Marketing in Action: Q & A with Seth Godin

If you’re in any way involved in marketing – online or off-line – chances are that you’ve read at least one of marketing guru Seth Godin’s best-selling books. He is the author of 10 books, including “Meatball Sundae,” “All Marketers Are Liars,” “Purple Cow,” “Permission Marketing” and “small is the new big.” Armed with a degree in philosophy and computer science from Tufts University, he began his career as brand manager for Spinnaker Software in Cambridge, Mass. Godin is also founder and CEO of Yoyodyne, an interactive direct marketing company, which was acquired by Yahoo in 1998. More recently, he founded Squidoo, a recommendation website, in 2005. Revenue’s Editor-in-Chief, Lisa Picarille, talked with the author, blogger and in-demand speaker about his unique views on marketing.

Lisa Picarille: How would you characterize the current state of online marketing?

Seth Godin: It works! It’s always worked, but now it really does. And, at the same time, off-line marketing is not working. We regularly see the results marketers are getting with big campaigns fail to meet expectations. At the same time, the power of social media continues to expand.

LP: What are the most important components of successful online marketing?

SG: Making something people want (choose) to talk about. They have power, not you. Also, delivering anticipated, personal and relevant messages to those that want to get them. And finally, treating people with respect.

LP: Can you give some examples of companies (and/or people) that are getting it right, and why?

SG: Talk about the importance of social media in online marketing – it’s becoming increasingly clear that messages that spread from person to person are far more powerful than those that come straight from a company. So, social media is powerful, but not if it’s manipulated. Then it fails.

LP: Are there aspects of social media that work for online marketers more effectively than others (Facebook, Twitter, blogs, vlogs, etc.)?

SG: Social media doesn’t work for marketers. Social media exists for the users. Sometimes there’s a positive side effect for a marketer who makes something worth talking about.

LP: You often post multiple blog entries each day; where does all your inspiration/topic matter come from?

SG: I look for things that are broken and then talk about them!

LP: If you were to give advice to someone that is just starting out in online marketing, what would you tell them to do as a first step?

SG: Start a blog. It’ll make you humble. And a better writer.

LP: Your book “small is the new big” is a huge success. But do the “Big Guys” really get it? It must be a whole new concept for many companies to grasp that success doesn’t directly correlate to size. That goes against everything they were taught.

SG: Yes it does. That’s where the meatball sundae comes in. This is a new time, a new era and a new industrial revolution. Not everyone will play by those rules, but that’s okay, because those that do will thrive.

LP: I’m curious what role you think customer service plays in marketing, and are online marketers leveraging that facet to their advantage?

SG: Customer service is part of the product now. So, amazing service (e.g., Amazon) is a valid replacement for advertising.

LP: What role do you think mobile marketing will play in the future of online marketing?

SG: Mobile marketing demands permission. You can’t do it as a spammer.

LP: What are the three trends that online marketers should have on their radar for 2008?

SG: Make great stuff. Get rid of the factory. Measure.

LP: What are the top challenges and hurdles that marketers are facing right now?

SG: This whole thing about “prove it,” and show “ROI” is totally bogus. There’s no ROI on TV or other traditional media. Why do I have to prove that the measured thing is better than the unmeasured?

LP: I keep wondering if marketers will become the new “celebrity chefs.” Do you see a time when marketers will be garnering more PR, praise and adulation than CEOs?

SG: I see a time (now) when the great marketers are the CEOs. Like Steve Jobs of Apple and Howard Schultz [chairman and CEO of Starbucks] and Sir Richard Branson of Virgin Corp.

LP: Is there an industry, vertical or niche that is poised to benefit more than others from the evolution of online marketing?

SG: The only people who won’t want to play in this space are those that make commodities, because it makes it more brutal. The neat opportunity is that almost anything can stop being a commodity (bottled water, micro steel mills, etc.)

LP: What is your vision of online marketing five years from now?

SG: When online is everywhere, all the time, it’s all online marketing.

They Can Hear Us Now: Q & A with Laura Marriott

The president of the Mobile Marketing Association says that ads on mobile devices will only get better, more widespread and easier to create and measure.

Laura Marriott is president of the Mobile Marketing Association (MMA) and spearheads efforts to get mobile marketing adopted worldwide. The MMA is a global nonprofit trade association with more than 500 members in 42 countries. It works toward removing obstacles to market development; establishing standards and best practices to sustain growth in mobile marketing; and being an evangelist for the mobile channel. Marriott was previously director of marketing for Intrado, and the director of business development at Cyneta Networks and Cell-Loc Inc./Times- Three Inc. Senior Editor Eric Reyes asked her some pertinent questions about where mobile marketing is going.

ERIC REYES: What is the history of the MMA? When and why was it formed?

LAURA MARIOT: The Mobile Marketing Association was initially formed in 2000 as the Wireless Advertising Association (WAA), a New York-based nonprofit trade association. In 2003, the WAA and the Wireless Marketing Association (WMA), based in Europe, joined to form the Mobile Marketing Association. At that time, the MMA had only 10 member companies, which included companies like m-Qube, Mobliss, The Weather Channel, Carat Fusion and Vindigo. The chairman in Europe at that time was Cyriac Roeding, who is our current global chairman, and in the United States, Jim Manis. The MMA remained around 10 to 20 member companies until 2005. At the same time, mobile marketing, in the United States, began to take off – we had interoperability among the carriers, a short code system for ease of consumer experience and a supportable revenue model. The MMA also established four national chapters in Europe in 2003 to 2005 – Austria, Spain, the U.K. and France.

The key differentiator for the MMA is that we have representation from across the mobile ecosystem – working in a collaborative, trusted manner to educate the marketplace and build guidelines and best practices for the mobile marketing industry. Members include handset manufacturers, wireless operators, technology enablers, aggregators, media companies, brands, agencies, market research companies as well as any organization focused on marketing via the mobile channel.

ER: Last year was supposed to be the year mobile marketing hit critical mass. This year, mobile marketing still seems to be finding its way. What are some of the indicators that mobile marketing is continuing to gain traction?

LM: Absolutely right! The number of campaigns that we see launching has grown into the tens of thousands worldwide. Indicators in the United States include: short codes listed on traditional and digital media as an integrated element of the overall campaign. For example, on billboards, magazines, television, etc.; membership in the MMA doubling year-over-year since 2005; the number of award submissions in the MMA award program growing from just over 100 last year to more than 260 in the 2007 program; brands and agencies establishing mobile divisions and hiring mobile specialists within their organizations; mobile has become a line item in the advertising budgets of many very large brands; mobile is being integrated into not only the verticals that want to be in front of the consumer all of the time, i.e., financial services, travel, entertainment, CPG, QSR and automotive, but we are now seeing mobile move even into durable goods and other segments; the growth of text messaging in the United States, increasing from 7 billion a month in 2005 to over 30 billion a month in June 2007; and an increase in number of short codes – the 5- to 6-digit number which helps to facilitate ease of interaction between brand and consumer – issued on behalf of the CSCA has climbed to over 2,600 in 2007.

ER: What has mobile marketing enabled marketers to do better?

LM: Mobile marketing has enabled the brands to develop a conversation of engagement with their consumer – a dialogue about their products and services and a means to effectively measure and evaluate this dialogue. Mobile also enables brands to target their consumers, anytime and anywhere, through their most personal device: their mobile phone. Consumers are in the driver’s seat on encouraging and defining the interactions with their brand – wherever and whenever.

ER: Some say the real gold mine in mobile is m-commerce (to make purchases directly from your mobile device). What is the MMA doing to enable this ability?

LM: The MMA has established a mobile commerce committee that is working on guidelines for digital and physical goods transactions, mobile couponing/ticketing as well as other issues having an impact on the ecosystem. The goal is to always ensure a positive and consistent experience for the consumer.

ER: What do you do to help brands enter into and perfect their mobile marketing initiatives and campaigns?

LM: Education. The key so far has been helping to educate the brands on the role of mobile in their marketing initiatives – and how to integrate a mobile call to action into the overall integrated marketing campaign. The MMA publishes a broad set of mobile case studies, white papers, glossaries and so on, to help to educate on how to use the channel most effectively and to learn from the experiences of other brands that have tried before them. The MMA also runs Mobile Marketing Forums at, which is our key event series to educate and evangelize on the mobile channel. These are held in every region around the world, four or five times a year and have become the premier event for mobile marketing.

ER: What do you do to help mobile marketers establish better customer metrics in their mobile efforts?

LM: The MMA has launched a measurement initiative, in June 2007, to define the metrics in a consistent manner for the industry. Measurement will be one of the key issues facing our industry in 2008. The MMA and the GSM Association are working together to ensure consistent measurement and metrics solutions for the industry.

ER: Does the MMA help establish best practices for mobile marketers? What are some of those practices initiated by the MMA?

LM: Yes; this is the foundation for the MMA – and we have been leading in the development of cross-carrier mobile content guidelines and best practices as well as mobile advertising guidelines since 2005. Current best practices/guidelines include: consumer best practices for cross-carrier mobile content services; mobile advertising for mobile Web; and mobile advertising for downloadables. The MMA has also published a number of best practices documents which include mobile couponing, mobile search, mobile promotions and sweepstakes, and so on.

ER: What does the MMA do to help streamline mobile search? Do you suggest standards?

LM: To date, the MMA has not suggested standards for mobile search; however, we have published two thought leadership pieces which include an introduction to mobile search and mobile search use cases, which outline the best practices and options for offering and evaluating a mobile search solution. These are published through the MMA mobile search committee and include the participation of leaders across the mobile ecosystem and our membership.

ER: Do you track innovations in mobile marketing strategies and mobile technology? How is that knowledge integrated into the mission of the MMA?

LM: Yes; the MMA is at the forefront of defining and participating in the initiatives which are helping to shape our industry – and works with our members to ensure we continue to self-regulate industry developments and stay in front of the trends. The MMA is an action-oriented association designed to clear obstacles to market development, to establish standards and best practices for sustainable growth, and to evangelize the mobile channel for use by brands and third-party content providers. The MMA has helped to guide the development of a sustainable ecosystem to ensure consumer privacy and protection is assured.

ER: What does the MMA do to fight mobile spam?

LM: Unsolicited messages, overall, are prohibited according to the MMA guidelines. The MMA guidelines ensure that mobile is always an opt-in experience for the consumer. This means no push-based campaigns – all consumer pull. The MMA also defines rules which prohibit the selling of third-party lists, so that the mobile channel does not experience the issues that we have seen in other digital media types. Our consumer best practices have become the base set of rules for messaging, mobile Web and IVR transactions in the United States, and have been integrated into wireless carrier contractual agreements so that all vendors in the ecosystem adhere to these guidelines. The industry has also launched a monitoring initiative which tests each short code campaign to ensure compliance against the consumer best practices guidelines.

ER: Is it difficult to convince brands of mobile marketing’s viability?

LM: Historically, there has been a belief that mobile is complicated. We encourage brands to first define their strategic objectives for their campaign and then determine which mobile solution will work best to achieve their goals. Once a brand starts their first initiative and sees the results, they generally continue to deepen their experiences with the mobile channel. Success rates in mobile have often been more significant than those you see in other media. The numbers speak for themselves.

ER: Are interactive agencies prepared to scale for mobile campaigns? If not, what do they need to do?

LM: Yes; 2007 saw a significant shift in how agencies are handling mobile. Many agencies have spun out digital divisions, i.e., AKQA Mobile, while others have ramped expertise internally by establishing mobile groups or mobile experts. In the early days, mobile was treated as a portion of the interactive business; for mobile to truly take off, it needs to be treated as its own business and own line item. Mobile is not the Internet. There are five very distinct media types within mobile, which include voice, downloadables, mobile Web, video/television and messaging. Mobile expertise is essential to ensure the media types are integrated effectively into a cross-media initiative. The other trend has been the development of a large number of mobile agencies in that companies are specializing in mobile creative and campaign development. These agencies are having a significant number of successes worldwide. A proof point of that success was Omnicom’s purchase of mobile agency, ipsh!, in 2006.

ER: Is there a difference in best practices standards between the U.S. and the rest of the world? Is there a push to get the whole world to practice the same standards?

LM: Yes; every market has its own regulatory and legal considerations which need to be considered. The goal of the MMA is to develop global guidelines, where possible, regional guidelines where necessary and local as required. A global brand is looking for ease of market entry when they are launching a program, and consistency is key. Many campaigns today already cross regional and local boundaries, so a consistent set of guidelines is ideal. Perhaps the best example is the mobile Web advertising guidelines which have been launched by the MMA. There is consistency in formats and creative across NA and EMEA – and the hope is to bring the APAC guidelines to the same formats by early 2008. The MMA has also published a global code of conduct which protects the consumer’s experience, privacy and protection being paramount.

ER: How is a successful mobile marketing campaign measured?

LM: Today success is generally measured by interactions, but these have varied according to operator and vendor. The MMA has a measurement committee working to define a consistent set of ad currencies, reporting criteria and cross-media effectiveness measurement in order to gain the best insight into mobile.

ER: How is the consumer being enticed to view mobile marketing?

LM: Mobile has become an integrated element of traditional and digital campaigns today. Mobile promotions and sweepstakes have been driving interactions with the consumer particularly through participation TV programs like “Deal or No Deal” or “American Idol.” Providing the consumer with exclusive information, coupons, opportunity to win, etc., have all helped to drive the interactions between brand and device. And, the consumer is receptive.

ER: Do marketers need new models to gain mobile marketing success? How does the MMA help to discover these new models?

LM: Initially, brands were repurposing content from other media for mobile, and while this does work, creative made for mobile content and solutions is key to long-term success. MMA research has shown that consumers are most interested in interactions that deliver information exclusively to them on their device, information that they cannot get through any other channel. The MMA helps brands by sharing case studies of what has worked successfully in markets around the world.

ER: What does the MMA do to help streamline the total mobile Web experience?

LM: Education is key. Reach is currently an issue with the mobile Web, so educating brands and consumers on how to use their mobile device will be critical to long-term success. Operators play a key role in encouraging mobile Web adoption by providing attractive data packages and compelling content to help encourage consumer adoption.

Natural Born Storyteller: Q & A with Steve Rosenbaum

Steve Rosenbaum made his name on MTV and doing documentaries. So it’s natural that he’s into Web video. Rosenbaum is the founder and CEO of, which powers user-generated video (UGV) channels for Web publishers, media companies and video bloggers. The Magnify. net platform searches and sorts virtually all video available on the Internet based on a site’s interest (such as hobbies, politics, music) and engages users to discover, share and rate them for relevancy and entertainment value. came out of closed beta in January 2007 at the DEMO conference and had 20,000 to 30,000 page views a day. It is now averaging 350,000 and was on target to pass 10 million page views in October. Currently there are more than 15,000 channels for users to discover.

Revenue magazine Senior Writer Alexandra Wharton asked Rosenbaum how he got interested in collaborative media production, how users can provide tools to build vibrant video communities and about the impact video will have on marketers and performance marketers

ALEXANDRA WHARTON: Although user-generated content has been all the rage for the past few years, you have been involved in it for much longer. How did you get interested?

STEVE ROSENBAUM: I’ve always loved hearing the authentic sound of a storyteller’s voice. So before video, that meant autobiographies, diary entries or journals – I found the raw and intimate nature of first-person storytelling very compelling.

I have been a filmmaker, and more of a visual storyteller, but there really wasn’t much of a place for first-person media in film or TV. The gear was just too big and expensive.

Then, in 1991 I got an 800 number and had viewers to my TV show call in and record their story ideas. I put their voices on the air. It was amazing. In 1993, Sharp released the first LCD ViewCam and made it possible to shoot yourself on video.

The result was a show I created for MTV called “UNfiltered.” It was a program that literally put the power of TV in the hands of the audience and let them shoot their own stories. People were hungry to express themselves and become part of the conversation. That’s only become truer today. You can see some of the clips here (

AW: Can you explain how a user could use to create a community?

SR: takes the idea that communities want to communicate and gives them the tools and resources to activate video sharing and engagement within their site. Really any site can do it. If you’ve got a site that is up and running, but you don’t have video yet, will let you choose your URL, and pick topics and keywords that you want video around. Then discovers the video and your community can act as the peer-review rating system.

AW: Do users need to be technically savvy?

SR: is built for site creators who are passionate about their content and community – technical skills are not necessary. All the tools are drag-and-drop simple; there are a few bits of code and you’re done. We have great tech support: FAQs, discussion boards and quick responses to our support ticket system. Other community members are supportive as well. It’s easy, fun and is ready to grow as your skills and abilities increase.

AW: You have been credited with creating a new paradigm for community- created video – did you always see the potential to monetize it?

SR: This may sound simplistic but I see the future opportunities for revenue clearly. Currently there is an advertising system that is optimized to reach a mass audience. TV media is designed to be mass media. But if you look at Google, for example, the real future is in aggregating the niches and providing contextual advertising into those verticals. Just look at the readers of this magazine. Many of them have sites that serve extraordinarily narrow audiences. But they have large defined audiences.

So yes – I think there will be an inevitable shift as more systems can target focused audiences. Content creators and community curators who do a good job creating high-quality audiences will be well-positioned to garner revenue as the spend against community-curated UGV increases.

AW: How does help serve those who want to build a community around a very niche site?

SR: There are two models: those who want to start from scratch and build a site, and individuals who have already built a site and want to add video. Two examples of this are and Radio Controlled Universe, respectively.

Pretty Tough TV [] is a network of Magnify. net sites created on that serve serious female high school athletes. It’s the work of a mom and her two daughters in Los Angeles who have a passion for sports. allowed them to build 14 channels into a sports network that they run out of their den.

On the other hand, there is the site Radio Controlled Universe (www., which had a successful website with 300,000 registered users. When they built their channel, hits on the videos were through the roof. Now they’ve got thousands of video makers and watchers and it is growing every day.

AW: Can you explain’s sites’ different types of advertising, including Google AdSense ads and integrated ads?

SR: We’ve built a solution that has three user configurations: advanced, moderate and hobbiest. The “advanced” users are going to claim their own inventory. That means banners, in-page display, CPC, CPA, text, and click-to-play video space on our pages. They’re going to bring their own ad relationships with CJ, LinkShare, Performics, Google AdSense and Amazon – whoever they want. They’re getting paid directly so there’s no waiting for us to reconcile and no crossed wires over payments. This is ideal for advanced affiliate marketers.

For the “moderate” users who want revenue but don’t want to be spending time on optimization and multiple ad network management, we offer a one-click integration with AdSense – just put in the AdSense ID and Magnify. net will do the rest.

And for the “hobbiest” that is using for the occasional video, you don’t need to claim any ad space at all. Odds are that for the casual user sites, they are not going to be participating in the ad network. Of course if traffic grows, they can claim their 50 percent of the traffic with AdSense.

AW: Can you talk about the AdShare Network that launched in August, which aims to allow site creators the ability to broker more lucrative deals with advertisers?

SR: For Revenue readers, our AdShare network is really the most interesting alternative. It costs nothing to build a video page and gives 50 percent revenue share.

We think that empowering our users to make their own decisions about content curation is smart for all. YouSurfTubes is the world’s largest collection of surfing videos []. Its site editor, DC Smitty, knows more about surfing than we could ever hope to. He also knows more about surf products and surf advertising. We think that over time, the more our partners fine-tune their pages to increase revenue, the more we will learn from them and improve the targeting and contextual relevance of our ads on those pages as well. Relevant ads serve everyone – sites look better when all the ads are appropriate and useful.

AW: Can you explain how to create a branded TV channel that pushes content through Facebook?

SR: We think that in some ways, Facebook is the future of network television. It’s the most direct way to plug in to the zeitgeist of what your friends think is cool, valuable and entertaining. We think that Facebook groups could be a launchpad for all kinds of things. Right now we’re learning a lot with our current Facebook application. It allows users to take their Facebook profile and use our technology to discover videos that meet their interests and share them with others on their profile page.

AW: How important is video to the performance marketing model?

SR: First, we believe that video will be ubiquitous on the Web within 24 months. That’s a sea change in the way people will be presented with information. Second, we think that the integration of UGV into content-oriented sites is inevitable and important. It means that publishers that have been marketing themselves as “speakers” will have to rebrand and rethink their offering and transform themselves into conveners of conversation really fast or miss out.

So performance marketing is logical as a partner to UGV because not all UGV is useful or valuable. And not all marketing messages have value. Now, customers get to vote – literally – and support marketing that supports sites they like simply by engaging in commerce within a context they want to support. This could be a powerful shift.

AW: If businesses are not currently using video, how do you suggest they dip their toes in the water?

SR: With both feet. There’s little to lose right now since it’s early. Customers aren’t yet critical and therefore won’t punish you for a misstep or a test. That doesn’t mean you can afford to have inappropriate content on your site, so curation is critical and essential. But it doesn’t need to cost a fortune. It can be as simple as adding video to an editorial product, getting some footage at a trade show or inviting your customers to videotape themselves using your product. But it needs to be interactive and enjoyable.

AW: What does video bring to online marketing that others can’t?

SR: Video is emotional – it can touch you in ways that text and photos cannot. It’s immersive – it can draw you in and take you on a journey. Video is convincing – you can convert people with a compelling pitch. But all of these things mean that you need to strive for authenticity and honesty – and really make an effort to go beyond marketing and into genuine storytelling. The Web is going to bring new tools to the experience as well – you’re going to see branch-and-tree video tools that allow viewers to respond to a story and have the video be responsive to that input.

For example, a company that’s touring a potential buyer through new construction of a high-rise could emphasize the playroom for families, and the neighborhood’s nightlife for 20-somethings. Old, one-size-fits-all video just won’t be enough, and that is what’s going to fuel innovation.

AW: Where do you see online heading in the next two years?

SR: I think the Web is the launchpad, not the destination. I think you’re going to see Web-programmed video on your flat screen [IPTV], and the iPod and iPod devices are going to be huge, and the iPhone will spawn a huge number of imitators.

The Web will be the engagement platform – it will be the place where you interact and “program” your video. I think that you’ll see RSS streams of your favorite channel on your TV within 12 months. That’s huge for marketers and users alike.

From a quality perspective, H.264 [a video compression standard] will mean a major jump up in quality. Not HD yet, but video on your TV that is looking good from the Web. For those of us that suffered through streaming video the last time, this is a major shift that’s been a long time coming.

In terms of revenue, you’re going to see two major changes. First, there are a ton of unhappy TV advertisers just dying to get their ads on the Web. It’s been a chicken/egg scenario – what comes first, the ads or the content to place them around? Now we know: Content is happening, and ads are next.

The second major change is the nature of who uses video for ads. We think of video ads as the realm of the big boys: national advertisers with big budgets. But that was back when making video and editing were expensive. Now with a digital video camera and a Mac with Final Cut Pro, you can whip up a great video ad for a couple hundred bucks or less. So as marketers figure this out, they’re going to jump to video in droves. Will it work for everybody? Certainly not. But for some categories it’s going to be huge fast – it’s a very exciting time to be in this space.

AW: What would you say to CMOs of big brands to convince them that video must be part of their marketing efforts?

SR: Most big-brand CMOs already know video works – they’ve been buying TV for years. The thing they’ve been facing is that there’s been a huge defection of the hard-to-reach consumer from TV to TiVO, DVD, the Web and other mediums that don’t do well using interruption advertising, so CMOs need to rethink how they talk to these customers. We don’t want to have our time wasted; we want to be educated and informed.

Community content is a powerful new tool that is just evolving – and it’s much nuanced, meaning that the line between education and evangelism is hard to walk. I think you’re going to see much more of what Seth Godin years ago called permission marketing – using video to deliver serialized messages to people who opt in. Today what a smart CMO should be doing is experimenting, taking moderate risks in a number of different platforms. The good news about all this is that it’s all measurable, so in the end, the new video-based solutions that will rise to the top will be the ones that work both for users and marketers.

Marketing Reality: Q & A with Joel Comm

Joel Comm has been building websites for over 12 years. He sold his first business to Yahoo in 1997 and it became Yahoo Games. Comm is the author of several best-selling e-books, as well as The AdSense Code, a New York Times best seller. His next venture is as the creator and producer of the online reality show “The Next Internet Millionaire.” The show, which is an “Apprentice”-type reality show being filmed in Loveland, Co., will air only online. The show features 12 contestants vying for a $25,000 prize and chance to start a business with Comm. It began taping in late July and started airing on the Web in mid-August. There will be 12 episodes and the winner will be announced in November. Comm spoke with Revenue Editor-in-Chief Lisa Picarille about the stigma of e-books, why the time is right for an online-only reality show and why viewers find marketing as compelling as he does.

LISA PICARILLE: Given the success of your books, are you making most of your money as an online marketer or as an author?

JOEL COMM: Many people got caught with their pants down when the bubble burst in 2000. I learned my lesson and have become a believer in multiple revenue streams. I now generate revenue through books, affiliate programs, courses, content sites, public speaking and advertising. The more you can position yourself as an authority, the more options become available for monetizing your brand.

LP: How do you get your books noticed with all the noise out there?

JC: I think it’s important to stand out from the rest of the crowd by creating a product that is more than another “me too” book. You have to give people original content and deliver it in a way that makes it accessible to a larger portion of the population. Of course, it never hurts to have great affiliate partners who believe in you and are eager to promote your products.

LP: Also, there is somewhat of a negative stigma associated with e-books as get-rich-quick schemes. What do you do to combat that image?

JC: There have always been snake-oil salesmen. There will always be snake-oil salesmen. Just like the television preachers who make legitimate evangelists look bad, there are so-called marketers who use legitimate techniques for illegitimate business models. People can frequently see through the game of the charlatans. I would hope the public would not throw out the baby with the bathwater. The best I, and other legitimate infopreneurs, can do is provide quality products that really help people. That’s one reason I post testimonials on my pages with full names, and audio when possible. It lets people know that there are others who are really succeeding with my material.

LP: Just curious ” there are many people who sort of bash the ‘gurus.’ What you think about people out there like

JC: It’s all just a show for those guys. I don’t care for RJ’s style of marketing. I guess there is money in condescending to people, but I sure wouldn’t want to have that as my claim to fame. If what I do doesn’t have a positive influence on people’s lives, I should probably be doing something else.

LP: You have a coaching club. Explain exactly how it works and what prompted you to start it.

JC: Once people have my book or course, they sometimes request assistance consuming the material. Having a coaching club where members can receive new material and teaching on an ongoing basis can make a huge difference in whether or not they succeed. It’s one thing to have information that can make you money. It’s another to implement what you have learned and take action on it. The same thing that attracts many people to making money online is the thing that can become one of the biggest obstacles to success. In other words, we want to be able to work at home in our pajamas, but it is difficult to stay motivated and disciplined when you have no one to answer to but yourself … in your pajamas. A coaching club and other continuity programs help people stay on track so they can reach their goals faster and with greater efficiency.

LP: Your newest venture is ‘The Next Internet Millionaire.’ How did the idea come about?

JC: Early this year, I began playing with the concept of producing my own reality show. As a reality TV fan, I realized that no one had attempted to do a competitive show on the Internet. As I spoke with my joint venture partner, Eric Holmlund, I discovered that he had a desire to get into video production. Our discussions led to planning, and here we are with the world’s very first competitive Internet reality show.

LP: Why do you think the time is right for this show right now?

JC: Reality shows are a cultural phenomenon. Video on the Internet is all the rage. And regular people are looking for ways to leverage the power of the Internet to bring in some extra cash. It’s a perfect storm whose time has come.

LP: Do you think that having the show air only online negates some of the legitimacy? If it is a good idea, why not try and get broadcast TV to pick it up?

JC: Broadcast TV is losing viewers faster than you can say The Internet is the new medium of choice, and one of my goals is to prove that there is a significant audience who is eager to embrace original programming on the Web, provided it is compelling and professionally produced. I don’t believe that anyone has created a production solely for the Web that is of the scale that this project is. If the TV networks want to pick up the series in syndication, I’d be interested in speaking with them, but I’ve never considered selling the show to a network out of the gate. I guess you could say that I am on a mission to prove that the time is right for this concept.

LP: OK, I hate to admit it but I’m a reality show junkie. I’m also a marketing junkie. Yet I’m not sure that I’ll actually watch this show, because it is only online. What do you say to those who may share my opinion?

JC: You’ll be missing out. Having spent the past two weeks of my life on the set with my guests and crew, I can tell you that this is going to be an incredibly entertaining and educational series. Every speaker and sponsor who has visited the set has been overwhelmed at the scope, uniqueness and professionalism of the production, with several people staying longer than intended just to hang out on the set! We’re breaking new ground, and those who watch will see a historical event online unfold before their eyes. Yes, it’s that cool.

LP: What is the target demographic for the show? Who do you think will be watching it?

JC: Our obvious base is the Internet marketing and affiliate marketing crowd. However, we have designed the show and our promotions to appeal to a more mainstream audience. I have never wanted to spend time in misery on a desert island, but I enjoy “Survivor.” And most people will never be pop icons, but millions watch “American Idol.” In the same way, “The Next Internet Millionaire” will appeal to a broad segment of the population, with the additional benefit of reaching an audience on the other side of the world via the Internet.

LP: You have a group of a dozen well-known marketing folks (teachers) who are working with you on the show. What is their role?

JC: I wanted to expose our contestants and viewers to some of the most successful marketers in the world. Unlike other reality shows, I wanted the content of “The Next Internet Millionaire” to go beyond entertainment into the educational realm. The experts who have been on location have been teaching our contestants about product creation, copywriting, branding, viral marketing and a number of other strategies and techniques for building a successful online business. These contestants must then apply their newfound knowledge to a relevant and entertaining challenge each day. It has been a privilege to work alongside such legends as Mark Joyner, Armand Morin, Marlon Sanders and Perry Marshall. The experts also play a role in the judging of challenges, as well as advising me on who they believe should be eliminated from the competition.

LP: The show runs 12 weeks, but you only spend a little over two weeks to film the entire show. Is that enough time to see the traits you are looking for in a winner?

JC: Yes. In fact, I’ve been amazed at how quickly we’ve been able to observe these traits. The contestants bonded on the very first day and the intensity of the competition has continued to increase. You really get to see what people are made of when put under a strict time crunch to complete a task. There are so many excellent qualities in our contestants, that while I’m certain we will end up with a great joint venture partner for me, each of the contestants will most likely go on to do some very significant things in the future.

LP: The winner of ‘The Next Internet Millionaire’ will receive $25,000 and get to start a business venture with you. Do you have a particular idea in mind already?

JC: No. I went into the audition process and the actual competition looking for a person, not a project. As I got to know the contestants on the set, I began thinking about what kind of project would be the ideal fit for each individual. Marketing is marketing. The key is to have the right partner. Once you’ve got that, there are always more ideas than there is time to execute. So I’m confident that my new partner and I will put together a fantastically successful product.

LP: How much input and financial investment does the winner have in the venture to be launched?

JC: The partner will have significant input in the venture, as well as a time investment. We will work closely together to develop the product concept and execution. It’s going to be very exciting to see it all come together.

LP: The show is called ‘The Next Internet Millionaire.’ That sort of puts the idea out that the winner will make at least a million dollars. But what if the venture doesn’t live up to those expectations?

JC: I’m not concerned about that. We make it clear that the winner will receive $25,000 and an opportunity for a joint venture with me. Certainly, I and my team will do everything in our power to build another success story with our winner. But my very first deal wasn’t a million-dollar deal. It was, however, a step in the direction that led me to where I am today. My goal is to build a success story with our winner. And while there is always the chance that we won’t make a million dollars right away, I’m confident that our work together will set the winner on the path to being the next Internet millionaire.

LP: You’ve enjoyed years of success. Does that make you more or less anxious about how this new show might be received by the public and your peers?

JC: Not at all. Once again, every one of my peers who has visited the set has been completely blown away at the scope and professionalism of this production. Several of them decided to hang around longer after they got a taste for what is happening here. The buzz is just beginning and I’m confident that we have a groundbreaking hit on our hands. How many people will have the opportunity to say that they created the world’s first competitive Internet reality show? Just one. Whether the public accepts it as a pop culture phenomenon or not, I can’t imagine ever regretting this project. If you aren’t willing to take significant risks, you will never reap the significant rewards. Besides, I’m having a blast.

Double Down: Q & A with William Cooper

As the CEO of TradeDoubler – a Swedish performance network with a vast European presence – William Cooper has his eye on global expansion. TradeDoubler, with its local offices in 15 countries across Europe, is known as the biggest affiliate marketing network in the U.K. Cooper was appointed president and CEO in March of 2007, riding a wave of first-quarter revenue for 2007, up 30 percent. Previously, Cooper, a six-year veteran of TradeDoubler, was COO of the company for a year. Before that, he oversaw the company’s U.K. operations. Currently, TradeDoubler claims a network of more than 100,000 website publishers and has more than 1,000 advertisers across Europe, including a mix of local and international companies such as Apple Store, Dell, TeliaSonera, eBay and Kelkoo. Revenue Senior Editor Eric Reyes asked Cooper about affiliate marketing in Europe and the rise of globalization in an ever-shrinking business world.

ERIC REYES: Since the Sweden-based parent company seemed to launch its affiliate network almost simultaneously across Europe in 2000, was affiliate marketing considered a risky business back then?

WILLIAM COOPER: It was risky from the perspective that it was untried and untested across Europe; it was a concept that was almost completely unheard of. However, it had clearly gained some notable success in the U.S., and this gave us the confidence to succeed in Europe.

ER: Compare the opportunities and volume of affiliate marketing in the U.K. with its popularity in the U.S.

WC: I think it would be foolish of me to think that I knew enough about the market in the U.S. to make a direct comparison. However, with regard to the U.K. it is a very competitive market, and affiliate marketing is generally perceived as one of the most valuable digital marketing channels, and definitely the most cost efficient. It is held in high regard by the majority of e-commerce players.

ER: Do you run a network in Europe differently than you would in the U.S.?

WC: There are many more complexities to running an affiliate network in Europe compared to the U.S. In Europe we have to deal with different languages, cultures, tax regulations, currencies and constantly changing rates of Internet, e-commerce and broadband penetration. All this means that the need for local people in all the markets in which we operate is essential.

ER: Tell us a little about the growth of TradeDoubler UK. Have you been surprised by the interest in the affiliate space in the U.K.?

WC: No, we haven’t been surprised. We believe that we have been part of the process of raising the level of awareness and the importance in this channel. We have positioned it as “premium” channel and not a mere commodity. Affiliate marketing, if performed correctly, can be a dominant driver of e-commerce for any advertiser, so it is right that it is so well-respected.

ER: As affiliate networks become more international, are you seeing competition from U.S. firms such as Commission Junction or LinkShare, and what are you doing to keep your lead?

WC: Commission Junction has always been present in the U.K. market since we have been here. They are a very good competitor and we hold them in high regard. At present we don’t see the presence of Link- Share in our markets to any great degree but they are clearly a ver y knowledgeable and successful player outside of Europe, so it will be interesting to see how they try to gain market share in this already- competitive market.

ER: Is TradeDoubler planning to enter the U.S. market, and what would the challenges be?

WC: There are no plans at this stage.

ER: What are the regulatory and legal challenges of setting up networks in so many different European countries?

WC: There are numerous regulatory and legal challenges of setting up in all these markets. I will not make it easier for our competition by naming them!

ER: Would you consider TradeDoubler more publisher-focused than your U.S. counterparts? Why is that better?

WC: It is too difficult for us to sense that. I believe that we are more publisher-focused than most of our competitors and I believe that this is one reason for our success.

ER: Are there U.S. competitors entering your market that give you cause for concern, and why or why not?

WC: At the moment they do not give us concern, as it is a very competitive market. I just hope that players entering this market respect where we have tried to position the product since 2000. This is not just a technology play; there is much greater value that we can add as network operators to ensure an affiliate program fulfills its potential and reaches the expectations of the advertisers.

ER: What are the concerns of your U.K. merchants? Do they worry about the same things U.S. merchants fret about – trademark bidding, brand management, quality affiliates, etc.?

WC: I think they all worry about very similar types of issues. I would like to think that TradeDoubler is very proactive in trying to address these concerns, many of which can be easily managed.

ER: Are there plans to enter the Asian and Indian markets?

WC: There are no specific plans at this stage.

ER: Do your U.K. affiliates do business outside of Europe, such as with America or China? What percentage? Is it encouraged or are there stumbling blocks?

WC: Some of our U.K. affiliates work outside the U.K. and in our other European networks. We actively encourage it and there are some great revenue opportunities for them in these emerging markets. We help them address any legal issues that they might face, but in general it is an easy process for publishers wanting to work in multiple markets.

ER: Do you think specializing in certain vertical markets in the U.S. would benefit a European network?

WC: There are various ways to approach a mature market like the U.S., and becoming a vertical specialist is definitely one of them. However, the ultimate aim for any network should be to cover as many sectors as possible. This is driven by the fact that we all have interests covering many different sectors, and therefore a publisher that can deliver good results in consumer electronics can also deliver effectively across other sectors as well.

ER: Is there special technology TradeDoubler uses to track and monitor transactions and affiliates? Does technology play a role in serving geographically specific content?

WC: We developed our own proprietary technology back in 1999 and we constantly update and refine that technology. We have separate affiliate networks in all the 18 markets in which we operate; therefore, we don’t need to rely only on technology to target a specific region.

ER: What qualities make up a really good publisher?

WC: A strong publisher in the affiliate world must have a well-defined target audience, i.e., one that is interested in a particular market sector such as travel or financial services. This is why credit card comparison sites, for instance, work well. The audience is visiting with a specific aim in mind and the site is fulfilling their expectations. A loyal user base is also essential – publishers will earn more if they don’t have to buy all of their traffic. They must also have good content to allow them to feature highly in the natural search rankings. The site owner obviously has to be Web-savvy, knowing what links will work well in what place, what affiliate links work better in some places than others and they should complement rather than compete with other advertising that they’re running. The best publishers have open minds and strong ideas of what they’re looking to achieve.

ER: What qualities make up a really good merchant?

WC: A good merchant is prepared to invest time and resources into their affiliate program. As well as ensuring that their website is functioning well with a clear customer journey and reasonable conversion rate before launching a program, there are many factors which will help to ensure that their program does well. A good merchant is committed to building longterm relationships and trust with publishers. They communicate regularly with their publishers to keep them informed about all upcoming activity and will often communicate directly with top performers. They will set commission rates at the right level to ensure publishers are incentivized to promote their program while still ensuring they receive cost-effective returns. They regularly update creative and ensure that it is engaging and sales-focused. They respect their publishers and pay them on time!

ER: While online gambling is a big no-no in the U.S., gambling sites in the U.K. are OK. What types of sites do TradeDoubler frown on and why?

WC: TradeDoubler does not work with any sites featuring dubious content such as violence or pornography.

ER: Are there any new ways to monetize performance marketing?

WC: One example of how the model has adapted in response to advertiser and publisher demands is demonstrated through the pay-per-call concept. At TradeDoubler we have developed a pay-per-call product called td Talk, which enables companies to advertise more complex products online, which may require a telephone conversation to complete the sale (insurance products for example), and pay for the telephone calls that are generated. This model is also appealing to smaller companies that may not have a website of their own but want the opportunity to use the reach of the Internet to market their products or services. On the publisher side, they can ensure that they receive commissions for calls that were generated as a result of advertising on their site.

ER: AOL’s recent attempt to buy TradeDoubler’s Swedish parent failed. Is this good for TradeDoubler UK or bad?

WC: This does not impact on the performance of TradeDoubler UK in any way.

Legendary Outlook: Q & A with Todd Crawford

More than a year ago, Todd Crawford created quite a stir in the affiliate community when he departed Commission Junction, a company he helped found in 1998. He emerged at Digital River’s oneNetworkDirect as its vice president of sales and business development, where he oversees affiliate recruitment and development, has profit and loss responsibility, and develops the technology road map and overall strategic direction for the company.

Although Digital River is headquartered in Minnesota, Crawford lives and works just south of Santa Barbara in Ventura, California, where he can ride his motorcycles and drink the local wine in Southern California’s year-round sunshine.

During his tenure at CJ, he was the vice president of sales. His main responsibility was new advertiser acquisition, but he also handled other business initiatives including industry relations and CJ’s international expansion in Europe and Asia.

Revenue’s Senior Writer Alexandra Wharton asked Crawford about a variety of topics including why an affiliate program for the software industry makes sense, the constantly evolving affiliate industry and the making of industry legends.

Alexandra Wharton: oneNetworkDirect is part of Digital River. How do the two entities fit together?

Todd Crawford: oneNetworkDirect is Digital River’s online affiliate network – a network that specializes in providing Digital River software publishing clients with affiliate marketing services and technologies as well as access to a channel of more than 70,000 affiliates.

AW: What is the reason to start an affiliate network for only software products?

TC: Since 1994, Digital River has focused on e-commerce and the digital delivery of software products, so it was a logical progression to launch an affiliate network focusing on these types of products to help our clients drive more sales.

AW: Has this been a long-standing opportunity or is it the result of changes in the marketplace?

TC: With broadband penetration where it is today, more and more consumers are opting to download their software purchases, and I believe this trend is only going to continue to increase. Affiliates can benefit several ways from offering digital downloads: 1) When sold online, downloads have a lower cost of goods than physical products, which means there are more margins to pay affiliates higher commissions; 2) software is a natural fit for affiliates to promote since the computers consumers are using to shop online run on software; and 3) consumers can begin using the software as soon as the download is complete, so affiliates do not have to wait for physical products to ship before receiving their commissions.

AW: During the eight years that you’ve been in the industry, what are some of the most significant changes that happened in affiliate marketing?

TC: The first thing that comes to mind is how much the entire industry has matured. In 1998, affiliate marketing was a great idea but did not generate significant revenue because most companies did not take it seriously. From 1998 to 2002, it seemed like affiliate marketing was trying to earn its wings as a legitimate marketing channel. Fortunately, the dot-com bomb accelerated this shift as it forced companies to make smarter decisions on how to spend their marketing budgets and eventually moved affiliate marketing to the front of the line.

The next big change was the emergence of search arbitrage. I remember the day we were doing some networkwide analysis on recent unexplained growth trends and saw a lot of referring URLs coming from Google and Overture. We looked into it deeper and figured out what was going on. It seemed like such a simple idea that obviously was working very well. Today of course, search arbitrage is a huge part of affiliate marketing. I believe that the success and popularity of paid search today is due to the early innovators in affiliate marketing.

AW: Over the next year, what are some of the biggest challenges facing oneNetworkDirect?

TC: The greatest challenge is taking advantage of all the opportunities in front of us. We have been growing at a tremendous rate since we launched in November 2005. During the past six months, we have made great progress on the affiliate interface, reporting and tool set. Prior to Affiliate Summit in Las Vegas, we re-branded and launched a new home page at www.oneNetworkDirect. com. We have a road map of new features and functionality and have been doing regular releases. During the past year, we have created more affiliate mindshare, which is also attracting more attention and interest in oneNetworkDirect. Some of our affiliates have found great success as part of our network and we are hoping that their success stories will drive even more interest in the industry.

AW: How many merchants are in your network?

TC: Currently there are more than 50 programs in oneNetworkDirect, including programs from leading publishers of digital products and software applications. We typically add several new programs each month.

AW: How many affiliates are in your network?

TC: More than 70,000 affiliates have signed up to participate in oneNetworkDirect.

AW: Can you talk about how you will focus on recruiting and developing affiliate relationships?

TC: Affiliate recruitment and development is our primary focus at oneNetworkDirect. We have a dedicated affiliate development team. Half of the team is responsible for recruiting new affiliates, and the other half of the team is responsible for managing top-performing af- filiate relationships. I recognized years ago that world-class affiliate service is the key to growing a network. We are very active at trade shows where we attract new affiliates and further develop our relationships with existing affiliates. This year we will be exhibiting at the Af- filiate Summit conferences in Las Vegas, Miami and London; Ad:Tech in Paris, London, San Francisco, Chicago and New York; eComXpo; SES; and at Digital River-hosted client events around the world.

AW: Can you explain what oneNetworkDirect’s product, trialTracker, does?

TC: trialTracker is a new conversion-monitoring technology that allows affiliates to promote “try before you buy” versions of software titles by integrating the affiliate ID dynamically into the download. Because the affiliate ID is actually in the software trial, any subsequent upgrades to paid versions will be credited to the affiliate that initiated the trial download. It is a great product offering because many software titles offer free virus or security scans that require the consumer to pay for the product to resolve any identified issues. Affiliates can offer something valuable and free for their users to try out and benefit from the eventual paid upgrades. trialTracker is exclusive to oneNetworkDirect.

AW: What are some of the incentives oneNetworkDirect has in place to attract top affiliates?

TC: oneNetworkDirect has several incentives that are designed to both attract and retain affiliates. Like most affiliate networks, we encourage all of our merchants to offer coupons and promotions to affiliates, including exclusive coupons for select affiliates. These coupon links can be accessed when searching for creative by type through the af- filiate interface. We also list promotions and other program-specific opportunities on our blog, which can be accessed at our website. Affiliates also can find a list of current coupons from top programs on the oneNetworkDirect site. In addition, we offer networkwide promotions on a regular basis. Currently we are offering the oneNetworkDirect Rewards Program that pays up to an additional 2.5 percent when affiliates achieve certain goals or thresholds. For more details, affiliates should visit our site.

AW: Can you tell me about oneNetworkDirect’s Achievers’ program?

TC: The oneNetworkDirect Achievers Program is targeted to our topperforming and high-potential affiliates. Through the Achievers program, affiliates are offered dedicated account management resources to help them gain access to special creative, offers, promotions and custom landing pages as well as receive help obtaining approvals for certain promotional opportunities, such as email or paid search. The Achievers Program also provides affiliates with special perks and opportunities tailored for this exclusive group, including VIP passes to conferences, free software and dedicated marketing dollars for individual bonuses and promotions. Affiliates can learn more about how to become a member and benefit from all the perks of the oneNetworkDirect Achievers Program on our website.

AW: What are some of the long-term goals for the company?

TC: To further increase the value we provide our clients, two important areas of focus for Digital River will be the continued expansion of our global footprint and strategic marketing services. In the end, we are committed to driving pay-for-performance results for our clients.

AW: In three years, what will the performance marketing space look like?

TC: What makes affiliate marketing interesting is the constant innovation and change. Just like with paid search, affiliates are eager to explore and take advantage of new opportunities. Right now, Web 2.0 is the big trend. Three years from now it will be something else.

AW: At CJ you were sort of the face and voice of the company in the affiliate space. Do you feel you have the same level of influence over the community in your role at oneNetwork Direct?

TC: I continue to play a very active role in the industry. I have a network of people that I interact with on a regular basis and we all influence each other. At oneNetworkDirect, we have an active trade show schedule, we frequently participate on panels and speak at industry events, contribute to blogs like ReveNews and ABestWeb and regularly meet face-to-face with affiliates, technology providers and marketers in the affiliate community.

AW: At January’s Affiliate Summit, you won the 3rd Annual Wayne Porter Affiliate Marketing Legend award. Rumor has it that you won because you are always willing to share your knowledge. Why do you think that’s important in this industry?

TC: If you want a young industry to grow, you can’t keep a lot of secrets. I like to talk to people about things I feel passionate about – and affiliate marketing is something I feel very passionate about. I’ve found that some of the best ideas come from open dialogue and conversations with other people. It’s by working together that we can build and develop the best ideas and solutions.

AW: In your opinion who else is a legend in the affiliate space?

TC: That is a tough question because there are so many people who have contributed to this industry to get it where it is today. I know developers, program managers, affiliates and other network executives who have worked very hard while keeping their heads down and consequently have not been in the industry spotlight to get the recognition they deserve.

Fair Play: Q & A with Kellie Stevens

Kellie Stevens is the president of, which is committed to providing a better understanding and interpretation of the behaviors that impact the affiliate marketing space. Stevens’ goal is to create a fair and competitive marketplace, and she does this by focusing on the actual behaviors – not the technologies – leading to unfair competition and abuse in the marketplace. Her tireless efforts, which started in 2000, have won her the respect and affection of many in the industry as well as the ire of those who are looking to skirt ethical practices. Regardless, Stevens vows to continue her mission to provide the community with resources for striving toward fair practices in affiliate marketing.

Lisa Picarille: What motivates you to find out who is using adware or acting in an unethical manner?

Kellie Stevens: Many of the behaviors I research and document go beyond just ethics. They are behaviors which I strongly feel impact negatively on the affiliate marketing channel as a whole. Affiliates who are automatically redirecting the merchant’s own traffic (both organic and paid traffic) as their own commissionable traffic, devalue the channel overall. Affiliate links showing extensively in adware security companies have deemed that security risks have contributed to blocked affiliate links and tracking cookies flagged as security or privacy risks. This impacts on everyone. Those are just a couple of examples. It’s the overall impact on affiliate marketing, from a business perspective, that is my main motivation.

LP: How did you get started pursuing those exhibiting bad behavior?

KS: Back then there was very little information available. Security companies weren’t researching these adware companies and their software. You couldn’t go to a security site and search their database. Only a few people were even talking about how some affiliates were driving sales and revenue. So I installed a few applications to see for myself. I began talking about what I saw in the community. The day came when I had a couple of applications installed on my computer and I went to my e-commerce site checking on a customer issue. When I got to my shopping cart, I received a pop-up with a blatantly false message encouraging the customer to buy a product from the adware company. That was very personal. I contacted my State Attorney General’s office and found out they knew very little about adware, but they wanted to hear more. I talked with them about six months later and they had a much better understanding; they didn’t like the practices at all but felt there were no existing laws in place to prosecute. Things gradually evolved over time as I continued testing for myself to understand what was going on out on the Internet and reporting back to the community on a somewhat ad hoc basis.

LP: How much of your testing is done without being paid?

KS: When I first started, and for quite some time, it was all done for free. As the demand for the information and my expertise grew, I gradually increased the amount of time I spent doing research and reporting. I’m now doing this full time, so of course it’s not all for free now. I still try to balance my time, providing some amount of information for free because the issues are too important to the industry. I haven’t sat down to put numbers to how much of my activities are devoted to free content and revenue-generating information.

LP: How much is consulting? And do you work with the big networks? If so, how often?

KS: I do private consulting as well as the subscription service through AFP. But again, I haven’t sat down and put numbers to the time (hour-wise) I devote to each area. I know I put in a lot of hours each week because there is always something that needs addressing.

I don’t disclose my clients’ identities for confidential reasons. I will say that over the years I have had contact and dialogues with all the major affiliate networks to varying degrees, whether that contact was paid or otherwise. I always welcome the opportunity to discuss the issues facing the industry, whether I completely agree with the points of view or not. I have always appreciated when the networks have approached me asking, “Kellie, what do you think about”?” Dialogue is extremely important if constructive change is to happen in the industry.

LP: Why do you think that there are individuals like yourself who pursue adware folks, but that there are no formal entities to police these rogue behaviors?

KS: There are probably many reasons. The idea of some type of formal entity has been brought up several times. It’s something I’ve had requested of me on numerous occasions. In fact, I am continuously educating people that AFP doesn’t do any type of “certification.” The largest stumbling block to having some type of formal entity is probably the fact that as an industry we have yet to come to a universally (or close to universal) accepted agreement as to what behaviors are and are not acceptable. You have to define what you will be policing before you can police.

LP: You are performing a very valuable service for the industry, yet you seem to maintain a low profile. Why?

KS: I don’t think I maintain a particularly low profile. I am out and about in the community. I don’t use my research findings to just sensationalize and garner PR for myself. I think the information is too important to dilute with such tactics. And doing so marginalizes my ability to bring about change towards more fair business practices in the industry.

I have found that I have been more able to achieve change by working quietly “behind the scenes” when it comes to specific issues/incidents at times. My ultimate goal has always been, and remains: changes in certain policies and practices in the industry.

I am focusing more of my energies in 2007 towards educating the community on issues related to adware, so in that sense people will probably be “seeing” more of me.

LP: Are you ever worried that these adware firms will retaliate against you?

KS: Anyone doing this kind of work should be cognizant of such possibilities. I have spent quite a bit of time over the years cultivating the way I both approach my work and present the information to minimize those types of risks. Ultimately, I want to be spending my time doing my research and providing information to the community, not dealing with retaliation tactics, legal or otherwise.

LP: And how do you protect yourself from this potential pitfall?

KS: I try to use common sense along those lines. That means being able to support what I report and staying clear of approaching matters in a way that is viewed as just being inflammatory. My goal is to be able to provide people with objective data and information from my research. So far, this approach has served me well.

LP: What’s the best part of doing your job?

KS: I probably have to say, when I see positive change happen. When I see a merchant or network change their policies or implement internal mechanisms to better catch bad behavior. When I have an affiliate come back and tell me their conversions (and revenue) have significantly increased after they took action on information I provided them. Or when a merchant tells me they are showing higher growth and ROI/ROAS in their affiliate channel based on the information they received from me. At the end of the day, that’s what it is all really about and makes the hours in front of the test computer worthwhile.

LP: What’s the worst part?

KS: I don’t know if I would call them the worst part, but there are some things that I find frustrating.

I find there is still quite a bit of misinformation and old information out there. I see people making [what appears to be] business decisions based on the inaccurate information.

I become very frustrated whenever I hear people say, “I don’t like the practices, but there’s not anything I can do about it and it’s just a cost of doing business.” In my honest opinion, that kind of apathy just encourages the bad behavior. There are many things that could be done within our industry to combat the bad behavior. It’s a matter of being committed to doing what can be done. And to say it’s the cost of doing business is devaluing the affiliate channel.

I really become frustrated when I see companies using anti-parasite policies, compliance and fraud detection as primarily PR spin to market their business, when in reality they are eyeball-deep in the relationships. People shouldn’t believe everything they read, but rather, engage in due diligence in understanding the business models/practices of those they partner with.

LP: What’s the most misunderstood element of dealing with adware?

KS: That could probably be a full article by itself; there are so many. One is that it is easy to monitor all of the potential bad behavior out there. It isn’t by a long shot. Could the industry as a whole be doing better? Yes, but that doesn’t make it an easy task. I remember catching wind of a particular application that I wanted to test. It took me two years to finally track down a copy of the software to test. When I did, they were using quite a few techniques to hide the fact from networks and merchants that adware was involved. Programming has become much more sophisticated, allowing adware to “hide” itself more easily from the end user (that it is even installed). And distribution methods have become more stealthy and sneaky as well.

A more global, or big picture understanding of how adware is operating within online advertising as a whole is still not fully understood by many, nor are all the different ways it can impact upon online businesses and affiliate marketing in particular.

There are still many misconceptions about the very basics of how adware functions. I still hear people talking about adware replacing their affiliate links on their websites, and their implementing programming on their site to prevent this. But the majority of adware does not even do that. In fact, some of the “protective coding” they implement could actually put their traffic at higher risk for interception by certain types of adware.

LP:What percentage of commissions do you estimate are lost to the bad behavior of adware?

KS: Lost to who? Affiliates, merchants or networks? All three happen now. There are also many ways a commission can be “lost.” Some of those ways are very blatant and obvious, like the automatic overwriting of an affiliate link by adware. Other ways are less obvious, like lost traffic or redirection into another advertising channel.

I don’t think anyone knows the exact dollar amounts, in truth. I’ve heard speculation of anywhere from 5 percent to over 40 percent of revenue in the affiliate channel attributed to adware. I’ve seen reports which put total revenue for adware, which included all advertising channels and other means adware companies have of generating revenue, at anywhere from $2 billion to $20 billion a year.

The problem with coming up with hard data along these lines is knowing all the adware players and those using adware [i.e., third-party ad buys]. Security companies face an ongoing battle detecting adware applications on the end user’s computer. Most adware companies are privately held, so their financial information is not public knowledge. Others operate outside of the U.S. When you start factoring in very rogue players and the world of botnets, the picture becomes extremely cloudy.

I think most agree that there is a significant amount of online advertising dollars that end up flowing through adware coffers.

LP: What is the future of adware? Will it ever be wiped out?

KS: Adware is here to stay. You don’t put the technology genie back into the bottle. As with all things related to the Internet, what we will see is the way in which adware is behaving and playing on the Internet. This has been the case so far as well.

LP: Who should be responsible to help in this fight? The government? Merchants? The networks?

KS: I think everyone is responsible to varying degrees and in different ways: affiliates, merchants, networks, consumers, regulators and adware companies themselves. Whenever there is a lot of money up for grabs, as there is in online advertising, there will always be people out there who are willing to use unscrupulous tactics to get their hands on some of the dollars. It’s unfortunate that adware has become synonymous with such tactics. My dream is to see the industry become more proactive on addressing the issues surrounding adware and being less reactive primarily when the stuff starts hitting the fan.

Guiding Lightly: Q & A with Anne Holland

Anne Holland is the president of MarketingSherpa, which aims to help marketers advance by sharing real-world marketing data and hard-won lessons. The Rhode Island-based company publishes a wide range of metrics guides, buyer’s guides and how-to reports, as well as a 500+ case study library. Prior to founding MarketingSherpa in 2000, Holland spent 20 years in publishing. She also served as the head of marketing for Phillips Business Media – a $100 million publishing company where she helped launch one of the world’s first profitable subscription sites in 1995 – and the trade publications Interactive Marketing News in 1994 and min’s New Media in 1995. Started in Holland’s spare bedroom, MarketingSherpa was recently acquired by marketing research firm MEC Labs out of Atlantic Beach, Florida. Revenue Senior Editor Eric Reyes asked Holland about her company’s role in moving marketing forward and what lies ahead for the performance marketing space.

Eric Reyes: What was the genesis of the MarketingSherpa idea? How did you perceive the need?

Anne Holland: Before I led MarketingSherpa I was a marketer myself, so I had a pretty good gut-level understanding of what marketers needed that wasn’t being provided by research firms or publications. However, that doesn’t mean I trusted my gut! Instead I toured the U.S. and U.K. for about six months, asking marketers themselves what information they really needed to do their jobs more easily and/or with better results. The final company – MarketingSherpa – was built directly from those suggestions. Turns out our target audience wanted lots of case studies, benchmark data, creative samples and how-to instruction at a practical yet advanced level. So that’s what we provide. We still tour regularly as well as surveying and talking directly with customers weekly to keep on track.

ER: Can you outline your inventory of content – how much is available and how has it grown?

AH: There’s a lot! Basically it breaks down into three areas – all of which are created by research and reporting teams in-house here (we don’t accept contributed content).

  • Case studies and how-to articles – based on hour-long interviews with actual marketers. We delve into what worked, what didn’t, what the data was and include creative samples. We’ve got a library of thousands of these, searchable by tactic and by company/brand name. They’re all exclusive.
  • Benchmark guides, buyer’s guides and tactical handbooks – based on research into what’s working for real-life marketers. We survey tens of thousands of marketers every year, and profile hundreds of consultants and vendors. These 200- plus-page reports come in PDF for instant question answering, and we also ship a printed-and-bound copy to every customer for easy reference.
  • Summits – every year we hold three big summits for marketers: in New York, San Francisco, Boston and a fourth city (next year it’s Miami). The topics include email marketing, selling subscriptions to Internet content and B-to-B demand generation. Naturally our summits feature loads of peer-presented case studies and new data.

ER: Now that MarketingSherpa has been acquired, what will change for you and the company?

AH: Pretty much since day one, there have always been a lot of people who wanted to buy us out or invest in us. I held out for seven years because I wanted our growth to be driven by our readers’ needs, not some board of investors. Every six months I take a few days to step back and review the progress and future of the company. When I did that this past June, I realized it had gotten too big for me to handle alone anymore. It’s a common fate for an entrepreneurial- driven company. You grow it as big as you can and then you hit the ceiling of your own desires and abilities. I wasn’t born to administer this fast-growing multi-million-dollar organization. I was born to research, write and keep in touch with the needs of the readership.

So that’s when I started looking for a new corporate parent for Sherpa. The goal was to find someone who would understand and appreciate our readers and our mission, plus appreciate the great team of employees and researchers we’ve built – not just someone who would wave a bunch of cash at me. By finding the right buyer, in effect I was hiring Sherpa’s new boss. Several organizations were in the running – after carefully interviewing several of them, I chose MEC Labs based on fit.

They are a research firm that partners with folks such as The New York Times to conduct experiments on live campaigns to discover what works (and what doesn’t) in marketing. We are a research firm that partners with our 237,000 readers via surveys and studies to discover what works in marketing. Culturally the fit works too. We are all fairly intense, hardworking people who also like the ocean. Their headquarters are on the beach in Florida. Our headquarters are about a block from the beach in Rhode Island.

MarketingSherpa won’t change much – aside from continuing to grow and serve our readership even better. We’ll just have even stronger corporate leadership to allow us to reach bigger goals and do some pretty amazing research projects. On the personal side, I’ll still be here. Only instead of being stuck in meetings with accounting, HR and IT, I’ll get to focus all my time on the things I really love – research, writing and the art of marketing. And, maybe a little more time to walk on the beach.

ER: What are some of the most important goals you have for MarketingSherpa next in the 12 to 15 months?

AH: Keep her on a steady, focused course. It’s easy to get overwhelmed with expansion opportunities, or to let success go to your head so you do crazy things, launch big new ideas that don’t hold to your core business. I’m an idea person, so it’s probably toughest for me. But our big idea is No New Ideas.

Aside from that, you’ll see several launches that have been enormously researched and several years in the making, the biggest of which is our upcoming membership site launch. At the base, it simply means instead of paying $5 to $9 per article every time you want to read something, you can pay one flat annual fee. Convenience is a wonderful thing. There are also some new features – but the dev team will shoot me if I talk too soon. Watch for December-January and you’ll begin to see.

ER: Are there industry segments that MarketingSherpa is not currently focusing on but would love to get into, and why?

AH: We set our course for a very specific marketplace from day one, and it’s a darned big one that will take us many more years to serve completely. Our chosen marketplace is marketing professionals (including advertising, PR and online) in corporate America at the manager to VP level. That’s about 140,000 marketers. We also serve the consultants, agencies and vendors who serve marketers. That’s about 10,000 folks. So it’s a total market of 150,000.

ER: How much effort is dedicated to the affiliate marketing space by MarketingSherpa ? And the performance marketing space? And do you see that changing in the future?

AH: We cover affiliate and performance marketing from the point of view of the merchant or brand-side marketer. That’s who our reader is. Although many affiliates also read us, they aren’t our target audience. So, for example, the affiliate marketing team at eBay reads Sherpa, but most of their affiliates probably don’t ” and that’s fine with us.

Our coverage in the spaces is decided by the input of our readers – they tell us what they want us to focus our research on and that’s where we go. I personally would like to cover affiliate marketing a bit more than we do, but for many of the merchant-side marketers, it’s just not all that critical to their jobs.

Often an e-commerce or lead generation site will have one marketer who is responsible both for affiliate and also managing SEM. That’s crazy – too much work for anyone to do well. But that’s the way it is. We try to educate marketers via our annual Affiliate Marketing Special (now in its fourth year) every January and other studies such as our Ecommerce Benchmark Guide. Many, however, many, especially in consumer software marketing online, are not there heavily yet, if at all.

ER: What are the next two or three things you think will turn Internet marketing on its ear?

AH: Frankly, I don’t see much changing over the long haul with the exception of a lot more mobile activity in the U.S. (at long, long last) and of course video, video, video. I’m sure what we’re going to see next is a lot of “shovelware” video [sticking your TV ad online], badly measured corporate podcasts and way too many text-voting entertainment campaigns.

If mainstream off-line marketers – the giant retail chains and consumer packaged goods firms – could easily measure Internet activity against their off-line sales, then you would see the world change. The biggies still spend single digits online. Bear in mind, all of SEM spending for this year is less than everything spent on promotional products such as embossed pens and T-shirts given out as marcom. We who research Internet quite a bit tend to forget how incredibly small the spend still is compared with other vehicles.

In the meantime, the real focus that every marketer should be spending their time and money on is not what’s new, but rather, how to make the old stuff work better. Our data show that if you just improve the copywriting on your site a tiny bit, your conversions leap up. Copywriting! That’s as old-fashioned a tactic as you can get. True success is about testing the basics.

ER: You do a lot of public speaking gigs and you also conduct many of the interviews for case studies. Is there one facet of your job you prefer, and why?

AH: My job has really evolved as the company has grown over the past seven years. Research is now run by our research director Stefan Tornquist and his team, while editorial is run by editorial director Tad Clarke and his team. We also have teams running summits and memberships. These days I’m doing less research and writing myself and far more leadership. So I get to attend departmental meetings and guide the company as a whole. I miss the old days when I was chief cook and bottle washer ” but now we have so much more capacity to serve our customers’ needs. So that’s a delightful thing.

Now my favorite things are speaking about new research studies (it’s so fun to say, “Hey, here’s info marketers are yearning to know – let’s go get it!”); speaking at shows, especially when I get to meet readers who have ideas about research studies or stories we should cover (many of our best case studies come from me meeting folks on the road); and once a week personally conducting a marketer-side interview for a story I or one of our reporting staff might write.

ER: During many of your talks you give real-life Internet shopping examples of good and bad things that you’ve encountered. How many of those incidents spark research on that topic?

AH: Actually events often spark our research because attendees will ask great questions… . Those questions drive the research. I’m way, way, way too close to the research we’ve done and the marketing world to know what marketers really want to know.

When you’ve studied something intensively for years, you’re the wrong person to come up with new ideas for studies. You’ll end up in esoteric or newfangled places that your audience couldn’t care less about. One of our biggest stories – in terms of readership and reader feedback – last year was research we’d done in partnership with CNET’s B-to-B Network on what white paper titles got downloaded the most. I thought it would be [just] an OK article, but my God, it hit a huge nerve: floods of thank-you email letters from our readers in the B-to-B space.

So, you have to let your readers tell you what’s hot and what’s not. Don’t ask your editor or newsletter writer. I’m shocked that so few email newsletters do reader surveys asking about content. They all need to.

ER: What are some of the benchmarks for maintaining the quality of MarketingSherpa research and other content?

AH: We never publish data that doesn’t have enough evidence behind it to be statistically reliable. That drives me nuts about other studies (including the DMAs). They’ll survey 10 people and then call it a “study” and make a big stink about findings. We don’t publish charts if the data has to be sliced “too thin” to get a number.

We know that many readers are using us for their budgeting, forecasting and to sell their marketing plan to their CEO. We don’t want to feed them misinformation or slanted data and mess that up.

Unlike most of our competitors, we do not publish third-party content. We don’t solicit editorial from vendors or consultants or anyone else. Our editorial is researched and created in-house. That’s a lot more expensive, but it’s worth it.

On the research benchmark side, we do create partnered studies with some folks where we survey the marketplace or examine results stats we could not do alone. We also gather best-of research from some third-party sources to fill in holes and provide perspective. But we’re not like eMarketer where 100 percent of the data is compiled from other people (they do zero primary research). With us, it’s about 20 percent.

That combination of our data plus partnered studies plus best-of-third-party data is a killer combo. You get everything in one place. It’s all about convenience.

Sometimes people question our data – for example, recently several SEO experts questioned whether our data on the industry slowdown was based in reality because, from their personal perspective, business was booming. Thing is, we had data out the wazoo – data from more than 3,000 client-side marketers, from 104 top SEO firms and from third-party studies. We had more data than anyone on the planet on search marketing. From our perspective, the industry was slowing like crazy and I was able to defend that very easily.

ER: MarketingSherpa covers so many areas of online marketing. Do you consider yourself an expert in any one area of marketing?

AH: I suppose my main personal areas of expertise would be e-commerce, lead generation landing pages and email marketing. I’ve personally been involved with research we’ve conducted in all three and met many, many of the marketers themselves in these fields. I’ve also been heavily involved in our SEM research and coverage over the years, but I think SEM is something that you really cannot be expert in unless you’ve rolled up your sleeves and you do it every day yourself. I don’t. Few of the press covering SEM have.

ER: What is the next logical evolution beyond paid online content?

AH: I am so psyched about buying TV episodes online! In a past job, I was the marketer for a paid subscription [print] newsletter called Interactive Video News. Back then in the early ’90s we were all talking about 500 channels and pay-per-view cable where you’d be able to view anything on demand. Well I have on demand at home on my cable now, but it’s a very clunky interface. However, our research director Stefan Tornquist brags he doesn’t own a TV at all ” he just buys and downloads anything he wants to watch from the Internet.

Mainstream TV networks are now cross-promoting new shows by running them on cable for a few episodes to get the word out. Broadcast TV is, in effect, now just a marketing vehicle for content that’s paid for with some ads. I buy the TV episodes directly by episode online now. Love it to death. That plus buying music song by song for iPods, and the huge long tail of that, is very exciting. Media consumption is changing hugely in the way purchasing changed in the past five years due to search engines for research and ecommerce.

Taking A Stand: Q & A with Brian Littleton

ShareASale is an affiliate network that has taken a hard stance on spyware, adware and parasite-ware by not allowing any downloadable applications into its network. That business model has won legions of affiliate supporters. ShareASale is growing, and is still considered the smaller, nimbler, more fun network – throwing memorable parties and playing host for standout social events. The company’s founder, president and CEO, Brian Littleton, is committed to affiliate marketing and creating a successful business by building strong relationships and sticking to his beliefs. He recently won’s first-ever Fair Practice Award (see Revenue September/October, page 18). Meanwhile, he, and everyone around him, is having lots of fun making it happen.

Lisa Picarille:What made you decide not to allow downloads or applications within your network?

Brian Littleton: Several years ago when the issue first came up to us, we took a look at how some of the software download applications worked – and it was obvious to me that they didn’t belong in any affiliate channel that I had any control over. As an affiliate network, our main job is to track a consumer from the point of a “click” to the point of a “sale” and commission the referring affiliate. Based on our testing, it’s impossible to accurately track this and commission the proper affiliate if there is a download or application in effect. Further, we witnessed some extremely disturbing distribution methods and behavior from some of the players in that market. Thus, to ensure that ShareASale is not party to any practices that contradict our values, we do not allow any downloads or applications within the network.

It is my opinion that these downloadable applications, most of which involve customer loyalty of some kind, should be a completely separate channel from the affiliate channel, one that is tracked and commissioned differently. They perform an entirely different service than that of an affiliate – and actually remind me more of the type of action such as using my “Reward Miles” credit card for a purchase as opposed to a “sales generating” affiliate. I love consumers, but it has never been my understanding that a consumer has the right to dictate where a commission on a sale should go. That doesn’t make sense to me. A lot of times, loyalty applications and affiliates could actually help each other out if they were properly channeled, but that may take time for affiliates to welcome back into the clickstream a party which has, in the past, taken money out of their pocket.

LP: What are the pluses and minuses to that business stance?

BL: The only minus is the occasional client who wishes to work with an affiliate who we do not work with. In those cases, we try to convince the client why partnering with a download or application is disadvantageous to their affiliate strategy. If that doesn’t work, we guide the merchant to another network. We don’t really see a financial downside to that, because our ultimate goal is to be a sustainable and long-term “sales focused” network. Also, it’s our view that the loyalty channel, which is essentially what most of the download applications are, does not belong in the affiliate channel. The affiliate channel should be focused on bringing in new customers, new businesses. Affiliates are able to extend beyond the brand and seek out different demographics. The purpose of a loyalty marketer is to drive consumer loyalty; it’s a different goal.

LP: Is there any other type of business/entity that ShareASale doesn’t work with; religious groups, sex sites, etc.?

BL: We review each and every application into the ShareASale Network – and have done so for as long as we’ve been in business. While I don’t want it to be our job to prejudge anyone’s ability to become a successful affiliate, it is important to me that we keep a certain level of quality in the affiliate applications. To that end, we screen for things such as adult content, hate groups, etc. More important to us than the actual site content is being able to verify an affiliate’s contact information as well as their ownership of the site that they have applied with. Because of the effort we put into this process, I feel we offer a great value to merchants in taking as much time as we do to verify affiliate information. Beyond that, we believe in every affiliate’s right to “start small,” and tend to err on the side of the affiliate in deciding if their site should be accepted for content reasons.

LP: You seem pretty tight with the ABW crowd. How has that relationship impacted your business?

BL: The ABestWeb community is a great friend to ShareASale, and I hope to continue to participate there as long as they will have me. I don’t have any explanation as to why our network has become popular there except to tell you that I think it is because we make a dedicated effort to take every request seriously without regard for whether an affiliate generates $5,000 per month or $5. Every business has “big” clients that are important, and obviously we have some relationships that garner more of our attention at times; however, one of our greatest assets is the collaborative expertise of all affiliates and merchants in this industry who are willing to give us advice on each issue we come across – and I’m always grateful for the advice that they have given me over the years.

LP: People cite ShareASale as the fourth-largest affiliate network. Do you aspire to be among the “big three”?

BL: I aspire to put together the best product that I can for the market that we serve. If you take a close look at the individual networks that are out there, I think you will find that each has strengths within its individual market that makes it as successful as it is. For us, we started out with the hopes that we could provide a solid technology platform and a network of quality affiliates to a market that was being mostly ignored by most networks. We wanted to provide an alternative, mostly for small to mid-size companies, who didn’t feel like their needs were being addressed, and to that end we’ve been fairly successful. Our goal isn’t necessarily to become one of the “big three” but just simply to continue improving both our technology tools and network of affiliates. There are distinct markets within which we compete very well, and within those markets we want to be not only the best solution available but also a solution that our customers are happy with.

LP: Do you any feel pressure to expand?

BL: I founded ShareASale in the year 2000, and have been able to launch and run the company without the assistance of outside capital. A close friend of mine in this business, and I, often discuss the pluses and minuses of being “independent” and I can tell you that I don’t feel any pressure to expand outside of what I feel we do best. We’ve added people nearly every year, but we do so within the realm of what we need. Expanding a business isn’t an important goal of mine. Doing what we do, and doing it well, is important to me.

LP: How many merchants are in your network?

BL: At the time I am writing this there are 2,071 merchant offers in the network. That does include some merchants who may have multiple offers so the true number of merchants is a little lower than that. Of the 2,071, there are 1,866 who are participating as “pay per sale” merchants – which is our focus. Pay per sale could indicate a revenue share, such as a percentage of a sale, as well as a flat dollar amount.

LP: How many affiliates?

BL: While we do discuss some numbers with merchants who call to ask, I try to avoid discussing the size of the network mostly because I think concentrating on the numbers isn’t a very good way to describe to a new merchant how affiliate marketing works. It is my personal feeling that merchants are mostly responsible for their own success whether they participate in ShareASale or any other network. Using a number like “100,000 affiliates in the network,” for example, is misleading to a prospective merchant because there is really zero likelihood that all 100,000 would ever become sales-generating affiliates in their program. For some merchants, one or two affiliates can make a successful program, and for others, it is 1,000 or 2,000. … ShareASale has been a successful platform for both of those types of merchants.

LP: Would you consider a merger or acquisition to grow the company?

BL: As a businessman, the potential for mergers/acquisitions is always a discussion that I would be open to. It isn’t, however, our main focus. We want to finish our own goals in putting together the best technology that we can, coupled with a quality network that merchants can grow with. I feel like there are large opportunities for growth even without considering the possibilities of M&As.

LP: Performics and Zanox are both based in Chicago, like ShareASale, and Zanox would give you a presence abroad. Would you consider teaming up with another company to expand your business?

BL: I’ve been lucky enough to meet with the folks both at Performics and Zanox, as well as LinkShare, who also have offices in the Chicago area. We’ve got quite a good group of affiliate marketers in Chicago including several merchants and affiliates. It should probably be renamed “Affiliate Row” as there are about five companies specifically concentrating on affiliate marketing within a five-block radius or so in this part of Chicago.

LP: Are there any plans to expand into other geographic areas?

BL: Geographically, I can’t say that we do – but in terms of markets we are hoping to have a full Spanish-language site available soon so that we are able to move into markets that otherwise would not be open to us.

LP: So, it’s a Hispanic version of ShareASale? When is that happening and what prompted that move?

BL: In my opinion, just taking the United States as an example, Spanish-language populations are and will continue to be important avenues for economic growth. It is one of my personal goals to learn Spanish myself – as well as a goal of this business to be able to provide a product for that market.

LP: What are the biggest challenges facing ShareASale over the next year?

BL: Growth puts a huge strain on resources both technological and human. Over the next year we expect to continue on a fairly high growth curve and thus will be faced with continual challenges to remain ahead of the curve. Things such as database design, fault management and even something as simple as timely payments can be affected purely by the scale of their scope – so we’ll be quite busy just tackling those challenges. Affiliate marketing itself is also becoming more challenging for merchants, and ShareASale will be providing tools to merchants to counter those challenges. Take, for example, the collision between the “affiliate channel” and the “loyalty channel”; we will need to provide better tools to merchants so that they can separate, track and commission these two channels differently without conflict, so that the two channels can be complementary and help each other grow. There are countless examples just like that one, where a technology provider has opportunity for innovation and we will be working on each one.

LP: What are the goals for the company over the next year or two?

BL: As has always been our goal, we want to put together the best product we can. Our affiliates tell us that they want more and more brand name merchants, so we are working on that. Our merchants tell us they want better reporting tools and methods for multi-commissioning a sale, and we are working on that. In our particular industry, I haven’t found it to be too effective in laying out goals too far in advance, due to the ever-changing landscape. Being a relatively small company, we have used to our advantage our ability to be flexible – and customize our solutions for merchants and affiliates as they need them. That is probably one of our biggest advantages; actually, as we get a lot of feedback from clients who tell us we were the “only one who would do what we needed,” etc.

LP:Why did you put together Think Tank? What are you looking to accomplish at this event?

BL: The ShareASale Think Tank is an event that we are putting together for November 4, 2006, at the Wynn Las Vegas – despite various unofficial events, parties and get-togethers. … This will be our first organized event including both sessions and social activities. Our goal is pretty simple: We want to bring a select group of ShareASale merchants to the Think Tank and allow them the opportunity of “pitching” their program in front of some of the best and brightest affiliates in the industry. Affiliates in attendance will be able to critique individual offerings, brainstorm new ideas on conversion/creatives/etc., all leading to an improved program for the merchant as well as a new personal relationship with those affiliates in attendance.

Of course, true to ShareASale, there will be social events to keep everyone from feeling like they are at a conference. If things all go well we are hoping to put on a Think Tank event every six months or so with different focuses to encompass all of the diversity that is an affiliate network.

LP: Tell me what you consider to be ShareASale’s greatest differentiator in this marketplace.

BL: To me, it is simply the willingness to work with our two greatest assets: merchants and affiliates. Affiliate marketing technology isn’t something that you can create and put into a box to sell off the shelf. Each new merchant who comes on board has the opportunity to work with us directly to make sure that they are getting exactly what they need in terms of specific reporting, creatives or even payment setup. Affiliates are treated the same way if they have specific needs that we are able to accommodate. Our ability to be flexible has allowed us to not only win client contracts in areas of competition, but also strengthen existing relationships. Especially with merchants, it has been really helpful for some of them to be able to deal directly with me on certain issues such as customized technology and contracts. We also have been able to continue to provide a level of support to our clients that has remained high despite the increased growth in number of merchants and affiliates – and this is something that is important to us going forward as well. Everyone at ShareASale pitches in and helps us where we need help on a given day; it isn’t unusual.

Performance Powerhouse: Q & A with Steve Denton

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

LP: How are you doing that?

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

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

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

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

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

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