Performics’ new VP of affiliate marketing claims the industry is still growing and is fueled by performance-based marketing.

Earlier this year Chris Henger, a veteran of affiliate network Performics since 2002, took the helm of the company’s affiliate marketing business unit. As vice president, affiliate marketing, Henger is charged with representing publisher interests to advertisers, a role he takes very seriously. In his former position as senior vice president of marketing and development with Performics, Henger dealt with affiliate issues from a different and broader perspective. Prior to joining Performics he was senior vice president/general manager at Emusic.com, which was acquired by Vivendi Universal. Revenue editor-in-chief Lisa Picarille spoke with Henger about his new role at Performics, some short-term goals for the Chicago-based affiliate network and where the online marketing space is headed.

Lisa Picarille: You recently took on some additional responsibilities; can you outline your new duties?
Chris Henger: Running our affiliate business unit for Performics is a responsibility that I took on with great enthusiasm. I am passionate about this industry and about Performics’ opportunity to take it to the next level. I represent the affiliate business within DoubleClick’s management team and manage a talented team of affiliate marketing professionals. In my role I am responsible for the growth and prosperity of our affiliate operations and that means making sure clients are satisfied and that publishers are productive and well-compensated. The possibilities for improved publisher productivity are endless and that is an area that receives a great deal of my attention and Performics’ resources.

LP: That sort of makes you the face of Performics, at least for affiliates. That can be a tough position with some very vocal critics. Talk about how you plan to interact with the affiliate community.
CH: I am proud to take on the responsibility of Performics’ leadership for the affiliate community. I am active at industry events like Ad:Tech and Affiliate Summit and I am always looking for ways to have more direct contact with publishers. We recently established a Publisher Advisory Board and this group has already proven to be an honest and insightful sounding board for ideas. I also represent our publisher interests to our advertiser clients. It is important that they understand the implications of the decisions they make, and I spend a lot of time talking to advertisers about publishers. There are tough critics in our industry but they have good ideas and the key is to absorb the feedback and use it to make sound decisions.

LP: Do you have mechanisms in place for addressing negative comments and effecting change?
CH: Monitoring and addressing comments are a shared responsibility at Performics. The affiliate marketing director keeps careful track of the media, blogs and other forums, and the product manager is active in the community. Our publisher services team fields inquiries from publishers and they are the first line of support to quickly address comments and effect change on behalf of our publishers. I meet with these teams on a regular basis to anticipate changes we need to make. We also have an internal blog that we rely on to get the word out to the program managers if there is a particular issue or change in the marketplace that needs attention.

LP: What are some of the goals you have for Performics in the next 12 months?
CH: The next 12 months are going to be very exciting for Performics. We have an aggressive growth plan in place and a lot of innovation coming with our product road map. Personally it is my goal to ensure that our employees continue to feel good about what we are building and I want to deliver the message to our publishers that I care about their needs and about growing their businesses. Actions speak louder than words. We are a heads-down team that is always striving to do right by our employees, advertisers and publishers.

LP: Performics recently announced it is providing network-level data for advertisers in the ConnectCommerceSM interface. What other functionality is planned?
CH: Performics is committed to continuous improvement and we have an aggressive product development road map for the next 12 months. One significant feature in development has been in beta with a small group of about 25 publishers for several months. The product feature, now called OrangeLinks, was integrated into our ConnectCommerce platform in June. This feature enables publishers to sign up to receive all updated links via email or FTP and eventually via RSS. The links are pre-generated and ready to be added to the publisher’s site. We saw a phenomenal increase in sales from the beta group, and other publishers should be able to increase their commissions with OrangeLinks.
Another important feature that will be released this summer is the availability of publisher contact information within ConnectCommerce. Performics and DoubleClick have recently adopted a new product development methodology called SCRUM. With this methodology in place we are working on short “sprints” to accomplish bite-sized feature improvements or components of larger enhancements. We have dramatically reduced the development cycle and improved deliverability. You are going to see seven or eight small releases a year, instead of one or two large releases.

LP: Why does Performics work with so many catalog retailers?
CH: We do have a very strong catalog client base that goes back to Performics’ roots as the first full-service affiliate provider. When the company was founded in 1998, the vision was to fill a gap in the marketplace for affiliate marketing services. Traditional direct marketers didn’t have the in-house expertise to tap what was the wild world of online marketing in the late nineties. The full-service value proposition really resonated with catalogers in the late ’90s, and the unique agency approach we take to affiliate marketing still resonates today.
Performics is also headquartered in Chicago, the birthplace of direct marketing and the home of large traditional catalogers like Sears and Spiegel. As a matter of fact, Spiegel was one of Performics’ original clients and we continue to manage the affiliate program with the new management at Spiegel. The other aspect is that affiliate marketing is nirvana for a direct marketer; catalogers “get it.” They really understand the power of performance- based marketing. Because of our roots in direct marketing we are pushing the envelope for catalogers today and helping them understand the dynamics of multichannel marketing.

LP: I know that Performics doesn’t accept affiliates from religious-related organizations; why?
CH: Performics has a comprehensive, quality affiliate network and we ensure that quality through editorial review. Just like major search engines, we have human screening of all affiliate applications and we have to provide that group of screeners with a set of criteria. To date, we have not allowed applications for sites with religious content and the policy is meant to minimize subjectivity from our editorial review process. Performics’ policy is not to allow sites that are focused on a particular faith. We don’t want our staff to have to make a judgment on whether or not a site with content from one faith or another is appropriate for advertisers. Recently I have seen some church-specific sites that are doing some very interesting things with affiliate links and using the commissions as a fundraising effort. This is certainly an example of innovation and we are willing to reconsider the policy.

LP: Are there any other types of affiliates that you don’t accept, and why?
CH: Yes, we do screen each application and there are many, actually thousands of applications that we reject each month. The most com
mon reason we have t
o reject an application is that the publisher’s website is not available for review. But upon review of the site we do have criteria about content that we evaluate. The policy is posted on our website and available to any affiliate:
Websites or publishers engaging in online activity that contains, promotes or has links to any one of the following will not be accepted into the network:

  • Pornographic, obscene or offensive content
  • Violence or hate-oriented speech
  • Extensive religious commentary or attempts to preach or solicit members for a particular church or faith
  • Gambling
  • Libel or defamation
  • Illegal substances
  • Unsolicited commercial email (spam) or trademark infringement
  • Any type of misleading, fraudulent or illegal activity

LP: Are there segments you believe are ripe for affiliate expansion?
CH: Blogs are certainly one segment that we expect to drive increasing volume. In recent years the affiliate channel has moved heavily toward commerce-driven sites. Coupons, discounts and shopping-related publishers garner a substantial chunk of sales volume and we have seen phenomenal growth from loyalty and reward sites. We’ll continue to see the bulk of the volume come from those categories. Publishers in those categories have grown increasingly sophisticated and many consumers have come to rely on shopping-related affiliates as an intermediary, as they are perceived to add value to the transaction chain. As for new expansion, we are likely going to see affiliate marketing go back to its roots and witness growth in the area of content. AdSense and programs like it are geared toward content- driven sites, and a lot of people talk about small publishers monetizing content as if it’s a new initiative. Monetizing content is what affiliate marketing is all about and that segment is ripe for expansion.

LP: You have a deep background in online music and music-related businesses. Are there any initiatives at Performics related to online music merchants or affiliates?
CH: I often rely on my experience in the early days of interactive marketing. Our business model back then is not far removed from effective affiliate marketing – build a loyal audience of consumers and at the same time attract advertisers that wish to engage those consumers with products and services. There was no question the promise of digital music was going to drastically change music distribution; the question was when. One of the core things that was lacking was a ubiquitous device, and obviously the iPod has solved that, and now the companies in the online music business are flourishing. A lesson I learned was it is critically important to stay focused around the core value proposition you provide your customer. This certainly applies to how we manage at Performics, as we stay focused on our two core businesses: affiliate marketing and search marketing.

LP: You attended the MSN Strategic Account Summit recently. What was the most important message you took away from that event?
CH: One of the underlying messages I took from the event was the importance of having aspirations and high standards. Creating an environment where people are held accountable for high performance often has a multiplier effect on the satisfaction they derive. At the end of the day, people want to feel they are contributors to the overall success of the business – that what they do day in and day out matters. I want to surround myself with the very best people, and share in our collective successes. I jotted down this quote, which rings especially true at Performics: “You strive to create excited, high-energy environments, but not exhausted ones.” In today’s fast-paced marketplace, it’s easy to get exhausted.
You need to have a definition of success so that when you get there it will be meaningful to reflect on the accomplishment. These types of moments are often understated because really, who has the time to laud achievement? The MSN Strategic Account Summit represented one of those instances. I left the event proud in the knowledge that Performics was out in front as the only SEM to share the stage with Steve Ballmer.

LP: Is Performics looking to leverage a more strategic relationship with MSN?
CH: Our long-standing relationship with MSN is certainly an asset that we value. We have been optimizing data feeds for MSN Shopping for years, and were the first to adopt the MSN adCenter API for Search. We work very closely with MSN, and strongly believe there are many opportunities for advertisers within that platform.

LP: Can you give us an idea of just what role search plays at Performics?
CH: Search plays a critical role at Performics and within DoubleClick. Performics was a pioneer in search engine marketing and among the first to realize the power of paid search. We are the leading SEM globally, and have a thriving natural search optimization practice. The affiliate and search channels are inextricably linked for Performics – affiliates use search to drive traffic, and we share many cross-channel clients. And more importantly for our advertisers, the Performics business model aligns our interests with our advertisers. A consumer who transacts with our advertiser through either channel benefits the Performics business model, whereas this is a differentiator between us and other affiliate providers.

LP: Is the reign of the “Big Three” (CJ, LinkShare and Performics) over?
CH: Absolutely not. Performics and our two industry peers are still growing by leaps and bounds. While there will always be changing dynamics in the marketplace, our target clients – retailers – are going to continue to look for affiliate marketing solutions. Multichannel marketers and other advertisers need a proven solution, a comprehensive network and reliable technology, which is core to the Performics offering.

LP: What is the biggest competitive threat to Performics’ business?
CH: We stay competitive by thoughtfully thinking and planning for the future. We recently completed an extensive three-year strategic planning process across Performics and DoubleClick. There is a very clear plan and set of priorities that the entire company shares on where we want to drive our business. Ultimately, business comes down to customer loyalty. If a company loses sight of the needs and wants of its customers, then it opens the door. We are fanatically focused on servicing the needs of our customers. Through strategic leadership, proactive service and sustained innovation we control our own destiny in creating loyalty with our customers.

LP: Talk about where ad networks and subnetworks fit in the performance marketing landscape and how they impact Performics.
CH: Ad networks sure are plentiful nowadays. They can provide value in increasing reach through one media buy, and most campaigns are on a performance-based pricing model which has similarities to affiliate marketing as well. In some cases we work with ad networks for select clients, and in other cases we produce leads for our customers directly through our affiliate network.

LP: How important is it for leaders in the online marketing space to be global companies?
CH: The Internet is a global medium and the barriers between nations, languages and communities are virtually invisible. DoubleClick is the world leader in online advertising solutions and that provides tremendous insight for our clients and employees. We are working to improve our interactions and payment processes for international affiliates because that segment is increasingly important.

LP: What are Performics’ global plans?
CH: We have an office in London that predates our integration with DoubleClick and we now have 21 offices around the world. We will certainly use that foundation as a platform for further expansion. Currently we license our affiliate marketing technology platform internationally but do
not have plans to set u
p affiliate networks in other markets. Never say never, but we have a huge growth opportunity in the U.S. and that’s where we are concentrating today.

LP: Give me an idea of what you think the performance marketing space will look like in three years.
CH: It is going to look even better than it does today – more growth, new and different distribution and better data across the performance-based channels. In the next three years we as an industry will have answers to many of the questions we face today. I think there will be a recognized distinction between adware and spyware. We are going to have an industry-wide resolution of ad blocking. I think we’ll see more sophisticated compensation for publishers that are tied directly to delivering on advertiser goals. We are going to have a larger pool of talent to expand with because the industry will be further developed. Performance-based marketing is a key driver in the evolution of online advertising and in three years we’ll see an industry that is taking a larger piece of the overall media pie.