Search Marketers Target iPod Users

Discover how your business can leverage podcasts before it’s too late.

Everyone’s talking about podcasts, those audio files downloaded from the Web and played on demand using an Apple iPod or any MP3 media player. Many podcasts are just for fun, but marketers are discovering they’re also a promising new way to deliver advertising.

In a sense, there’s no difference in what you can do with a podcast than with radio airtime. You can record a speech, an interview, a commercial or any other audio. But podcasts are used differently than radio because of their immediacy, low cost and flexible time duration.

First off, podcasts can cover the most unusual subjects. If, for example, you want to target a few hundred people, it’s cheap enough to do with a podcast, whereas a radio broadcast or a mailed CD would be unaffordable. Go ahead and record a podcast interview with a famous photographer about digital cameras. Mention your company a few times as the sponsor. Maybe you’ll sell a few cameras to serious photographers.

Many marketers use podcasts to reach the seemingly unreachable. Folks listening to iPods are walking around or stealing time they’d otherwise use to sleep on the train – time when they are beyond the access of most advertising media. Podcasts are also favored by those under 30 years old, who are becoming harder to reach through traditional print and broadcast advertising.

In addition, podcasts provide longform messages that were previously possible only with infomercials or public relations opportunities. And you can make one fast: Record it today and stick it on your website and your message is out there. For these and many other reasons, podcasts are the cool new way to deliver your marketing message.

The Search Marketing Angle

By now you may be asking, “What does all this have to do with search marketing?” Sure, podcasts broadcast your message, reach market segments that are tough to access, help your company seem trendy and keep your teeth flossed and pearly white, but they don’t benefit your search marketing, right? Wrong.

Podcasts are a great way to get links to your site, and search engines just love links. They especially love one-way links – links from websites to your pages that are not reciprocated. Those links seem to be the most unbiased votes for the quality of your content, telling the search engines to rank those linked pages highly for searches that match the pages’ words.

To get those precious one-way links, you need to offer content that causes other sites to voluntarily link to yours. Podcasts are a great way to do so. Audio is naturally more engaging than text and your podcast can contain up-to-the-minute, fresh information from experts with a strong point of view. Done well, podcasts act as link magnets for your site.

You can also use podcasts to give yourself a link. If you submit your podcasts to specialized directories, such as Podcast.net, you’ll automatically get a link back to your website. Every little link adds up to help your search ranking.

Podcasts and Search Engines

Podcasts attract links as we’ve seen, but that is just one of their many talents. Podcasts are also full-fledged members of the content community, so why can’t searchers find your podcast and discover your site that way? After all, you create Web pages to attract links, but search engines easily find those pages. Unfortunately, Google doesn’t really “see” your podcasts yet.

You’re probably familiar with Google’s image search, in which you can enter a keyword and find pictures that match that word. Enter “zebra” and see pictures of zebras, but Google does not truly recognize those pictures as containing zebras. In fact, Google is using occurrences of the word “zebra” to find the pictures. So it will find pictures stored in files named “zebra.gif” and it will find pictures that are described with alternate text that contains the word “zebra,” but Google has no clue whether the picture is truly that of a zebra. That’s why you can sometimes see weird-looking results in image search.

For Google and many mainstream search engines, searching for podcasts is much like searching for images. Google can find a searcher’s keywords on the Web page that describes a podcast, but can’t find podcasts that contain those same words in the spoken audio. That means that a searcher will find your podcast from words in the title or the description that you place on your landing page, but not from any other words said inside the podcast audio file.

Some podcast search facilities, such as Podcast.net, allow you to provide a title and description to their directory. Similarly, Odeo.com lets you claim your podcast and offer a description. No matter the mechanism, make sure you provide the right search keywords so that search engines find the landing page for your podcast. You do that the same way you’d choose which words to use when optimizing any Web page: by choosing the most popular relevant keywords and ensuring they appear.

Audio Search Engines

You might suspect that trying to find 15- to 20-minute podcasts using only the words in their titles and descriptions would leave a lot to be desired. Search engines are just beginning to expand their bag of tricks to look for the actual words spoken in the podcast audio. To do so, the engines translate those spoken words into text.

Nexidia.com company executives claim that the best way to make speech searchable is to convert it to phonemes, the speech sounds that correspond to each syllable spoken. While experts agree that the phonemic approach can be useful for proper names, many believe that true speech recognition (converting audio speech into the actual textual words) provides far better searchability.

One of these experts, Marie Meteer, the vice president of commercial speech for BBN.com, says searching for the name “Stern” might match the phonemes for the words “best earnings,” even though searchers would find this a strange result (it occurs because combining the end of “best” and the beginning of “earnings” results in a sound similar to “Stern”). Speech recognition techniques avoid this kind of error by matching the audio to the words “best” and “earnings.” Nothing is ever 100 percent accurate, but useful audio search engines based on speech recognition technology are beginning to appear.

Podzinger.com is a new search engine that uses the BBN speech recognition technology to find the words inside the podcast audio (for a full interview with the BBN crew behind Podzinger, visit MikeMoran.com and check out the June issue of my newsletter).

SingingFish.com, owned by AOL, also uses speech recognition techniques to find words spoken in audio and video files, including podcasts. Despite this interesting technology, however, none of these audio search engines draws many searchers.

What are the mainstream search engines doing? Yahoo Podcasts is a beta offering that searches explicitly for podcasts, but offers no speech recognition capability yet. Reports are rampant that both Google and Yahoo are hiring speech recognition experts, so stay tuned. Before long, the major search engines may be finding the words inside your podcasts just as they find the words on your Web pages. When they do, expect your podcasts to require the same attention to search optimization that you provide your Web pages today.

So get ahead of the game now. Perform keyword research before your podcast so that you use titles and descriptions on your search landing page that reflect what searchers are seeking. Moreover, carefully choose the vocabulary of the podcast to reflect searchers’ keywords. That way you’ll be ready for the speech recognition techniques from audio search engines as they become mainstream.

MIKE MORAN is an IBM Distinguished Engineer and the manager of IBM.com Web Experience. Mike is also the co-author of the book Search Engine Marketing, Inc. and can be reached through his website MikeMoran.com.

The Passion of the Site

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

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

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

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

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

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

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

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

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

The Right Stuff

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

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

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

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

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

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

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

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

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

The Root of the Problem

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

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

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

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

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

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

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

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

Mining for Keywords

Now that you’ve set up your search engine marketing campaign and it’s chugging along nicely, how do you take things to the next level? You’ve picked out some good keywords, written some good copy and you’re getting a reasonable ROI, but every time you look at your pay-per-click campaigns, you just know there’s more that you could be doing to maximize your investment. And you know what? You’re right.

The next step is to start prospecting for keywords that are lower in price but still bring good results. Anyone can set up a keyword campaign with all the obvious keywords and spend a bunch of money. Smart marketers know, however, that one of the best ways to beat their competition is to go after those keywords that the competition hasn’t discovered yet. More than 500 million keywords are searched every month on the major search engines, yet only 15 to 20 percent of those keywords have bids. A veritable gold rush of keywords is just waiting to happen.

Admittedly those keywords will have lower volumes of search than all of the one-word and two-word options you are currently bidding on, but the conversion rates will be higher, and by spreading your budget over a larger number of words, you minimize your monetary risk.

The Mining Process

You’ll want to utilize two methods in the mining process. One involves brainstorming, the other research, but good keyword development strategies take advantage of both.

For the first, find yourself a big blank wall and a stack of sticky notes. You’re going to use this wall to start the brainstorming process, but don’t do this alone or, even worse, with your marketing team. You are too close to your website to be objective. You’ve watched its growth and development since it was nothing more than a twinkle in the designer’s eye, and although you may try to think like your customer, nine times out of 10 you will fail to consider all the different ways someone might search for your product or service.

People search in very random ways. Most of them don’t know all the buzzwords, jargon and abbreviations associated with your business, so they don’t use them. Your marketing team may be in the habit of trying to influence your customers to behave in certain ways on your site. Many marketing teams are great at this, but their influence doesn’t extend to the way people are accustomed to searching. They are going to search their way no matter what you think, so your job is to figure out their thought process and put your website in front of them.

The best thing you can do is conduct your own informal focus group. Gather a bunch of your friends, associates, relatives and others, and sit them down in front of that blank wall. Feed them (if that’s the only way you can get them), but try to get folks who know little or nothing about your business. Tell them, “I sell widgets. If you were looking for widgets online, what would you enter into a search engine?” Then get ready to write each keyword on a sticky note as fast as you can. The reason you will want to use sticky notes is that once you have all the keywords written down, it is easy to move them around to create “buckets.” These buckets usually correspond to specific products, price and volume. Once you have those buckets, you can easily set up your categories in Yahoo and your Adgroups in Google. Having these buckets established will also allow you to write relevant titles and descriptions for each, thus minimizing the amount of time spent copywriting.

The second step in the keyword mining process involves using tools to dig for more variations on your keyword bucket themes. You can take all the words your focus group has suggested and use them to expand your lists by plugging them into such keyword research tools as:

  • Yahoo Keyword Selector Tool (searchmarketing.yahoo.com/rc/srch)
  • Google AdWords Keyword Tool (ad words.google.com/select/)
  • KeywordSandbox (https://adwords.google.com/select/ KeywordSandbox)
  • Wordtracker (www.wordtracker.com)
  • KeywordMax (www.keywordmax.com)
  • Keyword Intelligence (www.keyword intelligence.com)

Taking It to the Next Level

While brainstorming and research are crucial to the keyword prospecting process, they are much more effective when combined with other techniques. Take advantage of all the tools and advice available to make your site a veritable gold mine. Here are some time-tested ideas that have worked for me.

Add an internal search engine to your site. This will give you tons of information on how users are finding you. It will also let you know whether users are finding what they want when they get to your site. A good search engine tool can be found at www.freefind.com, or you can find many others by typing “open source search engine” into any search engine. You will want one that just searches your site rather than searching the whole Web, as you obviously don’t want to encourage users to leave your site as soon as they get there.

Check out the source code on your competitors’ sites. You may be able to get ideas for your brainstorming process from some of the keywords they are focusing on. Remember, it’s not a good idea to use the same keywords unless you offer the same product or service, but it’s a good place to start looking for ideas.

Consider your entire website. Many folks stop their keyword research on their home page. They don’t know that their internal pages can provide a wealth of new keywords to attack.

Look for all related words. Make sure you include all variations of a term. Choose words that are singular, plural, misspellings, abbreviations, etc.

As you mine, remember that a “keyword” is not just one or two words. Many keywords are now three, four, five or more words in length – these are the keywords that are producing higher ROI with less investment.

Internet users are becoming more sophisticated in how they search and are utilizing longer keyword phrases to find what they need. Marketers, fortunately for you, aren’t keeping pace with this trend, and that’s what’s driving the prices so high on the one-word and two-word search terms. By thinking a little more creatively, and pursuing more of those niche terms, you can compete very effectively against the big keyword mining companies. After all, a little bit of gold from a lot of rocks is worth just as much as one big nugget. You may have to work harder to get it, but in the end, a gold baron is a gold baron, regardless of how he made his wealth.

MARY O’BRIEN is a partner at Telic Media. She was formerly senior director of sales at Yahoo Search Marketing and is currently presenting their advertiser workshops around the country.

Analyze This

Affiliates are capitalizing on the predictable behavioral patterns of consumers by using Web analytics tools to decode customers’ habits and boost revenue.

So if you’re a publisher and want to know who exactly is visiting your site, how different types of visitors come back, what they are looking for when they arrive and what specifically makes them want to leave, you should be thinking about tools that help you sort, analyze and understand your customers.

Web analytics is an emerging category of software that purports to answer all those questions and many more that could help you identify the steps for your site to reach the top of its game.

“Affiliates have tremendous opportunity,” says Barbara Poole, a revenue improvement consultant at PoolResources.com, “because they already understand what it is to drill down to the specific customer relationships.”

And if you find the right software to help with that decoding you’ll already be ahead of the curve.

That’s what Miami-based affiliate Pedro Sostre did. Through a collection of analytics software that includes AWStats, ClickTracks Pro and WebSideStory’s HitBox, he has determined the success of ad campaigns, discovered new opportunities based on analyzing what keyword terms are being searched and routinely improved overall performance for his sites including FreeBookClub.com, iTravelMagazine.com, AudioBookDeals.com and Tax-Stuff.com.

“We use Web analytics every day,” Sostre says. “When we found that 88 percent of that search engine traffic wasn’t converting, we where able to save $2,000 per month at FreeBookClub on pay-perclick advertising alone.”

These tools don’t cost much: AWStats is free, HitBox is $30 per month and Click- Tracks’ basic level is a one-time license of a few hundred dollars.

“Eliminating pay-per-click listings at Aha and Kanoodle alone saved me the cost of the software,” Sostre says. “And then there is the value you get from seeing what people are looking for as far as clicks and what campaigns are working. I absolutely could not do what I do without being able to analyze the sets.”

New analytics tools actually create a snapshot of who your ideal customers are and what makes them tick. And it even can determine the different types of customers your site might draw. Once you can do that, “you get the ability to really use that information,” says Brent Hieggelke, vice president of software analytics company WebTrends.

Merchants and affiliates are catching on to this power. The Web analytics market grew 13 percent in 2004, marking what global market researcher International Data Corp. calls a “second coming.”

Analytics has officially grown up from its beginnings a decade ago, when eyeballs and unique page impressions were all that mattered, or at least all that were measured. “Who really cares if someone is sitting on a page for 20 minutes? People have realized how dirty those metrics are,” says SAS Web Analytics’ Richard Foley. “Basic metrics just aren’t cutting it.”

So what is? There are several Web analytics advances, some still in beta, that could be huge for affiliates. Segmentation, intuitive analysis and 360-degree views are among the latest advances that have affiliates applauding.

“We just started using [analytics], and we’re just blown away by the power of seeing day-to-day metrics,” says Joe Beruta, director of interactive marketing for Jenny Craig, which gets anywhere from 5 to 10 percent of its online registrations through affiliates. “We used to look at the month after the fact, with no real-time metrics. Now we’re looking at things like clients versus non-clients as they come to the site – and we haven’t even gotten into segmentation.”

Segmentation

Segmentation is the hottest way to analyze customers on the Web, and at as little as $35 per month it’s finally affordable for small publishers. The technology records and visually tracks a single visitor’s interactions at every touch point. Assigning each visitor a unique identifier, it compares its findings with its growing database of other users’ patterns. Similar users are grouped into one segment. The more a visitor interacts with your site, either by clicking links or making purchases or answering questions about interests, the more data the technology collects on what makes that segment tick.

“It’s a little bit like taking a helicopter and flying over a freeway to see where the bottlenecks are,” says Michael Chavez, vice president of analytics maker ClickFox. “It’s not about predicting a user’s behavior; you’re looking at what they actually did. And you now can link that to actual demographics.”

One of the first companies to make segmentation accessible is WebTrends, which rolled out version 7.0 of its program a year ago. The latest version includes actual breakdowns of how profitable each link is and all of its segmentation tools. There’s a free 14-day trial at WebTrends.com.

Today “this broad, comprehensive picture of the process is one of the absolute hot spots in the market,” says WebTrend’s Hieggelke.

This type of analytics can even help you find new merchants or improve the deal you have. “You get to know based on buying habits what someone wants from your company,” says Mark Bradley, vice president of product shopping at shopping comparison engine NexTag. “If you know people are heading off to buy another product from a third party, then you negotiate with that merchant to get a special deal to sell it yourself.”

Intuitive Analysis

With intuitive analytics, you also get recommendations specific to respective goals for sales, IT, marketing and Web design. Now, if a certain segment of customers are spending three times more time on your site, but buying half as often, the software automatically searches for commonalities like coupon codes, free shipping offers or site navigation and tells you what about your site or where the customer came from influences their buying behavior. It tells you what to keep doing to get more customers (including determining the best advertising avenues) and what to start doing to get them to shop more often.

“That’s what analytics is,” says Stephen Messer, CEO of LinkShare, which in May launched its Synergy Analytics application for its network of affiliates. “It says: ‘Let us do the analysis that you would otherwise do on your own.'”

With basic analytics, you may conclude you bought the wrong keywords if your search engine results are down – with nothing in your reporting to tell you exactly what you did wrong. Intuitive analytics will point out six, nine, maybe 10 different things that might be affecting why search engine returns were low. It may be that your landing pages were too slow or down, it might be the time of day, it might be that you actually do have some keywords that aren’t effective. Intuitive analytics does a report for each and more of these things, providing an immediate blueprint for what steps you could take to improve search engine conversions.

360-Degree View

The third big analysis development builds its reports not only on your site’s Web data, but also on all of your other campaigns. Email, direct mail, traditional advertising, search engine placements and keyword buys are all cataloged online using distinctive links, coupon codes, SKU numbers, even unique telephone extensions. It integrates offline and other marketing and sales data for a complete view of your business activities and a complete read on what works and what doesn’t. It is, however, the most expensive of the Web analytics tools: SAS, which released its 360-degree SAS Web Analytics product in mid-2004.

“A 360-degree view can really determine what people are doing on your site, by digging through and mining the Web data so you can see ‘these are my specific segments,'” says Evan Shelby, product manager for SPSS’s Web analytics products.

SPSS bought NetGenesis several years ago and has integrated it with another SPSS product – Web Mining for Clementine – to offer a 360-degree view. Its SPSS for Windows 13.0 is $1,499 for a business customer and $599 for a single academic user. SPSS server licenses start at $15,500.

“We look at things like affinities, segments, what activities might be associated for cross-selling and upselling – really digging into the data,” Shelby says.

In the end, most site publishers use a combination of tools like Urchin and ClickTracks, says Chris Winfield, president of 10e20, which concurrently manages hundreds of search engine marketing campaigns for clients like Virgin and Coldwell Banker. Other than high-end analytics like SAS, “there isn’t one package yet that we’ve found to truly meet the need to really be able to track all of these things at once,” Winfield says.

Analytics in Action

“It’s a very unusual combination of sophisticated technology and sophisticated math and analytics, when integrated together with merchandising and marketing communicating,” says Matt Moog, president and CEO of CoolSavings, an online direct marketing and media company.

Using analytics software from SAS, SPSS and Coremetrics, CoolSavings was one of the first to give online retailers a holistic view of customers that includes strategies for acquiring consumers, lowering churn and retaining consumers.

“It all starts in knowing what data to collect about the consumer, and storing that data – whether self-reported, behavioral or transactional data – in such a way that it can be used for those purposes,” Moog says.

It’s something Erick Barney, marketing manager for Medford, Ore.-based MotorcycleSuperstore.com, knows well. He added WebTrends 7.0 one year ago. “It’s amazing to see what kind of product you get from a company where that’s what they do,” Barney says. “It’s just leagues beyond what we had. We had all the basics. We knew where we stood, but we didn’t have the nitty-gritty. We didn’t know all the screws to tighten, all the design elements to tweak or all the things to do better – bidding on keywords or writing sales copy. Now, we dream up our metric and [our analytics provider] help[s] us put together the reports to analyze it.”

Using WebTrend’s overlay feature, which shows click-through and revenue numbers above the actual links on a screen capture of each page, Barney has been able to analyze everything from the placement of tables to clickthroughs on email communication links and automatically sees a red flag on those pages with frequent cart dropouts. Since adding WebTrends, MotorcyleSuperstore.com’s revenues have jumped nearly 50 percent.

“I’ve had access to most of the analytics from one source or another, but I had to log in to Overture, extract the numbers and build my own report to compare programs and make decisions,” Barney recalls. “This puts it all in front of you. I go ‘Campaign Drill Down’ and it’s all right there, and it’s really cool.”

On the other side of the coin are the affiliate sales that can be made on a product like this.

“Many of our partners use our technology to not only optimize their marketing efforts, but also complement their service offerings,” says Dan Shapero at NetApplications.com, which integrated Alexa Data Services into its Hitslink analytics tool in late-2003. Hitslink includes pay-per-click conversion tracking, click fraud analysis, referrers, search engine keywords and page navigation paths. It can track an Overture listing, for instance, all the way to orders and revenue, plus it sends out email traffic alerts when your traffic spikes. (There’s a free 30-day trial, good for up to 20,000 hits, at Hitslink.com/trial.)

Already taking statistics for a reported 40,000 publishers, most of Net Application’s customers come through its affiliate and private-label partner programs, Shapero says. “A big part of our vision is if we can enable these partners to use our technologies to market our products, they become our biggest evangelists.” Most of its 3,000 affiliates not only get 40 to 50 percent of every $9.95- to-start monthly hosting fee their users pay, but also get up to 50 percent off the price of using the software for themselves. (Hitslink now has $20 sign-up incentive.)

Meanwhile, Sostre is helping other sites master the analytics tactics he has learned as an in-the-trench affiliate. Using intuitive analytics reports, he helped one site change small things like the color of the button, where the sign-up is and what copy they put next to it. The results, reports a company spokesperson’s blog, were a 60 percent jump in EPC.

“These days,” reminds website strategy consultant Philippa Gamse, “you have to get into the behavior patterns – what you want to do better and what you want to stop doing – to be successful.” These new innovations in Web analytics, at a price range affordable to smaller sites, may be just what ROI ordered.

“The money there is real,” WebTrends’ Hieggelke says. “It’s the kind of thing that shows running your business by the numbers can absolutely have a fast payoff.”

JENNIFER D. MEACHAM‘s stories have been featured in The Wall Street Journal, Kiplinger’s Personal Finance, AARP The Magazine and at CBSMarketWatch.com. She’s a former reporter for The Seattle Times.

Killer Content Brings in Money

There are three main factors that determine the success of your Web site:

  • Effective site optimization;
  • Site popularity; and
  • Great content.

Site optimization is the process of placing your keywords in the right places and making sure your Web site is accessible to search engine spiders so that they can find you and index your content more easily.

Site popularity can be achieved by online and offline marketing (mainly good PR) and the number of people who link back to you. This is often confused with page rank, but page rank is only one factor in determining your site’s popularity.

The best long-term solution for high search engine ranking, and the factor that is easiest to tweak, is to create first-rate content. You don’t have to be a Pulitzer Prize winner to do it. You just need to focus on addressing the needs of your customers, and by doing that effectively you will also attract search engine spiders in droves.

Many search engine marketers would have you believe that the best way to get high search engine rankings is to stuff your pages full of keywords and use tiny text at the bottom of the page to create great spider fodder. They don’t focus on the usability of the page or think about how users want to view your copy.

This may be a good short-term strategy, and may get you good rankings, but in the long term that’s not a good idea. Spiders are getting smarter. They know when you are trying to spam them. From your customers’ perspective this also does a lot to minimize the credibility of your Web site.

We have all been to sites where the copy was poorly written and grammatically incorrect. It looks sloppy and leaves customers questioning the wisdom of giving you their credit card numbers. It doesn’t matter how many clicks you get or what your rankings are if you can’t convert a visitor to a buyer. First-rate copy serves all of your audiences – spiders and customers alike.

As far as high quality content goes, remember that it should offer significant value to your customers and other sites. Why other sites? Because they’ll link to your site. Good content should also be unique and be updated regularly, so that people will come back to your site often to see what’s new.

Structuring Your Content

When thinking of how to structure your page to make it usable for both spiders and customers, a good rule of thumb is to start to think like a newspaper publisher. The same rules apply when determining what your Web site copy should look like. The newspaper editor focuses on the way readers like to view content. The editor knows that users typically scan the headlines first and then, when something piques their interest, they zero in on the content they want to read.

If you structure your pages the same way, it will increase the usability of your site and also make it more spider friendly. Make good use of headline sizes to clearly identify to your readers what is the most important copy on your pages. Direct them to where you want them to go by allowing them to see at a glance which items are the most important. Include your keywords in your headings to reinforce the focus of the page for both users and spiders.

The same rules apply whether you are building landing pages to submit to paid search engines or for organic traffic. Users and spiders want clear, grammatically correct copy that helps them to find the value in your pages fast. You only have about 13 seconds to catch your users’ attention, so every page on your site should focus on one message, and include a clear call to action. It’s really just following the basics of direct response marketing and applying that to your Web site.

Once you have created great headlines, pick one topic per page and write decent articles that appeal to your users. More pages equal more spider food and more specific landing pages where you can send users for one-click information. What works for one Web site in terms of content may not work for another, so you’ll have to keep testing until you see what mix of copy makes users want to stay on your site, return again and convert to a sale.

Here are some examples to help you start thinking about what valuable content might look like:

  • CD retailer: Provide reviews of new releases and bands;
  • Accounting: Offer regular updates about legal changes that affect your clients;
  • IT trainer: Show IT folks how to train their internal clients, or offer some free online training or white papers;
  • Gardener: Show beautiful gardens from around the world, and offer tips on gardening;
  • Travel agent: Offer reviews of hotels, restaurants and attractions on different areas.

As you may have realized by now, creating and updating your content is a lot of work. It’s also hard to stay motivated if you don’t see immediate gains. It takes a very long time for word to spread about your Web site. Just as with paid placement, you have to test creative frequently. With paid placement you can see results immediately whereas with this, you need to wait a long time to get feedback. You need to hang in there and over time you will see that it really does pay off.

Another relatively pain-free way to offer frequently updated content is to create a blog. There are many great inexpensive blogging tools out there that will integrate well with your Web site and allow you to update your content on the fly. Savvy search engine marketers are rushing to add them to their sites. But be sure the quality of your blog is high. Blogs are easy to set up and are proving to be very spider friendly. After all, what the search engine wants to see is just what your users want: frequently updated, quality, relevant content. Nobody wants to read yesterday’s news, least of all search engine spiders. Increasing conversion is what it’s all about, and that’s what makes a successful Web site.

MARY O’BRIEN is a partner at Traffic- Mentor Inc. She has worked in Internet marketing for five years and was formerly senior director of sales at Overture.com.

The Write Stuff

Imagine you’re in a store. You’re browsing and minding your own business. Then, all of a sudden, a pushy salesperson ruins your shopping trip. What could be worse? On the other hand, a helpful, honest, knowledgeable clerk can turn an otherwise annoying shopping errand into a pleasure.

The same applies online. Blaring banners are like obnoxious sales clerks; shoppers want to avoid them. If you want visitors to value your site, you need to offer more than banners and obvious links to products. You need to give ’em a reason to come back. Enter content – the stories, letters, news, photos, drawings and other types of information that add value to your site.

“The key is attracting people to your site by offering information that is free and useful,” said Elizabeth Karolczak, president of OSKAR.com, the parent company of ContentFinder.com, a site that lets people find sources of syndicated content. “It shouldn’t be just sell, sell, sell.”

Yes, the name of your game may be selling, and not all sites need this type of content. Many successful affiliates operate online stores that contain very little content and win their customers over with a no-frills approach to shopping. Shoppers come to those sites simply to buy something quickly at a good price with no hassle. The drawback to that approach is that the customers leave as quickly as they arrive, limiting the time they spend in the store and how much they buy.

Giving people a reason to read and linger increases the likelihood of them seeing more of your site and more of your offers. The more frequently that information changes, the more incentive your visitors have to return to your site.

“If you update with relevant information, you increase the value of your site,” said Jim Pitkow, CEO of Moreover.com, which aggregates content from various publishers. “Content enriches the user experience and drives loyalty.”

User loyalty is exactly what some affiliates are after as they create content, get their visitors to do it or get merchants to provide it. And they find that attracting loyal users boosts traffic and revenue.

“The result of providing high quality editorial is that we are literally the No. 1 ‘senior magazine’ on the Internet according to search engines such as Google, Yahoo and Ask Jeeves,” said Reece Halpern, publisher of GrandTimes.com, an affiliate site that serves seniors.

GrandTimes.com takes a three-fold approach to content. It has a newsfeed from InterestAlert.com, an affiliate news site that provides free stories. It also posts outside content, articles from book publishers and other sources with whom they’ve established relationships over the past decade. Plus, one in-house magazine-quality article appears per week. This is all done with just two people: Reece and his wife. It doesn’t take a team of Pulitzer winners to make great content. But it does take dedication and persistence.

Create It Yourself

“I believe the key to our success is that we provide high quality content on a weekly basis,” said Halpern, who updates content from his home on Sunday nights. “Competitors who provided [public relations] material disguised to look like editorial are no longer around.”

Other affiliate sites agree that quality is important. “Most sites post only fluff,” said Bob Narindra, VP of LovingYou.com, a relationship site that has a staff of only three. “You want content that isn’t available everywhere else.”

Original content takes basic writing skills. If you are up for it, this can be the perfect creative outlet. It’s a good idea to brush up on your writing skills or ask someone you know who has a knack for turning a phrase. And you don’t want to turn off your audience by, for example, raving about every product you review (and sell). You’ll lose credibility very quickly and visitors will skip over your site as untrustworthy.

If you want to spice up your site, don’t use too much sugar. Whether you’re reviewing books, selling CDs, or critiquing clothes, let your words be immaculate. You want readers to respect you. That means telling the brutal truth. If everything you say is positive, then readers won’t buy what you’re selling and your site will suffer as a result. So give them quality content and everyone will be contented.

This means you can’t insult your readership with egregious errors. While it might sound like an obvious no-brainer, run a spell check and grammar check, even if you think you’re Mensa material. After all, mistakes happen.

And try to update it regularly. “When we went on vacation, our traffic would drop by 20 percent,” said Narindra. “So now if we have to leave town, we write content in advance.” The three partners manage to make the site look like it offers a lot by switching the order of the featured stories.

Get a Little Help

Most affiliates are on a tight budget, so they do it all themselves or consider farming out some writing. But if you are going to count on someone else to help you create content, make sure they really care about the topic they are writing about. The more passionate they are, the more likely they are to work for bargain rates or for free.

Many affiliates look to their own audience to find contributors passionate about the topic. Some invite visitors to express themselves. Amazon.com publishes book descriptions sent by publishers, but reader reviews are what guide many visitors’ purchasing decisions.

Jonni McCoy runs an affiliate site called MiserlyMoms.com and her site’s main objective is to sell copies of her own books. But she has cleverly enticed readers to submit articles to fill out her site’s offerings. There are “working from home” stories from readers, “miserly tips” from readers and even recipes from readers.

“The articles, tips, recipes and stories draw people in to read,” said McCoy, who even posts guidelines for people who want to contribute. “I get about 2,000 hits per week.”

If you have, say, a car site, get users to submit advice, set up polls and then post the results. People love seeing how others respond. A message board is another great tool. You can get the software free or cheaply by Googling such terms as “free message board software.” Look at what your visitors talk about to find out what topics are of interest to your readers. It’ll give you great ideas on what articles will grab readers.

Rely on Pros

A syndicator or content licenser can also help you figure out what your needs are and how to best serve your viewers.

“We’ve been doing this for seven years,” said Jeffrey Massa, president and CEO of YellowBrix, a content syndicator. “We are happy to share our experience with clients. Identifying the type of content that would be beneficial to your users is simple.”

But getting their expertise and advice can be costly. The last option is to license content from a content provider. The upside is that it lends your site legitimacy. Visitors know that you can be trusted, that you offer something valuable.

And syndicated content is not just for those with deep pockets. Halpern uses InterestAlert.com, which provides free news. But syndicators who charge may be worth the expense. Most syndicators get the rights to publishers’ content free of charge or on the cheap, because publishers like the traffic generated by licensing out their content. Moreover.com delivers 3 billion to 5 billion links per month. But the big content guns charge you because they invest in systems that make it easier for you to get what you want. That’s their service.

To compare a couple: YellowBrix has 3,700 sources and technology that categorizes and summarizes the content according to your needs. One client pays just over $1,000 a month while other clients pay more than $20,000 a month. Moreover’s feeds start in the thousands of dollars per year; clients range from Economist.com to a Wisconsin agricultural site. Publishers range from WSJ.com, the BBC and WashingtonPost.com.

“It’s very affordable, accessible, viable and compelling,” said Moreover’s Pitkow. “If you had to pay each of these publishers individually, you’d pay a lot more.”

Shop Smart

If you are considering licensing content, there are a number of things to keep in mind.

Understand what you are trying to accomplish. Then prepare a budget.

The cost of content varies, and you can pay monthly or annual fees. If you’re getting a newsfeed, you’ll probably get charged by the month; if you’re paying for access to a database, you’ll likely pay an annual fee up front.

When you approach a publisher or syndication source, make sure you’ve done your homework and you know how many site visitors you’ll deliver. Prices can vary depending on the content provider and how many eyeballs gain access. Publishers may want to know how you are going to use their content and how many people will see it. You can pay anywhere from nothing – what Halpern pays for an InterestAlert.com feed – to tens of thousands per month. Other providers charge by the categories and breadth of your needs, not by the number of viewers or page impressions.

Tech Issues

Be aware of what you are getting. Small affiliates usually have little technical expertise, so they need to be particularly clear about how they would like to receive content.

“Format problems can cause a lot of headaches,” warned ContentFinder’s Karolczak. Before you sign a license, have the contract spell out the exact number of articles (or cartoons or graphics, or whatever) you’ll get, how often, in what format (HTML or XML, for example) and how they’ll be delivered (via FTP or PDF, etc.). Otherwise, you’ll be doing a lot of technical work converting the content. Then, by the time you get it up, it’ll be out of date. You don’t want to drain your resources, so just be sure to state exactly what you want to receive.

Crediting the original publisher is another thing to consider. Accreditation can lend your site legitimacy. Readers will respect your content if they know it’s coming from a reputable source. On the other hand, some syndicators offer you a private label option – that is, you don’t have to say where you got it – but that’ll cost you more.

Flaunt It

After you’ve given your site a facelift with fabulous content, you should strategize on how to promote it: You want your audience to see your stuff.

“The No. 1 way to get people to come to your site is through an email with a hypertext headline,” said YellowBrix CEO Massa. “Everyone reads email. Give ’em a headline.”

GrandTimes.com encourages visitors to sign up for a weekly email that previews its latest articles. People will click on a link if they see something that interests them. LovingYou.com’s Narindra agrees that email is the best way to market your content. But be sure that you only send it to people who opt in and always give them the option to unsubscribe.

Perhaps the best reason to create compelling content is that it just may open up other revenue streams and help with your branding.

LovingYou.com has sold its content to Excite, IWon.com, AOL Time Warner properties and other online entities. And the sites credit LovingYou.com as the source with a link, which means more people linking, higher search engine results, more page views and more spidering. Narindra is excited about this because it means more in the coffers as well as more visibility for the brand. And the interest isn’t limited to the online world.

“Once a producer at Inside Edition [a TV program] came across our site, loved it and contacted us for help with a Valentine’s show,” said Narindra. The licensing of content is a nice byproduct that’s surprised the team. And now Inside Edition has approached them for help with another segment they are doing on couples getting married. Narindra said, “It’s a great relationship because once you help them once or twice, then they think of you first.”

DIANE ANDERSON has more than a decade of experience writing about the Internet and technology for The Industry Standard, Wired Digital, The Net and other publications.

The Best Paid Places

If you currently have a Web site, then I’m sure you are inundated with spam offering “guaranteed placement on more than 5,000 search engines.”

Before we go any further, let me just make something very clear. Yes, there may be 5,000 search engines out there – heck, at this point there may be as many as 50,000 – but there are only four that really matter. If you have your Web site listed highly on Google, Yahoo, MSN and AOL, then you have pretty much covered most of the search engine marketing you will ever need, because those four engines account for 90 percent of all daily searches.

Your first job as a Web site marketer is to get the best placement you can on the Big Four, and the only way to benefit from these listings is to rank highly. If you are listed in the top three pages on these search engines you will definitely get a lot of traffic. Recent studies have shown that 80 percent of Web users don’t search beyond the first three pages on most engines.

But what if you can’t optimize your site well enough to rank highly? Maybe you don’t have the time or don’t know how to create pages that are attractive to search engine spiders. Or maybe your industry is just too competitive. Don’t worry. You can still grab your share of search engine traffic by paying for placement.

Paid placement is generally divided into fixed placement and pay-for-placement (P4P), which sound alike but are actually a bit different from one another. With both of these methods you choose keywords you wish to target and the maximum price you are willing to pay, and then you submit your listings and wait for them to go live. The biggest difference between the two products is the length of placement and ranking control. With fixed placement, your listing will stay in the position for the price per keyword you choose, but with P4P you are part of a dynamic auction bidding system that will only guarantee your placement until someone outbids you. Fixed placement is currently available on only a few engines. However, pay-for-placement listings are available on all of the major engines listed above. So, depending on your budget, you too can buy your way to the top of these search engines.

In fixed placement, the price may be set on a cost-per-click (CPC), cost-per-impression (CPM) or cost-per-action (CPA) basis depending on the deal you are able to strike with the search engine. These listings generally guarantee you a ranking at the top of the search results page either as a “featured site” (on MSN) or a “recommended site” (on AOL). This is very attractive to larger advertisers as the campaign is fairly easy to manage, but requires a large budget commitment up front before you can even tell what your results might be from that particular engine.

Test the Waters

An easier way to test the waters before committing to a large fixed placement campaign is to pay for placement using one of the many CPC opportunities currently available. By listing your site on Google’s Adwords program, or Overture through Precision Match, you will gain top placement on Google and AOL (through Adwords) and MSN and Yahoo (through Precision Match).

With these programs, you choose the keywords you want to submit, write your ad copy (title and description) and submit it to the search engines using their submission forms. If you are struggling to write the copy, you can use Overture’s Fast Track program, where for $199 a member of the Overture team will select keywords and write the listings for you. Your placement on Google is determined by a combination of the amount you are willing to pay-per-keyword (maximum bid) and your ad’s clickthrough rate. With Overture your placement is determined by your maximum bid. Both of these campaigns will place you within the “Sponsored Listings” section of results on the larger search engines, and both require your listing to comply with their editorial guidelines.

There’s a few more things you need to know about buying listings. Before determining how much you can pay per click you need to figure out your marketing plan. Set your maximum bids based on your profit margin, the return on investment you seek, and the maximum CPA you can afford. An easy way to kill your business is to assume that because your competitor can afford a certain maximum bid you can too. The leaders in paid placement marketing set their bids based on their own metrics, not their competitors’.

Tracking your results helps you determine where the qualified buyers are coming from. At the very least, use the free tools offered by Overture and Google when setting up P4P campaigns to track conversions from these engines. And if you plan to make paid placement a long-term part of your marketing strategy, buy a good tracking solution. Add tracking URLs to every paid search campaign you run, and religiously review the reports generated by the tracking software, adjusting your bids based on your results (for a quick tutorial on tracking URLs, check out the Overture advertiser center).

The way you write your copy for your paid search listings can have a huge impact on the success of your campaign. The most effective way to write your listings is to keep in mind the following:

  • 1. Appeal to your customers;
  • 2. State your value proposition;
  • 3. Use a “call to action”; and
  • 4. Include your keywords.
  • If you keep these basic rules in mind, you too can get your business top ranking on the engines without all the time-consuming tactics that search engine optimization requires. There are other ways in which you can buy placement that we will cover in future columns, and we’ll also dive into the tactics that can give you a competitive edge in search engine marketing. See you at the top!

    MARY O’BRIEN is a partner at Traffic Mentor.net. She has worked in Internet marketing for the past five years and was formerly senior director of sales at Overture.com.

    Searching for Your Site

    Unfortunately, many folks create a Web site and then sit back and wait for the orders to start pouring in. That strategy doesn’t work in the field of Internet marketing any more than it does in the offline world. With millions of new Web sites being added to the Internet every month, the old days of hanging out your shingle and waiting for customers to beat a path to your door are long gone.

    Effective search engine marketing (SEM) is what separates winners from losers in the world of Internet marketing. And when it comes to SEM you have two choices. The first option is to optimize your site so that search engines find you easily and give you good ranking in their index. The second choice is to buy higher placement on search engines using paid inclusion or pay-per-click (PPC). In other words, you can pray for clicks or pay for clicks, the choice is yours.

    Praying for clicks is better known as Web site optimization. When taking this approach, it helps if you offer the search engine gods a peace offering by making it easy for their spiders to find and index you. (Spiders are programs that crawl all over the Web searching for pages.) Whether you choose to optimize your site yourself or pay a search engine marketing firm to do it for you the same strategy will apply, and you should be involved in every step of the process.

    Keyword Selection

    Choosing the right keywords and phrases for optimization is crucial. If you choose keywords that few people search for, then you can achieve a lot of top search engine rankings, but won’t get any customers. If you choose keywords that are too competitive you’ll find the competition won’t allow you to achieve any decent rank. You should also choose keywords that are attractive to your customer demographic; otherwise visitors will arrive at your site but never make a purchase. Simply make a list of relevant keywords that balance both popularity and competition. Use a keyword research tool like Word Tracker or Overture’s Search Term Suggestion feature to do this quickly and easily.

    Measure Your Rankings

    Before you can improve your position, you must know where you rank for the keywords and phrases that relate to your business’s products and services. If you did a good job in picking keywords, you should now have a list of highly relevant words and phrases that your customers are using. Use a tool like Web Position Gold, or my company’s free tools at TrafficMentorSEO.com/tools .html to determine where you rank for your targeted keywords on the major search engines.

    Page Content

    One of the easiest ways to attract both search engine spiders and qualified traffic to your Web site is to create Web pages that are appealing both to the user and to the spider. Spiders like to see short pages with lots of text and few graphics. People probably like to see more pictures. After all, any picture is worth a thousand words, just not to spiders. Balance is what counts. Creating pages that are attractive to users and spiders and free of annoying distractions like flash and frames is the name of the game. Try to create one page for each keyword or phrase you are targeting, and develop quality content that will bring users back to your site again and again.

    Optimization

    This is the main focus of search engine marketing and the piece that makes all the difference in your Web site’s ability to compete effectively. Simply stated, your goal is to give the search engine spider fodder. The easiest way to determine what it wants is to study pages already ranking in the top 10 and to emulate key aspects of those pages on your own site. Don’t copy your competitors’ source code and content line for line, just learn from their example. Study the basic statistical elements of the page such as meta tags, keyword counts, link popularity, word counts, etc. A good free tool to keep you on track and ensure that your page is spider-worthy can be found at InstantPosition.com.

    Submitting

    Don’t try to use a submission service to submit your pages to thousands of search engines and directories. These services are a complete ripoff. There are only a few search engines that count in terms of traffic, and you are better off submitting to them manually or using a tool like Web Position. Once you develop some third-party links to your Web site, most engines like Google will re-spider your pages regularly without the need to re-submit.

    Traffic and Revenue Tracking

    Ultimately, it isn’t just top rankings you want, but more targeted traffic and sales. This is where your investment in search engine optimization really pays off. Once you get your traffic-building pages set up, the pay-off comes in consistently. Utilize one of the many good tools out there for tracking visitors and revenues. You can use these solutions to track both PPC campaigns and organic visitors and you will learn a lot in the process about your site’s usability and its ability to convert visitors into customers.

    Follow Up

    While some pages may rank well for a long time without changes, most pages will require fine-tuning as the search engines change their ranking algorithms, and index new pages. It’s important to measure your rankings at least monthly. Re-optimize any pages that drop in rank and then resubmit or wait for the engine to revisit the page.

    The search engine marketplace can be daunting as things are constantly changing. In order to keep up your top rankings you need to stay informed. Read as much as you can. Sign up for the many search engine newsletters and forums and apply the tips in them religiously.

    After that, just sit back and smile as you watch all the visitors coming to your Web site. The best part is that all that traffic is free, and highly targeted. Yes, sometimes even the gods can be friendly.

    MARY O’BRIEN is a partner at Traffic- Mentor.net. She has worked in Internet marketing for the past five years and was formerly senior director of sales at Overture.com.

    The Pay Per Click Dance

    A few years ago, if your site wasn’t listed in Yahoo you might as well have given up. Yahoo was practically the only game in town, being the search engine of choice 75 percent of the time. There were all sorts of secret ways to get a better listing, and you had to know these and implement them or your site was invisible. Then, along came a little company called GoTo.com with its cheeky idea to let sites bid on better positioning in search results. A revolution was started.

    GoTo.com morphed into the king of pay-per-click search engine marketing, Overture.com., which was just purchased by Yahoo. When you couple that with the near-psychic accuracy of search results returned by Google through its Google Ad Words, you had better know how to tame these behemoths or once again you’ll be invisible. Once you have mastered the strategies, your top-placed search results will send anxious buyers streaming to your site. Within 48 hours, your return on investment on specific keywords can be analyzed, judged and tweaked to improve your bottom line.

    This is where affiliate marketing gets interesting. For as long as people have been commissioned to sell other people’s products, cleverness and innovation have produced the top sellers. I remember years ago a charismatic salesman came to my family’s house with an array of shiny new pots and pans. He proceeded to make a delicious meal, accompanied by never-ending sales patter. Before he left that night my dad had parted with a significant portion of his hard-earned cash for these magical pots. A very clever marketing tactic indeed.

    Affiliates have grasped this concept from the get-go. These days, good money can be made by going beyond banners and cleverly investing in and managing a pay-per-click search strategy. But what if both the merchant and the affiliates are both doing PPC marketing? That’s the big question every company that operates an affiliate program ought to be asking itself these days. In fact, good affiliates do use PPC and in many cases they’re doing it better than the merchants.

    So, how does that affect your business model and what kinds of policies should you establish around this issue? Well, it depends on what your marketing strengths and weaknesses are and it depends on how well you have analyzed your own marketing dollars’ ROI. To simplify it, there are basically three different ways to approach this issue: 1) Let your affiliates do anything they want with PPC search engines, 2) Prohibit affiliates from doing any PPC marketing, or 3) Compromise, and develop a strategy that allows you and your affiliates to divvy up the PPC traffic.

    Let’s look at the pros and cons of each of these models.

    1. Anything Goes

    If you let your affiliates do anything they want, you’ll get the same results as if you have NO policy. Good affiliates will research low-cost, high-traffic keywords relating to your site and products and will actively manage these bids to leverage what they pay for the words against what you pay them for the sale or lead. The “pro” is that the affiliates are bearing the cost of this marketing strategy. The “con” is that you are possibly paying more for that sale than you have to.

    2. Nothing Goes

    The second option is to prohibit affiliates from doing PPC marketing. Why? Because the knee-jerk reaction to No. 1 is, “Well now, wait a second, I could be getting all that traffic instead of them and paying less for it.” So you decide to pour your marketing dollars into PPC traffic on not only your brand name but on all your products and every keyword imaginable to “corner the market.”

    But the “con” of this approach is that your spending will go up dramatically, your management resources will go up dramatically to stay on top of thousands of words daily (sometimes hourly) and, worst of all, good affiliates who are good at this kind of marketing will drop out of your program.

    3. Compromise

    Finally, there’s the idea of compromising on a strategy that allows both sides to engage in PPC marketing. Helping affiliates make money will help you make money in the long run. How do you develop a good plan? You simply have to evaluate what you can manage and pay for effectively and what affiliates could do better and more profitably.

    For example, let’s say you have tested and done well in Overture with 300 top keywords and trademark names relating to your business. You’ve analyzed the stats and you’ve proved that staying in the top position for most of those returns a healthy margin between bid price and sales/lead volume. But you’re maxed out in terms of marketing budget or marketing staff to double or triple your buys.

    This is where your affiliates come in handy. Provide them with proven keywords and let them “have at it” on Google Adwords or any of the other PPC engines, like Findwhat or Kanoodle. Also, in order to keep competition between you and your affiliates to a minimum, ask that they not outbid you on Overture and police this aggressively. Take space No. 1 and No. 2 and let your affiliates take bids that place them at Nos. 3, 4, 5 and so on, and you have effectively shut out your competition on valued keywords and phrases.

    The main thing is to evaluate and then articulate a well-thought-out policy for you and your affiliates. Decide on the best use of your resources and budget, and then help your affiliates use this powerful sales channel to their best advantage. It will benefit you both.

    LINDA WOODS helps companies start and manage affiliate programs. Long known as the Affiliate Goddess, her new company, PartnerCentric.com, offers strategy consulting, training and outsourced program management services.

    No Free Lunch For Merchants

    It sounds like a no-brainer: Tap into a sales force of self-employed affiliates who’ll handle everything from producing product information to Web design to advertising. Let them do all the work, and pay them anywhere from a few pennies to a few dollars – but only if they produce to your exact requirements. What’s not to like?

    It’s a strategy that works for Bluefly, the online retailer of discounted designer clothing. In 2003, sales from its affiliate program ranged from 11.5 to 16 percent of the total each month. “We’re really excited with the progress we’ve made. We’re still early on in the process of refining our affiliate program, but I don’t see any reason why affiliates couldn’t contribute more than 20 percent of our sales,” said Bluefly executive vice president Jonathan Morris.

    While Bluefly’s total expenses were up, its marketing expenses actually decreased 17.4 percent. The company chalked that savings up to a switch from advertising to email and pay-for-performance marketing, including affiliate sales. As a result of this change in focus, Bluefly’s cost to acquire a customer dropped nearly 38 percent, down from $16.20 to $10.05 per customer.

    “The beauty of affiliate programs is that they’re performance based. The amount of commission you pay is dependent on the amount of sales you drive – not always the case in advertising,” Morris said.

    But it’s something of a misnomer to describe affiliate marketing as pure pay-for-performance. It’s not exactly a free lunch. In fact, overhead costs can eat into profits, while there’s a danger that inept or unethical affiliates can hurt the brand and actually drive customers away. To really get a handle on the upside to an affiliate program, a merchant must uncover the hidden costs – and risks.

    Micro Management

    Few affiliate programs are truly self-serve. Amazon.com’s is a good example of one company with proprietary technology that lets affiliates sign themselves up, quickly and easily. Yet, even with the hundreds of thousands of pay-for-performance marketers hyping everything on the site from books and DVDs to toaster ovens, every affiliate must be individually approved before starting, a process that typically takes less than 24 hours.

    Merchants can outsource most of the affiliate management to network services such as BeFree, LinkShare and Performics. Networks provide the software infrastructure and varying degrees of human oversight to handle automated sign-ups, link generation and the pushing of special promotions and information. Their staff will sometimes untangle snafus and soothe irate affiliates.

    But none of the companies contacted by Revenue put their affiliate programs on automatic. Instead, they devoted anything from a couple of staffers to a full-blown department to managing the program. “For probably the first two years after we started our affiliate marketing program in 1998, we didn’t do a whole lot with it, didn’t dedicate internal resources toward it. We just expected it to run on auto-pilot,” said Bruce Matthews, vice president of business development for electronics retailer Tiger Direct. As a result, affiliates brought in a few sales but the revenue they generated wasn’t exactly eye-popping. The program was floundering.

    Then, Tiger Direct decided to commit. “We dedicated more resources, and started to pay attention and make it work,” Matthews said. In 2001, the company added a staff position devoted to affiliate relations, began fixing problems in the program and added tools for the affiliates. The result: Tiger Direct affiliates now boost the bottom line by over $1 million a month in sales. Matthews said it took a year of solid work to bring Tiger Direct’s affiliate sales from under $100,000 to that million-dollar mark.

    Online department store outlet Overstock.com saw a similar boost when it got serious about affiliate marketing. After it revamped its program and made it a strategic initiative, the company saw its top-line revenue generation from affiliates grow eightfold in 17 months. But the program needs a lot of attention, said Shawn Schwegman, CTO and vice president of sales and marketing. “You’re developing relationships, and that takes relationship management.” Overstock.com has a five-person team responsible for 30,000 affiliates, headed by the company’s director of marketing.

    Hidden Costs

    Whether or not the retailer has staff whose sole job description is affiliate relations, overhead for the program is spread throughout the entire company, from the accounting department that cuts the checks to the janitorial service that hauls off the coffee containers emptied by night owl employees.

    The true cost of an affiliate program, said Prakash Bharwani, senior manger in interactive marketing for 1-800-Flowers, is, first of all, the salaries of his staff. “Then, there’s the indirect staff members, my IT team, my accounting team, my creative team, my colleagues. Then the infrastructure costs, server space. There’s a customer knowledge team, and we use up their time to understand how the affiliate program is working.” Bharwani said that promotions offered through affiliates should be added directly to the revenue share to get a true picture of how much the affiliate program costs the company.

    The first task of the affiliate manager or team is recruiting and approving new affiliates. Many large retailers approve each application by hand, paging through the affiliate’s site, making sure it’s professional and a good representative of the company. Even though 1-800-Flowers works with LinkShare, Bharwani said the first 30 or 40 minutes of his day is devoted to approving affiliate applications.

    Merchants will differ on what’s acceptable, they all share the risk of having their brand value diminished by its appearing on a shoddy affiliate site. Rick McGrath, director of e-commerce partner development for auto parts merchants J.C. Whitney Co., said, “Everybody starts someplace, and I try to maintain a low barrier of entry. But I need to see a clear commercial intent.” Sites that have pictures of the family vacation or someone’s favorite rock band will get the boot. And McGrath has no interest at all in sites that offer get-rich-quick-through-affiliate-marketing offers or multi-level marketing schemes.

    Next, he screens for downloadable applications like the Gator eWallet or WhenU, another deal-breaker. “That’s objectionable. I see that as undermining the affiliate program, in my humble opinion,” said McGrath.

    Bluefly’s Morris said he scrutinizes affiliate applications closely, and then continues to monitor the affiliates in the program. “We make sure they use the creative we provide and that the environment in which our creative appears is appropriate.” Bluefly staffers manually check affiliate sites, focusing on the ones doing the most business, but also performing random checks on less active affiliates. Besides a general level of professionalism, Bluefly makes sure the sites have adequate privacy policies and disclosures, and, he said, “are legitimately providing a service to their customers by promoting Bluefly.”

    The Creative Touch

    Affiliates aren’t professional designers, and even the sharpest affiliate can’t compete with the full-blown creative teams that retailers have in-house. Bad product photos scanned from a magazine, misspellings and incorrectly colored logos can make the merchandise look shoddy. To counter this, retailers end up creating special ads, content and images especially for affiliates.

    “You don’t want to just keep telling them, ‘Don’t do this,'” 1-800-Flowers’ Bharwani said. “You want to tell them, ‘Do this. If you want to send out an email, don’t send it with those ugly orange and pink colors, use this instead.’ We not only give them creative, but also help them with things like email templates.”

    Whether it’s producing separate-but-equal ad campaigns or simply reformatting existing digital assets, this work can stress the company’s resources or add to the overhead. It has the potential to divert time and attention from other forms of advertising. Overstock.com, with over 30,000 affiliates, has a dedicated designer producing materials for affiliates to use. Because the company buys limited lots of products, it instituted data feeds that every night automatically update dynamically displayed products on affiliates’ sites.

    Crying Game

    Good communication like that is important when working with affiliates, merchants say, not only to help affiliates succeed but to stave off problems. When affiliates feel they’ve been treated unfairly, they can strike back and really dent the merchant’s reputation. Internet message boards are rife with backbiting and flaming recriminations against merchants who disappointed.

    “If you have a few disgruntled affiliates or an issue that comes up, you have to be very proactive in resolving it,” Bharwani said. Merchants must deal with a wide range of personalities and operations, from highly professional types to loners in dark rooms. “There are guys who are big corporations and guys who are running it out of their homes. And each person matters.”

    Affiliate marketing may not be for every merchant. To avoid damaging the brand or siphoning off resources from critical projects, merchants must have the resources and culture to manage the program well. “You have to allocate resources, absolutely,” says Tiger Direct’s Matthews. “I believe you get out of it what you put into it. The key, he says, is to “balance what they want with what makes sense for you in a business case.”

    The bottom line: While there are risks, there are also rewards.

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