Marketing in Action: Q & A with Seth Godin

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Video + Twitter = Seesmic

I recently had to stop Twittering. It was awful. The doctors said I would go blind.

Seriously folks, even for as big of an Internet geek as I am, I was completely overwhelmed by the massive flood of 140-character messages from friends and colleagues that bombarded me 24 hours a day. So at the time of this writing, I’m off the Twitter-pipe, for now.

But just when I thought I was out, my friendly editor/publisher of this very magazine suggests that I do my next Innovations piece on another new, hot social tool, called Seesmic. So much for cutting down on my information load.

Talk about brand new – Seesmic only recently opened its doors around the end of November 2007 and proceeded to only invite about 300 users. Luckily, I know people (plus I know how to beg), so I was able to get my hands on an exclusive “pre-alpha” invitation code.

You’re probably wondering what Seesmic even is at this point, and why you should care.

Allen Stern of CenterNetworks. com sums it up nicely: “Seesmic is a video -sharing service just like YouTube, Vimeo, Viddler, etc. The difference is that Seesmic has stripped away much of the ‘extras’ that come with the other services.”

That’s a good start, but I think the best way to describe it is “Twitter plus video.” So instead of writing short text posts about anything you want and sharing it with your friends and followers, you instantly and easily record short videos, which are then shared with the community.

Imagine picking up the phone (you remember those days?) and calling one of your friends with a short thought about something on your mind. Seesmic lets you do that (sans phone), using your webcam, and gives you the option to share that short video message around the globe with your friends and colleagues, in an instant, all at once.

Getting started is easy. If you have an invitation code, you can register and immediately begin recording and sharing videos. You will have to have a webcam attached to your computer, of course. Once your video is recorded, you add a title and description and publish it to the community.

Now your video post is shown to the public, or you can choose to have it just sent to friends. Once published, other users can watch your video and they can reply to your video with their own, and so on “

Browsing the Seesmic site as it stands during pre-alpha is not so great. The Ajax-style community scroller area which shows each user’s video entries is slow and cumbersome at best. However, as mentioned earlier, they are in pre-alpha, so by the time this piece is published it will hopefully be more usable.

Your first video post is up; now what? That’s where the social aspect comes into place. Just like Facebook or MySpace or Twitter, you can choose to “follow” or “friend” other users. By doing so, you’ll be able to “watch” their Seesmic streams specifically.

To explain to you why this is innovative, I asked the exclusive base of testers for Seesmic what they thought. In my first- ever video on Seesmic, I asked the question, “What do you like about Seesmic?”

I recorded the short video (no script) asking for video responses and sat back and waited. A few minutes later, the answers started to pour in. Here are some of them. (Note: These are transcribed from videos in Seesmic.)

“I like Seesmic because it’s an unedited stream of consciousness for people. You get to know the real person.”

“Seesmic is the first application I’ve found that makes video blogging easy. I never really got into video blogging until Seesmic came around; I’m a podcaster.”

“Seesmic is like getting a book from a library with notes from other readers in it. It’s collaborative learning.”

“The reason I like Seesmic is because I don’t have to send you an email. I can send a video reply.”

“I am finding that I am getting to know people better and more quickly. It’s not just me jabbering into the camera. It’s me interacting and listening to others in video form.”

“I’m not sure I love Seesmic. I definitely fancy it. I would definitely sleep with it.”

Although I love to try out new social media technologies and I’m not married to any one, I certainly do enjoy the dating phase. And right now I’m anxious to see where my relationship with Seesmic goes.

Jim Kukral is an online marketing veteran whose most recent project, Scratchback.com, brings the fun back into making money online. Read Jim’s blog at www.jimkukral.com.

Looking for a Few Good Affiliates

Linda Woods, CEO of PartnerCentric, an outsourced affiliate program management group, says that affiliate recruitment is the hardest thing affiliate managers have to do.

“There is no software that spits the names of affiliates out,” she says, adding that there is no easy way around the arduous process of finding, meeting and building a relationship with the appropriate affiliates.

The process is time-consuming and multifaceted, and the AffStat 2007 Report confirms that recruiting is definitely an issue for affiliate managers. Nearly one-third of respondents said their biggest challenge is recruiting new affiliates. And even when affiliate managers do find the right affiliates, it does not mean they will join or implement the program actively.

When researching affiliates for their programs, managers should apply common sense regarding the products’ audience and industry. For example, Woods says that an affiliate manager for a high-fashion merchant should not look for coupon or discount affiliates (because they can cheapen the brand). Instead she suggests they look to loyalty/incentive sites, such as MyPoints or UPromise, which do well with big brands.

However, loyalty affiliates are a hotly debated topic in the industry. While some affiliate managers find them useful in helping with repeat customers, others question some of their practices. Many claim they often override or subvert other affiliates’ IDs, which results in affiliates not being credited for sales, commissions and leads.

The conventional wisdom behind recruiting affiliates has been that merchants should focus on the top-performing affiliates that fall within three concentrated categories: incentive/loyalty shopping, coupon/deal sites and search. For this reason, there are top-heavy programs, with a small group of affiliates representing a huge majority of traffic.

Unconventional Wisdom

But David Delisle, principal of The Partner Maker, a contact management and recruitment system developed specifically for the online marketing community, believes the “focus on the top affiliates” approach has done more harm than good for affiliate marketing. That’s because top producers are continuing to break away from being compensated as CPA affiliates (on pure revenue share). These affiliates are compensated for access to their audience, which consists mostly of repeat customers.

The result is that affiliates like eBates, Upromise and MyPoints look and act more like media companies than affiliates, Delisle explains. If merchants are interested in new-customer acquisition, they should be weary of these types of affiliates.

Delisle points out that when merchants focus only on the top-producing affiliates, they are ignoring the rest of the Web, and recommends marketers shift gears and pursue smaller affiliates in order to tap into the long tail.

The amount of smaller affiliates is positioned to grow, because today virtually anyone who uses the Web has a means to become an affiliate, with tools like PopShops – a product catalog “research tool” where affiliates can find relevant products to their niche. It allows an element of discovery based more on relevant inventory to an affiliate’s niche and less on criteria such as commission structure.

Angel Djambazov, marketing and business development manager of PopShops, says that an affiliate manager can use their PopShops product catalog as a recruitment tool to gain new niche affiliates by seeing the activity within the tool set among certain products.

The emergence of social networks offers another way for affiliate managers to recruit affiliates who are ambassadors of their brand. CEO of Molander & Associates Jeff Molander says This- Next and Stylehive are social networks that focus on the discovery and sharing of new items and offer marketers an upside that is “tremendous and untapped.”

Molander says marketers need to understand some products work better than others for social media strategies because they are natural fits for the “word of mouth” or “wisdom of crowds” models. For example, Wine.com’s community site works well because people buy wine using recommendations, and Patagonia’s community site is effective for its “highly conscious” consumers. But for a retailer like Gap, a social networking model could be less compelling, Molander explains.

Networks as Necessity

Another way to find affiliates for a program is through networks such as Commission Junction, LinkShare and ShareASale, because the networks can offer exposure to lots of affiliates and provide a wide reach.

But PartnerCentric’s Woods points out that “reach” is a misleading word – “what they have is a pool of affiliates, which is better than nothing.” Woods says most inexperienced managers rely on networks to find affiliates, but there are problems with this strategy. For one, some networks only promote new programs in front of affiliates one time, such as in a newsletter mention. The rest of the time the program is simply listed as a text link within a category.

Another problem is that networks list programs by performance – so a new program is ranked at the bottom because there is no performance data, such as the earnings per click (EPC), until the data shows up, which can take up to three months. If an affiliate is choosing a new program from a category, they will select the one that offers the most potential.

Linda Buquet, president of 5 Star Affiliates, an affiliate marketing consultancy, says another consideration is the 95/5 rule, which means that only 5 percent of the affiliates pulled from a network will be productive and active. And once these affiliates are recruited, to a large degree, they still require hands-on personal contact.

Affiliate managers cannot be dependent on networks, and Molander warns that affiliate managers cannot recruit affiliates by plugging into a network and walking away, because that strategy leaves money (affiliates) on the table.

Although networks are not in Roger Snow’s top three ways to go about finding affiliates, the director of marketing at Snow Consulting, says there are advantages. Networks are beneficial because they allow managers to use keywords to target specific affiliates as well as for starting programs because they announce the program to all affiliates.

Once affiliate managers launch their programs, they have the challenge of proactively building and retaining their publisher base. Networks can help affiliate managers who do not possess the business development and affiliate marketing skills necessary with these early recruitment tasks.

Depending on their vertical and brand, merchants must understand the overall online marketing landscape and whether or not a performance-based relationship will result in sales/leads. Kerri Pollard, general manager of Commission Junction, explains that Commission Junction has built a successful publisher sales team and sales engine that helps with this time-consuming work.

Another reason to work with networks is they can provide an affiliate manager with background regarding the ranking and quality assessment of a publisher. Pollard explains that Commission Junction designates qualified top performers as CJ Performers – noting that such insight isn’t available when managing an in-house program.

Most of the networks hold events with the core objective of getting merchants and affiliates together so productive networking can occur. LinkShare has its Partnership Summit and Symposium; ShareASale’s annual meeting is ThinkTank; DoubleClick Performics has its annual Client Summit; and Commission Junction puts on its annual Commission Junction University (CJU).

Research and Relationships

For finding affiliates, there is also good old-fashioned search engine research. A good way to find potential affiliates is to type the keywords pertaining to a product into Google and check out the results on the first few pages of natural search results. Snow says one of the ways he finds affiliates for his client, DiscountWatch- Store, is to Google terms like “watch review sites” to fi nd highly ranked and highly trafficked sites regarding watches.

Snow also looks for affiliates who use PPC as means to drive targeted traffic to their site because it shows they are actively marketing their site.

Woods agrees managers need to look for sites that come up in a search for particular keywords – “if they are advertising your competitors, reach out with your affiliate plan.” Woods also recommends finding affiliates through software tools such as Syntryx, which show sites that are linked to your competition.

But the easiest way for managers to recruit affiliates is to tap into the relationships that they already have established. Woods explains it’s important to have an experienced full-time manager who knows people in the industry because affiliates enjoy working with people they know. To foster the relationship, managers need to recognize affiliates who do well by giving them kudos, like financial rewards or tickets to a sporting event.

According to Snow, one of the ways affiliate managers can get to know affiliates is to join communities where the best players are – and recommends that managers become vocal participants in a large online marketing forum such as ABestWeb.com, where lots of savvy affiliates participate in discussions.

Affi liates are more eager to join programs they trust, according to Haiko de Poel, Jr., president of online affiliate marketing forum ABestWeb.com, which has more than 39,000 members.

de Poel says ABestWeb is an excellent recruiting medium because it is in almost real time and there are no spam filters. He also says that trust is a big issue in recruiting and ABestWeb works hard to overcome that challenge. According to de Poel, a couple of years ago some affiliate managers did not give out their real names on ABestWeb and the community reacted negatively. Now affiliate managers post on ABestWeb with their real first and last names. de Poel says that sometimes affiliate managers will come into a forum to ask a question and the community won’t talk to them until they state their real name.

There is an accountability factor when an affiliate manager reveals their name and the company they represent. “There is a trust that is built and affiliates feel like they are partners and not just affiliates,” he says.

Once a user gets involved and posts regularly, others see where that person stands on issues. He says this translates well to the real world because once they meet in person, there is instant credibility and a symbiotic relationship.

Many use forums and blogs to recruit affiliates. Buquet, who was an outsource affiliate manager but now specializes in recruitment and promotion, explains that word of mouth is instrumental to her success for finding affiliates – she recruits through her blog, her forum, her main site and through affiliate and online marketing forums.

By only representing tried-and-proven affiliate programs that have been tested, Buquet says she has earned a loyal following of affiliates and a good reputation. She says she turns down 99 percent of merchants that want her help recruiting affiliates because she’s looking for programs that have high payouts, long cookies, good conversions and high-integrity marketing practices.

There are outsource affiliate program management companies that can offer marketers access to top affiliates – companies like PartnerCentric, GTO Management, NETexponent and AMWSO.

Chris Sanderson, director of AMWSO, uses The Partner Maker, a contact management and recruitment system. He says the system allows him to build his own affiliate base so that when he launches a new program, he can review the affiliates in the system and contact those partners that would be a good fit. And because he can store multiple sites and marketing profiles for each partner, it also means he can contact the correct partner and not send a generic email.

Cold Contacting

The most popular methods for cold-contacting affiliates are email and the telephone.

Snow says he thinks most affiliates don’t want phone calls, and suggests sending emails that won’t be perceived as spam. “Don’t send them 4,000 words – just point out the benefits of the package [like commission, cookie duration, product data feed]. You only have one or two seconds – it’s just like selling door-to-door.”

The AffStat report showed that 30 percent of respondents believe email is the most effective method for recruiting affiliates, and 18 percent believe it is through the phone.

Affiliate Summit co-founder and affiliate program manager Shawn Collins says if sites don’t include an email on their contact page, affiliate managers can get the email addresses by looking up the WHOIS record for the domain.

Top affiliate Scott Hazard says that as a high-profile affiliate, he receives multiple emails per day from affiliate managers who want to recruit him – about half are personalized emails and about half are bulk emails. Hazard says some ask him what it would take to get them into the program – they try to find his pain point.

Make an Impression

To stand out, affiliate manager Collins has found fun items to send affiliates. In the past, he’s mailed postcards and has had good results with “Send a Ball,” which is an alternative to a greeting card. The ball is delivered via the USPS with the address, postage and personalized message right on the ball.

PartnerCentric’s Woods says face-to-face contact is essential for meeting new affiliates. She suggests affiliate managers get out to events and conferences like the two-yearly Affiliate Summit and Webmaster World. “If you sell lawn chairs, you need to go and meet the top home and garden sites,” she says.

When attempting to attract affiliates to a program, most experts agree money is a big motivator, although Woods claims it is not always the most important factor. The commission has to be at least as good as what the competition is offering, but affiliates look for programs that offer a variety of elements.

For one, a program needs to be well-managed because it’s important that affiliates are serviced and have their commissions paid. “The bane of affiliates’ existence is to have to chase down their commissions,” Woods says.

Often affiliates join programs because they trust the manager and they know the program won’t become “stale” – meaning that applications will be approved, new links will be put up and there will be email communication back and forth as needed, according to Snow.

Based on feedback received at ShareASale’s ThinkTank conference in October 2006, shoe retailer Chinese Laundry made changes to its affiliate program, including better ways to link, promotional banners and affiliate specific coupons. Chinese Laundry’s CIO, David Wright, says they starting seeing improvements right away and their conversion rate went up 600 percent – “from a couple of affiliate sales a month to 15 in one day.”

The conversion rate has to be good because many top affiliates are constantly evaluating the real estate on their site. Snow explains “it’s all about conversion,” and top affiliates do a lot of research because it is their livelihood.

Affiliate Hazard is a firm believer in doing extensive research before joining a program. For programs in the ShareASale network, he can look up the EPC and the average commission and then figure out the conversion rates. He also notes that it’s important for affiliates to try out the buying process before they start promoting a program. If the merchants make the buyer enter personal information before they state the shipping charge, if the production descriptions are poor or if things are hard to navigate, the chance of sales abandonment increases, which can ruin affiliates’ commissions and reputation.

To help merchants understand problems with their site from an affiliate perspective, Hazard recently began offering a site evaluation service to merchants. He looks for hiccups in the checkout process and analyzes the commission structure to see if a competitor pays more. When joining a new program, Hazard’s most important criterion is a very unique product line – something not readily available at other sites. He also looks for programs that fit into his themed websites.

With new offerings for connecting affiliates and merchants, and new tools that make it easier for publishers to become affiliates, in some ways affiliate recruitment is becoming easier.

Collins thinks recruitment is easier today than when he started 10 years ago. At that time, every person he approached had to be sold on the overall concept of affiliate marketing. He says, “it’s just a matter of breaking through the clutter and selling the reasons why the affiliate program is best.”

Still, Collins says it’s the activation and retention of affiliates – not the recruitment – that is the hardest part of being an affiliate manager. He says he believes that because most affiliates don’t focus on activation and retention, they “think” recruiting is the hardest task. But according to Collins, once you’ve got the affiliate, you have to know how to keep them and ensure they are productive.

Fracas over Facebook and Trepidation with Twitter

Since Facebook was featured on the cover of Newsweek magazine less than a year ago, it’s been called everything from the social platform that would revolutionize marketing forever, to an overblown and overhyped experiment.

Industry watchers say the truth lies somewhere in the middle. Although Facebook certainly offers marketers global reach, desirable demographics and powerful “endorsed by your social graph” capabilities, its recent attempts to transform online advertising have either fallen flat or failed completely.

Facebook’s increasingly worldwide audience is one of its most valuable assets. Its rapid international growth is especially remarkable because the majority of countries – including Turkey and Israel – experiencing speedy expansion do not speak English as their primary language.

More than half of Facebook users are not enrolled in college. The fastest-growing demographic is the over- 25-years-old group. In fact, comScore Media Metrix found that more than 41 percent of all Facebook visitors are 35 years or older.

Facebook has long been considered the social network of choice over MySpace.com for those with higher educations, but recently it overtook MySpace in terms of daily page views and reach, according to Alexa. The boost has been enough to make Facebook the sixth-most-viewed website in the world. Hitwise finds that U.S. traffic to Facebook increased 80 percent from November 2006 to November 2007. However, traffic to MySpace was almost five times greater than to Facebook in November.

Speculating on the valuation of Facebook was an industry pastime this summer until Microsoft bought a 1.6 percent stake in it for $240 million in October, giving Facebook an estimated value of $15 billion.

Critics wonder if Facebook is worth what Microsoft paid for it. Many say there is no way to justify the value unless Facebook can grow into something much more than its current iteration.

But with estimates that spending by advertisers on social networking could almost triple to more than $3.5 billion globally by 2011, it’s not surprising that companies like Microsoft don’t want to miss out on the marketing opportunities.

Many Marketing Methods

Advertisers and marketers have plenty of options when it comes to Facebook. One is “Insight,” which is collected marketing data of social demographics and psychographics that Facebook provides to advertisers in an aggregated, anonymous way.

Another feature is “Pages,” which is the capability of businesses to host pages on Facebook for various brands, products and services. Brands have long attempted to build their own profile pages, with little success of getting past Facebook’s identity moderators.

Advertisers can buy “Ads” that can be targeted based on member profile data such as location, interests and activity. They simply write an ad, decide where they want to drive traffic, choose a target audience and purchase them on a CPC or CPM basis.

“Social Ads” are another option; they pair targeted ads with related actions from a user’s friends – allowing Facebook members to sign up as “fans” of an advertiser and then have their names and profile photos displayed alongside the marketer’s ads on their friends’ Facebook pages.

Online marketing consultant Sam Harrelson says he ran two Social Ad campaigns and spent approximately $500 in all. The return was about $15. He’s disappointed and doesn’t think what Facebook has rolled out so far will ever work or sustain any sort of revenue for advertisers or marketers.

Scott Aikin, president of shopping site Mallicious.com, says that Social Ads are very similar to “Flyers,” Facebook’s original form of ads, which was discontinued in December. The biggest change is that ads now show up in the news feed when attached to a relevant social story, as opposed to only in the left-hand ad space. The news feed, which lets people know what their friends are doing on Facebook and in the real world, is the first page Facebook users see when they log on to the site – making it a key place for ads.

Affiliate Scott Jangro used Flyers to target college-aged women for his Virtual Costume Party app, and says that although the application got tons of page views, they were not highly converting. He thinks it’s possible that Facebook did some analysis on Flyers and slowed down the ones that didn’t have a high CTR, but that’s “just a theory based on that one data point.”

But Aikin says he managed a substantial amount of traffic to his Social Shopping Mall application through Flyers and by advertising on third-party apps. He says that the prices are a little high for the value, but thinks this may change as Facebook brings in more adults.

Accurate Audience

Some think that Facebook’s advertising opportunities are revolutionary. Adware, malware expert and longtime affiliate marketing pundit Wayne Porter wrote a blog on Revenews.com saying that for the first time, advertisers are able to see the interests listed on 50 million Facebook user profiles. “This is groundbreaking if you are a beer marketer, because there are not many places besides Facebook where the average young man writes ‘I like to drink beer’ next to his name.”

Affiliate marketer Carsten Cumbrowski says he believes ad campaigns could be effective for smaller-budget items like ringtones and cell phones because the Facebook crowd skews younger. In general, Cumbrowski thinks Facebook, like most other social networks, “is very limited in terms of the type of ads that work well.”

Others doubt that Facebook is the next advertising gold mine because users don’t have their wallets out on social networks. They are there to socialize. And some think advertisers would have better luck targeting users when they are searching on news or search sites – because it shows intention.

Beaten-Down Beacon

Causing much of a hullabaloo in the news is “Beacon.” It enables the tracking of user activity across a network of external participating sites and then reports that back to Facebook. Activities could appear in the form of “endorsements” (e.g., Harry just bought a book on Amazon), that appear in a Facebook RSS feed area. Facebook said the model was intended to turn millions of Facebook users into a “word-of-mouth promotion” service.

However, in late November, Facebook decided to alter its Beacon feature after attacks from privacy groups and MoveOn.org demanded Facebook stop broadcasting users’ purchases without their consent. The Beacon feature is no longer active for any transaction unless the user clicks “OK” – making it an opt-in, not an opt-out, system.

Consultant Harrelson says Beacon was a horrible idea. “It reminds me of the toolbar apps from 2002.” He believes there were too many concerns over privacy, data ownership and Facebook’s long-term sustainability as a platform “to cause much skirt hiking.”

Another Facebook feature, “Groups,” allows users to organize around a cause or common interest. Groups have several levels of controls associated with them and can be public, private or invite-only, and they can also be hidden from the group directory. Owners can email notifications and communications to all group members.

Jamie Birch, director of affiliate relations for Converseon, a digital Web 2.0 communications agency, says they are looking into having their own group because it would provide an additional venue to communicate with affiliates and educate them on Converseon’s programs.

Facebook Applications

Out of all of Facebook’s offerings, it is the ability to develop applications that is most enticing to affiliates. Launched in May, Facebook Platform allows developers to build third-party applications within Facebook’s user interface. It took off like wildfire because it gives marketers a cheap and effective means of promoting their website to the growing Facebook audience.

As of mid-December 2007, there are more than 10,000 applications, and the most popular apps include Top- Friends, FunWall and iLike when ranked by most engaging as opposed to number of users.

iLike, a music-sharing social network, allows users to list favorite songs and bands on their profiles. It makes money by facilitating purchases of music through iTunes and Amazon. During its first nine months on the Web, iLike attracted 3.5 million users, but on Facebook it added 5 million in just 60 days – proving to advertisers that people are interested in what their friends like.

But the viral success of iLike is not the norm. The dynamic of Facebook’s application marketing has changed because the marketplace has become saturated. Users frequently uninstall applications, and the release of each new application means more applications must fight for attention.

Michael Allen, president of ShoppingBargains. com, a source of coupon codes, released his application for Facebook at the end of September 2007. He says he wishes he had launched it a month earlier during the zenith of user installation and when developers could market their app to an unlimited amount of people. In late August, Facebook changed policies and limited marketing to only 20 people per day.

Allen is hoping to expose Shopping Bargains to new users through Facebook. He wanted to make its deals customizable and easily shareable among friends within trusted social circles instead of forcing people to leave that warm environment.

Mallicious’ Aikin developed the Social Shopping Mall app, which allows users to save coupons they find on Facebook to his site. He explains that if a visitor uses a $5 coupon for ShoeMall through his app on Facebook, Aikin gets 100 percent of that affiliate commission.

Aikin claims he’s glad to have developed an app because it was an interesting learning experience and gave him a better understanding of how to monetize social networks.

Users can find Aikin’s app on Facebook in a variety of ways: through ads, via the application directory, in a Facebook search, on profile boxes, using news feed stories, and on ads on apps that are available through third-party advertising networks. But Aikin warns that even with all the marketing tools available, “the success of your app comes down to the value you provide.”

Jangro, the affiliate who developed the Virtual Costume Party app, had a less favorable experience. He launched his app in October and would “not deem it as successful,” suspecting that current users of Facebook are “not in the buying mind-set.” Jangro thinks that if shopping is not fun or useful enough to gain traction on Facebook, “it doesn’t seem advisable for affiliates.”

Still, Jangro says there is an opportunity on Facebook to build brand, and recommends those who are thinking about developing an app should first focus on one that is entertaining and engaging and then worry about how to monetize it. He thinks if an application name is interesting enough, it could garner adds from curious friends who learn about it on the news feed page.

President of SubmitAWebsite.com Joe Griffin points out there are a plethora of opportunities for advertisers. If a marketer of iPhone accessories wants to reach people on Facebook, he could leverage iPhone Groups, check out the fans of the iPhone Page or advertise based on users’ demographic information or listed interests such as “gadgets, technology, Mac users.”

But many advertisers shy away from social networks because there are reports that they can’t trust what users say in their profiles – they fear people lie about their age or interests.

Consultant Harrelson says he likes Facebook as a social network but doesn’t think it’s a good fit for marketing in its current stage of evolution: “” at this point, we’re still too closely linked to off-line models and metrics that break down when you try to translate them to the social networking world.”

Twitter

Another much-buzzed-about application is Twitter, a free social networking and microblogging service that allows users to send text-based posts of up to 140 characters to the Twitter website via short message service, instant messaging, email or an application such as Twitterfic.

Converseon’s Birch says people feel three ways about Twitter: “You like it, you don’t understand it or you can’t stand it.” Regardless, Twitter has been one of the fastest-growing apps in the history of the Internet since it launched in the spring of 2007.

Marketers such as Birch like Twitter because it offers a new way to share information. It is an additional medium for communicating with his affiliates in the way that they want to be reached.

Affiliates vary in how they get their information: Some like phone calls, some want email once a year, some prefer RSS and some want information as frequently as it comes out. Twitter messages can be received a variety of ways: on Internet- capable devices, the Web IM, and phone – which makes it a flexible solution.

Affiliate managers want to offer affiliates the most up-to-date information in the way that is most convenient for them. The more affiliates know about what is going on with a program, the more they can tailor their marketing, and the more they are able to convert their traffic into sales, according to Birch.

So if an affiliate manager receives a new coupon or hot product from a merchant, they can send a tweet to those who are following the account. For example, Birch could Twitter about a promotion for a specific product – with the message that the first person to sell it gets a 12 percent commission. Birch says that he has incentivized people to use Twitter by offering deals available only through it.

Early Adopters

Another advantage of Twitter is that it is useful for reaching early adopters. Birch says they sent out the Twitter invitation to approximately 100 top affiliates in their 11 affiliate programs and about 40 to 50 affiliates are following it.

Some think Twitter is an excellent tool for reaching affluent, well-educated early adopters and influencers, but not the general public. Brands, such as Carnival Cruises and The Wall Street Journal, are experimenting with it but they only have followers in the double digits – more successful experiments have attracted numbers in the thousands, but nothing significant.

Twitter is appealing to marketers because it and other “presence platforms” are an immediate way for people to communicate their thoughts and ideas. Marketers can leverage it by selling to the user directly or by seeing major trends in the millions of daily public posts.

Harrelson says that as a marketing device, Twitter is great for building brand. “It can be a direct-response-type tool (TwitterLit.com comes to mind), but as a platform it’s much better for getting your name/identity/view/message out there.” Harrelson has been using Twitter since November 2006 and says it has been the source for more network connections than any other activity he’s been involved in, including conferences, email or Facebook. Jangro says Twitter is a good promotional tool for individuals but thinks there needs to be a good amount of people reading the updates. “If you can’t get the users, the marketing value is nothing.” For this reason alone, Twitter may not be on the top of the list when it comes to ways that brands can communicate.

Regardless of which social networking platform online marketers opt to leverage, most industry watchers agree that we are just starting to see the marketing possibilities.

Home Office Advantage

Many online marketers started out working from home as a way to escape the Dilbert-like cubicle farms of corporate life in favor of a flexible schedule. And while these home-based workers may have managed to avoid rush-hour traffic, endless meetings and the watchful eye of superiors, their work life is hardly about hanging out in pajamas.

According to 2000 U.S. Census data, more than 4.2 million people choose to work at home on a daily basis. And while the solitary work life can pose unique challenges for the self-employed, there are even more distinct technical, organizational and social skills needed to be successful (and remain sane) while working from home when you are part of a larger entity.

Online commerce has multiplied the opportunities for working as part of a virtual organization. Since technology (in the form of fast Internet access, file sharing and Web-based applications) has made it relatively easy to earn a living online, virtual office managers should focus on implementing strategies that often differ from what occurs in corporate America. You need to concentrate on sharing documents online, streamlining communications and organizing your time.

Put Your Work Online

In the corporate world of days gone by, workers kept their files on their PCs or on password-only accessible servers, protecting their documents as if they were the launch sequence for nuclear weapons. Now personal lives – through blogs, photo sharing and MySpace – are rapidly moving online, and work life should not be any different.

Making your relevant business documents and files available to peers will increase creativity and enhance productivity. From business strategy papers to spreadsheets to brainstorming notes, sharing documents online is essential to getting input from co-workers who aren’t in the same ZIP code.

Sharing your documents also eliminates the clutter of emailing documents back and forth and the frustration of sorting through folders to find out where you previously saved attachments. Maintaining a shared calendar through Google Calendar or Apple’s iCal can eliminate email strings that attempt to nail down an open time for a conference call.

Virtual office workers don’t usually have an IT department or top-heavy applications such as Lotus Notes to store and share their files, which many workers will consider a blessing. By organizing a common set of online folders, co-workers can quickly survey all aspects of a project and stay on top of progress.

Several secure online services simplify making files accessible to co-workers. Free services Google Docs and Spreadsheets and Microsoft’s Live Folders allow you to store up to 500 megabytes of content, while Apple’s iDrive permits 1 gigabyte of storage. The services enable you to specify the people (via their email addresses and passwords) with access. Subscription services such as Box.net offer additional security, storage capacity (up to 15 gigabytes) and workgroup features for around $20 per month.

“I feel like I know what my team is doing much more than I did when I was in an office,” says Sam Harrelson, general manager for the U.S. for search marketing firm Clicks2Customers. “I can access [what I need] at any time instead of having to go down the hall to ask someone for a document.” Getting into the habit of storing files online and using a Web-based email service also provides access to files when you are away from your virtual office.

Harrelson, who works from his home in Asheville, North Carolina, manages staff in other states and reports to management in South Africa. He recommends putting documents online through social network sites to save time. He and his peers use a private Facebook group to share files and store contact information, thus creating a public Rolodex. Clicks2Customers uses a private wiki to trade ideas, and it also enables individual contributions to be identified. Harrelson also recommends setting up an RSS feed to track a project’s evolution.

Basecamp, an online service developed by 37 Signals, provides extensive workgroup functionality including project management, file sharing and messaging, but at a much lower price than the corporate applications that often require IT interventions.

Bambi Francisco, the founder of Web startup Vator.tv, says her company uses filesharing service Basecamp to manage its software development effort, which is primarily done in Pakistan. The site includes to-do lists, milestone tracking and messaging/ comment threads that can automatically generate emails or RSS feeds. Centralizing all of the files and messages related to a project in a single location will keep everyone on task and makes the necessary information always available.

Controlling Communications

Francisco says written documents and messaging can simplify communications between people with accents and for whom English is not their primary language. Her peers were all born outside of the U.S., and reading an email or online status report can be easier than phone conversations. “Email has never been more important [for her business communications],” she says.

The isolation of the virtual office requires the most dramatic change in work routine and psychological adjustment. For a “people person,” having only the office furniture (and perhaps a pet) for company can create a yearning for the digital approximation of human contact. Virtual office workers need to become comfortable with cyber relationships and appropriately using instant messaging and telephone/videoconferencing.

In many cases, instant messaging is the most efficient method of getting questions answered or discussing a pressing matter. Making a phone call is a commitment – social convention dictates the exchange of salutations, and ending a conversation after just a few minutes can feel awkward. IM doesn’t have these limitations, and keeping an IM window to a peer open enables both parties to continue working in between messages.

Because of the usually immediate feedback, IM is replacing email as the most effective communications tool for virtual office dwellers. Email has become “more of a social application,” according to Harrelson, who uses it as a last resort if a peer isn’t online.

Shawn Collins, co-founder of the Affiliate Summit, who runs his company with partner Missy Ward, from New Jersey while she’s in Florida, also has another employee in Virginia, and some event staff in Colorado. He agrees that his biggest challenge is not having face-to-face interaction with his team. However, he estimates that he only speaks with Ward a few times a week, but emails her at least a dozen times per day. He also says they IM constantly and if one of them is on the road, the text messages are flying fast and furiously.

IM applications such as Skype, AOL’s AIM, and Yahoo or Windows Live Messenger can also be used for internal voice and videoconferencing, but the free services don’t take the place of an in-person client meeting. Vator.tv’s Francisco relies on Skype as her primary instant messaging and voice connection in her home office in San Francisco. Since her co-workers in Denver and Austria also use Skype, there is no need to pay for conference-calling features and the $35 annual fee for a business line enables her to call anyone.

A landline may not be necessary for virtual offices looking to keep costs down. Between Skype and a cell phone, Francisco is able to sufficiently stay in touch with peers and clients. However, virtual office workers cannot fully rely on instant messaging and voice communications. Meeting people in person or at least seeing their faces provides important but unspoken information about co-workers and business associates.

Videoconferencing, which can be done through inexpensive webcams, can provide a greater comfort level with peers whom you rarely or never meet in person. “It’s a visual world, and you want to see images of people,” says Francisco, whose company introduces entrepreneurs to venture capitalists through videos. She uses her webcam in conjunction with instant messaging chats and voice calls during many of her online discussions.

While videoconferencing suffices for many co-worker conversations, meeting in person is preferred when starting new business relationships, although she has signed one business deal without ever meeting someone from the company in person. “For partnerships I like to meet with people,” she says.

A New Approach

Communicating with affiliates who are accustomed to an independent work life can require a different approach. “Affiliates are not required to be good communicators; they just need to build a legitimate site or service that makes money, and they’re in,” says Mike Kansa, an affiliate from Arcata, Calif. Kansa is part of the FlamingoWorld.com team, which started as a one-woman affiliate venture. Connie Berg, the founder, has become a super-affiliate and her business has grown to such successful proportions that she now employs seven workers scattered all over the U.S.

Kansa, who has also worked as an outsourced program manager, says being effective can be more important than personal communication skills. “Today someone could probably grow to super-affiliate status and not talk with a single person along the way.”

Some affiliates who have never experienced cubicle life “may lack the organizational skills of working in a fast-paced, deadline-oriented office,” so the importance of deadlines must be reinforced, Kansa says. But he believes “individuals working from different environments help to add diversity to our industry.”

Organize the Day

Keeping focused on work despite the temptation of a sunny day or laundry that needs to be washed can be too great a challenge. “Some people have been a disaster; they can’t do what needs to be done because of distractions,” says Anne Fognano, the “Momma in Charge” at CleverMoms.com, who left the corporate world in 1999 to spend more time around her children. She finds it is easier to get work done outside of the corporate environment. “I used to have a lot of distractions … people would hang out in the cubicle to chat,” she says.

One of the biggest advantages of maintaining a virtual office from home is the convenience of being able to work at any time. That can also be a downside. The convenience of working at any hour can also be ruinous, and your co-workers may not share the same schedule.

Virtual office workers tend to work more of their hours outside of nine to five than the corporate set. This can be an advantage if you use technical people who live in different time zones, especially the growing number of qualified programmers and designers in Asia. Late night (U.S. time) can be prime time overseas, and planning ahead to work late and give yourself a break during the day will reduce the likelihood of burnout.

Recruiting technical help when you don’t have an office near an urban center can be a time drain, and since so much work is done remotely, there is no need to limit the geography of contract workers. Vator.tv’s Francisco posts available positions on her websites and asks candidates to submit video applications.

oDesk, a website for finding global technical talent, has an extensive database of local and international contractors. The site assigns “virtual team rooms” to coordinate project activities and takes care of international currency exchanges, according to CEO Gary Swart. The company manages the hourly billing, and oDesk customers provide ratings of the contractors. oDesk charges a 10 percent premium on top of the fees earned by the tech workers.

Scheduling regular videoconference or phone calls with team members will encourage people to meet their deadlines since no one likes to be caught unprepared at a meeting. Scheduling phone calls can reduce the number of spontaneous conversations that were meant to answer a single issue, but often turn into productivity-chewing marathons.

The biggest challenge for virtual workers is fighting the urge to check email or do “just a few things” during what is supposed to be leisure or family time. “I try not to be in my office unless I’m working,” says affiliate Kansa. “If I want to do personal stuff on my computer, I take it outside of my office.”

Collins says he’s very flexible about his schedule, but attempts to adhere to 9:00 a.m. to 6:00 p.m. “office hours.” He will only take calls during those hours and stops working at 6 o’clock to spend time with his family, which includes four young children. However, by 10:00 p.m., when the rest of the family is in bed, he starts his “second shift,” which typically lasts until 1:00 or 2:00 a.m. It’s at that time that he answers emails and gets a lot of his busy work accomplished.

Collins says that time zones aren’t an issue for him, since he’s flexible and works with like-minded people. “Both Missy and I keep somewhat unconventional hours,” he says. “So if we need to have a call with someone in Australia at midnight our time, that’s fine.”

He also notes that for the Affiliate Summit in the U.K., he and Ward are partnering with Jess Luthi, who lives in the U.K., but that the five-hour time difference has yet to be a problem. “She’s in London, but she keeps odd hours. We see her online at all hours of the day and night, so there hasn’t been an issue with communicating.”

Clicks2Customers’ Harrelson says relying on a cell phone as your business line lets you answer questions as they arise, but makes getting away from work a challenge. “It’s all about balance,” he says. “Overdoing it doesn’t help. But then I find myself working some days until 2:00 a.m., and starting again at 6:00 a.m.”

The Trust Issue

Working in a virtual office involves a greater level of trust since you rarely, if ever, get together with co-workers. Home workers don’t have the hearty handshake or leisurely lunch to bond with peers or clients, so they must have faith that their digital communications provide an adequate representation of the people with whom they interact. Being skeptical when a person is out of touch is natural, and virtual workers have to fight the urge to assume the worst if an assignment is missed or someone goes missing for a few hours.

“When I first started my business, I was more trusting about whom I hired. Now I get non-compete and confidentiality agreements,” says CleverMom’s Fognano. Fognano has never met a woman she manages who lives hundreds of miles away but, “As long as she does her job, it works out well.” Fognano makes a point of attending several industry events each year to get the necessary face time with partners and peers.

Those who have successfully worked from home are attractive candidates for employers, should they choose to reenter the corporate life, according to Harrelson. Virtual office workers who perform can be trusted to work independently, a desirable trait, he says, “… If you are producing results in a remote environment, [that means] you are a flexible person who can get something done.”

John Gartner is a Portland, Ore.-based freelance writer who contributes to Wired News, Inc., MarketingShift and is the editor of Matter-mag.com

Old Dog, New Tricks

Forrester’s March report, “Email Marketing Comes of Age,” finds that clickthrough rates have remained steady since 2003, at an average of 5 percent, and that email is the No. 1 activity on the Web.

And Datran Media’s December 2006 annual email study found that 83.2 percent of respondents picked email marketing as the most important advertising tactic they planned to use in 2007. British Columbia-based super-affiliate Colin McDougall claims that email marketing is his most powerful marketing channel and it accounts for approximately half of his business earning. He thinks that relying on natural search rankings is a “fool’s game” and considers his email list to be his customer base. McDougall says that when he sends an email to his list, the response is immediate, with most of the sales flooding in on mailing day, and then a trickle of sales ongoing as a result. The Forrester report finds that when email solicitations work, they work quickly: 29 percent of all online consumers buy immediately following an offer. And consumers who buy products advertised in emails spend 138 percent more online than peers who do not.

Email 2.0

Email marketing has been around for more than 10 years, but lately it’s been going through a renaissance as marketers experiment with integrating new innovations into email to make it more effective and useful. Web 2.0 has been defined as the more interactive iteration of the Web – the participatory Web, which involves user action. That’s what today’s email campaigns are designed to do – reach out to potential customers and get them involved.

Email newsletters comprised of user-generated content (UGC) are one example. Tara Lamberson, vice president of marketing and solutions for interactive agency MindComet Corporation, says that its client, Daucourt Martin Imports, has a newsletter called the Drink Pink Weekly for its brand XRated Fusion Liqueur. The newsletter, targeted at professional women, highlights UGC-like consumer-submitted recipes and drinks collected by bartenders.

Lamberson says the campaign’s results are measured by viral pass-alongs and the tone and spirit of the user feedback, and that the campaign is effective in nurturing brand evangelists.

A newsletter called the Daily Shoe Digest, by the shoe e-tailer Zappos.com, is constructed only of UGC. The newsletter, which has links to Zappos but does not appear promotional, has a moderator who edits the content. Chad White, director of retail insights and editor-at-large at the Email Experience Council (EEC) and editor of the RetailEmail Blogspot, points out that if references to other retailers were deleted, the forum would seem artificial and overly managed.

White explains that Zappos is trying to build a community of passionate shoe buyers and bask in the halo that it generates. “UGC is all predicated on the success of product reviews – and products that have received good reviews sell much better.” He also notes that allowing contributors to mention other outlets builds credibility for Zappos as a trusted source of information.

UGC in email newsletters works best for narrower categories. White says there needs to be a “niche to grab on to,” so a company like Macy’s would be too broad. AbeBooks newsletters are effective at creating a sense of community because when consumers subscribe, they choose an area like cooking or science fiction, and then are sent relevant content related to that interest and asked to contribute book reviews and participate in poetry contests.

Another popular form of UGC is blogs. Companies are establishing blogs to nurture ties with customers – and retailers are promoting their blogs in their email newsletters. In January, PETCO launched its PETCOnews.com blog and alerted subscribers to its presence in a PETCO Post newsletter the following month. PETCO has been using its email newsletter and blog in tandem to keep people updated on the pet food recall and has directed subscribers to its blog for updates.

Marketers also are promoting their RSS feeds through email newsletters. Retailer eBags entices email recipients to subscribe to its brand-alert RSS feeds, which tends to be very frequent, so consumers can see new styles as inventory is updated. Jeanne Jennings, an email marketing strategy consultant, explains that some prospects want email, others like RSS and others prefer direct mail. “Consumers can choose – they are more likely to read the information if you’re catering to their preferences.”

RSS feeds can be delivered in email form to their subscribers. Rosalind Gardner plugs her blog’s RSS feed URL into AWeber’s Blog Broadcast and it takes her blog’s content and automatically creates an email newsletter. Affiliate consultant Shawn Collins also uses Blog Broadcast – he has it set up so that when he posts two entries to his Affiliate Tip blog, the entry is sent to subscribers’ email boxes.

Going Viral

eMarketer analyst David Hallerman says that email remains the primary way people tell other people about an ad or marketing website that’s funny or fascinating or in some way cool. “Although some people communicate via community postings or IM, the “Did you see this?” kind of email message still rules.

Greg Cangialosi, president and CEO of Blue Sky Factory, says he has clients who use email to drive their audience to blog posts, online videos and wikis and from there, the dialogue continues and the message is extended. Cangialosi predicts that out of all the elements that are highlighted in email, he thinks that blog posts and video will be the most widely used and will generate the most interest.

Marketers are also leveraging video in their email campaigns. As of June, EEC’s White found that 18 percent of the 100 major online retailers tracked via RetailEmail Blogspot have included a link to video in at least one email in recent months. White suspects this number will grow rapidly and that the frequency of use will increase.

White points out that links to video can be useful for a lot of different types of marketers. Barnes & Noble uses video for book readings and author interviews, and Bass Pro Shops has video tutorials on fishing advice and trips.

Executive director and senior partner of Worldwide Email Marketing of OgilvyOne, Jeanniey Mullen says that based on case studies of Ogilvy clients over a 60-day period in the spring of 2007, response rates for emails with video links are three to 10 times higher than those for static email. More important, these email messages tend to drive even higher increases in landing-page traffic and conversion. White explains that in 99 percent of cases, email newsletters have included a link to the Web-hosted video because there can be problems with embedded video – many email clients either don’t support it or block it by default.

But Mullen says that most of the problems with video-embedded email such as spam filters stripping JavaScript from emails and lack of broadband penetration have been overcome. She says that email service providers, such as VIZmail and AviMail, are able to deliver emails with video and flash inside.

But others find there are frequently rendering issues with video inside of email. Founder of the Affiliate Summit, Shawn Collins, says that a lot of email clients don’t allow video to be played with video in email – it doesn’t work right – it gets stripped out and “comes up blank in the email.” Most experts agree the best practice for right now is to link to Web-hosted videos so the user experience will not be degraded.

Mullen agrees that the best practice is to link to Web-hosted video for other reasons: Video that opens up in emails can be wasted on a recipient who does not have the volume up, or the recipient might not want to disturb office neighbors and quickly close the email – causing the message to be lost.

One of the solutions for distributing video via email is through Magnify.net, which allows website creators to create a branded site to showcase their videos. Through an embedding option, Magnify.net lets email marketers use plain HTML to insert a static image of the video player. When it’s clicked, email recipients are taken to the page where they can view the video. Collins explains that Magnify has AdSense built in to the landing pages and they share the revenue with the community owner.

Social Media Tools

In addition to users generating and sharing content, Web 2.0 innovations also look at how users can promote and rate content that is important and relevant to them. Marketers can leverage this trend in their email campaigns to incentivize consumers to indicate what is important to them.

When subscribers receive Shawn Collin’s Affiliate Tip blog RSS in their email, they have options as to what they can do with each post. They can use “Email This,” “Digg This” or “Add to del.icio.us.” Collins explains that these methods are a way that The Affiliate Tip gets more exposure in top Web properties. This past spring Buy.com experim ented with Digg and Delicious links alongside its products in one of its newsletters so that subscribers could click on the links to recommend products to those communities.

Craig Swerdloff is the vice president and general manager of Postmaster Network, part of Return Path, which offers email deliverability solutions. He explains that for Dell’s campaign to drive customer acquisitions, they sent an email that had a four-point rating system along the side that asked the recipient how relevant the offer was to them (on a scale from “highly valuable” to “no value”).

Swerdloff describes this type of a campaign as a “win-win” – the recipient gets to provide feedback and the marketer can gather data that over time improves their ad targeting, which eventually helps to fine-tune an appropriate offer. But marketers sometimes stay away from email because of the problem of unwanted email, Swerdloff says. However, ISPs are coming up with solutions that distinguish between wanted and unwanted email and some experts predict that deliverability issues will improve in the short term.

This is good news for marketers who are experimenting with new elements to use in email to engage potential customers. White says that all the improvements we’re seeing in the Web world will be translated into the email world and that email is benefiting from the growth in content on the Web such as video and UGC. Affiliates should keep in mind that they can have an advantage over merchants that are sometimes apprehensive to try new marketing techniques.

Presidential Performance

Obama’s got one. So does Hillary. As does McCain. John Edwards has a good one. Rudy Giuliani, Mitt Romney and Bill Richardson also each have one.

It will come as no surprise that all the major 2008 presidential candidates have websites this election cycle. While they are not all of the same quality and some have way more bells and whistles, the sites carry news, video clips and the all-important areas for donations. What is surprising is how well the candidates have harnessed the power of the Internet and what tracking data can do to help their victory. And while the candidates gear up for an astonishingly early election season, it also means marketers and affiliate marketers can take advantage of the interest in this political period to further their cause or add a few ducats to their sales. But challenges still lay ahead.

The Internet as a political platform is not new – just look at the various blogs that have sprouted up since the 2004 presidential election, not to mention the various other new conduits for candidate conversation such as podcasts, user-generated video and cell phone text messaging. Remember that Howard Dean was the first – then virtually unknown – candidate to blog in 2003. This season candidates have more ways to get their talking points out.

Performance marketing network Performics in fact, recently completed a survey that said 42 percent of Americans will seek more information on the 2008 elections from the Internet.

“Campaigns have embraced Internet strategies to stay competitive,” Alexis Rice, project director of CampaignsOnline.org, says. Not only campaigns, but also mass-audience destinations have launched political areas such as MySpace.com’s Impact Channel, where users can drag candidate ads onto their own MySpace pages.

A Burst Media survey found that more than 20 percent of likely voters have actually already gone to a presidential candidate’s website. Of those, one-quarter have clicked on a candidate or advocacy group’s online advertisement. The study also found that use of the Internet to understand the positions of candidates outpaces all other forms of media. A quarter of likely voters said that going online was the best method to learn about the issues, which beat out TV (21 percent), newspapers (17 percent), radio (7 percent), magazines (4.4 percent) and other paper material (3.3 percent).

Back in 2000, before the dot-com bust, pundits and publications made fun of most candidates’ websites, singling out their old information, lack of transaction abilities and their stupefy-ingly bland sense of Web design. Today, just like outdated ASCII art or “site of the day” home pages, political sites have seriously evolved. Now the candidates and the third-party companies that help their digital campaigns are more than savvy; they are refreshingly cutting-edge and Web 2.0 in their approach.

The amount of money being spent and raised online for the elections is also evolving – albeit a little more slowly. Although PQ Media predicts the online campaign ad spend will top $40 million this cycle – up from $29 million in 2004 – it is still dwarfed by the $2 billion to be spent on TV ads alone. And while 38 percent of registered voters received telephone calls from campaigns in 2006’s midterm election push, only 15 percent got email from the candidates, according to Pew Research Center. Advocacy website MoveOn.org raised upward of $28 million in 2006 – the majority of that through online donations. The Center for Responsive Politics measured more than $100 million in online fund-raising by election day. Still it seems a drop in the bucket compared with the $2.6 billion in total 2006 fund-raising.

It may not be huge, but the revenue stream from online is worth tapping into. Candidates for House and Senate seats in 2006 were pleasantly surprised by how much they raised via the Internet. Democrat Joe Sestak earned a House seat in part from the nearly $900,000 he received in Internet donations; $88,000 of that from a single email blast. Democratic advocacy group Act- Blue touts the fact – in big numbers on its home page – that it has received $19,918,240 (at press time) through online donations since 2004. Not to be undersold, the John Kerry campaign in 2004 claimed it owed $80 million of its campaign funds to donations made via the Internet.

While no candidate is likely to refuse money from Internet donations, the biggest realization the Republican and Democratic parties have made – the Democrats more so because they were so challenged by muddled messages in 2004 – is that data is king. Since around 2001, the Democrats, after being demoralized by their defeat, have become conscious of the fact that the GOP simply had better voter data.

One result is that the 2008 democratic candidates have sleeker websites. Another is the Democratic National Committee hired Plus Three, a “progressive” digital marketing firm to build out a database of voters.

The data that Plus Three is going after is basically the most detailed demographics it can get by law; most urgently, email addresses, phone numbers, income and birth dates. Plus Three and the Republican counterpart – Voter Vault – together hold information on more than 165 million folks in their respective hard drives. The most coveted are email addresses because, as Plus Three states, it can mount email campaigns for a fraction of the cost of phone campaigns or TV and print advertising.

Fast Fund-raising

With the data at the ready, campaigns can send email blasts as news happens. Following on the heels of John Edwards’ morning announcement that his wife’s cancer had returned, an email went out that afternoon with a personalized message to all who had registered at Edwards’ website. He was the first presidential candidate to join Twitter (the mini-blog social network) and the first to announce his candidacy online by way of YouTube. On his website, Edwards has all the tech bells and whistles – with profiles on social sites 43Things.com, Bebo.com, blip.tv, Capital Hill Broadcasting Network, Care2. com, Collective.com, Essembly, del.icio.us, Facebook, Flickr, gather.com, hi5, LiveJournal. com, Metacafe, MySpace.com, Ning. com, PartyBuilder.com, Revver, TagWorld, vSocial, Xanga.com, Yahoo360 and YouTube. Edwards also has a Store button on the home page where T-shirts, buttons, mugs and stickers get their showing. Additionally there is a download area for podcasts and RSS feeds.

The week after Edwards broke the news about his wife, ActBlue reported the Edwards campaign received $540,000 through online donations. However, fellow democrat Hillary Clinton raised more than $1 million in online donations the week after her husband, former President Clinton, asked for contributions at the end of February.

The intersection of this highly charged political election and widespread technological advancements is something that marketers can also take advantage of.

CEO of search engine Powerset, Barney Pell, points out three examples of opportunities for online marketers: “First, a bookseller could create a special section on their site that organizes books according to political topics, issues and personalities,” he says. “Second, a company specializing in clean and environmentally friendly products could create a website focused on these issues,” adding that they could then track what the candidates have said or how they voted and then link the issues back to the company’s products. “Third,” he says, “companies could take a stand on issues or back candidates from social media properties. This level of authenticity, while risky, can connect with target audiences in a whole new way.”

Not to be discounted, search marketers can grab ballot-fever by the handle and utilize the “mind-set” of the voter. “Search marketing is a fantastically underutilized area for political candidates to demonstrate their qualifications beyond the status quo,” says Todd D. Malicoat, a search consultant who runs the site Stuntdubl.com. “When someone does a search for a candidate’s name they are volunteering their attention versus the normal approach of a candidate interrupting a voter for their attention.” He says that the information found through search can “actually sway a voter’s opinion” because they are infinitely more receptive to the information. He adds “the difficult opportunity for search marketers is mostly in finding a way to market themselves to the candidates by demonstrating how valuable these services could be to a candidate’s campaign.”

Whatever a marketer’s commitment to showcase political topics or products, Gary Marcoccia, Marketing Director of affiliate network AvantLink, suggests choosing something you’re passionate about. “This makes it easy to maintain and add content on a regular basis,” he says. “Publishers should shoot for 20 to 30 posts a month and think hard about including keywords in the headline and a couple of times in the post itself.” He says, for example, on an eco-friendly blog, a publisher could write a post on how to save energy in the home, categorize it appropriately and then send the traffic on to a merchant that sells low-energy light bulbs.

The other changing face of campaigning in the digital age is commerce versus community building. Hillary Clinton’s site has a good number of videos with her message on her site, as does Barack Obama’s site. But McCain, Mitt Romney, Clinton and Richardson have no online stores.

What the major candidates lack in storefronts, they gain in grassroots efforts online. Democratic-leaning Party- Builder.com lays claim to 10,000 virtual volunteers since September of last year and its Republican counterpart MyGOP says it has “thousands” of online volunteers as well. The Edwards campaign has its OneCorps, a virtual volunteer network that plans and executes grassroots Edwards house parties and serves as a platform for launching other campaign actions. Gone are the days when simply having a website was enough. “The organizational aspect is transformative,” says David Plouffe, a political consultant. When Maryland candidate for comptroller Peter Franchot emphasized his presence on MySpace and Facebook, his campaign got 80 percent of its volunteers from there.

When Maryland candidate for comptroller Peter Franchot emphasized his presence on MySpace and Facebook, his campaign got 80 percent of its volunteers from there.

In a month his volunteers – most of them obtained through online efforts – made 15,000 calls and distributed 50,000 campaign flyers. Franchot did win. Online experts have called this effect the “new virtual playing field.”

Online Voter Army

The site has pulled in 10,000 volunteers since September 2006. The Republican National Committee’s counterpart, MyGOP.com, also claims “thousands of people” and shows Web pages chartering each individual volunteer’s fund-raising progress. When Democrat Ned Lamont ran for Connecticut Senate he set up a space on his website where supporters could type in personal endorsements or “virtual postcards” and send them from the site. He got 25,000 visitors to do this. He beat incumbent Sen. Joe Lieberman.

Another lesson that campaigns still need to learn is the power of performance marketing. As noted, online stores on candidate sites – at least at this stage of the election cycle – carry inconsistent content. More importantly, the stores are mostly populated by products sold by third-party companies, which are either mom-and-pops or come from the direct marketing world.

John Edwards’ store, for example, is run by The Progressive Store, which is owned by Keith Shirey in the Los Angeles area. Shirey, a former janitor who touts the fact that his political buttons were banned on eBay, also sells stickers for Obama, Gore, Kucinich and Clinton. However, he doesn’t offer links to his store like Tigereye Design does. Tigereye sells Obama, Clinton, Richardson, Kucinich and Edwards campaign products and offers cut-and-paste link code for anyone to put a store link on their site.

Data Determination

As mentioned, the Republicans had made great and precise use of data before the 2000 election. Their Voter Vault database is drawn from voter registration and from other public and private records. What shakes out is a potential for the database to have hundreds of pieces of demographic information on every single voter, such as what cars they drive, what churches they go to, what magazines they subscribe to, what political organizations they give money to and even whether they hunt or fish. The data is run through a computer model and a prediction is made about how they are likely to vote. These folks can then be targeted with very specific messages, be that via letter, phone call, email, TV or other collateral. This form of “microtargeting” essentially won the GOP the White House in 2000, pundits say.

Democratic online efforts are motivated by trying to match what the GOP has built. Democratic online volunteer campaigns are aimed at amassing a virtual army of advocate foot soldiers. Voters with personal websites and affiliates can take advantage of the political season by linking to the candidates’ stores; however, there is no commission. If education and awareness are important to the affiliate, a candidate store section would not be out of place on a site selling retail goods or a site or blog that is opinion-based. If an affiliate runs a travel site or coupons, the links might be out of place. Certainly MySpace and other user-generated social sites are an ideal place for store links. One could even link to the candidates’ donation pages where visitors can pledge funds from the bare minimum to the maximum allowed by federal law. Throwing in a few well-chosen keywords at the new areas of a website could increase traffic overall and may generate a sale or two.

“Studies in the retail sector, where users who are served ads get a cookie placed on their machine ” provide a glimpse into how effective online ads can be in planting ideas in peoples’ heads that shape future behavior,” said political blogger and executive director of the Internet Advocacy Center in Washington, D.C., Alan Rosenblatt. Colin Delany of political blog e.politics.com notes, however, that “what the Internet excels at is relationship-seeking and relationship-building,” meaning those who seek out a candidate or sign up for a candidate’s RSS feed are probably already followers of that campaign. But once a potential supporter is in the door, so to speak, the campaign can leverage email and viral messages to help solidify support and donations. The next big step is to track them and target them as well as the online marketing sector has with analytics and what the Republicans did so well with microtargeting.

The multimedia aspects of a candidate’s site have proven popular and engaging. Burst Media reports that 50.7 percent of likely voters stated they would watch a video clip on a candidate website that features him or her talking about the issues. That number held for all age groups, including 55 and older. A quarter of voters said that they would hear a podcast by a candidate outlining his or her platform. Podcast listeners in the 18- to 34-year-old category scored far higher on that question than other age groups.

Right now, the bigger blogs such as RedState or Daily Kos may pull in a wider audience demographically on the Web but are still small numbers compared with the reach of a single campaign email blast. And with a solitary email, Rosenblatt notes a campaign can reach a whole array of donors who give small amounts – $25 to $50 – who wouldn’t otherwise give off-line. As one campaign finance expert noted, “It’s the only way you get a million people to each give you $10 on the same day.”

Virtual Worlds, Real Opportunities

They hang out for hours on end, actively seeking out new people and things to experience. These “residents” of online worlds – who also aren’t afraid to buy online – match the definition of a desirable audience. With millions of registered users and thousands of dollars changing hands every minute these virtual worlds provide ample opportunity to enhance e-commerce and bolster your brand.

However, marketing to virtual-world participants is very different than in the real world. It requires carefully assimilating into the community of pixelated people and tactics that are more about nuance than numbers. Those who buy not-so-real estate before understanding the culture could cause damage to their brands that carries over into the real world.

Virtual worlds enable people to escape the doldrums of school, work and home life by using altered egos (avatars) to navigate terrain where almost anything goes. Virtual worlds such as Second Life, World of Warcraft, There.com and Kaneva are among the fastest-growing (and most-hyped) destinations for online entertainment, and marketers have been quick to stake their claim.

Second Life has grown from 100,000 to more than 4.4 million registered users within a year, and often has more than 40,000 people online simultaneously. World of Warcraft, a massive multiplayer game, has more than 8 million subscribers.

Console makers are getting into the act as well, creating virtual- world extensions of their gaming platforms to retain their customers when they take a break from killing or competing with each other. The Sony Playstation Home world will launch later this year, while Nintendo has developed a virtual world for owners of the Wii console.

Buying In

Today most of the money to be made from virtual worlds comes from subscriptions and selling virtual real estate. According to analyst firm Screen Digest, online virtual worlds surpassed $1billion in revenue in 2006, but most of it (87 percent) stems from subscriptions paid to the worlds’ creators.

Marketers are spending on in-world events to increase their reach, and most importantly, to get access to a desirable demographic. If you imagine that these worlds are primarily a respite for socially awkward teens, think again. Because the sites require a faster-than-average computer and broadband Internet access, users tend to be somewhat computer-savvy and more educated, according to marketing consultant Sam Harrelson.

“They are not your typical audience,” says Harrelson, who counsels clients on marketing strategies for Second Life. Participants tend to also use many social networking sites such as Flickr and del.icio.us, and because they buy virtual goods such as clothing for their avatars, they are comfortable with spending online. Screen Digest projects that commerce (both business to consumer and consumer to consumer) transacted through these sites will top $1.5 billion annually by 2011.

There.com, a virtual world created by Makena Technologies, has more than 600,000 registered avatars, with participation equally split between males and females, according to Betsy Book, director of product management. The median age is 22, and 70 percent of members are between 13 and 26, she says. Shopping for items for avatars is one of the most popular activities, according to Book.

Learning the audience

Before deciding whether to establish a corporate presence, companies should create avatars and join the virtual world as individuals to learn how people communicate and what their tolerance is for marketing. Virtual-world residents have developed their own culture that must be understood before marketers establish a presence, according to Harrelson. Residents would prefer to learn about companies from their peers rather than be approached by advertisers or overwhelmed with graphic ads. “If you buy a building without a marketing plan you can be wasting a lot of money,” Harrelson says.

Opening a storefront and expecting avatars to cruise by and start shopping is an unreal expectation. Sporting goods and apparel company Reebok did just that and had their store defaced by Second Life activists who are rebelling against the commercialization of their escapist distraction, according to Harrelson. (Buildings can be reset in Second Life, so the damage was only temporary.) The company erred in not doing any community outreach before setting up shop, he says.

Companies must be sensitive to what are considered acceptable levels and aggressiveness of advertising in virtual worlds. “If brands go in and assume that you can have ‘in your face’ advertising, it could potentially be very damaging,” says Greg Verdino, who blogs about online marketing. Companies must “join the community and add value” or risk anti-brand backlash, he say. “A bad brand impression in Second Life can follow you into real life.”

A virtual presence must be interactive and offer some entertainment or incentive to be accepted by the community and to garner traffic, Harrelson says. Just as in the real world, free music, sporting events and item giveaways are the best methods for attracting a crowd.

“If you are not authentic and do not offer anything to the community, you are likely to be ignored, at best,” according to Catherine Smith, director of marketing for Linden Lab, which operates Second Life. “However, those firms who commit to a long-term, creative presence in Second Life have an opportunity to interact with their community in new and innovative ways.”

American Apparel, a Los Angeles-based casual clothing company, was the first retailer to establish a Second Life store, in June of 2006. The younger audience of people who “are into leading-edge stuff” was a good match for American Apparel’s customer base, according to Web director Raz Schionning.

American Apparel held several events to generate attention on Second Life, including a launch party that surpassed expectations. Avatars were lined up outside their store in a four-hour queue, according to Schionning.

He says the company thought a Second Life storefront would be a better investment than advertising in an online game. “I’m not sure that a billboard in a racing game would get us much notice” because of the speed of video games, he says. The virtual storefront is modeled after a Tokyo store and costs a few hundred dollars per month to maintain, Schionning says.

Revenue Slow to Grow

Virtual worlds sell real estate in the form of buildings and islands, which can cost tens of thousands of dollars to set up and maintain. IBM purchased 24 islands on Second Life and has committed to spending $10 million on virtual-world marketing.

MTV set up a virtual Laguna Beach island on There.com to promote its TV show of the same name. Reuters, Cisco, Dell, Wired Magazine and General Motors established virtual-world stores or offices, and Calvin Klein launched CK IN2U, a virtual perfume.

Land speculation is becoming big business in virtual worlds. Companies that don’t want to buy an island or take the time and resources to develop an attractive property themselves can buy or rent a building or office space from a virtual landowner. Second Life real estate developer Ailin Graef of Germany claims to have made $1 million developing and selling virtual properties.

So far the majority of the commerce transacted within virtual worlds is consumer to consumer. People are happy to spend a few dollars to buy a skateboard or outfit designed by a fellow resident. More than $1.6 million changed hands in a single day on Second Life in March, according to the company. Companies such as American Apparel are testing the waters of selling virtual goods to generate revenue, but more importantly, to get more exposure for their brands.

American Apparel sells items (virtual jeans or T-shirts) to avatars to wear while cruising Second Life. The clothes are all modeled on real items, and American Apparel offers coupons for 15 percent off real world items when someone purchases the virtual equivalent, Schionning says. The virtual coupons link to its online store, but the transition between the websites could be smoother. “The technology is a bit too clunky,” he says.

While the 12,000 purchases of American Apparel garb in Second Life currency (Linden dollars, which are purchased with real money) aren’t enough to boost the company’s bottom line, the attention from the media and access to Second Lifers has made it a worthwhile investment. “The value is in the exposure,” notes Schionning.

People tap into their inner consumer through their avatars without the restrictions of the real world. While you might not be able to own a tricked-out sports car or diamond necklace for financial or practical reasons, your avatar can, and marketers can use the boundless possibilities to broaden their branding opportunities.

Residents of There.com can buy or rent apartments and adorn their online homes with furniture or art designed by residents or sold by retailers that represents the life they would like to have, according to Makena Technologies’ Book. Shopping is the most popular activity on There.com, she says. “Your online self represents what you are, and where you live says who you aspire to be,” Book says.

The growth of virtual money-changing got the attention of a congressional committee, which is studying the possibility of taxing virtual purchases. Profits made from selling virtual goods are required to be reported as taxable income when converted into currency, and Congress could tax individual virtual transactions in the future.

Brand aid

While companies should not expect a virtual store to convert its visitors into millions of dollars in online commerce, participating in virtual worlds generates buzz and creates brand awareness that can justify the investment.

“Real-life businesses are generally not looking at Second Life as a revenue opportunity, but rather as a way of extending their brands,” Linden Lab’s Smith says.

Brands that create a positive impression in the virtual realm can transfer that interest to their real-world products, according to Book. For example, Nike sold virtual sneakers that enable avatars to run faster, she says, which reinforces the company’s message of its products’ enhancing performance.

Determining an accurate way to measure the value derived from a virtual store or event is a work in progress, according to Book. “We’re still trying to figure out what works in metrics,” she says. The company is developing methods for tracking avatars’ presence in commercial areas of the virtual world to provide demographic data to marketers.

While a company might be happy that the avatar of a young woman is flirting with others at their virtual party, they can’t be sure that it is not an older married man behind the avatar, making it difficult to be certain who is being exposed to your brand. “There is no way to be sure if the registration [information] is actually who they are,” says Book.

Virtual Cottage Industry

While anyone can join and do business in an online world, creating an experience and brand identity that is worthy of residents’ attention requires an insider’s insight. Hot on the heels of the virtual worlds craze are marketing consultants, ad agencies and graphic designers specializing in building and monetizing in the faux environments.

Companies such as Electric Sheep, Millions of Us and The SL Agency provide consulting services that enable companies to create a virtual presence that is consistent with the rules and culture of virtual worlds. Hiring a graphic artist who has experience building offices or islands in a virtual world will expedite the process for companies looking to build a virtual presence.

Joe Mastrocovi and his partners at Long Island- based Moderne Promotions thought their 25 years of event marketing experience would translate well to the virtual realm. After spending time learning the ins and outs of Second Life as residents, the company launched The SL Agency, a marketing company focused on developing events such as volleyball tournaments, concerts and parties in Second Life.

The same tricks of the trade to entice young audiences that work in malls and clubs (free music, free clothes) also work on Second Life, according to Mastrocovi. The SL Agency purchased an island named Activ8, which provides avatars with a place to ski, wager, dance or cruise the boardwalk.

The company sells virtual outdoor advertising such as billboards on Activ8, as well as sponsorships of events. Mastrocovi says virtual and real-world events can be held simultaneously to maximize the press potential and viral buzz.

Similarly, There.com holds events that match what is going on in the sports world, such as skiing events during the winter, and a virtual grand prix in March, according to Makena Technologies’ Book. Companies can purchase sponsorships to expose their brand to virtual world participants without having to commit the resources needed to establish a permanent presence, she says.

But companies expecting to host a DJ-ed virtual party for a song are mistaken. “The costs aren’t much cheaper than a real-world event if you want to hire talent,” Mastrocovi says. By combining in-world and real-world events, companies can create millions of impressions to websites as well as drive customers to brick-and-mortar stores, according to Mastrocovi.

Just as event companies hire beautiful 20- somethings to hand out merchandise in the real world, Mastrocovi recommends that marketers pay well-known avatars to walk around Second Life and promote a company’s brand. These “brand ambassadors” are people trusted in the virtual environment, and an endorsement for them holds weight with other residents, he says.

Participating in online worlds today provides access to an influential younger audience, but it is a challenge to quantify the return on the investment. In the future the companies that administer these sites will develop better ways of tracking the time that residents are exposed to a brand as well as offer more in-depth demographic data. Makena Technologies’ Book says the company would likely develop methods for sharing details about the people behind the avatars that are attending events and making purchases.

The popularity of virtual worlds is encouraging more companies to create alternatives, including kid-themed universes and even a world based on Shakespearean characters. However, blogger Verdino says consumers will have a limited appetite for virtual participation. “No one is going to join 57 different virtual worlds.”

The technology to make virtual worlds interesting and interactive places to while away the hours has arrived. By getting in early, companies can help to set the course for marketing in these burgeoning worlds.

John Gartner is a Portland, Ore.-based freelance writer who contributes to Wired News, Inc., MarketingShift, and is the Editor of Matter-mag.com.

The Web, Take Two

Like new confections spilling out of Willy Wonka’s chocolate factory, the brain trusts at Web companies big and small over the last three years or so have spun out a brand new Web. Like candy, this version of the Web is flashier, full of speed, comes in a cool wrapper, has good stuff inside and is highly addictive.

But unlike the dot-com crash of six years ago, it seems these new companies (and some old ones thinking in new ways) have figured out how to make the Web user king, keep the eyeballs and make money.

Think about what has happened since 2001: Google has put search front and center; online affiliate marketing was born; smaller computer programs on websites have made shopping and collaborating easier; and user-generated content has redefined entertainment and online marketing. With redefinitions come labels, and since 2004 these innovations in the Web experience have been called Web 2.0 – to mean a second generation of Web-based services and technologies.

Angel Djambazov, marketing and business development manager of affiliate management tool Popshops, says, “Web 2.0 lends itself to more interactivity between the user base and the site.”

Web 2.0 also has been called the “participatory Web” that involves consumer action, not just reaction to your website or message. Web 2.0 has been called the explosion of video – homemade and commercial video slathered freely and easily across the Web. Web 2.0 has also been called the rapid rise of blogs (highly personal websites), widgets, RSS feeds and the podcast.

Web 2.0 is really all these things. Tim O’Reilly – founder of O’Reilly Media, publisher of technology books – coined the term and in essence meant it as a perceived shift in the Internet as platform.

He has defined it this way: “Web 2.0 is the business revolution in the computer industry caused by the move to the Internet as platform, and an attempt to understand the rules for success on that new platform.”

Where 1.0 was HTML Web pages you read like a book, 2.0 is Ajax-coded pages where mini-programs are swirling away on your desktop telling you the weather, what to eat, showing you videos or – most important to marketers – reporting your traffic. YouTube, MySpace, Facebook, Flickr, craigslist, Wikipedia, Digg, Photobucket and del.icio.us would all be considered Web 2.0 sites.

Adapting for the 2.0 World

For online marketers, now is the best time to be in a Web 2.0 world. There are hundreds if not thousands of companies who claim their technology or service is Web 2.0-enabled. Pundits say it’s not just another bubble. Venture capitalists are expressing their confidence with their checkbooks, sending $844.4 million into Web 2.0 companies last year, according to Ernst & Young and Dow Jones VentureOne. Advertisers are also coming on board and they are predicted to spend $1.5 billion on online video alone by 2009, according to eMarketer.

Mike Moran, author of Search Engine Marketing, Inc., says there are three main changes for marketers and advertisers in a Web 2.0 world: You can now target even the smallest group; you can measure every single message’s effectiveness; and you must change your message in response to what customers say and do. Fortunately, he says, Web 2.0 helps you do all of these.

The most recent Web 2.0 lightning rod is the widget or Web widget. It is a kind of mini-program that can be embedded into a Web page and operates separately from your website. Widgets can contain anything from updated weather to interactive ads, videos and photo slide shows, to calendars, feeds to games and polls. Widgets are often Adobe Flash or JavaScript, which make them lightweight and easy to embed.

Because widgets are transportable – meaning a thousand folks can place the same widget with the same information on a thousand different websites – marketers are nervous of the threat to their business. “Widgets allow for individuals to take or use parts of the content from a marketer’s site and apply that content to their own Web page,” says Sam Harrelson of CostPerNews.com. “Of course, that can be threatening to a large segment of online marketers.

“For those marketers attempting to monetize their sites or programs with page view metrics, it should be threatening.” He says that YouTube did not become a major Web property and bring a billion-dollar price tag because it just had funny clips of people doing funny things.

“It provides a perfect example of how a company can grow quickly, in terms of numbers of users and advertising dollars, through the use of these democratized or decentralized ways of serving unique content.” Harrelson adds that marketers should be on the cutting edge anyway, looking for ways to measure what is going to happen on the Web, with or without widgets.

Currently there are thousands of widgets available – most of them free – on the Web and some that are embeddable media players come branded with advertising. Recently MySpace.com banned the use of most kinds of widgets that come with ads in them from being placed on MySpace profiles. Critics said the move was made so that MySpace could control the ad messages to its 90 million monthly visitors.

Making Technology Work (Well)

Another Web 2.0 technology in search of scale is the RSS feed. An RSS feed is a format that allows certain content to be pushed to your computer. Newsletters, favorite blogs or columnists and news sites use it when they have frequent publishing schedules. Users can subscribe to a feed and receive only that information they sign up for. Usually, Web users must install a feed reader to subscribe to the content. While use of feeds is popular, Feed aggregator FeedBurner also sees great potential for the ad market in feeds. “There are a lot of blog authors creating great content on a variety of topics, but advertisers are challenged to find flexible and scalable deployment of a blog ad campaign,” says Brent Hill, vice president of business development at Feed- Burner. While FeedBurner continues to extend its ad network for RSS feeds to include ads on blogs, Hill says that advertisers need to realize that quality sites, reach and effective placements of feeds will help drive advertisers to the well.

As companies are adapting their messages for the cell phone, so is Web 2.0. Mini-blog site Twitter, for example, is making it easier to use connected mobile devices to add to Twitter threads. Twitter basically only allows 140 characters to be posted at a time. This limitation seems well-suited to the legions of text-messagers already sending short notes to each other. In addition, Twitter now has a short code or abbreviated message system where the word “weather” and your ZIP code will get you back the information you seek.

This is just one example of the user-centric mobile Web experience that’s exploding. Companies such as Mobio, SoonR and Loopt all allow cell phone users to receive specific kinds of information directly to their mobile device, usually event or dining listings, physical locations of friends in your network or data pushed to your phone.

All these technologies are part of the greater social Web or social media; usually video, audio or other content that users can interact with. Web 2.0-styled social media applications can be found at sites such as Wikipedia, Second Life, Digg, MySpace. com and Flickr. The media can usually be shared, rated and oft times edited by visitors. This is also called user-generated content and is defined as content on the Web influenced but not necessarily created by visitors to those websites.

Consumers = Participants

The impact of user-generated content on marketers has been great. As Moran points out, Web 1.0 users were considered consumers by marketers; now with Web 2.0, they are participants. He says that now readers “comment on your blogs, change your wikis, create blogs of their own, create hate sites if they don’t like your products and produce ‘mashups’ of your content and functions.”

This sea change has given rise to the term “social media optimization”; what Rohit Bhargava, vice president for interactive marketing with Ogilvy Public Relations Worldwide, calls “changes to optimize a site so that it is more easily linked to, more highly visible in social media searches on custom search engines and more frequently included in relevant posts on blogs, podcasts and .” He says that while that sounds a lot like search engine optimization, the difference is that Web 2.0 will make it easier to get your message out through tagging and bookmarking sites, widening your linkability, helping your content fit onto more niche websites and blogs and encouraging users to blend your message with other messages, or what is called the mashup.

On a participatory level, wikis are the exemplar of social networks that don’t require fancy technology. Wikipedia, for example, has taken the concept of building an online encyclopedia that every visitor can contribute to and made it very successful. Now there are wikis devoted to paleontology, linguistics, Swedish and Russian textbooks, law-student life, Star Trek, maps and collaborative novels, just to name a few.

While blogs and podcasts (downloadable audio shows) are also considered Web 2.0 innovations, the blog or Weblog technically has been around since just before the dot-com crash. Blogs and podcasts are beginning to be embraced by marketers also. Blog tracker Technorati reports that as many as 75,000 new blogs are created every day. While sites such as PayPerPost.com have made it easier for marketers to simply pay a third party to create a blog about their product, the effectiveness metrics are absent in that arrangement. Recent research has begun to balk at the reach of podcasts. Pew Research released a study that said only 12 percent of Internet users have downloaded a podcast and Forrester Research says that as few as 1 percent of all North Americans have downloaded a podcast.

A Web 2.0 spin on broadcasting information on the Internet is a company such as Userplane that enables webchats, webcasting and instant messaging. They sell themselves as a very Web 2.0 sort of company. Michael Jones, CEO, says that “Web 2.0 companies I come across all started as Web services companies. We saw an interesting need to have an online communication tool, and we started to say maybe there is an interesting way to turn on the lights in these rooms.” The company is beginning to host live webchat town halls with political candidates, which they hope will grow as the political season heats up.

Ad network MIVA also identifies itself as a very Web 2.0 company and has even outlined trends for 2007. Seb Bishop, president and CMO, has stated that mobile video sharing will offer an even greater level of immediacy than the Web, that mobile search will become localized – meaning mobile search will be less about browsing and more about fulfilling a need in real time and that advertising will become “democratized.”

Some critics have said that Web 2.0 is nothing but a marketing slogan itself. Russell Shaw, a columnist for ZDNet.com, has simply said that Web 2.0 “does not exist.” He says that things labeled Web 2.0 “are forward lurches of various standards and technologies; some compatible, some not, some revolutionary, some evolutionary, some impractical. Some are collaborative; others are highly competitive with each other.” He agrees with skeptics who say that the term is essentially meaningless and irrelevant.

CostPerNews’ Harrelson, however, perceives loads of relevancy in the new Web, especially as it relates to marketers. “Once marketers realize that the inventory available on publisher and affiliate sites is growing at near exponential rates, they will realize that metrics based on limited inventory such as CPA or CPC are increasingly inefficient,” he says. “That, more than anything, will lead to a re-examination of traditional marketing methods online and move the equation of metrics toward something more 2.0-ish.” He adds that “attention data is the new black. ” My practical advice to companies is to start developing attention metrics. That’s where the next black gold lies.”

Social Meets Business

An affiliate marketing experiment used Twitter to connect the community at a recent show.

As an idea, Twitter is nothing new – a method of communication between various parties. However, as a real and practical application, Twitter is revolutionary. It has the potential to reinvent communication between affiliates, networks and merchants.

Twitter was a side project of Odeo in March of 2006 and is a part of San Francisco-based Obvious Corp. Users of this new social messaging service are able to post messages 145 characters in length to answer one basic question, "What are you doing?"

These short snippets can be sent to Twitter through the Web, via instant messaging (Jabber, Gmail’s chat service, and AIM) or through text messaging on a mobile phone. When people that you have added as your contacts on the service post messages, you can also receive their messages via those avenues.

Even for the non-bloggers and nonforum participants, this invitation to share details about daily life and experiences seems to be too much to resist. According to Twitter’s creator Jack Dorsey, the service currently has about 20,000 daily active users and is growing by over 1,000 new members a day. While small in some metrics, those active users include some of the most influential bloggers and businesspeople in the online marketing world.

Interestingly, Twitter is expanding our own notions of instant communication. Companies such as the BBC, CNN, Technorati, 30 Boxes, Microformats, Ma.gnolia and even the conference Macworld have all begun to make use of Twitter’s ability to reach people instantly and efficiently with important news or service updates, wherever they happen to be at the time. Highly influential websites such as Technorati have begun to send out alerts of service outages or upgrades that were once only issued on the company’s blog.

Affiliate marketers and affiliate networks are beginning to notice the benefit of the service as well. For example, Brian Littleton, founder and CEO of ShareASale, recently began a "Twitter experiment" with his affiliate network in an effort to judge Twitter’s ability to transform network-to-affiliate communication. Brian announced the experiment both on the ShareASale blog and on ABestWeb and offered affiliates a chance to join Twitter and receive instant updates from him regarding network offers, payouts and other news from his network.

The ShareASale team has attracted dozens of affiliates to its Twitter network since the middle of January. These affiliates are regularly posting and communicating about industry news, offers and their own lives and they have created quite a unique community in just a few short weeks.

Here’s what Littleton had to say about his Twitter experiment: "Improving communication between affiliate managers and affiliates benefits both parties, as well as ShareASale, who stands in the middle. We are constantly looking for new ways that we can facilitate good communication, on a level playing field. Affiliates don’t like to be constantly harassed, and merchants often don’t know to what extent they should extend their help."

With the Affiliate Summit upcoming, we felt it was a great opportunity to get both parties interested in a new tool that could become a new way for managers and affiliates to communicate. We’ll be illustrating some of the instant effect of Twitter communication by giving away time-sensitive prizes at our booth as well as updating attendees on the whereabouts of various ShareASale team members. I think by the time we are done with this experiment you’ll see quite a few affiliate managers setting up little Twitter networks for their programs," Littleton says.

His comments point to what was the true tipping point for Twitter’s early adoption in the affiliate world: Affiliate Summit West in Las Vegas on Jan. 21–23. By the end of the summit, Littleton had over 40 influential affiliates who had signed up for his updates on Twitter. Those affiliates included some of the best and brightest in the industry. From the Friday before the summit to the days following, these affiliates were using Twitter as a way to find each other for meals, locate each other at industry parties, share information of where to find tickets to the events at night, critique speakers on the various panels and share interesting schwag finds at the booths. Dozens of "twitters" poured in through cell phones and IM clients at all times of the day and night. The web of communication and information sharing created was impressive and a unique experience.

Industry conferences provide an excellent demonstration of Twitter’s potential. Network representatives, affiliates, merchants and press reporters are constantly (and sometimes hopelessly) attempting to reach one another in the vast sea of faces and booths. While the cell phone is a great aid, it is often difficult to contact someone on a call during the heat of battle on a conference floor. Using Twitter, an individual would be able to post their location, schedule or need and have that message sent out to either just one person or a marketing team, or even a large number of contacts.

As for the ShareASale experiment, the company was able to effectively drive the affiliates on their Twitter network to their booths for special giveaways, prizes and news by sending out certain announcements throughout the summit. Littleton also used the service to locate members of his own team and arrange meetings with affiliates and clients. As an instant information sharing platform, Twitter met all expectations at the summit, and in some ways exceeded them.

However, the implications for affiliate marketing don’t end with conferences. ShareASale’s experiment with Twitter is an interesting start to what could become a revolutionary platform for instant, yet nonintrusive communication regarding offer updates, new payout structures, new coupon codes and just about any type of update a network could make aimed at participating affiliates.

Email correspondences between networks and affiliates have been lagging in terms of deliverability and the many snares and traps that an HTML email must avoid in order to reach the intended recipient. Along with that, changes in Microsoft’s new Outlook in the Vista OS will considerably hamper the use of affiliate newsletters. Some merchants have moved to blogging and reaching affiliates through such means as RSS feeds. However, affiliate adoption of RSS has been slow, and only about 30 percent of merchants and networks are blogging (with a much smaller percentage regularly updating their blog).

As more affiliate networks discover the advantages of using this type of communication to augment their existing efforts through email or RSS, I expect adoption by affiliates to continue to rise. Social communication, which blurs the pre-existing line between personal and business communication, will be this year’s hot topic in reaching and activating affiliates. Keep an eye on the growing group of affiliates using Twitter for social and business communication.

 

SAM HARRELSON runs CostPerNews.com, a weblog about online marketing, specifically CPA offers, programs and networks. He has held positions at Rextopia Network, PrimeQ and Aluria Software.