Affiliates Yearn For Standard Bearers

Affiliate marketing is entering its adolescent phase, but the lack of standards for delivering data is inflicting some serious growing pains. If the industry is to grow up as well as out, merchants and affiliate networks need to provide affiliates with consistent methods of accessing the data that feeds their development.

While nearly anyone with a Web address can create a static storefront with a few dozen links or banner ads, affiliates looking to stand out from the competition are finding it necessary to incorporate near real-time feeds of product information. These feeds allow affiliates to differentiate themselves by displaying daily promotions, available inventory and updated pricing.

Unfortunately, sales sophistication comes at a cost. Because many merchants and their network intermediaries continue to deliver data using 20th century technology and proprietary data formats, affiliates must develop custom applications for each partner relationship. This time- and resource-consuming process detracts from the goal of promoting products.

The State Of Disunion

Today most affiliates receive creative materials for banner ads and product information as text files delivered via email, or by downloading them from a merchant file transfer protocol site or password-protected Web site.

Chris Henger, senior vice president of marketing and product development for affiliate network Performics, says that the current process is one whereby affiliates are mostly responsible for retrieving the information. In cases where the merchants deliver information to affiliates, it’s usually formatted as XML data or comma-separated value files. But there is no consistency of formats or order of product names, categories or descriptions, Henger says.

Performics converts the merchant data into customized files for each of its 75 affiliates, which requires considerable data massaging and some human intervention, he says. However, he notes that even as technology advances, affiliate networks will continue to deliver information in multiple formats because of the lack of technical sophistication of many affiliates.

“There will always be some (affiliates) who are happy with cut and paste,” Henger says. And for affiliates who sign up to offer products from dozens, or even hundreds, of merchants, that’s a lot of cutting and pasting, which inevitably leads to embarrassing errors.

The level of technical expertise among affiliates varies tremendously, according to Kellie Stevens, president of AffiliateFair-Play.com, an industry advocacy group. Stevens says some networks have developed application scripts to somewhat automate the retrieval of data, and frequently affiliates “install them on the servers without knowing what they do.” And while some affiliates have a background in programming, “For some it’s a stretch just creating a Web page,” she says.

But getting pricing information and daily promotional materials aren’t the only items that have affiliates clamoring for data feed standardization. Most also need to get near-real-time data about their specific commissions, click-through rates on banner ads and raw sales data. The largest networks, including LinkShare and Commission Junction, use the same technologies to track those important affiliate statistics, but affiliates may still have to do some of their own number crunching to figure out the top-selling products and those that are merely taking up screen real estate. Some networks with fewer affiliates provide performance feedback via instant messenger.

Because affiliate marketers are by nature independent-minded and have a variety of opinions on how to streamline the data-sharing process, there is not likely to be a single data standard anytime soon, Stevens says. And because there is also no strong industry association to recommend or impose standards, affiliates will likely have to grapple with proprietary data feeds for the foreseeable future.

Networks Eye RSS

However, a few forward-thinking networks are embracing a standard from the online publishing world that simplifies receiving real-time data feeds. The real simple syndication, or RSS, standard was developed to allow news publishers to seamlessly share headlines and article content with other Web sites and is currently used by many media leaders including Yahoo, the BBC and Wired News. RSS standardizes the XML tags used to identify components of an article and is popular with many Web logs, which also use RSS to publish their own content so that other Web sites can link to it. Online marketers realize that the RSS standard could be used to define tags for product and pricing information and reduce the amount of programming needed to extract information. RSS data can be distributed via email or FTP, or automatically streamed to remote Web servers. To view RSS feeds, you need to obtain an RSS reader application, such as FeedDemon or NetNewsWire, or point your browser to a feed-reading service such as Bloglines or MyFeedster.

One of the early adopters of RSS is diamond jewelry seller Mondera of Bangkok, Thailand. Chris Sanderson, Mondera’s marketing and affiliate partner manager, says the company is turning to RSS because email “has started to reach its limit as a useful tool.” Affiliates, like the rest of the wired world, receive a high volume of spam, so they use email filters that frequently block the data files, he says.

“We needed an easy way to reach out to our affiliates that wouldn’t clutter their mailbox, that they could opt into É and that provides easy access to more detailed information,” Sanderson says. Shawn Collins, who runs several affiliate sites and merchant programs, including ClubMom, is making the transition to RSS for his data feeds. Collins recommends that companies disseminating information via email should switch to RSS because it can be used to get around spam filters. Collins uses NewsGator, a news reader plug-in for Microsoft Outlook that enables RSS feeds to be sent directly to folders without screening by spam filters. RSS enables Collins to more quickly manage multiple programs and affiliates. A small number of affiliates are starting to use RSS but, Collins says, “Most affiliates don’t realize that they are missing out.”

Merchants who aren’t interested in developing technology themselves or negotiating with affiliates are turning to consultants and affiliate management companies for guidance. These groups often minimize the technical hurdles of sharing data with affiliates by taking data in whatever format the merchants prefer and finding a method of matching it with the affiliates’ preferred means of communication. Michael Stalbaum, CEO and affiliate manager of UnREAL Marketing, says affiliates get what they pay for in making a technology investment and that many affiliates are happy using email and FTP files to find out how their shops and ads are performing. However, he notes that the quality tracking of referrals through a timely data feed is key in a performance-based industry. “Since you only get paid when you generate leads, you need to understand what is working and what is not,” Stalbaum says.

Affiliate marketers are looking at the networks to organize the data distribution process using standards such as RSS, according to Gary Stein, senior analyst at JupiterResearch. He says that any standardization is likely to come from larger players like Commission Junction, LinkShare and Performics.

Standardization of product and performance data would give marketers more timely insight into their customers and allow them to more quickly make decisions about promotions. “Product feeds are getting more in demand. If you can set up an automatic feed using RSS, you can do all kinds of things,” he says. For example, if prices change, you can automatically rotate the least expensive item to the top of the list. Stein says that while many marketers grab the cheapest technology to get the job done, “20 percent of the affiliates are really sophisticated and passionate” and are willing to invest in technology.

Blogs: The Interactive Affiliates

Blogs, which are often personal opinion, news and rumor Web sites, have attracted huge followings during the past few years, and they are now monetizing their popularity by becoming affiliates. Entrepre-neurial bloggers are now using scripts to combine their RSS-formatted content with affiliate links. This ensures that when another Web site uses content that features text links to merchants, the original blogger is credited with referring the traffic.

Dick Costolo, CEO of data feed services company FeedBurner, says several networks have asked his company to help them create a commerce solution leveraging RSS feeds. Affiliates who receive RSS feeds no longer have to read through emails or check the Web sites of all their merchants to see if new content has been posted. RSS is a “more efficient way of tracking Web-based content,” he says.

There is a substantial business opportunity to combine blogs and commercial publishing traffic with affiliate marketing, according to Costolo. He claims there are currently about 4 million RSS feeds being distributed, 95 percent of which come from bloggers. Affiliate marketers can have their referral IDs inserted into RSS content streams, enabling them to contextually link within articles while maintaining tracking information.

Costolo recently began working with one of the biggest fish in the affiliate stream, Amazon.com. The online merchant is streamlining its affiliate program using RSS to make it easier to track purchases and associate relevant sale items with content. For example, an affiliate that has content about books can scan the RSS feed to find related content that is continually updated. “We are giving publishers more options by enhancing their feeds,” Costolo says.

Merchants At Your Service

Affiliates looking to partner with the largest online sellers may be required to make a more substantial investment in technology, but in the process they can gain experience with the leading e-commerce standards. Amazon and eBay have granted access to their massive inventories via Web services application programming interfaces, or APIs. Web services are platform-independent applications broken into component functions that are used to share information over the Internet.

Amazon and eBay have provided Web Services blueprints detailing how affiliates can query their databases to obtain real-time price and product information using tools common to many developers, including Java, the simple object access protocol (SOAP) and XML. Through Web services, affiliate developers can access product images, perform searches and find related products through standardized APIs. “The focus [of the Web services initiative] is to give programmers the guts of Amazon’s technology so that they can build a storefront on top of it,” says Jeff Barr, program manager for Amazon’s Web services.

Combining Web services with RSS data feeds is a “great example of creativity” that enables affiliates to mass-produce dynamic Web pages, and “this allows small companies to compete with the bigger guys,” Barr says.

But don’t look for Amazon to provide comprehensive tools that enable affiliates to cut and paste some code or download a utility and immediately hang out their virtual shingle. Barr says the Web services method requires some programming, and third-party companies are filling the void by developing applications that are more affiliate friendly. However, affiliates who aren’t afraid to learn a few simple scripts and shop around for third-party tools could put up a basic site within a few days, he says.

Choosing A Path

Affiliates looking to promote products from many merchants must manage the tradeoffs of committing to create custom feeds for each partner with the overhead of implementing cutting-edge technologies such as RSS and Web services. Or, they can take the path of least resistance and join up with a single affiliate network.

“Signing up with an affiliate network is the way to go,” for most affiliates today, according to JupiterResearch’s Stein. He says it is the affiliate networks’ responsibility to be the trusted source “guaranteeing that all the clicks are being counted.”

However, some affiliates are leery of committing to affiliate networks without being able to understand the networks’ proprietary data feeds that are used to calculate their commissions, according to AffiliateFairPlay’s Stevens. She says the networks were created to intervene between merchants and affiliates, but now some affiliates are learning how the data feeds operate so they can police the networks.

Understanding what goes into your feed is never a bad idea.

John Gartner is a freelance writer living in Philadelphia. He is a former editor at Wired News and CMP. His articles regularly appear on Wired.com and AlterNet.org.

A Show-Stopping Performance

In times when change comes quickly, many things can keep online marketing managers up at night. The question is: What should keep them up?

Some grapple with balancing their own search marketing efforts against affiliates’ or understanding which marketing strategy delivers a better yield in terms of marketing cost as percentage of sales (CAPS). Others struggle with an increasing need to spend on customers more than once, through multiple advertising venues, in order to earn the final purchase.

Looking forward, e-commerce executives must plan to actively deal with two critical issues: embracing integrated performance marketing and adjusting their goals, success metrics and tactics. While this sounds simple enough, the risks behind making the wrong choices continue to rise.

Performance marketing surrounds us and has converted Web marketing from a grand experiment into a must-have for direct, retail and brand-focused marketers. Given this hyper-focus on performance, savvy marketers and the agencies they employ are playing in multiple facets of online marketing ranging from traffic-focused cost-per-click, to awareness focused barter arrangements, to cost-per-sale/action campaigns.

Other interesting trends include the emergence of geographically targeted and “day part” search buys wherein pre-set business rules help to automate decision making behind campaigns. Contextual marketing technologies like the UK’s Vibrant Media or Quigo also offer potential leveraging strategies that employ text-based ads and use content relevancy to place them.

If they could, marketers would choose a single, reliable, integrated technology or agency partner that offers vital insights, reduces friction and streamlines media buying. Centralization of campaign data across multiple advertising strategies offers the potential of an information-rich environment to make short- and long-term decisions. It also opens the door for rule-driven automation that enhances the productivity of already constrained human resources. This is integrated performance marketing, or IPM.

Moving forward on such an approach requires an appreciation for complex legislative, technical and operational issues that shape today’s performance-focused strategies. Many marketers have surface-level perspectives on how, as an example, affiliates actually generate legitimate (or illegitimate) sales or return on advertising spending on key search terms. Making the leap to IPM will provide marketers with insights needed to streamline decision making.

Until then, reality demands marketers must plan, execute and optimize their campaigns with fragmented tools. Marketing managers responsible for numerous performance initiatives will continue to be at the mercy of disparate technology solutions. Tracking campaign performance within individual spheres – email, affiliate programs, CPC media buys, etc., – is simple. But centralizing data is difficult, making it harder to work smarter or faster. Search marketing company iProspect created iSEBA to address these needs.

Concurrently, in an environment filled with change, executives are forced to come to grips with mergers and acquisitions among vendors. (See story, page 60). Industry consolidation inside the affiliate, search management, ad-serving and comparison shopping spaces serve as examples. As companies like ValueClick, DoubleClick and aQuantive continue to cobble together performance-focused technology and service providers, the market is forced to ask itself, “Why?” and “What’s in it for me?” Time will tell, but IPM looms on the horizon.

Not So Simple

There is agreement in that performance strategies are not as simple as they look. Marketers are suffering through the intertwining of performance strategies such as affiliate and search marketing. A more sophisticated approach to measuring and benchmarking the effectiveness of individual strategies is needed.

As an example, although affiliate marketing is perceived as purely performance based, experience dictates otherwise. Specifically, what appears on the surface to be affiliate-generated sales oftentimes result from multiple customer behaviors, unscrupulous tactics or other marketing campaigns. Efficacy of each is clouded.

By assuming an integrated perspective and focusing on how customers end up arriving on their Web site, savvy marketers are discovering that customers are being driven to purchase based on multiple online and offline ad/marketing spends. As an example, individual orders generated by customers may involve multiple media interactions such as radio advertising, a shopping comparison portal and, finally, a cash-back affiliate site. Today without the proper tools, it’s difficult to see such trends. With an IPM approach, it is possible both to spot them and to adjust media spending accordingly so as to significantly lower marketing CAPS.

Seeing Through New Glasses

Brand awareness and direct response advertising can coexist and must plug into corporate goals shared across the e-commerce team. IPM can help. Inside these different marketing realms, campaign-level spending and objectives are measured in different terms yet both intersect with overarching business objectives such as CAPS and lifetime value (LTV) of customer. These measures drive strategic decision making (i.e., media budget allocation) offline and online; they must be understood clearly.

By aggregating data cross-strategy, decision makers can hold various types of media spends up against each other using a common, business rule-driven yardstick specific to their goal. The marketer may be interested in hitting a predetermined marketing CAPS and/or LTV number. In either case, centralizing results data yields new perspectives on cost efficiencies of each particular strategy. While a handful of marketers are able to engage in such an approach and reap the benefits, costs may very well outweigh the benefits.

Embrace And Adjust

More and more, we see the need for technology solutions to facilitate streamlined IPM. In order for marketers to develop smarter media spending plans, a cross-strategy viewpoint aimed at good, better and best strategies is needed. Yet many struggle by integrating existing and homegrown solutions.

Search management and performance-marketing agencies like Advertising.com, AvenueA and iProspect are beginning to roll out solutions in which business rules drive media buying decisions under a single strategy. In order to make the best media spending decisions, it is paramount to measure effectiveness across multiple types of performance campaigns in real time. This requires a tactics-level understanding of the details of each strategy, such as how affiliates generate sales numbers. Equally important, marketers are being forced to identify quickly which marketing vehicle delivers results better than others and why.

JEFF G. MOLANDER is CEO of Molander & Associates Inc., a Chicago-based publishing and consulting firm that helps multi-channel retailers, catalogers and service companies to manage their affiliate programs.

Search For Tomorrow

It was the summer of 1998 when GoTo.com launched its pay-per-click (PPC) program in a fairly straightforward way. Back then, there were few competitors and the bids were low. Often a top slot could be had for a penny a click, and the reporting was bare bones.

It was morning in paid search country.

Six years later, the paid search landscape has gotten a lot more crowded. According to PayPerClickSearchEngines.com, there are now about 600 PPC engines. It has also gotten a lot more expensive, with the minimum of a dime per click at Overture. And all that has made things a lot more complicated.

If you want to know what the future holds for the fusion of paid search and affiliate marketing, strap in and hold on tight.

The typical affiliate program is heavy on affiliates utilizing either natural optimization or paid placement. A third of all affiliates promote their links in PPCs, according to a survey in the AffStat 2004 Report. Additionally, 16 percent cite data feeds as their preferred method for promoting an affiliate program.

When CAN-SPAM (Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003) took effect on Jan. 1, 2004, the email affiliates were significantly bridled. This has resulted in a seismic shift by affiliate programs and their growing reliance on search engine affiliates.

According to Kevin Lee, CEO of the search marketing technology firm Did-it .com, paid search is moving toward more personalization, automation and the greater emergence of vertical portals. There are also some changes on the horizon with regard to use of company trademarks by affiliates, says Lee.

Personalization Per Click

Affiliates using Google AdWords can now target regionally and locally, so they can reach the prospects who are most appropriate for the affiliate program they are promoting. For instance, if an affiliate is running a fan site for the New York Jets, it wouldn’t make a whole lot of sense for them to use paid search to push a Jets banner to a national audience. But with regional, city-level and IP targeting (using the address uniquely identifying a certain computer on the Internet), affiliates may focus on specific cities and metropolitan areas to market Jets goods. Google even enables affiliates to define their own target area by choosing a point and a surrounding radius of 20 or more miles or by picking points in order to define a border.

Personalization could be focused on regions or interests. “Rich media search, image search and news search will gain in popularity, and paid results will become available within these areas,” says Did-it’s Lee. “All the search engines will roll out some kind of personalization or personalized search where the engine remembers things about you. This will help with targeting ads better as well as algorithmic results.”

You can expect affiliates to begin using this option more extensively, bringing in a more attractive and effective CPM (cost per thousand advertising impressions) and CPC (cost per click).

Automate To Elevate

Affiliates have long relied on spreadsheets to manage all of their keyword bid campaigns, but as the paid search space matures, the administration and tracking of PPC campaigns is getting more advanced.

“In order to continue participating in the ever-increasingly competitive marketplaces for keyword bids, marketers will be forced to use marketing automation techniques that take into account order profit values and lifetime value, not just simple ROAS (return on advertising spending) or immediate ROI (return on investment),” according to Kevin Lee.

Some of the more popular tools for automating paid search processes are Atlas OnePoint (formerly Go Toast), the Maestro Client from Did-it.com, and PPC Track from KowaBunga Technologies. Additionally, search engine marketing firm iProspect unveiled iProspect Search Engine Bidding Agent (iSEBA) in the summer of 2004. ISEBA manages the keyword bidding process for pay-per-click advertising campaigns on both Google and Overture’s paid search programs.

Making A Vertical Leap

As affiliates get deeper into personalization, it’s natural that they’d also gravitate to vertical portals that serve the channels for the affiliate programs they promote. While search engines do not generally define themselves as servicing certain types of users, the MarketingSherpa Search Marketing Metrics Guide reveals that just like any other media property, each search engine has a remarkably distinct type of user.

This MarketingSherpa report, which surveyed 3,007 marketers in July, reveals that highly educated men with an interest in technology tend to use Google. Kids are more likely to Ask Jeeves for their search results. Older teens rebel by making MyWay their way. Moms tend to prefer MSN search.

So for affiliates trying to reach the men and kids, Google AdWords is the way to go to get your ads on Ask Jeeves, MyWay, and of course, on Google itself. But if you want to hawk wares to moms, you’d better be using Overture to place your targeted ads on MSN. Bear in mind that things may change due to consolidation and new business arrangements, so keep an eye on who’s serving whom.

Lee expects that vertical portals will become hotter, including the shopping portals, as well as portals within specific industries or customer segments.

On Your Mark. Get Rules. Go!

In the early days of affiliates bidding on keywords, there were no regulations being enforced by the affiliate programs. This can be attributed to a number of issues, including good old-fashioned ignorance; many affiliate managers have never been affiliates and don’t know how they do what they do. However, you could also attribute it to self-preservation. Affiliate managers are aware of activity that’s not particularly beneficial to their company, but it makes the affiliate program look better. This resulted in an environment where multiple affiliates, and the trademark owner, were competing for ad placement on trademarked terms.

The bad news for affiliates is that things are changing. Over the past year, there’s been a significant shift. In a poll of affiliate managers on the AffiliateManager.net Forum in August 2004, 65 percent said they were no longer allowing affiliates to bid on their trademarks.

And why wouldn’t they feel that way? It’s a low hanging fruit that converts well, and if the company isn’t in a bidding war with their affiliate, it’s a cheap cash outlay. Why outsource that sort of thing to affiliates and pay exponentially more for it?

Don’t Jerk That Knee

But all things considered, merchants ought to be most concerned about controlling what’s above the fold. At least that’s the contention of David Lewis, president of 77Blue, which operates private- label shopping portals and coupon sites with more than 800 merchants in three countries. “There are unintended consequences to restricting trademark bidding. It’s not all about ROI. You have to consider PR,” says Lewis.

Lewis’ view is decidedly merchant-centric, which is surprising for an affiliate. According to Lewis, “Advertising on a merchant’s trademarks is a privilege and not an affiliate’s right. Merchants should consider creating a separate agreement with two or three affiliates they trust, and allow them to bid on the trademark,” he says. “This gives the merchant control that is forfeited when banning trademark bidding.”

By banning affiliates from bidding on trademarked terms, Lewis argues, “merchants are giving management of their brand to Google and Yahoo, with whom they may have no relationship. I would want to control the results that come up when a user searches on my trademarks, especially knowing that most users click predominantly on the first 10 results.”

While the majority of merchants are currently banning their affiliates from bidding on trademarks, Lewis’ view is gaining ground. Beth Kirsch, the affiliate manager for Audible.com, had a policy against affiliates bidding on her company’s trademark. But after taking Lewis’ thoughts into consideration, Kirsch did something of an about-face.

She says, “While Audible is our trademark, it’s also an everyday word. No affiliate PPC bidding left room for other companies to promote ‘audible’ products. It clearly damaged the brand. David’s input made us change our policy, where we now allow a couple of trusted affiliates to bid on our trademark,” she says. “What’s a few bucks, when we have spent millions to build a brand?”

Another affiliate, Steve White, sounds a similar note. “Affiliates have an incentive to apply creativity to the bidding and keyword selection process. That incentive is more commissions,” he says. “Therefore, a dedicated group of affiliates can far outweigh the internal efforts of a program, unless that program has the resources to hire full-time search engine experts, as well as the capital to bankroll the campaigns. The affiliates bring both to the table at no cost (to the merchant), and the results are almost instantly calculable.”

The Other Trademark Issue

Even though affiliates may not be able to bid on the trademark for Company X, they can bid on the trademark of Company Y (the chief competitor to Company X). The bids on Company Y can then direct traffic to Company X. This is an escalating problem, says Lee of Did-it.com.

“There may be some significant litigation regarding trademarks and search engine marketing (SEM),” he says. “Some marketers may try to encourage affiliates into bidding on competitive trademarks (not their own) in an attempt to shield themselves from litigation.”

In the past, Google granted requests from advertisers to bar competitors from bidding on their trademarked names. However, Google will now only review trademark complaints that relate to text appearing in sponsored listings on its Web site and those of its partners. So affiliates cannot mention a company in copy for their competitor, but they can bid on the trademarked name of that company, and that could be a liability for the affiliate program they are promoting.

Trademarks aside, the bulk of affiliate programs permit bidding on most keywords, and there are still bidding bargains to be had. Communication between affiliate managers and affiliates is essential, and the well-informed affiliate is the most efficient affiliate.

Audible’s Kirsch knows this, and she makes a “keyword kit” available to her affiliates. It’s a document outlining which keywords affiliates cannot bid on, as well as a list of suggested keywords for affiliates to use that convert well.

It’s The Brand, Stupid!

In some cases, affiliate programs have forbidden SEM outright for their affiliates. For instance, the fund-raising affiliate program for the Republican National Committee doesn’t mince words when it comes to how their affiliates may promote them. The description of their program states: “Please note that search marketing is NOT allowed. Affiliates will NOT be paid for donations generated through search engine marketing.”

Often, the reason that companies will ban affiliates from utilizing search engines in their promotion efforts is that they are concerned about the way affiliates will represent them if left to their own devices.

“We’re seeing some increased dissatisfaction from consumers who are clicking on paid search ads and being directed to an affiliate site,” commented Rob Key, president and CEO of Converseon, a communications agency. “Companies need to think very carefully about how they allow affiliates to bid on their brand names. For brand-sensitive companies, we recommend they own their brand names and derivatives. With inflation expected to grow in paid placement, finding efficiencies is absolutely critical. A merchant’s affiliate network cannot afford to work at cross purposes.”

One cautionary tale, or marketing parable, depending on where you are sitting, was on a popular marketing message board. As affiliates debated whether it was okay to use pay-per-click search to promote affiliate programs, one affiliate comments, “If in doubt, just do it!” This was followed by another affiliate who commented “It’s always easier to get forgiveness than permission in anything … just do it.”

It may come as little surprise that when affiliates were asked in the AffStat survey, “When signing up for an affiliate program, do you read the affiliate agreement?” only 45 percent responded that they always read it.

Ignorance of the affiliate program terms is bliss for some affiliates. And when an affiliate program is on autopilot, it makes it that much simpler for affiliates to game the system.

So where are we headed with all of these changes? Well, we have seen the future of affiliate marketing and paid search, and with all of the personalization, automation, verticalization and gate keeping, we will be better equipped than ever before to measure ROI.

Gone are the days of pray-per-click.

SHAWN COLLINS is CEO of Shawn Collins Consulting, an affiliate program management agency; webmaster of the AffiliateTip.com affiliate program directory; and a founder of the Affiliate Summit conference. He authored the book Successful Affiliate Marketing for Merchants and the AffStat affiliate marketing benchmark reports cited in this story.

Using Data With Integrity

A crucial element of building and maintaining a database is data integrity – making sure your information is accurate and in the correct format, unchanged by technical glitches. You can personally verify information if you are entering it manually, but when users are filling out forms on your Web site, and that information goes directly into your database, you need another approach.

There are two places to check data validity: on the client and on the server. Checking data on the client involves adding scripts to your Web pages that examine what the users enter before they submit forms to your server. A script checks that the data in the form meets the criteria you have established. If there is a violation, the script can pop up an alert message and request a correction.

To check data on the server, the user must submit the form and let the code on your server verify the data. If there is a violation, your server can return the form again with a notation of the error that needs correction.

In general, server-side checks can be more thorough, as you can check other resources on your server to validate the information. For example, you might have a database of valid discount codes, or you might check that an email address is not already in your system. However, client-side checks provide more immediate feedback to the user, and can save iterations of submitting a form and then correcting any errors. A balanced combination may prove the best choice.

A simple check on the client side could be a matter of confirming whether the user entered any value at all.

More Sophistication

Your checks can be more sophisticated. For example, you can make sure an area code was entered as three digits. And you can see if an email address contains invalid characters like a space, or if it’s missing the @ character.

In some cases you may need to examine more than one form element at the same time, such as only validating an area code if the user has selected the US or Canada. You can add a name property to the form tag. Your JavaScript function would be passed the name of the form, let’s call it “myform,” and could reference a specific form element value like “myform.test.value.”

Once your form has passed all of its client-side checks, it gets sent to your server where more sophisticated checks can be performed. If you have a database of area codes, you can validate that the user entered a legitimate one. Or, you can ensure that a user has not already signed up for your program or for your service.

If the data you receive from a form is placed directly into a database, then it is even more important that you check the information on the server before storing it. Depending on how your server performs its database access, it is possible that users may include data-base commands in their submission that could directly affect your database.

Another example is a search form, where your server performs a search through your database. If the user can search for an email address based on a name in your maillist, and the server executes “select email from maillist where name=”<name>'”, where <name> comes directly from a form submission, then the user could get your entire maillist.

If they submit the name text “‘; select * from maillist where name matches “*”, then both selects would get executed. The first would produce no results, but the second would match every entry in your maillist. If your code looped through and displayed the results of the select, assuming that only one or two matches would occur, then this example would end up displaying your entire maillist.

In both cases the user would have to guess the name of your table, but it seems there are people out there with nothing better to do.

EDWARD ARENBERG, vice president and CTO of EPage, created one of the first fully dynamic Web sites. He manages and develops for EP.com, Epage.com and AdConnect.com.

Setting the Data Table

The last issue of Revenue gave an overview of databases and how they can be used. Let’s delve a little deeper into how you, as manager of an affiliate program, can use a database to improve your service and provide customized information for all of your affiliates.

When creating a database, the first step is to understand what information you want to record, and the important relationships among the data. Similar information is grouped into a table in the database. An affiliate will have a variety of contact information such as an email address, a postal address and perhaps even a separate payment address. All of this information could be placed into a single table. Let’s call this table affiliate_contact.

You may want to record certain accounting information about an affiliate, such as the date a sale was made, what item was sold, how much the affiliate earned and the total dollar amount generate by the sale. This information could be placed into the affiliate_contact table we already created, but we will place it instead into a new table called affiliate_sales. I’ll explain why later.

In database design, you want to create tables that group similar information and then link these tables together based on their relationships. This is where the term “relational” comes from when describing a database. Relational databases, such as Oracle, DB2, SQL Server and MySQL, provide very rich tools for extracting information based on these relationships.

Planning and mapping the information you have into tables is just the first, but perhaps most important, step in developing your database. You could change a database’s design once it is running, but if you have a lot of data, or a lot of code using the database, changes can be difficult and time consuming. So, it is worthwhile to take some time and care in planning your tables. In 10 years, my company, Epage, has gone through a few database redesigns, but there are some tables that have not changed structure since the first design.

Creating basic relationships between tables can be quite easy. Usually, it’s accomplished by having a common item such as a table column in related tables. If your affiliates all have a unique identifier, such as their contact email address, this can be used to link tables together. The affiliate_contact table and the affiliate_sales tables would both have an “email” column with the affiliate’s email address. If you want to retrieve information from both tables, like the affiliate’s first name and last sales date, you could query both tables using the same lookup key (the affiliate’s email address).

There are other ways to generate relationships among tables. We like to generate a unique number or string of characters to identify one of our users. This unique identifier is only used internally to form table relationships, and may never be seen by the user. This way, if a user needs to change their email address, it would only need to be changed in one table. In our example above, both tables, and perhaps many more, would need to be updated.

There are many reasons to break your information into multiple tables. Tables with many columns (email, address, phone, etc.) can be very difficult to manage. Database servers are designed to efficiently deliver results to your queries. But, they can get bogged down when you have a lot of columns that you might want to select from. For example, when you insert a new row, such as adding a new affiliate to the affiliate_contact table, the database must re-optimize the way it retrieves data from that table. The more columns that are in a table, the more work the database must perform.

Efficiency is another reason for multiple tables. Some tables may have only one row (entry) for each affiliate, such as the affiliate_contact table. Other tables, like the affiliate_sales table, may have many rows, one for each sale. If these two tables were combined, there would be a lot of wasted space for repeating the contact information for each sale.

Consider what unique information you want to record for each affiliate when planning your tables. You may want to know certain business information. For example, you may want to know whether the affiliate prefers to be paid by check or electronically. Or you may want to review the payment terms for certain affiliates, such as the percent of the purchase price they earn. A database can record these unique terms for each affiliate, allowing you to personalize how your program works. You might want to offer better terms to a desired affiliate or during a promotional period. When a sale is made, the percentage earned by the affiliate would be read from the database, and the result would be stored into the affiliate_sales table.

If you send multiple mailings to your affiliates, some might not want to receive all of the messages. You could store which type of messages they don’t want in the affiliate_contact table. Or, you might want to contact your top-performing affiliates. Each month you could query the affiliate_sales table to find those top performers.

Once you have the information recorded, how you use it is limited only by your imagination. You could send a special message on the anniversary of an affiliate’s signup. You could determine which affiliates had a big drop-off in month-to-month sales – perhaps they are having a problem you can solve. You could determine characteristics of your best affiliates – perhaps it’s their location – and target more like them.

Another good piece of information to record is how new affiliates found out about your program. If you use a tracking code in your advertising, you can record the code in the affiliate_contact table. Then you could determine not only how many affiliates were generated with a specific code, but how much revenue that advertising generated. One last idea to consider: If your users can refer new affiliates to you, then you could record who referred each affiliate. Offer an incentive to these users, such as a percentage of sales generated by the affiliate, and you have the potential for a huge force generating new affiliates for you, with almost no work on your part.

EDWARD ARENBERG, vice president and CTO of Epage, created one of the first fully dynamic Web sites. He manages and develops for EP.com, Epage.com and AdConnect.com.

Databasics 101

Most small business operators have dabbled with databases, but relatively few use them to their full advantage. So here’s a crash course call it Databasics 101 on why you need them, how they work and what they can do for you.

Businesses live and die on the information they collect and how they put it to use. For example, at my company, we send a reminder for unpaid ads on the day following their entry. This provides a timely reminder with an easy link to our payment page.

The key tool for storing, organizing and making sense of this information is a database. Many programs use a built-in database, such as an email reader, a calendar or a contact manager. These programs are already heavily used by individuals and businesses to manage their activities. However, these programs only perform specific functions.

If you want to send email to all of your clients who registered with you during a particular week last year, you are facing a long manual process with standard personal information management (PIM) tools. A database can provide such a list of addresses with ease. It also can track the performance of individual ads, determine your best customers, provide page-view history for affiliates and automate your billing process.

There are a number of excellent databases that run on desktop computers. Some examples include Access, dBase, FileMaker and 4th Dimension. There are also dozens of programming, scripting and report-generation tools for these databases.

On servers, popular databases include Oracle, DB2, SQL Server, Sybase, Informix, and the freeware MySQL and Postgres. Some of the advantages to having a server-hosted database include the ability to connect from different computers in your office, the option of using a wide variety of programming languages and the benefits of using an industry-standard structured query language (SQL). If you run a Web server for your business, it is relatively easy to connect the Web server to a database.

In my company, for example, we use server databases for both office and Web environments. In the office, we can do on-the-fly queries to find out information about a customer and to determine how much customers spent on each of our features. These queries can be run by anyone in the office, because we access the same common database.

You’re a Sales Machine

Pairing a database with a Web server allows your site to become a customer-driven sales machine. Of course, it will take a little programming to put your business practices online, but the key component is a robust database. With this combination, there are Web sites that support thousands of affiliates, providing customization for each one. The key parameters for each affiliate are stored in a database.

Databases store their data in files optimized for rapid access. You can’t view these files directly, but databases provide facilities for writing and reading information. It’s important that your database provide facilities for backing up this critical information, and that you back it up frequently.

Just about every database has graphical tools for creating, browsing and modifying database content, generally called tables. Desktop databases come bundled with these tools, but for server databases they are often separate products. These tools can help with the creation and casual browsing of database tables.

To take full advantage of a database, you need to look at its scripting or programming interface – a process that may sound harder than it really is. Server and some desktop databases provide a common language called SQL for manipulating their contents. For example, the SQL statement “select email from customer where area code = 310” would select all email addresses from your customer table whose area code is 310. This same statement could be used on any database that supports SQL.

Databases that provide an application programming interface, or API, open their power to third-party or even customer-written applications. One industry-standard API is called open database connectivity (ODBC). ODBC compliance allows third-party applications and programming languages to connect to and manipulate a database.

My company, for example, uses an ODBC interface to connect Java applications to a database. To find all unpaid ads from the prior day, a Java program connects to the database through the ODBC interface. It then issues an SQL request through that connection. The request is something like “select * from classified where starttime > yesterday and starttime < today and paid = 0.” (This is an SQL simplification, but it serves our purpose.) The “*” indicates we are selecting all data from the classified table that meets the criteria.

The classified table contains the classified ad contents as well as information about the ad owner, such as the email address. It’s then a simple matter for the Java program to send an email message reminding the ad owner that the ad still has an amount due. The message can be personalized, and it can include the ad contents of the ad.

This is just one example of how to use a database, but it shows the potential power of one of the most common tools available to small businesses. Doing this operation manually would be a very time-consuming process and would require personal attention every single day. Using a database allows you to automate the entire process, freeing you to focus on growing your business, not just maintaining it.

If the technology is a bit beyond your personal capabilities, don’t despair. Remember, there was a time not long ago when most people were intimidated by the idea of owning their own computer. There are plenty of people around who can help you, and finding them will be well worth your effort.

The best place to start your search for help is from friends who understand the technology. They probably won’t want to do the work for you, and you shouldn’t expect them to. But they can help you screen the person who will do the work.

Professional help doesn’t have to break your budget. In most cases, you should be able to find a contractor for about the same price as a plumber, and often for less. But if you have a complex project in mind, you may want to seek bids from several computer consultants. n

EDWARD ARENBERG, vice president and CTO of EPage, created one of the first fully dynamic Web sites. He manages and develops for EP.com, EPage.com, and AdConnect.com.

A Nose For Data

As a canny entrepreneur, you’ll want to monitor all aspects of your business. On the Internet, that comes down to tracking data, all kinds of it.

Remember, an affiliate is really an Internet marketer and successful marketers of all persuasions love data. Marketers burn to know who their customers are, where they heard about the company, what makes them come back, what makes them buy. One of the key differences between Internet marketing and the bricks-and-mortar kind is the amount of actionable data the Net can provide.

Keeping track of all that information can seem overwhelming. When she launched bargain shopping site DealHunting.com in 2000, Maggie Boone spent 16 hours a day trying to keep up with stores, products and coupons Ð for a grand total of $2,000 a month. “It’s really hard and very time-consuming,” Boone said. “If anyone thinks it’s easy, well, it’s the opposite.” That careful tracking paid off. Three years later, although she still puts in the hours, Boone has four full-time employees and an income that lets the family live comfortably without her having to work outside the home. She has enough profits salted away that her husband can retire whenever he wants to.

Get ready to become a data hound. If you want to be as successful as Maggie Boone, you’ll need to keep track of four different areas: sales; merchants and their offerings; traffic to, from and within your site; and your advertising and marketing.

How deeply you have to get into tracking data depends on what kind of site you have and how many programs you run. To offer one example, Rotten Tomatoes is a site for film buffs, packed with movie reviews, news and gossip. Visitors can buy DVDs, posters and games. Because the site is so targeted, Rotten Tomatoes works directly with just a handful of merchants. “A lot of these groups have their own ways of tracking,” Rotten Tomatoes CEO Patrick Lee said. “We can either log in to see them, or they send us reports.” Lee trusts the reports, although he might check how many clicks the site is sending over to a merchant, to make sure the numbers make sense.

Compare that simple approach with CouponMountain, a site that strives to help people “live a little above their means” by getting discounts on all sorts of stuff. Founded in 2001 as an after-work hobby by Talmadge O’Neill and Harry Tsao, it now draws 1 million unique visitors every month and reports that it sends more than $100 million in sales each year to approximately 500 merchant partners. CouponMountain, which now has a staff of 11, employs a mix of third-party services and homegrown software applications to keep close track of merchants, referrals, coupon expirations and advertising. The company has one person dedicated to checking merchant reports each day, using AffTrack, an Internet-based service that aggregates reports from networks and individual merchants.

The bottom line

Sales are, of course, top-of-mind for affiliates, because they’re the main influence on the bottom line. Each merchant program may have a different basis for commissions: One might pay for clicks through to its site, another for site registration, and another for sales of products.

Affiliate networks and individual merchants offer other Web-based reports where their partners can check sales and revenue. Reports may be real-time or updated daily or weekly. While many affiliates like to check their reports once a day, most wait at least a month or two to drop under-performing programs. Tracking of sales and commissions happens automatically and reliably, according to Chris Henger, vice president of sales and marketing for affiliate marketing company Performics, because each affiliate’s traffic comes to the merchant via a unique link. “Affiliates don’t have to monitor whether tracking is working,” Henger said. “[There are typically more issues] around, ‘What sales volume am I getting from this merchant, and how do I improve that?'”

Successful affiliates focus not on gross revenues, but on earnings-per-click, or EPC. (See the sidebar “ABCs of EPCs.”) “The most important metric you can get from any network or software is the EPC,” said Shawn Collins, director of affiliate marketing for resource site ClubMom. For example, someone might send a thousand clicks to a bookseller and only 120 clicks to a clothing store, each of which pay the same commission. If you looked only at the commission, you might assume the two programs were equally lucrative. You’d be wrong.

“They don’t pay attention to the fact that it took a lot less traffic to make that same amount of money from one of the merchants,” Collins said. “They don’t take the time to crunch the numbers to see what they actually earn. They’re just stupefied by the [gross] numbers.”

Tracking EPC can help you put your efforts into programs that return the most profit for the least amount of effort. Some network reporting tools and third-party software can automatically calculate and compare EPCs from a variety of programs. Some can also let affiliates create custom reports that compare merchants and programs in different ways so they can identify trends or compare conversion ratios. DealHunting and ClubMom use tracking and analysis tools from AffTrack. There are a lot of reporting options that people don’t take advantage of, according to Collins. Those who don’t, he said, “don’t see the real story.”

Merchant-dizing

When it comes to keeping an eye on all the different merchants, offers and promotions, top-producing affiliates can expect personal service from affiliate managers with the networks and merchants. For a smaller fry, it’s more self-serve. Boone said most of her time is spent on this aspect of her business. “We get a lot of our sales info from the customer channel,” she said. “A handful of merchants keeps us really informed; the rest we deal with as a customer to know what’s going on. We subscribe to the email newsletters that go to their customers, and we literally get hundreds of emails a day from different merchants with sales and bargains.”

Boone turned to a programmer friend to create a database of stores that automatically tracks coupon codes and deletes them as they expire. She can query the database to find out, for example, which stores don’t have any current offers. CouponMountain also built its own tool to track coupon expirations. And it has a content team that spends its days checking to make sure that offers are still good.

Aside from keeping an eye on expiring offers, affiliates have no control over their visitors’ experiences when they arrive on merchant sites. The more you make clear your role as a referrer, the less likely your visitors will blame you if things go wrong with a merchant. Working with trusted partners can ease your mind. Networks protect you by vetting merchants, and they’ll pull the plug on deadbeats. When dealing with established retailers, you can rely on their reputations to some extent. That doesn’t mean you shouldn’t explore less established brands. “There are always different new companies,” said Collins of ClubMom. “I’ll go to different message boards and ask around, ask who’s considered to be the most trustworthy vendor of a product.” Collins warned that you should take such advice with some caution, however. “There’s always a risk that a competitor might try to send you to a bad company. People are helpful and friendly, but they have their competitive interests.”

Still, it’s wise not to take remove yourself too far from consumer-merchant relations. Daniel Washburn, director of merchant development at CouponMountain, says consumer feedback is an important part of his business. “I’m in contact with merchants on a daily basis,” Washburn said. “But in an online business, customers aren’t walking in your front door. So having some sort of communication with them is very important in building a successful site.”

Every time a visitor requests a coupon from CouponMountain, a popup box asks, “Did this coupon work?” There are many places on the site that request feedback, and the company gets as many as 50 customer emails a day. These are not just complaints but also requests for particular coupons or items. But don’t ask for feedback unless you’re willing to respond within two days, the industry standard for good customer service. Wait any longer, and your customers will get impatient and either contact you again with more irritation or go elsewhere to find out what they want.

Positive attributes

Tracking offers and merchants is just the beginning. You can go deeper. Consumers on the Internet are often searching for product information to help them make choices. You need to understand why they make the choices they do on your site, so that you can encourage them to make choices that lead to sales. At the same time, as in the real world, not all shopping choices are based on objective considerations. Merchandising and presentation play a big part in decisions. Therefore, you should carefully track what Lisa Riolo, vice president of client development for affiliate network Commission Junction, calls “attributes.”

Offer attributes may be actual features of the product. To use credit card offers as an example, the product attributes include the introductory APR and annual fee. If you ran a financial information site, analyzing the attributes of your best-performing credit card offers might show you that your audience preferred cards with no annual fee, Riolo said.

How products are described and displayed are also attributes. A retailer might offer several different photos of the same product, in different sizes, with and without backgrounds, from different angles. If you keep track of which photos or descriptions you use, you can understand what works best with your unique site.

Traffic jamming

Another element to come to grips with is internal traffic: how do visitors move through your site? Large corporate Web publishers use complex applications to track visitors’ movements. Many affiliate networks let you put extra information into your links so that you can see which pages do the best job of getting visitors to click. This information lets you move ads and links to the pages visitors like and delete pages of no interest.

Tracking the comings and goings of Web visitors is as important as monitoring revenue. After all, it’s the traffic that makes you money. Check your ads, including banners, link exchanges and paid search results, to see what it is that drew people to your site.

Playing the search keyword game is an art and science unto itself, and many affiliates devote the majority of their time to scrutinizing and massaging their word lists. Search engines Google and Overture have tools that let advertisers observe how their paid search advertising performs. Some networks have management tools that let you incorporate paid search advertisements into your analysis of your overall activity within the network. Some site-building or management applications will let you compare results across search engines and networks.

When you’re ready to become more sophisticated, look for software tools that let you map everything we’ve discussed. “You may want to track all the events that led up to a sale, not just what ads got the most response,” said Commission Junction’s Riolo. Look at where the visitor landed on the merchant’s site, where and when people converted from shoppers to customers. Compare that to which product image you used, the product description and any keywords you bought to advertise on search engines and the text of your ad. “The combination of all this drives the consumer,” Riolo said.

This may sound like a lot of work, but it is worth your time. By tracking all these nitty-gritty details, you’ll get the big picture. Like a well-trained hunting dog, you’ll be able to anticipate the movements of your customers and sniff out the most profitable deals before they get away. n

SUSAN KUCHINSKAS, managing editor of Revenue, has covered online marketing and e-commerce for more than a decade. She is also the co-author of Going Mobile: Building the Real-time Enterprise with Mobile Applications that Work.