Going to the Mat

In the last two issues of Revenue magazine I’ve written about mistakes that affiliates make, highlighting common errors that most affiliates commit at some point in their affiliate marketing ventures as well as detailing my own outrageous faux pas. Turnabout is fair play, so in this issue we’ll look at an example of how affiliate managers prove that they too are only human.

Before I begin however, I must say that I have a lot of respect for most of the affiliate managers with whom I work. Theirs is an unenviable position. They’re doing a j-o-b for a network or independent merchant and must deal with entrepreneurs, many of whom do not understand the industry. More difficult still, many managers have the added responsibility of policing their programs and trying to ferret out those affiliates who violate terms of agreement and incur needless costs by using underhanded methods of traffic and lead generation.

All too often managers are trying to communicate with affiliates who, after years of doing a lucrative business on the Net without the requirement to carry or ship inventory, process orders or administer customer service, may be a tad lazy. Speaking from experience, many of us in that situation join programs, put up links and then go on vacation, making us almost impossible to contact through ordinary channels.

But here’s a tip for managers who want to get their affiliates’ attention in a hurry. Send an email with “Link Expiration” in the subject line, such as the one I received recently from Cheryl Averill, the affiliate manager at CardOffers.com.

The body of the message read as follows: “A representative from XYZ Bank has notified us that your account has been participating in email marketing campaigns known as Spam. Due to this, the card issuer has asked that you be excluded from marketing their products. We have expired your links for the XYZ Bank cards today. They have asked me to let you know that they have put your site on a ‘blacklist’ so that you cannot get their links from another source.”

Now, if you read the issue of Revenue in which I detail my foibles in the financial services sector, you know that I have little or no interest in my credit card site which is, and always has been, a waste of time from an earnings standpoint.

Regardless, when falsely accused of sending Spam – with a capital ‘S’ no less – I’ll stand by and up for my site and marketing methods until the issue is completely resolved. The last thing any affiliate wants or needs is to have his or her reputation as an honest broker ruined for lack of proper investigation.

To this end, I emailed Cheryl to say that in eight years as an affiliate, I’ve never spammed anyone and demanded that XYZ Bank provide proof of their allegations, which of course I knew they wouldn’t be able to supply.

To her credit, Cheryl has always been one of the most responsive affiliate managers with whom I’ve dealt, and is one of the few who makes the effort to get to know even her least-productive affiliates, a.k.a. yours truly. She quickly replied that she “did find it very strange that you would have come up in that list.” Also to her credit, she didn’t simply accept my “I don’t spam” explanation but chose to investigate the situation further by asking if I sent out “an opt-in newsletter or anything of the like that they may have confused with Spam?”

Although I had been quite peeved at being falsely accused of spam and moreover, having my “hammock time” disturbed, I did appreciate the suggestion that it was her client that was “confused.”

I explained that although there is an opt-in form on the site and a series of eight messages programmed into the autoresponder, that broadcast messages are rarely, if ever, sent to that list.

Cheryl then went to bat for me and said she would try to obtain proof from her client, prior to expiring my links. I found their response very interesting indeed.

Apparently, according to XYZ Bank, my site was “engaging in very active comment spam,” which is just one of many types of spam that warrant termination from their program. Cheryl then asked me, “Do you even have a comment area on that site? I can’t find it.”

Cheryl couldn’t find a comment area because no blog exists on my credit card site. Further correspondence with XYZ Bank would therefore be required to find out exactly on which site they found the offensive spam comments.

XYZ’s answer was that the comment spam was located on my “personal blog.” For some reason, however, they neglected to provide Cheryl with either screenshots or a URL for the site – in other words, PROOF.

Considering that I don’t write a “personal blog” and run only three commercial blogs, each of which is moderated and spam-controlled to the nth degree, I still wasn’t satisfied with XYZ’s lack of appropriate response to this very serious allegation.

Neither was Cheryl. In a later email chat she informed me, “Due to these issues we are now going to have to modify our T&C [terms and conditions] and send out a notice to all partners about it.” She went on to say, “I feel bad for affiliates ” there are so many rules. Don’t bid on these terms, don’t bid more than this much, etc. They are being resourceful and using other methods of getting traffic to their links and now those are getting shut down.”

There’s another good hint for affiliate managers. Show empathy for our increasingly difficult plight and we’ll be more responsive to your emails and requests – perhaps even forever grateful.

Judging by her next correspondence, I suspect that Cheryl was now becoming as frustrated as I was by the inconvenience of this needless accusation, and probably just wanted to wrap things up.

“Here is the final word. We do not have to expire your links. Yesterday it was explained to me that partner links would have to be shut off if those links were posted in a blog. Today when I told them that another partner produced 717 sales for XYZ Bank from their blog page and it didn’t seem like good business sense to cut them off, they said that people could post them in THEIR OWN blog, but not in OTHER people’s blogs.

“After they clarified that for me, I asked them if I would have to expire your links since you posted them in your own blog. They said no I didn’t, which brings me to the question that I will most likely never get the answer to … Why did they even bring this up if you were not posting in someone else’s blog?”

Yikes! But I DIDN’T post anything to my blog, and I thought the issue was about an unmoderated blog with comment spam!

Oh well, occasionally you just have to let some things go. Especially when your affiliate manager wraps up her assessment with the best solution possible.

“I have told them, the next time there is a problem, we would like to have proof such as links where the violation was found and/or screenshots,” Cheryl explains.

Eureka! Just as I’d requested right from my first reply to the false accusation, the burden of proof rests with those making the allegation. Fortunately for Cheryl, unlike other affiliates who might have ditched the program, I’m not so overworked as not to have time for affiliate managers with whom I have a good working relationship, and was therefore willing to see this issue to the (almost) bitter end.

More to her credit, Cheryl ended with “Sorry for all the stress this has caused.”

Actually, I wasn’t stressed at all. I was out lounging by my pool, soaking up a few rays, while responding to all those emails, so no harm done, other than a few finger cramps induced by more typing than usual.

ROSALIND GARDNERis 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. Her best-selling book is available on Amazon and www.SuperAffiliateHandbook.com.

Introducing Dr. Makeover

Not every website needs a complete redesign. Contrary to what most Web designers tell you, designing a website for results, or what I like to call Conversion Design, doesn’t require a pretty website. I’m not interested in redesigning websites just for design’s sake. So we’re shaking things up a bit for this issue of Revenue. Instead of a complete visual overhaul of one site, I’m going to answer some frequently asked questions.

Enter Dr. Makeover – my alter ego. He’s a combination of Dear Abby and Dr. Phil with an Internet business twist. And he’ll provide quality advice about how to make your website perform the way you need it to.

Dear Dr. Makeover: I’ve been using my website (ClaudineLewis.com) for over a year to promote my side business of professional voiceover services. I had a friend help create it for me and while it looks “OK” I feel like it should be more dynamic. What can I do to make sure I’m putting my best voice forward? Claudine Lewis

Dear Claudine: I really like your site. It’s simple, personal, the colors are pleasing and your photo looks genuine and professional. I already want to work with you. Sometimes we like to over-think and over-complicate websites. This one proves that sometimes even a basic site can be very effective. Of course, I have a few points of constructive criticism.

  • There’s no link back to the home page from your lower-level pages. The home page is a safe spot – a comfort zone. Make it easy for people to get back there.
  • The samples should play in an audio player of some sort, rather than making the user download an MP3. This makes it easier for people to listen to your samples. That’s really what they’re here for.
  • Speaking of samples, make some of your best ones available right on the home page. Consider recording a friendly “Welcome to my site” audio message.
  • Make your contact information available on every page.

Those tips will help get people the information they’re looking for and increase the number of contracts you get. The personal nature of your site makes you seem really approachable. That’s one of the strongest selling points in my opinion. Don’t lose that as the website continues to grow. Dr. Makeover

Dear Dr. Makeover: Please help. We have the coolest product since email, but visitors to our website (inclue.com) still don’t get it. Our RSS reader for Outlook is an easy-to-use plug-in that allows anyone to have news, blogs and even videos delivered right into Outlook. This is a product that has universal appeal, but our website isn’t communicating that. My feeling is that people either get scared off by the techi-ness of RSS, or they just don’t see the “Hey, Wow!” benefit. What can we do? Nick Gogerty, CEO of inclue!

Dear Nick: I can see some areas that could use a little improvement. First, you want to build a group mentality. People feel safety in numbers, so if you can show that 10,000 other people have already downloaded this thing, that will make visitors feel like it’s okay. I suggest keeping a live download count on your home page.

Next, you should provide some type of demo to visually spell out the benefits of using this reader. If you created a nice Flash demo that showed, for example, a Hillary Duff video being delivered and played right through Outlook, that would generate the “Hey, Wow!” response you are looking for.

Third, dump the people-from-weird-angles-on-a-white-background clip art. That is so 2001. I’d use imagery that isn’t so dated.

Finally, the home page tries to communicate too many things. I counted 11 different marketing messages all around the page. People tend to dismiss marketing talk. Instead, create one strong message. Something like, “Inclue! Delivers Your favorite News, Videos, Jobs, and Auctions straight to Outlook – FREE!” That might be a little long, but you get the idea. Dr. Makeover

Dear Dr. Makeover: I used one of those “Easy Website Builders” to create my site (ExecutiveCareerPro.com) just a few weeks ago. While my resume services are top-notch, I’m worried that my professionalism and skill level aren’t being communicated. Even though I’m limited to the changes allowed by the website builder, I can make copy changes, add pages and include graphics. What can I do to more effectively appeal to my target market of high-earning executives? Rita Fisher, CPRW and President of ExecutiveCareerPro

Dear Rita: You’re at the top of your game and it’s time to make sure everyone else knows it. Executives at this level should already understand why it’s important to have a professional resume, so selling them on those benefits may be unnecessary. Your site should really focus more on you and your credentials. The way it is now I can barely find your name on the site. Don’t bury the good information.

At the bottom of the home page you offer a free career strategy consultation. Why are you hiding that way down there? By moving that up, maybe just above the navigation, it gives potential clients an easy, no-risk way to get in touch with you to see what you can do for them.

The testimonials are a strong point on the home page, but the color scheme makes it uncomfortable to read. I’m not a big fan of templates in general, but if you have some other alternatives, you might want to consider choosing a different one.

After several more clicks, I finally stumbled on your About page. Here’s where you decided to hide all the good stuff. Your work has been featured in the book “Gallery of Best Resumes.” Congratulations. Let’s make people aware of that. I also like the photo of you. It isn’t the best quality, but it adds a personal touch and really helps to break up the blocks of text. Finally, the Professional Association of ResumeWriters’ logo shows that you are active in this industry.

Let’s bring the photo, the association logo and the book cover graphic over to the home page. Highlighting these images creates an instant, almost subconscious credibility. The idea is to help users understand what you have to offer before they even start reading the text on your page. With all the resume websites out there, the main selling point for yours is YOU. You need to toot your own horn as much as possible. Dr. Makeover

If you have a question for Dr. Makeover or want the chance to be picked for a free home page or landing page redesign, send your name, company, contact information and a brief description of your business (including the URL) to bydesign@sostreassoc.com. Please put “Revenue’s By Design Makeover” in the subject line.


PEDRO SOSTREis pioneering Conversion Design and its ability to turn online shoppers into online buyers. He serves as president of Sostre & Associates, an Internet consulting, design and development firm, which also promotes affiliate programs on its network of websites. Visit www.sostreassoc.com to learn more.

Get a Second Life

Living in a virtual world may lead to innovation in the physical world.

Innovation is the lifeblood of business. Failure to innovate is a common problem among businesses and even more common among big corporations where it is hard to turn on a dime and internal politics tends to slow down rapid thinking and change. This means that smaller marketers, boutiques and niche marketers have an advantage – a market opportunity. One of the later and perhaps the most innovative of Internet transformations is the rise of a parallel, post-human experience via digital worlds. This can be experienced in all its beauty in Second Life, a partly user-created and partly subscription- based 3-D virtual world. Linden Lab, created by Philip Rosedale flung, the doors of Second Life open to the public in 2003. Linden Lab has Amazon.com’s founder and CEO, Jeff Bezos, as a second-round investor.

The Second Life “world” is not a real one. It resides, like most virtual worlds, on a series of servers commonly called “The Grid.” The Second Life client program provides its users (called residents) technological tools to view and modify the Second Life world and participate in its growing economy. The built-in object editor allows residents to create complex objects like wigs, skins and even giant buildings out of a set of basic building blocks known as “prims,” shorthand for primitives.

The economy is perhaps the most notable feature of Second Life. Unlike most other digital worlds, Second Life boasts its own economy based on the Linden currency, which exchanges with U.S. dollars. According to its website, the Linden-based economy is circulating several millions of dollars’ worth of U.S. currency each month. This is not a trivial amount, and startling, considering, for now, Second Life residents are a somewhat limited group. At press time Linden Lab reports almost 370,000 members and growing.

This virtual economy has created a warm petri dish for innovation where residents own their own businesses and more importantly, they own the digital content they create. Since the residents own the intellectual property rights to their content, it has created a wildly different atmosphere, not unlike the dotcom boom in terms of raw creativity and innovation. Residents are creating clothing and skin shops for avatars, building construction, creating games and experiences, and due to the interactive nature of the world, they can even construct their own systems.

Examples of digital businesses include a bustling “hair shop” where residents can buy wigs for their avatar, stock exchanges, groups that will erect buildings for residents and the creation of interactive games. One of these creations is now in a game for Nintendo’s Game Boy Advance system and soon to be released on cell phones. I do not think it’s far off before we will see alternate Second Life currencies emerging in this purely virtual environment.

Big business is starting to take note of this phenomenon too. Intel, Wal-Mart and American Express are among many powerhouse companies starting to experiment in Second Life. Not to mention a wide array of universities and learning institutions are setting up shop in the digital landscape to explore digital construction and instruction.

Some companies are straddling offers across the dirt world and the digital. For example, when you make a purchase in the in-world American Apparel store, you will get a note card in your inventory with a promotional code offering a real-life discount at their online store. Web-enabled sale boxes also allow Second Life users to purchase a virtual item to wear on their Second Life avatars. There’s, an option to go directly to the American Apparel website where they can purchase the item in real life.

I was searching for a metaphor on how best to describe the application of the Second Life experience for performance marketers. Stephanie Agresta, vice president of Affiliate Marketing at Commerce360, put it this way in a recent blog entry:

“For example, I participated in one-off discussions about meme engineering, virtual world creation, emerging digital economies and goods, instant messaging service bots and the imminent post-human experience. I would call that innovation – I would call that very forward thinking. The best-of-breed affiliates move like digital cheetahs hunting on the vast plains of cyberspace. As an agency, we have to keep the same pace. Affiliate marketing is much like a safari – you see some incredible diversity and creative adaptation – but to make it work you cannot view it from the safety of a jeep – you have to be able to navigate the complex jungle and avoid the potential pitfalls.”

Calling best-of-breed affiliates digital cheetahs is an adept metaphor. In performance marketing, one often sees wild and creative uses of technology to drive ecommerce. Some of these uses are questionable and some uses and adaptations are actually quite novel. The trick is finding the novel, and restricting or staying away from the negative aspects. It is important for marketers not become so wrapped up in daily execution that they become myopic. To ward off myopia it is essential to build in time for research and development, exploration and purely imaginative research. This exploration should be the catalyst for innovation and in a world that changes so rapidly, ideas are the loftiest of currency.

What is going on in the purely digital world is intriguing. Business owners can learn more about the importance of digital worlds by reading, exploration and most importantly, participation. There are many books useful for learning how to navigate that virtual landscape. I have found three entertaining reads that highlight the experience and have sage business gems buried inside:

Ender’s Game by Orson Scott Card (Tor Books): Ender Wiggin battles it out with the Formics in this Hugo-Award-winning novel that is perhaps the quintessential guide for the new blogging metaphor. Pay special attention to Peter and Valentine as they control the nets through alternate personas. Make special note of the protagonist’s psychological development and monitoring by the “Mind Fantasy Game.”

Snow Crash by Neal Stephenson (Bantam Spectra Book): Snow Crash is a fast-paced romp through cyberspace laced with satire and dark humor. The novel weaves everything from Sumerian mythos to visions of a postmodern civilization ready to fall. Readers should pay close attention to the Sumerian elements and how the culture of Sumer used a primordial language for control. In addition, the novel explores themes of reality, imagination and thought, all in the context of a virtual world experiencing a state of rapid decay. This has useful applications when studying the groups and behavior of citizens in a purely digital world like Second Life.

Pattern Recognition by William Gibson (Putnam Adult): The science of pattern recognition aims to classify data based on previous experience and through statistical mining of patterns. In this contemporary novel, the readers explore the concept of “cool spotting,” which has been in use in marketing for many years, through the eyes of Cayce Pollard. Pollard is an incredibly intuitive market-research consultant. Marketers should get an idea for new metrics and perhaps new ways to measure the efficacy of campaigns as well as the importance of looking ahead for future trends.

Naturally, reading will not take the place of participating. Active participation in the experience and communication with digital life residents is the best way to get up to speed and to see what imaginative worlds like Second Life offer. This is merely the beginning of a shift as the Internet continues to make life, business and our world more complex and completely different.

Those who innovate will reap the rewards. Don’t sit on the sidelines – grab a Second Life and explore. The good news is that you can have several.

WAYNE PORTER is the co-founder of Revenews. com, a Microsoft Security MVP, and served as the CEO and founder of XBlock Systems, a specialized greynets and malware research firm . He is now the Sr. Director of Greynet Research at Facetime Security Labs, which acquired XBlock Systems in 2005.

Guerrilla Generosity

With the holiday season waiting just over the calendar horizon, I can’t help but remember how holidays are disasters for the unprepared. To help prepare you, I want to activate your generosity awareness.

There seem to be two kinds of affiliates: givers and takers. Giver affiliates are quick to give freebies to customers and prospects. The freebies may be gifts, but more likely come in the form of information. The right information is worth more than a gift and often worth far more than money.

There was a time – it existed primarily during the last century – that people believed they were supposed to guard information, to keep it secret, to not even dream of sharing it. That attitude has taken a U-turn.

Imagine yourself in a large, dark room with many people, each one holding a candle. But none of their candles is lit – except yours. You use your candle to ignite the candles of all the other people in the room. Now the room is glowing with illumination and brightness.

And yet, the flame on your candle has not been diminished at all. Everyone in the room gains, while you lose nothing at all. Canny affiliates share their precious information with many people because the word is out that shared information is a lot more valuable than private information.

One of the prime purposes of marketing is to educate your prospects and customers on how to succeed at their goal, whatever that goal may be – earning more money, losing weight, attracting a mate, growing their business, hiring the right people, planting and maintaining a beautiful garden.

You can accomplish that noble purpose of marketing by freely disseminating information – by giving the best possible information to the people who need it the most. The main idea is to think generously, then give generously.

One of the key personality traits possessed by successful guerrillas is generosity. I’ve always known they were blessed with infinite patience and fertile imaginations. I’ve written in awe of their acute sensitivity and their admirable ego strength. I’ve raved about their aggressiveness in marketing and their penchant for constant learning.

I’m similarly impressed, but not surprised, at their generosity. They are, every single one of them, generous souls who seem to gain joy by giving things away, by taking their customers and prospects beyond satisfaction and into true bliss. They learn what those people want and need and then they try to give them what they want and need absolutely free.

The result is delighted prospects who become customers and delighted customers who become repeat and referral customers.

What kind of things do guerrilla marketers give away for free? Let’s start with a short list and your mind will be primed to dream up more:

  • They give gift certificates to their own business, whether the certificates are for products or services.
  • They give money to worthy causes and let their prospects and customers know that they support a noble cause, enabling these people to support the same endeavor.
  • They give free consultations and never make them seem like sales presentations. They truly try to help their prospects.
  • They give free seminars and clinics because they realize that if their information is worthwhile, it will attract the right kind of people to them.
  • They give free demonstrations to prove without words the efficacy of their offerings.
  • They give free samples because they know that such generosity is the equivalent of purchasing a new customer at a very low acquistion price.
  • They give invaluable information on their website, realizing that such data will bring their customers and prospects back for more, thereby intensifying their relationships.

In addition, guerrillas are highly creative in dreaming up what they might give for free. Of course, many advertising specialties such as calendars and scratch pads, mouse pads and ballpoint pens are emblazoned with their names and theme lines, but they seem to exercise extra creativity as well. ere’s an example from the off-line world: When an apartment building went up, signs proudly proclaimed that you get “Free Auto Grooming” when you sign a lease. Soon, the occupancy rate was 100 percent. The salary they paid the guy who washed the tenants’ cars once a week was easily covered by the difference between 100 percent occupancy and 71 percent occupancy, the usual occupancy rate in that neighborhood. The key to their generosity was this question: “What might our new tenants want and appreciate?” While the usual gifts were considered, none answered the question as substantially as a free car wash each week. Hardly an obvious gift. But, just the ticket for these tenants.

That means your task is clear: Think of what might attract prospects and make customers happy. Be creative. Be generous. Then, be prepared for a reputation embracing generosity, customer service and sincere caring.

Many affiliates shy away from early holiday promotions because they don’t want to begin too soon. They don’t want to be criticized for their eager ways. But many members of a busy public will appreciate the hint of being reminded of what is just around the corner and the reminder that good planning makes for a more joyful holiday.

Tell your customers and prospects that even you may be the first to begin celebrating this holiday season; you want them to be the first to take advantage of early planning. You want them to be able to avoid emergencies, inventory problems, crowded shipping facilities and even early season bargains. You may even come up with an early shopper special or two. When you do, be sure you give those customers something extra, something special and something unexpected.

Are they going to appreciate the combination of being given information that can help them, as well as price breaks that might put a twinkle in their CFO’s eye? Is Santa jolly?

Today’s customers are attracted to giver affiliates and repelled by taker affiliates. What kind of affiliate are you?

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.

Special Order

News of the death of the catalog is greatly exaggerated. It’s no secret that the catalog retail universe is a big one. Brands that started as paper catalogs sent in the mail go back more than 100 years to the Sears & Roebuck catalog sent to families in rural parts of the country. In its pages people could order everything from bars of soap to do-it-yourself homes delivered right to the doorstep.

Catalogs in general have gone through a sea change of sorts and nowadays the best-known ones sell mostly apparel, kitchen and bath goods, electronics and other home and gift items. Many of the brand names are nearly ubiquitous: L.L.Bean, Eddie Bauer, Chadwick’s, Patagonia, Harry & David, Spiegel, The Sharper Image, Brookstone, Crate & Barrel, Hammacher Schlemmer, Pottery Barn, Williams-Sonoma, Land’s End, Lillian Vernon and Victoria’s Secret.

Some of these brands are, of course, multichannel marketers now – be it Web sales, catalog, physical store or telemarketing. The printed catalog may be how the brand is recognized, but it’s the various channels that keep sales humming.

In fact, multichannel marketers are very big participants in the $2 trillion U.S. retail market, according to the Direct Marketing Association (DMA). About 40 percent of retailers sell through three or more channels, 42 percent through two. That’s almost a quarter of all retail sales generated through direct marketing efforts and that direct mail (such as paper catalogs) accounts for half of that revenue, according to the DMA.

Smooth Transition

When e-commerce came along many predicted that the pick-up-the-phone-and-order-from-a-paper-catalog model would die out. It hasn’t and is in fact thriving, especially as affiliates for these catalog businesses do extremely well.

Like the overall affiliate cosmos, the top 20 percent of affiliates for catalog retailers bring in the heaviest sales. Contrary to their fears, catalogers, as they are known, have transferred the catalog model to the Web rather well.

Online catalog and call center revenues reached $9.87 billion last year, and online sales through retail chains brought in $27.75 billion in 2005, according to Internet Retailer. Eighty-two percent of multichannel retailers who have a catalog component run profitable Web operations, according to Internet Retailer/WebSurveyor. This is actually ahead of the virtual-only merchants – only 75 percent of them are profitable.

Contrary to what might be suspected, the Web presence does not take away from the overall catalog brand. All catalogers believe in e-commerce, says Chris Henger, vice president of affiliate marketing at Performics. He says the days of catalogs asking if they should invest in the Web are over. “There may not yet be best practices in what channels get the credit for sales, but they are learning. Sending a catalog is a tremendous vehicle and so what better time to be omnipresent with an interactive message,” says Henger.

Performics manages affiliate marketing programs for more than 300 advertisers, including more than 100 catalogers. Catalogers are kind of its specialty, he says. Some of its top catalog clients include Blair, Cabela’s, Eddie Bauer, Brylane, Chadwick’s, Patagonia, L.L.Bean, Harry & David, Spiegel, Newport News, Sears, and Sportsman’s Guide.

According to Henger, the message from consumers is loud and clear: The customer needs to touch the brand the way it wants to – whether that is on the Web, over the phone or walking into a store. The good news is that those channels all help each other.

“Customers are seeing growing sales on the Web – 30 to 60 percent of sales,” Henger says. “They have all come to the conclusion that [mailing] catalogs is not going to go away. It builds brand equity and there is a balance to the push and pull.”

Others agree.

“Going online in general has benefited us greatly,” Chris Park, affiliate and partnerships manager at Blair, the men’s and women’s apparel seller, says. “We may drop catalogs all the time and [customers] may look at a catalog a few times but they go to the website many times.”

Teamwork

He says there’s really no choice anymore: The print catalog and online have to work together. Many customers look through the catalog and then come online when it’s time to buy, Park says. Blair can then promote a $0.99 shipping offer once customers come to the website.

Some catalogers take the time to look at the affiliates themselves and measure their value in a more granular way instead of just heaping together all affiliates into one category.

“Before we were just looking at the sale and now we are looking at the affiliates themselves and putting them in different buckets,” Park says.

Knowing so much of their sales are now attached to the Web and by extension, affiliates, some catalogers believe they need to go the extra yard for their earners. Brad Sockloff, vice president of e-commerce at Lillian Vernon, says he works personally with top affiliates every day.

“We do special promotions with the top 20 percent and we do monthly meetings with them,” he says. The top earners get to know when Lillian Vernon has overstocks prior to the holiday season. “Why sit on it for another year?” Sockloff says. The company also produces a newsletter exclusively for affiliates.

Lillian Vernon additionally has a link to find out about their affiliate program prominently displayed on their home page, as does Brookstone, The Sharper Image, Eddie Bauer, Hammacher Schlemmer, and Chadwick’s of Boston. None of that personalization is too surprising from Lillian Vernon, who markets gifts, housewares, gardening, seasonal and children’s products among other gift-related items – most of which can be personalized with a name or monogram.

As far as helping affiliates, you might not get any better than at Sierra Trading Post. They were named Innovative Merchant of the Year by LinkShare in 2005. The tools on the company’s site to help affiliates are plenty, more so than most of the other cataloger affiliate Web areas. Sierra has available on its site an extensive guide for affiliates, website templates in three different styles, a product data feed and tools for easier product showcasing on your site. In beta are two new tools: Synonymizer, for maintaining your search engine rankings even with a data feed; and Linkwrapper, an automated linking tool.

Justin Johnson, affiliate manager at Sierra Trading Post, says if he makes the affiliate’s job easier they will make more money. “Help them fill the hole,” he says. “Data feed sites give visitors a good idea what they are looking for and we automate some of that for those that don’t know. I try to figure out what affiliates are struggling with” and base a tool on that.

Sierra also posts sales contests for affiliates where they can compete for prizes. Johnson says while making the sale is great, he loves to learn something from the contests, such as finding out an elusive metric like numbers of new customers. He says Sierra’s recent Summer Camp contest will try to get the affiliates to communicate with each other and learn from each other. “I ask myself, what affiliates do not know,” Johnson says. “It benefits us all. Customers profit because they find what they are looking for and affiliates profit because they get high conversions.”

On A Shoestring

While catalogers restate their commitment to affiliates, there are still the somewhat- tight budgets driving an affiliate manager’s workload. Recent DMA statistics say about 9 percent of catalog/Internet marketing budgets go to affiliate marketing. That’s in line with about 8 percent of affiliate budgets for all retailers.

And JupiterResearch recently determined that search engine marketing managers also did five other jobs on average, including Web design, IT staffing, email marketing and e-commerce management. Or in the case of Andrew Dunn, online advertising manager for Vermont Teddy Bear Company, you manage stuffed bears, pajamas, flowers and mail-order gourmet foods. He agrees he could be doing more to reach out to affiliates. “We’re such a multichannel brand,” Dunn says. “The affiliate is a smaller channel for us, but we will broaden things as much as we can.” He says less than 5 percent of overall sales come from affiliates.

The Vermont Teddy Bear Company began selling personalized stuffed bears on the radio in 1981. The company’s other catalog brands include Pajama Gram, Calyx & Corolla, Gift Bag Boutique and Tasty Gram (which is online only). Dunn says he considers any business in the “gift” category to be his competition, so he admits he is often too busy to attend to all affiliates. Paying more attention to the big earners is just “physics,” he says.

While staying in contact with affiliates keeps him very busy, he finds ways to steer everyone somewhere. He says if an affiliate emails him with a simple html question, he may refer them to an online tutorial. He says he will refuse entry to affiliate applicants whose Web address is a provider name with a tilde denoting their personal site. A person who isn’t going to spend the money for a unique Web address is probably not going to be an earner, he says. Blair’s Park says that some affiliates never want extra emails or phone calls, preferring to be left alone. Some, he says, want all the details – “They IM me, call me and I know who they are. I’ve got to keep those people happy.”

Search Sells

In the performance marketing world, catalogers and other e-commerce sites – whether they sell through multi-channels or not – can’t deny the effectiveness of search engine marketing. While a DMA study stated that 58 percent of catalogers said they use affiliate marketing as an advertising strategy, 65 percent said they used search engine advertising or the buying of search keywords. Interestingly, both pay-per-performance and shopping aggregators have a decent presence among retailers with catalogs, at 41 percent and 24 percent respectively. And it is good to see that the annoyance of pop-ups and adware keep their numbers low, at 9 percent and 4 percent respectively. Up-and-coming strategies still in the beginnings of a groundswell are Flash ads and video ads, at 8 percent and 3 percent respectively.

Park agrees that catalogers will employ better conversion methods as they get more used to the possibilities. “Search is definitely the big thing,” he says. “Aggregators will also get big.” He says he would like to see more of an understanding of adware. He says he won’t work with anyone where software attaches to your computer. He publicly speaks out against adware when he can.

While some catalogers have put a ban on bidding of brand keywords, search may be the only thing catalogers have a certain control over. Some catalogers would rather not lose control over the brand. If you have, say, 50,000 affiliates, all with a different Web address, you don’t know what’s being done to your brand, says Sierra Trading Post’s Johnson.

A high-profile catalog such as Crate & Barrel chooses to have no affiliate program whatsoever. “We wouldn’t have anything like that here,” a spokesperson says.

The more affiliates contribute to your online sales, the more time and investment you’re going to give to an affiliate program, says Johnson.

“There’s lots of pressure more and more in the affiliate channel,” Vermont Teddy Bear’s Dunn says. “There is more competition for ad space, and from a search perspective, contextual ads-wise. I can pick and choose as a marketer but if I’m an affiliate marketer there is more work involved.” He says in his year and a half as online ad manager, “We are growing up with it and see what works and what doesn’t.”

Unlike Vermont and its relatively small 5 percent of online sales that come through affiliates, Lillian Vernon’s Sockloff says affiliates bring between 10 and 15 percent of their online sales. Not only is it a fairly large percentage as far as affiliate involvement in sales figures goes but for Lillian Vernon, half of their overall sales come in the fourth quarter since the holiday season is its busiest. Sockloff says the affiliates really begin to ramp up in early September for the holidays. While he says that increases the incremental customers they get – buyers who wouldn’t otherwise come to Lillian Vernon – those customers are used to looking for items on the Web and the self-serve aspect is a “perfect fit,” he says.

Dunn says that at the end of the day, he sees themselves as multichannel marketers and not just catalog retailers anymore. “If our transactions are online, we have to ask, Would we have gotten that order anyway? The multichannel challenge is what we have every day,” he says. Does it make him think the paper catalog is dying out? He points to the radio market – where Vermont got its start – as an example. With satellite radio now in the picture, he says, the market just evolves.

Henger at Performics is more than optimistic about catalogers’ longevity in the business. “[Catalogs] capitalize off e-commerce growth,” he says. “We [at Performics] see continued growth in the sector. They often need something like us – they don’t typically have a full ad marketing dept. Target [stores] has it and has a history of keeping it in-house. Most catalog retailers, however, are budget-challenged and need us.”

Budget-challenged or not, the benefits for consumers have only multiplied with the choice of sell channels and that means catalogers continue to grow with the rest of the affiliate world – one innovation, one sale, one page at a time.

Big Brands Believe

TV commercials and print ads aren’t dead yet. Major brands still believe in traditional media. After all, a blockbuster commercial with a catchy jingle can positively boost brand equity. No one cares to dispute the power of a well-placed Madison Avenue ad. But nowadays, marketing teams are increasingly feeling pressure to account for the dollars they spend; they need to show the hard results for money in a real way.

No wonder many marketers are starting to expand their ideas about what constitutes the best-spend blend. While dollars spent on old-fashioned media can positively impact brand image, many major marketers are frustrated by the paucity of accountability in that arena.

Enter the Internet. A decade ago, it was a way to blast banners and burn through a huge amount of cash. Now with access to high-speed connections the norm, and rich-media taken for granted, marketers believe more and more that the low cost, high measurement and constant tweakability make the Internet a magic formula for marketing.

The growth of online ads isn’t showing signs of slowing down and traditional commercial markets are feeling the loss. For example, the up-front market, the time period during which TV networks show their fall lineups and try to sell ad space, is losing its luster. This year the Walt Disney Co. network did well during the up-front, selling $2.3 billion in airtime, a $200 million increase over last year. But the final network TV up-front haul came out to only $9.05 billion, compared with $9.1 billion last year.

“This year the interesting thing is it isn’t just about TV anymore; there are a lot of other places to be worked into these TV buying deals,” says Stacey Shepatin, senior vice president and director of national broadcast at agency Hill Holiday in Boston.

She points out that CBS put the NCAA games on the Web and drew a huge audience. “Content is on the Web, on iTunes and on cell phones. Clients want to be able to reach consumers wherever they are getting their content and for some clients, mobile phone and the Internet make more sense than network TV.” Shepatin says the networks will be aware of this shift and work out up-front packages to please marketers.

AD SPEND UP

Beyond anecdotal evidence of the trend, data backs up the new reality. While many industry observers like to speculate, few have actually pinned down hard numbers. But Universal McCann’s forecaster, Bob Coen, recently revised his estimates for overall U.S. ad spend downward. However, he’s bullish on Internet ad spending and has revised those particular estimates upward. Coen now forecasts that Internet ad spend (excluding search) will amount to $9.705 billion this year, which is a 25 percent increase over 2005.

In December, Coen predicted that online advertising spending would total $8.7 billion in 2006, or an increase of 10 percent over 2004. But in the first quarter of this year online advertising spend increased more than 19 percent from the first quarter of 2005, according to Coen. To give you an idea of the contrast, he now predicts that overall ad spending will increase to $286.4 billion in 2006, a 5.6 percent increase from 2005. In December, he had forecast 5.8 percent growth. The Internet numbers are enough to leave even skeptics believing that this online ad thing has real momentum.

Other numbers also prove the point. The Interactive Advertising Bureau (IAB) and PricewaterhouseCoopers announced that Internet advertising revenues reached a new record of $3.9 billion for the first quarter of 2006. The 2006 first quarter revenues represent a 38 percent increase over the first quarter 2005 at $2.8 billion and a 6 percent increase over the fourth quarter of 2005 total at $3.6 billion.

Some types of companies are quicker to catch on than others. Not surprisingly, high tech companies are among the first to get hip to trending their ad spends toward the online universe. Yahoo’s chief marketing officer Cammie Dunaway agrees that a commitment to “performance- based marketing,” like the Internet, is more effective than just doing branding on network TV alone. Yahoo has also ventured into getting its brand seen in off-line environments, with a Sheraton hotel deal in which Yahoo sponsors the wi-fi lobby Internet connections. Yahoo plans to continue its much-lauded street marketing stunts but will also continue to refine its online and search efforts.

“I really believe in interactive. Soho Square [New York] is our overall agency that pulls in WPP partners,” Dunaway says. Yahoo did a lot of promotion for its music product and in addition to buying TV spots on the broadcast of the Grammy’s and throwing parties in Miami, it did a lot of online work.

“We had great online creative as well; you could throw Green Day’s equipment with your cursor – we had a fun, engaging online element. OgilvyOne [also in New York] handles online, and ours is very extensive. We do so many online campaigns! Great branding makes your search work harder. In 2006, our marketing will be a blend. We’re do search engine marketing as well as branding – ad campaigns, buzz marketing and partnerships like Sheraton,” Dunaway adds.

Those looking to reach a youth demographic, including large brand advertisers, are spending billions online. Sprite was an early blog advertiser and trailblazed IM ads featuring a hip-hop cartoon personality known as Miles Thirst.

John Vail, director of the interactive marketing group for Pepsi-Cola North America, says the company isn’t as much about clickthroughs. To gauge effectiveness, the soda giant is participating in an experiment run by Yahoo and market research company ACNielsen that tracks the online behavior and offline purchases of about 36,000 U.S. families. PepsiCo Inc. doubled its online display advertising spend in 2005, allocating just 2 percent of its total U.S. spending. But Americans spend close to 20 percent of their time online, so there is a gap.

Advertisers aren’t really taking advantage of the fact that a fifth of our time is spent online. So there’s a great opportunity for even more expansion.

PRINT IS NO LONGER THE KEY

But at least one advertiser has woken up to the reality of the way consumers are currently choosing to view media. Absolut vodka, known for its iconic print ads, is at the cutting edge. It has radically altered its marketing strategy away from print to the Internet. The company says it changed directions because consumers’ tastes were changing and many competitors were entering the marketing.

“Online plays a more important role than print. Print is not the key media anymore,” according to Patric Blixt, communications manager for new media at Absolut in Stockholm. “Our consumer is more focused on the Internet and mobile communication so we’re shifting also. We’re evolving the iconic advertising, making it more inclusive and modern with the same wit and creativity we used in our off-line advertising.”

While Absolut won’t abandon print, outdoor and TV advertising, those media will take a back seat to the Web. “Even if the print media budgets remain larger, the print is now much more seen as the first window into the Absolut world, driving interested users to the whole brand experience online,” Blixt says.

Absolut will increase its online spend to about 20 percent of its media budget. This would account for about an $8 million outlay in the U.S. as the brand spends upwards of $40 million annually.

And Absolut is probably smart to target consumers online. But marketers of electronics would be wise to follow suit. More than 50 percent of Americans were ready to upgrade their home electronics this summer, according to research from Pioneer and Roper. Before they hit the stores, however, 90.2 percent of them went online for product research.

A survey from the Pew Internet & American Life Project finds that 45 percent of American Internet users have turned to the Web for help with a purchase in the past two years and that 57 percent considered the Internet “the most important source of information,” so many marketers know the Internet is a smart place to be.

Automakers are another group that is riding the wave of the sea change. Ford Motor also dropped its magazine ad allotment from 23.5 percent to 21 percent last year but increased its spending on the Internet to 3.5 percent from 3 percent, according to AdAge.com. The company’s overall ad budget remains flat. General Motors also plans to spend 20 percent of its marketing budgets online this year. Automakers, like Audi and Lexus for example, have been quick to champion emerging media and buy advertising on blogs and podcasts.

TECH TALK

You’d think that technology companies would be at the forefront of parlaying their expertise into taking advantage of the way media is developing. While guerrilla marketing and sponsorships are becoming more popular with tech companies, Internet ad buys are also a big part of their focus. Microsoft is also keen to take advantage of online ads. This year it will spend a hefty $500 million to promote its new “People-Ready” message. However, the long-awaited release of its new operating system (“Longhorn” which was later renamed “Vista”) isn’t slated until 2007, and a new version of Office might not see corporate offices for some time. The company hasn’t announced when it will air ads for either product. But vice president Mich Matthews says Microsoft will spend a nice chunk of its “People-Ready” budget across more ROIeffective media, namely the Internet.

Google has begun selling advertiser image ads, which are displayed on its publisher partner sites. And according to Sheryl Sandberg, vice president of global online sales and operations for Google, the search giant recently introduced a “click to play” advertising service that lets brand advertisers pay fees when visitors click to play video ads, which are often construed as brand ads.

Ad options in the online universe will continue to grow. The variety of newfangled online ads is proliferating. Blog spending increased in 2005, with over $16 million reportedly spent. Podcast advertising earned more than $3 million last year and is forecast to grow, with a projected 2010 revenue of more than $300 million, per research from PQ Media in Stamford, Conn. Companies such as EarthLink, for one, are experimenting with ads on Internet video blogs. And mainstream household names like Whirlpool are testing the waters of podcastlandia.

Meanwhile, traditional media is far from dead. Instead, it is adapting. TV is beginning to mimic the Internet. Not only is it becoming a more on-demand media format (along with TiVO), but it’s also shaping up to be more measurable, too. Several media buyers, such as Zenith and Starcom, have signed on to receive Nielsen’s minute-by-minute ratings data, which will show exactly what viewers are watching. They’ll be able to find out which commercial breaks viewers actually watch. Some agencies are expected to also negotiate prices based on where a commercial falls within a program, or within a commercial break.

eMarketer data shows that large projected increases amount to 24.4 percent in online ad spend, compared with much smaller growth (4.2 percent) for all media.

Things have changed since the late ’90s as advertisers have become more comfortable with the Internet as an advertising medium. It was very easy for them to pull dollars from the Web or ignore it completely, but you just can’t do that today.

During the previous boom, “traditional advertisers hadn’t yet embraced the medium, so growth slowed,” says Denise Garcia, an analyst at WR Hambrecht + Co. “That’s not going to happen again because Procter & Gamble, large auto manufacturers and other companies have said they are decreasing spending on traditional media, like television, in favor of online media.”

Despite frequent reports of its demise, TV advertising is far from dead. JWT, in fact, has bought up all the front-page ads on the news blog site HuffingtonPost.com for one week, inviting users to view, comment on and share some of the agency’s best TV ads. The ads invite users to view JWT commercials for clients such as Ford, HSBC and JetBlue. After clicking, visitors are taken to a separate section where they can see nine different JWT spots, leave comments and forward the link to a friend. Jonah Peretti, a partner at HuffingtonPost.com, said the effort is a joint experiment to see if social media sites are fertile ground for TV ad messages to enjoy a viral effect: “If you make excellent advertising, good content and put it in an environment [where] it can be shared, you can learn a lot about how to improve what you’re doing.”

DIANE ANDERSON is a senior editor at Yoga Journal. She previously worked for the Industry Standard, Brandweek, HotWired and Wired News. She lives in San Francisco.

Santa in September

Kathy Eickenberg, who runs PurpleBearsShopnEarn.com, knows exactly what she is going to do this holiday season to ramp up her Christmas sales. One is start early; another is she has started a newsletter. She’s hopeful her Christmas ideas will help her move the teddy bears, arts and crafts, toys, children’s clothes and other collectibles and party supplies she carries on her site.

“I do try to read up on things and pay attention to various sources to find out what are considered the ‘hot’ products for the holidays and will definitely spend more time on the electronics, jewelry and toys sites since I assume they’re natural shopper favorites,” she says. She adds that she probably stands in the shadow of the “really successful” affiliates, but she’s proud and determined to learn as she goes. “I’m not really sure what to expect this year,” she says. “Sales have been improving, so we’ll see. Virtually all of my toy sales are around the holidays. It will be interesting to see how many toy sales will remain with Amazon or be done through Toys R Us, since they’re now separate.”

She also knows that any affiliate – with one site or one hundred – who sells gifts, clothes, electronics, books, toys and other retail goods is tested in the fourth quarter of the year when holiday sales could mean as much as 90 percent of an affiliate’s income for that year. Mostly, affiliates like Eickenberg are catching on to the techniques they need to rank higher in searches and keep the visitor interested – whether through content, coupons or presentation. What they want is to start as early as they can – for some, July is when they gear up – and to have the merchant weigh in, too.

There is do doubt holiday sales are big business – especially online. In 2005, holiday shoppers in the U.S. spent $30.1 billion online (that’s excluding travel) during the period of roughly mid-November to Dec. 25, according to a study by Goldman Sachs & Co., Nielsen//NetRatings and Harris Interactive. That spending is actually up 30 percent over the previous year. A separate report by comScore Networks put the Nov. 1 through Dec. 25 spending number at $19.6 billion (excluding travel, auctions and large business gifts) – a lower amount but still 25 percent more than its previous year’s total.

The Goldman Sachs & Co., Harris Interactive , Nielsen//NetRatings, study stated shoppers spent the most money on clothes, at $5.3 billion, followed by computer hardware and other peripherals at $4.8 billion. The ubiquitous iPod and consumer electronics in general made for a very fastgrowing category at 109 percent year-overyear, according to the study. This, they say, was due to demand for the iPod but also the lower prices in 2005 on laptops, printers and plasma televisions. The study also said shoppers bought $3 billion in books and $2.3 billion in toys and video games. And purchases didn’t necessarily stop the day after Christmas. Nielsen//NetRatings says while the number of unique visitors to websites in the week leading up to Dec. 25 totaled 60.2 million, the week after Dec. 25 to Jan. 1, 2006 totaled 61.2 million, as recipients proceeded to promptly spend their holiday gift cards.

AFFILIATES EMBRACE THE SEASON

Joel Bevil also knows the holiday season is an important period, but unlike Eickenberg, isn’t quite sure how to approach it. His BeachCombersCove.biz, DreamJewelry.biz, RoadTripVacations.net, and VarsitySportsStore.com will be experiencing their first Christmas this year. He says he plans to look into how to best market his sites in the next few months but that right now he’s actually just finished some back-to-school sales that did rather well for him. He says he primarily goes to ABestWeb.com forums on the Internet two or three times per week to seek out advice and to gather helpful hints.

Marilyn Olsen with American- Luxury.com has recently started a blog to help her sales. She also runs World- Luxury.com and French-Luxury.com, where she sells higher-end apparel, furniture, baby clothes and accessories, interior decorating ideas, gardening essentials and dog and cat gifts. “The fourth quarter is more a difference of magnitude rather than a change in what I offer to my clients,” she says. “Very special, handmade items, both decorating and gifts, sell as soon as they become available, which is usually in October.” For her the holiday season means working long hours to update the Web pages, which she does individually. “Since I carry everything at an individual item level, both image and text, this represents extra hours to add SKUs, and because of the faster sellthrough, I spend much more time checking for broken links or out-of-stock conditions,” she says.

Olsen says the blog adds a personal touch, which her buyers appreciate. She says the blog acts as a kind of newsletter to alert clients to “developing trends and to provide information about specialized luxury products to help them make informed buying decisions that meet their lifestyle needs.” She’d rather do it that way than to send email, which she says is too obtrusive. She does allow clients to set up an RSS feed to get only the information they want.

Marilynn Ferguson of GoodBulbs.com knows seasonal cycles. (Can you think of anything more seasonal than flower bulbs?) “I’m going to be promoting GoodBulbs with some brick-and-mortar advertising,” she says, “and some online ads, working to get the branding up … things like that. During the bulb-selling season, I’m going to fire up several ad campaigns. I’m quite excited about advertising on the merchant side, because I can go for branding and such and can afford to take a longer view when it comes to the ROI. Plus, a merchant site is a natural destination site.” She says that although she’s all for gearing up about two months before a high-selling season, “on the affiliate side, September is early enough for me,” she says. “Any earlier, and the ‘newly updated’ SE rank bonus dies before the season starts.” She adds that even with marketing pushes that some retailers start offering before Halloween, she doesn’t believe the selling season in actual sales numbers has changed in “20 years.”

What she calls the “actual” buying season for Christmas products should be anticipated by “SEOing” those items a couple of months in advance so that they get ranked at the right time. This is a different approach than any “regular” items you may have on your site, she adds. “Just tweaking the pages to show up in the SEs will do,” Ferguson says. “And if it’s a summertime item, they can pretty much forget it for Christmas; the ‘holiday’ for most summer items is Memorial Day – if there’s any holiday for them at all. There are some July 4 items, but other than that, summer stuff seems to not be connected to a particular day.”

As much as Ferguson is aware of the product life of her goods throughout the year, people like Bevil and Eickenberg want – and may need – more guidance from an affiliate manager. Fortunately, there are some who know they need to help make the sale, too. John Walter, affiliate coordinator at outdoor apparel and gear sites DogFunk.com, BackCountry.com, Tramdock.com and Explore64.com, knows that teaching affiliates a little SEO isn’t going to cut it. He says his sites do 50 percent of their sales in the fourth quarter and that he actively goes to the forum sites and advises affiliates to start their holiday work early – like August.

“We have a clear-the-warehouse sale then to get ready for the holiday season.” He says the 120-day cookie on his sites helps, as does the bi-weekly banners through Commission Junction so that affiliates don’t have to change that link. This year, they are gathering all the programs under one “mega-program” in CJ – so that will “diminish tracking errors across sites,” he says. “That’s less painful for affiliates.”

MAKE IT SIMPLE

Gary Marcoccia, co-founder of network AvantLink.com, says they go the extra yard for affiliates who need massive site updating for the holidays. They offer an automated data feed management tool that comes in handy when pages and pages of your site may need the necessary customizing to get them ready. Marcoccia says he noticed a fundamental difference in the kinds of online traffic some time ago.

“We recognized there were people either surfing or shopping,” he says. “We found out that we get a 10 times greater conversion rate from those shopping online. Those people are in buying mode. That said, we help affiliates make the sale by offering spiderable content. This way you don’t have to pay too much attention to it. It can take two to four hours per week customizing content manually.” This automation can be completed a few weeks before the beginning of the season so that spiders are sure to find it.

“We are focused on a shorter tail,” Marcoccia says, “not the thousands of affiliates who are just throwing up banners.” He says that while their affiliate selection process is very rigid, their platform can allow an affiliate to promote a feed so specifically that it is essentially syndicating affiliate creative. Even so, Marcoccia actively goes to forum boards and campaigns for early preparedness. He says affiliates have to go to their merchant sites in September to make sure the merchant inventory is still in stock and the price hasn’t changed. He says the best success is to devote one page to one item. But if summertime comes and the link stays up, then you have to go back to the static page, he says. And no one wants to manually check hundreds or even thousands of items.

For many, instinct and manual techniques are all they have at their disposal, especially if you’ve maxed out your SEO budget. To this end, the National Retail Federation’s Shop.org recently released a best practices and holiday trends study for holiday retailing 2006. The study’s highest-ranked advice is to start early. About a third of consumers plan to start their online shopping earlier than they did in 2005, so that means marketing campaigns will have to start earlier, too.

Secondly, the study found that the other two-thirds of online shoppers are waiting to shop later and later – 20 percent wait until 13 days before Christmas to start the bulk of their online shopping (compared to the 9 percent who leap in on the day after Thanksgiving). To facilitate the late shoppers, more than half of all online retailers were still offering free shipping during the last six days before Christmas. The study also commented that savvy online shoppers were expecting big online sales and promotions as early as Nov. 26.

With the ease of shopping online now a nonissue, customer satisfaction just keeps rising. Shop.org’s study cites an 11 percent jump in “very satisfied” online shoppers from the previous year. While 29 percent of online merchants began markdowns even before Thanksgiving, an equal 29 percent offered no markdowns all season and both groups came out ahead – 87 percent of merchants saw the same or improved profit margins.

SHOP + SEARCH = SALES

The Shop.org study also reiterated a basic truism: Search is still king. Even though some retailers were wary of spending so much money on paid search, the majority are still allocating budget moneys to it and even increasing their efforts in paid search this season. Affiliates also put search high on their list of effective seasonal strategies. Some will use search this year for the first time.

Ferguson at GoodBulbs.com would love to see the timing even up over at some merchants. They may want to help for the holidays, but she says sometimes the promotions are ill-timed. “It would be nice to start seeing the offers and new links and banners in September and October,” she says, “when there’s still time to do something with them, but not so darned soon that putting them up would give a reasonable person the idea that the ad was left over from last year.” She adds that some merchants email her the week before Christmas shipping ends (or even closer to the deadline) with some deal, “as if I’m going to be able to do a thing with it then.”

Her standard operations are to “fire up the PPC campaigns and tweak the SEO for my affiliate sites. Affiliate-wise, I aim for products that aren’t limited to Christmas interest, so rather than a ‘now or never’ type of cycle, the holidays just cause increased interest all around. A lot more buyers come out at the holidays, so sales rise accordingly. So, for me, it’s just a matter of making sure my pages are getting seen at that time.”

This year, Eickenberg says she will put “more emphasis on the gift cards that are available. I have only started to experiment with some pay per click and am still very much learning about it. I may devote some effort into that this coming holiday season. Probably everybody else will be, too, so not sure how effective that will be.”

Marcoccia at AvantLink loves to say that removing all the manual labor for the affiliate helps them execute “best practices.” It isn’t all just feeds; he says he lets affiliates know what feeds will be holiday-related and communicates that to them. In his network, though, the learning curve is a bit steeper. “With us,” he says, “if you’re not a little bit savvy, you are going to be challenged.”

Olsen of American-Luxury.com lauds the whole retail industry for embracing the online world. They may still be learning how to do things but clearly are in for the long haul. “I applaud online merchants who realize that truly unique items for which inventory could not be supported in brick-and-mortar [stores] can be offered successfully online to an audience that may be a small niche but is willing to pay full retail early,” she says. “This not only can give them important information on trends, but is also profitable.”

The Social Security

Sites that rely on user-generated content are altering the human fabric of the Internet and the way that performance marketers reach out to customers and merchants and communicate with each other. Online marketers are testing all of the new communication methods – blogs, social networking sites, wikis, and photo and video-sharing sites – to see if these platforms can help them drum up business.

And with good reason. The popularity of many of these emerging areas is seeing steady, if not explosive, growth. Blogs, which allow users to easily post new content to their site as well as effortlessly link to other sites, are on fire. Forty-four percent of American Internet users read and post on blogs, discussion boards and other consumer-generated media outlets according to a February 2006 Pew Internet & American Life project study. Technorati reports that approximately 70,000 new blogs are created every day and that the total number of blogs doubles at least twice a year.

But it’s not just blogs. Social networks, such as Bebo and MySpace, are communities in which an initial set of founders sends out messages inviting members of their own personal networks to join the site, and new members repeat the process, are a new national phenomenon. As of July, MySpace has 72 million members, Bebo has more than 57 million members and hi5 has more than 40 million.

In addition, there are single-use social networks where people share one type of topic such as YouTube.com for video, Flickr.com for photos, Digg.com for news stories, Del.icio.us.com for links and Wikipedia.com for encyclopedia articles.

All these types of collaborative platforms are the crux of the Web 2.0 model where the ease-of-use technology allows anyone the ability to contribute.

These sites are built to harness the breadth of experiences so everyone can benefit from the collective wisdom – they have the advantages of collaborative group input but because these services are online and can be anonymous (through aliases), users are not afraid to dissent, according to Jim Nail, a former analyst at Forrester covering the social networking space, who is now the chief marketing officer of Cymfony. “Therefore there is not concern about the dangers of ‘groupthink,’ when individuals intentionally conform to what they perceive to be the consensus of the group.”

And when it comes to growing social groups MySpace.com leads the pack. In July, Hitwise announced that MySpace.com, for the first time, was the No. 1-ranked website in the United States based on the number of visits. MySpace.com accounted for 4.46 percent of all Internet visits in the U.S. for the week ending July 8, 2006 and has propelled past Yahoo Mail. Bebo increased its market share of visits by 21 percent from May 2006, the largest percentage increase among the social networking websites.

THE SOCIAL BUTTERFLIES

So who’s hanging out at these social networking sites?

Nielsen has identified a group, called “My.Internet,” that’s especially likely to visit networking sites. Sixteen percent of Web users belong to this group, which has a median age of 32. Nearly all members of this group – 99 percent – visit blogs; 84 percent are members of an online community; 57 percent have their own blogs; and 22 percent use RSS feeds. Nielsen reported that “My.Internet” users tend to be highly engaged with most of the websites they visit, as measured by 10 factors, including whether they “liked” the site and were likely to return.

With all of the promising information about traffic and demographics, advertisers are eager to get their messages in front of the young and wired demographic that favors the social networking sites. Combined spending on blog, podcasts and RSS advertising skyrocketed 198.4 percent to $20.4 million in 2005. It is expected to grow another 144.9 percent to $49.8 million in 2006, according to an April 2006 report from PQ Media, a custom media research firm.

But advertising on social networking sites can be tricky, and marketers need to take strategic and creative approaches. The audiences skew younger, and often these younger audiences are exceptionally adept at tuning out traditional banner advertising – therefore pushing ads no longer works.

Mark Brooks, an analyst for OPW.com, says, “Interruption marketing is old school and not appreciated by the younger audience. Marketers wanting to use social networks need to put their thinking caps on and get creative.Case in point: Burger King is sponsoring downloads of episodes of 24. Very cool and very viral and plays to the MySpace demographic perfectly.”

In addition to advertisements and sponsorships, marketers know that the buzz generated on social networks is much more of a powerful endorsement than any form of promotion. In fact word of mouth is widely considered the most powerful form of marketing and the wave of the future for influencing sales. According to a December 2005 McKinsey report, approximately two-thirds of all economic activity in the U.S. is influenced by shared opinions about a product, brand or service.

Forrester Research’s 2004 study showed that over 60 percent of consumers trust product recommendations found in online sources like discussion boards. A 2004 RoperASW report, now part of GfK Group, found that over 90 percent of Americans cite word of mouth as one of the best sources of ideas and information. Further, they rate word of mouth twice as important as advertising or editorial content and put one-and-a-half times more value on it today than they did 25 years ago.

Dave Evans, moderator of the social networking panel at Ad:Tech San Francisco in May and co-founder of Digital Voodoo, along with Dave Ellett, CEO of Powered, examined the purchasing funnel of ACP (awareness, consideration, purchase). They saw that the majority of traditional advertising dollars, such as interruptive efforts like television commercials, is applied at the awareness point in the ACP. But because consumers are increasingly finding ways to block advertising through TiVo, spam filters and do-not-call lists, the impact of these types of traditional advertising has diminished. Now marketers are not only tasked with how to get their messages through to potential customers, but they must also worry that their potential customers are increasingly talking with each other and “comparing notes.”

To counter this problem, Evans says that, “When marketers reach out in the consideration phase, they contact consumers at the precise moments that they are thinking about a product or service. Through consumer-generated media and word of mouth, evangelists can actively impact consideration processes.”

The advantage of social networking for marketers is that it does not involve interrupting like an advertisement (which is in the awareness phase) does.

LEVERAGING SOCIAL NETWORKS

There are a variety of ways marketers are taking advantage of consumer-generated media and word of mouth. Social networks are having an incredible influence on how business is getting done. Organizations, ranging from movie studios to sneaker manufacturers, are changing the way they make decisions, connect with customers and market products because of the increase of new tools that enable people to express themselves more easily online.

“There is a new paradigm where consumers drive the conversation and have the control. Companies have to let go of the marketing speak and let people communicate with each other in an unfettered environment,” Geoff Ramsey, CEO of eMarketer, says.

One opportunity is for marketers to take ideas from social networking sites and apply it to their own business, he says. For example, GlaxoSmithKline is working on a social networking site for the weight loss community that lets users talk with each other and answer each other’s questions about how to lose weight, such as diet and exercise. GlaxoSmithKline is doing it for two reasons:

  1. To gain learning from these affinity groups – marketers can find out a great deal about how this group of people define and express themselves. They can use the language or phrases observed for purchasing keywords for search campaigns. They can apply the learning to sales copy in magazines, radio campaigns or on the Web.
  2. To participate at the site, the visitors must register there and provide some demographic information. Now GlaxoSmithKline has a list of consumers to market to when the weight loss product launches.

By listening in, marketers have an opportunity to hear how people really feel about their brand or product. With such learning, they could correct misperceptions in the marketplace or make effective changes to their products or customer service.

“Until you have demonstrated that you listened and responded accordingly, you cannot deliver hard-core messages to people,” Ramsey says. For this reason, there are many natural language processing companies that can determine what users are saying.

One company, Cymfony, offers a product that follows the flow of the message, tracks the positive and negative reactions to it and measures its influence on the audience. It scans and interprets the voices of users in blogs and social networks to determine how these discussions are impacting potential customers.

Nail points out, “In Web.1.0, the marketers’ job was to appear adjacent to that content but now that users are generating the content and are looking for a social engagement, marketers’ messages need to be part of the content.” To do this, companies need to know what their customers are saying.

Another way that companies can use social networks is to create profiles on the sites. For example, MySpace is currently charging upwards of $50,000 per month for big brands such as Pepsi, Adidas, Dell and Ford to build and promote profiles. Although this seems like something that members would dismiss as sheer commercial promotion – a quick look on MySpace shows that Jack Box, the character behind the Jack in the Box restaurants, has 130,989 friends (meaning that these MySpace members intentionally linked to the Jack Box profile). Of course, MySpace must be careful that selling these types of member profiles does not cause a mass exodus of its members.

Another way that marketers are leveraging user-generated content is by having consumers create their advertisements. The benefits are multifold: It gets consumers involved in the brand; the ads feel more authentic; it saves marketers money because they don’t have to hire an advertising agency; and if the ads are funny or interesting, they propagate themselves by being sent around on platforms such as YouTube.com or GoogleVideo. Companies like Volkswagen and MasterCard have harnessed the affection that some customers have for their specific brand by asking them to create and vote on ads, and created successful campaigns and tremendous buzz in the process.

AFFILIATES GOING SOCIAL

When it comes to testing the waters in burgeoning areas, affiliates are usually eager to dive in headfirst.

Rosalind Gardner has a blog called Net Profits Today, which she updates daily. She says: “I love my blog. They make posting new content to the web such a breeze. No uploading required. Just write and publish. It doesn’t take much to copy and paste a merchant offer and add a few of your own editorial comments. Another advantage is the free search engine traffic that blogs invite. Search engines love fresh content, so I’d highly recommend that any affiliate who isn’t blogging yet, start ASAP! Of course, the best benefit is that blogs are yet another way to enhance the relationship you definitely want to build with your visitors as an affiliate, especially in light of how difficult it is becoming to make sure the mail gets through nowadays.”

One social network specifically for affiliates is the Affiliate Summit Social Network. Consultant Shawn Collins, the Affiliate Summit co-organizer, says the network “helped Affiliate Summit by enabling attendees to network in advance of the conference, as well as to brand themselves through posts to their journals, sharing bookmarks, etc. This value-add assisted us in selling Affiliate Summit, and I think it is conducive to our goal of bringing the community closer together.”

He adds, “Now that the [July] show has ended, I will be focusing on getting more attendees to register after the fact. The ongoing network will benefit them, and we will be using it as a retention tool that ties to our mission of creating a unique educational environment and networking opportunity that facilitates the exchange of information about affiliate marketing.”

Affiliates are also testing the waters of mainstream social networks, such as MySpace. Collins has created a profile on MySpace, with the user name affiliate manager, and posts the content of his blog, AffiliateTip.com, on his MySpace blog. “My goal is to get more eyeballs for my blog. The goal is awareness – to get incremental readers – the ultimate goal is to recruit managers for affiliate programs. The first thing I talk about in my profile is that I am running these two programs and I have banners up to join them – PayLess Shoes and Snapfish.”

One clever affiliate whose social networking site has garnered lots of media in the past six months, including spots on CBS Early Show and Good Morning America, is 23-year-old IT manager Kevin McCormick. Six months ago he started DressKevin.com, a site that is a graphical database of his wardrobe, where users vote on what Kevin should wear on a daily basis and later comment on it. DressKevin.com inspired a second site, MyDrobe.com, a wardrobe management system for users. Both sites keep track of the last time an item of clothing was worn, the size, brand and style details.

On DressKevin.com, the clothes descriptions sometimes include a link to the merchant or affiliate program where it can be purchased – but not for every item. “If affiliate marketing did not exist, I would be providing uncompensated referral links anyway. I am trying to maximize it without comprising the integrity of the site. That is why affiliate marketing works well for me. I have Old Navy shirts on my site and they have links to Old Navy through Commission Junction. But I also have descriptions of my shirts from Hollister and Express with no compensation because I like their shirts.”

He attributes this growth and popularity to the credibility and authenticity of his site. McCormick says he started his site not to make money but to see if it would catch on and people would pass it on to their friends. “I was uninformed about CPC advertising, media, PR, affiliate marketing or even making a website.”

McCormick does not actively seek out affiliate agreements with merchants. He signed up to participate with some retailers such as Old Navy and Macy’s through Commission Junction. He appreciates the convenience that the network offers in terms of finding him appropriate merchants to sign up with, and the tracking and processing of commission paychecks.

McCormick’s other site, MyDrobe.com, offers more opportunity for generating revenue. It is a wardrobe management system that is a database for clothing, and enables users to manage their wardrobe and create a profile as well as enabling people look through other people’s clothes and to see what they are wearing. MyDrobe.com has 4,900 registered members and the demographic is heavily female, with a significant amount of girls between the ages of 13 to 16, followed by a concentration of girls in the 16-to-20 age range.

“Any website that focuses closely on brand-name products like clothing is a great candidate for utilizing affiliate marketing channels that will pay a commission on referral sales. MyDrobe’s clothing descriptions have ‘click here to buy this shirt online now’ for those who see a particular item of clothing that they like in someone else’s wardrobe and would like to buy it for themselves as well,” he says.

The site offers complete product catalogs that are provided by affiliate networks in “vendor showcases,” which are made for a single clothing company. For example, at the vendor showcase at MyDrobe.com/gap, users can browse through clothes currently for sale at Gap. Users can add clothing to a wish list, post comments and provide ratings and click on links that will bring them to Gap.com.

“Product feeds make this possible because MyDrobe will automatically update these vendor profiles based on what is currently for sale, so that my site does not need to continually manually enter new clothing into the site. XML technology makes this easy to implement for both the clothes manufacturer and site operators,” McCormick says.

Another property exploring how much social networks affect e-commerce is the brainchild of Lisa and Brian Sugar in San Francisco. In March 2005, they started a blog devoted to celebrity news called PopSugar and a community developed rapidly around it. By June 2006 they had 4,000 registered users chiming in about Jennifer Aniston’s new YSL bag or Britney’s second pregnancy.

In June 2006, they launched TeamSugar, which offers its readers a service similar to MySpace, providing registered users with their own profile, Web page, blog and the ability to send messages to one another. FabSugar, a fashion blog, launched in July with other sites devoted to topics like technology, home decor, and fitness to come subsequently. Brian Sugar, who previously was the chief Web officer at Bluelight.com and vice president of e-commerce at J.Crew, explains that “eventually, we will have 12 categories that sit on top of your social network which is called TeamSugar.”

Sugar’s goal is to get 100 million page views and 25 million unique users per month from the combined sites that will target trendsetting women between the ages of 18 and 35 and the advertisers that seek to reach them. He points out that, “TechCrunch and MySpace cater to guys, and DailyCandy is about fashion but without the celebrity gossip component. There is a massive crossover between InStyle and RealSimple and Allure and I don’t think the readers are getting served online from social networking and an editorial standpoint.”

FabSugar blogs about style and beauty products; for example, it contains an entry about the flats that Kate Bosworth and Sarah Jessica Parker are wearing, with links to two sites that sell them. Right now the site has text links with no merchant agreements yet but Sugar thinks that, “We definitely will be linking at Sephora and J.Crew. If they offer an affiliate program, we will sign up. If they don’t use affiliate programs, I think we will be able to broker the deals,” he says. “We have always believed that the majority of revenue would be from our advertisers.”

LOTS OF BUZZ

Another site that drives word-of-mouth commerce by leveraging the community aspects of a social network is MyPickList.com. The effort integrates a user’s profile and his or her favorite product recommendations into a networked community.

It works like this: Users create a list of their favorite items from multiple categories, called a pick list. They add the product, choose a preferred merchant for product sale, write a short product review and tag it. Only products that are sold through a retailer in the MyPickList network are eligible for a product commission. Once the pick list is created there are four ways to get a pick list viewed/distributed: Send to a userdefined buddy/email list; RSS feed; a banner ad creation (MyPickList.com badge/widget) that allows users to create custom ads to promote their pick list on websites and blogs and MySpace page; and direct from the MyPickList.com website.

Jeff Eichel, CEO of MyPickList, says it helps users become affiliates “by allowing them to recommend products and services under their MyPickList account. If a product that a user recommends gets purchased from the pick list, that user will earn a commission ranging from 1 percent to 10 percent. Most of these people would never get approved for affiliate programs on their own, but because they are under MyPickList there is no approval needed.”

Another social media platform for affiliates is Affilipedia, which, like Wikipedia.com, uses Wiki software to allow users to contribute articles and edit entries. Novices to experts can submit new information on affiliate marketing as well as edit the existing pages in the affiliate marketing encyclopedia if they disagree with the explanations of affiliate, merchant, commission or other affiliate marketing terms.

This egalitarian collaboration works – Cymfony’s Nail points out “Wiki in general is a collaborative platform and therefore they don’t have [to have] a centralized editorial staff. They are not limited to how much you can afford to pay.”

Although the sharp increase in content presents more prospects, it can be risky to be associated with some of the uncensored and often-critical material of user-generated content.

“You might come to the conclusion that this is not a ‘safe’ environment for advertising your product or service,” says eMarketer’s Ramsey.

If affiliates do decide to invest their time and effort into a specific social network, they should be aware that although members can be loyal to their favorite sites – studies find that users are driven to return often by ever-changing content and membership – audiences (especially young audiences) can be fickle and move on to the next great thing and online marketers need to be ready to move on as well.

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

Performance Powerhouse: Q & A with Steve Denton

Earlier this year Steve Denton was named president of LinkShare, following the resignations of Chairman and CEO Stephen Messer and President and COO Heidi S. Messer, who led LinkShare’s development from its founding in 1996 through its $425 million sale to Rakuten in late 2005. Denton heads up all day-to-day operations including management and continuous development of the talent and processes required to drive LinkShare’s continued growth. Revenue Editor-in-Chief Lisa Picarille spoke with Denton about the cultural, organizational and other big changes that LinkShare is dealing with in order to achieve its goal of becoming a performance marketing powerhouse.

Lisa Picarille: What’s changed since LinkShare became part of Rakuten last year?

Steve Denton: Rakuten USA is the company set up in Boston, and the CEO of Rakuten USA is John Kim and he’s the CEO of LinkShare. LinkShare was the first international acquisition for Rakuten. It’s been great working with John and the entire team at Rakuten, including Hiroshi Mikitani, the CEO. Rakuten is now the sixth-largest Web services companies in the world from a market cap standpoint. And having access to those resources from that organization has been very rewarding and very fulfilling. When there are new products we want to roll out, new markets we want to enter, new geographic footprints that we want to establish, I don’t have to wait for two years to accumulate the capital to do that. I have an owner that has the resources and that’s why we sold the company. We also sold the company because we don’t just compete against affiliate companies. We are in a performance marketing industry – so we are competing against everyone out there that is going for inventory on these publishing or distribution sites.

As far as the way we operate the business, there has been no real change. The financial results roll up into Rakuten. That is obviously a structural change. There’s a new board of directors. But as far as running the day-in-and-day-out business there’s John Kim and myself. We have seven teams’ employees working with counterparts in Japan on integration projects to see where we can find some synergies and some best practices from both organizations. That’s taken a good amount of time and we just looked at the final presentations [in June] and there have been some subtle changes there that you wouldn’t notice externally. We’ve been the beneficiaries of development resources from Japan, which again, Jonathan Levinson, our CTO, came from Rakuten. But as for the nuts and bolts, it’s all about continuing to build on what we have.

LP: What impact has there been for LinkShare since the departure of Steve and Heidi [Messer]?

SD: Clearly anytime the founders that established a business and an industry leave, they are missed. But as an organization we are moving forward. I run the day-to-day business or the customer-facing business. I deal with distribution services, merchant services affiliate support, marketing, product development, client development and search. All of those roll up to me. And beyond the customer-facing – tech, legal, GNA, finance – John Kim manages that.

We’ve been focused on three things since this past February: the leadership transition; strengthening our core offering; and the cultural transition from being a New York-based privately held business to a business unit in a division in a large international media company. That’s been a big transition – culturally, and the leadership change, that’s been a big focus.

The second big thing – strengthening the core offering – not that we had any issues with the core offering and some of the products we announced at the symposium – rolling out Link Locator Direct, which is our first Web services offering. It enables affiliates to have easy access to links, and have them defined in categories: coupons, hot products, logos, general promotion, free shipping and best converting.

We’ve made some changes to our merchandising product. We have a client in beta now for whom we’ve recently categorized the data feeds; so, working with normalization and unification. Synergy Analytics has been in beta for some time. We held the affiliate and merchant advisory boards in San Francisco at the [LinkShare] Summit; we got some great feedback. And working with the development teams, and it’s our intent to take both of those products out of beta by the end of the summer, then run dual reporting for six months as the performance testing and get the feedback from the users. It’s been in beta a long time but that’s because it’s a product that’s going to change and revolutionize the way we do things here at LinkShare and send information to our partners. That’s been a big focus.

LP: What changes have you made at LinkShare since being appointed president?

SD: Lead generation, ad networks, AdSense itself and shopping comparison, performance- based and what used to be known as affiliate marketing deals have all evolved. I think that we need to embrace that and find a way to be inclusionary with that, rather than just watching it grow up around you.

People ask me if the affiliate marketing industry is slow – no. I don’t define affiliate marketing as just what I do; I look at performance marketing. Anytime you are paying a third-party website a commission for some sort of thing that is a measurable and definable event – applications, sales, subscription – that’s inventory that a company like LinkShare should be going after. Because we’ve got great merchants, and we’ve got great distribution partners. That’s inventory we should be going after.

LP: What are some of the initiatives LinkShare has planned over the next 12 months?

SD: It’s been a busy four months: leadership transition, cultural changes, integration with Rakuten. The Synergy Analytic product – getting it out of beta is just step one, but then refining that product and taking the feedback from users and enhancing that product over the next six months and beyond is key for us. The work we’ve been doing on the merchandising data feeds and expanding that out. Taking this new locator direct and expanding our Web services offering in new ways of distribution of links is critical. Then we’ll be in the middle of back-to-school, then right into fourth quarter, and that’s not a time to roll out new products. So, our road map is fairly well-defined, with some of the exciting things we did last year and with Athena and enhancements we’ve been making to that – the affiliate analytics and the changes to that. It’s been busy. And launching U.K., that road map is fairly well-defined. And at the end of the day it puts us in a space where we can make LinkShare a safer, more reliable and more profitable place to do business on the Web. We’re focused on the right things.

LP: Is the reign of the “Big Three” (CJ, LinkShare and Performics) over?

SD: When you talk about the big three, I think Yahoo, Google and Rakuten, and we’re all going to be just fine.

LP: Interesting that you don’t count Microsoft in there at all.

SD: I do, but you said three, not four. I think Microsoft all the time. I spend a lot of time thinking about Microsoft. I spend a lot of time thinking about Yahoo. I spend a lot of time thinking about Google. And eBay. And Amazon. And ValueClick. That’s what changed. Because all those folks are in my game. They all have performance- based products – they are called different things. They look different, but they’re all in this space. It’s just not LinkShare against CJ and Performics. We are competing against well-funded big organizations with many assets. What you need to talk to your clients about is, How can I help you with your performance- based needs?

LP: But many of the big three you talk about have mainstream mindshare. What is LinkShare going to do to establish itself among those players?

SD: LinkShare is a B-to-B company – not a customer-facing brand. Although Rakuten is a customer-facing company in Japan. As a B-to-B, we need to stay focused on executing where we are. It’s new markets, new product and new ways to monetize. As we move forward there are lots of other areas we can make headway in. Like mobile. That’s an area in which we are very successful at LinkShare in Japan. We have a significant amount of transactions through mobile devices. As new platforms become available for us to work with, that’s an area where we can do really well.

However, the affiliate terminology limits us. I would submit that LinkShare brought affiliate marketing mainstream. We are recognized as the pioneer in affiliate marketing. When you are the leader in any space, it’s great; people look to you for your thought leadership but you can get pigeonholed as well. The difference between lead generation and ad networks and AdSense is those are affiliate sites, but just the way you compensate them and contractually the way that the relationship is set up may be different, but at the end of the day a third-party website is getting paid to drive a commissionable action to your site. And who manages that salesforce for you – that’s where the differentiation lies. So, if an ad network is managing that salesforce for you and they’re taking a financial risk and they’re putting their money to work and they are working on a spread – then that is called an ad network. If Google is doing it and they’re sharing a percentage of it – that’s called AdSense. But yeah, it’s jargon. But the bottom line is websites are getting paid commissions to drive commissionable and measurable events.

We need to stay focused on providing our clients with new ways to engage with their customers, new ways to monetize those engagements and expanding that global footprint.

LP: How are you doing that?

SD: We are opening our LinkShare U.K. office [on July 1, 2006]. We have space over there and we are staffing it up. We’ve got people on the ground. We already had the LinkShare U.K. network, but we’re putting people on the ground there and aggressively going after that marketplace now. There will be five to seven people to start out. Mostly customer-facing – sales, service, distribution, affiliate support, things like that. I’m really excited about that. That’s the resources of Rakuten. I can make the commitment to do that and aggressively go after that market. Our clients expect that from us, being part of a global company.

LP: Give me an idea of what you think the performance marketing space will look like in three years.

SD: From a LinkShare standpoint, we’ll reflect the needs of our customers, we’ll help them grow their business cost-effectively by acquiring new customers at a fair price or on a pay-for-performance basis. We’ll introduce new products, new channels of distribution and new marketing. International expansion is key in this space. New tools, Web services.

The performance space in the next three years. Let’s take a look back three years. Search has transformed this landscape. And that was very new three years ago. I imagine there will continue to be transformations like that in the future. The key with LinkShare is to remain flexible enough to ensure that we can offer our customers any new performance-based marketing tactic.

We do that today, but need to remain flexible to continue to give them insight to the ROI – whether it’s a click to a sale, or subscription or pay per call or mobile.

As our merchants find new ways to monetize and exchange with their customers we need to be there – one dashboard – to provide that feedback. I think the methods are going to vary but LinkShare’s core value proposition will not. The performance marketing space will still exist – it will experience robust growth as we see today, continue to grow. The performance-based marketing industry outpaces the growth of e-commerce. That’s where we need to stay focused: on this platform that can track all of that and provide the markets and the channels that our clients need to get there. I think it’s a two-pronged approach – platforms and channels.

eBay: What’s in Store

Describing eBay as a commerce website is like saying Elvis was a singer. The 11-year-old company that began as a virtual flea market similarly has become an international phenomenon, spurring the creation of cottage industries and sustaining thousands of small businesses.

And despite being one of the Internet’s forebears, the company is in many aspects just getting started. As eBay grows, so will the myriad of obvious and less-apparent methods that marketers can use to profit in, around and through eBay.

By economic standards, eBay is a medium- sized country. In 2005, the value of the sales through its marketplace ($44 billion) and financial transactions through its PayPal service ($27.5 billion) together were slightly more than the gross domestic product of Belarus, an Eastern European nation of 10.2 million people.

The eBay network includes much more than online auctions, encompassing vertical marketplaces (Motors, Rent.com), fixed-costs sites (Express and Stores) shopping sites (Half.com, Shopping.com), as well as a telephony company (Skype) and PayPal.

The San Jose, California, company’s revenues continue to grow at an unusually high rate for a mature company, jumping by 35 percent during the first quarter of 2006. “eBay has its own weather pattern,” analyst Greg Sterling of Sterling Market Intelligence, says. In addition to the many people who make a living selling goods on eBay, Sterling says the rapidly growing eBay economy also impacts “off-line eBay enablers, including packaging and shipping companies.”

INSIDE INFORMATION

While the auction service is eBay’s signature sales venue, it is only a fraction of the revenue opportunities available to marketers, many of which do not require selling goods. Publishers are leveraging the site’s considerable traffic to complement or as a portal to their own websites.

The eBay audience of active purchasers grew to 75.4 million users in the first quarter of 2006, up 25 percent from the previous year. The same strategies used to attract consumers on the greater Web, including search marketing, optimization and email advertising, can be used to capture traffic within the eBay universe, according to eBay Power Seller Skip McGrath.

“A lot of people use [eBay] as a marketing gateway, to market to them later,” says McGrath, who is the author of seven books on the company including “Titanium eBay, A Tactical Guide to Becoming a Millionaire Powerseller.”

Even if consumers don’t make a purchase, publishers can still profit by linking to their sites from within eBay, according to McGrath. “A substantial amount of people make more money from the advertising on their own sites through traffic from eBay than from actual [auction] sales,” he says. “I get 2,000 to 3,000 visitors per month just from people clicking through from eBay,” he says.

Publishers must be careful in promoting external sites, as eBay will ban anyone who violates the company’s linking guidelines, according to McGrath. For example, only the “About Me” page of an eBay Store can contain external links, and those must be at the bottom of the page. But McGrath has commandeered substantial traffic by including the URL of his business in the image he created for his About Me page, which he says is okay by eBay rules.

Maintaining an eBay Store not only provides the possibility of selling items for fixed prices, it also enables sellers to advertise to eBay’s massive audience. The company has one of the largest inventories of advertising positions to sell, as it is ranked as the fifth-most-trafficked website, according to comScore Media Metrix. In May of 2006, 77 million people visited the site, or 60 percent more than Amazon.com

eBay sellers can promote their wares by purchasing keywords on the site, but the ads can only link to eBay Stores. eBay Stores are promoted through Google’s Froogle shopping engine, and eBay spends about $250 million per year advertising with Google’s AdSense program to increase traffic, according to analyst Sterling.

eBay offers an email marketing program for contacting registered users. Power Seller McGrath says he increased the traffic to his website by including links in a newsletter that has 35,000 subscribers. “It’s a great platform to reach international markets, as it is hard to promote a website overseas [through search marketing],” McGrath says.

Marketers looking to improve the performance of their products on eBay or to identify the valuable keywords to promote in search marketing can license data from the company, says Greg Isaacs, the manager of eBay’s developer program. Publishers “can determine fair market value of items that are for sale” by analyzing data about sales at a fixed price versus at auction, Isaacs says, but eBay does not license personal data about its registered users.

To capitalize on the potential of the wildly popular social networking phenomenon, eBay recently launched two of its own Web 2.0 services. During the eBay Live users conference in June, the company unveiled Member Blogs, which enables members to promote their products and stores. Bloggers can expand their social network through posts in which they are not restricted from promoting and linking to their websites. The company automatically creates RSS feeds of the blogs to facilitate syndication and continually update readers.

Also announced at eBay Live was the eBay Wiki, a user-created encyclopedia of insider marketing tips and best practices for participating in the eBay economy, which publishers can use to showcase their marketing savvy.

“The next level [for eBay promotions] will be social commerce,” says Robb Hecht, a business blogger who publishes the Media 2.0 site. He says getting the blogosphere to build a community around the company and its products will be an important factor in maintaining eBay’s growth.

In addition to promoting themselves within the eBay cloister, marketers have a plethora of opportunities to generate revenue by promoting eBay commerce throughout the Web. Through advertising, integrating eBay listings and affiliates, marketers are spreading the gospel according to eBay and earning commissions.

An advertising system under development by eBay will enable publishers to generate commissions by referring users. AdContext, which competes with Google’s AdSense, searches the content of a Web page and automatically generates links to relevant eBay categories.

“Contextual advertising allows us to leverage content on any website, and connect it with any transaction [on our site],” says Lily Shen, a senior manager who oversees eBay’s affiliate program. Or, publishers can manually match their content with eBay keywords using software available to eBay affiliates.

Affiliates interested in AdContext sign up through network partner Commission Junction, according to Shen, who says affiliates are prohibited from using AdContext to link to their own eBay Stores. Commission payouts are tiered based both on the volume of new eBay users referred and the dollar amount of the winning bids that referring consumers make, says Shen. While referrals to eBay Marketplaces (including eBay Motors and eBay Express) are aggregated toward reaching the tiered goals, affiliate referrals to other eBay companies (such as PayPal, Half.com or Shopping.com) are not, Shen says.

Affiliates who promote other eBay companies receive separate revenue and traffic reports and must sign up for each program individually as every eBay property has its own commission structure, according to Lisa Riolo, senior vice president of business development at Commission Junction. Riolo says the addition of AdContext could help eBay to reach new publishers, although “there aren’t too many publishers who aren’t aware of eBay.”

Would-be publishers looking to create their own Web identity can use an eBay commerce and content tool. ProStores.com is an eBay subsidiary that offers an email marketing system for sending permission-based newsletters and promotions.

BUY DON’T BUILD

While eBay provides an extensive list of application programming interfaces (APIs) that publishers can access to integrate content into their websites, a growing number of third-party programs provide the shortest route to assimilating with eBay. The roster of eBay’s developers doubled last year to 30,000, according to eBay’s Isaacs. Applications developed by independent programmers generated 25 percent of the listings on eBay, he says.

Specialty retailers can boost their inventory by incorporating eBay Marketplace listings into their stores. For example, by customizing an eBay API, ticket reseller FatLens.com displays eBay items alongside tickets from other vendors, says president Siva Kumar.

While Amazon.com has more mature software, eBay’s technology is straightforward to use, and Kumar is impressed with the quality of the listings. “eBay has many long tail items like Civil War uniforms, things you can’t find in a regular store,” he says.

Advertising company Scope Aware recently introduced SmartyAds, a program for companies that want to participate in search engine marketing with the leading engines but do not want to manage multiple programs. Scope Aware acts as an agent, managing the campaigns for marketing eBay Auctions, eBay Store, and eBay Express listings across MSN, Google, Yahoo and Ask.com, according to founder Ali Gungor.

Scope Aware’s software “automatically analyzes goods for sales and comes up with the keywords to buy,” says Gungor, who charges a setup fee and percentage of the value of the goods sold. SmartyAds creates the ad copy and suggests the language for landing pages, Gungor says. By acting as an agent and negotiating with the search engines, Scope Aware enables small advertisers to participate in paid search dominated by large companies, he says.

Even though eBay’s commerce business is more mature than search, the company and its partners continue to develop new services for marketing and selling products. But maintaining that growth in the face of competition from Google, which is just beginning to exploit commerce, and Amazon, which is adding content to its retail properties, will be a challenge according to analyst Sterling. “It’s unclear how broadly eBay can expand.”

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.