No Check, Please

Whether it is for spring to begin, for Godot or for a commission check, no one likes waiting.

The 30 to 90 days that affiliates – especially those outside the U.S. – must wait for commission checks to arrive can seem like a lifetime, and waiting in line at the bank to cash it is so 20th century.

While merchants might not be as anxious to see the money leave their accounts, replacing lost checks and answering calls about payments wastes time and money, and paper leaves an expensive trail. For recipients, being paid by check requires a trip to the bank and then waiting (there’s that word again) 24 hours or more for the check to clear.

Paper checks are also permanent – a discrepancy in the amount must be resolved by another check, or possibly returning the original draft. When merchants are issuing dozens or hundreds of checks per month, the cost of resolving disputed checks can pile up in a hurry. "Receiving a check is one of the more inconvenient payment methods," says Ron Hynes, vice president of product development of Prepaid for the Americas at MasterCard Worldwide.

Enter the electronic payment. No sitting by the window looking for a delivery person, currency exchange fees or checks that disappear into the ether. The other advantages of electronic payments – including faster processing, greater accuracy and lower transaction fees – all but guarantee that the paper check will soon become an endangered species in the online marketing space.

For the issuing party, there’s the printing (where errors occasionally happen), verifying and signing of the drafts and the stuffing of envelopes – all time-consuming tasks. Direct deposit to a recipient’s bank account is the most popular form of electronic payment, and it is increasingly being used for business-to-business transactions. B2B automated clearing house (ACH) payments grew by 10.9 percent between 2005 and 2006 to 2.3 billion transactions, according the Electronic Payments Association.

Alternative electronic payments that do not require a bank account for deposits are also on the rise, with services including PayPal and PaidByCash becoming commonly accepted methods of payment. In all, electronic payments represent more than 10 percent of online commerce transactions, and similar technology is being applied to B2B financial transactions. Adding to their attractiveness is their "green" quality, as eliminating paper checks saves trees, while fewer trips to the bank means less time behind the wheel.

Electronic payments have grown more rapidly in the consumer arena, but B2B is catching up, according to Edward Kountz, a senior analyst at JupiterResearch. "There’s more pent-up demand on the B2B side" of electronic payments, Kountz says. The lack of a unified payment standard has held back adoption, but more businesses are moving to paying electronically for the same reasons as companies accepting electronic payments – "to eliminate friction," he says.

Catching On With Networks

Performance networks are moving to electronic payments to eliminate the costs and administrative hassles of paying with paper. DoubleClick Performics began paying affiliates electronically through direct deposit in 2001, according to Ed Fleming, the company’s finance manager. DoubleClick Performics developed software that is integrated with its reporting and accounting system to streamline generating direct deposit payments. "It costs us about half the price of a stamp to process" a direct deposit payment, he says.

Currently DoubleClick Performics’ payments are split evenly between checks and electronic deposits, Fleming says. Affiliates that generate the most revenue are the most likely to participate in direct deposit. Fleming estimates that 90 percent of commission dollars are sent out electronically.

DoubleClick Performics regularly contacts affiliates to recruit more to accept being paid electronically, but some still prefer to be paid by check. Affiliates may decline to participate in direct deposit because they fear identity theft. "They don’t want to give out their banking information," Fleming says. DoubleClick Performics has had internal discussions about offering alternative electronic payment options, but there has been "no outcry or huge demand" from affiliates, according to Fleming.

Commission Junction currently offers direct deposit and is evaluating offering PayPal as an electronic payment option for affiliates, according to Dave Osman, the company’s vice president of Client Services. "There doesn’t seem to be a clear leader" in B2B electronic payments, he says. While electronic payments would save the company, "Our desire to eliminate [checks] is based on customer needs, not cost," Osman says.

LinkShare recently announced a new payment plan for publishers, which pays them weekly from the first dollar earned. By moving to a weekly payment schedule, LinkShare reduces publishers’ wait time to receive commissions and doubles the number of paydays. The new plan intends to help publishers improve their cash flow so they can invest resources in their growing businesses. LinkShare officials declined to comment for this article about its payment options.

PayPal, the eBay company that has popularized online funds transfers in the consumer realm, has developed software called MassPay for automating the processing of electronic B2B payments. MassPay can be integrated into payroll and reporting programs through a free application programming interface (API), according to Michael Oldenburg, Associate Manager of Corporate Communications for PayPal. T here are now 18 affiliate software applications that incorporate MassPay, including Affiliate Guerilla, AffiliateShop and MyAffiliateProgram.

Transaction fees for MassPay are up to 2 percent of the value of the transaction to a maximum of $1 per transaction and are paid by the issuing party, according to Oldenburg. Money can be transferred without cost from the online account to a PayPal debit card for off-line spending, he says.

Alternative Payment Options

As an alternative to direct deposit, networks are beginning to roll out debit cards that are linked to online accounts and accept electronic transfers. These cards, also known as "prepaid," "stored value," "reloadable," or "payroll" cards, do not require affiliates to provide bank account information – only a valid address is needed to initiate an account.

Prepaid cards have the same efficiencies as direct deposit without requiring a complex sign-up process, MasterCard’s Hynes says. Prepaid cards enable companies to eliminate commission checks altogether when used in combination with direct deposit, says Hynes, which works with banks and payment processing companies to distribute MasterCard-branded cards.

Payment companies Payoneer and Ecount as well as network Axill offer prepaid card services that have no start-up fees to the network, and the cards are free for the affiliates.

These cards offer the security of gift cards (if you lose the card there’s no access to a bank account) with the added benefit of third parties, such as networks being able to deposit funds electronically. Payoneer, of New York, offers MasterCard debit cards that can be used for shopping or to get cash through an ATM, according to Yuval Tal, CEO of Payoneer.

Although the cards are free to affiliates, there are fees of up to $2 for withdrawing funds through an ATM. Affiliates who are part-time workers and use commissions as discretionary income can find it advantageous to separate their earnings from their primary bank accounts.

Just as with direct deposit, the funds are available the same day of the funds transfers, Tal says. However, if a balance is kept on the card at the end of the month, Payoneer charges a fee. While paying a fee for someone to hold onto your deposit might seem counterintuitive, Tal says that the cost of tracking and administering held-over balances is more than any interest the company could make.

Electronic Payment Options

Merchants looking to accelerate their payment processing while eliminating the cost of paper and accounting hassles have several options for going electronic. Transaction fees vary to a maximum of a few dollars per transaction, but they are all superior to the cost of paper checks.

Direct Deposit It’s easy, universally understood and safe. However, it requires validating an affiliate’s bank account number. Finding international banks to participate can be costly and time-consuming.

PayPal Many affiliates already have existing accounts so they can be very comfortable in getting on board. Little to no information is required to recruit affiliates, and PayPal can pay out in 17 currencies.

Prepaid Debit Cards Ecount and Payoneer, along with many banks backed by Visa or Mastercard, offer cards linked to online accounts. With a minimal of software integration, publishers can issue payments from within their affiliate software. Affiliates can get cash through ATMs using a card with the network’s branding.

Affiliates who set up a Payoneer account can also direct funds from any network, even if Payoneer does not have a relationship with the network, according to Tal. Each Payoneer account includes a routing number that can be used for direct deposit, similar to a brick-and-mortar bank. Affiliates can also mail endorsed checks from Google, and Payoneer will deposit the funds into their debit account, Tal says.

Debit cards can be set up so that the networks pay most or all of the transaction fees. Tal says the per-transaction fee depends on the volume of funds that the network processes. Networks that use Payoneer include AmieStreet, ROI Rocket and JoeBucks. Gary McNelly, CEO of JoeBucks, a health and beauty affiliate network, chose Payoneer because the transaction fees are less expensive than implementing PayPal. Integrating Payoneer into his reporting system required just one hour of technical staff time, he says.

Ecount of Conshohocken, Pa., offers electronic payment systems that can be used by networks to compensate affiliates and for affiliates to offer rebates to consumers with minimal administrative costs. Jay Levin, senior vice president of consumer payments at Ecount, says companies can build loyalty by offering MasterCard debit cards with their branding. "Online marketers can be tough to get off-line branding," Levin says. Offering a branded card "will give them that viral feel." As an added benefit, affiliates that work with several networks are more likely to remember and positively view a network if the logo is on a debit card that they use for discretionary income.

Ecount requires a database or XML file from the network that can be submitted via FTP or email to generate electronic payments. The company creates a custom-branded website that cardholders access to check their account balances and payments.

Ecount’s debit cards can also be used as periodic rebates for signing up for a service, Levin says. Wireless phone carriers and cable companies have issued debit cards to new customers as an incentive for signing up. Part of the cost of a new phone or cable box is returned to the customer via monthly payments to a branded card, which builds consumer loyalty at a lower cost than issuing paper checks, according to Levin.

Axill, an international network located in Piscataway, N.J., has been aggressive in pursuing the expediency of electronic affiliate payouts. The company, which is a subsidiary of online marketer Northgate Technologies of India, offers same-day payouts to affiliates who sign up for the company’s Visa debit cards. However, same-day payouts are limited to affiliates that accrue a minimum of $25 in commissions. As with other debit cards, funds can be withdrawn at ATMs from the Axill-branded cards.

International Payment Options

Paying affiliates outside of the U.S. is often costly in transaction or currency exchange fees, and affiliates who are paid by check do not have immediate access to funds. Wire transfers can cost up to $50 each, and checks from U.S. banks can take up to a month to clear out of the country – if affiliates can find a local bank willing to cash them. Recipients living outside the U.S. may also be required to pay additional fees to exchange U.S. dollars for their local currency.

DoubleClick Performics’ Fleming says making payments to foreign banks "is by far the biggest issue" in using direct deposit. The fees (associated with foreign bank transfers) "are a drawback for using electronic payments" outside of the United States, he says.

PayPal’s MassPay enables publishers to issue payments in 17 currencies to 190 countries, with transaction fees of 30 cents each plus up to 2.9 percent of the balance, according to Oldenburg. A single batch of up to 250 payments can handle multiple currencies.

Since approximately 98 percent of his affiliates are outside of the U.S., JoeBucks’ McNelly says minimizing the cost and complexity of international payments was a must. Most of his new affiliates in India, Russia and Asia choose to be paid via a Payoneer account, and they like being notified by email of a funds transfer, he says. "We haven’t had many complaints [about using Payoneer], which is unusual, because [affiliates] complain about everything," he says.

Ecount can issue electronic payments to only U.S. and Canadian residents and will add three European markets in 2008.

Payment methods will continue to evolve with technology as merchants and online marketers look for ways to create efficiencies.

Merchant Advantage: eBay Partner Network

In mid-March of 2008, eBay announced it would be transitioning away from having its massive affiliate program run by a network and instead they would take it in-house.

eBay began its affiliate program in 2001 and had since grown it to the second largest affiliate program in the world, behind Amazon.com’s Associate Program.

The eBay Partner Network launched on April 1, and the company started to transition its affiliate program away from Commission Junction. eBay also brought Half.com over to the new network.

Speculation that eBay might be thinking of a transition began back in September 2006, when it announced the launch of their own affiliate linking infrastructure called Project Rover. At that time, eBay claimed the new linking structure would provide a variety of improvements, including reduced ad and cookie blocking by using an eBay hosted domain; limited redirects, thus reducing the risk of user drop-off and improving speed and performance; and global infrastructure improvements by enabling eBay and Commission Junction to develop increased global tracking capabilities, allowing for more seamless international affiliate promotions.

That migration, which angered some affiliates who had to swap out links, was the start of eBay’s transition to bring its program in-house.

Senior Manager of the eBay affiliate program, Will Martin-Gill, emphasized the move had nothing to do with a dissatisfaction with CJ or ValueClick.

“CJ was great when the program was with them. They also were really helpful with the transition – from talking us through the public announcement, to helping with the messaging to the affiliates, to transitioning the team. Once they understood where we were going, that gave us the support to get there,” he says.

More Control Over Data

For eBay, according to Martin-Gill, it was simply time to bring the affiliate program in-house the same way eBay brought their search services in-house three years ago.

“When we did that, we were able to do more things than SEM agencies and use our internal conversion data,” Martin-Gill says. “We were able to determine the value of a click and what constitutes a good click. We learned so much from the data. That helps us make more informed decisions and is a tremendous advantage. We wanted to do the same for our affiliate program.”

Martin-Gill also noted that eBay was looking to build more flexibility and innovation into their program, to reach and sustain the more diverse crowd of affiliates and publishers on the Web today, and to have a direct relationship with those affiliates. Thus, it gave the company increased control over data across various marketing channels.

Martin-Will comes at this with some insight given that, prior to leading this effort, he was responsible for leading key advertising and search engine marketing initiatives for eBay. Before that, he was senior manager of corporate strategy, which being responsible for strategy development,mergers and acquisitions and various projects across Marketplaces, PayPal and Skype, including Internet marketing strategy.

eBay’s massive worldwide affiliate base was also a factor in the move. eBay was looking to turn its program into a global platform where publishers and affiliates can sign up to all the various country-specific programs at once, through the same interface.

eBay didn’t completely move away from ValueClick and is using MediaPlex’s tracking solution for the eBay Publisher Network. In addition, Tradera AB, ProStores, Reseller Marketplace, Media Marketplace, eBay Stores and StubHub continue to be on CJ’s platform.

There was a two-month overlap between the two platforms during April and May so that affiliates could make all the necessary changes to their links. eBay also paid an extra 5 percent commission to affiliates that transitioned their links and ID to eBay Partner Network by May 1. The company claims that by the end of May over 90 percent of its active affiliates had followed them to the eBay Partner Network, and eBay’s program also retained 90 percent of its volume.

“This was a big effort. It was an undertaking that required a huge effort that we didn’t take lightly,” Martin-Gill says.

He adds that it took over a year to put together all the technical and organizational elements required to get up and running. It required creating groups and systems to handle customer service, network quality and fraud detection,finance and payment, and account management. Martin-Gill won’t disclose the exact size of the team running the network, but did note that it has tripled since bringing the program in-house. The technology group responsible for the infrastructure and development is a shared group at eBay.

So far the biggest challenge for the network, according to Martin-Gill, was the volume of initial customer service inquires. “People have lots of questions,” he says. “This was a big growing pain for us in the first three to four months to get customer service up to speed. I don’t think we did too badly.”

To get its message out there, eBay launched a blog, relaunched the affiliate discussion boards, had a booth at both the Affiliate Summit and Ad:Tech conferences. The Partner Network also gave a presentation to a large group of eBay sellers recently.

Turning a Corner

Martin-Gill says that it wasn’t until October that the entire EPN team began to feel really comfortable. “We felt like we turned corner,” he says.

Early on in the program’s history there were some affiliates that questioned if tracking discrepancies had occurred in the transition, as some affiliate experienced a drop in commissions. Ironically, tracking was not one of the core infrastructures that changed the move. MediaPlex,which is owned by CJ’s parent company ValueClick, continued to handle all the tracking.

Martin-Gill says that EPN conducted audits both internally and by hiring third party firms, and in same cases issued “make goods” to affiliates.”We take tracking really seriously,” he says. Now he’s confident that after an exhaustive three month study, everything is on track.

The other thing EPN has learned over the last nine months is that a lead is not a lead is not a lead, according to Martin-Gill. “Some leads are more valuable than others,” he says.

Under CJ, eBay was paying $25 to $35 for each new user registration. He claims that there were those affiliates attempting to game the system by getting a customer to sign up and then buy a $2 piece of plastic jewelry – and then collecting a $25 commission.

To curb that behavior EPN created an algorithm that accounts for the lifetime value of a customer and pays the affiliate accordingly. In August, eBay moved to a value-based pricing plan for Active New Registered Users. The move was intended to better reward top affiliates,provide incentives for other affiliates to improve the quality of their traffic, and pay fair compensation for users who have low lifetime value to eBay. Under the new arrangement, they pay affiliates $1 to $50 per new user.

The new pricing structure took effect on August 1 for new affiliates and November 1 for all existing affiliates. At press time, more than one-third of their active affiliates are now earning $28 or more for every new user they drive to eBay, while several hundred affiliates are qualifying for the new $40 and $50 tiers.

Other enhancements since the transition include providing additional data to affiliates including a campaign quality report that shows affiliates which of their tactics and campaigns are driving the most engaged users. There is also a new report showing affiliates which categories of products their users convert, so they can improve targeting.

In addition, eBay has added tools for customer banners, as well as special creatives associated with particular deals and holidays.

“We want to give affiliates more tools and better ways to promote us, such as the customer banner where affiliates can specify pixel length and width. For 2009, EPN is also planning to roll out coupons in the banners. Martin-Gill says that they will build-in unique coupons that are offered to high-frequency users. In addition, EPN is looking to offer affiliates more product feeds.

“We are making a push toward finding highly valuable publishers – we are not just about volume.”

Merchant Advantage: CSN Stores

When Brent Elias began working at CSN Stores.com in 2002, the Boston-based online home furnishings retailer didn’t have an affiliate program. Elias began his career at CSN working in the advertising department on the keywords team. Like many e-tailers, CSN Stores was afraid that affiliate marketing would cannibalize sales from its main online store.

But as the privately-funded company grew, it began to see that affiliate marketing might add some value. No one at the company knew much about affiliate marketing, so Elias, who showed interest, started researching the best way to start a program.

Beginning in July 2005, Elias spent several months researching all of the major networks and which would best fit with the unique business model of CSN Stores. He knew that it would have to be a long-term relationship and didn’t want to jump into anything. He did his homework looking at sites that discussed affiliate marketing and pouring through online forums such as ABestWeb.com to help educated himself and make a better decision.

By October of that year, CSN Stores was ready to dip its toe into the waters of affiliate marketing. The company chose ShareASale as its network. Elias says that he spoke with all of the other major networks but none was able to accommodate CSN’s desires to have a single merchant ID that let affiliates work with any of the company’s 250 online stores. Most of the networks claimed that the stores would have to be grouped together by categories and CSN would end up having something like 20 or more accounts.

Make it Simple

Elias knew that would be too confusing and troublesome for affiliates. He also couldn’t imagine how his company would log into and manage so many accounts efficiently. Elias says ShareASale was the only network willing to host all 250 stores under a single merchant ID – giving affiliates a single place to get creative. It also allowed CSN to set things up so that affiliates could work with the main CSN store or just pick the niche stores – like CSN Rugs or CSN Baby – that they were interested in promoting.

ShareASale was also willing to work with CSN Stores to create custom data feeds, along with a unique tracking system and custom designed analytics. Elias says that level of personal service was “a breath of fresh air” and won CSN over.

Wanting to jump right into things, Elias attended ShareASale’s first annual ThinkTank retreat in 2005, just two weeks after launching the CSN Stores program. He says it was an eye-opening experience and set the tone for how he deals with his affiliates.

“It wasn’t that we were doing things wrong, but we were still figuring out what affiliates wanted,” Elias says. “At ThinkTank when everyone gets into a room and seasoned affiliates lay it on the line and don’t hold back, you take that information and feedback to heart.”

Elias says he learned right off the bat about being fair to affiliates, and that the merchant-affiliate relationship is a partnership. “I don’t think all merchants see it that way,” he notes.

Because ShareASale is a smaller network and many of its merchants and affiliates prefer to work exclusively with them, Elias says that was a selling point. He figured that the network’s stance on adware and downloadable applications (it doesn’t allow it) meant he wouldn’t have the headaches of policing a lot of issues related to cheating and bad traffic. “In addition, I figured that it would also give our affiliate peace of mind that cookie were set for them and that there would be no cross-tracking problems with other networks.”

By inviting feedback from affiliates, Elias learned CSN’s affiliate interface was confusing and he was able to work quickly to get that changed. He was also told that CSN’s data feeds were overwhelming and contained way too much information. He worked closely with SAS to change the data feed structure so affiliates could get only the information they wanted – whether it was by product category, specific stores or master feeds.

Forums, Feedback and Facts

CSN Stores has an active forum on ABestWeb.com and Elias is always there to post information and answer questions, or just take feedback. “I love it and have learned a lot there,” Elias says. “It has a family atmosphere. It can be rough around the edges, but what I love is that people put their heart into affiliate marketing. In the end, I respect that.”

A while back, CSN Stores made a decision to pay coupon sites a 2 percent commission on an order when they were last in the click stream. That decision did not go over well with all his affiliates. Elias says that for CSN’s business model it wasn’t an ideal situation to partner closely with coupon sites. He’s not convinced of the overall value of the traffic the couponers bring to him, but CSN decided they deserved a small cut of the commission on an order. On ABestWeb, CSN took some heat, but Elias says that he was able to give his reasons for the change in policy, “talk people down from the ledge,” and be honest and forthcoming about the business decision.

As an affiliate manager, he believes it’s important not to get defensive or mad, but instead to be open and honest and communicate with affiliates. “That way it remains a discussion rather than a fight,” he says.

He also claims that taking accountability and admitting mistakes is also key for affiliate managers. “Everybody makes mistakes. We are human. Affiliates know that. And if you approach situations positively and honestly and make moves to set things right, then affiliates are forgiving – they respect that. Of course, you can’t make everyone happy but you do what is best for affiliates while balancing the concerns of your business.”

That attitude has served CSN’s affiliate program well. In 2008, the affiliate program will bring in more than $10 million for the company – a significant jump over last year. He says that winning the Affiliate Summit Pinnacle Award in 2008 for Most Ethical Merchant also helped boost the company’s reputation and bring in more affiliates. The program now has more than 4,000.

Growth of the program has slowed a bit, but Elias attributes that to the economy and the natural stages of growth. “You can’t grow 100 percent year-over-year forever. I’m happy with our growth, which continues to be steady month-over-month. The program has really got some steam.”

The growth of the CSN Stores affiliate program has not gone unnoticed within his own company. Elias says that every now and again, he’s forced to field questions from his bosses about expanding the program even further and possibly doing that by switching to a bigger network. All of the big networks have tried many times to lure him away from ShareASale.

But Elias is adamant that ShareASale helped him achieve success and he has no plans to leave. “I’m not budging. The selling point of the program for affiliates is that we are exclusively with ShareASale. And from my perspective, we have their attention. When I want something done there are no questions asked. Plus, I never have to question the type of traffic I’m getting. I know I’m not being cheated or that cookies are not being dropped. With one of the bigger networks, I would have to take a huge chunk of my time to police the program and I don’t want to do that.”

And for Elias, time is at a premium right now. After three years of running the affiliate channel on his own, he’s also recently added SEO Manager to his duties. However, Elias says CSN has shown its continued commitment to the affiliate space, by recently hiring an assistant affiliate manager to help out.

That’s a good thing, because CSN Stores has some new projects on tap for its affiliate program over the next 12 months. The company wants to continue refining its data feeds by partnering with Golden Can. There are also plans to create an affiliate Web page. Currently, the most complete information about the company’s program can be found on ABestWeb, but Elias says CSN needs a formal affiliate spot on its own site as well. The company is also beginning to expand beyond the U.S. into the U.K., Canada, Australia and Germany, which could represent even more opportunities for affiliates.

For Elias, running a good affiliate program means understanding affiliates and what issues are important to them. “I feel an obligation to support those affiliates that have put their faith in my program to help them make a living. It’s all about being comfortable and trust. You can give affiliates all the tools they want, but if you don’t have their trust, you won’t have success.”

Crossing the Line

The roles played by each of the key parties in the affiliate marketing space are very clearly defined. Just like a well-oiled machine, each component has its job to do, each ensuring that the industry as a whole functions, if not in harmony, at least in synergy.

Affiliates should drive value added traffic and consumers to a merchant’s site.

Networks are considered to be the middlemen that track affiliates’ traffic and merchant sales.

Merchants convert that traffic and consumers into sales.

Affiliate managers are there to oil and facilitate the whole process.

Each group enters into relationships with the other parties with the presumption clear boundaries will be maintained. For the most part it works, and each group wants to keep it that way. Affiliates don’t want to see affiliate managers doing their job and merchants don’t want to see networks becoming merchants.

The only potential for crossover is the job of the affiliate manager, as they can exist with the merchant’s organization or within networks or as outsourced program managers. An affiliate manager could certainly boost their personal revenue rather nicely if they started playing all sides of the business,but at the same time they are likely to destroy trust with their affiliate partners.

Trust is the key issue in all of these roles. This complex ecosystem functions because it is based on trust. Trust is not something that people should take lightly or for granted.The presumption of trust exists within each party’s responsibilities, but still, each group needs to earn and continue to foster that trust.

One of the most complex and debated roles in the industry is that of the affiliate network. They are considered to be a trusted third party that is meant to remain neutral and ensure everyone is working in a fair field of play. That’s not an easy task given that there are widely differing opinions on various sides of what constitutes fair play.

Both LinkShare and Commission Junction have previously bought affiliates, and while this has caused concern, it didn’t raise any real alarm bells at the time. And those moves have since faded from the limelight. But let’s face it – many of the larger CPA networks are affiliates that turned into networks,and most still operate as affiliates.

The PepperJam Network has progressed through the affiliate business from merchant,to affiliate, to affiliate managers to affiliate network – presenting them with a serious challenge in how they separate and manage their industry role. The mixed reviews and acceptance PepperJam has received from the affiliate community shows it’s not an easy path to travel. It’s a very difficult journey to take while keeping all constituencies happy. And the larger a company becomes the harder it is to ensure boundaries inside the company are enforced and trust is kept in place.

So it is perplexing when a “Trusted Third Party” network such as LinkShare recently began allowing OneCause, an affiliate, to operate in violation of its’ own terms and conditions, overwriting affiliate codes without a consumer action and targeting direct-to-site traffic from organic search results.

What makes this even more upsetting to the delicate balance of affiliate marketing trust is that OneCause is owned by Rakuten, LinkShare’s parent company.

The industry has long argued whether BHOs (Browser Help Objects) should be part of the affiliate channel and how they should interact with the consumer. That debate continues to rage on. But the real question here is, why is LinkShare (or any network) now operating as an affiliate?

Extensive tests by members of the affiliate community showed that, not only is the LinkShare-owned BHO failing to follow LinkShare’s own Terms and Conditions, but it is also going beyond other BHOs, such as the ones from affiliate eBates, and overwriting affiliate tracking that is meant to be protected by the industry standard afsrc=1 code. This means LinkShare is being credited for commissions that should have gone to its own affiliates. It is wrong on all levels.

LinkShare wrote in its blog that the issues were immediately addressed, but continued testing shows the same results as prior to the fix.

LinkShare isn’t the first to do this, but as the company likes to state, it is a market leader. So, why is one of the three largest U.S. affiliate networks seemingly going out of its way to cannibalize its own affiliate base? In fact, CJ and Google Affiliate Network all cleared OneCause.

Economic conditions are tough in the U.S. market, but it’s hard to believe that business is so bad that networks can’t find other ways to increase revenue rather than undermining affiliates and slicing up their affiliates’ revenue. This is ultimately bad business for the long run because it undermines the basic rules of trust between a network and affiliates.

Merchants need to ask themselves if they want to be working hand-in-hand with networks that are cannibalizing their valuable affiliate sales channels and undermining core affiliate partners. And affiliates must consider if they want to be promoting merchants that allow their traffic to be cannibalized for someone else’s profit. The affiliate business exists because of synergy and trust between all parties. Cannibals have no place in that equation.

Chris Sanderson is the owner of AMWSO.com, an Outsourced Affiliate Management Firm, with an international team of dedicated affiliate managers supporting clients programs on a global basis.

Commission Junction: Putting the Pieces in Place

Kerri Pollard took over the helm of Commission Junction as general manager over a year ago. Pollard’s rise through the ranks – starting at BeFree back in the day and then at CJ as director of publisher services – gives her a wide variety of network experience to draw upon. Since Pollard took over, CJ has undergone some changes.

Lisa Picarille: You’ve been running Commission Junction for over a year now. What’s changed at CJ?

Kerri Pollard: It seems like a cliche, but the first order of business was to get the right people in place. Our emphasis is customer focus on the advertiser, publisher and agency side of the business. We didn’t spend a lot of time on agencies in the past. Making sure we had the right people gave us greater focus. Everyone is now aligned and focused. On the agency side, we have a support team and the resources on the sales end. I’m happy to say that coming off CJU we’ve gotten positive feedback about the increased support and partnership. Also, both the advertiser and publisher sides made alignments in the marketing and products teams. There is ownership and accountability within their teams. That is reflected in the product groups. I grew up on the publisher side of the business at BeFree and we have added more support on that side of the business. Mike Ouellette, a former BeFree-er from back in the day, has also joined us as director of publisher developments.

LP: What has resulted from the personnel changes?

KP: Those changes give us a couple of different things. In this business, it’s all about bringing in new advertisers to the CJ Marketplace and retaining them. Organizationally, we are focused on retention and acquisition. We are really trying to re-emphasize customer outreach.

LP: And the biggest changes?

KP: They’ve been on the technology side and the marketing and product sides. We are becoming better at product marketing. We hadn’t been marketing ourselves. We are also able to focus on Web Services. We launched that two years ago, but there are more opportunities for third party developers and to get traction with developers.

LP: Have the changes allowed you to attract more developers, advertisers or publishers?

KP: We tend to err a little more on the conservative side. But we continue to bring in new clients in each quarter when you look at the year-over-year numbers. It’s all about how we track it and we are also very conservative about sharing that data.

LP: Has the fact that Performics is now part of Google impacted your ability to bring in new clients?

KP: No. It’s been no different thus far. That could change. But it hasn’t impacted the sales process of anything with our existing clients. As far as we are concerned, it hasn’t changed from when they were Performics.

LP: Now, the inevitable question about the impact of the economy on your business?

KP: Because our business is tied to the online process we have been looking at the forecasting process. A lot of people are in the dark about what the holidays will bring. Analysts are all over the place with predictions – anywhere from 12 to 13 percent growth, but we’ve also seen numbers as low as just 3 percent growth for online sales. On the positive side, we are seeing that companies are definitely redirecting money from other channels into affiliate marketing because it is cost effective. Even if a company or retailer has laid off workers, they can’t shut down that channel. But they need our help on the services side of the business – especially if they don’t understand that when they pay out more to publishers, that’s a good thing. That it’s tied to increased sales. But it all comes back to the consumer. More and more consumers are coming online and shopping, and the adoption rate will continue to increase. Will that fact offset what is happening with the economy? Not sure. And we definitely won’t know for sure until a couple of weeks into 2009. We are doing what we can, but things like Citi Bank filing for bankruptcy and more consolidations at financial institutions are beyond our control and they do have an impact.

LP: What’s the impact been on affiliate marketing overall?

KP: I do know affiliate marketing is the safest business. It’s measurable and cost-effective. But businesses are also in hunker-down mode. But I think we can grow the affiliate marketing pie. We are helping our existing clients with greater education, so they can really understand performance marketing. We are also looking to areas like BtoB. People tend to take a shot and need the support for publishers. That business can be tracked and we are looking into what role we could play. We are also looking at doing more tracking retail outlets and VARs (value-added resellers). We are having conversations about how, as a business and technology platform, we can track other things within an organization.

LP: And you have the technology to do that?

KP: We have a lot of technology initiatives. We were the first to launch Web Services domestically. We are revitalizing that initiative, making it more of a community and a mashup. We want third party developers and others to make widgets. We are also working closely with some of the other ValueClick properties to leverage their technology – Media Convergence and MediaPlex. We want to move beyond the methodology. ValueClick is already doing behavioral and contextual targeting. The biggest challenge is the amount of heavy lifting involved.

LP: Are you leveraging other technologies as well?

KP: We want to make it easier for existing clients to do business with us. Publishers get excited when it comes to optimization. Big publishers have made a significant investment. We need to make things easier for the great diversity of publishers. We are looking at creating more push network features for new publishers. So, we are looking at the core fundamentals. This is a relationship-based business. There are social networks out there and communities. We also want to have more automation on the reporting side. We are open to leveraging other developers. We don’t have to build everything ourselves. We just launched a pay-per-call beta test with CallWave. It has a branded CJ look and feel.

LP: There have been issues around network compliance and those that continue to override affiliate commissions.

KP: Network quality is important to us and we are very diligent about it -maybe more than anyone else. We’ve put an increased focus on it. Jeff Randall is handling our network quality and developing that even more. Adware and spyware have been difficult and more egregious, but when it comes to adware, there are customers that are still supporting it. We will still continue to watch it and stay one step ahead. In addition, trademark bidding is a big piece to monitor. The focus for us is staying on top of it. To do that, we are adding more regulations and policies.

LP: A while back, you were expanding into countries outside the U.S. Is that something CJ will continue?

KP: ValueClick has a big global presence. CJ launched in Spain this summer. We also have offices in the U.K., France, Germany and Sweden. We are looking to continue expanding in 2009 and looking at different ideas. We are also seeing more client interest in the Asia-Pacific.

LP: What are some of the specific goals for CJ in 2009?

KP: There are economic factors in play, but we’re focusing more on what we can control. In general, we are seeing greater focus on profitability and margins for our customers. We think that by educating our clients and being focused on technology we can grow distribution beyond the scope.

LP: Are you seeing larger affiliates get bigger and the gap between the largest and smallest affiliates get wider?

KP: Large publishers – especially couponers – are having their best year ever. But double digital growth year-over-year is going to be more difficult. It’s getting more difficult to be successful in this business. The small guys are trying to compete, but it is survival of the fittest and there is a huge increase in competition. The changes to search engine policies this fall hit hard for a lot of people. Search engines determined that content was ranked higher based on what was compelling to consumers. That hit the smaller guys hardest.

LP: Do you feel pressure from the CPA networks?

KP: No. Not really. It’s just arbitrage to an extent. They have not made an investment. It’s not a relationship. I see them as here today, gone tomorrow. They are ankle-biters. I think when you think about networks it really comes down to the Big Four.

LP: What are the other major challenges for CJ over the next 12 months?

KP: It’s been an interesting year. I’m excited about all the things that we’ve been able to do. It’s like we’ve been cleaning up the stable and the horses are ready to hit the racetrack. We are making sure that we stay focused on the customers and the products and services they need the most.

ShareASale: Size Doesn’t Matter

ShareASale.com founder and CEO Brian Littleton runs what is considered to be the fourth largest performance network in the United States. Littleton has earned the respect of the industry and garnered a dedicated following of merchants and affiliates by taking a firm stand on issues. His company is the only network that does not allow downloadable applications of any kind. His personal style and outspoken views on important issues are reflected in this wide-ranging interview.

LP: How does that impact the company?

BL: We want to be very approachable to clients, merchants and affiliates. The feedback has been that everyone wants to be able get a hold of a real person to get their questions and concerns answered. We want to serve everyone and not just those that are making super-affiliate type of revenue. Even if an affiliate is making a few hundred dollars, we want to be able to answer their questions. Now we have beefed up and are able to do that. It is a core thing that is very important to me.

LP: What about the growth of the sales team?

BL: We are working to grow our base of merchants and need sales people to handle that. Right now we are at 2,588 merchants. Getting over the 2,500 mark was a big milestone for us and we are looking to continue that growth. Of those, 2,435 are retail pay-per-sales commission-based merchant programs. We are a retail-focused network, which is very different from the large variety of CPA networks dealing with lead-based offers. We have 244 lead-gen merchants. They are not the core of what we do. We are adding nearly 100 merchants every month – of course, there is always some churn in the math. But unlike the other networks, we are targeting a different type of merchant. They are smaller, non-Fortune 100 companies. We want to help anyone, no matter what size, that wants to take a shot at performance-based marketing. It’s not easy to provide a system that works for everyone – whether it’s a Fortune 500 company or a two-person company.

LP: Are you leveraging technology to help with that scalability issue?

BL: One of our main focuses is technology. It’s a big differentiator for us in the space. We are always coming up with new ways for merchants and affiliates to leverage technology – like our widgets for video. They are unique across the board.

LP: What are some of the goals for SAS in 2009?

BL: We are very focused on networking. We are always trying to find a better way for affiliates and merchants to talk to each other. It’s difficult in the network model. Often, merchants are over-eager. Merchants tend to think their offers are the best. Affiliates are more selective. They don’t want offers all the time. We are looking at better ways to make that happen. We want to let the merchants interact more without so much material that it’s impossible for affiliates to read it all. It’s a big thing for us to get it right.

LP: What are some of your challenges over the next 12 months?

BL: I think the industry will be faced with many more complex compliance issues in 2009. There will be more toolbars in 2009. Merchants are looking at a lot of different types of affiliates – coupon affiliates, PPC affiliates and loyalty affiliates. As a whole, questions will be answered as the individual networks take their own routes. We are working on PPC issues. We introduced a PPC Violation Report which allows merchants to upload a screenshot of those they feel are in violation. We then do more research into the allegation. Because merchants don’t always know if an affiliate is really bidding. We dig deep and decide if there has been a violation. We have a three strikes and you’re out policy. If the affiliate is in violation of a merchant’s PPC policy, then we remove them from the network. We give the affiliate a three month grace period to get in compliance, but if, after that, they have are not in compliance, they are out. The goal is not to cut out those that made an honest mistake but those that are continually abusing the rules and praying on merchants that have difficultly policing that activity. Toolbars and loyalty go together. More and more toolbars are coming out. It’s like everyone is seeing their competitors doing it, so they do. More are popping up. Whatever has been the position of those in the past, adware and toolbars present a unique set of challenges because they all do different things – notifications, pop-ups, etc. We feel that we need to look at each one.

LP: That sounds like a Herculean effort.

BL: There is not an easy way around that, to maintain quality inside a network. You have to make sure a toolbar’s behavior doesn’t violate the rules you have. It’s not something typically that individual merchants can keep up with. Maintaining compliance is on the network side, because we have the data. We allow the merchant to have a say, but the network should be handling those issues. It’s a lot of work, but it’s part of the network role to keep on top of emerging technologies. It happened with PPC and coupons, and happened with toolbars as well. They’ve been around for years. It’s nothing new, but there seems to have been an explosion. I’m basing that on the number we’ve seen lately and the perceived success merchants see with competitors’ toolbars. They see them working for others, so they want them. I think it will be a huge challenge in 2009.

LP: What impact have you seen on the performance marketing space because of the current economic conditions?

BL: I think affiliate marketing will increase in profile because of the depression of the CPM or ad marketing. We won’t know for sure for a while. Some merchants will look to affiliate marketing to fill gaps. That’s traditionally what affiliate marketing has been best at. That’s been a strong point of the affiliate marketing industry since the beginning.

LP: Do you have any specific goals for SAS that you can share?

BL: We don’t have any specific goals as of yet. We set our goals more broadly. It’s a personal style of mine. I prefer to say things like, “we like to get closer to our publisher base, rather than we are going to do X a specific number of times.” The main thing we will be doing is continual work on the technology; it is at the core of what we do. We want to come up with new tools and technology for not only those who have a greater understanding, but for the first-timers who join the network. We want to make it simple for newer merchants and affiliates to understand. It’s a back-to-basics approach. I think that will make us more attractive. On the relationship side, we are looking to get closer to our affiliate base. We are targeting affiliates that we feel historically have been aligned with other networks. We are also letting our existing base of affiliates know that we have even more stuff they might be interested in.

LP: Has style been a big differentiator for the company?

BL: I don’t know. I don’t like to make presumptions. I like to highlight what I think we do the best. Certainly, there are clients on every network that are happy as clams. But we do focus on the results and quality of what a merchant is getting out of their relationship with us. This shows in the adware discussion. We are the only network that doesn’t allow adware. I know it’s a loaded works and there are discrepancies over exactly what adware is. Years have been spent hashing that out in the industry. But for me, it comes down to making sure that the quality of sale is just as important as the volume of sales. Sales tied to adware are not true growth. It’s important to report these activities to the networks and that the networks do something about it. But that’s a choice that’s being made by each network. Not keeping up with compliance is detrimental to the industry as a whole, over the short and long term. That’s our stance.

LP: By not accepting certain types of merchants, ShareASale hasn’t grown to the same size as the some of the other networks.

BL: The size issue has forced us to be good, if not better, with our technology. You can’t be the small size we are and have that number of merchants with bad technology. You need automation. Our datafeeds are automated and registration is automated. You can’t have bad technology. Everything needs to be smooth to support that volume of merchants. We are doing things faster. We are a different type of company. There is a big difference between us, a small company, and a privately-held company.

LP: But you are competing against companies with huge resources. Have things changed for your company since Performics was bought by Google?

BL: Not really. It’s business as usual. I know people there and we have a good relationship with them. Of course, it’s important for any company to know what’s going on with their competitors. People brought up the possibility of conflict, but Google sold off Performics’ search division. The name and backing of Google may help them, but in the end I think it’s a positive for everyone in the industry – especially if the largest brands get interested in joining the performance marketing space.

LP: Would you consider offers to buy SAS?

BL: Our technology is built inside the company. I would rather build in-house. We get more value that way and so far we have built everything we have. There could be minor exceptions – if there is new technology we could get faster through an acquisition – but I like to think that building it in house gives us long-term value. I’m conservative with our assets. We have grown organically and we are profitable. I’m not going to put that at risk for a new technology.

Kristopher B. Jones: The Small-Town Big Man

His speech is peppered with “awesome” and “ready to rock and roll,” as if he were fresh out of high school. He’s only 32 but he feels luck has a lot to do with his good fortune. He took what was basically an idea to sell jam and turned it into a successful online marketing company.

But we’re jumping ahead. Jones is a small-town fellow. He grew up around the quiet northeastern Scranton, Pa., region – in towns with quaint names like Forty Fort and Wilkes-Barre. He still lives in basically the same area where he was raised and headquarters his business not far from those same stomping grounds.

He knew early on that he wanted to be in public service – drawn to the tantalizing returns of politics. After graduating high school in 1994, he got a full scholarship to Villanova University to study experimental psychology in 1998 after graduating from Penn State, but questioned whether he really wanted to be a clinical psychologist.

During that period, his brother Rick called and asked, “What do you think about selling grandma’s Mississippi mud over the Internet?” Jones says while he was the resident computer guru in school and was sitting on a lot of school and credit card debt, he was pretty committed to going to law school. He decided he would finish out his law degree and start this gourmet food business.

Grandma’s Mississippi mud was actually a kind of jelly he had eaten as a kid. He calls it a kind of gourmet dip. He typed the ingredients into the Web and out came the popular Northeast dip called pepper jelly. But Jones didn’t want to sell just another pepper jelly. In the end – and after consulting a friend in the food business – they decided on “Grandma Jones’ Originals Pepper Jam.”

It Started With the Jam

That, Jones says, was when his entrepreneurial spirit came out. He could point to other adventures in his business past – the lawn business he had in school and the 1-900 psychic service he started, even day trading – but they never really made any money.

The pepper jam, on the other hand, had legs. Through contacts in the gourmet food business, it started to get some traction. The business was started in 1999. “My brother was the creative side and he had all these flavors he wanted to do,” Jones says. “It all happened pretty quickly. I was going to do all the marketing. I drove the branding and launched the website called pepperjam.com. We personalized it with pictures and stories.”

Soon they realized in order to get traffic and sales, they needed to rank higher in the search engines. The most obvious way at the time was to cycle in fresh content. So, they then came up with the idea to interview famous chefs and put those up on the site. In the end, they posted interviews with the likes of Paul Prudhomme, Emeril Lagasse and Jorge Bruce, to name just a few.

Bruce sampled the product and loved it. At the time Bruce was looking to hire a consultant to get his brand and other chefs online, Jones said. “I will try to cook with this product,” he told Jones. “He may have thought we had offices when we were really operating out of a kitchen,” said Jones. Bruce suggested QVC. “I went into shock,” says Jones, “and had to put the phone on the bed and take a breath a minute. At the time, he was the highest-grossing chef on QVC.”

The chef interviews were getting a lot of traffic now and the question of how to monetize it all became important. That’s when Jones joined LinkShare and started adding affiliate links (his first check from ValueClick was for something like $37). He was just about to leave for law school and was trying to make money through affiliate marketing when in early 2000, he says he began his marketing journey in earnest. “I still own 50 percent of the gourmet food business,” he said. His brother told him to take the marketing business and he’d handle the product. “I knew that the Net marketing side of this requires work. I just started to build out websites – build out content based on a theme. My first was cookware.”

Also in 2000, he adds, Google came out with AdWords. “I was generating close to $100,000 per month in affiliate profits,” he said. He was doing this while doing his consulting work and serving as law school class president two years in a row.

“Once I had money, I wanted to do something with it,” he says. He put all the cash he had been earning while in school into this single idea – to turn his super-affiliate status into a new kind of marketing business – pepperjam.com. “We got an office. I hired my best friend as COO. We knew we could hire smart, young professionals and could help these businesses that were coming online and had no clue what affiliate marketing was,” Jones says.

Getting Into the Affiliate Game

2003 was the breakout year. Jones didn’t realize the impact his company was having until he went to his first LinkShare symposium (they got invited through Overstock.com). “We went to this event not knowing anybody and thought no one knew who we were,” he says. “My attitude was, ‘I’m a super-affiliate, let me manage your affiliate program.’ We were blown away.” When a merchant rep found out who he was, she hugged him. “You’ve been making us so much money,” she told him and introduced him to a whole bunch of merchants. “We were very well received,” he says.

With that boost in his pocket, Jones parlayed that excitement into a new small office and started to hire employees. From 2003 to 2005 he built his client list. From 2005 on, he says, it took on a life of its own. In 2006, the company was about 28 employees. Then pepperjam made Inc. magazine’s list of the 500 fastest-growing companies in the U.S. It was the only affiliate marketing company on the list. “As a search engine marketing agency, we were one of three with iCrossing and MoreVisibility.” All he could say was, “It was just a big party. We’re pepperjam, we’re in the black and we’re an Inc. 500 company.”

While still nurturing a desire to serve in a public way, he was invited to speak at a conference for the first time in 2004. He’s been hooked ever since and speaks quite often all over the country. It kind of feels like he’s class president all over again.

Somewhere amid all this work, he did manage to get married – to someone who works for the company. He said while his wife, Robyn, and he did attend the same high school, they weren’t pals. One night when home from school for a spell, his COO and he went out for a drink and spied her. They remembered her from high school. Jones sat back and watched his COO walk over and try to flirt with her. Finally, Jones joined them and he said they hit it off right away.

“She kind of asked me out after 60 seconds,” he says, “and here she was talking to my friend for the last 15 minutes; but we’ve pretty much been together ever since.” She wasn’t happy at her other job and Jones asked her to work for Pepperjam.

“I know you don’t want to work for your boyfriend, but I’ll have you work from home and write an employee manual or something. We can have you write out some client case studies,” he remembers telling her. After about a month, she began to come into the office and has been with the company for two years.

Growth Spurt

Jones says there has been a lot of interest to be acquired and from venture capital money. Last year, with about 50 employees “we had to think about crossroads – and decided to focus on our own technology,” he says. The company decided communication in this industry was the problem. “It is difficult to get in touch with your affiliates to admonish or to praise them,” he says. There was a lack of affiliate transparency. “We said, ‘We will tell you who are the key affiliates and can protect your brand.'”

This led to the notion of launching a Pepperjam network. Jones worked and consulted with hundreds of affiliates and merchants to preview the network – robust players such as Affiliate Classroom’s Anik Singal, and super-affiliates Lee Dodd and Jeremy Schoemaker, to name a few.

In January 2008, he launched pepperjamNETWORK. This essentially turns Pepperjam.com into a technology company with exclusive merchants such as luxury brand Judith Leiber, clothier Ben Sherman and Jelly Belly. Jones sees this as a super-transparent network that can be an alternative to the big three – LinkShare, Commission Junction and Performics – as well as an alternative to ShareASale. “We are not going up against the big three networks,” he added. “They are much better financed than us and bigger. There is still only one investor in pepperjam and that is me.”

Jones proudly says pepperjam.com now has about 105 employees in a 13,000 square foot floor of a building in Wilkes-Barre. He has five executives and 15 senior-management-level people. He has divisions now – online media planning and buying, search engine marketing, pepperjamNETWORK and full-time salespeople – their first. In the next 18 months, he predicts 300 employees. But he thinks of everyone as family. His wife is director of affiliate marketing; his bulldog is in the office every day. He doesn’t want it to be a corporate environment – there’s Free-Pizza Fridays, ping pong and “Guitar Hero” on the floor. In early 2007, they launched a corporate blog where a randomly chosen employee is given less than 30 seconds’ advance notice to come up with a presentation to be videoed and then posted to the site (some can be found on YouTube; some featuring Roxy the bulldog).

Amid all this success, Jones was approached in the early summer of 2007 by publisher Wiley to write a book on SEO and search marketing. “Search Engine Optimization: Your Visual Blueprintâ„¢ to Effective Internet Marketing” will be published this spring. “In fact,” he said, “I had always dreamed of writing a book in college. I always thought, how can you make a difference? I can join the clergy, be a great father or write a book.”

If that isn’t enough on his plate, Jones and his wife are expecting their first child in August. That’s not going to slow him down. “We are very focused on building out what we are creating,” he says. “We have a bunch of families now; we’re not just a small family anymore. I’ve always been the kind of person that believes that my time hasn’t come yet. I want to focus on being a great father, and from a business standpoint we want to become a great affiliate network. I want to see where we take it.”

While the future seems like a busy one, Jones notes that “pepperjam has just started.”

Going Out Is In

Companies are outsourcing affiliate managers to fuel online marketing programs.

Former London-based freelance writer Rob Palmer knew he was on to something when he launched the affiliate program for his FreelanceWorkExchange.com subscription site. For several years he ran the program in-house; revenues were decent, affiliate applications were steady, but “there simply weren’t enough hours in the week for me to manage the program and deal with all the other management issues which required attention,” says Palmer from his new home in Australia. Plus, “the freelance market is massive and growing fast, but most affiliates hadn’t realized this can be a very lucrative source of commissions. I felt there was huge potential in the affiliate sector that we were not making the most of.”

His solution? Like the employers that use his site to outsource writing, programming, design and other freelance functions, he set out to find an external source of his own: an outsourced affiliate manager. Palmer found it with affiliate-turned-OAM Greg Rice.

Outsourcing isn’t new. Companies have done this for years, primarily to – according to a Dun & Bradstreet study – maintain competitive edge, focus on core business and improve service quality.

“But it’s new in comparison to the overall market that we’re in,” says Andy Rodriguez, an OAM and affiliate management consultant who will host a third OAM training conference in Chicago this August. “There just aren’t that many [OAMs] around. In the past, a lot of merchants hired a manager and said, ‘Here’s the affiliate program.’ Then they discovered what they really needed was someone that can lead a virtual salesforce, managing a large group of people by phone, by email and by instant messaging, who has a background in technology and knows how the Web works. That’s why so many merchants are now correcting their mistake of just hiring anyone in-house, and going out and hiring the best [OAM].”

Industry watchers informally estimate there to be a few hundred OAMs – either on their own or as part of an OAM agency – worldwide. And that number seems to be on the rise.

“The demand for OAM is large,” says Linda Woods, former Commission Junction affiliate manager and founder of the six year- old OAM agency PartnerCentric in Santa Barbara, Calif. “Our biggest challenge over the past year has been to find top-quality, experienced AMs.”

Others agree.

“Outsourced affiliate program management is a very new and, hence, an extremely exciting sphere to be working in these days,” Evgenii “Geno” Prussakov, a St. Petersburg, Russia-based OAM who manages programs for such U.S. clients as RussianLegacy.com and FantasyJewelryBox.com, says. “Many online businesses are in need of good affiliate program management, yet the number of experienced [OAMs] around the world is very limited. The competition between [OAM] firms is certainly growing, but the market is still very new and fresh.”

PartnerCentric’s OAMs hail from affiliate teams at Orbitz.com, Gap.com, 1800flowers.com and other “upper echelon” merchants; each having at least one year of full-time AM experience.

Even the term “outsourced affiliate manager” is somewhat nebulous. Few OAMs operate on their own; many have staffs of three or more assisting with new clients. “To find one person with a blend of all the skill sets needed is pretty rare: recruiting, selling ability, keywords, optimization,” says Peter Figueredo, CEO and co-founder of NETexponent, a NYC agency running affiliate programs for NYTimes.com, FinancialTimes.com, PuritansPride.com and others. (He has 13 on staff, and is hiring more “online media managers” to fit the OAM bill.) “We approach it as a team, bringing different people with different skill sets together to work with our client accounts.”

That’s the case with OAM agency PartnerCentric.

“Very few [merchants] have the internal expertise to run an affiliate program to the level that it needs to be run today,” says Woods. “It’s incredibly complex now because of all the new issues involved: fraud, spyware, conversion rates, EPC, competition. Two years ago, there were one or two furniture companies with affiliate programs. Now there are 40. Affiliates used to have a few hundred merchants to choose from in a network; now it’s a few thousand. The tracking has become more complex. And there’s even competition for clients from OAMs, especially if a merchant feels one AM can give them more exposure. That’s the kind of complexity we face every day, so managers have to really know what’s going on.”

In April, PartnerCentric acquired AMWSO, a Thailand-based OAM agency led by Bangkok-based Chris Sanderson. “By being able to work with a U.S.-based OAM agency, we can benefit our team here,” says Sanderson, pointing to programs his team already runs for Shopster.com, WesternUnion.com and 18 other international merchants. “That’s the personal touch we wanted.”

PartnerCentric manages affiliate programs for about 50 merchants, including TheCompanyStore.com catalog company, NationalGeographic.com, DigitalRiver.com (a half-billion-dollar e-commerce software company) and recently ClubMom.com. It’s had 300-percent-per-year revenue growth for the past three years, and Woods expects to double its revenue in 2006. PartnerCentric now has 20 on its team, plus eight other staffers; a move Woods says is “definitely moving towards the big boys.”

Some affiliates, however, are often going it alone until they’ve built up enough business to start adding staff.

For instance, the new outsourced program manager for FreelanceWorkExchange.com, Greg Rice, was once a superaffiliate for TigerDirect.com. He’d been an affiliate for seven years running a shopping mall site, and made the switch after going through Rodriguez’s mid-2005 OPM training. Currently, Rice owns CommerceMC.com and manages four programs, including ITHeadhunter.net.

“Working as an affiliate, you have contact with a lot of affiliate managers,” Rice says. “You get to see firsthand what works and what doesn’t work – and you get to see firsthand the opportunities that exist because most AMs don’t have a clue other than putting links up there and walking away from it.”

Another affiliate who’s going the OAM route is Kevin Webster, owner of outsourced B2B affiliate marketing agency OPMWeb.com, near Rochester, NY. For five years he ran a site called CorporateLeverage.com, stocked with his own articles on business-to-business sales and affiliate links to relevant products. In late 2005, he left his day job selling Cingular and Verizon cell phone plans to businesses, sold his affiliate content “for a scant $1,500” and launched OPMWeb.com.

“The rumor is that this industry is underpopulated,” Webster says. “It’s my intent to grow this organization slowly and smartly, ensuring that each new client receives all the focus their program deserves. That’s critically important at the launch of an affiliate program, and never really changes.”

Webster’s first client is SimpleGuardian.com, a notification security and medical alarm company targeting real estate agencies and arenas; two other contracts are in the works, he says.

“Simple Guardian had a very traditional brick-and-mortar sales model before this point,” Webster says. The company is very new to e-commerce, so this is a real test of a lot of things. Our main focus is B2B, which in my opinion has only been done with limited success up until this point. Plus, the merchant uses a content management system where I’m able to log in on the back end to tweak things for those landing pages. They’ve given me access to basically their entire organization – I can pick up the phone or send an email to just about anyone, from their database guy to their graphics department to their sales team. Not all merchants are going to be like that.”

While some OAMs fulfill otherwise-disregarded fundamentals, others are using technology as their edge. From a home office with a DSL connection, AvantLink co-founder Gary Marcoccia works with three other home-based OAMs in the Salt Lake City area to distribute data feeds from 16 merchants to several hundred affiliates. They do it all thanks to an integrated “deep-linking tool center” supported by Web service technology, RSS publication of affiliate ads and content and a simplified management interface. New merchants include ToolKing.com, Altrec.com and CampSaver.com; tools are free for affiliates to use, and merchants pay a flat $1,200 for its “start-up package.”

“Merchants really warm up to the start-up package,” Marcoccia says. “Once they realize that they really do need someone to manage the affiliate channel, it can be somewhat terrifying. Unless someone has deep pockets to justify hiring us as an [OAM] at $3,000 per month, it’s daunting. A start-up package should get them off the ground.”

The package includes program detail pages that are searchengine- optimized to be crawled and indexed; “buzz” on AvantLink’s AbestWeb.com’s forum; program announcements to AvantLink’s affiliate opt-in list; a few hand-picked “quality affiliates” to start; and, soon, a press release on the merchant’s new program sent through one of the PR news wires.

“We have tools that are pretty advanced,” Marcoccia says. “We’ve identified effective conversion methods, and kind of promise them five quality affiliates that will get going with the program, use the tools effectively and get the program running. That’s a pretty powerful service to offer a company that’s in limbo. We solve that catch-22; these merchants are interested in starting an affiliate program, they have a good niche but they don’t have to pay an in-house AM $10,000 per month to get the program off the ground.”

Technology is also the foundation for San Rafael, Calif.- based WatchDog Affiliate Managers, which runs programs for such merchants as InteriorExpress.com, Yoox.com and MadisonAvenueMall.com.

“Lately, we’ve been writing contracts starting at around $2,100 for the smaller guys that we think have a product that will grow and where the affiliates will be attracted to because the commission is good,” co-founder Christina Lund says. “For that low of a rate though, we would ask for a little bit more in commission; maybe 1 or 2 percent more than the 2 to 5 percent we usually charge.”

This bare-bones package includes all of its full-service offerings: recruitment of program-specific affiliates; newsletter writing and distribution; use of a WatchDog-branded administrative software system that allows advertisers to make changes to creatives that are automatically fed to all of their affiliates in real time; XML-based coupon feed so affiliates automatically get up-to-date offers; plus its “Merchant Express” multilingual data feed software, which uploads up to 2,000 product descriptions and photos and feeds the results in real time to affiliate-tuned storefronts with only the types of products that affiliate wants.

“It’s a whole store in one line of Java script,” says Cory Lund, WatchDog’s vice president of product development. “The whole part of this game is to really nurture these affiliates, and make their job a lot easier. With technology, we can offer everything in the big package, but the hours are shaved a bit ” it may be 20 hours per week for an OAM to manage instead of full time.”

WatchDog has nine freelance OAMs in its fold – spread out in San Francisco; Ventura, Calif.; Minnesota; and Kansas City, Missouri.

With technology being a selling point in the OAM world, it makes sense that some of the networks are jumping on the OAM wagon. Six-year-old affiliate network ShareASale, which is historically a place where merchants run “self-serve” programs, recently started managing the programs for clients. On its OAM to-do list: day-to-day administrative management, including affiliate approval and review; coupon and promotion distribution; newsletter creation and distribution; regular traffic and sales reporting; assistance with product data feeds and basic banner creation and management; and providing unique content, keyword lists and custom merchandised storefronts for the merchant’s top affiliates.

“Management of programs is only a small part of what we offer; ours does require membership in the ShareASale network, and is really more of an ‘add-on’ to our basic service, as opposed to a true outsourced solution,” says Brian Littleton, president and CEO of ShareASale.com. “But for small-to-medium- sized business, where ShareASale concentrates their efforts, [our OAM] services can be extremely helpful in allowing merchants to focus on their best practices, while allowing the [OAM] to assign best practices to the affiliate channel based on their expertise.” Though Littleton won’t divulge the total number of accessible affiliates in ShareASale’s network, Littleton says they’ll “often research categories for merchants who inquire about joining the network in order to give them rough ideas as to what to expect.”

Meanwhile, at LinkShare, “we really go out to market with our account management and client services,” says Liane Dietrich, vice president of merchant services for LinkShare. “Most of our merchants are working with in-house AMs or outsource their program management to LinkShare.”

Still, for Chris Henger at affiliate network Performics, outsourcing is a loaded word. “We prefer to look at it as an extension of the merchant’s marketing team. ” Yes, clients rely on their Performics’ program manager to administer the program, negotiate with affiliates, field inquiries and optimize the program,” Henger says, “but we don’t view our approach as outsourcing. The advertiser maintains control and still has to make critical decisions, particularly in regards to promotions and customer quality.”

The addition of network outsourcing of affiliate program management is an interesting hurdle for OAMs.

“A lot of people go directly to the networks because they don’t realize there’s a whole region of independent managers out there that can manage their program independently as well, if not better,” says OAM Shawn Collins, who runs affiliate programs for PaylessShoeSource.com and Snapfish.com. “Yet I get a lot of calls from headhunters wanting affiliate managers to run a program inhouse, and they’re just not around. The in-house talent pool has been moving to the agency side – because they can manage multiple programs which can potentially be more lucrative.”

Which brings up the subject of money. OAM firms usually work on monthly retainers of anywhere from $2,000 to $7,000 for only a few products, and up to $35,000 for rollouts of a big-merchant range of affiliate-sold products. Remember, however, that the retainer could be funding the cost of several managers and, in the case of NetExponent, even OAM health benefits.

While the numbers may seem large, merchants are recouping that several times over from affiliate sales. The highest-paid OAMs also often come with the most to offer: “All that money that was spent in the dot-com blowup went toward educating a lot of staff people,” says former BarnesAndNoble.com AM Stephanie Agresta, who’s now an OAM at Commerce360, a Pennsylvania-based agency that guides merchants through the LinkShare platform. “You can’t replicate that just anywhere, for any price. If you live in Kansas, you may be able to find someone who can work for $30,000 per year – but in areas with lower labor cost, there’s more of a chance you won’t be able to find the expertise. At a minimum, we’re talking salaries of $60,000 to $100,000. For that same amount of money you can buy an OAM solution that comes with expertise and relationships.”

For now, costs continue to climb, as the existing OAMs in greatest demand gain more experience and more relationships with super-affiliates that they’ll bring in tow, observers say. In time, costs are likely to level out as more OAMs enter the market.

No need to fear, says Prussakov. “Competition only benefits the industry. It constantly makes OPMs think of new ‘outside the box’ ideas to enhance affiliate performance and draw more quality affiliates to their programs.”

The advent of aggressive outsourced program managers brings certain advantages to affiliates, namely the ability to work directly with managers who’ve once been affiliates themselves.

“It’s absolutely imperative to have affiliate experience,” Rodriguez says. “You cannot help someone build a house unless you’ve built a house before. You can’t help someone ride a bike unless you’ve ridden a bike before. At the same time, in no case should an affiliate manager compete in the same business as their affiliates. They have access to very sensitive information, and this is a trust industry.”

Given recent flap over affiliate managers at the big networks leveraging affiliate strategies to start competing affiliate sites, this is a fair warning. If you’re concerned, simply ask your OAM to add a noncompete clause to your contract. Many already include it. Some avoid even the appearance of a conflict of interest by working with only one client in each type of industry. Others count their expertise with multiple, similar programs as their strength. The choice is yours. Meanwhile, the lure of the money that can be made from the OAM price tag is already leading to some problems, as a few OAMs overload their plates and end up shortchanging everyone.

“You need two people full time, or four people half time to fully service one affiliate program,” Figueredo says. “The quality of work required to have a really robust and aggressive program comes out to that amount of work, at least.”

For FreelanceWorkExchange.com, adding one more was the perfect number. “Greg [Rice] has done a great job of taking on all the important tasks that had been neglected in the past, from liaising closely with affiliates and managing bonus schemes, to writing our affiliate newsletter and recruiting new affiliates,” says FreelanceWorkExchange.com’s Palmer. “The hardest part of the process was making the decision to let an outside party handle such an integral part of our business. But once that decision had been made, the only issue was choosing the right consultancy for the job. I didn’t want to find myself paying high fees to a company that just delegated our account to a junior with little experience. We were looking for someone who could deliver high-level expertise at a reasonable cost, and that’s what we found with CommerceMC. In every other respect, it has been pluses all the way – we now have a more professional and more efficient program that is attracting new affiliates daily.”

JENNIFER D. MEACHAM is a freelance writer who has worked for The Seattle Times, The Columbian, Vancouver Business Journal and Emerging Business magazine. She lives in Portland, Ore.

Relationship Manager Needed

Connection, communication and commitment are the cornerstones of a good affiliate marketing relationship.

I’m looking for someone to share my life with. My life is busy, complicated and filled with people who are looking to me for advice on relationships. I spend all day helping others make meaningful relationships, only to come back the next day and start all over again. I’m not in it to make a match for myself, but to help everyone around me make a match. Why, you may ask. The answer is quite simple: As an affiliate manager, that’s my job.

I manage affiliate marketing relationships for an online personals site. I’ve managed affiliate relationships for a number of years, and I’ve come to realize that what I do for work feels a lot like dating. For instance, every day I search for someone special who shares my goals and is willing to work as hard as I am to reach them. I look for someone who knows that an affiliate relationship must be built on communication, and sometimes compromise. I want to find someone with whom, in the end, I hope to make a successful match to ensure a long-term commitment.

As an affiliate manager, I recruit people and companies to join my program, and these affiliates recruit others to join the site. These two objectives are inexorably linked. The stronger a bond I create with my affiliates, the harder they will work for me. I believe in my affiliates and, above all else, I believe that I should invest as much as I can into establishing quality affiliate relationships.

I would like to share five essential tips that have helped me build successful and profitable relationships with my affiliates.

Provide Attractive Creative

It is important for an affiliate program to have fresh, well-designed creative in a variety of sizes and styles. Many affiliates judge the value of a program by the way its creative looks. It’s important to remember that a program’s creative reflects not only on the quality of the program, but also on the quality of an affiliate’s site. After all, affiliates’ sites are your first line of defense, and establishing trust and rapport with their visitors is vital.

In a lot of ways, this is like searching through your closet and picking out your best-looking outfit, getting a haircut and washing the car before you pick up a date for a nice night out. If you don’t look like you care about how you present yourself or the way you feel about your affiliation, it’s going to be difficult for your relationship to take root and bloom.

Communicate

Communication is the cornerstone of any great relationship. Not only does communication take patience, it also requires that we listen to the needs and concerns of others; it’s a two-way street. Affiliate managers need to make sure that they ask their affiliates for tips and suggestions and give advice accordingly.

If something is working well for your company, share it with your affiliates. If you’re an affiliate stuck in a rut, call your affiliate manager and talk to them about looking at your site to find ways to push the needle. In the words of recently retired Loyola University Chicago professor John Powell, “Communication works for those who work at it.” If you work at communicating with your counterparts, you will be able to increase your earnings and give your affiliates incentive to remain loyal to your program.

If you work with a network that does not share affiliates’ personal contact information such as phone numbers and email addresses, this may be a little more difficult. However, you can still make sure that you provide affiliates with the easiest ways for them to contact you. Give them all of your email addresses, phone numbers, instant message handles and, if you operate a blog, the blog’s URL. But don’t let that be all. Most networks still allow you to send out emails, newsletters and promotional offers, so take advantage of this. It is important to make sure that your communication is of the highest quality and will add value to your affiliates’ promotional efforts.

Be Available and Accessible

I am constantly receiving email and phone calls from affiliates who are so grateful that we make ourselves available to them. Nearly every night before I go to bed, I check my email; when I have new messages, I try to respond to them as soon as possible. A number of our affiliates run their sites as a side business and usually work on them after-hours. Therefore, if I can expedite my responses and make an affiliate’s work easier, our program will benefit.

Be Honest and Up Front

Never make promises you can’t keep. This is the quickest way to destroy relationships. When you are honest and up front about expectations and goals, both sides will be more willing to foster that perfect team of manager and affiliate. Give More Than You Receive In a very real way, being an affiliate manager is like being a big brother to hundreds of people. My job is to fight for the needs of my affiliates. If an affiliate needs more creative, then it’s the manager’s job to make sure the affiliate gets it. Above all else, managers should always be looking for ways to give more to affiliates – more time, more commissions, more of whatever they need.

Gone forever are the days when affiliate managers and affiliates could ignore one another and remain successful. Relationships in the affiliate marketing world take a lot of work and must be managed well in order to succeed. If you want your affiliates to work for you, start working for them. Do more than send monthly newsletters or mass emails, although those are a good start. Constantly review affiliates’ sites and look for ways to improve them or to help affiliates with any errors they may not be aware of. Then call each of your main affiliates and those with potential to be top affiliates. Develop that personal relationship and help them to grow their programs.

We would be smart to keep in mind the words of entrepreneur and author Dr. John C. Maxwell: “If your focus is on what you can put into people rather than what you can get out of them, they’ll love and respect you – and those attributes are great foundations for building relationships.”

JAMES GREEN is customer acquisitions manager and heads up the affiliate program for MingleMatch, Inc., a division of Spark Networks plc. Originally from Utah, Green formerly worked for 10xMedia and 10xMarketing.

A Failure to Communicate

There’s plenty of communication, but most of it’s ineffective.

Communication at its most basic level is the exchange of ideas and information. Seems simple, right? Like most things that involve people and processes, it’s not always as straightforward as it appears. Communication is part art, part science, part X factor. Getting it right is not easy. And when things go awry, it can be a hugely frustrating experience for all involved.

This appears particularly true in the online marketing space where the ability to clearly and effectively convey and share information between various groups is hampered by complexities, technology and just plain information overload.

In order to operate effectively, publishers need to get creative materials and up-to-date offers from hundreds of advertisers. Merchants and advertisers often rely on affiliate networks to act as the middleman in contacting their publishers. Publishers need to deal with online agencies and communicate with the networks to track their commissions. The networks have to stay on top of both their advertisers and publishers. It’s very complex and can become difficult.

“The state of communication and general communication throughout the industry is a big problem. It always has been,” according to Linda Buquet, an affiliate management consultant and president of 5 Star Affiliate programs.

That sentiment is prevalent.

“I believe in communication advocacy and relationship marketing – affiliate marketing is lacking that,” says Richard Lewis, president of ReturnOnAffiliate.com.

“Communication is a big issue in the community,” says Adam Viener, president and CEO of search marketing firm IMWave. “On one hand, each affiliate manager wants to communicate better and more often with affiliates. But affiliates want to deal with hundreds of merchants and yet they do not want to have to deal with everyone.”

Viener adds that there is information that is critical to his business that needs to be more effectively communicated to him, but it is often buried in a mountain of other communications that are informational but not urgent or necessary.

“I need to know if there is a change in the terms of an agreement or if someone I’m dealing with is moving – those are the kinds of messages that if I don’t see, I’ll lose money. But many of the messages I get are about opportunities to make more money,” Viener says.

Email Overload

There’s no lack of information available to everyone and methods abound for getting your message directly to your intended recipient, including email, RSS feeds, instant messaging, blogging, newsletters and even the telephone.

If you’re like the average connected person, or the average online marketer, email is your preferred mode of communication and your inbox is overflowing – even after the junk and spam mail filters have done their jobs. The average online marketer is likely to receive hundreds of emails per day.

IMWave’s Viener claims that at one point in early February, his inbox had more than 2,100 unread messages – dating back to November 2005.

“Every once in a while, I miss an important message and I’m not notified when there is a new message. That’s why instant messaging is so good for me,” he says.

That’s what prompted him to create the Affiliate AIM List (affaimlist.com), a list of the AOL Instant Messenger handles of people in the performance marketing space. Members opt to sign up and are then added to the buddy lists of all other members. That allows everyone on the list to see who is offline or logged into IM and then contact them directly (see Revenue March/April issue).

The Affiliate AIM List was created by Viener to facilitate communication among the many different parties comprising the affiliate community. Viener, a longtime fan of AOL Instant Messenger, thought the communication tool would be a great way to foster better and more frequent communication between people.

The list is not a moneymaking vehicle but more of a community service, Viener says. To date, it’s been well-received, and has 250 members. In April he launched AffiliateSkypeList.com as another way to boost communication.

“There has been a dichotomy between merchants, who want the most communication, and the affiliates, who want the stuff, but feel it’s very hard to control the volume,” Viener says.

Getting Personal

Instant messaging works for many, but Shawn Collins, president of Shawn Collins Consulting, says that IM is a more personal communication tool and that using it to send out mass IMs is irritating, impersonal and turns him off.

What irks 5 Star Affiliate’s Buquet is spam. “First and foremost with affiliates is reading emails and not knowing if they are spam they should be filtering or an important program announcement,” she says. “Then you end up having to go through the junk filter.”

Buquet adds that even with all the email rules and filtering offered by most applications, many affiliates still complain of being overwhelmed and bombarded with emails and unfortunately, “some affiliates aren’t very good at organization.”

On the flip side, most program managers don’t think beyond using email. They continue to contribute to the flood of email as it’s the easiest way to communicate quickly with a large group of people.

“With a lot of the affiliate managers, it never occurs to them to go beyond email and that thinking is flawed in so many different ways,” Collins says. “People are not opening email. How about picking up the phone more and engaging affiliates? Also, there’s RSS or direct mail. Just touch base with affiliates on a regular basis.”

He says that it’s also easier to catch less-than-scrupulous people on the phone. “If you have a reason to believe that someone is doing something questionable with affiliate links, you should call and ask them questions,” Collins says. “You can tell by the tone of their voice and the way they deal with you. It’s a much easier way to get a read on someone when you are communicating with them by phone than when they are sending you a prepared statement in an email.”

According to ReturnOnAffiliates’ Lewis, it’s not about how many parties you have to communicate with, but rather the effort that is put into those relationships. “Affiliates often feel like they are just a number,” he says. “I believe affiliate managers will get more out of affiliates if they communicate on a professional level and understand the person they are dealing with. There needs to be more respect for each other’s needs and that includes communicating in a way that is best for each affiliate. For some, that might be a phone call. For others, it might be email and still for others, newsletters.”

There are several things Lewis is unsure of when it comes to the fine art of communication, but one thing he’s sure of, “Communication is the end and the start, and it has to be free.”

Monkey in the Middle

But sometimes it’s hard for any two parties to interact directly with the networks, which are often acting as the middlemen between merchants and publishers.

“The networks get in the middle of merchant-to-affiliate communication to impede direct communications,” Buquet says. She suggests RSS as a way to get around that problem.

“One of the solutions that is an important piece of the puzzle is that the networks and the merchants aren’t using enough RSS,” Buquet says. “But it’s a chicken and egg thing. Not that many affiliates are using RSS feeds, because not that many merchants offer them. And merchants aren’t offering them because affiliates aren’t using them.”

LinkShare also noted the communication gap as an issue at the company’s annual LinkShare Symposium, held in January. Then senior vice president Steve Denton, who has since been named president, offered up some possible solutions from the affiliate network. One of these was a future version of its platform that requires publishers to read their messages right after logging in to the interface, and would not permit them to check other things until they view the messages.

Utilizing the Forums

Many industry watchers claim that forums offer a good way to communicate with partners. A multitude of them exist, and most often companies with big programs have their own designated spaces on these forums to directly relay information to their affiliates and partners.

But some say that many of the bigger, more established forums have taken on a culture of mean-spiritedness. Many blame anonymity for that. While the ability to post under a screen alias provides some freedom – especially if you are criticizing a company you do business with – it also can be abused by others to make unsubstantiated claims.

“If you are saying something on a board, you need to let people know who you are to be taken seriously as a professional and have others value the board as a business tool. Otherwise, it’s just a lot of people trying to point blame rather than debating important issues. There’s no real value to that kind of communication when you don’t know who is asking the questions and who is providing the answers,” ReturnOnAffiliates’ Lewis says. His social networking site started in January 2006 as an alternative to existing forums.

Several sources declined to speak on the record about specific forums for fear of public recrimination. However, many sources that requested anonymity cited ABestWeb.com as an example of a space they did not consider overly friendly or tolerant.

“There are all different types of forums and the mood of the forum is usually much like the personality of the forum leader. It’s like corporate culture based on leadership. If the guy at the top of the company is mean and hard to deal with, then likely so is the company. On the other hand, if someone is an empowering leader, that filters down. The culture is not only that of the forum owner and administrators, but the moderators as well, since they typically have the same ethics as those that hired them,” says one source, who asked not to be named.

Buquet, who is the founder and moderator of the WebProWorld affiliate forum, as well as the moderator of the affiliate forum at Search Engine Watch, posts regularly on approximately 30 affiliate and webmaster forums per month, answering affiliate marketing questions from both affiliates and merchants.

Often called the “Forum Queen,” she says it’s a well-known fact in the community space that one of the best ways to gain attention and notoriety for a forum is with flaming and saying something negative about a popular person or figure. “Sometimes the nice forums are not dicey or exciting enough for some people,” Buquet adds.

For merchants to cut through the clutter and noise in forums, she says, the most basic rule is to choose to participate in a forum that is moderated. Otherwise, the forum can turn out to be a “spam house” and merchants will just be lost in the promotional noise.

One idea currently floating around is working with the bigger affiliate networks to create their own proprietary mini-social networks. The way it might work, according to one proponent at an affiliate network who asked not to be named, is that the networks would offer all the communication facilities and tools used in the existing industry forums (blogs, mail, message boards, etc.). But the main topic of discussion would be issues related to the network rather than general performance marketing subjects.

“It could build value for affiliates and bring the merchants and network closer to affiliates,” the source says.

However, if you have an opinion or information that you’d like to communicate, but aren’t interested in expressing in a more public forum setting, there’s always blogging.

Blogs don’t need to be public. Merchants or affiliate managers can set up a blog with an RSS feed that is sent out only to a specific set of individuals. Many likened this approach to an updated version of a newsletter. Such blogs can be used to convey information about a program, announce changes in creative, publicize new promotions, highlight top performers or offer tips.

Personal blogs by people in the industry also allow communication of ideas.

“Anyone can blog,” Lewis says. “There’s no gatekeeper and the blogger can share their feelings about their work and the industry without too much worry of backlash.”

Sharing Is Caring

Still, many in this market space claim that giving up any information about their business is harmful. Because the barriers to entry in the online marketing space are relatively low, revealing the secrets of exactly how you achieved success is not seen as smart business (see Revenue Volume 2, Issue 7).

But others believe by sharing information you will help the industry grow and thus ultimately achieve even bigger success for your own company. Collins, Buquet and Lewis all claim that is not just part of their personal philosophy, but a key component in how they conduct their respective businesses.

Buquet, who launched her forum in July 2005, says it’s “goal oriented” to promote “positive success.” She wants her members to work together and share ideas.

“It’s an interesting human phenomenon to do things for the right reasons,” Buquet says. “The more you give, the more you receive. I try to empower people.”

Collins agrees. “People don’t really see the need or benefit to help people. It’s way too easy to be selfish and keep secrets. But sharing really does pay off. Giving benefits the overall industry and leads to more quality programs,” Collins says.

He attributes much of the success of the twice-yearly Affiliate Summit conferences he co-hosts to helping others. “I think I did the right thing,” says Collins. “I shared with people, without giving too much away and my business is growing. It’s a pay-it-forward thing.”

Be a Mentor

Collins has been helping people on an informal basis for years and now he’s working to formalize a mentoring program that would have industry leaders working directly with others. The idea is that the leaders would share their experience and knowledge, acting as role models and offering inspiration.

Collins says it’s a grassroots effort that started in 2001, when 30 online marketers in the New Jersey area would get together and simply talk about issues. He claims it spread to other regions, but was never formalized and eventually sort of faded away.

“It would be great to resurrect it. It became too onerous to organize people for the meeting, the meeting space, the food, etc., so it just fell off,” Collins says.

With the explosion of social networks, Collins believes that people are looking to connect in a more personal way with other like-minded folks. This time around, he’s looking for a more one-on-one connection and likening the new idea to the Big Brother Big Sisters mentoring programs.

His idea is to get industry leaders in various geographic locations to agree to participate and then connect them with someone within a 20-25 mile radius. The two would meet periodically to discuss whatever business issues they choose. Of course, people in competing businesses would not be paired up.

“It sounds like a wonderful idea. People respond best to people they can relate to, as well as if they care about you as a person,” says ReturnOnAffiliates’ Lewis. Beth Kirsch, group manager of affiliate programs at LowerMyBills.com, is working with Collins to get the program off the ground. “I’m happy to do anything that will improve communication between parties in the online marketing space,” says Lewis.

Collins is also pairing up people at his conferences. He’s attempting to facilitate the schmoozing aspect of the conference by holding formalized social networking sessions that allow attendees to request mini-meetings with other attendees they would like to meet. It’s like speed dating for the business conference crowd. By starting a dialogue between the attendees, Collins believes he’s helping improve industrywide communications.

Most agree that despite the lack of communication in the industry, things are looking up. There are many vocal performance marketing players from all areas working hard to rectify the problems using a combination of existing tools, new ideas and emerging technologies. This could bring some much-needed sanity and repair the communication breakdown.