality, then blowing through a “budget” should equate to blowing through sales goals – and that’s a good thing, right? They should be feeding the revenue machine.

MS Are you involved in Commission Junction’s Internet radio show, “Affiliate Marketing Today”?
LR Yes, I participated in the decision to produce the show and it launched on March 21. Our team changed the broadcast format to take a unique approach in that it covers the continual changes in the industry, with both an advertiser and publisher perspective across beginner, intermediate and advanced levels.

MS What’s happening in 2006 at Commission Junction – any big changes?
LR This year is very exciting for us and our clients. We have some significant projects in our pipeline. Also, I mentioned earlier we plan to launch in some additional European countries this year.

MS Do you think Yahoo’s ban on trademark bidding will have a big effect on SEM?
LR Right now, a conflict exists between brand marketers and performance marketers. The assumption is that you are either creating awareness or driving sales. Actually, both channels should benefit the other. I think pricing models and ROI metrics, rather than restrictions, are the best way to manage the effectiveness of a channel. As marketers’ perspectives on this issue evolve, I think Yahoo may choose to alter their policy.

MS What would happen to Commission Junction if Google suddenly went out of business?
LR At its core, Google is a distributor of information. I don’t think Google created demand that wasn’t already there. Instead, they found a way to effectively supply the information. Initially, Google altered the way people navigated the Web. If suddenly the system being used to access information disappears, what happens? People adapt and find a new source, or sources, to access information. With respect to Commission Junction, we, through our publishers, would adapt. Publishers would find new opportunities to promote offers at the emerging information sources.

You know what? These changes are already happening, but it’s gradual, not sudden. Web users navigate and source information differently today, compared to yesterday. What are we doing about this? Sensing, responding and facilitating changes within our model.

MS How has your psychology degree helped you in your career?
LR A psychology degree wasn’t supposed to help me in business – or so I recall having heard from people more often than not. I remember thinking that studying psychology would help me understand what motivates people. And, it seemed to me, if I was going to be an effective leader within any business, I better understand what motivates people. I think my theory held up pretty well.

The Research Report

How online marketers use facts, figures and forecasts.

Studies, polls, reports, surveys, statistics and forecasts. Every day the latest data on the most current trends is widely disseminated and distributed. Want to know which demographic group is most likely to spend more online, to have broadband or to download music? There’s data out there that purports to have the answers.

There’s no dearth of data, for sure, but just how much of this mountain of market research is useful for online marketers who need to make crucial business decisions is up for debate.

Kathryn Finney, a.k.a. The Budget Fashionista, uses reports from Forrester Research and comScore to learn about the top sites in women’s apparel. This gives her an idea of “who to target, who to partner with and to get an idea of where the industry’s going.”

Joe Zawadzki, founder and president of Poindexter Systems, which provides online ad management services, is less convinced about the value of some market research. “Once that research is made public, the opportunity to capitalize on that information is gone. Private data is the key.” Zawadzki says public research does have its uses, claiming it’s good for sales and venture capital fund-raising.

Some merchants claim research is helpful to them in a variety of specific areas, including understanding the competition.

Catherine Paschkewitz, manager of Consumer Marketing at HP Home & Home Office Store, which has partnerships with Forrester, JupiterResearch, eMarketer, comScore and Hitwise, says HP wants to see how Hitwise is working with the competition, which helps to understand and plan campaigns.

“We want to see how we rate versus our competitors,” says Paschkewitz. “We also do studies around search behavior and research to see how we can further optimize our program.” HP commissions comScore to create some of this custom research, but also relies on its own customer base for information, overlaying Claritas data and performing usability studies internally.

“Research is part of a process,” she says. “One part is up-front planning – looking at affiliate sites via Hitwise to see their traffic and customer profiles.”

When the HP Home & Home Office Store launched its affiliate program, for example, the team wanted to make sure it would succeed, so they researched what was working for the affiliate market, and talked to affiliates, managers and merchants who had affiliate programs, in addition to looking at research on the subject, Paschkewitz says.

HomeGain’s Affiliate Manager Marie Nilsson says merchants often use research to start a campaign.

“[It] is actually a piece of your research project in a sense, if you document your findings, draw conclusions and use it for optimizing your future campaigns,” she says. “That’s the beauty of advertising on the Internet: Provided you have the right tracking tools in place, you are able to measure each move.”

Nilsson says that once you have some experience, the research process is easy.

“As a merchant, you understand how your channel works by launching campaigns and documenting every step of the way, noting all the details, such as placement, targeting, creative used, time of year, close rates, conversion rates, CTR, pricing, etc.,” she says. This type of data becomes your future research. “Every campaign can be looked upon as an individual test in a series which compiles a research project if you outline, structure and target your tests.”

HomeGain obtains its research in several ways. It gets monthly Hitwise information, which Nilsson says “is great for understanding what your competition is doing.” The company also internally compiles metrics and data. “We use census information, which is free. We also do consumer surveys on a regular basis, all in-house,” Nilsson says.

But not all research is relevant for a merchant’s business, according to John Joseph, Performics’ senior vice president of affiliate marketing. He claims that merchants are very interested in statistics regarding overall ad spend and retail figures. “A year from now, merchants will really start using the demographic info that’s available,” says Joseph.

However, the use of research appeared to be a sensitive subject for many merchants. Calls to BestBuy.com went unanswered. Representatives from Walmart.com and Target.com declined to comment, on the grounds that this type of information is proprietary.

The Affiliate Perspective

FatLens’ co-founder and president Siva Kumar says the research his company finds the most useful is “learning about other companies with similar challenges and business models to us. We meet with and share experiences with many of the marketing personnel of other companies.”

However, Kumar notes that, “While we have perused published research from establishments like Forrester and find the information interesting, the high-level nature of the reports is not as relevant for daily decision making.”

FatLens relies on its own traffic and revenue performance data as research, because it is the “best way of learning about what is working and what we should expect to see as results.”

He claims that this type of information is most critical to help FatLens in modifying its programs as well as experimenting with new methods of traffic and revenue generation. “Our growth as a company from inception to our current revenue and traffic levels over the last nine-month period is mainly due to the research we have done on the various online customer-acquisition techniques for similar companies in terms of market segment and business models,” Kumar says.

Melissa Salas, senior marketing manager at Buy.com echoes Kumar’s reverence for research.

“It’s essential for marketers to be well-informed about industry reports, analyst projections, shopping trends, product announcements and reviews, as well as critics’ remarks. With this knowledge, you can position your company to meet your overall business objectives.”

Salas claims that marketing campaigns benefit from research as well. “Being a multi-category retailer, it is imperative to stay on top of best sellers and new product releases so marketers can create specific promotions to gain market share,” she says.

Research = Understanding

“Consumer research leads to insight,” Greg Smith, executive vice president of media, insights, planning and analytics at interactive agency Carat Fusion, says. “It gives you ideas of where to place ads.” Smith cites a past campaign in which research led his agency to recommend positioning minivan ads on parenting and kids’ sites as well as on car sites.

Smith says Carat Fusion’s use of research depends on the client’s objective, be it marketing or branding. Marketing efforts are most always motivated by sales, so the results are measured in straightforward metrics and the agency can move from site to site until it finds the best results for the client. With branding, clients are usually looking to change perceptions and attitudes, which makes the process a bit more complex. Here, Smith would use research to define the target, and then figure out where to find that audience in large numbers. Later in the process, Carat conducts “follow- on advertising” to find out if consumers bought the advertised product. The results are then presented to the client.

Carat Fusion has relationships with AdPlan (owned by AGB Nielsen Media Research) as well as comScore, Forrester and Jupiter. Smith says the company also researches its campaigns by analyzing search results and chat rooms to find out how a product is thought of, and speaking to consumers themselves.

Going Deeper

Former JupiterResearch analyst Gary Stein, now director of client services at BuzzMetrics, has noticed a trend of late that companies are conducting deeper research on the front end. Syndicated search from companies such as Jupiter, Forrester and Fathom Online acts as “preventive medicine” for their clients.

Stein estimates that clients usually have 90 percent of their campaigns nailed down, with ads placed on high-profile sites, but that the remaining 10 percent is “haphazardly planned.” That’s where research comes in – to offer insights to fill that gap.

Some research is suspect, Stein says, such as financial surveys sponsored by brokerage houses. To find reliable data, Stein recommends finding an objective source with a good track record, looking at several studies and in the end, making your own estimates. It’s an economic issue for many companies, because to get a good survey sample, they have to pay for each person, says Stein.

Stein believes some research is misleading, not in the spin it receives or the headline it gets, but in the very questions it puts forth. For example, Stein sites one study that asked, “Would you use a Bluetooth-enabled device?” of consumers who were not likely to know what a Bluetooth-enabled device was.

The best surveys are those that are weighted properly, according to another former Jupiter analyst who asked not to be named. “Numbers are good, but demographic variables are better.” He claims that most surveys by the well-regarded resources are properly weighted (see Research sidebar).

Pulse of the People

Most research industry insiders note that the majority of statistics are garnered from the U.S. Census data, released every 10 years. One company that has census information to power its business is Claritas. Prizm NE (short for New Evolution) is the company’s signature product. Introduced in 2003, it’s updated whenever there is new census data.

Prizm NE is a segmentation tool that divides the population into 66 categories based on a “geodemographic system” revealing behavioral and consumer activities. The product uses the census as its primary source, but is also infused with data from private sources and other governmental data. The 66 categories, which include controversial names such as “Shotguns & Pickups,” change based on the census. When the last report was issued in 2000, 26 names stayed the same, bringing 40 new ones to light. The geography is based on zip codes, with the census data as the foundation.

“Our syndicated services definitely affect online marketing decisions,” claims Bill Tancer, general manager – global research at Hitwise, which resells Prizm NE data. Hitwise provides research including “benchmarks so customers can see where they rank, and click-stream analysis to see why they have that rank.” Hitwise also offers traffic information so clients can see how users are getting to their sites, as well as the sites of the competition.

The majority of online marketers obtain research from established companies in the field. But smaller companies are popping up with some new ideas. Cydata Services owns T3report.com, a site that spotlights products such as T3 Competitor Report and T3 Affiliate Report (see Revenue March/April issue). These products allow affiliate managers to get the info they need to copy competitors’ marketing plans and potentially poach affiliates.

Having worked exclusively in the adult entertainment industry to date, Cydata recently turned its attention to the performance marketing arena. While some may find the company’s tactics unethical, Cydata founder and CEO Brandon Shalton claims his company is simply providing a shortcut to success, even though he does admit it is “a very disruptive service.”

He likens Cydata’s clients to smart fastfood chains, which shouldn’t “bother with all the research – just move in across the street from McDonald’s, because they’ve already done the research.” Shalton believes the T3 products let you “advertise smarter.”

Joe Pilotta, Ph.D., vice president of Big Research, feels his company is offering a unique service as well. “We produce more of an index of what the influence is on category of merchandise purchased. Our clients don’t need click data, etc., because it’s not that important.” Pilotta says his company’s data is created by sales and future intentions, so it’s never static.

Big Research obtains its data from established panels, and occasionally invites offline participants, such as listeners from radio stations, to weigh in. The company conducts its Simultaneous Media Study twice a year, which analyzes 32 different types of media. To get a complete consumer’s point of view, the study surveys 14,000 to 15,000 people.

Predicting the Future

Just as research reports and surveys of past activities play a big role in online marketing decisions, so do predictions for the future. “Forecasts give a gauge of how to prioritize – is search as big as we think it is? People want verification that people are spending money on a sector and that it’s growing,” Shar VanBoskirk, senior analyst on Forrester’s marketing strategy and technology research team, says.

HP’s Paschkewitz uses forecasts to plan for her company’s future, but adds in the site’s own data to get a more accurate picture.

Like most industry watchers, who claim that forecasts play a more valuable role for publishers rather than retailers, Performics’ Joseph says merchants don’t really act on general forecasts, such as last year’s hype of the potential of the Hispanic market (see Revenue March/April issue).

Big Research’s Pilotta says his clients definitely use forecasts to make decisions. Since the company releases its Consumer Intentions and Actions forecast every month, his clients are working with “fresh data” from 10,000 people.

“We use forecasts and trend reports to ensure that our infrastructure planning is adequately matched to the expectations of the market, FatLens’ Kumar says. “The trends also help us judge relative performances of the various marketing channels we are using and adjust our spending according to industry directions.”

Buy.com’s Salas agrees. “Reviewing forecasts and trend reports is an important part of preparing for the future of your business. Our marketing team makes business decisions based on internal customer behavioral data in addition to accurate and reliable forecasts, trend analyses and competitive intelligence,” she says.

HomeGain’s Nilsson says her company watches trends in the online real estate and marketing fields.

“We see a big shift now from a seller’s market to a buyer’s market. It’s a nationwide trend – the question of 2006 in real estate is ‘The Year of the Buyer?'”

Nilsson’s company also keeps an eye on housing price trends in local areas, as well as changes in the competitive landscape.

“For real estate, smaller online players with great technology and VC [venture capital] backing, like Zillow.com, posed a threat in the beginning of 2006. We saw this coming at an early stage and answered with adding more local neighborhood data and by marketing our free home-valuation tool more aggressively,” she says. “Another example is foreclosed homes. A lot of homeowners have interest-only, adjustable-rate mortgages; they are going to get hit hard as rates rise, and a larger percentage will default and go into foreclosure. In anticipation of this, we’ve deepened our partnerships with the foreclosure companies.”

While many statistics are dismissed as obvious or hype, data often provides merchants, affiliates, analysts and even researchers themselves with an idea of how to improve their marketing messages and overall businesses.

TV Tunes In

Broadcasters are jumping on board the online bandwagon as bandwidth makes video a reality for users.

Television networks have spent much of their 60-plus-year media reign continually adapting their revenue models for new delivery platforms such as cable and satellite. After many years of hoping that interest in multimedia Internet content would fade as quickly as sitcoms featuring former Seinfeld stars, the networks are now fully embracing online video distribution.

Now that online consumers spend just as much time at the keyboard as with the remote control (14 hours per week, according to JupiterResearch), the TV networks are joining the party. The top networks are creating custom content and partnering with online media moguls to develop streaming and download services.

Making even a fraction of the vast reserves of current and archived television programming available through streams or downloads to portable media players and mobile phones will greatly increase the partnership and revenue opportunities for online advertisers, search marketers, publishers and affiliates.

Video Takes Action

The networks’ initial forays into distributing content online primarily featured clips of programs that were distributed for free and without advertising.

News dominated the early offerings from CNN, MSNBC, Fox and the big three broadcast networks (ABC, CBS, NBC). NBC was the first network to stream an entire regular newscast, when it launched its webcast of the NBC Nightly News with Brian Williams.

Late last year that trickle of content became a steady stream, thanks in large part to Apple Computer. Apple sold more than 1 million video downloads within the first three weeks of its iTunes video store opening in October 2005. Over the next few months Apple signed deals to sell downloads of TV programming from NBC, USA Network, ABC, Disney, Showtime and others through its iTunes service for $1.99 per program.

The global market for pay-per-content broadband was $360 million in 2005, and it is expected to skyrocket to $7.5 billion in 2010, according to ABI Research principal analyst Michael Wolf.

He says that previously the networks were wary of putting premium content online, afraid it would cannibalize their broadcast efforts, but Apple’s successful introduction of a new version of its iPod that plays video files convinced the networks of the feasibility of selling television content online.

According to Wolf, the most dedicated followers of popular TV shows such as Desperate Housewives or The Office are likely to also be active online media consumers.

CBS’ website had the most unique visitors among video publishers, followed by MSN Video, AOL Television and Yahoo TV according to December 2005 data from Nielsen//NetRatings.

In order to broaden the reach of video content beyond their own websites, the TV networks are turning to search engines and portals to distribute content. CBS partnered with Google to sell downloads of some of its top-rated shows including CSI and Survivor as well as “classic” shows such as The Brady Bunch and I Love Lucy through the Google Video Store. Disney is developing a broadband channel that could make up to one-quarter of its prime-time offerings available on demand.

America Online is offering old TV shows from parent company Time Warner including Alice, Chico and the Man and Wonder Woman. AOL also purchased video search engine Truveo in December 2005. Yahoo is teaming up with actors/producers Matt Damon and Ben Affleck and reality show guru Mark Burnett to develop an online reality show called The Runner.

However, the online video market still has some things to learn about alerting consumers to its offerings. Unlike television viewers who have several options to find programs of interest, online consumers are currently dependent on search to find programs.

To find what’s on broadcast and cable TV, viewers can look to TV Guide, newspaper listings, online programming guides and advertisements on the networks themselves. Currently, it’s the early days of television distribution on the Internet, and video search engines from Google, MSN, Yahoo and AOL do not offer TV directories or guides. Instead users are primarily using search boxes. Users plug in terms and hopefully find what they are seeking.

The next 12 to 18 months will be the prime time for the expansion of television programming online as the networks and search engines reach out to large and niche publishers to aid in content distribution. But the portals are not alone – specialty video search engines including TVEyes.com and blinkx.com are challenging the biggest players for a share of the advertising revenue from online television programs.

San Francisco-based blinkx has signed up E Entertainment, BBC, ABC, NBC, HBO and British news broadcaster ITN to deliver TV programming through its video search engine. blinkx CEO Suranga Chandratillake says, “2006 will be about telling other people to put our search on their sites.” The company is also partnering with performance marketing network Miva to expand the distribution of its video search.

Publishers can “splice and dice” the blinkx television feeds to create custom channels that match their individual audiences and will be paid via a revenue share, according to Chandratillake. For example, publishers could choose to limit searches to celebrity news, or make available only content from the A&E network.

Chandratillake says that to simplify the indexing of content, the TV networks provide metadata describing each program. blinkx enhances the quality of the search results through speech-recognition technology that identifies the subject matter being discussed.

Arise Ye Networks

Although most of the current revenue from full-length TV programming is derived from subscription services or downloads, income from advertising-supported content is expected to rival payfor- content. Advertising revenue will come from banner and contextual ads displayed on search results pages, as well as video ads that appear within the program.

Since the beginning, advertising has largely financed consumers’ almost-endless appetite for television, and online it is likely to be the same. The advertising market for online video will reach $8.6 billion by 2010, according to ABI Research.

“Broadcast TV shows are filler between the ads,” Peter Carlin, a TV critic for The Oregonian newspaper, says. He recently attended the Television Critics Press Tour where the Internet rated “above ratings” as a leading topic of discussion. Figuring out how to capitalize on online video distribution is top of mind for many TV executives, Carlin says, as they are anxious to exploit the lucrative online audience that tends to be younger and slanted toward males.

Carlin says broadcasters are learning how to maximize their revenue from digital content by exploring relationships with search engines and portals, and by testing new advertising models. “Nobody wants to be like the Betamax of new media age” and be left behind, he says.

To fully exploit the possibilities, TV broadcasters must learn about search engine optimization, developing affiliate networks and performance marketing revenue models. Carlin expects that the networks won’t have a problem with taking lessons from the online experts. “Being entirely reactive is not something they are uncomfortable with,” he says.

Video Ad Specialists

Demand for video ads will also create a new industry of production companies and interactive agencies that specialize in developing and distributing video ads. Companies such as ROO, PointRoll and Eyeblaster will work with online publishers to place ads within their online and downloadable content.

Repurposing TV programming for online distribution could also ignite interest in interactive technologies that link from videos or advertisements to landing pages. The networks have turned to escalating the use of product placement within programming to offset some of the revenue lost to online advertising, according to Carlin.

American Idol has blatantly pitched Nextel’s wireless service and placed large cups with the logo of Coca-Cola prominently in front of the judges, Carlin says, and The Office has an executive producer whose job is to determine how to incorporate products into the storylines “without prostituting the show.”

Microsoft is developing technology for its AdCenter platform that will enable video ads or broadcasts to link directly to other websites and with new technologies. This could open the door for the interactive TV market that has been much ballyhooed for a decade.

Dollars Drive Creativity

The revenue generated from online video distribution is likely to affect the creative process by increasing the demand for content and opening up the market for short forms of content. Television networks will likely use feedback from their websites to assess the viability of existing shows as they debut new programs online first to gauge audience response.

Carlin believes online distribution “increases appetite for shows that are less obviously mainstream.” The TV networks are quicker than ever to cancel shows, and online metrics could give the networks valuable input in determining a show’s fate. For example, fringe shows like The Office may get more consideration by the networks because of their popularity online.

Cable channel Comedy Central is aggressively pursuing an online audience and will develop 24 new online-only programs this year, according to Lou Wallach, senior vice president of original programming and development at Comedy Central.

Comedy Central has developed a media player called the “MotherLoad” to showcase its repurposed and original content. Wallach says that comedy is well-suited for short-form videos (five minutes or less) that have become popular online. Comedy Central’s online lineup includes sketch comedy and parody shows, such as All Access: Middle Ages, which pokes fun at the black plague and the crusades. The short-form video will also give increased exposure to digital and stop-motion animation, according to Wallach.

Wallach says one video ad will be shown in between every four to five segments. In addition to banner and video ads, Comedy Central is also considering sponsorships and product placement as revenue options.

Artists are embracing the new format, Wallach says. “The talent community recognizes that this form is here to stay.”

During the next year, television broadcasters will shift from experimentation in online distribution to expecting positive returns on investment. There is a strong incentive for publishers and advertisers to work with them to successfully exploit the medium. If online video distribution fizzles, the networks will likely cancel their online programs and invest more in competing video-on-demand services delivered to televisions.

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 in MIT’s TechnologyReview.com.

A Failure to Communicate

There’s plenty of communication, but most of it’s ineffective.

Communication at its most basic level is the exchange of ideas and information. Seems simple, right? Like most things that involve people and processes, it’s not always as straightforward as it appears. Communication is part art, part science, part X factor. Getting it right is not easy. And when things go awry, it can be a hugely frustrating experience for all involved.

This appears particularly true in the online marketing space where the ability to clearly and effectively convey and share information between various groups is hampered by complexities, technology and just plain information overload.

In order to operate effectively, publishers need to get creative materials and up-to-date offers from hundreds of advertisers. Merchants and advertisers often rely on affiliate networks to act as the middleman in contacting their publishers. Publishers need to deal with online agencies and communicate with the networks to track their commissions. The networks have to stay on top of both their advertisers and publishers. It’s very complex and can become difficult.

“The state of communication and general communication throughout the industry is a big problem. It always has been,” according to Linda Buquet, an affiliate management consultant and president of 5 Star Affiliate programs.

That sentiment is prevalent.

“I believe in communication advocacy and relationship marketing – affiliate marketing is lacking that,” says Richard Lewis, president of ReturnOnAffiliate.com.

“Communication is a big issue in the community,” says Adam Viener, president and CEO of search marketing firm IMWave. “On one hand, each affiliate manager wants to communicate better and more often with affiliates. But affiliates want to deal with hundreds of merchants and yet they do not want to have to deal with everyone.”

Viener adds that there is information that is critical to his business that needs to be more effectively communicated to him, but it is often buried in a mountain of other communications that are informational but not urgent or necessary.

“I need to know if there is a change in the terms of an agreement or if someone I’m dealing with is moving – those are the kinds of messages that if I don’t see, I’ll lose money. But many of the messages I get are about opportunities to make more money,” Viener says.

Email Overload

There’s no lack of information available to everyone and methods abound for getting your message directly to your intended recipient, including email, RSS feeds, instant messaging, blogging, newsletters and even the telephone.

If you’re like the average connected person, or the average online marketer, email is your preferred mode of communication and your inbox is overflowing – even after the junk and spam mail filters have done their jobs. The average online marketer is likely to receive hundreds of emails per day.

IMWave’s Viener claims that at one point in early February, his inbox had more than 2,100 unread messages – dating back to November 2005.

“Every once in a while, I miss an important message and I’m not notified when there is a new message. That’s why instant messaging is so good for me,” he says.

That’s what prompted him to create the Affiliate AIM List (affaimlist.com), a list of the AOL Instant Messenger handles of people in the performance marketing space. 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 (see Revenue March/April issue).

The Affiliate AIM List was created by Viener to facilitate communication among the many different parties comprising the affiliate community. Viener, a longtime fan of AOL Instant Messenger, thought the communication tool would be a great way to foster better and more frequent communication between people.

The list is not a moneymaking vehicle but more of a community service, Viener says. To date, it’s been well-received, and has 250 members. In April he launched AffiliateSkypeList.com as another way to boost communication.

“There has been a dichotomy between merchants, who want the most communication, and the affiliates, who want the stuff, but feel it’s very hard to control the volume,” Viener says.

Getting Personal

Instant messaging works for many, but Shawn Collins, president of Shawn Collins Consulting, says that IM is a more personal communication tool and that using it to send out mass IMs is irritating, impersonal and turns him off.

What irks 5 Star Affiliate’s Buquet is spam. “First and foremost with affiliates is reading emails and not knowing if they are spam they should be filtering or an important program announcement,” she says. “Then you end up having to go through the junk filter.”

Buquet adds that even with all the email rules and filtering offered by most applications, many affiliates still complain of being overwhelmed and bombarded with emails and unfortunately, “some affiliates aren’t very good at organization.”

On the flip side, most program managers don’t think beyond using email. They continue to contribute to the flood of email as it’s the easiest way to communicate quickly with a large group of people.

“With a lot of the affiliate managers, it never occurs to them to go beyond email and that thinking is flawed in so many different ways,” Collins says. “People are not opening email. How about picking up the phone more and engaging affiliates? Also, there’s RSS or direct mail. Just touch base with affiliates on a regular basis.”

He says that it’s also easier to catch less-than-scrupulous people on the phone. “If you have a reason to believe that someone is doing something questionable with affiliate links, you should call and ask them questions,” Collins says. “You can tell by the tone of their voice and the way they deal with you. It’s a much easier way to get a read on someone when you are communicating with them by phone than when they are sending you a prepared statement in an email.”

According to ReturnOnAffiliates’ Lewis, it’s not about how many parties you have to communicate with, but rather the effort that is put into those relationships. “Affiliates often feel like they are just a number,” he says. “I believe affiliate managers will get more out of affiliates if they communicate on a professional level and understand the person they are dealing with. There needs to be more respect for each other’s needs and that includes communicating in a way that is best for each affiliate. For some, that might be a phone call. For others, it might be email and still for others, newsletters.”

There are several things Lewis is unsure of when it comes to the fine art of communication, but one thing he’s sure of, “Communication is the end and the start, and it has to be free.”

Monkey in the Middle

But sometimes it’s hard for any two parties to interact directly with the networks, which are often acting as the middlemen between merchants and publishers.

“The networks get in the middle of merchant-to-affiliate communication to impede direct communications,” Buquet says. She suggests RSS as a way to get around that problem.

“One of the solutions that is an important piece of the puzzle is that the networks and the merchants aren’t using enough RSS,” Buquet says. “But it’s a chicken and egg thing. Not that many affiliates are using RSS feeds, because not that many merchants offer them. And merchants aren’t offering them because affiliates aren’t using them.”

LinkShare also noted the communication gap as an issue at the company’s annual LinkShare Symposium, held in January. Then senior vice president Steve Denton, who has since been named president, offered up some possible solutions from the affiliate network. One of these was a future version of its platform that requires publishers to read their messages right after logging in to the interface, and would not permit them to check other things until they view the messages.

Utilizing the Forums

Many industry watchers claim that forums offer a good way to communicate with partners. A multitude of them exist, and most often companies with big programs have their own designated spaces on these forums to directly relay information to their affiliates and partners.

But some say that many of the bigger, more established forums have taken on a culture of mean-spiritedness. Many blame anonymity for that. While the ability to post under a screen alias provides some freedom – especially if you are criticizing a company you do business with – it also can be abused by others to make unsubstantiated claims.

“If you are saying something on a board, you need to let people know who you are to be taken seriously as a professional and have others value the board as a business tool. Otherwise, it’s just a lot of people trying to point blame rather than debating important issues. There’s no real value to that kind of communication when you don’t know who is asking the questions and who is providing the answers,” ReturnOnAffiliates’ Lewis says. His social networking site started in January 2006 as an alternative to existing forums.

Several sources declined to speak on the record about specific forums for fear of public recrimination. However, many sources that requested anonymity cited ABestWeb.com as an example of a space they did not consider overly friendly or tolerant.

“There are all different types of forums and the mood of the forum is usually much like the personality of the forum leader. It’s like corporate culture based on leadership. If the guy at the top of the company is mean and hard to deal with, then likely so is the company. On the other hand, if someone is an empowering leader, that filters down. The culture is not only that of the forum owner and administrators, but the moderators as well, since they typically have the same ethics as those that hired them,” says one source, who asked not to be named.

Buquet, who is the founder and moderator of the WebProWorld affiliate forum, as well as the moderator of the affiliate forum at Search Engine Watch, posts regularly on approximately 30 affiliate and webmaster forums per month, answering affiliate marketing questions from both affiliates and merchants.

Often called the “Forum Queen,” she says it’s a well-known fact in the community space that one of the best ways to gain attention and notoriety for a forum is with flaming and saying something negative about a popular person or figure. “Sometimes the nice forums are not dicey or exciting enough for some people,” Buquet adds.

For merchants to cut through the clutter and noise in forums, she says, the most basic rule is to choose to participate in a forum that is moderated. Otherwise, the forum can turn out to be a “spam house” and merchants will just be lost in the promotional noise.

One idea currently floating around is working with the bigger affiliate networks to create their own proprietary mini-social networks. The way it might work, according to one proponent at an affiliate network who asked not to be named, is that the networks would offer all the communication facilities and tools used in the existing industry forums (blogs, mail, message boards, etc.). But the main topic of discussion would be issues related to the network rather than general performance marketing subjects.

“It could build value for affiliates and bring the merchants and network closer to affiliates,” the source says.

However, if you have an opinion or information that you’d like to communicate, but aren’t interested in expressing in a more public forum setting, there’s always blogging.

Blogs don’t need to be public. Merchants or affiliate managers can set up a blog with an RSS feed that is sent out only to a specific set of individuals. Many likened this approach to an updated version of a newsletter. Such blogs can be used to convey information about a program, announce changes in creative, publicize new promotions, highlight top performers or offer tips.

Personal blogs by people in the industry also allow communication of ideas.

“Anyone can blog,” Lewis says. “There’s no gatekeeper and the blogger can share their feelings about their work and the industry without too much worry of backlash.”

Sharing Is Caring

Still, many in this market space claim that giving up any information about their business is harmful. Because the barriers to entry in the online marketing space are relatively low, revealing the secrets of exactly how you achieved success is not seen as smart business (see Revenue Volume 2, Issue 7).

But others believe by sharing information you will help the industry grow and thus ultimately achieve even bigger success for your own company. Collins, Buquet and Lewis all claim that is not just part of their personal philosophy, but a key component in how they conduct their respective businesses.

Buquet, who launched her forum in July 2005, says it’s “goal oriented” to promote “positive success.” She wants her members to work together and share ideas.

“It’s an interesting human phenomenon to do things for the right reasons,” Buquet says. “The more you give, the more you receive. I try to empower people.”

Collins agrees. “People don’t really see the need or benefit to help people. It’s way too easy to be selfish and keep secrets. But sharing really does pay off. Giving benefits the overall industry and leads to more quality programs,” Collins says.

He attributes much of the success of the twice-yearly Affiliate Summit conferences he co-hosts to helping others. “I think I did the right thing,” says Collins. “I shared with people, without giving too much away and my business is growing. It’s a pay-it-forward thing.”

Be a Mentor

Collins has been helping people on an informal basis for years and now he’s working to formalize a mentoring program that would have industry leaders working directly with others. The idea is that the leaders would share their experience and knowledge, acting as role models and offering inspiration.

Collins says it’s a grassroots effort that started in 2001, when 30 online marketers in the New Jersey area would get together and simply talk about issues. He claims it spread to other regions, but was never formalized and eventually sort of faded away.

“It would be great to resurrect it. It became too onerous to organize people for the meeting, the meeting space, the food, etc., so it just fell off,” Collins says.

With the explosion of social networks, Collins believes that people are looking to connect in a more personal way with other like-minded folks. This time around, he’s looking for a more one-on-one connection and likening the new idea to the Big Brother Big Sisters mentoring programs.

His idea is to get industry leaders in various geographic locations to agree to participate and then connect them with someone within a 20-25 mile radius. The two would meet periodically to discuss whatever business issues they choose. Of course, people in competing businesses would not be paired up.

“It sounds like a wonderful idea. People respond best to people they can relate to, as well as if they care about you as a person,” says ReturnOnAffiliates’ Lewis. Beth Kirsch, group manager of affiliate programs at LowerMyBills.com, is working with Collins to get the program off the ground. “I’m happy to do anything that will improve communication between parties in the online marketing space,” says Lewis.

Collins is also pairing up people at his conferences. He’s attempting to facilitate the schmoozing aspect of the conference by holding formalized social networking sessions that allow attendees to request mini-meetings with other attendees they would like to meet. It’s like speed dating for the business conference crowd. By starting a dialogue between the attendees, Collins believes he’s helping improve industrywide communications.

Most agree that despite the lack of communication in the industry, things are looking up. There are many vocal performance marketing players from all areas working hard to rectify the problems using a combination of existing tools, new ideas and emerging technologies. This could bring some much-needed sanity and repair the communication breakdown.

Vinny Lingham: Playing the Angles

Vinny Lingham’s career as a marketer started early. In kindergarten, he made money buying Thundercat stickers and selling the popular ones. In his early teens, he switched to cricket cards and then Magic The Gathering cards. In college, he partially financed his undergraduate studies by playing pool and managing and booking bands.

So it’s not difficult to see why the entrepreneurial aspect of online marketing appealed to him. In 2001, he caught the bug while he ran the search marketing department for a company that marketed on behalf of online casino clients, which had a large paid search budget.

Two years later he left to start his own company. Lingham is the founder and chief strategy officer of incuBeta, an online marketing company based in Cape Town, South Africa. incuBeta owns the super-affiliate Clicks2Customers.com, a paid search marketing company, incorporated in the United States, which specializes in directing targeted traffic to its clients’ sites and is one of Commission Junction’s top five performers.

With more than 50 full-time employees, incuBeta is on track to generate eight-figure commissions this year, as well as over $100 million in sales for its merchant partners. The company was a recent winner of Business Day’s Most Promising Emerging Enterprise in 2005.

Lingham started the company in 2003 with two friends and his then-fiancee, Charlene Troskie, who is now his wife and focuses on new development within the company’s campaign team.

It’s not easy working with your spouse – especially when you’ve been married just over one year, recently bought a house and make an international business trip every month. But Lingham feels that the toughest part of being employed at the same company is trying to keep shop talk from seeping into their home life.

Still, the line between his business and personal life is blurry. The self-described workaholic says he is online 24 hours per day and works 60 to 70 hours per week. He is often toiling at home into the night to keep up with clients on the west coast. Lingham estimates that 25 percent of incuBeta’s clients are in the United States, where he travels every two or three months.

Despite all the traveling, Lingham does not feel that his company’s location in South Africa is a disadvantage.

“Cape Town is considered the ‘Silicon Valley of South Africa.’ And we’re pretty close in time to London,” he says, which is where 60 to 70 percent of incuBeta’s clients are based. The only real issue is having to hop on a plane to get the interaction with clients he feels is so important. “The power of face-to-face is indefinable. But we’re a global company, so we’d have to travel wherever we were.”

Only one thing about traveling so much really bothers him. “I hate airports – taking my shoes off, waiting in queues and taking my laptop out of its case.” He’s also learned not to combine leisure travel with business trips, ever since work forced him to cancel the holiday portion of a trip last year. He did, however, manage to get away for his honeymoon, where he was “forced not to work for 10 days. I only signed on twice in all that time ” it drove me a little crazy.”

When Lingham does have spare time, he likes to spend it watching movies, including “Tsotsi,” which not only won this year’s Academy Award for Best Foreign Language Film, but was co-produced by Moviworld, a company that received investment from TEIM Ventures, the same private equity firm that provided incuBeta with crucial development capital.

Lingham is also a big reader – he’s read all of Dan Brown’s books and loves them. He’s also a big Tom Clancy fan. And his favorite book, Rich Dad, Poor Dad by Robert T. Kiyosaki and Sharon L. Lechter, reinforced his existing viewpoint that there is a huge difference in the mindset of the haves and have-nots.

Originally from East London, a city on the east coast of South Africa where his parents still live, Lingham is happy only when he’s learning. In addition to his more-than full-time job, he is also studying for his Master of Science degree, which will likely conclude with a thesis on incuBeta. He’s also interested in getting an M.B.A., but only in the U.S. His ideal school would be somewhere in the Silicon Valley, where he’s interested in spending a few years to grow the business.

Lingham was recently invited to join the Society of Industry Leaders, which provides knowledge and information to Vista Research, a Standard & Poor’s company. He also belongs to Mensa, defined on its website as “the international society that provides a forum for intellectual exchange among members.” But Lingham thinks the formula for selection is flawed. “I know my IQ but I don’t put a lot of faith in it. It’s your mental age divided by your chronological age,” he says, claiming that means the older you get, the lower your score becomes.

He considers Virgin founder Richard Branson a role model. “We’re similar in many ways, but I’m not as crazy as he is. He has a fantastic brand. Some of his companies have worked and some haven’t. But he does it because he enjoys it – for kicks. It’s a passion. It’s not about the money.” Other mentors include a former manager who inspired Lingham to study at Harvard one day, and Bono of the Irish rock group U2, “because of the work he’s done in Africa and for Africa.”

Lingham is a fourth-generation South African, whose ancestors hail from India. He does not consider himself religious, but says, “I was born Hindu, but I tend to focus more on the spiritual aspects of the religion (Karma, etc.), as opposed to the religion itself.” As for politics, he thinks he has “far too much candor to be a politician, but maybe I’ll become president of South Africa one day. Who knows?”

Proud to Be a South African

Lingham says there’s a lot of erroneous information circulating about his country in terms of drought, poverty and AIDS. “The Rand Water Board has one of the top three water supplies in the world,” he says, referring to the 100-year-old water utility that services South Africa. “Our economy is growing at 6 percent a year and all the urban and semi-urban areas, which house 70 percent of the population, can be considered ‘firstworld’ by many standards. The AIDS contraction rate is actually at a decline in South Africa, according to the latest statistics,” he says. And while the CIA World Factbook lists the poverty rate as 50 percent, Lingham says that is incorrect because “it doesn’t take into account PPP (purchasing power parity) or currency differentials.” Lingham says, “The poverty rate has dropped to around 20 percent, which is exceptionally low for a developing country, but is still obviously not ideal.”

Lingham also feels his country’s low life expectancy rate of 43 years is misleading. “The average is skewed by the number of AIDS babies that are born that die at a young age,” he explains. “It’s not an ideal number, but I guess that’s one of the things that the government is working on. Countries in Africa need relief from first-world debt in order to focus on issues like healthcare and poverty. Bono deserves his Time Person of the Year award for the work he has done in order to drive this forward.”

Lingham loves the weather, the people and the sports of his country. “I will probably spend a few years living abroad before finally settling down and having kids, but South Africa is my home and I truly enjoy living here – it’s a beautiful place.”

Lingham’s passion for his country is matched only by his passion for his business as a performance marketer. He even has a blog – VinnyLingham.com – where he discusses industry issues and events that he deems important to the online marketing community.

The Company He Keeps

In the beginning, Lingham and his associates needed a name for their new company. “We were looking for a word that embodied a start-up company looking for opportunistic ways to grow Internet businesses,” he says. Unfortunately, their first choice wasn’t available. “Someone suggested the name incubator, but obviously, the .com was taken. But incuBeta wasn’t – and seeing as technology is almost always in beta, it stuck.”

Clicks2Customers.com’s traffic comes from search engines – primarily Google and Yahoo. The company works with three affiliate networks: Commission Junction, TradeDoubler and LinkShare. Lingham’s company has had a relationship with CJ since its inception three years ago and was honored with the network’s Award for Innovation in 2004. Lingham’s site works with merchants with defined metrics (leads, sales, etc.) to generate traffic.

But don’t call him an affiliate.

“The term ‘affiliate,’ as it relates to online, was coined back in the day when Amazon and Barnes & Noble were paying commissions for clickthroughs on banners that resulted in sales for their sites. That was almost a decade ago,” Lingham says. “We’re performance marketers.”

Lingham wants incuBeta to become “the biggest performance marketing company – not just an affiliate.”

Given his fervor for the industry, that seems like a real possibility. “Nine times out of 10, we beat in-house and agency bids because our margins are better,” he says.

Lingham says he feels incuBeta is almost guaranteed to succeed, since the company has built-in motivation – it uses its own money to make clients’ projects work. The company is also growing and expanding. It’s opening an office in the United Kingdom this month, which will join the small setup in Woodland Hills, Calif., the Cape Town headquarters and the office in Johannesburg, which is considered the financial capital of South Africa.

Still, finances were once a huge challenge.

“When we started out, cash-flow management was the worst green-eyed monster,” Lingham says.

The difficulties stemmed from paying Google up front for search engine marketing costs, then waiting 60 days for a check.

“You can’t pay your debts with future profits,” he says.

The second-biggest issue was growth – the number of people working at incuBeta increased so rapidly that it became hard to create a functional business culture. But it was Lingham’s previous career ups and downs that made it all possible. “incuBeta wouldn’t have been started unless I had the experience I had. I believe if something doesn’t work, try something else. Failure is only a bad thing if you don’t learn from it.” Another challenge for incuBeta is being able to react to new developments in the search marketing field.

Flexible and Focused

“This industry is new and young, and when the rules of the games change every month, you have to be flexible,” he says.

“I think our biggest success has been in the paid search marketplace. Our focus is on the end user and delivering high-quality and targeted advertising. Whenever the search engines, especially Google, make a move to release new features or functionality, like quality scores or the affiliate policy, which relate to the user experience and relevancy, it always improves our performance because we both understand that user relevancy is the key driver in the search marketplace, and our business focuses on such,” Lingham says.

One thing that isn’t a problem at incuBeta is the dress code. Since only one of the company’s clients is based in South Africa, the office is pretty casual. “Cape Town is a beach town,” says Lingham. “Some employees are surfers and come to work after their morning run. Jeans are considered formal,” he jokes. Despite the laid-back environment, incuBeta is serious about business. Lingham has faith that his company can achieve great things and believes it is well on it way.

His definition of success includes helping South Africa lower its high unemployment rate (estimated to be 25.2 percent by the CIA World Factbook) by adding jobs to the local economy. He would also like to be a philanthropist, “investing in social community projects and education projects, and finding a cure for AIDS.” incuBeta is still a bit too new to be able to give much back to the community, but Lingham says they do participate in “charitable donations. It’s something we want to do more of going forward.”

Lingham says the Internet has made that a real possibility.

“Marketing has always been a relationship thing with no accountability. Performance marketing is different. The beauty is information for results – you can see what you’re getting for your money. If you can find things that satisfy advertisers, you can be successful. You can do it yourself. It’s the cradle of innovation on the Internet.”

Dialing for Dollars

Whether it’s fashion, technology or commerce, what’s old often becomes new again. Pay per call is the latest revolution in performance marketing, and it focuses on incorporating a 130-year-old technology – the telephone – into the process.

While it’s not a surprise that pay per call is rapidly becoming a preferred model for local advertisers, it’s remarkable that it hasn’t been a significant part of the equation all along.

The rise in popularity of performance marketing, which now represents 40 percent of online advertising revenues, made it inevitable that someone would create a mechanism for businesses that do not have websites to market themselves, according to Greg Sterling, senior vice president at analyst firm The Kelsey Group.

Instead of ads linking to a website, pay-per-call marketing lists phone numbers, often accompanied by phone icons. Merchants pay a fee to the publisher when someone calls after seeing the ad. The number of calls is easily tracked because each ad is associated with a specific phone number, a practice that has been used for many years in print and broadcast ads.

The pay-per-call market, in all forms of media, is expected to reach $60 million this year, and rise by an astonishing 6,000 percent to $3.7 billion by 2010, according to The Kelsey Group. Pay per call enables small and medium-sized enterprises (SMEs) that do not have websites to spread the word and only pay for phone leads.

“Most local businesses don’t know how to deal with clicks,” says Sterling.

He notes that many small businesses complain that understanding and monitoring pay-per-click advertising is too complicated. Approximately 70 percent of SMEs prefer receiving calls to receiving clicks on their websites, according to Sterling, who estimates there are 10 million SMEs.

A survey of SMEs, by The Kelsey Group, indicates that 74 percent of small businesses would pay up to $1 for a call.

The persistent problem of click fraud will also spur advertisers to shift to pay per call, which is difficult to fake, Sterling says. Most companies that advertise in local Yellow Pages are more comfortable with communicating with customers on the phone. Also, two-thirds of SMEs that have websites do not participate in online marketing, suggesting that companies have been reluctant to commit the money and attention to develop leads online.

SMEs also believe that a person who calls is a better quality lead than someone who clicks on a website for information, Sterling says. “If you pick up the phone, you are more buy-oriented than people who are clicking,” he says.

The promise of pay per call has prompted a variety of networks and technology providers to enter the market in recent years, including ADSclick, Jambo, VoiceStar, Miva, eStara and Ingenio. Publishers currently offering pay per call include Verizon’s SuperPages, YellowPages.com, Local.com and Amazon’s A9. Search giants Google and Yahoo are currently testing the pay-per-call model to attract local and small business advertisers.

Microsoft is also working on a click-to-call solution to be included in its Windows Live offering, according to David Cole, a Microsoft SVP and head of MSN and the Personal Services Group.

The click-per-call capability, introduced in mid- March, will let users connect to businesses via Web-based calls by clicking on MSN search links. Last September, just a week after Google launched its Google Talk instant-messaging service, Microsoft purchased Internet-calling startup Teleo to expand the capabilities of MSN Messenger. With the Teleo acquisition, Microsoft also gained click-to-call dialing capabilities that would allow MSN’s upcoming adCenter service to offer pay-per-call pricing.

Dialing for Dollars

Sterling says the potential rewards from pay per call dictate that eventually all publishers involved in local search will incorporate some form of pay per call. “Calls can generate much more revenue than clicks,” he says.

Pay per call is desirable for publishers because companies are willing to pay a lot more for a call than a click. According to The Kelsey Group, the advertising categories willing to pay the most for leads include mortgage lenders ($35), lawyers ($30) and travel agents ($8).

More than 1 billion searches per month are performed on pay-per-call network Ingenio, according to chief marketing officer Marc Barach. Ingenio’s launched in 2004 and has relationships with America Online, MySpace, Miva and Infospace.

Pay-per-call advertisers can decide if they want their ads to reach local or global audiences. Ingenio ad network can specify geographic region, and the company has also implemented IP tracking to determine the consumer’s location, according to Barach.

One potential limitation of the pay-per-call model for publishers is that unlike clicks, which are generated around the clock, call revenue will primarily be generated during business hours. By specifying that pay-per-call ads only run at certain hours of the day (or “day parting”), customers can make sure they don’t receive calls off hours, Ingenio’s Barach says.

The amount that Ingenio’s customers pay for a call depends on the amount that competitors are willing to pay. Taking a page from the SEM model, Ingenio’s auction model charges one cent more than the next highest bid at the time the call was placed. The company sets prices based on categories, not keywords to simplify the model. The minimum charge for a call is $2, which is the case for many categories.

David Clarke, the marketing manager for American Incorporators Limited of Wilmington, Del., began placing pay-per-call ads on America Online one year ago, and is happy with the results. “The biggest advantage is that those who call are a lot further along in the decision-making process and are more serious than people who click,” he says.

Clarke pays between $15 and $18 per lead for calls requesting information about AIL’s services for forming corporations, and approximately 10 percent of those calls result in a sale.

Publishers will have to weigh the potential revenues to determine if ads that generate money from calls or clicks get top billing. Where they are available, the higher-priced pay-per-call ads seem to get preferential treatment, getting the prime spots on AOL and YellowPages.com.

Pay per call is a “small but growing portion” of Ingenio’s overall revenue, which was $83 million in 2005, according to Barach. Ingenio has deals with networks Performics and Miva to promote pay per call, he says.

While pay per call has promise, it will not overtake traditional ads in search marketing, according to Mike Kerans, a senior vice president at Miva. Pay per call is appropriate for selling complex goods such as financial services, travel and “high-ticket items” like flat screen TVs, but because of the higher premiums charged, “I wouldn’t use it if I were selling ink cartridges,” Kerans says.

Pay per call will grow in popularity for the 25 percent of searches that are local, but national ad campaigns will continue to rely on other models, according to Kerans, whose company began offering pay per call in late 2004. “It’s never been that new media completely replaces old media,” notes Kerans, adding that pay per call is an effective way for small businesses to dabble online, as only one in three have a website.

Miva works with local TV stations, newspapers and larger publishers, including Verizon’s SuperPages and Infospace in the United Kingdom, and recommends that advertisers include a telephone icon to distinguish listings from pay-perclick ads, Kerans says. Companies should also use landing pages with maps to show the proximity to the customer, or promote special offers to induce people to call, he says.

Kerans says publishers have to determine how much ad space to give to pay-per-call versus payper- click ads based on the cost per thousand (CPM) that they expect to receive.

Calling All Clicks

An alternative form of pay per call enables consumers to prompt a phone call from the advertiser by entering their phone numbers online. Click-to-call technology was originally used to provide customer service, and automatically connects the two parties when consumers click a button. Click-to-call work can be financed through a pay-per-call model when applied to advertising, or through a flat fee or volume pricing.

Using click to call for sales enables customers to continue with their online sessions without having to stop to dial the phone, according to John Federman, CEO of eStara, which offers click-to-call and pay-per-call services.

While pay-per-call advertisements require unique phone numbers that identify the referring publisher, eStara’s Web-initiated calls save money by requiring only tracking numbers for each publisher, according to Federman. Using “cross-channel data passing” technology, the customer’s information is automatically forwarded to the advertiser’s call center, where sales representatives can view it on their screens. eStara customizes the pricing for each publisher, offering auction as well as flat pricing and subscriptions.

Click-to-call technology is also being used on commerce websites to prompt customers who are idle on a website. For example, after a shopper is browsing a website for a few minutes and stops clicking, a pop-up window offers customers the chance to talk with the merchant live to complete their order or to ask for more information, Federman says.

Some people aren’t anxious to fill out forms or give credit cards or social security numbers online,” according to Federman, whose company provides click-to-call services for Amazon, DaimlerChrysler and Continental Airlines. Federman said that after switching from formbased leads to click to call, DaimlerChrysler cut its conversion time from 30 days to four days or less, and doubled its conversion rates.

Search engines and local publishers of Voice over Internet Protocol (VoIP) technology reduce the cost of click-to-call phone connections, Federman says. Consumers using dial-up connections may be hesitant to go offline to call an advertiser, but click to call using VoIP enables them to instantly converse online. Technology developed by eStara automatically checks to see if the consumer’s PC has a microphone, and if so, launches a VoIP window.

While clicking an ad to talk live with someone is a “lower barrier to action than picking up the phone,” according to The Kelsey Group’s Sterling, consumers are not yet comfortable with making calls through their computers.

However, the rise of inexpensive VoIP services from Skype and Vonage could change consumer perception. “When VoIP is mainstream, you may start to see ads with phone icons (that initiate PCbased calls), but that is years away,” Sterling says.


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, Alter- Net.org and in MIT’s TechnologyReview.com.

The Search Tug of War

The balance of power between merchants and affiliates is shifting.

Welcome to my first column – Mary O’Brien set a high standard that I hope to live up to. I’ve been working in search technology since the 1980s, so I can help you understand what lies behind some of the search advice you receive. I initiated IBM’s search marketing program back in 2001, and I also understand a merchant’s perspective on affiliate marketing. Search engines are complicated beasts, but a little knowledge can give you a leg up on your competition.

Let’s dive into the topic at hand: the issue of branded keywords in paid search marketing campaigns. In the earliest days of affiliate marketing, most merchants didn’t understand the importance of search marketing or, if they did, they didn’t know how to succeed at it. In those bygone days, merchants were happy to – in effect – outsource their search marketing.

How times have changed. Search marketing is big business now – the prime way that affiliates attract visitors to their websites. But it’s also one of the biggest ways that merchants drive traffic to their sites. And those merchants are no longer asleep at the switch. They are keenly aware of the competition their affiliates pose for searchers’ clicks, and they are starting to take action.

The Organic Search Front

Merchants are beefing up their organic (also known as natural) search marketing efforts. Some were embarrassed to find that their affiliates ranked ahead of them even for searches containing their own brand names. Merchants have many organic search improvement techniques at their disposal, but one is symptomatic of the tug of war between merchants and affiliates: the search-friendly affiliate tracking system.

Affiliate tracking systems are at the heart of the relationship between affiliates and merchants. Each affiliate codes a link on its site to the merchant’s site that transmits the affiliate’s identifier. When a visitor clicks the link, that identifier is transmitted and the merchant’s affiliate tracking system credits any purchases made by that visitor to the affiliate, so that the proper commission can be paid. So far, so good.

What makes this more interesting is that search engines have their own agenda for links. Google and other search engines raise a page’s authority based on its incoming links. Search engines calculate authority by analyzing the number and quality of links to the site from other well-respected (high-authority) sites. Pages higher in authority tend to rank higher than other pages in an organic search. For search queries that match many pages on the Web, a page’s authority is often the most important determinant of where it ranks, so search marketers care deeply about acquiring those precious inbound links to their pages.

It would seem that merchants would benefit greatly from all those inbound affiliate links. But, mostly, they don’t. That’s because traditionally (if any business this young can have a tradition), affiliate tracking has been performed using links that search engines don’t assign any credit for. Some affiliate tracking systems use JavaScript links that can’t be seen by the search spiders that constantly scour

have increasingly sought to control their affiliates’ paid search campaigns by adding new restrictions to their affiliate agreements, banning the use of the merchant’s trademarks and other brand names in any paid search marketing campaigns by their affiliates.

Studies by MarketingSherpa indicate that this practice is on the rise. Just 21 percent of merchants restricted their affiliates’ paid search campaigns in January of 2005, but that figure had zoomed to 39 percent by August of the same year.

Just 21 percent of merchants restricted their affiliates’ paid search campaigns in January of 2005, but that figure had zoomed to 39 percent by August of the same year.

pages on the Internet. Other tracking systems use temporary redirects (also known as 302 redirects), which are designed to shift a page’s URL for a short time – and search engines don’t credit any authority to a page that may soon disappear. Only permanent redirects (also known as 301 redirects) transmit their value to the linked-to merchant pages, because the search engine expects each permanent page to have a long life – making it a strong candidate for a search result.

As you can imagine, savvy merchants are beginning to migrate to these “search-friendly” 301-based tracking systems. So far, this trend is just a trickle, but you should expect to see more and more merchants wake up and “think links.” As they do, those merchants’ organic search rankings will get a boost, making it that much harder for affiliates to outrank them.

The Paid Search Front

This is a two-front war, with organic search in many ways the less hard-fought of the pair. Over the past year, merchants

These merchants argue that searchers using trademark names have already made a brand decision, and should be brought directly to the merchant’s site. They see no reason to pay an affiliate a fee for bringing them a customer who was trying to come to the merchant in the first place. These merchants are happy for affiliates to conduct paid search campaigns using generic keywords devoid of brand and trademark names – those keywords are bringing the merchants customers that might have gone to competitors.

You can see the trend here. Merchants began with a laissez-faire attitude about paid search, allowing affiliates free reign to use any keywords in their campaigns, happy to make the extra sales. Now, merchants are increasingly clamping down because they want those sales for themselves. Not only do they save the fees they’d have to pay to the affiliates, but they may be able to bid lower for their branded keywords because they’ve reduced the number of companies that can bid against them.

Unfortunately, no matter what a merchant does to block its affiliates from buying branded keywords, competitors can’t always be blocked, because the merchant has no control over them. The merchant can buy just one ad per branded keyword, but the search engines always show several ads on each result screen. Although the merchant might have the top paid spot, who has the rest of the spots?

Before that merchant began blocking its affiliates, the bulk of those other ads were likely from its affiliates. Searchers who clicked on those affiliate ads (and bought) were still buying from the merchant, even if the merchant had to shell out higher fees than if the searchers had purchased without coming through an affiliate.

But Randy Antin, search marketing manager of Travelocity, notes that when his company restricted its affiliates from bidding on branded keywords, “the spaces in the bidding were soon replaced by our competitors’ affiliates.” Searchers clicking anything other than Travelocity’s single ad might end up buying from a competitor. Yahoo has recently changed its policy to block competitors from using trademarks, but it remains to be seen if other search engines will follow suit.

Some merchants believe they should treat search results the same way they would treat shelf space in a grocery store – by filling it with their product. Those merchants might decide not to block affiliates from bidding on branded keywords because they want every paid search result to sell their product, whether it is direct from the merchant or through an affiliate. Although merchants and affiliates must work together to be successful, it’s inevitable that they’ll have channel conflicts – especially in search marketing practices.

MIKE MORAN is an IBM Distinguished Engineer and the manager of IBM.com Web Experience. Mike is also co-author of the book Search Engine Marketing, Inc. His website is www.mikemoran.com.

The Passion of the Site

All the planning in the world won’t make up for a lack of interest.

My financial services affiliate site has hit the skids. Let’s take stock and I’ll show you how it ended up in the poorhouse.

Before I launched the site, I did my research. I discovered that the highestpaying merchants in Commission Junction’s Financial Services category rose to the top when results were sorted by sale. In early February of this year, for example, E-Loan paid a hefty $150 commission per funded motorcycle loan and $60 to $90 per funded auto purchase loan. Commissions for a qualified mortgage refinance application were between $50 and $75.

E-Loan defines a “qualified application” as one with “all necessary fields filled in, including a valid name and social security number for a loan product that can be offered by E-Loan or one of its partner lenders.”

Talk about easy money! Referred visitors to the E-Loan site don’t have to buy a thing. As long as they can type their information correctly into the application form blanks, you could be raking in the big bucks.

In addition, I found that Google AdSensor did especially well with financial sites. When Google AdWords recommends that advertisers place a minimum bid of $5 for keywords like “credit card” and “loans” just to get their ads displayed, AdSense revenues on the same terms are rich and rewarding.

And goodness knows there was no shortage of credit demand. According to Overture’s Keyword Selector Tool, almost 900,000 surfers searched for terms including the phrase “credit card” in December 2005. About the same number searched for “loan,” while the keyword “mortgage” topped the charts with 1,317,728 queries in the same month. One might conclude that the number of credit seekers is inflated during the Christmas spending frenzy. But how many more people need credit solutions when the bills arrive in January?

Furthermore, the market for credit certainly showed no sign of decline. According to an ACNielsen survey released on Jan. 24, Americans are among the world’s most cash-strapped people. After basic living expenses are paid and discretionary items bought, nearly a quarter of Americans (22 percent) have no money left at the end of the month. At 19 percent, Canadians came in a close third behind Portugal, which tied the U.S. for first place.

Let’s review: high commissions and a huge, hungry market – that should have been a one-way ticket to Easy Street. Maybe the site was the problem.

The Right Stuff

When you visit the site, you see a nice design that includes the requisite number of pictures of people jumping for joy.

Site navigation is consistent throughout and the categorical structure is simple, limiting a visitor’s choice to credit cards, credit repair, credit reports, debt consolidation and loans on the first tier. Specific credit card and loan types are made available on the second tier.

Because we didn’t want to overwhelm visitors with too many complicated options, an Editor’s Top Pick is included at the top of every product page, and the number of choices per category is limited.

Informative articles including “What To Consider Before Approaching Lenders” and “5 Killer Steps to Avoid Credit Card SCAMS” are posted to educate and motivate users to visit merchants who will help ease their financial burden. Credit card and savings calculators are available to figure out how long it will take to pay off loans and how much interest can be earned from saving. A glossary defines unsecured credit card, balance transfers and more than 35 other important financial terms and concepts. Contact, Privacy Policy, Disclaimer and About Us pages are all in place.

Last but not least, there is an opt-in form on every page that offers a chance to sign up for my newsletter, “FREE Money-Saving Tips & Credit Advice.” Subscribers receive an eight-part e-course delivered over a period of three weeks. The e-course covers topics such as applying for credit, mortgage lending and debt consolidation. It also goes into moneysaving hints and tips, how to repair bad credit, and saving for retirement.

So far, so good. The site is rich in information and other incentives to keep visitors interested. After receiving the last installment of the e-course, however, subscribers never hear from me again.

What a mistake! Especially since building relationships by regularly communicating with my subscribers has always been the lifeblood of my affiliate marketing business. Even my merchant partners confirm that my lists are some of the most productive they’ve ever seen.

Readers of my affiliate marketing newsletter or book will attest to the fact that I harp constantly about the need to establish a trust relationship with their audiences. During site reviews, I tell webmasters who haven’t placed a lead-capture form on their site to either build a list or go out of business. Those who act on the warning see their conversion rates soar. For example, one webmaster whom I convinced to install a lead-capture form later remarked, “Holy cow dung! I’ve already got 1,000 subscribers and make $2,500 whenever I send a broadcast. Thank you, Ros!”

OK, he didn’t say “cow dung,” but the rest of the message is verbatim.

The Root of the Problem

So, why didn’t I follow my own advice and write a regular newsletter for my credit and loan site?

Well, I discovered that chasing the almighty dollar doesn’t work. When I ignored my first rule of business, “follow your passion,” the second rule, “build relationships,” was impossible to follow without unacceptable compromise.

Although I am passionate about helping people improve their financial situation and can write all day long about wealth-building strategies and techniques, the dry-as-toast subject of credit and loans doesn’t exactly fuel my fire. Call me Pollyanna, but the thought of encouraging debt just feels wrong.

While I could hire a ghostwriter to write a year-long broadcast series, proofreading the material would be a huge yawn, and this Pollyanna would balk at the sham. Worse, I’d live in perpetual dread of having to research and answer subscribers’ questions.

Boredom, drudge work and dread. My goodness, but doesn’t that sound exactly like a J-O-B? What a foolish choice to make when I already had a proven formula for highly profitable affiliate sites.

Learn from my mistake. Pick a topic you love, chat with newsletter subscribers who share your interests, and then say, “Goodbye debt, hello AAA credit ratings!”

By the way, if you are passionate about the credit and loan niche, I know of a slightly-used website in which you might be interested.

ROSALIND GARDNER is a super-affiliate who’s been in the business since 1998. She’s also the author of The Super Affiliate Handbook: How I Made $436,797 in One Year Selling Other People’s Stuff Online.

From Maui, With Love

A comprehensive but dated Hawaiian travel site gets a modern makeover.

Break out your favorite Hawaiian shirt and toss a lei around your neck – we’re headed to Maui! Well, Maui.us, anyway. Unfortunately, when we found the three-year- old online travel guide, it was wilting faster than a week-old hibiscus. But don’t fret – we can revive this online travel site.

They say content is king, and I agree. If you want to garner a loyal audience, you need to present the content that audience is seeking (with frequent updates, I might add). Maui.us CEO John Bottomley said he spent thousands of hours building his site. With an interactive map, a comprehensive activity guide, a meticulous hotel directory and a slew of other exclusive features, Maui.us certainly has all the content it needs to become “the major travel gateway to the island of Maui” that Bottomley always dreamed it would be.

Still, Maui.us is hardly generating the new traffic, repeat visitations or conversions Bottomley anticipated when he launched the site in 2002. So while content may be king, let’s not forget to invite conversion design, his lovely and talented queen, to the luau. Conversion design is the process of designing to meet business objectives, such as converting traffic into sales.

The Problems

In order to live up to its potential, Maui.us needs to exude the authority, trust and credibility that people expect from a major travel gateway. The site must also instantly communicate its compelling offerings and make it crystal clear why visitors need them. Finally, to make the conversion design transformation complete, we need to place more emphasis on the site’s top moneymakers. Bottomley says that these are, in order of importance, the custom vacation builder, hotel bookings and the activities guide.

The bottom line is that Maui.us lacks visual appeal, which can be assessed within 50 milliseconds, according to a report published in the Behaviour & Information Technology journal. That suggests that Web designers have about 50 milliseconds to make a good impression. Keeping that in mind, here’s a list of shortcomings we can remedy to make those first 50 milliseconds really count.

Outdated appearance. The site’s outdated graphics and cliche island imagery leave users wondering whether the site is still active. Savvy travelers today are flooded with online options, and they refuse to waste their time on a site that might be outdated. Remember, they are looking for information and resources they weren’t able to find at the first five Maui sites they visited. We need to make visitors feel confident that Maui.us can provide the answers they need.

Inconsistent and cryptic site wide navigation. In our last two makeovers, we pointed out a common problem: too many items in the main navigation. While that is also an issue at Maui.us (count a whopping 12 items), the even bigger problem is inconsistent placement and appearance of the main navigation. On an 800 x 600 browser, you actually have to scroll down to see the nav. What’s more, the placement and arrangement of the links changes from page to page.

Then there are the cryptic icons; so cryptic that users “don’t think to click on them,” says Lisa Ramos, sales director for Sostre & Associates. (Ramos just happens to be planning a trip to Hawaii in a few months, making her exactly the audience that this site needs to woo.) “The icons just look like part of the design,” she notes. “At first, I thought the site only offered hotel and air search. That discouraged me from exploring the site further.”

Wide text columns. It’s hard enough to read text online. By taking your column of text and stretching it across the length of your Web page, you’re essentially guaranteeing that no one will read it. Just for fun, here are the numbers for some top information websites: MSNBC articles feature text columns that are 460 pixels wide, BBC articles post at 405 and Yahoo news stories come in at about 550. Compare that to Maui.us, which stretches its text columns to almost 700 pixels wide. As a general rule, the maximum width for columns of text should be around 500 pixels.

Poor use of photos. Occasionally you can get away with using poor images. I’ve even been known to discourage the use of gratuitous images in conversion design. But come on – we’re talking about Maui here. If there was ever a time to leverage photos and imagery, this is it. Images help to create an emotional response, and that’s what people want when they’re planning a Hawaiian vacation. After all, it’s not often that someone needs to make a trip to the middle of the Pacific Ocean, so we must encourage the emotional desire to take the trip of a lifetime.

The Solutions

Now that we’ve identified the issues, let’s get to work. Our first step was to go to iStockphoto (www.iStockphoto.com). When you need great images, and you have a limited budget, this is the place to go. iStockphoto offers professional-quality photos and illustrations for ridiculously low prices (about $1 each for Web quality). A search for the term “Maui” yields 462 mostly professional images of the stunning Hawaiian isle. After downloading a few that didn’t work out, we settled on a relaxing scene from Big Beach, Maui.

Next, we whittled the navigation options down to five. We kept the links to the seven other items, but we worked them in toward the bottom of the page to reduce viewer confusion. Next, we placed the main navigation right at the top of the page, like most websites, so it wouldn’t jump around as users moved from page to page. Last but not least, we worked a little conversion design magic to give the site a more current look, while maintaining our focus on the big three income generators. After all, that’s what conversion design is all about.

When Bottomley submitted his site, his original goal was to “make a top-ranking site that MUST be as beautiful as the natural beauty of Maui itself!” Of course, meeting that challenge is surely impossible (have you ever been to Maui?), but I believe we’ve brought the site much closer with this new design. The real proof will come with the increased number of users that decide to use Maui.us for vacation planning.

Would you like to get a free home page or landing page design for your website and see it featured in this article? To be considered, please send your name, company, contact information (phone, email, etc.), a brief description of your business and its goals and, of course, your URL, to bydesign@sostreassoc.com. Please put “Revenue’s By Design Makeover” in the subject header.

PEDRO SOSTRE is principal and creative director at Sostre & Associates, a Miami-based consulting and development firm that also promotes affiliate programs on its network of websites, including Audio-BookDeals.com, EquestrianMag.com and iTravelMag.com. Sostre is currently working on a book about his concept of conversion design, scheduled for release in summer 2006. For more information, visit conversionpublishing.com.

The Importance of Being Creative

Creativity was not an inherent talent in Neanderthal man. It was, fortunately, part of our makeup by the time homo sapiens came into being. People may not think they have the capacity to be creative, but Michael Ray, a Stanford University professor who teaches a course on this subject, disagrees. He contends that creativity exists within everyone, including guerrilla affiliates.

Professor Ray believes that when people can’t tap into their creativity, that doesn’t mean it doesn’t exist. Instead, it means that the creativity is being suppressed by what he calls the voice of judgment – what I call the inner censor. That’s what gets the blame for destroying self-esteem and slowing down sales by affiliates.

According to Ray, there are five qualities of creativity: intuition, will, joy, strength and compassion. Four tools stimulate those qualities: faith in your own creativity, absence of judgment, precise observation and penetrating questions. He and I agree wholeheartedly that creativity is not one great eureka moment that produces a brilliant idea. Instead, it is a way of life.

That’s the way it ought to be with every guerrilla affiliate. Almost every creative professional knows very well that true creativity is not the result of inspiration, but instead comes from hard work and focus. I’ve authored or coauthored 44 books, and not one of them has come from a moment of inspiration.

If I waited for that flash of inspiration, I’d still be laboring over page one of my first book. The idea is to be able to create by reaching deep into yourself and not to wait for a bright light to flash inside your head. If you do opt for that bright light, you’re in for a long, dark wait.

Memes and Marketing

Your job as a guerrilla affiliate is to come up with a winning meme – a symbol that conveys an idea, such as international traffic symbols do. Unlike a logo, your meme should be one that not only identifies your business and communicates something about the quality that you offer, but expresses it in terms that suggest a benefit.

If you’re looking for creativity heaven, you’ll find it right inside of yourself. And you’ll see that your meme will not only be the result of your creativity, it will also serve as the nucleus of creativity for all your future marketing.

Would the great artists, musicians, dancers and writers throughout history have been creative guerrilla marketers? My guess is that they would have – because they did not wait for inspiration, but instead knew where to find it inside of themselves.

A powerful meme is of extreme value to a company that markets online because it conveys at a glance what that company is about. In addition, it can be used on a website and as part of a link. But many online marketers are so wrapped up in technology that they are accustomed to finding their inspiration outside of themselves rather than within. After all, it’s outside of themselves that technology has always resided.

But the rules are different for creativity with true guerrilla affiliates. It resides inside of them – if only they’d look long and hard enough.

The Making of a Meme

In the mid-80s, the telecommunications wars were being waged with ferocity and nonstop telemarketing. All the phone companies had been striving for a point of difference. My guess is that some copywriter in some ad agency was one of many working to give his or her client an edge.

Research showed that one of the benefits that could be offered by a phone company was clarity of sound. Said copywriter most likely pondered this concept and then tried to recall how people refer to clear sound. “So quiet, you could hear a pin drop” came to mind. That spurred the birth of Sprint’s meme, a graphic depiction of a pin dropping next to a telephone, which immediately suggested sound quality.

Since that time, Sprint has been using its meme wisely and consistently, in true guerrilla fashion. Even when the company merged with Nextel, the pin-drop meme was blended into part of the new logo. Ideally, Sprint will be able to stay with that meme for a long time, or at least until research shows that clear sound is taken for granted. Unlike Y2K, which was a short-lived meme, the pin dropping can be a meme with longevity – the best and most powerful kind.

The tale of Sprint is one of creativity in action. It should serve as inspiration to you as an affiliate. That copywriter was probably not aiming to win awards or accolades. Instead, the motivation was to communicate a meaningful benefit to consumers, something instantly conveyed by the visual of a pin dropping. In just a flash, viewers and readers got the point – no pun intended. This kind of creativity is rare. But it’s the kind you’ll need in our increasingly competitive marketing environment.

The Meaning of Creativity

Because creativity is so misunderstood in marketing circles, astonishing sums of money are wasted. Truly creative marketing does not have to be attractive, but should come on strong to key prospects, attractiveness aside. It takes into consideration the lifetime value of a customer rather than the instant gratification of a quick sale.

My advice to you as a guerrilla affiliate is to trust the creativity that you already have and use it to communicate with your prospects and your current clients. Don’t think that it is not in your possession, because it definitely is – and if you use it, you’ll have an enormous edge over those people who think they are not creative.

Remember that for an affiliate, the true measure of creativity is profitability. If your communication efforts garner compliments, earn sales and win awards, but don’t generate profits, they are not creative. If your communication efforts result in pats on your back and high fives, but don’t generate profits, again, they are not creative.

Creativity for affiliates is proven when the bottom line gains beauty. All of your creativity must be directed toward accomplishing this – and it is not easy. I have had many clients enjoy record-breaking numbers of responses to their offers, record-breaking sales figures and record-breaking traffic to their sites, but they were losing money as those things happened. That is not creativity. That is not guerrilla marketing.

These people took their eyes off of the bottom line and focused on the wrong criteria. I hope you will always maintain your bottom-line focus and realize that it is that very line that is the lifeblood of your business. It is the reason you are in business in the first place.

As an affiliate, true creativity is your shining light toward increasing your revenue. Let it shine. And let those revenues reflect it.

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 website is www.guerrillamarketingassociation.com.