July 2004 – UtilitesDB

The Best Paid Places

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

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

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

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

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

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

Test the Waters

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

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

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

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

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

1. Appeal to your customers;

2. State your value proposition;

3. Use a “call to action”; and

4. Include your keywords.

If you keep these basic rules in mind, you too can get your business top ranking on the engines without all the time-consuming tactics that search engine optimization requires. There are other ways in which you can buy placement that we will cover in future columns, and we’ll also dive into the tactics that can give you a competitive edge in search engine marketing. See you at the top!

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

Traveling and Treasure Hunting

Every time you go on the road, you should position yourself to market like a guerrilla and earn money like a king named Midas.

Keep in mind that the road leads in both directions. You can promote your site when you’re away from your town and you can promote it to travelers who come to your town. It’s a double-edged golden opportunity.

When you’re a traveler, don’t forget that the copy shops of the world are the allies of affiliates. Taking a trip to Houston? Print up your marketing weapons before you leave, then take them to the closest copy shop to your hotel in Houston.

Ask them to print a quantity of circulars, posters, stickers, mini-brochures, gift certificates, coupons and/or postcards, then distribute them at hotels, airports, trade shows, ballgames, concerts and bulletin boards. For example, there are 800 free community bulletin boards in the San Francisco Bay Area, and there are hundreds of others in most major cities. Post your flier on any or all of them. And you thought that visibility and awareness cost a lot of money? Wrong!

Whatever you print, copy, post or distribute, be sure it is exceptionally easy to read and lists your Web site. That, too, should be a paragon of clarity.

You’ve heard of viral marketing. It only happens if people want to talk about your product, service or marketing. If you’ve got the goods, your marketing weapons can be your virus. Word-of-mouth advertising is often generated by a “blitz” or “total immersion campaign” such as this. Your job is to overcome inertia and create momentum. Using a combination of guerrilla marketing tools does this.

You’re not going anywhere? No problem. Canny affiliates also use this kind of 360 degree marketing at home. They generously distribute their marketing materials in venues visited by travelers. We’re talking restaurants, hotels, convention halls, theaters, night clubs, sporting events, concerts, tourist attractions, train stations and all the rest that draw crowds of tourists.

Give those people a dose of your marketing message coupled with information that will help them while they’re in town. Some of those folks will actually take that information home with them, possibly use it on their sites, and if you’ve done a good job of marketing, evangelize about your “biz” to their friends and co-workers. Don’t laugh. It happens all the time.

It’s always a good idea to see if any trade shows are being held where you’re visiting. You don’t have to exhibit at a trade show to earn a lot of money. At any show, you can learn, you can make contacts and you can get good ideas. Your take-homes from a show should be new relationships and profit-producing ideas. Fill your suitcase.

If I had to pick a list of things all traveling affiliates should do while they’re accomplishing the primary mission of the trip, they would be these seven guerrilla marketing tactics:

1. Start viral marketing. It’s still the most power-packed method of marketing because people trust their friends as credible sources. You get it when you are a first-rate listener, when you ask questions and when you pay attention to the details spoken by the person to whom you’re listening. You also get it in spades when you follow up by phone, email or surface mail. And you can speed it up when you institute a power-packed referral plan, tapping current customers and prospects for the names of prospective customers.

2. Influence people who can influence other people. That’s exactly what Nike is doing when it gives free shoes to athletes and coaches. You may meet some serious movers and shakers while you’re away from home. Some of them can motivate hundreds of others to do things you want them to do. As all customers are not created equal, all prospects are just as unequal. Your “A” list may be worth more to you than your “B” through “Z” list combined. The road is a great place to meet the influencers.

3. Focus on what’s most important to your target audience. After all, they don’t pay attention to marketing, but they pay rapt attention to whatever interests them, and that can be marketing. They pay especially rapt attention to people who pay attention to them, who use their names, who look them directly in the eye and who smile. When you’re a traveling guerrilla, often your handshake is a more important marketing weapon than your computer.

4. Expand your potential for getting free publicity. You can do it by making it a point to develop at least one new media contact each time you visit a city. Whether you have a meeting, a lunch, a conversation or a cocktail with them, media contacts are your key to dynamite public relations. There is no substitute for knowing a media contact on a first name basis. Guerrillas never assume that PR kits and press releases can do the job. No way. Media contacts do the job.

5. Enrich your travels with brochures and newsletters. These make exceptional conversation starters, serve as potent follow-up weapons and allow you to intensify your relationships. They also allow you to prove your expertise, to help your prospects and customers and to sell the dickens out of your offering. No longer are they expensive to produce. You can offer your free brochure or no-cost newsletter to all the prospects you meet while traveling and while at your destination. You can and should even offer them at home, sweet home.

6. Utilize guerrilla media. By the time consumers figure out that the message you’ve stenciled in chalk on the sidewalk is actually an ad, you’ve already hit home with them. Look into all sign-posting opportunities. They are all over the place. You’ll learn to love them. Become aware of the countless opportunities to run free and low-cost classified ads prior to your trip.

7. Make yourself the recognized expert by speaking before groups while your travel. If you offer to speak for free, you’ll be dazzling at the speaking invitations you’ll get. You should speak for about 30 minutes and provide information of worth and value, delivered with passion and insight. At the end, it’s cool to distribute brochures or give your elevator pitch (that means you should be able to describe your business in the amount of time it takes to ride an elevator).

You do have an elevator pitch, don’t you? As a strong recommendation to travelers, I caution you, as Karl Malden did a couple of decades ago, “Don’t leave home without it.”

Jay Conrad Levinson is the author of the Guerrilla Marketing series of books, the most popular marketing series in history with 14 million sold in 39 languages. He also publishes the Web site GuerrillaMarketingAssociation.com.

The Color of Success

Color is often a forgotten factor in online design. Online merchants spend millions to hone their Web site designs, but they sometimes forget to research their color choices as well. That interferes with their attempt to build a brand relationship with their customers and also affects purchasing behavior.

Color invokes a physical reaction in the human brain. These reactions can perpetuate the mood or tone of your customer in a quick glance, leading to an association of your brand, products or service offerings. You’ll want to make sure that association is favorable.

Psychologically, color can have many different meanings for different cultures, age groups and gender. One of the biggest mistakes an online retailer can make is choosing a color without first knowing how it could be perceived by their target audience. So the first positive step in choosing the appropriate color is knowing exactly to whom you’re selling.

For example, the color white is often associated with wedding celebrations in Western societies like the US, but in Chinese cultures it signifies funerals. Men have been found to prefer bright colors, while women prefer softer colors. Remember, just because you like the color orange doesn’t mean your customer does.

Typically colors can be classified into three categories: warm, cool and neutral. Warm colors like red and yellow are often associated with power, creativity and optimism. Cool colors like blue and green are often associated with beauty and calmness. Neutral colors such as white and black are most popularly associated with good and evil. However, white can also be associated as innocent, and black as elegant.

Plan Ahead

When you’re building your brand online, think about what a color means before committing to it. The following is a reference list of primary colors, their typical association with online viewers, and their possible uses.

Blue is many people’s favorite color, and is associated with honesty.
Possible Use: Software.
Green is good to use if you want to symbolize growth or show your company’s power.
Possible Use: Finance.
Red is an aggressive and exciting color that gets your customers’ attention.
Possible Use: Hardware and automotive.
Black shows off power and elegance and works best for expensive or luxury items.
Possible Use: Luxury Automotive.
Orange provides a feeling of satisfaction to your viewer.
Possible Use: Online Content Provider.
Yellow works best to showcase feelings of warmth.
Possible Use: Kids’ Products.
Purple suggests sophistication and passion.
Possible Use: Jewelry.
White is elegant and clean.
Possible Use: Heavy Content Sites.

Using Color Effectively

Once you’ve done your due diligence and chosen the colors that best fit your target audience, you can begin to utilize those colors to enhance your clicks and your bottom line.

One of the best ways to use color is to draw the customer’s eye to a specific point of interest on your site. One way to do this is by creating contrasts between colors. Contrast can be used to separate points of information, allowing the viewer to easily distinguish the difference between all the information presented. Just be sure to choose colors that are complementary to each other.

For example, colors based on the same hues, like red and orange, often don’t work well against one another. Green and yellow are another example of colors that should be blended carefully, if at all.

Contrast is also important when displaying ads within your site design. Typically, one might think that you should create direct color contrast with an advertisement. However, in today’s online ad space, it pays to look less like an ad and more like regular content.

Build Your Brand

What color is a Coca-Cola can? Unless you are color blind, you know that it is red. You know it so well that you can picture the can in your head and even visualize the shade of red. Imagine you are standing 100 yards away looking at a fence with three soda cans sitting on it. There is a red can, a blue can and a green can. Without being able to read the logos on the can, you’d still be able to know that the red one is a Coke can, right?

Color is a powerful way to drive your brand identity into the minds of your customers. Done right, through consistency over time, your customers will begin to associate your color choice to your products and services. So choose wisely.

Most monitors today can handle millions of colors; therefore, adhering to the browser-safe palette of 216 colors is not completely necessary these days. Unless you’re a stickler for exact consistency, it’s not something about which you should worry too much.

However, that doesn’t mean you should turn your Web site into a rainbow of colors. First, choose your primary color, and then choose two to three complementary colors to use as accent within your site design. This set of colors will become your color palette. Stick to your palette to create a sense of consistency across your designs.

White space is one of the most important graphic elements of any design. It is defined as the space in your design that exists between page elements like headlines, blocks of type, ads, photos, etc.

Too little use of white space can make your Web site look crowded. Too much use of white space can separate and distance your message. Use white space to create a Web site that has “breathing room” for your messages, which in turn makes them more readable and ultimately more attractive.

JIM F. KUKRAL serves as brand manager and director of e-marketing for KowaBunga Technologies, which makes My Affiliate Program tracking software.

Online Travel Takes Off

Schlepping his burgundy leather briefcase and navy canvas travel bag through the Portland airport, George Bragg doesn’t care as much about how he gets his ticket as how soon he’ll get home to Dallas. He’d happily buy tickets from affiliates, discounters, travel agents or airlines.

With travel representing the single largest source of Internet commerce, travelers like Bragg have so many options "it’s hard to keep up with them any more," drawled the weary business traveler with five frequent-flyer cards in his wallet. Airlines and hotels sell directly from their own sites. Discounters offer an array of fares. Travel agencies – hit hard when airlines stopped paying commissions – offer online fares and more. That leaves affiliates with a hearty marketing challenge: reaching consumers and agents already bombarded by messages from the big brands and the discounters that resell the brands. But there’s hope in the numbers: "Close to 100 million people have purchased travel online at some point over the last year," said Melissa Derry, a spokeswoman for Expedia. "While there are 20 million people coming to Expedia’s site each month, there is still a huge number of people who are out there looking for a place online to get these services."

Though higher fuel prices may put a crimp in auto or jet travel, industry watchers still predict record years. Online bookings have never been more popular. Out of all flight and hotel reservations, 30 percent come from online bookings, reports travel researcher PhoCusWright. By 2005, it predicts half of all flight and hotel reservations will be made online. "It just continues to grow," said Bill McGee, a consultant who watches the sector for Consumer WebWatch. "A few years ago, it was mostly business travelers, but now it’s really across the board. It’s used by leisure travelers, by families, by just about everybody."

Airlines, hotels, cruise lines, rental car companies and travel discounters see this huge market, and know their marketing can’t capture it all. So they turn to affiliates. "We think of them as an extended sales force," said Blagica Stefanovski, online marketing and affiliate manager at Orbitz.com. Nearly any site can sell flight, hotel or rental car bookings, whether it’s a sophisticated rewards site or a simple Web page put up by a neighborhood association to fund speed bumps or stop signs. "There are so many opportunities for travel on the local level," said Jason Price, vice president of marketing at Hospitality eBusiness, an Internet consultancy for hotels. "You can post local news or sports information, and provide a travel link to help fund the site. Maybe some kid in his basement wants to talk about high school sports in the area – why not have a Marriott button there for the hotel around the corner?"

Whatever the site, now is the best time for sales. "We’re [in] our best seasonality – the peak summer travel season – so it’s a great time for affiliates of travel merchants to promote their travel options and improve their placement or for new affiliates to give it a try," said Veronica Young, affiliate marketing manager at Hotwire.com. "The winter holidays are another big travel season: Thanksgiving, Christmas, New Year’s."

Travel is perhaps the easiest entry for new affiliates. They are credited for sales up to 30 days after customers click through their links, even if customers don’t go through the affiliate when they actually buy. New banner and link codes are sent within emails so affiliates don’t have to log into an interface. Many travel affiliates don’t even update their codes anymore. Their merchants do it for them using dynamic rich media. Travel merchants often have teams of "program managers," rather than one affiliate manager, to give personalized service to affiliates. "It’s certainly an ongoing challenge to stay on top of all the changes," said Michael Bauer, senior vice president of affiliate marketing for Hotels.com, which offers an online "university" for new affiliates. "What we offer affiliates is we are the eyes and ears of our industry. If there’s a swing, we identify it."

Travel merchants also actively help affiliates convert the curious into buyers. Interactive banners, for instance, are the hottest buzz in this industry and are offered by most travel merchants: Customers input their destination and dates at the affiliate’s site first, moving them further into the search and committal process.

Since the peak summer travel season is in full throttle and holiday travel is just around the corner, these perks should prove beneficial to affiliates trying their hand at the high-flying online travel industry.

Hotels

So what’s the hottest-selling travel product now? Hotels top the list. Eighty percent of active business travelers and 73 percent of active leisure travelers went online for hotel reservations in the past 12 months, according to the 2004 National Travel Monitor (NTM).

Affiliates could work directly with the brands, but few offer affiliate programs. "Only two or three brands have actually launched an affiliate program – only in the past two or three years and with moderate success," said Price, who cites Accor Hotel’s worldwide affiliate program with 3,700 hotels. "The rest of the brands have not embraced the affiliate market. As soon as these early adopters come out with performance, the others will jump on." Individual hotel properties may be willing to negotiate with affiliates who can give them Web bookings. Try it.

Affiliates can work with discount sites that show fares for dozens of hotel partners, ranked by price or brand. They can work with "opaque" sites like Priceline and Hotwire, which rank unbooked hotel rooms – along with excess airline seats, car rentals, vacation packages and cruises. Both pay 2 percent commissions to affiliates. "We’re kind of the Costco of the online travel industry," Young said. "Any affiliate that has a site where customers are going to be looking for cheap prices is a great fit for our program: a travel site, a discount site, a coupon site."

Affiliates also can work with affiliate-only networks like World Choice Travel. World Choice offers fully branded travel search pages, with an underlying software that combs the Web for lowest fares. World Choice pays 5 to 10 percent on hotel bookings, plus half of any transaction fee.

Flights

Nearly 75 percent of consumers who researched travel online bought their airline tickets online in 2003, reports NTM. The incentive for online bookings is there: Internet fares are now, for the first time, the cheapest way to buy airline tickets, according to Consumer WebWatch.

Affiliates can sign up with specific airlines like Alaska Airlines/Horizon Air, which pays $2 for every ticket booked. Affiliates can sign up with discount sites that rank searches by price, flight times or airline. The largest are Expedia, Orbitz, Travelocity, CheapTickets, OneTravel and TravelNow. Consumer WebWatch found that Expedia leads in the greatest number of lowest fares but Travelocity, which has the best booking tools, has the largest array of flight times and low fares.

There’s also World Choice’s branded program, which searches anywhere in the US, Canada, UK or Europe for the lowest prices from about 30 airline and booking sites. Affiliates earn 5 percent on online sales and 3 percent on call center sales.

Car Rentals

Forty-five percent of active business travelers and 32 percent of active leisure travelers went online to rent a car during the past 12 months, reports NTM. Those numbers should only grow, as insiders predict that more than 20 percent of all car rental bookings will be made over the Internet this year. Alamo’s program pays 3 percent of time and mileage, with checks mailed monthly (no minimums). Expedia and Travelocity pay 2 percent commissions, and Orbitz pays a flat $2 per rental. World Choice Travel searches 28 worldwide car rental companies for best fares and pays 5 percent on any of those booking. Plus affiliates can split the optional $2.99 to $6.99 transaction fee.

Cruises

In the first quarter of 2003, more than 2.2 million travelers worldwide took a vacation with major cruise lines – a whopping 23 percent increase over 2002, reports the Cruise Lines International Assoc. (CLIA). "As the cruise industry has grown and as more people take cruises and become confident with the components of the cruise, they’re becoming more confident with booking online," said Brian Major at CLIA. "A lot" of affiliates, he said, have benefited as a result – most notably CruiseCritic.com with 110,000 registered members, as well as affiliates CruiseMates.com and Cruise Addicts.com.

Packages

Packaged travel is emerging as a solid moneymaker. More than 68 percent of online travel buyers buy more than one component, reports PhoCusWright. Among active leisure travelers during the previous 12 months, 20 percent went online to book a complete vacation package with flight, hotel and often car rentals in one transaction. "If you look at the online travel space, 2003 was the year of the package," said Joel Frey, a spokesman for Travelocity. Sites like Expedia have even added theater reservations, sports tickets and transportation to and from the airport. Flights are now "like the milk at the back of the store," said Derry at Expedia.com. "By packaging options together we can afford customers better pricing and affiliates better commissions." Now affiliates can get paid for the whole trip and not just one flight.

Affiliate Options

Affiliates have a number of ways to get into the travel industry.

Link or banner: You don’t have to be a travel site to make use of affiliate links. Webmasters with sites touting everything from book reviews to financial advice have travel banners on their home pages, suggesting that the appearance of having advertising support from a big travel provider has its benefits.

Powered by: More travel-specific sites often go with co-branded versions of the merchant’s site. Visitors make their reservations on a page of the affiliate site that is "powered by" a merchant. After typing in their destination and time frame, their travel options are displayed on the merchant’s site.

Private label: With this option, affiliates can carry their own site design onto every one of the travel reservation pages. And affiliates can offer personalized call center services to buyers. Options are either a generic toll-free number, where the call center asks for the discount code or special Internet code from the affiliate’s site, or a dedicated private toll-free number answered on behalf of the affiliate and its brand. "We are usually the ones that come to the affiliate and say, Ã”I think it’s a good time to offer this customized toll-free number,’ which doesn’t cost any additional dollars," said Bauer from Hotels.com. World Choice Travel’s private label program even puts the affiliate site’s name on consumer credit card statements.

Trends

The implementation of account management teams is enabling more personalized services for new and existing travel affiliates. "There’s a lot of competition, so merchants have to differentiate themselves from the competition," said Young of Hotwire. "Part of that is how they treat their affiliates."

Globalization is another big trend. The Internet has no borders, so these days an affiliate in Europe can be a merchant’s top producer of US travel bookings and an affiliate in the US can produce great bookings for an Italian air travel site. "We encourage our affiliates to think outside of their boundaries," Bauer said. "No matter where they are in the world it’s up to them what region they want to target." Hotels.com supports five different languages and 13 different currencies through its US, European and Asia/Pacific affiliate networks.

Meanwhile, last-minute bookings are moving online. Several integrated sites like Travelocity offer cheap rates up to three days prior to a trip.

Bus and train bookings online are still in their infancy in the US. In Europe, Euro Railways is ahead of the game, offering 5 percent affiliate commissions on discount rail passes.

"For me," said businessman Bragg, ready to board a flight to Dallas for the 12th time this year, "it’s all about price and convenience and the simplicity of the site." Affiliates or not, sites offering those features have the potential to get him, and 100 million others, on board.

JENNIFER MEACHAM is a freelance writer who has worked for The Seattle Times, The Columbian, Vancouver Business Journal and Emerging Business magazine.

Share and Share A Link

Talking about Steve Messer’s role in online affiliate marketing is like talking about Davy Crockett’s role on the wild frontier. Since founding LinkShare in 1996, Messer has been a leader in the rapidly expanding pay-for-performance channel. Deloitte & Touche has named LinkShare the fastest growing technology company in the New York area for the past two years, and ABestWeb.com called LinkShare the best affiliate network provider in 2002.

In this conversation with Editor in Chief Tom Murphy, Messer showed one of his secrets is the willingness to challenge conventional thinking, particularly in assessing the value of small- to mid-size affiliates

TM: You’re an attorney with a specialty in communications law, so I have to wonder what you’re doing running an affiliate marketing company.

SM: In 1995-96, I finished law school and was recruited to a think tank up at Columbia Business School that was called Columbia Institute for TeleInformation. There I recruited two other people from Columbia – Cheryl Ho and Horace Meng – as well as my sister, Heidi, who is now president of LinkShare. All of us had a technology and communications background, so LinkShare was a natural fit for us. (Meng is now LinkShare’s CTO; Ho directs media relations.)

TM: LinkShare has been around for about eight years as affiliate marketing mushroomed. Would you say the opportunities for affiliates during that time have gotten better or worse?

SM: LinkShare started the affiliate marketing concept in 1996 and we got the patent in ’99 for what we do, for what is today called affiliate marketing. If you had asked me that question two years ago, four years ago, six years ago, I’d say exactly what I’m going to say today, which is that every year the entrepreneurial spirit has driven this market into completely new directions that were unexpected when we started this in ’96.

TM: Would you say those are better directions or worse?

SM: Much better. Typically, you find that entrepreneurs build on the work of prior entrepreneurs. So this market takes what has been effective for the last seven or eight years and continues to build something new on top of it. For the most part, that has been great. Occasionally, you do find that someone takes it into a not-so-positive area.

TM: I know LinkShare is a closely held company, but what can you tell us about your revenue and your growth rate?

SM: We do not disclose revenue because we are a private company. We are obviously the largest company in the space. If you look at some of the statistics that do come out, that are public, we won the Deloitte & Touche “Fast 50” award two years in a row. The first year we won it with a 32,000 percent growth rate over a five-year period. Last year we won it with a 27,000 percent growth over a five-year period.

TM: When you talk about a 27,000 percent growth rate, can you give us a starting point or a finishing point on that?

SM: That would be the equivalent of giving you my revenues, which we don’t do. But I appreciate the question.

TM: With the long-awaited Google IPO, it seems like it’s a good time for other companies to think about going public. LinkShare, I would think, would be a prime candidate. Have you thought about going public?

SM: You know, LinkShare filed to go public in 2000 and the market window closed before that was possible. So we have some experience with that process. A company typically goes public for three reasons. One is they believe they can get a great currency to do tons of acquisitions. The second is they need liquidity for their investors or to raise capital to grow their business. And the third is, to be frank, ego. In LinkShare’s case, we’ve been profitable for three years and we continue to be extremely profitable. So we have quite a bit of true currency to do acquisitions that we want to. Being a public company is not necessarily the most positive thing these days, and it requires a lot of restrictions on the company and how it works. Our goal is to focus on our partners and our investors and, at this point, continuing our business as we think best.

TM: LinkShare’s home page says you have “over 10 million partnerships in the network.” What does that mean?

SM: We use a metric known as relationships as a way to judge how effective our business is and how well we’re doing. We’ve actually used that metric of 10 million relationships for over three years. The reason we use that metric is because an affiliate can join our network and not participate with any of the merchants; that has a potential for revenue of zero dollars. But another affiliate could join and partner with 10 of our merchants; that would be the equivalent of 10 relationships. That gives us a sense of where the potential revenue is for that affiliate and that partner. So the more relationships we have, the greater the revenue potential for our partners and our customers.

TM: Of those 10 million relationships, how many have been paid commissions during the last few months?

SM: When you look at our base, you see an extremely large and diverse base which is unusual in the industry. We have heard people talking about how only a few players are making money. That’s actually not the case at all. We find that almost all the growth of our company is coming from what we call the core producers. That would be the small- and mid-sized sites that don’t necessarily drive the volume of the majors, but are actually growing at a much faster rate. I’ll give you an example. If you look at the top 50 affiliates we have from last year, from the year-end perspective, and you look at the top 50 today, there are only about eight that remain from last year. They haven’t gone away, but we have new people constantly entering that list.

TM: Do you clean out your database after a while and break off relationships with affiliates if they’re not producing?

SM: We look at it from a relationship perspective. A relationship in our system has a time limit like any other contract. When that comes to expiration, it ends. By virtue of that, they do go away. We believe that if someone is registered in our system, there’s always a chance to reactivate them, so we don’t necessarily destroy the prior information.

TM: One of your investors is Comcast Interactive Capital. It seems like there’s a natural synergy between online shopping and TV shopping. Have you had any discussions with Comcast about doing something as a cooperative effort?

SM: We don’t disclose internal discussions, but you’re not wrong in the sense that, if you look at our business, the reason Comcast was so eager to work with us is, first, we all have cable backgrounds. The second thing that is interesting is that our technology is already interactive TV-enabled. So the idea that you could translate what we do online to the interactive television world was really exciting and compelling to them. And it’s nice to see now that Comcast is the No. 1 player in that space.

TM: A lot of people see a growing role for the niche networks, and there seem to be more of them popping up. It makes me wonder if LinkShare would consider spinning off a division to focus on a particular industry, or perhaps start a second company.

SM: Creating a niche network is challenging unless it’s built off somebody else’s technology because the volume that a niche network can drive is so small that it can’t really support what a transactional network needs. LinkShare’s tracking is set up like a bank’s. It doesn’t use cookies because it cares about accuracy and it cares about privacy and it has to be able to keep a record and an audit trail of exactly what happened. That equates to a bank. Cookie-based technologies are the equivalent of cashing 10 checks at a bank, but only nine of them get credited to your account. It’s not an accurate way of doing business. So as you begin to focus on different segments of the business, you still have to have that accuracy. That requires money. With most of the niches, you have don’t have enough money to support an accurate business.

TM: Some merchants are running their own in-house programs. And there’s an argument to be made, as affiliate marketing becomes a bigger part of the revenue stream for a particular company, it might make sense to take that in-house to reduce the costs. What’s your take on that?

SM: You don’t really see it happening often with any of the major players. You see it in some of the smaller players, and frankly that’s the scarier side of the business. The smaller players have a higher incentive to manipulate the information because there’s no third-party audit going on. That can happen behind the scenes, and there’s nowhere to go to resolve the issue. When you get to high volumes, the big names don’t want to do it themselves; they don’t want to put their brand on the line. What they’re looking for is a company that will represent that this is a fair and accurate program and also do all the underlying work. Large companies who try to do this on their own typically don’t succeed at it or find that the cost of doing it doesn’t really work. Geoffrey Moore, a legend in the business school world and in the business thinking world who wrote Inside the Tornado, has a great concept called core competency, which is that you should only focus on your core. Anything else you do just distracts you and you’ll do poorly, and over time you’ll only lose and it will become a drain on your company. He spoke at our summit event, which we held in New York in January, and he focused primarily on why LinkShare is the exact example of why you should not be doing this on your own, why you cannot survive. And I think he’s dead on. Obviously, I have an incentive to believe that, but I think he’s right.

TM: Let’s look at your revenue models for both affiliates and merchants. Can you first give us a typical model for working with a mid-sized merchant?

SM: With all merchants we do an evaluation. There is no standard package in our business. Because we’ve been doing this for eight years now, we do a needs assessment. We ask them, “What kind of resources do you have for this program? Here is what a well-run program requires you to do.” Then we usually walk through and say, “Do you have the expertise to do these things, and do you have the people to do these things?” At the end of that, we make an evaluation and say, “Here’s what we’re going to do. Here’s what you’re going to do. And here’s what it costs to perform that.”

TM: Roughly speaking, what kind of figures would you throw out to a mid-sized company about costs?

SM: On a monthly basis, the lowest is about $3,000. And it can go up to $25,000-plus, depending how big [they are] and what they want to do.

TM: Let’s look at the affiliate side now. What is a typical model for working with your affiliates?

SM: On the affiliate side, we have two teams who work with them. One is called distribution services, which is a concierge-level service designed to help our partners grow. We look for high potential partners and we look for up-and-comers. We also look to support our existing partners who are doing high volume. And finally we go out there and source new business. The second team is our support group. It goes beyond answering basic questions like “How do I copy and paste?” They’re also there to provide you with proactive information, such as “Have you thought about working with this merchant or that merchant?”

TM: You recently gave a $15,000 award to a superaffiliate for driving growth with a large number of merchants. Do you plan to give that incentive each quarter?

SM: We do have a titanium award. And our LinkShare Club program, which started in the fourth quarter of last year, is the first loyalty club for an affiliate marketing company. It was extremely successful. We did award a $15,000 titanium award. But we also award, every week, lots of cash – thousands of dollars. In our Earn More in Q4 program, which was the first program in which we awarded the titanium award, over $350,000 in bonuses were paid. Every week, people were getting a tremendous amount of money. That was great. We were able to see some of the things our partners are able to do. Affiliates can do some amazing things when given the right motivation.

TM: Speaking of motivation, beyond cash, how often do you communicate with your affiliates? What kinds of things do you do to motivate your affiliates?

SM: Great question! We have the Club Award, an email that goes out every week to let the affiliates know where they stand in hitting their goals. We also do other things for promotions inside. We have Consumer Promote, where we tell affiliates what a merchant is promoting, what specials they have that week. We also have promotions of what the affiliates are selling to the merchants every week, so the merchants can see affiliates have a service they want to sell. We have weekly meetings where if we hear there are special deals or we source special offers for our merchant partners, we bring it to them. And that’s essentially an affiliate saying “Can you get me a sponsor for this or that?” So we spend a tremendous amount of time communicating with them. But that’s all online or on the phone. We also take it a step further and, twice a year, we have both a symposium and a summit. The summit is an intermediate to advanced level thought leadership opportunity for people to get together and take this industry and really move it a step forward. The summit is an amazing event. The second thing we do is the LinkShare Symposium, which is now going on seven years in existence. It’s an invitation-only event. We have about 700 people come out to see incredible speakers, listen to panels and then, in the afternoon, conduct Deal-Maker Direct – an opportunity for them to sit down at a table and meet all the affiliates and merchants together so they can try to cut some deals. This year, we’re taking it a step further by doing the LinkShare Golden Links Award. We’re doing a black-tie, evening event where affiliates and merchants have been nominated for awards. It’s also where we’ll be awarding the titanium award to winners and given them their checks.

TM: What’s your company’s position on “parasiteware?”

SM: We’ve taken a very unique position in the industry. We originally changed our affiliate agreement about a year before anyone else realized this was an issue. A year later, we added the anti-predatory advertising addendum. What that does is to contractually restrict what downloadable software can do before it can work within LinkShare. We are today the only company taking such a strong stance. We chose not to participate in the Code of Conduct because we felt it was too loose a set of rules. It didn’t hold anyone’s feet to the fire. So we’ve taken a very strong position. We’ve kicked out players who were unwilling to sign the addendum. And once they sign the addendum, we do require ongoing testing to make sure they’re in compliance.

TM: There’s been a lot of talk about Norton’s program that blocks ads. Has LinkShare been in discussion with Norton, trying to get them to change the defaults on their software?

SM: We are. We’ve met with Norton many times. We continue to have discussions and dialogues with them. We’re fortunate in the sense that we have a very good story with the names behind us to help them understand we are more than just a behind-the-scenes company. We’re a real entity with real names behind us. So that’s been very good for us. We also work not just with Norton but with any of the other parasiteware removal companies to make sure they don’t make mistakes and think that we might be associated with them.

TM: What do you think is the biggest challenge to affiliate marketing for the next couple of years?

SM: To be honest, there are a lot of concepts out there without a lot of data behind them. There are very good concepts that end up with very poor results. For example, we see a phrase up there that is “shrink to grow,” which means to shrink your program down to grow its revenue. We’ve seen that time and time again fail as a concept and hurt affiliates. Affiliates are up-and-comers. Affiliates are people who can add value to a merchant’s products and help them to differentiate in a positive way. These concepts are sometimes wishful, but they most likely are inaccurate. The data is often overlooked, and that’s the place we probably should be looking first.

TM: By shrink to grow, you’re talking about a company weeding out its less active affiliates and trying to emphasize growth by the most productive people, is that right?

SM: True. The numbers just don’t pan out. When you look at the top players who are out there, they’re all growing at a slower rate than e-commerce. Yet their commission rates are growing at double the rate we see in the marketplace. So what you’re doing is you’re paying more and more for less volume and less traffic. And over time that makes the programs less effective on behalf of the merchants. You also find those top players offer a very low-level, value-add: cash-back models, coupons and loyalty-type programs. Those models don’t help our merchant partners get new customers, and the costs of retaining customers continue to increase. So, if our partners’ goals are to find new customers, they need to look into new markets and they need to manage a blended average of new partners and new customers with their existing base of retention sites.

TOM MURPHY is editor in chief of Revenue and author of the book Web Rules: How the Internet is Changing the Way Consumers Make Choices.

The Write Stuff

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

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

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

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

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

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

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

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

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

Create It Yourself

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

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

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

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

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

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

Get a Little Help

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

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

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

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

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

Rely on Pros

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

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

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

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

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

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

Shop Smart

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

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

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

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

Tech Issues

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

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

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

Flaunt It

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

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

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

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

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

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

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

Holy Profits!

Webmaster Jermaine Griggs truly believes in selling the Gospel online. His sites gross almost seven figures per year. His conversion rates are miraculous; six out of 10 people coming to his site end up buying. His list of potential customers grows by 6,000 each month. He has 650 affiliates evangelizing his products. And he’s barely old enough to drink communion wine.

“I attribute everything to God,” the 21-year-old preaches. “This is not only a business venture, it’s a ministry.” His products are mainstream enough: videos that teach piano players how to perform gospel music by ear. But with GospelKeys.com, HearAndPlay.com and a host of other sites catering to the church crowd, Griggs sings the praises of online religious sales with the same passion and conviction with which he leads the choir at Good Success Christian Fellowship in Long Beach, Calif.

“I empower musicians who not only play for themselves but go on to play for churches,” Griggs said. “That’s the ministry side, and it really gives me satisfaction.”

Griggs is one of thousands getting satisfaction from selling faith-based products online. In what comScore ranks as “one of the top 10 gaining categories,” merchants and their affiliates are bringing products once relegated to religious bookstores and church foyers to the online masses. They’re selling religious books, CDs, videos, devotionals, Bibles, gifts, greeting cards, crucifixes, rosaries, menorahs, Kiddish cups, stationery, art, church supplies, incense and – the latest fad – T-shirts with a religious message. “In the past, most of the online sales were driven by [religious] music and books,” said Mike Goldenberg, marketing director at body products merchantMountOfOlivesTreasures.com, which promotes its affiliate program as an online fundraiser for religious groups. “But the theme is now expansion into other categories that heretofore have been largely ignored.”

Suddenly, religious kitsch seems sublime. What was a $2.6 billion market in 1991 is now an $8 billion market, according to Packaged Facts, the publishing division of MarketResearch.com. A growing portion of that revenue comes from online merchants and affiliates. Many target Baptists and charismatic or evangelistic Christians, who are nearly twice as likely to buy Christian books as other Protestants or Catholics. A survey conducted by Hallmark showed four out of five Americans – roughly 230 million – call themselves Christians. Evangelical Christians alone represent 72 million potential buyers, said Goldenberg.

Current events may be fueling a revival. Religious validation, it seems, is often tied to war. And then there’s the buzz gen-erated by Mel Gibson’s movie, The Passion, which grossed nearly $600 million worldwide in its first 10 weeks at the box office. “With The Passion movie that blew through theaters, business has been quite good,” said Ian Rutherford, who founded the Catholic resource AquinasAndMore.com, which pays 6 per- cent to 12 percent to its affiliates. “Our March sales actually beat Christmas.” That doesn’t mean believers are willing to buy every religious trinket online; at least not yet. But it does mean that savvy Webpreneurs are finding ways to get some of those searchers to their own online paradise. “Many specialty items aren’t readily available at Wal-Mart or even the local Christian bookstore, especially if you’re not Christian or your branch of Christianity is not well served by the local store,” said Roger Finke, director of the American Religion Data Archive at Penn State University. “The online retailer can carry greater variety and a larger volume because they are appealing to a potentially larger market.”

With 50 million hits and 275,000 unique visitors per month, Bible.com fits the bill. ComScore’s Media Metrix ranked it the 14th most popular religious site on the Net in April. Who would guess it’s run by a soft-spoken retired couple from Dewey, Ariz.? “We’ve been in this Internet ministry since 1994, with no prior experience,” said Bud Miller. “I’m 75 years old, and Betty is 64. We’re not quite in the age group in the cutting edge of the Internet, and it’s been quite a learning curve. But because we’ve been in ministry, everything we do is trying to get the gospel of the Lord Jesus Christ out. And if we sell something that helps underwrite what we’re doing, then praise God.”

Profit and Piety

These affiliates say they don’t embrace profit; the message, they believe, could be lost in the medium. “Although at times hypocrisy results from this mix of profit and piety, for the most part this sense of ministry imparts a refreshing collegiality to the business,” reports Packaged Data. “Indeed, religious products marketers tend to regard themselves as allies against their real adversaries: the godless and corrupt influences of the secular world.”

Not surprisingly, one hears very little about spammers, predatory ads or other problems in this segment. Revenue spoke with affiliates who earn less than $100 a month and others who earn tens of thousands. Whatever the cash flow, it is often earmarked for greater goals, such as construction of a new parish, missionary trips or the ability to continue spreading a spiritual message.

“We’re pretty much financing the ministry by ourselves right now,” said Marilyn Bush, operator of FastTrackMinistries.com. “And it’s just one more way to make money.” Her job introduced her to the value of affiliate relationships – she’s assistant to the marketing director for GospelCom.net, parent company to GospelDirect.com. Now she uses a GospelDirect affiliate link on her personal site. Commissions go to fuel her trusty 1984 motor home, donned with “Fast Track Ministries” signs on each latte-hued side. “We take our motor home and go to different auto racetracks,” said Bush, who spends weekends with husband Larry driving to Michigan’s 43 dirt tracks or NASCAR tracks. They roam the pits talking to the drivers and their families, walk through the stands handing out pictures of Christian NASCAR drivers or sports devotional books and – once announced – greet the children under the shade of the motor home awning and tell stories of David and the giant Goliath or Noah and his ark of animals. “Our site is pretty small, so we don’t even make $100 per month,” Bush said. “But with gas prices now, $100 a month almost fills our motor home. I would accept that from anybody.”

GospelDirect.com offers an 8 percent commission, which is about average for religious sites. But some sites give more. PacificHeritage.com, for example, pays a 20 percent commission on sales of its gifts and statuary, which includes 16- to 33-inch-tall saints and angels with glass eyes and “life-like, long beautiful eyelashes.” Pacific Heritage also offers a bonus to the people who refer new affiliates: 25 percent of the new affiliate’s commissions. JustCatholic.com rewards consumers by offering to send rebates to the parish of the shopper’s choice. In 2003, it sent checks to 1,200 US parishes.

Being an affiliate in the religious space takes some conviction. “The non-religious product companies would die to have the passionate cause that’s inherent in the religious companies,” said Jackie Huba, author of Creating Customer Evangelists. “Buying things that are already part of your belief set fills an emotional need and emotional desire for your life. The religious companies already have that cause, and their buyers are already true believers.”

There are already many online gathering spots for the religious, from forums, to webcast religious services like WekivaPresbyterian.org, to issues-related message boards, to Christian dating services like FriendFinder’s BigChurch.com. “Just like every other industry, Internet-related stuff is coming into its own – for religious purposes as well,” said Stan Taylor, co-creator of ReligiousResources.org, a free directory of 5,000-plus online merchants selling everything from religious art and events to memberships in electronic communities and religious texts. “The community potentials on the Internet are showing a lot of promise in faith-based items.”

Thanks to Amazon.com’s religious books and Google’s AdWords, Taylor is now pulling in a few affiliate checks of his own. “They enhance our site, and we make money off of them,” said Taylor, who reports 2 percent clickthroughs and commissions of a few hundred dollars per month on free ads automatically placed by Google’s software on Web pages matching ad content.

Target Audiences

Catholic sites, for instance, “focus on either Catholics who want to learn more about their faith or Catholics you’d consider devout – orthodox Catholics who take their faith seriously,” said AquinasAndMore.com’s Rutherford, who recently launched a Catholic version of eBay, CatholicAuction.com. Christian sites most frequently target evangelicals and Baptists, the two largest Christian segments after Catholics. Jewish sites focus on orthodox Judaism, the most ritualistic and therefore most heavily associated with Judaic products.

For webmasters, every sale, every site visit, every ad is a chance to bring individuals into the flock. Consumers “want something that’s missing in their life, and if they find it at your site they’re going to walk through your doors,” said Dean Peters. He helps his Baptist church youth group raise funds through CafePress.com’s affiliate program, and during the week runs the HealYourChurchWebsite.com forum.

Despite the zeal with which they talk about their products, religious affiliates seem less advanced at spreading their message in the Internet world. Email campaigns are few and far between. Few religious affiliates bid on search engine placement. Viral marketing is largely limited to e-cards. And potential affiliates who already have a substantial land-based following shy away from affiliate programs, not because the money isn’t there but rather, they’re afraid to be perceived as having a site that hawks its wares.

That’s actually good news for new affiliate entrants. There’s plenty of opportunity to get high-ranking placements on search engines. “You can get in with Gospel products for less than 10 cents per click,” said Griggs. “I have affiliates out there – five or six – who are working search engines with their own financial resources, but their commissions are outweighing what they pay by four or five times.”

That’s a pretty good return on investment, echoed in sites outside of Griggs’. “If a site is really willing to promote and can get on the search engines, they can do well,” Rutherford said. “A banner somewhere on the site just doesn’t cut it. They’ve got to be willing to go out of their way to promote specific products or categories on their home page or throughout their site. [After that], it’s really a matter of how much they’re willing to do.”

It also pays to pay attention to trends. For Catholic sites, items such as rosaries and Gregorian chants – things that have waned in popularity over the years – are starting to gain interest again. For evangelical sites, T-shirts proclaiming “Jesus is my homeboy” or other pseudo-evangelistic phrases are hot, as are Christian magazines and Bibles aimed at the teen market.

With all the well-behaved sites in this sector, are there any hurdles for sites based on religion? “There’s always a problem between the secular and the Christian/religious world,” said Griggs. “And that’s what we have to deal with. We do have the people who are in this business just for the money. We do battle with that. But for the people who love God, and gospel music is what they do, we’ll never have a problem with those people.”

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

Collecting Your Share

Paul DeMoney is an affiliate marketer’s dream: a shopper who is always ready to buy. Anytime, anywhere. He wants, no, he needs Star Wars action figures, and he doesn’t care where he gets them. Your site. Another e-commerce site. The nearest toy store. Whatever.

He just wants the new toys wherever he can get them. And whenever. No need to wait for the holidays. He’s always looking for new toys. It’s a year-round passion.

“Collecting is much easier nowadays with eBay and all the vendor sites out there,” DeMoney said. “I am no longer at the mercy of toy stores. On the Net, you can always find what you want if you know where to look.”

DeMoney is more than an Internet customer. He is what we call a collector – someone with a passion for product. And what more could an affiliate marketer want?

Imagine marketing to a niche where the shoppers are passionate about buying the items you promote. Envision being rewarded with the lofty commissions that are offered through the different programs offered, with the potential of earning a five-figure monthly income as a top-producing affiliate.

What’s more, these collectors aren’t ruled by season or reason. They will buy anytime, anywhere as long as the item is something they want. Meet your dream niche – collectibles, and your dream target audience – the collectors.

Carolyn Tang understands the collectible industry from the affiliate manager’s perspective. She manages the affiliate program for CollectiblesToday.com. “The collectibles segment is really a lot of fun, and if you like marketing, you’ll love marketing to collectors,” said Tang. “Our consumers are so passionate that it keeps conversion rates healthy.”

Industry Rising

The collectibles industry is growing fast. According to CollectiblesToday.com, in the year 2003, the total retail sales reached $3.9 billion in the collectibles niche. A survey done by eBay showed popular items to collect include pottery, glass, dolls, holiday items and sports memorabilia. Popular antique items include fishing nets, weathervanes, metal picture frames and quilts. The number of collectible merchants have increased in the last two years, giving affiliate marketers options to be creative and the ability to earn more when marketing this niche.

“The industry’s continued growth can largely be attributed to Internet sites that sell collectibles,” according to collectibles expert Barbara Crews. “The Internet has completely changed the world of collectibles. Things that we once thought were rare or hard to find are now easily available through online auctions or Internet venues. It’s been the boon and the bane of collectors everywhere. Perceived values have usually dropped as a result of more items becoming available, but the collector is now able to find those bargains and hard-to-find items.”

Unity Marketing’s latest research shows that about 40 percent of US households collect some item. In other words, 43 million American households actively collect something.

“The desire for people to collect things is deep-seated and something that transcends time and place,” said Pam Danziger, president of Unity Marketing and author of the book Why People Buy Things They Don’t Need. “People will spend money to acquire items that they keep, cherish and collect.”

Why They Buy

Creating a profile of the typical collector is no easy task, with good reason.

“A typical collector? There’s no such animal,” said Crews, who is About.com’s collectibles guru. “Many folks collect things that bring back memories of childhood, such as toys they might have had that Mom threw away. Or the cookie jar that sat on their grandma’s counter.”

It is said that collectors have addictive personalities. And their addiction leads to shopping that borders on compulsive. “You’ll find collectors will want one of everything,” Crews said, “every Barbie that’s been made or every Ty Beanie Baby.”

To understand the collector, affiliate marketers must identify what moves the collector to buy. “Today’s collector is younger, smarter, more sophisticated, more affluent and shops in a much wider range of retail venues than yesterday’s collector,” said Danziger. “Reinventing the collectibles industry means getting in touch with the new collector, understanding their wants and desires and creating products based on that.”

Know Your Audience

As with any marketing niche, you must know your audience if you are to succeed. This is critical to success for anyone entering the collectible marketplace.

“If you’re trying to market to a Precious Moments collector, take some time to research the topic and stay updated on product developments,” said Tang. “Know which lines are coming down the pike and keep your finger on the pulse of the collector. Continually ask yourself, ‘What is the collector looking for now?'”

Research conducted by Unity Marketing in 2002 suggests that men are the future of a market once thought to have been dominated by women. “Since the Beanie Babies craze died down, women have turned their attention to decorating rather than collecting,” Danziger said in her book. “While the collectibles industry has sprung up largely serving a female audience, the collector market today is becoming more and more dominated by men with their different collecting interests and passions.”

Men, the Unity study revealed, tend to start collecting at a much younger age than women. “Men carry their collecting passions right from childhood through early adulthood and then on into maturity, while women tend to delay active collecting until they reach 35 years or so,” it said. This is great news for affiliate marketers in the collectibles arena. Not only are more people collecting, they are starting young and shopping into their middle age.

Risk in Rarity

Along with the enthusiasm and excitement that surrounds the area of collectibles, you will find a specific interest in antique and rare collectibles. Using the Internet and online auctions, it is now easier to find items that were once limited and/or hard to find.

How does one protect oneself from purchasing items that are counterfeits and have no value? “Ultimately buyers should make sure they purchase from a well-known dealer in order to protect themselves,” suggests Bill Ferrol, owner of BillBam.com.

The antique market is limited in available merchants for affiliates. This is often due to the fact that rare and valuable items have higher price tags and take longer for a sale to take place. This can require more time and effort on the side of the affiliate marketer. While the commission may be higher – say, 15 percent of $20,000 – the time it takes to make that sale has to be weighed against the profit. Affiliate marketers who do chose to market these rare and valuable items should work with merchants who offer a certificate of authenticity. This will ensure that you protect your credibility and gain repeat orders from customers.

Start Small, Think Big

BillBam.com Affiliate Manager Chris Sanderson recently entered the collectibles marketplace but says there is plenty of room and opportunity for anyone interested in entering the field.

Sanderson encourages more people to enter the niche and offered tips for how to do so. “The market sector of collectibles is very big. There are a fair number of merchants selling collectibles and the sector itself breaks down into a wide range of niches, ranging from plush toys to pins to cards. So there is room for a lot of affiliates to be involved at different levels,” stated Sanderson.

“Start with a small focus on a selection that you are interested in,” said Sanderson. “Mix the collection with items from other stores that fit the selection, add some value to your presentation with some content.

“For example, if you like Star Trek, then start with that selection, find books, videos and posters from other merchants to complement the site and add some content to the site, not only to make it more search engine-friendly, but so that visitors feel that your site is ‘adding value.’ Your content might be about Star Trek, or it might be about the products or the merchants.”

That doesn’t mean the market space isn’t full of competitors. A suggestion from all affiliate marketers that are playing in this space is to pick something you are interested in, have fun with it, and expound on it. This formula, along with some basic skills, will enhance your chance of success.

Competition is Plentiful

“Competition is fierce,” said BillBam’s Sanderson. “There’s a lot of overlap and often it comes down to first to market and largest product range. The price can be a secondary issue for the consumer and affiliates on what is bought.”

Carolyn Tang confirms that competition is fierce but is quick to note the positive in that. “I’m one of those armchair economists who believes that competition makes for a healthy marketplace, so I think it’s a good thing to have,” Tang said. “It also provides an affiliate with options.”

As with any marketing venture, it falls upon the affiliate to establish a niche or specialty in the larger niche. “I haven’t seen any indication that the affiliate market for collectibles is anywhere near saturation,” Tang said. “There are still a lot of niches out there that can be developed.”

Starting is Easy

“Almost any kind of site can be successful,” said Sanderson. “There are obviously the ‘shop store’ style sites that promote the full product range, but also you have sites that might be focusing on a particular TV show, like Star Trek, that can sell collectibles focused just on that niche.”

Creating your own affiliate success within the collectibles industry doesn’t require skills any more advanced than those used in other niches.

“Knowledge of search engine optimization or pay-per-click marketing, or other methods of site promotion would be good to have,” said Sanderson. “No traffic, no sales. For affiliates who want to do datafeed-powered sites, skill in ASP/PHP is useful, as well as potential MySQL.”

Ongoing Interest

“There’s an odd perception out there that the collectibles market is seasonal,” said Tang. “This isn’t completely accurate because collectors are always collecting. They don’t just work on their collection during the holiday season. It’s a year-long hobby for them.”

On the other hand, affiliate marketer Andy Derrick started marketing collectibles in the third quarter of 2003 and enjoyed the rewards he saw over the Christmas season. “There are some serious collectors always buying, but holiday sales offer the most opportunity in this market from my perception,” he said.

Not only do collectors carry on through rain, sleet or snow, they also continue to collect even when the economy is slow. “Even when the economy takes a downturn and their disposable income is squeezed, you’ll see a lot of collectors switching to generic brands to save money for the third issue in a five-part series of, say, plates,” Tang said.

Affiliate marketers who tap into the year-round shopping habits of collectors earn great rewards. For example, Tang’s Collectibles Today just opened a jewelry storefront. Top-performing affiliates average $10,000 to $12,000 a month, while those who might spend a few hours a week tweaking their site pull in a couple hundred dollars a month. Affiliate marketer Pat Hartray of LightHouseStore.com agrees with Tang on the financial benefits: “Commissions for collectibles are above average for the industry. You can find collectible affiliate programs offering anywhere from 5 to 20 percent on sales.”

Because there are so many niches within the collectibles marketplace, there is enormous potential for affiliate growth. In order to experience that growth, take some time to research the products and stay updated on product developments. “Collectibles are fun and entertaining. They have mass appeal,” said Hartray.

The trick is to know what will catch the eye, and the dollars, of the collector. Continually ask yourself, “What is the collector looking for now?”

LAURA SCHNEIDER is the marketing editor for About.com. Her articles on marketing have been published by more than 4,000 Web sites and magazines. She is also partnership development and marketing manager for Revenue Partners where she has developed and managed online marketing ventures for a decade.

The Way To Ebay

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

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

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

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

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

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

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

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

Million-Dollar Club

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

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

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

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

Co-Op Ads

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

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

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

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

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

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

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

Mythical Disconnect

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

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

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

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

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

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

Adult Content

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

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

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

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

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

Indie Labels

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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