Growing in an Unhealthy Climate

Economists, politicians and media types are no longer arguing whether or not the economy is in a recession. Instead most are debating how long it will last.

If recent trends continue, the prognosis is relatively dismal for real estate values, gas prices and the unemployment rate. And as corporations and consumers grow frugal, cutbacks in advertising threaten the vitality of everything from cable operators to newspapers. Internet analysts, wondering about the ripple effect on the industry, offer a variety of opinions. While some think a recession would not have any affect on online advertising and marketing, others feel that it could have a significant impact – negative or positive – on the sector.

Slashed traditional advertising budgets are already apparent. TNS Media Intelligence found that ad spending in the fourth quarter of 2007 declined .1 percent from the fourth quarter of 2006.

But a Direct Marketing Association’s Quarterly Business Review survey in the fourth quarter of 2007 uncovered good news for online marketers: 50 percent said they would increase email marketing, 44 percent would increase database segmentation and 35 percent would increase spending on search engine optimization in 2008. And PQ Media found that spending on alternative media such as social networks, lead generation advertising and consumer-generated media is expected to grow by 20.2 percent in 2008 to $88.24 billion.

These findings reflect a long held belief that there will be a shift of marketing dollars from traditional media to the Web. Some believe this move would protect online companies from feeling the effects of a recession. Standard & Poor’s Internet analyst Andy Liu noted at the company’s 2008 Media Summit that he expects online ad revenues to grow by 20 percent this year – recession or not.

However, not all indicators (or analysts) are so bullish. In March, market researcher eMarketer lowered its estimates for U.S. online advertising market by nearly $2 billion, predicting that it will grow $25.8 billion, as opposed to $27.5 billion, in 2008.

Ability to Measure

Advertisers are shifting online to not only reach their audience, but because Internet advertising costs less and is trackable. Founder of Seer Interactive, Wil Reynolds, predicts a trend where any medium that offers less tracking will lose dollars to areas that offer more accountable results. Effectiveness can be measured by clicks, impressions, registrations and purchases, which are very attractive to bean-counting advertisers.

Brad Waller, vice president of business and affiliate development for AdJungle.com, points out that General Motors, the country’s third largest advertiser, announced it is shifting half of its $3 billion budget into digital and one-to-one marketing within the next three years. He claims this is the beginning of things to come, noting that the market online is growing faster than any other spend.

Founder of FatWallet.com, Tim Storm, says online advertising can be measured but offline initiatives, like direct mail, can’t be tracked. Online campaigns offer ROI down to the penny – so advertisers don’t wonder where their budgets were spent.

Paying for Performance

Even more appealing during belt-tightening days is performance marketing, where advertisers only have to pay when there is an action that is commissionable or measurable. Storm says he thinks there will be a shift of spending toward performance marketing, as opposed to advertising on a CPM basis. He doesn’t think Internet advertising will be affected by the recession as long as advertisers don’t look at the spending as a budgeted line item – which tips the scales in favor of performance marketing.

Online marketing consultant Sam Harrelson agrees that CPM big budget ad buys will suffer in 2008 and performance marketing will continue to increase its reach, effectiveness and popularity.

In fact, the Interactive Advertising Bureau statistics for the first half of 2007 indicate that "CPM deals" were replaced by "performance deals" as the leading pricing model for Internet advertising. In 2006, CPM deals comprised 48 percent of the overall total while performance deals (such as CPA) were at 46 percent. However, in 2007, performance deals made up 50 percent of deals while CPM fell to 45 percent.

There is evidence that performance marketing initiatives such as paid search are becoming more popular. OneUpWeb.com found that 48 percent of all U.S. online advertising spending in 2007 went toward paid search, and predictions are even higher for 2008.

Paid Search

Although paid search is considered more resistant to cuts than other advertising because it’s performance based, some think it is not immune to decreased spending. Advertisers could reason that people are less likely to surf the Internet for potential purchases during an economic downturn.

In March, comScore, the Internet ratings firm, reported that Google’s paid clicks fell .3 percent between January 2007 and January 2008, even as the number of searches rose 40 percent in the same period. As recently as April, Google’s ad clicks were rising at a 60 percent clip.

The industry panicked that Google, considered a bellwether for the overall sector, was being affected by the cyclical economic forces of the overall market.

It’s possible that Google is tightening the reins on clicks to combat click fraud and generate better clicks in general. And Hitwise found that the percentage of traffic going from Google to retail shopping sites is actually increasing. Since the bulk of paid search advertising is shopping related, the Hitwise data draws a different conclusion than the comScore data.

But cost per click has its challenges – there continues to be big inflation numbers. As more folks jump in, the costs get higher.

It’s possible that there won’t be less activity in paid search but there might be less money spent on bids. Seer Interactive’s Reynolds offers an example: the same number of marketers could bid on a term like "mortgage" but spend less money doing it. So if in the past a marketer paid $1,000 for 10 leads that convert, today that $1,000 dollars would only buy five leads.

Reynolds doesn’t believe this will cause marketers to abandon paid search, but thinks it could cause them to lower their bid to spend $750 for those five bids – reasoning that "smart marketers always will spend up until they max out their ROI." Interestingly enough, Reynolds says the saved $250 isn’t likely to go to buy radio or display ads. From what he has seen, people looking to rein in their paid search move into SEO as their next step.

Reynolds has seen shopping and e-commerce people moving from paid to SEO – and believes the affiliate space might have a good fallout as well because the closer a marketing channel is tied to results, the easier it will be for managers to get funding for it.

Survival of the Fittest

Google has boomed over the past few years because of search engine marketing – so it is possible that search engines will fare well during an economic downturn if paid search continues to be popular. Yahoo, Google, MSN and AOL have worked to become one-stop shops for advertisers by building up ad networks with targeting and tracking capabilities. David Hallerman, eMarketer senior analyst, notes that when "the portal is both destination and network, perhaps advertisers can get all they need without straying – at least that’s what the Big Four hope for."

Many niche sites have flourished while they get better at improving targeting to meet the needs of their clients. Reynolds says that vertical sites, if they can show ROI for marketers (even with less traffic) will start to get dollars if markets like Google become to expensive to play in.

Specific verticals that offer people a way out of a bad situation such as employment sites, job training sites, and mortgage refinance loans and debt consolidation sites like LowerMyBills, could become more in demand. Also well positioned are sites that offer people efficiencies in a weak economy such as comparison shopping engines and coupon sites.

FatWallet’s Storm believes that coupon sites could fare well this year – he points out that some of FatWallet’s best years were during the last downturn of 2001 and 2002. When the economy is in a slump, people gravitate towards being more cost conscious. For example, Storm has read reports that the craft industry does well because people make their own quilts – it is both entertainment and fulfills a need.

So far this year, Storm has not noticed any spending shifts – booms or drop offs – for FatWallet. Electronics and technology continue to be FatWallet’s strong categories as do other categories like Health & Beauty and eBay.

Insurance is another sector well positioned to weather an economic storm. Jon Kelly, president of SureHits, an ad network for insurance and loans, thinks it could increase because consumers are adopting the Internet as a primary means of buying insurance. Even technology laggards, who in the past surfed the Internet to find the best quote but picked up the phone to complete the transaction, are purchasing through e-commerce.

Another reason for Kelly’s bullish prognosis: "When the economy turns rough, people start looking for the best deals on insurance and they turn to the Web to do it." Kelly explains that auto and home insurance look particularly strong over the next few years because consumer demand for them does not drop in a recession – car insurance is mandated by law and home insurance is mandated by mortgage companies.

Kelly predicts that there will be increased Internet spending by insurance companies as the battleground for customers moves online. He thinks the areas where they will increase spending are paid search and affiliate and ad networks with a strong vertical focus like IndustryBrains, Quigo and SureHits Ad Network.

AdJungle’s Waller has seen record growth on its classifieds site, EPage – with 30 percent growth in revenue with January 2008 over January 2007 and an increase in the average revenue per user. He has seen growth in areas that want to get rid of excess inventory and says that in a tight market, people buy more items used than new. Listings for home-based businesses that offer ways to earn extra income are popular – like "how to make money from your laptop."

EPage makes money from advertisers paying for more exposure, as opposed to getting a cut of the purchase price. Advertisers pay to have their ad ranked higher on the page – when advertisers have success; they are willing to pay more.

Conventional wisdom would suggest that real estate would be hard hit in a recession. But Michael Stark, the founder and president of PostYourProperty.com, says that just because the housing market is tanking doesn’t mean there will be a negative effect on the online real estate vertical.

His real estate sites focus on the for-sale-by-owner (FSBO) market, which accounts for approximately 15 percent of U.S. real estate and says that traffic to his sites continues to grow despite the recession because of the focus on enabling the "do it yourself " FSBO movement. In fact, the crumbling prices, slow sales and a credit crunch in 2008 will make the FSBO option attractive to an increasing number of buyers and sellers.

Foreclosures are good for Stark’s sites because more postings mean more inventory, which means more advertising for his sites. Advertisers on Stark’s sites include people trying to sell their house, brokers, agents and lenders looking for new business.

Waller says that lead generation companies like Epic Advertising (formerly Azoogle), XY7, CPA Empire and Leadpiles could do well because people are buying and selling leads for real estate.

Performance marketers should feel confident that their industry is well positioned to weather a recession although things could get a bit tougher. Affiliates might get scrutinized more heavily – marketers don’t want to pay affiliate commissions if they find evidence that a paid search campaign created the sale. "Many marketers are estimating the ‘influence’ of their affiliates and zeroing out commission when other marketing campaigns are involved," Lee Gientke writes on ReveNews.com.

Some industry watchers say that marketing will move more in-house as knowledge of how to do search or affiliate marketing continues to spread out into wider communities instead of just specialized networks or agencies.

.mobi for All

Neil Michel bought .mobi top-level domains as soon as they were available without consulting his bosses. As eMedia Director of Prosper magazine in Sacramento, Calif., he saw it as his duty to claim ownership of the mobile domain names before anyone else could capitalize on the company’s brand name. He managed to snag ProsperMag.mobi and ProsperMagazine.mobi but not Prosper.mobi.

“At the time I registered them, no one knew .mobi existed,” Michel said. “I just did it and told [my bosses] we did.” The .mobi names went on sale on September 26, 2006, but only recently has awareness of the top-level domains become more pervasive. But even as the domains are being registered, there is still some doubt about their relevancy in an iPhone world where the full Web-browsing experience is finally coming to the cell phone.

The .mobi (also known as dotMobi) company is the informal name of the mTLD Top Level Domain firm appointed and approved by the Internet Corporation for Assigned Names and Numbers (ICANN) and is backed by mobile operators, Internet companies and device makers with investment by companies such as Ericsson, Google, GSM Association, Hutchison, Microsoft, Nokia, Orascom Telecom, Samsung, Syniverse, T-Mobile, Telefonica Moviles, TIM, Visa and Vodaphone.

While the idea for .mobi domains was a Nokia brainstorm that dates back to 2000, it wasn’t until March 2004 that 10 companies signed on to a .mobi consortium. In July 2005, ICANN approved the top-level domain and in May 2006, select big brand companies were invited to buy their domains before this was open to the general public.

A typical .mobi website is supposed to be formatted for easy display on a mobile phone. That means, in most cases, simple text, few if any graphics and content that is in an easy-to-read summary form. Ads can be placed in a .mobi environment – sometimes as a page before the content, sometimes placed between pages of content. More image-friendly banner ads for .mobi can be employed, as advertisers CNET, The Disney Channel, Zagat and the wildly popular “High School Musical” have done.

Michel says that buying the domains is “nothing – developing it is another story.” And that seems to be the hang-up right now with the .mobi explosion. While around 700,000 .mobi names have been registered so far, people like Michel are developing them for a very slow rollout. In the case of Prosper magazine, the publication in the last year redesigned its print magazine and its website and went through a hiring spurt before they could even think about their .mobi properties.

Finding Mobile Footing

Their .mobi dilemma is a case study in grappling with a .mobi strategy that fits in with a company’s overall business plan and vision of what they want to deliver to their customers versus what can be monetized over .mobi. “The game is changing under our feet,” Michel says, “because of the new more realistic browser experiences coming from the iPhone and others like it.” He wonders if the iPhone will allow them to do something in a more traditional Web browser environment, or if it would be better to cater to the 200 million handsets in America that may have limited browser capabilities.

Since Prosper is a regional magazine aimed at the Sacramento Valley area at large, Michel wonders what will be valuable to that audience in a mobile environment. It won’t be a 2,000-word article, he says. Plus, Prosper’s main website has a lot of video on it. “In a handheld, the video is a joke,” he says. “We can’t put our video into the .mobi domain.” In terms of mobile advertising, they are focusing on the mobile ad banner for now. “Until advertisers themselves have a .mobi strategy, we don’t have anything.”

Some mobile commerce networks are glad .mobi is around but don’t see a huge impact on their business yet. Dan Wright, CEO of mobile commerce portal mPoria, sees visibility gaining. “If the retailer sees value in .mobi and the customers do, then it does impact our business,” Wright says. He adds that “a good portion of our merchants are using .mobi. If they ask us if they should use it, we say it certainly is good to have. At least you can be found on mobile.”

Wright says that right now mPoria powers m-commerce sites on the mobile Web to help them sell their stuff. They provide the front end and the back end and the hosting for the sites. Medio is their mobile advertising partner. Wright says mPoria has seen 300 percent growth quarter-over-quarter using their current model, and that if .mobi helps their merchants’ marketing, “then that’s good for us.”

On the software side, some companies are still trying to decide what the mobile customer prefers. GoWare, makers of custom software for mobile publishers, perceives a disconnect. Jason Thibeault, CTO and co-founder of GoWare, says that “among mobile software providers that are dedicated to the mobile Web, there is a big disconnect. There are a lot of different Webs right now. The desktop user is very comfortable but the mobile Web user wants quick, efficient access [to content].”

He says that while .mobi is still in its infancy, GoWare is doing its best to integrate coupons and ads into a .mobi platform. “We are getting the targeted marketing messages to your mobile phone,” he notes. Yahoo, he says, is just serving banner ads. He wonders, who wants a banner ad in a .mobi environment? Thibeault believes .mobi is not visible enough right now. “The content sites are not sure they want to commit the research – not to the .mobi bandwagon right now.” He says he knows a lot of sites that are using their main top-level domain to serve up their mobile websites and not conforming to the simplicity of presentation the .mobi Web would seem to promise.

The folks at .mobi itself are proactive in their quest to put a spotlight on the possibilities of the domain. James Pearce, VP of technology at .mobi, thinks that as far as Web relevance, .mobi prevails even now. “A lot of people are not brave enough to type in an arbitrary dot-com Web address because the content will be irrelevant to them when they’re out and about with their phone.” He’s convinced .mobi will be automatically relevant and faster no matter what kind of browser your phone has. His current mission is to make .mobi part of the “consumer vernacular,” because he admits to a certain chicken-and-egg conundrum at the moment where content needs to be built out ahead of the platform but marketing it will be needed too.

Going Mobile

Mobile ad networks such as start-up AdMob are seeing tremendous growth without customizing for .mobi. They showed more than 1 billion mobile ads in just 28 days last summer. Companies such as AOL and Microsoft are acquiring mobile ad companies to add to their offerings. Microsoft is also expanding its mobile search efforts in a partnership with Sprint to allow easier Web searches on mobile phones.

And while developing for the .mobi experience on phones has been seen as a complex ordeal, executives at .mobi have also been proactive in quashing rumors about the new domain. Various blogs have dismissed .mobi as nothing more than a way for .mobi investors to get more money. The rebuttal: Investors are building out platforms and tools but it all takes time because huge companies such as Google don’t turn their product life cycles on a dime, and many initiatives inside these big companies are pretty confidential until launched. New tools are available at the dev.mobi site and they are pushing their mobile phone database and a content directory.

Others complain that .mobi is not releasing their premium brand and generic names to buyers yet so they can drive up the prices. In fact, the first load of premium names went on sale in September and the schedule was always to sell those names on the one-year anniversary of .mobi in bursts from September to January 2008. Some have said that waiting too long to auction those names has hurt the .mobi market, but executives at .mobi state that they always had the “long-term view” in mind, and essentially waited for the good content-making tools to be released. In fact, Google recently announced the launch of AdSense for Mobile, a campaign to encourage ad placement for sites designed specifically for mobile phones. Yahoo and AOL Time Warner have similar mobile- centric ad networks.

As far as the criticism that too many .mobi sites are still dark, it is true that parking pages are out there (the ProsperMag. mobi page is still unfilled), with about half of the .mobi registered names still not hooked up to DNS servers, but real sites are coming live every day. The .mobi people say they also provide free tools to help content get live as easily as possible. They say that there are about 5 million pages indexed on Google with .mobi addresses. They add that big brands such as ESPN, BMW, BusinessWeek, Amtrak, AAA and Fox News, to name just a few, all have .mobi presences.

.mobi’s Pearce indicates that with the high profile of the iPhone, the realities of surfing the Web on your phone look more attractive. But he cautions that it’s the diversity of handsets that is holding developers back. And while the iPhone’s browser is a full browser, the network is slow and won’t get any faster until sometime later in 2008 when the phone is likely to be 3G-ready. Yet the idea of a “cool” Web experience on your phone is largely due to Apple’s product. And while Apple sold 1 million iPhones in its first three months of selling, that’s still a far cry from the 200 million-plus handsets in use in the U.S.

Some detractors have also stated that the need for .mobi is completely unnecessary because sites can detect whether a Web page is being called by a phone (and in some cases what brand of phone), and serve up a more mobile-friendly dotcom landing page especially designed for handsets. The folks at .mobi argue that if dot-com domains fulfilled every surfer’s demands there wouldn’t be any need for .org, .it, .de, .fr or .biz.

For those in a quandary over whether to .mobi or not to .mobi, there is a .mobi Advisory Group that is independent of .mobi the company – financially and agenda-wise. The group gathers feedback and suggests initiatives to .mobi developers. Currently they are looking at such issues as mobile advertising, PPC, mobile commerce, browsing, mobile email and the mobile Net for developing countries.

Pearce says that since operators are beginning to flatten their tariffs and open out the access, the stage is set for the “culture, sites and services” over .mobi to explode. “We’ll look back on this as the time the mobile Web found its feet, like in 1997 when flat tariffs enticed a mass of content onto the fixed Web.”

In the meantime, Prosper magazine’s Michel has until December to ready a .mobi site to be part of an Apple demo, and appreciates the deadline pressure.

Kim Rowley: The Marketing Mama

Rowley is a successful affiliate marketer who runs 50 websites and also has her hands full raising four kids. Still, she found time to design her own house from the ground up and manages to shuttle between Nebraska and Denver to see her boyfriend every other weekend.

She has an easygoing manner, and carries the enthusiasm of someone just a few years out of high school even though she’s 34 and has been through a tumultuous seven years, which included a divorce.

Rowley says she didn’t have the best of childhoods. Her parents were also divorced. At the time it was scandalous for the tiny town of Pierce, Neb., (population about 1,700), which she describes as “very fl at.” She graduated in a class of 50 and she says that living in a very small town has its good aspects and bad. Her plan was to leave as soon as possible. She wanted to become a commercial artist, maybe make TV commercials, maybe light out on the promise of a track scholarship. But then at 17 years old, she got pregnant, subsequently married and stayed in Pierce.

Her oldest son, Taylor, is now 16. She has twin daughters, Macy and Mallory – who were preemies weighing 2 pounds each at birth – are 13. Her youngest son, Tatym, is 4. Taylor and Macy have been diagnosed with obsessive-compulsive disorder (OCD), something they inherited from their father, says Rowley. It makes for a busy household and Rowley says driving them more than two hours away to the doctor in Omaha can be trying. While OCD can be controlled with medicine, Rowley says she still gets great pleasure from raising her kids and designed a nice “bonus room” in her new house where her daughter can “rock her head,” her way of making sense of the day. The oldest can drive the younger ones to summer sports activities now and Rowley’s sister often helps out.

She says she feels more stable without her ex-husband, who she said liked to spend money a bit too much. “He basically remarried soon after our divorce was final,” she says. She learned his “mood swings” were OCD after the kids were diagnosed. He was a pilot by hobby and the plane she bought him went with him when he faded from town.

She says she’s the talk of the town, but not because people are peeking over the fence at her private life. In the time she’s been an affiliate marketer, she designed from scratch and built a brand new 4,000-square-foot house on what the neighbors call “snob hill.” She drew out the design on graph paper and turned it over to contractors to come up with a budget and then construct the home. She says she wants to do it again because there were so many things she wants to improve on already. While she designed an office for herself, she realizes now that it isn’t big enough because that’s where everyone tends to congregate.

A DIY Attitude

This speaks to her do-it-yourself attitude in nearly everything she does. In the beginning of her affiliate career she knew nothing of online marketing. One night in one of her first experiences with the Internet she typed “html” into Yahoo and, bam, a whole new world opened up. She taught herself HTML when she was a physician’s assistant in the local doctor’s office. She chased a college degree in business administration at night and completed it after nine years. Her first site was on Tripod.

PreemieTwins.com was her first affiliate site. As an avid coupon clipper, she started with coupons on her own sites and then realized she could actually get paid for doing it. At first, she says, it was still a hobby while working at the doctor’s office. Then in 1999 she started getting checks. Since 2001, she has supported herself solely off her affiliate sites. One of her first programs was with Staples, who at the time was with Be-Free. She thought it was win-win because customers get the savings and she gets the commissions. From there she signed up for a whole bunch – Amazon.com, LinkShare’s More.com drugstore and others. Now-defunct e-currency site Flooz.com once named her “best affiliate.”

Now some of her sites include AllBabyDeals.com, CoffeeAffiliate-Blog.com, EnterOnlineSweeps.com, FreeCameraPrints.com, Florist-Village.com, FreePregnancyCalculator.com, OneDayOnlyDeals.com, RxSaver.net, TopLineWatches.com and WorkInMyPajamas.com. She founded Shoeaholics Anonymous and launched a deal site at House- ForKim.com when she was building her new house.

Most of her sites are blogs, with frequent updates written by Rowley and her two aunts. Her older son chips in by swapping coupon codes and adding links to her ShoppingBookmarks.com. She’s trying to get him to learn to code in PHP so he can teach it to her. She says he is more technically inclined and wants to design computer games eventually. She’d like to get her boyfriend to work for her as well. She says she always has fresh ideas for new things and keeps a pen and paper by her bed to jot down brainstorms in the middle of the night, like an idea for a blog or a new domain name.

Blogging and the Personal Touch

If you go to any of her sites, the blogs are breezy and conversational. There is certainly no hard-sell here and that’s probably why she sees the traffic she does. A typical ShoppingBookmarks.com blog entry goes something like: “On Sunday, I wanted to go to Sam’s Club in Sioux City to stock up on some staple items (you know, lasagna, pizza pockets, crab rangoons), so asked my sister if she wanted to ride along. Sure, as she wanted to go shopping at the mall for some clothes.

My oh my, did she dink around at every store. I did buy a few tops at Deb’s to wear to Miami next month, but I mostly sat around and waited for her.”

Her personal touch includes posting a photo of herself every Friday wearing a different T-shirt she got for free. She’s just as likely to detail the pregnancy progress of her cousin’s twins or tell you what she found when she Googled one of her favorite authors. Blogs on Eva Longoria’s flip-flops come to her as easily as the need to quote the words to Reba McEntire songs on her PreemieTwins.com blog. She’ll chronicle exactly what novels she reads, having recently discovered the joy of reading. “I was not a reader at all. I never even made it to the end of a newspaper article.” Now she reads what she calls “chick flick” books – Match Me If You Can; 4 Blondes; Mine Are Spectacular and Be Honest – You’re Not That Into Him Either, among other titles.

A year and half ago she met a guy who grew up nine miles away but now lives in Denver. They didn’t know each other growing up but met when he was back in town for a visit. Now they have a nearly virtual relationship – they IM most of the day, talk on the phone at night and every other weekend she meets him halfway to Denver. Sometimes she’ll drive three hours, and then take a one-hour flight to Denver. Long term, she says, the goal is to move perhaps to Denver. Or maybe he moves back here, she says. Her son has been looking at colleges in Denver, so you never know, she says.

A Daily Dose of Reality

Rowley says that even though she thinks she clocks in about 12 hours in front of her computer, the day is broken up by daily life with four kids. The day starts at about 6:30 in the morning. The kids get lunch money (unless they want to make their own lunch). In her small town there is one elementary school and one high school. When the kids are off to school, she checks email and stats and sometimes forgets to eat. If her stats reveal more visitors around a particular keyword, she’ll build a page around that keyword. She really likes naps, so there might be a short snooze in the middle of the day.

In the meantime, there is also her son’s football practice; soccer and volleyball for her daughters; and dance classes. Her regular commitments include the PTA Booster Club, volunteering at SCORE to give advice to small business owners in the next town over and this year she’s president of the Kiwanis Club.

As involved as she is in the community, Rowley says the majority of people in town still have a hard time grasping what she does. “Nobody really knows what I do,” she says. “Rumors include that I was doing porn in my basement.” Once or twice a week people will come up to her and say they want to do what she does. And then they interrogate her with a million questions. So she set up WorkInMyPajamas.com to tell people about affiliate marketing – such as where to post a press release, good hosting firms, how to use templates and other observations of the affiliate world. She also runs ShoppingKim.com to introduce readers to couponing. If that weren’t enough, she set up her boyfriend, Patrick, with a blog and is helping roll out Foster57.com, a blog network named after the town he grew up in with a population of 57.

Staying on top of it all is now second nature. “I do what I can to read up and I go to forums,” she says. Her favorites are ABestWeb and WebmasterWorld.com. And if she can give a little back from what she learns, all the better for the affiliate community at large. She loves to go to the Affiliate Summit conference and has been to every one, she says. “The networking is great there.” In fact, she’d like to do more traveling and dreams of having homes all over the world. “I’d like to see every country.” But she’s not necessarily dreaming of living the high life, sipping champagne by the shore. She says she’d like to do missionary work in a third-world country. When she worked in the doctor’s office, they would donate surplus medicines to the nuns and saw what a little help can do for the greater good.

She readily admits that she is not the best housekeeper in the world and says pretty plainly that she doesn’t really cook or clean, but is still dedicated to running a happy house through her hard work and making sure her kids get what they need. “I can’t see myself retiring,” she says, and really has a very long time before that would ever be an issue. She has way too many blogs to update – and that PHP won’t learn itself.

B. Knoblach: The Fast Talker

If you asked 100 people on ABestWeb what kind of experiences they have had interacting with B. Knoblach, they probably wouldn’t have a clue as to who you are talking about. But if you say the name Billy Kay, you’re likely to get a huge reaction.

Billy Kay is not just a screen name on ABestWeb; it’s the business identity of a man who has a huge personality and huge heart.

And yes, his first name is really just the letter “B” and no, it’s not short for something else. He claims that his dad was named Walter and didn’t want a junior so he named him B. Although it seems like there might have been other choices for his father, in the tale Knoblach tells that’s how it goes. Period.

One thing about Knoblach is that it’s hard to know just when he’s kidding or saying things for effect. Most of his talk seems designed to provoke and titillate. The way he says things is a huge part of who he is. He’s a fast-talking native New Yorker, who still has a noticeable accent despite having left his home state more than 30 years ago.

Back in the ’70s he made his way out west to California. He served in the Air Force straight out of high school and then used his GI benefits to attend college at CW Post. Armed with a degree in music and $10,000 worth of musical equipment (including keyboards, drums and guitars) to his name, he headed to Los Angeles with a big dream to make it as a professional musician.

But he claims that a shipping problem changed the course of his life. The instruments he shipped to LA arrived and were signed for, just not by him or at the correct address. Back then the tracking and authentication methods of package shippers weren’t as sophisticated as they are now. So after months of arguing with UPS about not receiving his instruments and also trying to file a police report (which was declined because the police said the goods weren’t stolen since someone signed for them) he called it a wash and started hunting for a job to pay the bills.

An ad in the paper looking for ex-New Yorkers who were musicians caught his attention. It was for a telemarketing job. He jokes that New Yorkers are ideally suited for telemarketing because they have the natural gift of gab. He has that in spades and thrived in the business. In fact, he did so well that he stayed there for eight years. He was a standout and not surprisingly was noticed by the owner of the company. His boss was apparently infamous for questionable money-making tactics. Billy Kay won’t reveal much more about those early days except to say that his tax forms listed his occupation as “publishing.”

But it was clear to him that something was missing. He had good money coming in and a serious girlfriend but he really wanted to be a parent. He thought about being a big brother but that wasn’t permanent enough. He jokes that he already had season passes to the zoo and lived near Magic Mountain, he just needed the kid. Someone suggested to him that he might want to think about being a foster parent.

So nearly 13 years ago Billy Kay took the steps to become a foster parent to a six-month-old boy named Jesse. He says it was the best thing he ever did. But being a parent meant undergoing some serious life changes.

In his personal life, Knoblach’s longtime girlfriend wasn’t willing to change her pampered lifestyle to accommodate a child, so they eventually split. “It changed our whole lives. Jesse wasn’t a puppy that could take care of himself. He needed someone who wanted to be there for him and share a life with him. She cared about getting her nails done and rubbing shoulders with stars.”

On the work side of things, Knoblach needed more “respectable” employment. He claims that he “knew what I was doing was wrong,” and started to look for other things to do. It all started with a Web ring for personalized gifts. He began his online marketing career as a drop shipper, and then one day in 1999 a merchant asked to place a banner ad on Knoblach’s page. He was stunned, given that the business wanted to pay him $5,000 and could have just put the ad up on the ring for free. Knoblach took the deal and the next thing he knew that merchant’s direct competition called and wanted to place an ad. Suddenly there was a bidding war and Knoblach was the beneficiary.

Then “affiliate marketing was invented” Knoblach says, and the merchant asked if instead of incurring the shipping charges and the hassles associated with drop shipping if Knoblach wanted to be an affiliate.

Meanwhile, four years had passed and within the California foster care system, you had to relinquish care of a foster child or adopt them. There was no question in Knoblach’s mind that he could never give up Jesse.

So he began the complex process to legally adopt, but there were some huge hurdles. The first and foremost issue was that Jesse is African-American and Knoblach is Caucasian and California had very strict state laws governing interracial adoption. After years of legal battle, racial sensitivity training classes and a yearlong court-imposed order whereby the two had to move to New York for a year to be close to Knoblach’s Long Island family, the adoption was legally sanctioned.

When the year in New York was up, Jesse was five and they immediately planned to move back to LA but “stopped in Las Vegas on the way home and never left.”

Viva Las Vegas!

Living in Sin City isn’t for everyone, but Knoblach isn’t like everyone. For him that straight-laced life conjured up images of parents that spent little time with their kids. “I didn’t want to see Jesse just 10 minutes a day. I wanted to have work that would let me spend my life with him.”

The pair has been living in Las Vegas for nine years and Jesse, who is now 13 and in the seventh grade, spends lots of quality time with his dad. Bill Kay can thank his job as an affiliate marketer for that freedom.

“I thought, all I have to do is put up a link and not deal with customers; why not?” he says. “I lucked out when I found this.”

Suddenly he started expanding, going from his mail order collectible site (MailOrderShoppe.com), which is still his main moneymaker, to niche sites (ceramic baby shoes, business cards, golf gifts, etc.) and coupon sites.

Currently he runs about 20 sites and typically wakes up each day at 4:00 a.m. to begin his three hours of work to update all the sites. By the time he’s through with that process, it’s time for him to get Jesse off to school. Once Jesse is gone, Knoblach gets into what he calls the experimental stuff and then he claims he’s burnt out by 10:00 a.m. When Jesse gets out of school at 2:30, he and Knoblach often go to one of a handful of casinos.

Knoblach takes his laptop and often works from a casino, whether it is the lobby of the Mirage or in a poolside cabana at the Palms. In fact, taped to the bottom of his laptop is his business license so that his place of business is wherever he happens to be working on his laptop at the time.

It sounds like something out of the movie “Casino.” One day he’ll be working at the MGM; the next he’s at the Excalibur. He’s treated well because he’s got host contacts at all of these casinos. That means he can call up his host at whatever establishment and say, “Jesse and I would like to see a show, or, we’d like to come swimming on Friday,” and whatever the request (within reason), it will be arranged immediately.

He boasts that he once had the presidential cabana at the Palms and that they kicked out Vince Neil of Motley Crue in order to make room for him and Jesse.

To celebrate Thanksgiving last year, the Luxor flew the pair up to Reno in a private jet. And then put them up at a swanky hotel. Jesse is also probably one of the few teenagers that receive a personalized Christmas card from the Maloofs, the billionaire owners of the Palms. Often one of these hotels will send a car to Jesse’s school to pick him up, where the 13-year-old will be greeted by a limo driver holding a sign with his name on it.

The high-roller treatment occurs because Knoblach is a regular and loyal gambler. Video poker is his game of choice. He says you don’t have to be super rich to get perks. All it really takes is loyalty and showing up at the same casinos. His coin-in rate (which is the amount of money you put in and how much that added up to before you cashed out) at the Palms last year was $1.8 million. He allows himself to gamble for one hour each day. He doesn’t set a money-spending limit but instead just sticks to his set time limit. During that hour he gives Jesse $20 to go to the casino’s arcade and lets the boy play video games.

After that the two get together for regular stuff – like dinner and homework. They enjoy spectator events such as movies, shows, sporting events. Although lately Jesse has been trying to get his dad into more participatory things like playing baseball rather than just watching it.

Creating a Family

Knoblach is anything but a spectator on the message forum ABestWeb.com. He’s an active and vocal poster at ABW, which he likens to a family. That’s very important to him because he says he’s not particularly close to his own family.

He also gives back and treats his ABW “family” well – especially when he gets to play host in his “hometown.” At the Affiliate Summit conference, which was held in Vegas last January, four hotels gave Knoblach comp rooms. He ended up passing on that good fortune to several out-of-town affiliates attending the show to help them defer costs. He also generously offered a few of his colleagues some friendly gambling tips. And in one case his advice helped net a friend a $500 payout.

He credits others with helping him along the way – especially Haiko de Poel Jr., ABW’s founder [and Shawn Collins]. “If it weren’t for Haiko, Billy Kay wouldn’t exist,” he says. “They are both really good at what they do and I got so much from both of them.”

The rest he’s learned through much trial and error and lots of research. “You’ve got to do your research. It’s 90 percent of your job as an affiliate.”

He also says that he works backwards. When he was planning to create a site for license plate frames, he did a search to check on what search terms people are using for them. Then he made 48 pages using the 48 exact terms people searched for. No more; no less.

Research is important but so are common sense and good instincts. Because of his previous work, Knoblach claims that he can think much like the bad actors out there trying to steal commissions. This helps him put in place ways to thwart parasites and other bad folks. It also helps him when analyzing his numbers. He’s good at spotting inconsistencies and looking for the angles.

So, the obvious question is, why hasn’t someone who has an aptitude for fast talking and making money, perverted his online business (which is always ripe for scammers) into that kind of operation – especially since so many of these scammers do it because it’s very lucrative?

“I have a conscience. It would only take a second for me to do something bad, but I won’t. I spend half of my day trying to defeat the bad apples. It’s a pain. I truly believe that some congressman’s wife will get a bug about this and then there will be regulation regarding this behavior.”

Instead, he’s fallen in with a crowd that abhors that type of behavior and is not shy about making it public.

Meanwhile, Knoblach spends a lot of his work life looking into new things. “Copying and pasting links is drudge work. Thinking about new ideas is the fun part.” He’s getting into a partnership with some peers from the affiliate space, but he coyly declined to provide any details except to say that “it will be bigger than eBates.”

But Knoblach’s life as an affiliate is really just about having a job that allows him to focus on raising Jesse. His work gives them both freedom and a good life filled with fun and enjoyment. We’re not a regular family but “life is great. Who could ask for more?”

A Call to Action

Someone is hijacking your traffic and stealing your commissions. That someone might be a competing affiliate marketer, or worse, the merchant whose products you are promoting.

To my dismay, I discovered that traffic from one of my sites was being diverted when a friend sent me some screen captures of that site’s home page. The first screen shot showed my site open in a browser window with 80 percent of the page behind an AdultFriendFinder pop-up window – despite the fact that my site does not have a pop-up to AdultFriendFinder.com on the home page.

The main domain in the pop-up window’s address bar was AdultFriendFinder.com, but the affiliate ID was not my affiliate ID for AdultFriendFinder, or for any site within FriendFinder’s network.

A portion of the URL included my domain name (preceded by .sub), which clearly indicated interest in referrals from my site. However, this was not so FriendFinder could compensate me – their long-standing, loyal affiliate – for referrals from that page, but rather to ensure that its Zango advertising campaign was returning a good ROI. This fact was made apparent from the prominent white-on-blue banner splayed across the bottom of the pop-up window that read, “This ad served by Zango software downloaded by Zango.com. Click here to learn more.”

Enter Zango, a company formed by a merger of Hotbar and 180solutions in June 2006. During its incarnation as 180Solutions, the company was dropped as an affiliate by the major networks, including Commission Junction and LinkShare, for invalid activity (cookie stuffing, etc.). 180’s detrimental effects on affiliate commissions have been well-documented by anti-spyware expert Ben Edelman and others.

Zango’s current service works as follows. In exchange for access to free programs and tools, surfers are required to download the Zango Search Assistant. With the Search Assistant installed, Zango’s advertisers’ Web pages are popped open when certain keywords are detected in Internet search or browser windows.

Now enter Zango’s advertisers. If a domain address is listed in an advertiser’s campaign and a visitor to that site has the Zango Search Assistant installed on their computer, the advertiser’s window will pop open, virtually obliterating the view of the first page visited. The situation occurs regardless of whether a Zango surfer reaches the page via paid or natural search engine listings.

But wait, it gets worse. Merchants and their competitors are bidding on their own and each other’s domain names, to ensure that their own ads are popped by Zango when their sites are visited. So, even if the Zango surfer finds your site behind a pop-up and clicks on one of your affiliate links, chances are good that the merchant site that opens with your affiliate ID embedded will be covered up by yet another pop-up window coded with an ID that isn’t yours, which means that as an affiliate you can say goodbye to your commissions.

Zango claims a customer base of 20 million users that grows by “more than 200,000 new opt-in consumers every day,” according to a September 26, 2006 press release from the company.

When you add 100 million MySpace teenyboppers who all want to redesign their profiles with VideoCodeLab’s free design tools – available through a Zango download – it’s no wonder that advertisers are jumping on the Zango bandwagon.

However, I can’t understand why a merchant partner would list an affiliate’s domain name in its Zango advertising campaign and risk accusations of commission shaving, or worse, losing affiliates by the boatload. So, I asked FriendFinder’s CEO Andrew Conru, and Lars Mapstead, vice president of marketing. Both stated that Zango supplied FriendFinder with a list of keywords that included my domain name. In another conversation, Mark Ippolito, Zango’s vice president of sales, confirmed that Zango provides its advertisers with a list of suggested industry-related keywords upon request.

To their credit, FriendFinder removed my domain name from their campaign soon after my request. The pop-ups continued, however, and further research uncovered that LoveAccess.com, another dating service with an affiliate program, was also bidding on my domain name. Steve Piotrowicz, director of marketing for LoveAccess.com, had “no comment” on my request to remove my domain name from his campaign or on how Zango’s advertising tactics impact affiliate marketers.

To find out which of my other merchants’ sites were being advertised on Zango, I opened a test advertiser account at Zango through AdConnect.Zango.com, and learned that the scope of the problem extends into every sector of the industry. Commission Junction merchants such as LowerMyBills, Esurance and Magellan’s had bids up to .518 cents per impression and up to 12 advertisers bidding on their URLs.

Attempts to enter URLs for Google, Yahoo, eBay, WeightWatchers and Expedia were “predenied” by Zango as they were insufficiently targeted, Zango’s Ippolito explained. However, he flatly refused to remove my domain name from Zango’s list. (If only it had been that easy!)

Interestingly enough, when I suggested to Ippolito that advertisers should bid on the term Zango, after hesitating a moment he replied that Zango “retains the right to refuse certain listings.” Go figure.

When asked how he would react if paid traffic to his site was repeatedly diverted to other sites, Ippolito responded that my question was “irrelevant” and “best discussed over a glass of red wine,” followed by another assertion that although Zango’s business methods are “aggressive,” they are “entirely legal.”

Legal? Let’s take that scenario off-line. How long would it take the police to arrest Zango’s workers if they showed up with 10-story sheets of plywood to block 80 percent of a storefront each time someone was poised to enter the premises?

What Zango does is legal only because the case hasn’t yet been properly made. Even given a successful outcome, worldwide enforcement would be a logistical nightmare.

So, what’s an affiliate to do to prevent shaving to the point of decapitation? Ending your affiliation with the merchant would seem to be the easiest solution. Unfortunately, giving up does not solve the problem. Merchants and affiliate competitors will continue to bid on your URLs, and their Zango pop-ups will still obliterate your home pages to divert traffic from the other merchants that you promote.

A more drastic alternative would be to give up affiliate marketing entirely and go back to work for some employer who wouldn’t steal from your paycheck. That, however, is not an option for most of us and it certainly will not make things right.

Here are a few suggestions that may help to start making things right:

  • Open up a Zango advertiser account and enter your own domains and the domain names of your merchant partners to find out which are being targeted.
  • Contact Zango at 425-279-1200 and leave a message demanding that your URL be removed from their keyword lists. They probably won’t respond, but your call will be on the record come court time.
  • Next, contact applicable merchant partners and ask that your URLs be removed from their campaigns immediately. Discuss your concerns for lost revenue, and you may want to introduce the term “commission shaving” at some point in your conversation. If your merchant’s program is affiliated with a network, file a complaint with that network as well.
  • If either Zango or your merchant partners refuse to stop popping in your territory, file a complaint with the Better Business Bureau, the FTC at http://www.ftc.gov/ and your local district attorney’s office.

Regardless of complaints from affiliates or the threat of class action lawsuits, it is time for ethical merchants to take the high road and close their Zango accounts.

As for those affiliates who cherish their little 45-cent Zango leads too much to play on the white side with real affiliates – the Zango affiliate voodoo dolls are currently in mass production.

ROSALIND GARDNER is a super-affiliate who’s been in the business since 1998. She’s also the author of The Super Affiliate Handbook: How I Made $436,797 in One Year Selling Other People’s Stuff Online. Her best-selling book is available on Amazon and www.SuperAffiliateHandbook.com.

Redemption

It all started with Asa Candler, a “prescriptionist” in Atlanta 112 years ago. A modest pharmacist who dealt in tonics and medicines, he bought an unassuming recipe for a patent medicine called Coca-Cola. When he gave out handwritten slips of paper for customers to try the new drink for free, the coupon was born.

The simple yet brilliant marketing idea Candler conceived has, of course, become a staple of American shopping. During the Depression in the 1930s, grocers fell in love with coupons as a way to attract needy families into their stores. And when the supermarket took over and coupon redemption became easier in the 1960s, half of all Americans used coupons. With the advent of the freestanding insert, or FSI, in the early 1970s, reams of colorful and enticing coupons came with the country’s Sunday newspapers.

As expected, the coupon migrated to the Web and even with technology laying the pavement for better distribution and security – it is still a work in progress. Online coupons are busting out all over but they aren’t as big as you might think. The world of couponing has survived the digital age so far and has made some unique advancements, but there are still challenges ahead.

Coupon distribution continues to prevail. In 2005, U.S. coupons set a new record of 323 billion coupons distributed, the first year to pass the 300 billion mark and a nice jump of 9 percent over 2004, according to CMS, a coupon-processing firm. CMS also states that the redemption rates of Internet coupons rose from .59 percent in 2004 to .96 percent in 2005. That may seem like a small amount but it’s a big jump for a fledgling coupon vehicle. Overall coupon redemption rates hover between 1 and 3 percent year-over-year.

While some analysts have forecasted the death of the paper coupon in as short a span as five years, the trends don’t seem to reflect that. Yes, more people are using the Internet to gather coupon codes to buy from websites instead of clipping an FSI and walking into a store – but those numbers are a very small slice of the coupon pie. A resounding 88 percent of redeemed coupons are FSIs, snipped from the Sunday edition of your newspaper.

Still, some are confident that the paper coupon will disappear sooner than we think and that coupons delivered via email or to our cell phones will dominate. “Young marketers are leading the way toward eliminating the paper coupon,” says marketing strategist Peter Sealey, CEO of The Sausalito Group.

Precision Targeting

For now though, only a small percentage of redeemed coupons come from online. But the upside is that online couponing – whether via a coupon code, printable coupon or emailed coupon – is able to reach a more precise target than the traditional FSI. In fact, recent redemption studies have borne out that Hispanic coupon users redeem at higher-than-average rates. Therefore, coupon distributors are finding ways to hit the Hispanic market with coupons via cell phone (Hispanic households use more cell phones than the general population). Sealey says the benefit for marketers is that they “can target people who can actually afford to buy a Porsche.”

The efficiency that technology brings is seeing immediate results in the online coupon world. Coupon networks, for example, use technology to help with everything from RSS feeds of coupons to organizing all their expired online coupons. But even then, the technology doesn’t get in the way. “We like to call ourselves a document security company,” says Steven Boal, CEO of Coupons.com, a network enabling printable online coupons. He says that proclamations of the death of the paper coupon are greatly exaggerated “for a very important reason. Because I print paper coupons – a business that has been around a long time. Up until three years ago it hadn’t changed much. Does it change? Yes. Small percentage shifts in this business move huge dollars.”

His Coupon.com platform runs on more than 3,000 affiliate marketers’ coupon websites and some of the most high-profile coupon websites use his company’s back end, including Yahoo, Boodle.com, NBC.com, SmartSource.com and other coupon sites in the U.S., U.K. and Australia.

It’s true that coupon redemption rates dropped 6 percent in 2005, but as mentioned, distribution rose sharply. What’s at issue isn’t that fewer people are using coupons but that products that wouldn’t otherwise be sold are selling, according to Matthew Tilley, director of marketing at CMS. “Consumers just aren’t responding to coupons at the same rate that they used to, but that hasn’t really dampened marketers’ enthusiasm for them.” He affirms that high redemption rates are not the goal, but that “moving more product than you would without promotion – but at an efficient cost – is really the goal.”

While the big online coupon networks can scale for brands, smaller affiliate marketers have also been able to take advantage of the interest in online coupons. Popular sites such as Amazing-Bargains.com, CleverMoms.com, Fabu.com, Shopping- Bargains.com and FlamingoWorld.com have all seen great success with their coupon sites.

Much like product affiliates, coupon affiliates must track the newest offers, post them, bring down expired offers and make sure the link goes to where it is supposed to – but do so on a fairly grand scale every day. Too often the monthly offers inundate the affiliate on the first of the month, so that (if he or she works the website alone) it could be two weeks before a coupon is posted.

“I don’t know how they do it,” Michael “Mikey” Yack, founder of FabulousSavings and Fabu.com, says. He built his coupon sites from the ground up, too, but now has 30 employees. He doesn’t do code anymore. “I’m on the phone with my merchants all day,” he says. That’s the only way he can up the value of his coupons. “Once [merchants] know you’re legit, they throw you more.”

Fabu.com is also a site that employs rather sophisticated methods to keep it all together. Yack says his team writes original product descriptions and uses automated software to take down expired links. Other technology involves automatic rotating codes to avoid inviting other affiliates to cut and paste Fabu links on to their sites. He says his exclusive link with Toys R Us changes every 18 hours so that a stolen link will no longer be good after a brief window of time. All his expired coupons switch themselves out automatically.

Technology: The Good and the Bad

Link stealing may be the biggest pet peeve of the online coupon affiliate community. And while it does occur, some affiliates and networks work with it as a nuisance. Others complain that merchants aren’t doing enough because for them it just means broader distribution. The other pet peeve is that some merchants tailor coupons just for affiliates and create other deals for all the other channels they sell in. Affiliates fear the better deals may be going to the other channels.

“There are many things low-quality coupon sites do that are deceptive,” wrote Michael Coley, founder of Amazing- Bargains.com, in a Web forum. “While these things may temporarily increase their [clickthrough rates] or sales, the long-term effect is that they lose customers. Who would go back to a site that they knew was deceptive, and what merchant would want to keep working with a site that was deceptive? Their antics backfire in the long run.”

For couponers who have been at it for a while – like any Web venture – adaptation is the watchword. “Technology is always changing and those who survive must change with it. Web services, RSS feeds, JavaScript, storefront generators, XML and other delivery tools are making it easier for coupon sites to maintain current content. However, much of the, heavy lifting remains manual for those who want to offer unique content and features,” Mike Allen, president of Shopping-Bargains.com, says.

The potential for technology to take more of the sting out of couponing online has generated more than a few companies ready to cash in on new platforms. RSS feeds for coupons have been a boon to companies that do it, such as CouponBar.com, DealoftheDay.com and PhatDeal.com. Couponing from cell phones is the next area of interest for some. Companies such as Cellfire, MoBull and Quickpons are startups that just deliver coupons via cell phones. And they are already getting buzz. Redemption rates for mobile coupons are very high – at about 23 percent – mostly because cell phone users opt in to receive the coupons or must register or download a piece of software to the phone to participate.

Allen thinks this will undoubtedly drive the mom and pop out of business. “Coupon sites,” he says, “have become mainstream businesses. All the major players have recently undergone extensive revisions, technology upgrades and aesthetic enhancements to better compete in what is now a very sophisticated and fast-moving marketplace.” He says that what was once “amateur or hobby categories” are now sites that can be called brands on their own. The larger the main players become the harder it will be for small affiliates to keep up, he says.

Boal of Coupons.com thinks the future is Web services and mobile. “We took our time with mobile,” he says. “We didn’t make it so difficult.” They waited until they figured out a way for everyone to use it instead of only customers with certain cell phone brands.

CMS’ Tilley outlines what keeps coupons hot. The face value of coupons has risen about 9 percent while product price inflation has risen only about 2 percent. Coupons that require multiple purchases are down, but their response rate is up. For nonfood products, shoppers are 30 percent more likely to use a buy-two coupon than a discount on a buy-one. For food, the buy-four is more popular than the discount on one item. And for both categories overall – food and nonfood – shoppers are 49 percent more inclined to use buy-four than a buy-three or a discount on one. And while coupons redeemed has slid from 3.9 billion coupons in 2001 to 3 billion in 2005, traditionally coupon redemption drops in a good economy.

What’s In Store?

The in-store coupon is also becoming very popular. About a third of redemptions now come from the in-store instant savings coupon or offer. Tilley says packaged goods marketers plan to migrate up to 20 percent of their coupon campaigns to online by the end of this year.

While some retail affiliates wouldn’t dream of dealing in coupons, some couponers like Allen simply think it’s harder to be a retail product affiliate. “General coupons are easier to deal with than many specific retail products,” he says. “Why essentially recreate the retailer’s website on your own? It’s not good for organic search and most affiliates don’t have the resources to do all the split tests and so forth needed to optimize product layouts for multiple retailers. Why compete with what they do best?”

Fabu.com’s Yack has a real simple and direct assessment. “We’ve been working on Fabu for nine months. I have ads in 180 newspapers; I have three publicists. A lot of these sites still look the same as if they came from the wayback machine. I built Fabu because times are changing ” and I’m getting paid for having a link on my site – how crazy is that?”

Taking It Offline

If baseball is the thinking person’s game, then online advertising is the thinking person’s medium. Much like the national pastime, part of the draw of online advertising comes from the ability to break down performance into limitless particles of useful (and useless) information, such as batting average with runners in scoring position after the 7th inning, or the clickthrough rate differential for an ad run at 8 a.m. versus 8 p.m.

But just as it is impossible to figure out why combining the best players won’t make for the best team (just ask George Steinbrenner), determining the most effective roles that online and off-line marketing should play to produce the best possible results remains largely a mystery. Online advertising revenue continues to close the gap with off-line spending, resulting in heightened interest in wanting to figure out how best to integrate performance marketing with off-line campaigns.

Integration Issues

During the first half of 2006, online advertising revenue grew by 37 percent over the prior year according to the Internet Advertising Bureau, and the dawn of video ads will likely further accelerate growth. Advertisers flocked online because they could get more precise data about ad effectiveness than through broadcast or print.

“Before, everyone had to take [ad effectiveness] on faith,” says Mark Williams, a founding partner of San Francisco interactive agency Mortar. But after seeing the low (1 to 2 percent) clickthrough rates, some advertisers ask about putting more resources into off-line, which he views as a mistake.

Focusing only on clicks as a performance metric doesn’t tell the whole story, according to Williams, who says that as with off-line campaigns, assessing online performance should consider factors such as brand awareness and the ability to generate word of mouth. “CPM blindness” as Williams calls it, is when advertisers get lost inside the numbers of what is known about certain aspects of a campaign instead of looking at the overall picture. Many people who saw an online ad will eventually go into a store and make a purchase, and the advertiser will never be able to connect the dots, according to Williams.

One method for tying off-line to online campaigns is to promote custom URLs in print or through broadcast and track the number of responses. Advertisers have adapted the longstanding practice from newspapers that printed unique phone numbers to track leads.

Marketing services company Who’s Calling, of Kirkland, Wash., develops custom landing pages that can be promoted on-or off-line to track individual behaviors, according to CEO Stuart DePina. Newspaper or TV ads include links to pages that contain unique phone numbers, enabling the original media source to be identified.

DePina says client Chrysler sent out direct mail that included a link to custom landing pages for different vehicles, so that when online shoppers called the listed phone number, the agent answering would know in which vehicle they had interest.

Tracking customers through unique pages “helps to build demographic information from the start,” DePina says, resulting in a greater likelihood of moving the buying process further upstream.

Michael Stalbaum, CEO of marketing services company UnREAL Marketing, says promoting websites off-line can become even more effective when combined with search engine marketing. His client Synova Healthcare was running radio ads to promote an online coupon for a menopause test kit without much success, which Stalbaum attributes to the inability of people to write down a website address while driving.

After buying keywords related to menopause testing, the number of coupons downloaded per week more than tripled, according to Stalbaum. By integrating campaigns, Stalbaum says you may not reach more people, but touching them multiple times can increase the results.

Advertisers whose off-line campaigns are limited to promoting custom URLs can be disappointed, according to Mortar’s Williams. If an advertiser gets a low response rate, it “creates the opposite of what you want because it gives the impression that it doesn’t work,” so Williams recommends against the practice.

While being able to quantify the interaction of off-line and online may be difficult, Williams says every campaign – whether for a brick-and-mortar or online-only seller – should include online and off-line components to maximize its effectiveness. “Online brands that take themselves seriously have to go off-line,” he says. For example, Travelocity and Yahoo recently launched integrated campaigns with multi-million-dollar buys in print and television.

Translating Word Of Mouth

Off-line campaigns that emphasize branding can have a snowball effect when used in conjunction with affiliate programs and search engine marketing, according to Ed Weisberg, vice president of e-commerce for Pingo, a company that sells prepaid calling cards online. Weisberg says the company has been buying banners ads and keywords on search engines as well as working with affiliates for two years.

This summer the company decided to advertise on billboards and in subways in cities where there is a heavy concentration of its target customers – those who make many long distance phone calls. The hope was to expand the audience by getting people in the communities with large Indian and Chinese populations to talk about the calling card savings since “not everyone uses search engines,” Weisberg says. Pingo representatives also attended ethnic festivals such as parades and carnivals and handed out promotional materials to reinforce branding. The company saw a surge in orders coming from the cities where the company was advertising off-line.

Weisberg coordinated the effort with affiliate managers, allowing them to put their own branding on the cards, and to develop call-to-action strategies where searches based on the word-of-mouth campaign could turn into special offers such as coupons. The off-line advertising also attracted new affiliates, according to Weisberg.

“If we have someone to reach, we’ll be less successful in reaching them if we only advertise in one place,” Dave Evans, co-founder of social media company Digital Voodoo, says. Evans claims an effective method of leveraging consumer buzz is to provide information that stimulates interest online and then use offline marketing to encourage people to do word-of-mouth marketing through their online and off-line social networks.

According to Evans, online advertising can respond quickly to negative press or word of mouth. If bloggers take a company to task, their message can rapidly become widespread, so online advertising is a better method of reacting more quickly than off-line.

While off-line campaigns can help build awareness, online advertising can be more effective in prompting sales because they reach people at the time when they are looking to buy, according to Gian Fulgoni, chairman of comScore Networks. “In the off-line world it is difficult to put an ad in [search] context,” says Fulgoni, whose company measures advertising and media performance. The exceptions are advertisements in print directories such as the Yellow Pages, he says.

Because there is not a reliable method to track the effectiveness of off-line campaigns of an entire population, comScore works with a panel of representative households and tracks their online behavior, Fulgoni says. Software that tracks online journeys is installed on the panel’s computers. The company measures how many people search for and buy particular products before and after a television or print ad runs in their area. Panel members are also surveyed about their subsequent off-line purchases as well, according to Fulgoni.

The effectiveness of television advertising can be greatly enhanced by reinforcing the message through online video advertising, Fulgoni says. “Video [ads] will make things really move in search,” he says, adding that the company is developing metrics for tracking video ad performance.

To reach audiences who spend a lot of time online, video ads are becoming a substitute for TV campaigns, according to Fulgoni. “Once you have sight, sound and motion [in online ads]” advertisers may not need to run television campaigns, he says.

An integrated campaign for the 2007 Dodge Nitro SUV demonstrated the effectiveness of using video on multiple platforms. Dodge geared the car ad toward male buyers and shot a series of video spots that would be used on broadcast and satellite TV and online, according to Mark Spencer, a senior marketing manager at Dodge. To reach the 30- something male demographic that spends many hours per week online, “we needed multiple screens, not just TV,” Spencer says.

The campaign was first introduced online. Dodge built on the experience from a previous campaign for the Caliber by increasing the number of videos online so that the experience online was similar to the television spots, says Spencer. When Dodge ran Nitro ads during the World Series that directed viewers to the website, traffic increased by 40 percent, according to Spencer.

The same creatives were used off-line and online to generate word-of-mouth buzz, says Spencer. “Our strategy was to be consistent … so that enough people will talk about [the car],” he says.

The TV campaign, which ran for 90 days, included spots run during programming that skews to younger males, including the NFL, NASCAR, and NBC’s “Law and Order”. Print ads that promoted the website ran in publications geared toward African-Americans and Hispanic audiences, Spencer says. Dodge’s integrated strategy also includes promoting the Nitro through the NHL 2K7 video game, according to Spencer.

The online campaign, which represented 20 percent of the total advertising dollars, included pre-roll and click-to-play videos on MSN, YouTube and The Onion. To move potential customers from the website upstream into the buying process, Dodge introduced click-to-talk and click-to-chat features that include the ability to pass customers from Dodge representatives to local dealers, Spencer says. (The campaign was only a few weeks old at the time of publication, so results were unavailable.)

Measuring Clicks To Sales

Just as it is impossible to accurately determine the number of online purchases that were initiated in response to someone seeing a billboard ad or radio spot, the ability to track the offline purchases of those who see online ads effectively ends when people step away from the keyboard.

While it is common for retailers to ask buyers where they first heard about the company or product at the point of purchase, this practice does not indicate the true influence of online advertising as consumers who first heard about a product off-line may have had that message reinforced several times online.

Who’s Calling’s DePina says that because the Internet (largely through search) is used more frequently for research than for purchasing, tracking off-line purchases gives a better indication of the effectiveness of a campaign. For example, some keywords drive clicks used to get more information, while others prompt consumers to make phone calls, he says.

Because only 7 percent of consumer purchases are done online, search marketers need to determine how their activities can result in off-line purchases, according to comScore’s Fulgoni. For example, a survey of comScore panel members showed that 25 percent of people who searched for consumer electronics equipment online made a purchase within 90 days, and 90 percent of those transactions occurred off-line.

Some integrated campaigns mistakenly treat the online and off-line worlds similarly, according to Digital Voodoo’s Evans. For example, companies that sell beer that advertise on the websites of sports networks that they advertise with on TV are missing an opportunity. Instead of this “TV thinking” of lumping consumers together into a category, the Web offers many more options for targeting people based on their individual preferences, he says.

“I expect to be marketed to as if I’m an individual,” Evans says. For example, advertisers could employ behavioral targeting or other tracking mechanisms to better understand the audience.

JOHN GARTNER is a Portland, Ore.-based freelance writer who contributes to Wired News, Inc., MarketingShift and is the Editor of Matter-mag.com.

The Mobile Marketing Monster

Tony Phillip will tell you the exact moment he knew that mobile marketing and advertising – predominantly via cell phones – had crossed over into the mainstream.

It was when American Idol, the extremely popular TV singing contest, allowed viewers to vote for their favorite singer via text message – and more than 50 million did in 2005 versus 21 million in 2004, according to the CTIA – The Wireless Association. Also in 2004, 46 percent of text messaging votes for a new pop star sent in was from wireless subscribers using text messaging for the first time, CTIA figures state.

Less than a year before, UpSNAP had a deal with ABC to allow text-message voting during the Academy Awards. It was basically a disaster, according to UpSNAP CEO Phillip, who notes, “If viewers didn’t have text messaging, they weren’t going to use it.”

What a difference a year makes. There is little doubt that mobile marketing – that including text-message ads displayed with a mobile search or via opt-in, coupons sent via cell phone, video and display ads interwoven with downloads or streaming from cell phones or other handheld device connected to the Internet – has arrived.

More major brands, agencies and start-up companies are putting their energy and dollars into exclusive campaigns and technologies aimed at mobile marketing, and for some it is already big, big business.

As people in the U.S. become more reliant on their cell phones, mobile services such as mobile search and Web surfing will become commonplace. Consider the following facts according to The Pew Internet & American Life Project:

  • 52 percent of adults have their cell phones turned on 24/7.
  • 30 percent of adults say they want to Web-surf from their cell phones.
  • 47 percent say that mobile maps and driving directions are a must on the next phones they plan to purchase.

MOBILE IS GLOBAL

Mobile marketing adoption is shooting through the roof. Worldwide mobile ad spending is expected to top $870 million by the end of this year, according to Informa Telecoms & Media. Meanwhile, The Shosteck Group predicts mobile marketing will be worth $10 billion in the U.S. by 2010.

Furthermore, 43 percent of U.S. marketers are using or about to use mobile marketing in the next 12 months, according to Forrester Research. And nearly 90 percent of major brands plan to market to mobile phones by 2008, according to a survey by Airwide Solutions.

“It’s happening faster than anyone expected,” Laura Marriott, executive director of the Mobile Marketing Association (MMA), says. “2006 is certainly a year that more and more brands are getting involved but so much more can happen. Response rates from mobile are very high. There’s great engagement from the consumer.”

That sounds like a giant wellspring ready to gush, but the U.S. is not even in the lead here. Most of Europe is slightly ahead in the adoption of text messaging because of the availability of cheaper cell phones. In March, mobile phone users in Britain sent more text messages than they ever had before – 3.19 billion or about 103 million per day. That’s a region with only about 60 million people in it.

In Japan, NTT DoCoMo recently pulled in $2.5 billion in the first quarter of 2006 in non-voice revenue. About 35 billion text messages are sent each month in China, where about 426 million people have cell phones – that’s like giving one and a half phones to every person in the U.S.

Pay per text has also taken hold in the U.K., where users can request a text message of a phone number when calling directory assistance or have directory assistance send the number automatically. Phone numbers and special-offer text ads are sent when directory assistance is asked for a keyword such as “travel.”

“[Mobile marketing] can be a big cash cow for any company,” Holger Kamin, country manager USA for Germany-based Zanox, a multichannel commerce provider, says.

The ease with which so much of the world outside the U.S. has embraced handsets to communicate in ways other than phone calls means the choice for advertisers is simply how to reach out to them. Of cell phone functions available, the surprising choice for marketers so far has been the simple text message.

“We always go back to what the consumer knows,” says Marriott of the MMA, “and what is already available in handsets.” She says text messaging has made a pretty natural rise to the top, but also wants to make sure “we don’t get ahead of ourselves in technology.”

While Americans may own 200 million cell phones, marketers wonder if all these people are using even the simple functions on their phones. While 75 percent of U.S. teens (age 15 to 17) own a cell phone, according to eMarketer, only 36 percent ever send or receive a text message. These conflicting statistics are what may be holding back the really big advertisers from designing campaigns for mobile en masse.

It was only two years ago the CTIA – The Wireless Association introduced cell phone short codes, which are 5-digit numbers that text-messagers use to send their message instead of a standard 10- digit phone number. The short codes were designed to help marketers reach out to brand customers via mobile phones. Anheuser-Busch, Dove soap and Daimler-Chrysler are just a few of the major brands that ran successful short code campaigns to get customer feedback via cell phones.

CAMPAIGNS TO GO

That will not stop the innumerable mobile ad companies from vying for your attention.

MobileLime CEO Bob Wesley, for example, thinks of it as developing a one-to-one relationship. “This is all viral now,” he says. So far MobileLime has used radio ads to get opt-ins and serve coupons to cell phones. It is not only paving the way for m-commerce (paying for an item through your cell phone), but gathers rich data for the advertisers, such as if recipients opened the coupon, when they did, what they used it for and for how much, Wesley says.

Currently, some companies such as Bango enable payment via mobile phones through a deal with PayPal, but the selling merchant must sign up for Bango’s service to allow the capability. Other companies such as JumpTap aim at launching a mobile search index to challenge Google. Carriers join the search index and online auction platform and serve it to their customers.

Of course, in the online world, coupons are big business and they are not being left behind in the mobile arena. Mobile coupons are making great inroads to the electronic platform because of the “sheer inefficiency of paper coupons,” says Peter Sealey, CEO of consulting firm The Sausalito Group. He says with redemption rates for paper coupons at only 3 percent, advertisers realize they save more cash going electronic. The marketer pays only when someone prints a coupon, eliminating distribution costs. “Marketers after the 2000 dot-com crash said, ‘Thank God that’s over,'” Sealy says. “We can go back to TV and radio.” Now, mainstream marketers are embracing the full bloom of mobile marketing again, he adds.

Sealey predicts that within five years, the paper coupon will be as good as dead. Search giant Google recently said it would start to offer local coupons in conjunction with using Google Maps. Online coupons in general have already taken hold with as much as 50 percent of online coupons being redeemed, according to some estimates. Companies such as CoolSaving, Coupons, Inc. and Zixxo do well marketing coupons over the Internet. Sealey says as more marketers accept electronic devices as a viable vehicle, the better adoption rates will get.

Some mainstream advertisers and companies are already rolling out robust campaigns to cell phones. Strawberry music stores on the East Coast are text-messaging promotions and deals to mobile handset users who sign up to receive alerts and geographic-based special deals. While Strawberry has relatively few stores in its network, Starbucks with thousands of locations has run a scavenger-hunt-style loyalty promotion where cell phone users signed up to get questions via text messages, the solving of which could send five chosen players on a vacation to Costa Rica.

Recently named No. 2 carmaker Toyota spent $10 million on a mobile campaign targeting Hispanic cell phone owners to watch funny hidden camera clips on their phones featuring the 2007 Camry. And Google is undertaking significant testing for its own mobile ads on its mobile search results and to launch a version of AdWords for mobile. Google is testing the search ad in the U.S., the U.K. and Germany.

Popular eateries McDonald’s and Subway are also getting their feet wet by offering some promotions via mobile phones. Even Net vet AOL has had its Mobile Search Services up since December 2005 with search, a shopping comparison module and a Yellow Pages feature.

MOBILE ON TARGET

Firms with mobile technology know-how are not the only ones seeking to cash in on mobile marketing. AirG, for example, sets up social networks on its platform and has found great success in sending mobile promotions to its base of users. They worked five years to get 5 million users and in the last eight months that has bounded up to 10 million. AirG’s display ads and ad-sponsored games for handsets capture detailed demographics and consistently get a more than 28 percent response rate. Receiving the ads can be turned off and on at will and are all opt-in.

Along the way, AirG discovered they had a significant Hispanic demographic, so they customize certain promotions to target only those groups. Frederick Ghahramani, AirG co-founder, says he can find the Latino males in New York City who are single and send only them an appropriate promotion or coupon electronically.

“What’s been lacking isn’t the enthusiasm [for mobile marketing],” he says, “but the ability to target the active base of customers.” They share personal information with each other and find like-minded people. AirG brings relevant targeting to the table, he says, noting, “The industry has had the ambition but now is waking up.”

There is nearly universal agreement that the key element for the continued success of mobile marketing is targeting. Third Screen, the largest U.S. mobile ad network, got the jump on everyone when it started four years ago and has only recently said that targeting mobile ads has finally reached a kind of maturity. The company has stated that the next achievements in mobile marketing will be privacy standards for all carriers, predicting more detailed demographics from broad information and more and better mobile ads based on real-time location of the handset user.

With the popularity of buying and downloading ringtones and entering online auctions via cell, companies like Ad Mob want to make sure you can reach users based on their region, platform, device capabilities and even manufacturer. If you want ads to reach only Nokia users on MIDP 2.0 devices in Europe, AdMob, who also has polyphonic ringtone support, states they can do that. Of the many companies that now have a mobile marketing component, better targeting is their crown jewel, the company claims.

Some companies have come up with original ways to engage people via cell phones. Vibes Media has its Text-2- Screen that invites concert-goers to text to the Jumbotron screens at stadium-sized pop concerts. The text they send to the screen is displayed on the branded screens with messages such as “Get ready 2 rock!” and “Happy birthday, Sarah J.” Irvine, Calif., company go2 recently launched go2 SpeedPoll, which conducts surveys sent via cell phone that ask about attitudes toward certain brands – with results viewable in real time.

MOBILE PERFORMANCE

Affiliate marketing powerhouse LinkShare won’t be left behind. President of LinkShare Steve Denton says its parent company Rakuten of Japan is having considerable success with mobile commerce. He says that at LinkShare Japan, a significant percentage of affiliate purchases are coming from mobile commerce.

“Our customers live and work and play in a world without boundaries,” Denton says, “and we must find ways to exchange with our customers, and then we need a platform for that; then mobilize.”

Japanese m-commerce is exemplified by someone shopping in a mall who finds a cool jacket, takes a picture of the UPC code on the tag, sends that to a browser and makes the purchase via cell. In addition, that customer can mobile email the code and a picture of the jacket to as many friends as he or she thinks would also like to buy it.

Denton says he has no doubt that “affiliates could plug this into their business models very quickly. But the infrastructure is not there yet.” He adds that publishers have great house lists but are not using text or cell phone numbers from their customers. “Cell phone numbers will be more valuable than email addresses in five years,” he says, adding that LinkShare in the U.S. will have some key additions to mobile in the near future.

But even as the adoption numbers keep steadily rising, there are still some gray clouds out there. For example, for a country with so much Internet usage, only 16 percent of U.S. mobile phone subscribers use their Web-enabled phones for the Internet. Some ad networks only work with certain brands of cell phones and even companies that say their platforms work across all brands and telecom networks can’t guarantee that the service will work for consumers consistently.

While marketers are very eager to reap the financial benefits mobile promises, some critics have said that not enough is being done to erect coherent marketing strategies. In the rush to go mobile, some companies are grabbing whatever firms are offering and not building their own goals, figuring out how to follow the metrics, putting up privacy standards or discovering a solid plan to get people to opt in. “Some companies are so decentralized,” says Zanox’s Kamin, “that they don’t even know they have [offices] in Europe.”

Other critics say a patchwork of partnerships keeps true standards from emerging. In the realm of mobile search, a giant like Google can go out on its own with few partnerships because most go to Google anyway, but other search companies (Yahoo, MSN and others) must become allies with a carrier to get the best traffic. These kinds of deals can shut out some cell phone owners from getting the right information when they want it. There are also bandwidth inconsistencies as there are with general cell phone reception depending on location and interference. SEO firm Oneupweb has noted that the myriad of technical issues with mobile commerce and advertising will smooth out for the next generation of mobile surfers and searchers because the interfaces will gradually become less technical. It will be like operating your TiVo or your iPod.

“Unlike a year ago – the early days,” says Phillip of UpSNAP, “search [via mobile] didn’t make a lot of sense, but now they will do what is relevant to their mobile lifestyle – comparison shopping, for example, before you get into your car.”

Marketers are also just beginning to realize that the mobile lifestyle cuts across socioeconomic barriers. Most people in the U.S. – even some of the most poor – have a cell phone. With 200 million handsets out there and growing, the young and old and rich and poor and racially diverse pretty much covers everyone who can participate in mobile marketing.

Anne Fognano: The Mother Lode

The old adage that necessity is the mother of invention is certainly true when it comes to this mother.

More than a decade ago Anne Fognano, then a new mom, needed a way to earn additional income while being able to work from home.

She had just completed her master’s degree in clinical psychology when her son Austen was a year old. And while it was her dream to be a therapist working with children, she also loved being a mom and wanted to be home with her kids.

However, she was also used to engaging her mind and needed to keep busy. She was a Prodigy user, and paying for dial-up service she surfed the Web looking for parenting sites and family-oriented Web pages, but found little that was interesting or useful to her. Being an extremely curious person, Fognano began opening up the source code to some of those sites and then taught herself some HTML.

In 1997 she started a website for Beanie Baby collectors after being appalled by the scalping that surrounded the hot collectibles. Although not a massive collector, she just thought Beanie Babies were cute, and was irate about people taking advantage of kids by doing unsavory things like tracking the shipments to Hallmark stores or tracking UPS shipments and stealing them.

She also admits that she had a lot of time on her hands and no specific focus or mission. Her site FunkyMommys.com was designed as a trading board for moms and kids to swap Beanies without fear of being ripped off. At the height of the Beanie Babies craze, the site had more than 2,000 members but Ty, the maker of Beanie Babies, began to enforce its trademark in cyberspace and sent cease and desist letters to those using the word “beanie” and even “beans.”

Although Fognano at the time thought that she could have fought Ty (her message board was called Bouncing Beanie Board), she didn’t have the time or money for a protracted legal battle with a big company. She also could have just changed the name of her board; instead, she pulled down the site and contemplated her next move.

THE COUPON CRAZE

By now it was 1997 and Fognano still had a mortgage to pay and two young children to care for at home. So, she decided to put up an online resale shop for moms. She settled on a doll-house theme (see image) and then spent $2,000 to have an artist and programmer create the site. Fognano was very pleased with the way it turned out and thought the site was beautiful. Moms could post ads and pay her 25 cents for each one. Things were going pretty well. The site was getting some decent traffic and Fognano was adding even more content including coupons from an early dot-com drugstore (PlanetRX.com). The popularity of the coupon portion of the site led her to add a coupon box in the lower right corner of the page. Soon she noticed that 98 percent of her traffic was clicking directly on the coupon box.

But instead of being delighted, Fognano was devastated that she had worked so hard and spent so much money to create this site she loved but people were only interested in the coupons. After she emerged from her funk, she signed up with two of the first merchants to have affiliate programs – Amazon and Barnes & Noble – and she decided that she needed to dump her beloved doll-house theme and concentrate on the coupons.

Currently, Fognano has three very successful coupons sites – CleverMoms.com, CleverDads.com (manly things), CleverBabies (baby and toddler items through 5 years old). She is a super affiliate and works with Commission Junction, Linkshare and Performics. She has one employee. Previously, she had two – one full time and one part time. But earlier this fall, she discovered that she could handle some of the load herself as both of her kids went off to school for the first time.

Fognano had been home-schooling her children because each of them had unique learning issues. Her daughter had a language impairment and Fognano battled the school for years. It now has a program and Haille, who is now 9 years old, can attend classes full time. For the last year a teacher had been coming to the Fognano’s home to help. Her son Austen, now 11, is a very gifted student and there was no advanced placement class for his grade. So, Fognano home-schooled him until the third grade.

THE MOTHERING INSTINCT

“I’m one of those mothers that want things to be perfect for my kids,” she says. “I took care of them when the school wasn’t.”

She likes to take care of people. Fognano’s two employees were both stay-at- home moms that she has never met in person or even talked to on the phone, despite that the one in Portage, Wisconsin, has worked for Fognano for four years and the one in Syracuse, New York, had worked for her for one year.

While she admits it was slightly odd to be paying people to work for her that she’d never met, she says it was a great arrangement. Both of the moms were previously loyal visitors to her site and began sending Fognano deals – sales and coupons – and she decided that she should start paying them for their efforts.

Although Fognano has been an affiliate for almost a decade, 2006 has been a year of changes for her and her business. Sending her kids off to school meant more time to attend conferences, shows and events – something she never had time for previously.

Earlier this year she attended a conference in Dallas for women in business (EWomen Network in June). She referred to the event as “one big Oprah show,” but she heard some great speakers and took home some sage advice. Top of the list was learning to delegate.

While she still admits to having this kind of “do everything yourself” attitude, she realizes that is a vicious cycle since there is always something to be done, which means she would never stop working. She said it was amazing this summer when she felt comfortable enough to delegate responsibilities to her employees and take some time off for the Affiliate Summit in Orlando.

In the past she says she would have been in her hotel room updating her site or running from Disney World back to the hotel to check on things. This time it was a relief to know that someone else could handle all the duties. That freedom meant that she was able to have quality face-to-face contact with her peers – many of whom she’s developed longstanding email or instant message relationships with over the years.

And she’s working less as well, dropping down from about 10 hours per day, which was previously just early in the morning and then again late at night – to about four hours a day. But in that shorter workday she’s focusing on more strategic issues such as branding her site and trying to get media coverage to educate users on how to use online coupons and where to get those savings and promotional codes.

“Many customers really have no idea about online coupons. It’s astounding to me. There is a lot of work to be done to get discounts,” she says, adding that she never shops online unless there is a coupon. “It’s an annoying thing if you know someone is getting a discount and you aren’t. If I see a promotional coupon box and then can’t find a coupon, then I won’t shop there.”

The new schedule is also allowing for many things that have been neglected for years, according to Fognano, such as her daily exercise routine, things she enjoys like sewing and scrapbooking, and nine years of photos in shoe-boxes that need to be organized into albums.

In addition, she’d also like to do some writing about online shopping – maybe for business and consumer magazines. And while her experiences and success story would be good fodder for a how-to book on affiliate marketing, she says that route doesn’t immediately appeal to her.

MEASURING SUCCESS

“There are too many different factors associated with being successful in affiliate marketing. It’s all about being in the right place at the right time,” she says, recalling that when she began there were only a handful of coupon competitors. “You could count them on one hand.”

She claims that most of her visitors are type-in traffic and that she doesn’t get a lot of eyeballs from the search engines. But once people get to your site, you’ve got to give them a reason to come back. Her writing helps in that department.

She already has an email newsletter that she sends out every Thursday to her large base of subscribers. She often writes stories about her husband and kids and things that are going on in her life. These personal stories are not intended to be a marketing trick but a reason for visitors to come back to her site. She thinks getting personal has helped others identify with her on a deeper level and created loyalty.

“It’s just me being me,” she says. “About 70 percent of the time, I try to be funny and mostly I succeed. People are always writing to me to let me know they could really relate to what I was writing about.”

But there are times that she gets some negative comments and feedback on her personal tales, but those are far outweighed by the positive responses she typically receives.

She recalls a story she wrote where she mentioned waking up late one morning and rushing around trying to get the kids ready for school, while her county policeman husband was moving at a snail’s pace. Many people wrote to her saying that she should have never called out her husband in a public forum and “shame on her.” She was shocked at the response.

Regardless, she enjoys the interaction with her customers. “This business is not always about making a buck,” she says. “If I can have something that people look forward to every Thursday, that makes me happy.”

Maybe that’s because she has also far exceeded the goals she originally set for herself when she started out with her doll-house resale site: to make $1,000 a month. Many of her work friends from back then shunned her because she chose the mommy track rather than opting to climb the corporate ladder. Now she makes more money than most of them, although she declined to provide specifics on how much she earns as an affiliate.

“I don’t have to make a specific amount per year. I don’t focus on that. As long as we have our bills paid, then I’m happy with the income the site generates.”

She’s also thrilled to be able to work at home. It’s one of the best things about her job. She says that she’s not exactly the affiliate in her pajamas at the computer, or the affiliate marketer sitting out by the pool, but she’s got a lot of freedom. She can have coffee with a friend whenever she chooses. She can attend a sewing conference. She can have lunch with her husband. She can volunteer at her kids’ schools.

But working at home requires self-discipline. Much of that discipline comes from Fognano’s educational background. She paid her own way through college and graduate school, which took her 12 years since she could only take classes as she could afford them. She used to fly to Vermont for 12 days every six months and the rest of her curriculum was done as independent study. While getting her master’s degree she would drive two hours each way to attend classes. She got straight A’s all through her education because she “couldn’t bear to get a B.”

That discipline, coupled with Fognano’s desire to help people and her love of being a mom, is the driving factor in her success. She also has a strong sense of what’s right for her.

“I could not stick an offer up for a quick buck – like something for a gambling site,” she says. “What if someone got hooked on gaming? I just wouldn’t be able to sleep at night. I make sure to deal with ethical people that are not spammers. I want things to be ethical, honest and up front.”

The bottom line: “I’m just a mom doing this. I thought I’d never be in sales and never in marketing. I’m just a mom who opened a resale shop online hoping to make money and the coupon site is a fluke or should I say, a blessing. I love doing it.”

The title on her business card says it all – Mama in Charge.

Scott Hazard: The Performer

Despite having many talents that often thrust him to the forefront, Hazard is a modest man who typically shuns the spotlight.

For more than three years he’s been an extremely active and vocal member of several online affiliate marketing forums. While many of his closest industry friends often refer to him by one of his message board handles, he prefers not to give away his online identity publicly so that he can continue to voice his strong opinions about unethical practices without fear of repercussions.

But Hazard stresses that he’s not hiding behind the anonymity of the message boards and that he never says anything in those forums that he wouldn’t express face-to-face. Rather, the fear is that if the offending players in the space knew his real name and his websites, they might retaliate by using their technical know-how to attack his sites, which are his livelihood. Other affiliates say they worry about being physically harmed or having someone knock on their front door. He agrees that type of threat is within the realm of possibility.

Still, Hazard dismisses the notion that some message boards can be vicious at times. For him it’s been a wonderful community where he’s been able to develop some extremely close friendships – which are a very important component of doing business for him. Because he works from home – like many other affiliates – he’s somewhat isolated from the typical, everyday office interaction and considers the message boards his water cooler, albeit an online version.

He appreciates all the help and advice he’s often received – and given – as a huge factor in his continuing participation in these forums. The ability to log on and find answers about a merchant he’s promoting or thinking of promoting is priceless. Approaching the posters on these boards with a sense of humility and respect means that forum members will bend over backward to help you, Hazard says.

But it’s not like everyone is about to divulge all their secrets. He likens the amount of information that affiliates are willing to reveal to each other to the Seinfeld episode where two magicians are having dinner. However, in the popular TV show, the magicians spend the entire meal trying to one-up each other, and most affiliates, Hazard notes, are just the opposite – they don’t give out any information, including the most basic stuff – like the names of their websites. He laughs at that idea, calling it a very cool dynamic.

And he’s no different when it comes to disclosing specific information about his business. He operates approximately 30 to 40 websites that are in the retail space and focus primarily on apparel, but he’s hesitant to give out any more details. But when it comes to his latest site – CouponPouch.com – he’s not shy about talking it up.

The site launched in April and is his first venture into coupons. He always thought there was a large opportunity in that area – especially since he’s got some friends that are every coupon-intensive people, many of whom he describes as toting around a tickler file of coupons that weighs two pounds.

In order to spread the word about CouponPouch.com, Hazard is taking a multifaceted approach. There’s lots of local advertising in many parts of the United States. He’s using newspapers in each area to get the word out. He’s doing a lot of online and off-line promotion and focusing on viral advertising. He wants people to talk about his site and he thinks freebies and giveaway goodies (business cards, fridge magnets, hats, etc.) are a great way to do that.

Of course, there’s the Honda Element he drives around the central Florida area with the giant kangaroo on the side that’s hard to miss. He recently had the SUV professionally wrapped to display the CouponPouch.com logo. And if you spot his vehicle parked and stop by to say hello – he’ll give you a free gift. However, don’t try and pull him over on the road for the free gift. He’s a gung-ho marketer, but not at the expense of on-the-road safety.

None of these marketing ideas is random. Hazard says he lies awake at night thinking about these kinds of things. He’s got a pretty good idea of what works and what doesn’t. And he’s learned that means striving to be independent of any single source of traffic. Although natural traffic is free and he spends money on Yahoo and Google, he stresses that affiliates need to get smart and develop marketing strategies outside of the box.

He may lie awake at night, but he bounces out of bed each morning and can’t wait to get to his computer. Hazard loves his job because it allows him to use his creative side to think about ways to bring items to market. But he can also use his logical side to structure events to bring the creative vision to fruition. He says it is the most fulfilling job he can possibly imaging having – and it’s not about the money. Yes, he admits, we all need money and money is not a bad thing, but for Hazard, it’s the satisfaction of developing an idea and then walking it through to completion that is the real joy.

He loves that, armed only with creativity, personal drive and a computer, he has the ability to compete with multi-million-dollar corporations. “They have a website. I have a website. The playing field is much more level,” Hazard says. “I can’t go to the mall and build a Nordstroms and sell wares, but I can sit at the computer and create a website to sell wares.”

And not everything is a success. If something doesn’t work, he’ll shuck it and move on. He has lots of ideas and spends time cruising through the networks and looking at websites searching for new ideas and things that spark his creativity. He checks many of his new pay-per-click ideas using what he calls the $200 rule. That means he spends a day or two to set up a website or Web pages, sends some PPC advertising to it and when he’s spent $200 he evaluates whether it’s working or not. If not, he just puts it aside and moves on.

He may have an easy time turning off marketing campaigns that aren’t performing, but he admits that it’s not as easy for him to turn off work – especially since he works from a home office. He’s thought about renting an office nearby and trying to do the 9 to 5 thing, but knows that he’ll end up back in front of the computer at home in the evenings anyway, so he’d rather not waste the money.

Hazard has a love/hate relationship with his computer. “The computer is always there,” he laughs. He works about 60 hours a week and says that often he has trouble distinguishing what day it is.

He springs out of bed around 6 a.m. and starts the day off with a big 16-oz. coffee, while he checks his stats from the previous day and scans the Internet for news. A self-admitted Yahoo pool addict, Hazard will usually get in a few games before getting to his real work in the morning. He also plays Yahoo pool in the late evenings when he’s wrapping up for the night.

His No. 1 piece of advice to affiliates is to stay physically active. He says he’s gained weight since becoming an affiliate three years ago and stresses that work-at-home affiliates need to force themselves to exercise and stay active. But at least he’s quit his 20-year smoking habit.

In an effort to kick back a little more, he just bought a fishing boat after not having owned one in eight years. For the avid bass fisherman it’s a wonderful way to relax. So is music. He recently attended a Willie Nelson concert and says it was a wonderful feeling to have a night unplugged, where he just sat back 40 feet from the stage in a small auditorium and drank a couple of Heinekens and listened to two and half hours of Willie.

The youngest of seven kids, Hazard loves music. He plays the drums and sings. He recently moved from belting out tunes from behind the drum kit to center stage where he now fronts The Quarter Mile Band. They play straight-up rock tunes – covers and about a dozen originals, half of which Hazard wrote. After an 18-month hiatus and some bad luck with a string of bass players, the band is now practicing once a week and working toward putting out a CD or getting their material out in MP3 format.

Still, it’s very difficult for him to turn his brain off. The wheels are always turning with ideas and he’s always looking for better ways to do things. He’s been like that as long as he can remember.

One way to improve things was to go to college. At 29 he quit his job selling Hondas near his hometown of Alexandria, La., and enrolled at LSU with the goal of becoming a certified public accountant.

Although he was making a good living selling cars, he hated the business. One of the reasons was that he’d often spend several weeks talking with a potential customer, only to return from a day off of fishing and find that customer had come in and bought a vehicle and that he’d lost that commission to another salesperson. There weren’t any ill feelings; he was just tired of being in commission-only sales and hustling people for a living.

But accounting didn’t suit him either. After just two semesters, Hazard decided that being a CPA wasn’t for him. He spoke with an adviser and took some aptitude tests that showed he had strong skills for becoming an attorney. Instead he decided to pursue a liberal arts degree with three minors – English (in his senior year he was the editor of the LSU newspaper); history; and speech/theater.

Four years later, with a degree in hand, he was ready to move out of the student mode, give up his part-time gig as a weekend disc jockey at a rock station in Alexandria and get back into the world of full-time employment.

So, he moved to Miami to direct at a theater in South Beach for the summer. He starved, had a great time and then went to work for a marketing company in Fort Lauderdale. That company immediately sent him to work on a project in New Orleans for three months. When he returned to south Florida he pitched his firm on an idea for a jobs site. The company passed and Hazard left to start SouthFloridaJobs.com on his own in 1998.

After visiting a friend in central Florida, he made the move there in the spring of 1999 and subsequently sold his company in the fall of that year. “I’m a Southern boy and I have to move north to get back to the South,” he says.

He began doing various freelance Web design projects and then started designing an e-commerce website for a merchant in Daytona Beach. That website competed with affiliates and Hazard says “those affiliates were kicking my butt and eating my lunch.” His relationship with that merchant ended and he was forced to look at affiliate marketing.

He calls that 2003 incident the single best thing that’s ever happened in his life.

Maybe that’s because he surpassed his original income goals. Hazard pays more in taxes now per month than he originally estimated he’d make in a month and now generates between $2 million and $4 million in sales annually. He was also was named as a charter member of CJ’s Performer program in 2005.

“My affiliate endeavors have proven better than my wildest dreams,” he says.

But a big part of those dreams for Hazard also included leaving behind the rat race and having complete and total control over everything in his business. However, there’s a downside to complete control, according to Hazard, who says that often there is nobody to question your decisions or say no to you, and it’s not uncommon to get tunnel vision.

That’s where friends and forums come in for feedback. And in the end, for Hazard it all comes down to doing the right thing and having good friends.

Savvy affiliates like Hazard often have a choice to make – work extra hard to develop new methods to make money or employ questionable tactics that in the short term will increase revenue. Hazard loathes those that opt for the latter, which he believes is the easy way. He credits his mom and dad with instilling a rock-solid sense of right and wrong in him. He says that at the end of the day, when he’s brushing his teeth and looking in the mirror, he enjoys knowing that what he’s accomplished was good and right.

Plus, he has like-minded friends that will call him on his actions. He gets together with a group of four to six friends in Orlando once a month to talk about the affiliate space. These folks are not direct competitors – there’s an affiliate manager and some other merchant affiliates (but they are all in different verticals). They openly share very sensitive business information.

It’s a relationship based on trust formed over the years, according to Hazard. In the end, he likes being a key piece of what he calls the happy triangle.

“If I did something that helped someone find a shoe and in the process generated a sale and the customer and merchant are happy, then I’m happy,” he says. “If I simply find ways to cheat the merchant and I end up with money and the customer is happy, but not the merchant, then that’s not a happy triangle.”