Flipping the Switch

Maybe your relationship with your network has soured. The reports are frequently late, revenue is down and your questions are not being answered in a timely fashion. You’re thinking about switching to another network, but that means learning new tracking processes and establishing relationships with an unknown group of affiliates.

So, is it really worth all the potential trouble to move over to another network?

Switching networks is a disruptive business decision that temporarily reduces income and requires additional commitment of resources to restart your affiliate program. Yet merchants large and small are choosing to change networks primarily out of frustration.

Anger Management

Merchants cite a variety of customer service reasons for jumping to another network, but they share a common theme: Merchants aren’t happy with the way things are and think they can get better service elsewhere.

While increasing revenue is the ultimate driver of most business decisions, the impulse to switch is usually a reaction to negative experiences. A nagging feeling of neglect from the network foments the frustration and leads a merchant to end the relationship. These feelings of frustration can be found on merchant and affiliate blogs and message boards and are aimed at each of the largest networks.

Ask a dozen people about the performance of their network and you are likely to get a range of opinions from highly positive to very negative, according to Noelle Bermingham, site manager of affiliate SavingsWatch.com. Bermingham says it is similar to the opinions rendered about mobile phone companies. While some people switch from company A to B to get better customer service, others are switching from B to A for the same exact reason.

Each network also has its strong and weak points, according to Bermingham, who worked as a consultant for Home Depot on its affiliate program before becoming a publisher.

The networks “all have their issues,” says Bermingham, who has worked with many of the leading networks during her career, including Performics, LinkShare and Commission Junction.

Lee Gientke, affiliate manager of ProHealth.com, was dissatisfied with the service she was receiving and decided it was time for a change. In August she switched from Commission Junction to LinkShare. A few months after the switch, Gientke is thrilled, saying she has already eclipsed her previous high in monthly income.

She attributes her improvement to LinkShare’s superior reporting capabilities, as well as a “better commitment to service,” she says. She is saving money because LinkShare includes services such as emails to affiliates at no cost that previously required paying additional fees.

Seth Greenberg, who runs eHobbies .com, used a change in technology platform as an excuse to re-evaluate his entire operation and change networks. He shares the blame as to why his program with Commission Junction was under-performing. “We haven’t done a great job internally with affiliate programs,” he says. “We weren’t taking advantage of them in a positive way.” Greenberg says that oversight of the affiliates was an internal bandwidth issue.

Greenberg decided to move eHobbies from internal fulfillment and Yahoo’s online store platform to Amazon.com’s technology and distribution services. Reprogramming the site for a new network at the same time would eliminate the need for another round of updates later.

For Greenberg, the risk was outweighed by the opportunities of starting over. “We didn’t have much to lose because we weren’t taking advantage of the channel,” he says.

Change Is Good

Regardless of motivation for switching networks, merchants undergo a cathartic experience in ridding themselves of a negative relationship. Similar to periodically cleaning out your wardrobe closet, it feels good because you are being proactive, closely evaluating what stays and what goes.

As part of the housecleaning process, merchants will cut the ties with under-performing affiliates and focus on what is being done right with the 10 to 20 percent that are bringing in the cash. While revenue will hopefully increase as a result of the change, you feel better for having done something, which will likely motivate you to work smarter in the future.

During the network switch, merchants also reflect on the internal processes that have been successful. In many cases, this new attitude and focus makes it difficult to determine whether it is the change in network or improvements within the merchant’s operation that prompt subsequent increases in revenue. If a merchant reverts to bad management habits, then the improvement could be only temporary.

Preparing to Switch

Reducing the disruptive impact on your revenue flow of switching networks requires several weeks of preparation to bring your most effective affiliates to the new network, as well as learning the new system for reporting and communications. Although sometimes the work can be done within 30 days, a two-month period of preparation will increase the likelihood that a merchant will start earning comparable revenues from a new network.

The first two weeks of a planned switch are dedicated to contacting the top performers who bring in 90 percent of your revenue, according to Todd Crawford, vice president of sales for Commission Junction. Successfully recruiting the top affiliates, setting up their accounts and updating their links can take up to 30 days, Crawford says, after which the attention is focused on the remaining affiliates that merit moving over. Merchants may see a dip in revenue during the transition, but ordinarily that disappears quickly.

During this time Commission Junction also notifies the top 20 to 30 performing affiliates on its network that a new merchant is coming on board. These affiliates often share the news about the new merchant’s arrival with their peers, creating the “network effect” of additional affiliate relationships, Crawford says. If done correctly, growing the stable of well-performing affiliates should boost revenues above previous levels.

Before notifying your current network that you are leaving, merchants should make sure that another network relationship is cemented. Commission Junction carefully screens merchants and accepts only 50 of the 1,000 or more that apply each quarter, according to Crawford. The network looks at the merchant’s existing revenue figures, and if Commission Junction isn’t sure it can do better, the company will decline to accept the merchant.

“I would rather have someone unhappy that they are not with us than have them unhappy for being with us,” Crawford says. He says it is important that both parties agree up front on realistic expectations for revenue growth and earnings per click. “The last thing I want is for people to join from a competitor and be unhappy and go back.”

Crawford, who recently won the business of outdoor equipment maker REI and shopping site Buy.com from competitors, says larger merchants are less likely to switch networks than small and mid-size merchants because the amount of work and perceived risk is greater. “It’s similar to the difficulty of turning around a large versus a small boat,” he says.

Commission Junction isn’t happy when a merchant chooses to go with another network, but Crawford says the company doesn’t want to impede a merchant’s business. He says the company allows the existing network links to stay in place for an overlapping period of 30 to 60 days. “If we turned it off as soon as they went live with someone else, we would be foregoing some revenue,” he says.

More Than Money

Merchants that switch networks primarily to save on costs or reduce the revenue share are likely to be disappointed, according to Heidi Messer, president and chief operating officer of LinkShare. Messer says merchants focusing on costs are more likely to “under-invest in the channel” and have unrealistic expectations. LinkShare screens potential customers to make sure that they will make the necessary investments in the technology platform to make the affiliate program succeed.

Having the contact information of your existing affiliates is crucial when switching networks, according to Messer, who says LinkShare has won more than 40 clients from other networks during the past year. “A migration is only as useful as the information you have about your affiliates,” she says.

Messer recommends that merchants expect the switch to a new network to take several weeks, although it can be accomplished more quickly if necessary. However, she advises merchants against overlapping the networks because it makes managing revenue and crediting sources difficult.

If a merchant switches networks, Messer says, the impact on most affiliates will be minimal. Most affiliates likely have relationships with all of the networks, so they are familiar with how to code their links and work with their reporting systems, she says.

A merchant that frequently switches networks also risks losing partnership opportunities, according to Linda Buquet, president of affiliate consulting company 5 Star Affiliate Programs. Merchants that regularly require their affiliates to change their links will develop a reputation as a “network hopper” and have difficulty finding new affiliates.

Buquet spoke with one merchant that had switched from Commission Junction to LinkShare and then back to Commission Junction. She declined to work with the company because it was viewed as untouchable by many affiliates.

Sharing Affiliates

Merchants that also have in-house affiliate programs should consider if they want to convert any of these relationships to the network as part of their switch, says James Green, affiliate manager of MingleMatch.com.

Moving your high-performing affiliates to the network could raise your earnings-per-click statistics, making you a desirable partner for affiliates, Green says. By boosting EPC, “you represent yourself better to recruit other affiliates,” he adds, but at the cost of having to share a percentage of the revenue with the network.

While adding your best affiliates to the network could enable you to attract new affiliates, you may also lose some of the direct connection, as communications must then go through the network.

Merchants might avoid having to switch if they better understood the strengths and weaknesses of each of the networks. For example, LinkShare is great at protecting large brands while being weaker at publisher development, according to SavingsWatch.com’s Bermingham. Commission Junction offers hands-off affiliate programs that enable merchants to “be more of a do-it-yourselfer,” and is improving the way it works with larger merchants, she says. Performics’ strength is in comprehensive affiliate management, but the company does not have programs that allow merchants to manage affiliate relationships themselves.

Turning the Tables

The frustrations of one affiliate lead to the creation of a network competitor. J. P. Sauve, who ran several affiliates, says he was frustrated with not being treated well by the major networks’ “our way or the highway” attitude. His emails to network representatives went unanswered, statistics were often incomplete and campaigns sometimes disappeared without warning, he says.

After sharing his frustrations with peers, Sauve co-founded MaxBounty as a competitor to the large networks. “Our policy since day one has been to treat all affiliates, big and small, with the same respect we’d expect from others,” he says. The network encourages direct communication between the merchants and publishers and competes on price by charging a lower percentage of the revenue, according to Sauve.

The decision to transfer networks requires careful consideration of your existing relationship and a dispassionate critique of internal business practices. It is a good time to focus your energies on what is working while eliminating affiliates that have not been contributing. Terminating the relationship with your network sends a clear signal that service is important, which needs to be communicated to the next partner to ensure that the problem does not recur.


JOHN GARTNER is a freelance writer in Portland, Ore. He is a former editor at Wired News and CMP. His articles regularly appear on Wired.com, AlterNet.org and in MIT’s TechnologyReview.com.

Managing Affiliates in a Rapidly Growing Market

Over the past two years, the online real estate traffic volume has increased exponentially. Part of this dramatic growth is driven by the low interest rate environment, but a bigger reason for the increase is the rapid shift in realtor marketing dollars away from offline media – such as print – toward online advertising venues.

Affiliates play a large role in the success of online real estate. While this rapid growth has led to new opportunities, it also brings significant challenges. Merchants who match consumers with professional service providers must maintain a consistent flow of only the highest-quality leads. Low-converting traffic will frustrate the service provider and may eventually result in unwanted churn. The observations following are true in particular for any merchant who matches consumers with professional service providers.

A good affiliate manager must connect the dots from consumer inquiry to affiliate sites prior to approving any potential affiliate. You should strive to determine the main sources of traffic that a potential affiliate brings to the table. Affiliates can generate traffic a number of ways. The most common methods are cost per click (CPC) campaigns, search engine optimization (SEO) and email marketing.

These are all generally accepted practices of online marketing and can be verified by the savvy affiliate manager. For example, if the affiliate is using CPC campaigns to generate traffic, you can verify this by typing in keywords and looking for the affiliate’s ads. If the affiliate is unable or unwilling to provide at least some examples of how the traffic is generated, then you should assume the worst. If you are unable to connect the dots, then it’s possible the affiliate is driving traffic using means such as spyware, incentivized clicks or link hijacking. Connecting the dots is important not only to prevent approving a fraudulent affiliate, but also to gauge the quality and potential volume they can deliver.

In addition to connecting the dots, a good affiliate manager should be able to make the best of a bad situation whenever possible. If a particular affiliate or campaign is under-performing, you need to investigate all possibilities to salvage some or all of the relationship. This can be done by adding, removing or modifying product offerings. You can change pricing. Perhaps most importantly, you can change creative and integration techniques.

For example: an affiliate promoting our brand at a national level wanted to drop the program due to poor results. We offered the affiliate a series of custom city-specific links better suited to his network of local sites and were able to improve the affiliate’s performance significantly.

In another case an affiliate was promoting one of our products but didn’t match the consumers with the appropriate buying service. To turn this around we encouraged this affiliate to start promoting a more appropriate home listings product. This change sent revenue climbing sharply.

In addition to understanding the affiliate- generated consumer traffic, good affiliate managers possess a keen awareness of all consumer traffic channels. To state the obvious: free traffic (SEO or brand recognition) is preferable to inexpensive traffic, which is preferable to expensive traffic.

If free traffic volume increases, the merchant providing professional services should focus more on optimization of existing affiliates and less on recruitment. Aside from ranking traffic by price, you also need to factor in quality. For instance, if SEO traffic is higher quality versus comparable channels, then you should recruit new affiliates that consistently show up well in the search engines for large-volume, relevant searches.

To gain large market share in times of rapid growth, you need to have a flexible affiliate program. One way to do this is to allow affiliates to participate on several different platforms. Affiliates who prefer the online reporting and payment structure of affiliate networks can join under either of those programs. For larger affiliates who want to partner directly, consider offering higher payouts and direct links. On the product side, flexibility could mean offering regularly updated data feeds, including XML feeds and co-branded forms as well as forms of different layout or length. On the payment side, you could let direct affiliates choose between cost per click, cost per lead or even revenue sharing arrangements. This flexibility in terms of platforms, products and pricing is paramount in helping your program expand.

With the recent explosion in Internet advertising, affiliates are bombarded with merchant offers from all angles. To rise above this noise, you need to be an extremely effective communicator. New value propositions such as better payment tiers, contests, fresh creative, case studies, new products and affiliate testimonials must be communicated regularly to existing and potential affiliates. Due to spam filters and overflowing inboxes, email newsletters are becoming a less effective communication method. Try to communicate one on one with larger affiliates whenever possible.

With so many new affiliate applicants each day, it is inevitable that a few bad apples make it through the approval process. To prevent affiliate fraud, you have to routinely deny affiliates that do not respond to initial contact. While the vast majority of existing affiliates play by the terms and conditions of the affiliate program, there are instances where you’ll need to take disciplinary action. In cases where affiliates purchase trademarked broker keywords or if an affiliate violates the CANSPAM Act, action must be taken quickly.

Other challenges include taking steps to monitor cost-per-click fraud. CPC management requires additional time for analysis and closer contact with the affiliates. Each month you need to look closely at the revenue generated per click for each affiliate. Unusual behavior is typically easy to spot and must be corrected quickly. New affiliates – especially those who start on the CPC program – can be given a monthly budget cap to your company’s exposure to any potential click or lead fraud. As trust builds with an affiliate, this cap can be raised or removed altogether.

Merchants offering CPC products should also have analytics tools with robot filtering mechanisms in place, as well as the ability to track click patterns funneled down the merchant’s site. For CPA products, you should monitor each affiliate’s lead-to-close rates and raw lead data on a monthly basis to ensure lead quality.

Implementing tight controls will ensure you have a good handle on your existing base of affiliates, which makes it easier to expand your program as your company grows.


MARIE NILSSON is the affiliate manager for HomeGain, a wholly owned subsidiary of Classified Ventures, based in Emeryville, Calif. She has a background in project management for the telecom and chemical industries and holds a Master of Science degree from Lund Institute of Technology in Sweden.

Targeting Affiliates

Name: John Hobson
Job: Manager, Online Advertising, Target.com
Date of Hire: September 2002
Previous Job: Manager, Online Advertising, Fingerhut

Target’s program is powered by LinkShare and earns affiliates 5 to 7 percent on purchases based on volume. The program currently has a 10 percent commission offer for October 1 to December 31.

DIANE ANDERSON: How did you come into the world of affiliate marketing?

JOHN HOBSON: Fingerhut was an early adopter of affiliate marketing. Commission Junction was started in Minneapolis, and Fingerhut was part of the early days. When I joined Fingerhut the program was in place, so our team expanded the CJ program and then added Dynamic Logic (Performics) to the mix.

DA: What is the best thing about Target’s program?

JH: The Target program continues to evolve and change with our business. These changes allow us to continually update our program to better serve our affiliates.

DA: How many people work on it?

JH: There is one full-time person committed to the program and two supporting team members that dedicate a portion of their time to the program.

DA: Why should affiliates work with you?

JH: The power of the Target brand coupled with strong site promotions and an aggressive commission structure should result in increased revenue for the affiliates. Also, we are listening to what our affiliate partners are suggesting and want to create lasting partnerships. This is evident by the updates we have made over the past year. Keep the suggestions coming!

DA: How many active affiliates do you have?

JH: Can’t disclose.

DA: How often do you update creative?

JH: We have great promotions on our site that update as frequently as weekly. We update our creative to reflect these site promotions. We also have a standard, more general set of creative that is updated every two to three months.

DA: What sorts of promotions do you run?

JH: Target.com has a very robust promotional calendar that includes free shipping and percentage off offers. The affiliate program supplements this with activation campaigns, stretch-goal campaigns and category-specific campaigns for increased commissions.

DA: What sorts of sites should think about affiliating with you?

JH: Being a general retailer with such a selection of products allows us to appeal to a wide variety of affiliates. I think coupon and deal sites do really well with us because of our aggressive pricing. Target.com carries products that appeal to a wide spectrum of customers on affiliate sites. The key is for us to work closely with the affiliate site to get the right messaging and creative in front of their customers.

DA: What do you do to help boost conversion rates?

JH: Supporting our strong site-promotion schedule with appropriate banners and text links for affiliates as well as providing affiliates with information on best sellers in each category help boost conversion rates.

DA: What accomplishment at Target are you most proud of?

JH: Within two months of starting, we launched Target’s first affiliate program in time for Q4.

DA: What trends do you see in the industry for 2005?

JH: Continued growth. I see more and more great affiliates popping up each year with new and unique business models that keep pushing the affiliate space. For as much controversy as some of the business models cause, I appreciate the innovativeness.

DA: What will be the hottest products in 2005 that your affiliates should think of promoting?

JH: We have some fantastic new products in our Home category. The merchants have a great eye for new furnishing items. We are also expanding our Gift category to include some very unique, global items that will be exclusive to Target.com. And as always, our Electronics department will be carrying the latest in cool gadgets.

DA: What advice do you give your affiliates?

JH: The two biggest tips that I can give our affiliates are: Read our weekly news- letters to make sure you are up to date with the latest site promotions, hottest selling items and any changes to our program; and continue to give us feedback. We want to hear from you and hear your suggestions. One of the toughest problems we are currently having is how to best communicate with affiliates. Email newsletters are a great way to share a large amount of information with everyone, but affiliates receive emails from each of their merchants making it difficult to cut through the email clutter. I can’t imagine being an affiliate and reading every single merchant newsletter. In the next year we will be testing a number of new communication tools, but I would enjoy hearing from more affiliates regarding this issue and their suggestions.

DA: What’s getting heavy rotation on your iPod?

JH: Sting and John Mayer are staples. Current heavy rotation includes Franz Ferdinand, The Killers, Spymob and Switchfoot.

DA: Where do you live?

JH: Minneapolis, Minn.

DA: Who do you live with?

JH: I live by myself.

DA: What is your most treasured possession?

JH: I don’t really have a most treasured possession, but if I had to pick I would most likely say a collection of items that were left to me by my grandparents (books, mementos, etc.).

DA: Which person currently living do you most admire?

JH: My sister.

DA: Which person currently living do you most despise?

JH: Really depends on the day. Most days it is that really slow driver in the left lane holding up traffic.

DA: How would you like to die?

JH: Peacefully after a long and fulfilling life.

DIANE ANDERSON is an editor at Brandweek. She was the managing editor of Revenue Magazine for Issue 4 and she previously worked for the Industry Standard, HotWired and Wired News.

The Overstock Obsession

Every so often, there’s a company, a person or a philosophy that attracts such a rabid following it can be only be described as a phenomenon.

In music, the Beatles and Elvis come to mind. It’s hard to think of either without envisioning ecstatic throngs of screaming, teary-eyed fanatics who would do anything for a souvenir to link them forever to their idol.

In technology, Apple Computer has survived as much (or more) on the strength of its zealous customers as on more mundane considerations like operating efficiencies or distribution channels. A piece of advice: Never try to tell a Macintosh user there are any advantages to using a PC.

In dieting, the current rage is Atkins. Eat all the protein and fat you want, but lay off the bread and pasta. Want to know more? Just ask someone who’s on it. They’ll talk the pounds right off you.

Overstock is like that in the affiliate world. Although it’s a nascent company that is far from perfect by some business measures, its customers, affiliates and employees simply ooze adoration for the fast-growing e-tailer and its undeniably magnetic CEO, Patrick Byrne. It’s not just that they like the company. This is unbridled zeal. It’s the kind of blissful rapture one expects from saffron-robed monks selling flowers at the airport.

The numbers show the love. Gross merchandise sales jumped 88 percent to $96.6 million in the company’s second quarter from the year before. And more than 3 million consumers have now bought something from the site, thanks in large part to Overstock’s 35,000 evangelistic affiliates. To put that last number in perspective, Macys.com has only 2,000 affiliates, or less than one for every 16 that Overstock claims.

After only five years in business, Overstock has blossomed into the 18th largest e-tail site. It attracted 9.3 million unique visitors during July alone.

Much of that success can be attributed to Byrne, a sort of existential capitalist whose top-tier schooling (BA at Dartmouth, MA at Cambridge, PhD at Stanford) has left him with a penchant to quote philosophies ranging from the Bible to Sun Tzu to Obi-Wan Kenobi. He often speaks in adages colored by a metaphysical hue.

“If you treat people well and customers well, you’ll be rewarded,” he says describing the “virtuous circle” of the retail world. “You can’t cheat karma. The karma police will always get you.”

He’s first to admit his company’s shortcomings in a way that enhances his credibility. In the company’s last earnings report, for example, he expressed his disappointment with Overstock’s “Daily Deals” promotion. “I am not giving up,” he said, “but this has been a dud.” He also admits to worrying about “bottlenecks” and declared outright that “B2B has been a disappointment.”

“Cynics claim that my candor is but an attempt to pump my stock by drawing investors looking for someone who does not pump his stock,” Byrnes wrote in the company’s recent earnings report. “I am flattered to have attributed to me such Machiavellian subtlety!”

Byrne grew his company the hard way after “getting turned down by 55 VCs (venture capitalists)” in his quest for funding. Overstock went public in 2002, using the same Dutch auction process that Google adopted this year.

The Art Of Affiliates

He’s so dedicated to building his affiliate program that he’s given Affiliate Manager J.T. Stephens a force of 10 assistants to build it. Byrne required them all to read Sun Tzu’s The Art of War, which he views as the “textbook on Internet affiliate marketing.” And, although Overstock’s commissions are relatively low at 3 percent to 7 percent (many merchants pay 10 percent to 12 percent), affiliates love the company for its highly personalized support.

“It isn’t always the commission,” says Sandy Breckenridge of SlipCovers- Fabric.com. “Higher commission sites don’t come near Overstock when it comes to support and personal attention.”

Another devout affiliate, Asif Malik of Plaza101.com, strayed from the Overstock flock for a while until one of its managers came after him like a shepherd looking for a lost lamb. “For a while, I dumped them,” says Malik. “But I got a call from Adam Russo and that changed.” Now the two work closely on updates, sometimes talking several times a day to make sure Malik is doing all he can for Overstock.

“It makes a difference,” says Malik. “I email or call and they respond right away. I email or call other companies and sometimes never hear from them. Or I get a message back telling me they don’t provide tech support.” Malik scoffs. “I don’t need tech support. I have technical know-how. I am just trying to help generate revenue for them. They are fools and I drop them. If they are too busy to talk to an affiliate like me, they lose.” And Overstock wins.

“No other merchants are calling them,” says Stephens. “We call them. We’re like a free marketing consultant, and affiliates are all ears.We tell them our best sellers and suggest placement. We give them the resources and tools to make money.”

Industry Advocate

The company also won admiration from many affiliates for filing the first suit under Utah’s groundbreaking Spyware Control Act. The suit alleged rival SmartBargains created ads that popped up over the Overstock Web site. (SmartBargains had filed its S-1 for an IPO. At the time of publication, it was in a quiet period and could not comment.)

“I love them,” said affiliate Connie Berg of FlamingoWorld.com, who recently shared LinkShare’s award for “Most Vocal Advocate” with Overstock’s affiliate team. “If they can get some spyware stopped, it helps people in other programs, not just Overstock’s.”

Byrne sees his raft of affiliates as his not-so-secret army to do battle with larger rivals like Amazon.com. “It’s a war of the fleas against the elephant,” he says. “A few years ago, affiliates did $150,000 in sales a month. Now they do millions It’s not yet $10 million a month, but it will be by the end of this year.”

While many companies trim inactive affiliates from their ranks to concentrate on their top producers, others see them as a source of potential growth. LinkShare CEO Steve Messer, for example, believes that once an affiliate shows interest in a company, “there’s always a chance to reactivate them.” (See Issue 3, Share And Share A Link.)

Overstock never cuts affiliates, meaning many of those 35,000 soldiers are ghosts that occasionally come back to life. One “inactive” affiliate who hadn’t generated any sales for Overstock in more than three years recently turned in $10,000 in one month.

Overstock champions the little guys, small affiliates who generate between only $500 and $3,000 in sales per month. The superaffiliates may generate more sales per affiliate, but they also demand higher pricing, flat fees and enhanced commissions, which makes them more expensive and harder to work with.

“We like the medium and small affiliates. I’d rather have 10,000 of them anyway. We try to do well by our affiliates. At this point, we think of them as jedis and padawans,” says Byrne, referring to the fully trained warriors in Star Wars and their young apprentices. “They are a mercurial bunch and they react quickly to good treatment.”

Stephens, meanwhile, translates the focus on the smaller affiliates to hard cash. “When you work to get 50 affiliates to add even $1,000 to $2,000 each in sales each month, it ends up affecting the bottom line,” he says. “Everyone else is cutting down and we are building out. Other companies limit themselves. But their loss is our gain.”

And the company does try to treat them well. “You can never lose sight of the fact that affiliate marketing is a symbiotic relationship,” says Stephens. This focus on affiliate appreciation seems to be paying off for Overstock. Affiliates like knowing they are talking to someone who specializes in their category (see list).

“Overstock is one of the easiest ones to set up and start earning money with,” says Gabriel Lam, who runs GotApex.com. “They have a wide range of products and very good pricing.”

Less Than Perfect

Of course, just as Elvis had a weakness for fried peanut butter and banana sandwiches, Overstock has a few flaws, too. Its immense expansion had led to some growing pains, and the company has yet to achieve profitability.

Some affiliates report that Overstock’s coupons get posted but don’t work right away, which they say happens very infrequently with other merchants. And Overstock spends a lot on advertising: $5 million in 2003 and $2 million in January through July 2004. It acquired 744,000 customers during 2003, but the cost was high – $13.30 per customer.

Overstock handles all advertising internally, a risky venture for a company dependent on brand awareness and national media buys. (It had to back off its “Big O” campaign after Big O Tires complained.) And Wall Street analysts remain wary. Only two analysts follow the stock and both are from investment banks that do business with Overstock.

In a research report published in July, analyst Tom Underwood of Legg Mason Wood Walker rated the stock as a “hold,” roughly the equivalent of a grade of C in school. “Success is not only still unassured,” he said, “we can’t quantify potential financial results around the business with any accuracy.”

And then there’s the area of search engine ranking. Overstock does its own optimization and could use some improvement. In a recent Google search for “discount shopping,” Overstock didn’t even appear on the first page for sponsored or unsponsored links. (The sponsored links included Target and SmartBargains. Curiously, Connie Berg’s FlamingoWorld .com topped the unpaid list.) Because Overstock describes itself as selling “name-brands at clearance prices,” Revenue ran a search for “name-brands clearance prices.” Again, Overstock was a no-show, paid or unpaid.

‘Smitten’ Buyers

Some affiliate managers find that some of their best customers are their own affiliates. It makes sense given that affiliates want to support their merchants and earn a commission on their own purchases. But Overstock’s cultish shoppers have been known to turn that model around by becoming affiliates simply because they love shopping at Overstock.

That’s the case with an affiliate named Beverly C. Lucey, editor of the blog WomanOfACertainAgePage.com. She has affiliate links to Amazon because, as an educator she wants to encourage reading. She turns down other business ventures offered her – from manufacturers of Viagra, weight loss products and “anti-aging goop.” But she decided to provide a link on her site to Overstock.com. “They didn’t ask me to,” Lucey wrote in an e-mail interview. “I’ve been a happy customer for the last four years.”

Of course, she swoons, there was another factor: After hearing an NPR interview with Patrick Byrne, she became “smitten.”

Byrne seems to have that effect. “Everything he touches turns to gold,” gushes Stephens. And Marketing Vice President Kamille Twomey says, “He is an exciting and convincing man. ” I came in to talk to him and a few minutes later, I was working for him.”

Special Treatment

The company runs network-wide promotions with tiered bonuses, but it also brokers one-on-one deals with Web sites, letting affiliates sell, say, a Burberry scarf, for less than Overstock does. Many affiliates who Revenue interviewed said special deals were a great incentive.

“I call Overstock and Amazon the Masters of Promotion,” says Michael Conley of Amazing-Bargains.com, who has been working with Overstock since 2000. He also likes their dependable and cheap shipping, which is usually $2.95 whether users buy a book or a couch, and sometimes is free. The symbiosis should help around the holidays.

The holidays are critical to Overstock. “In 2003, half our sales were in the fourth quarter,” says Twomey. In the late summer, the company employed about 500 people. With seasonal help, that number will jump to 2,500, up almost 80 percent from the 1,400 working for Overstock last holiday season. Clearly, the company is preparing for sales of biblical proportions.

“We’ve been thinking about the holiday season since January,” says Byrne. “In past Novembers we finished the ark by wading in waist-deep water pounding nails in the rain. This year our ark will be complete before the first raindrop falls.”

Spoken like a true believer.

DIANE ANDERSON is managing editor of Revenue.

A Show-Stopping Performance

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

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

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

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

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

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

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

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

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

Not So Simple

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

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

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

Seeing Through New Glasses

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

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

Embrace And Adjust

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

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

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

Five Who Drive

It takes a special something to be among the best in your field, especially when the field is as competitive as affiliate marketing. We all know it takes more than commission checks and banner ads to rise above the crowd.

Revenue decided to take a look at five strong programs and the people who run them. Of course, convincing program managers to talk about their success is rather like getting Grandma Virginia to share her famous cherry cobbler recipe. But there are some commonalities in these programs that deserve attention.

The first thing we found is that each is led by a strong manager with a clear vision of how that company differs from its competitors. And all these managers demonstrate great respect for their affiliates, although they may show it in different ways.

You’ll see other similarities, to which we’d like to offer one more: You don’t need to be one of the top 100 retailers to see a big increase in your affiliate sales. But it never hurts to think big, as did these five individuals.

Mondera.com

Name: Chris Sanderson
Title: Affiliate Manager
Business: Jewelry

Mondera.com found its crown jewel in affiliate marketing, which generates 30 percent of the online jeweler’s income in an average month, according to program manager Chris Sanderson. During the holiday season, the percentage climbs even higher.

Mondera sells a wide range of wedding and engagement jewelry, such as diamond engagement rings and wedding bands. It also sells a wide range of support jewelry for birthday and Christmas presents, with prices ranging from $30 to more than $500. The average sale at Mondera totals $1,250. Affiliates can earn from 5 to 20 percent per order.

To help drive sales, Sanderson said the company began a modest affiliate program on BeFree in 2000, but “we left it to manage itself.” The company switched over to LinkShare in July 2002 and ramped up its efforts. The extra work has paid off smartly. Sales started rising about three months later and reached their peak after 18 months of Mondera’s continuous effort.

Sanderson attributes the success of Mondera’s affiliate program to four important factors: constant, dedicated support, an easy-going, accessible approach to affiliate management, a firm stance against parasitic activities and, of course, commissions that most affiliates only dream about. “Who doesn’t dream of getting a commission on a $10,000 diamond sale?” he asks.

Sanderson is quick to note the benefits of affiliate marketing and has lots of advice for other managers.

“Affiliates put in the same amount of effort that you put in,” he says. “Providing affiliates with fast, friendly support is very important. When things go wrong, put your hand up. Affiliates respect trust and honesty – and a high conversion rate – above all other things.”

He also notes affiliates can be a great source of feedback about a merchant’s site, and can even become a valuable pool of customers. “If they promote your products and like your products they will also buy from you. Ten thousand happy affiliates means 10,000 potential customers,” he says.

“There are a number of affiliates who don’t add value, intercepting traffic before it arrives at your site and inserting tracking to make it look like they are driving sales. Merchants need to review their partners carefully to ensure they are adding value,” he says, adding one final piece of good advice: “Always pay on time.”

Shoes.com

Name: Brook Schaaf
Title: Affiliate Manager
Business: Shoes

Shoes.com had an active affiliate program in place from the moment the site launched in 2001, and Affiliate Manager Brook Schaaf says the program started generating sales in the six figures after just half a year.

The affiliate program has been a very comfortable fit for the shoe merchant, which doesn’t use traditional media. “We like programs we can measure. CPA and CPC are our big revenue generators,” says Schaaf, who is also delighted at how the program has given the business a good deal of trend reporting.

“We see an increase in sales beginning with back-to-school and climaxing with the holiday season, then again in the spring – very strong in the spring,” Schaaf says. “Taking program growth into account, we did 40 percent more business in the last half of 2003 compared to the first half.”

Schaaf gives affiliates most of the credit for Shoes.com’s affiliate marketing success. Affiliates earn 10 percent on each sale, but Shoes.com has been known to run promotions that increase the base commission rate for affiliates.

“My favorite affiliates are mom-and-pop-type operations; often literally a husband and wife team working from home. They’ve got good control of their sites, are responsive and easy to work with,” Schaaf says. “With thousands of affiliate programs out there, part of the challenge is staying on top of people’s minds. Our network, Commission Junction, has also given us a lot of credibility and visibility.”

His advice for other merchants just getting started with affiliate marketing?

“Consider your tracking needs carefully,” Schaaf said. “I am partial to Commission Junction. Performics is good, too. Most important: Hire a full-time manager and empower him to make decisions for the program. Know how much you can afford to pay and what your competitive advantages are. Communication and consistency are important.”

And Schaaf notes that it’s important to look out for your affiliates.

“Remember that affiliates – real affiliates – are making a living off of sales, so you have to speak to their heads as well as their hearts,” he says. “Say, ‘You’ll earn more money with me’ and coordinate internally to make this a reality. Listen to everyone but listen closely to the people who are sending you big sales because they talk the least.”

T-shirtking.com

Name: Bill Broadbent
Title President
Business Retail Sales/T-shirts

T-shirt King President Bill Broadbent isn’t new to the business of selling T-shirts. He’s been doing it – quite successfully – since the 1970s.

T-Shirt King was recognized this year as one of the “Best of the Web Top 50 Retailing Sites” by Internet Retailer magazine. Broadbent continues to see consistent growth in his company’s online presence and brand recognition. That’s surprising when you consider that the company houses only 18 selftaught employees and is considered to be one of the largest employers of tiny Mountaineer, NM.

Although he didn’t enter the affiliate marketing arena until 1998, affiliates already account for a third of the company’s sales. He now views his decision to start an affiliate program as a turning point for the company.

“We saw results in six months, because that’s when we got serious about it,” Broadbent said. “Affiliate marketing can bring you results immediately if you take a serious approach and invest time into it,” he says.

Ian Larson, who manages T-Shirt King’s program at PartnerCenter, says much of the success of this program lies in the product. “The T-shirts sold by T-Shirt King are marketable because they are officially licensed and represent such a broad range of interests, from music to favorite bands to politics. T-shirts are most people’s way of expressing who they are quickly and succinctly without having to even say a word.”

During the holiday season, T-Shirt King rakes in 40 percent of its annual sales. So the company’s Web site offers publishing partners a 365-day cookie that allows affiliates to make the holiday season last all year long.

Broadbent says the benefits to his company go beyond mere revenue. “Even if we were not making sales with our affiliate program, our message is out there,” he says. “People see us, they become familiar with us. The exposure is a great benefit. We are reaching an international audience from rural locations.

“It’s amazing.”

Broadbent has advice for other retailers who are considering an affiliate program: “Don’t do it unless you are serious about it. Be proactive and committed to the program.”

Redenvelope.com

Name: Myles Felsing
Title: Director of Interactive Marketing
Business: Luxury Gifts

Although RedEnvelope didn’t launch its affiliate program until September 2002, the program now accounts for half of sales for this online retailer.

But RedEnvelope’s quick success didn’t come without extensive pre-launch legwork, and they want to make sure other merchants realize this before diving into affiliate marketing.

“Do research before beginning an affiliate program,” says Myles Felsing, director of interactive marketing. “Evaluate the marketing channels you currently have in play. Make sure it’s a good fit for your business.”

RedEnvelope learned the importance of doing research the hard way. Originally known as 911Gifts.com, the company was launched in 1997 as a way for last-minute male shoppers to find the perfect gift.

Two years later, it went through a high profile restructuring, with a new name and a new mission: to sell upscale, luxury gifts starting at $20. In addition to its affiliate program and online sales, the company is now planning to launch a catalog company backed by traditional marketing in the coming months.

The company’s revenue was $79.3 million for its last full fiscal year. Per-order sales were $72 million in the first quarter of the current fiscal year, with a profit of $38 million. The company went public during 2003, trading under the ticker REDE.

Affiliates earn between 8 to 12 percent per sale. RedEnvelope also offers incentive plans based on demand volume. This makes it possible for its best affiliates to have an overall effective revenue share of 20 percent.

“Affiliate marketing appealed to us because of its performance-based structure and broad reach into areas where we did not have internal recourses to manage direct relationships. By introducing an affiliate program into the marketing mix that operated at a high efficiency, we were able to not only scale our online marketing efforts significantly and increase our overall ROI for online programs, we were also able to extend our direct marketing efforts as well while attaining our overall efficiency goals as a company,” says Felsing.

What advice does Felsing have for other merchants? Start communicating.

“We focus on fresh creative and keeping our affiliates up to date on promotions and new items,” he says. “We reward our top affiliates by giving them a higher commission during peak seasons, or establishing a revenue goal with the affiliate prior to a peak season, and if they meet that revenue threshold, a bonus is paid out. These arrangements encourage our top affiliates to promote us even more.”

Urbanscooters.com

Name: Frank Minero
Title: CEO
Business: Electronic and gas scooters

Motorized scooters may not pop into your mind as a hot item for online sales, but Frank Minero has been in the business since 2001. He first heard about affiliate marketing about a year later.

As it turns out, he stumbled across a forum on ABestWeb.com and liked what he read. “I dug in and learned all I could,” he says.

He launched his affiliate program in the fall of 2002 and, within the first few months, started seeing steady sales of his gas and electric scooters, which go for $99 to $1,000 each. By Christmas 2003 he had doubled his sales from the previous year Affiliates earn 7 percent on Internet sales and 5 percent on telephone sales.

“I believe the success of our program boils down to open and honest communication, good information and a bit of fun,” Minero says. “I simply ask myself, ‘Self, if you were an affiliate, how would you like to be treated and what information would you need to get the job done?'”

That soul searching helped him understand that affiliates need incentives, but that they also have a lot to offer in return. “We offer an affiliate contest annually and reward our top affiliates with cash and prizes,” Minero says. “We have some pretty knowledgeable affiliate partners, and through the course of sharing information I’ve learned things that have greatly benefited our business.”

In addition to an affiliate program, Urban Scooters also uses other measures of Internet marketing such as pay-per-click advertising and organic search engine optimization. “In the last two years we’ve tried other traditional methods of advertising and found these three methods to be the best,” says Minero.

Minero says managers who are thinking about launching an affiliate program must be ready to make the kind of commitment it takes to be successful. “Give it a shot, but make sure you allow the time to provide your affiliates with the information they need to effectively sell your products,” he says. “It does take a good amount of time to effectively manage an affiliate program. Unlike Ronco’s Rotisserie, you can’t just ‘set it and forget it.'”

LAURA SCHNEIDER is the marketing editor for About.com. Her articles have been published by more than 4,000 Web sites and magazines. She also serves as operations manager for PartnerCentric Inc. and owns a consulting firm, ZealSpin Inc.

Indie Labels

As the affiliate manager for Calendars.com, Hilary Poseski hawks more than 6,000 different calendars. They feature dogs, fashion models, families, folk art, God, teens, transportation, lesbians, history, cooking, ethnic groups, patriots, sports, cars, photos, travel, nature, music and wild animal tamers. Among many other things.

“Whatever your hobby is, we have a calendar for it. These all translate into niches to find affiliates to work with us,” said Poseski. “Since we focus on affinities, the customers our representatives generate for us are highly responsive to the additional marketing that we do. Affiliates who come in are highly qualified, with great conversion rates because they come from Web sites that have a strong affinity for our product.”

Her success is not only due to having great affiliates, it has to do with how she finds them. Unlike the vast majority of companies, Calendars .com runs an independent affiliate program with the help of off-the-shelf software, shunning the popular option of paying a network to run its program.

From retail giant Amazon.com to smaller players such as ABCLeads.com and ChoiceShirts.com, there are hundreds if not thousands of companies that choose to take on the task of running their own programs. And they have no problem finding affiliates. Sixteen percent of affiliates prefer to work with indies instead of networks, according to AffStat, a statistical study published by Shawn Collins Consulting. Another 41 percent said they have no preference.

Of course, there are drawbacks. It’s more work for both the affiliate manager, who has to make payments, recruit affiliates, fix technical glitches and handle myriad other tasks. And it can be harder for affiliates to work with a lot of different managers instead of collecting a single check through a network representing multiple programs.

Networks are quick to point out the positive things about working with them. “As a trusted party, we offer value much greater than the cost of the network,” said Elizabeth Chowalsky, vice president for marketing and product development at Commission Junction. “Certainly the software that allows you to do it in-house handles the technical issues, like tracking. But when you run a network there’s a relationship between the advertisers and the publishers, and we make sure they all abide by the rules of the advertisers.”

And then there is the sheer bulk of the networks. CJ, for example, claims 70,000 “active” publishers, which the company defines as affiliates who’ve earned commissions within the last six months. LinkShare claims 10 million “partnerships,” but Ð by policy Ð doesn’t purge inactive affiliates from its ranks (see story, p. 38).

Nine of the 10 leading online retailers work with CJ, Link Share or Performics, including such giants as Sears, JCPenney, QVC and Gateway. For affiliates who depend on big brand names to lure customers, that’s a big incentive to work with networks. The notable exception is Amazon.com, a pioneer of the affiliate marketing industry that set up its own “associates” program in 1996.

“A company deciding whether to out- source this or do it in-house has to decide whether having expertise in online marketing is important,” said Sara Spillman, senior manager for Amazon.com Associates. “For us, understanding consumer buying behavior is most important, along with encouraging Web sites to merchandise our products. That’s our key to success.”

Amazon has a whopping 900,000 affiliates. Spillman said the percentage of active associates is “healthier than average,” but wouldn’t say how much revenue the program generates. “We are very intent on optimizing the experience and creating a compelling program. We continue to invest in this program, which should tell you that it’s very successful,” she says.

Part of Amazon’s success stems from the number of authors who promote their own books, then steer customers to the Amazon site. “I get more money on Amazon clickthroughs buying my book than I get in royalties from the publisher on the same sale,” said Michael Dean, who writes textbooks and novels. His titles include $30 Film School and $30 Writing School. “I make $1.10 per book from Amazon.com, and $1 from my publisher,” said Dean.

Some affiliates see a bit more risk working with indies, depending on the nature of the affiliate and the time they have to work on their programs. Take PhillyBurbs .com, a local news site that supports itself in part through both independent and network revenue sharing programs. “Affiliation is a small portion of our revenues, so investing too much time into one of them isn’t good,” said Executive Editor Karl Smith. “When you’re dealing with networks, the real upside is consolidated payments. But the downside is that some of their affiliates use predatory tactics that can steal business away from us. If the company is an indie, it’s much easier to know for sure what their practices are.”

CJ’s Chowalsky chafed at the notion that networks are havens for predators. Her company monitors all of the links from affiliates and, if they catch anyone redirecting traffic from other affiliates, the fraudster gets the boot, she said.

The single biggest consideration in deciding whether to work with networks or remain independent is, of course, the cost-benefit equation. Networks charge fees, often large fees. The fees may be thousands of dollars a month, since the cost structures are as high as 30 percent of total payouts. So the question becomes: Are the services rendered worth it?

ABCLeads.com didn’t think so. The company generates sales leads for licensed long-term care insurance agencies. It started out paying network fees that kept the company from paying its affiliates more than $7 per lead referred. After it brought the program in-house, ABCLeads was able to raise payouts to $8 and to keep more money for itself.

ABCLeads Marketing Manager Karen Hudgins said network rules also prohibited it from paying recruitment bonuses. Now it pays affiliates 50 cents for each lead generated by an affiliate they’ve referred to the program.

Control is another big reason that indies go it alone. At DomainDirect.com, Affiliate Program Manager Bessy Nikolaou noted that 20 percent of her 2,400 affiliates produce 90 percent of her sales, so she likes to shower affection on them.

“The small mom-and-pop shops that are listed with the mega-networks have never proven profitable with us,” she says. “I want to have control over who can participate in our partner program. My main focus is on identifying potential partners whose product offerings complement our domain and hosting services.”

Likewise, says Pat Matthews, CEO and affiliate manager for WebMail/Excedent. “We almost went with a network, but I didn’t like their managed model,” he says. The network “works with a lot of regular retailers as affiliates. We prefer to recruit webmasters and consultants for our enterprise email solutions. You have to find the right affiliates to promote your products and services.”

Poseski said Calendars.com’s customer acquisition costs are much lower as an indie than they were when the company was in a network four years ago. The cost of software is quickly offset by the lowered costs of being independent, she says. Another tradeoff is the time it takes to run an independent program.

“The biggest challenge is the time and effort that it takes. But this is also what makes the program successful. I stay really involved. It’s grass-roots marketing,” says Poseski. It helps that Calendars.com is part of a larger company, CalendarClub, which has its own accounts payable and customer service departments.

Kerri Kaufman, the affiliate manager at ChoiceShirts.com, found some affiliates aren’t very “sophisticated” when it comes to promotional and technical issues Ð a potential time drain. “But once we get in touch with them and help them get going, it’s easier to get them to stick around,” she says. “A lot of prospective affiliates apply to a bunch of programs at once, so once you approve them, you want to get them to come to you rather than to another merchant.”

Kaufman says the time factor also helps to make sure her affiliates are productive. “We deactivate a lot of affiliates who don’t become active because we can’t spend the time trying to work with a small affiliate who won’t generate enough revenue,” she said. That limits the program size to several hundred affiliates, but Kaufman boasts that two-thirds of them are active.

Being independent can also save time. At ABCLeads, Hudgins said they were seeking leads for long-term care insurance, but many network affiliates would ignore the very important adjectives before the word insurance. “One affiliate drove 12,000 leads to our site seeking health insurance, and we had to get refunds [from the network] on all of those. That kind of thing happened more than once,” she says.

Now, if affiliates send any mismatched applicants, it’s much easier to eliminate them from consideration, in part because Hudgins is in direct communication with the affiliates Ð she requires affiliates to list their contact information on their sites. “This fosters stronger relationships and makes it easier for us to get in touch with them,” she says.

Under the network system, the only way she could contact affiliates was through the network’s messaging system.

Rapid communications often translates into quick profits. For example, when illusionist Roy Horn was mauled by a tiger during his Las Vegas show, Siegfried and Roy souvenirs started selling, well, like wild. Calendars.com’s Poseski quickly got in touch with the operators of fan sites, alerting them to push for sales of calendars based on the famed duo.

“We understand the multitude of niches that we market to, and no network can do that for us,” she says. “We retain the ability to respond really quickly when a new affinity catches on. Trends come out of nowhere, and you have to capitalize on them.”

Running an indie site just might be one of those trends.

JACKIE COHEN has been covering affiliate marketing since 1998. She previously edited the Net Returns section at The Industry Standard.

The Way To Ebay

To state the obvious, eBay has become a household name, at least in the US where everyone recognizes the brand as the largest online auction site. What may be less obvious is that eBay also has one of the largest affiliate programs.

That may seem odd given that most merchants use affiliates to sell goods or services, and eBay doesn’t sell goods or services. Instead, it’s a virtual warehouse filled with millions of constantly changing items being sold by other folks.

So why does eBay even need an affiliate program, and what do those affiliates do? As it turns out, eBay is a company based on a different business model, and that has led to a slightly different use for affiliate marketing. First, eBay uses affiliates to attract new bidders. It’s especially anxious to build its account base internationally, and there is some churn when deadbeat bidders are removed for failing to pay on three winning bids.

And then there are all those items passing across the auction block. EBay affiliates include sites like RollingStone.com, which links to the rock memorabilia category on eBay. They also include collectible sites that keep a sharp eye out for rarities. The Web, after all, is a great vehicle for finding rare items (see story, page 66). There’s just one limitation: You can’t be both a seller and an affiliate. As an affiliate, you can point to someone else’s auction, but you can’t point to your own.

Aficionados of the site who want to get involved find plenty of opportunities. The company offers $5 cents to $16 for every new member referred who bids or transacts within 30 days of registering on the site. The site also pays 5 to 15 cents per bid or BIN (short for “buy it now”) placed by referees per visit. Repeat bids on the same item don’t incur additional commissions, despite the fact that many affiliates believe they’re entitled to such recurring revenue. The discrepancy is simply an example of a larger trend: Affiliates tend to sign up for programs without reading the terms of service.

Another way to score affiliate cash is by referring merchants to eBay’s PayPal subsidiary, which the auctioneer acquired in late 2002. Buyers, sellers and affiliates can participate – the one catch is that the referrer needs to have a pre-existing business relationship with the referee. Once the latter sells $1,000, the referee scores $10. Another sawbuck is awarded for each additional grand until the maximum bonus of $100 is reached. Also, payouts are only applicable for the first six months after the merchant joins PayPal.

But these fees can be earned in some interesting ways. “We have shopping cart vendors who earn referral fees” by PayPal enabling their merchant servers, explains Dave McClure, director of the PayPal developer network and senior manager of the merchant services group, which launched the referral program last fall.

“In the eBay world, there’s a natural buyer-seller crossover,” he said. “But now we’re trying to move from the seller viral model to the buyer viral model. We’ve been thinking of ways for buyers to, say, petition their merchants to start accepting PayPal. This is the first step in allowing buyers to refer sellers.”

Million-Dollar Club

PayPal’s program may be growing, but there’s more money to be made from affiliating with eBay. In fact, it ranks among the top 10 percent of the advertisers on Commission Junction, which provides indices of merchants’ commission sizes and volumes. “EBay is a strong program with lucrative payouts,” says Lisa Riolo, vice president of client development at Commission Junction. “They have publishers who’ve earned $1 million or more. They talk about the sizes of these payouts in the eBay newsletter, so publishers can see that some of the top performers receive really large checks.”

The newsletter boasts that the largest affiliate made more than $1.4 million in commissions in February of this year, but doesn’t disclose who that big earner is. That same party became the first affiliate to hit the seven-digit-commission-in-one-month threshold last December. The newsletter puts this in perspective: The top 100 affiliates earn almost $25,000 a month each. The top 25 affiliates average more than $100,000 monthly, suggesting an annual income of $1.2 million or more.

“EBay is working with most of the top performers in the pay-for-performance space,” Riolo said. “They’re very forward-thinking, they’ve taken the principles that have been successful to them and extended them to the community they created. We’ve given them numerous awards. This is a win-win relationship for us.”

But there’s one way in which you can’t win it all. As stated earlier, eBay is very explicit about keeping sellers and affiliates separate. You can only be one or the other, so the publishers tend to be folks lacking fulfillment capabilities or other resources. Sellers who try to become affiliates are banned from the site – including those who attempt to do so using aliases – because directing traffic to one’s own listings is considered fraudulent.

Co-Op Ads

Affiliates do get to participate in eBay’s developer program, which encourages third parties to create software for buyers and sellers. “We think that’s in the affiliates’ best interests,” said Vaughan Smith, senior director of Internet marketing at eBay. And sellers get to market themselves in other cost-effective ways, through the auction’s Co-Op Advertising Program, which reimburses 25 percent of the insertion fees that are placed on co-branded advertisements.

While sellers number in the millions, the affiliate community is around 10,000 strong. But most of them are active entrepreneurs, says Vaughan. This flies in the face of industry benchmarks like those of Affstat, which holds that only about 5 percent of a program’s affiliates are actually active.

“We work closely with our affiliates, and we look for affiliates who want to work with us,” explained Smith. “It’s better for the affiliates that way. The most important thing is we like people who are interested in making lots of money, and we think we’re in a great position to provide that opportunity. We want quality affiliates, rather than quantity.”

While many merchants listed on CJ get all their affiliate members from the network’s directory, roughly half of eBay’s affiliates discover the affiliation opportunities by surfing through the links on the auction site. The remaining half come from Commission Junction.

Unfortunately, eBay wouldn’t disclose what portion of its revenues come from affiliate marketing. The company’s latest filing with the Securities and Exchange Commission indicated overall sales and marketing expenditures of $192.7 million during the first quarter of 2004, mostly dwarfing the numbers posted by other publicly held merchants participating in Commission Junction.

With such scope, you’d think that eBay would be quite capable of running its own affiliate program in-house. But the site handed this business to CJ in March 2001. “We essentially decided that we’re experts at running a marketplace, and Commission Junction’s comparative advantage is running a network with lots of affiliates,” said Smith. However, eBay also has an in-house staff of six people who work with affiliates on improving their performance.

Smith’s sidekick, Eva Hung, manager of Internet marketing, adds, “EBay decided to work with Commission Junction because it’s simply the best solution for building and managing a strong pay-for-performance program. Three years later our publisher base is still growing and our pay-for-performance channel is responsible for a significant portion of eBay’s customer acquisitions.”

Mythical Disconnect

The auctioneer certainly dispels the myth that affiliate programs and television advertisements don’t mix. EBay’s show tune-inspired TV spots are so catchy that fans are blogging about the lyrics enthusiastically on the music video site Clipland.com.

The ads and the affiliate marketing are intended to be synergistic. “When people are online and they see an affiliate ad present itself in front of them, they remember what they saw on TV and that prompts them to come to the site and transact,” said Smith. “Then repeat users come from the offline ads.”

As with all programs, there are some grumbles among affiliates whose expectations about commissions are unclear: Many presume they’re entitled to commissions on repeat bids on a listing, a frequent occurrence in competitive auctions. The terms of service state that an affiliate gets only one such payout per referee visit that comes from visitors clicking off the referrer’s site. Many affiliates’ reports show reversals of commissions ensuing from such repeat bids Ð apparently, that’s a software glitch that eBay adjusts manually on all transactions, said Kelly Stevens, president of the testing and analysis site Affiliate Fair Play. The site consulted eBay on this very topic.

“The Commission Junction cookie should expire after that one-time commissionable event, and it doesn’t expire; it just tracks any further bids or Ôbuy it now’ transactions, so eBay has to manually reverse them,” Stevens said, explaining this is essentially a conflict between Commission Junction’s technology and eBay’s stated policy.

One member of eBay’s program is GovindaMall at Govinda.nu, which participates in several hundred other affiliate programs, 20 percent of them through Commission Junction. Govinda Proprietor Wu Chung Fai says that, based on the number of Web surfers that he has referred to the auction site, his earnings per click are on the lower end of the spectrum, comparable to the rate he gets paid by Amazon.com. However, his traffic is “easy to convert” because there’s “something for everyone” on the site, he said. And he noted that eBay’s “editor kit offers great flexibility to add content to an affiliate site.”

However, he lamented that the program has grown to the point that the market is “saturated in terms of current commissions,” and there’s “too much competition from other affiliates.” He also questioned the reliability of eBay’s tracking mechanisms for tallying up referrals.

Adult Content

Another affiliate also had some beefs about the program. “I am not happy with some aspects of eBay’s program Ð notably one incident that remains uncorrected,” said Amber Lowery of EastCoastWebs.com, a three-person site building firm. “Several months ago, I contacted [eBay] because mature and inappropriate business category auctions (with text and images) were showing up on my pages and I run several family-friendly certified sites. There was no way to filter this and I ended up dropping eBay from all of my sites that promoted the Business/ Industrial Category. The part that upset me was that no one at eBay seemed to care, despite the fact that the material in the auctions was against eBay’s own [Terms of Service], as well as the TOS of the affiliate network, CJ. This problem remains uncorrected.”

Lowery also had positive comments. “On the upside,” she said, “I do find eBay’s [Application Programming Inter-face] to be helpful, easy to use and comprehensive. Display of auctions is in real time and actually provides not only revenue but also makes for decent content when integrated nicely into one’s pages. I do see both positives and negatives in the eBay program.”

How does eBay feel about such an incendiary opinion? “The affiliate industry is fragmented: There are the people who work hard and the people who don’t,” said Smith. “Very often the vocal ones aren’t the ones who are earning the most, so they have plenty of time on their hands to make negative comments. From time to time we do change the way in which we compensate affiliates, and each time we do that we try to communicate how we do so. But inevitably there are people who still misunderstand these changes.”

To put that another way, eBay’s affiliate program may not be much different from many others after all.

JACKIE COHEN is managing editor of Revenue. She has been covering online affiliate programs since 1998. She previously edited the Net Returns section at The Industry Standard.

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.

Wanted: Affiliate Manager

Here in the midst of the fearsome jobless recovery, one job remains hard to fill: affiliate manager.

And nobody seems surprised. After all, online affiliate marketing is still a relatively new field. While thousands of corporations have established affiliate programs, many still haven’t figured out the skills required to manage the programs well, much less what they’re worth.

Can you blame them? Anyone who has ever tried to explain affiliate marketing to a friend knows the very concept can be, well, a bit abstract. But now some very large companies are starting to notice there is real money flowing in from that strange little group of people in the affiliate marketing area. And the pressure is on to find someone who can lead them to greatness.

But what exactly goes into that job description? What skills are required? What experience is needed? And how much, exactly, should the affiliate manager earn? Is this a technical job or a marketing position? Or does it require an MBA?

We set out to answer those questions after we discovered salaries spread out, pretty evenly, from $40,000 to $250,000 – a range that reflects a great deal of confusion. (About one in eight AMs makes more than $120,000 annually.) With the help of many experts, we also learned there are some common elements to great affiliate managers. Revenue is proud to present the top 10 traits that the folks in HR absolutely must list when placing an ad that reads: “Help Wanted – Affiliate Manager.”

1. Great Communicator

Perhaps the No. 1 skill desired in an affiliate manager is the ability to communicate well through many media to many affiliates. Affiliates need to know about your products, prices, promotions and a whole lot more. “Tell your affiliates when you’re having a promotion, tell them what your hottest products are,” said Matt Ranta, affiliate manager for electronics retailer Vann’s. “Don’t make them go out and find it.” Monthly or weekly newsletters and regular emails are key to that communication.

Carolyn Tang, AM for CollectiblesToday.com, uses informal, usually weekly, text emails to communicate affiliate stats, merchandising ideas or details on the merchandising manager’s “hot product” picks. “Communication isn’t just the writing,” Tang said. “It’s the ability to communicate with affiliates on different levels, from casual to complete professional, like making sure checks get paid on time and problems are solved.”

Since affiliates come from many backgrounds – single parents with children at their feet, retirees, home-based entrepreneurs and companies sometimes larger than the merchants themselves -“we put marketing tips in the newsletter, from ‘How to increase conversion rates’ to ‘How to increase your average order size,'” Driscoll said.

“I am in contact today with 400 to 450 affiliates that I consider to be the top producers in the industry,” said Andy Rodriguez, an outsourced affiliate manager and owner, Andy Rodriguez Consulting in Miami, Fla. “Our conversations include ‘How’s your family, how’s your dog?’ It’s that information I can draw upon when I bring a new affiliate aboard.”

2. An Entrepreneur

In true entrepreneurial form, AMs must be self-motivated innovators who can create a custom blueprint for growing the merchant’s affiliate program, follow and forecast revenue, select affiliate tracking technology, understand contracts, manage data feeds, and represent the merchant’s brand and interests through the affiliates – often with little support from others within the company.

“The affiliate manager is basically CEO of this little slice of pie within the bigger program,” Driscoll said. “They basically get to run their own show, their own business, with their own sales force through the affiliates.”

Todd Daum, vice president of marketing for Overture, added, “Being able to recognize an opportunity, such as a high-potential affiliate or an opportunity for a new promotion, will go a long way in helping differentiate one affiliate manager from another.”

3. A Bit of a Nerd

Of course, it’s not enough just to be a hotshot entrepreneur. Great AMs should also be, well, a little geeky. They’ll need to understand html, search engines, coordination of search keywords and search URLs. They’ll need to provide quality control for the Web site, as far as researching availability of images, scanning images and uploading images.

It also pays to have hands-on experience with BeFree, Commission Junction, LinkShare and/or Performics management interfaces. And, of course, the AM should be a whiz at communications tools such as instant messaging, PDAs and online chats. Online forums are great learning tools for uncovering current tech issues, such as new parasites and new pop-up or anti-virus software. So managers may want to hang out in some.

Many AMs also are affiliates themselves, giving them the experience of working with technology from the affiliate’s point of view. “Have your own affiliate site, or set up a test account in Commission Junction [or other network interface],” Ranta said. “Go in and see what an affiliate has to go through to get a text link, a banner or individual product links. That way, [you] can walk new affiliates through the process.”

4. A Marketing Maven

Hear ye, hear ye: AMs must be able to sell affiliates on using their program, and sell internal Web designers on creating a site that makes sales once people discover it. “If you’ve got the qualifications [for being an AM], and it’s apples to apples, what breaks the tie is chemistry – someone who could really keep the affiliates motivated and pass on that enthusiasm for our products to them,” Driscoll said.

Marketing goes one step further: “You want to give your affiliates good sales tools – not just banners – that really work,” said Jim Gribble, an outsourced AM and managing director of LinkProfits.com and PartnerIndustry.com. That includes links coded to product tracking information, so affiliates don’t have to log onto a management interface and go through the rigmarole of downloading each individual product.

It also includes having real, personal relationships with at least your top 20 affiliate partners, Gribble said. “Then spend at least 25 percent of your time prospecting for partners. Even if the program is going well, [you should] always be looking for new partners.”

5. Resourceful

AMs face constantly moving challenges: forming alliances with key players who can move the merchant’s program forward and finding creative ways to reach decision makers on the sites they want to partner with. “Maybe pick up the phone, or use regular mail to get their attention,” Gribble said.

The AM also has to know how to adjust quickly to increasingly sophisticated affiliates. “There’s more and more (affiliates) who are really getting smart about their business,” said Michael Brucker, affiliate manager for Yahoo. “They are placing the search engine bids. They’re coming in and asking really targeted questions, and they’re challenging us: What’s our conversion? What are our proprietary keywords?”

6. Good with Numbers

It pays to keep track of sales numbers. “I monitor that on a daily basis,” said Jack Boulant, affiliate manager for InsureMe.com. “We have an amazing IT department, so we can really see the affiliates that are drivers for us.” How does Boulant reward his superaffiliates? “Increase their payouts,” he said. “A fair thing is to pay them 45 percent of what we make – so we’re both making a profit. Together we are growing this company.” AMs also must take care of financial reporting, figure commissions, cut the checks, and analyze what clickthroughs are legitimate and what could be fraudulent.

7. Graphically Inclined

An AM must come up with fresh banner ads and provide design input for Web sites in order to increase sales. “They must know how to work with a designer, or have Photoshop experience,” Ranta said, “and be able to do quite a bit yourself or communicate what’s needed to the design staff.” A 30-day version of Adobe Photoshop can be downloaded for free at Adobe.com. AMs will need to create special storefronts for seasonal events, size and process new images, research and load missing images, and coordinate photography of new products with the photo studio and designers.

8. Respectable

AMs must have a commitment to doing the right thing: being truthful, ethical, and quick to resolve problems. “Be true to your word,” Ranta said. “Your word is your bond.” For instance, Ranta recently made a mistake in a contest he was running and errantly told one of his affiliates that she was the winner. “I gave her the prize anyway, and told her in person that I had made a mistake,” Ranta said. “If you tell your affiliates you’re going to have a new data feed available, or you’re going to go in and do new creatives, you need to follow through in a timely fashion. Don’t say something just to get them off your back.”

Because affiliate managers are salaried plus commission, rumors abound that “doing the right thing” with affiliates is held back if that means AMs could lose money on their sales charts. “But it’s been proven that once they do the right thing, such as dropping parasitic relationships, the sales numbers just blow up,” de Poel said. “It doesn’t matter what your competition is doing; it doesn’t matter what search engine optimization guys are doing. It matters what you are doing for your channel, treating your affiliates appropriately and rewarding your affiliates for the business that they drive.”

Remember, said Tang, “We all make mistakes. The ability to say, ‘I’m sorry,’ and make up for it is where all the respect comes in.”

9. Contactable

By returning toll-free calls, emails, forum questions or instant messages within 24 hours, affiliates feel like telecommuters and part of a team. Even if the affiliates aren’t contacting you, it’s a good idea to be checking in with them: “I always check in with my affiliates, some more than others,” Boulant said. “I at least try to do it on a monthly basis; some of our top affiliates I talk to on a weekly basis, some more than that.” But what about those affiliates who don’t like to be bothered and are happy just being paid on time? “It’s all part of the relationship process: you have to learn what your affiliates want,” Boulant said. “What I do is I send new affiliates a welcome-mail, and then leave them a voicemail just to introduce myself so they know that there is someone here just to help them. If I get a response by email, I know they’re more responsive to communication that way. Some call, and I respond the same.”

Said Rodriguez: “You have to be able to go home at night, and think that you have people working until 2:30 or 3 in the morning for you, placing links and banners on their pages to sell your products. Be accessible to them, even at that time.”

10. A Team Member

The best AMs can work with cross-functional teams including customer service, sales, technology and administration. “Excellent affiliate managers should have the ability to work closely and effectively with account managers,” said Daum at Overture. “Taking the time to develop those relationships is imperative.”

AMs must also treat affiliates well, be good relationship builders, and know how to reward but not “manage” their affiliate sales team. “The long and the short of it is maintaining and building a relationship with an affiliate,” Boulant said. “Good or bad, it should be ‘Tell me and I’ll take care of it.'”

It boils down to this, said Rodriguez: “Be sure that the merchant and the AMs are on the same page. Treat your affiliates as partners, they are your salespeople. Be sure you have open communications to build a level of trust, so that when everything is going great, everyone is on the same page, but when you have a problem, you can go to them and say, ‘Everything is going to be fixed’. It’s no different than a marriage, [except] the goal here is for everybody to make money.”

JENNIFER MEACHAM, managing editor of Revenue, has been writing about business and technology for more than a decade. She was named the Region X Journalist of the Year by the US Small Business Administration in 2002.