Month: October 2004

Four Ways to Make More Money

Have you ever wondered why big Web sites like AOL, Yahoo and MSN don’t run many cost-per-action (CPA) deals in their ad spaces?

It’s simple: They don’t have to. They make much more money selling ads based on impressions rather than the number of customers or leads generated. Who wouldn’t prefer to get paid for just showing the ad instead of having to rely on it really performing?

If a large property can’t sell all its ad space, even at discounted remnant ad rates, it might throw in a CPA deal here and there, but that’s a rare exception.

On the other hand, the most common way to compensate an affiliate is through a CPA deal. A merchant who runs an affiliate program can pretty much choose its own acquisition cost because it only pays for results. It’s rare that an advertiser’s affiliate program has the highest acquisition cost of all its channels. Instead, affiliate programs are seen as a way of acquiring customers at the lowest possible cost. And there’s nothing wrong with that.

But the same company might be willing to spend two to three times the fixed CPA acquisition cost to acquire the same customer from CPM-based (cost per thousand viewers) ads on large Internet properties. Why? Because low-cost affiliate programs offset the costs of higher CPM campaigns and offline channels. Together, they result in an acceptable overall acquisition cost.

I’m not saying that you should start hiring sales reps and putting together a media kit for your sites. But you might be very well served by looking at additional revenue streams such as CPM and CPC income, or something called coregistrations.

Here are four potential additional revenue streams for your site.

Use An Ad Network

It makes all the sense in the world for a smaller site to outsource ad sales. There are a lot of advertising networks out there that will sell your ad space for you for a cut. If they have good advertisers, your smaller site may become part of large ad buy by a well-known brand.

Of course, there are some downsides. You might have to give up as much as 50 percent of the ad revenue. And it can take forever to get paid, because you get paid after the ad network gets paid. But, all in all, joining an ad network might be very worthwhile if you can get accepted.

How do you qualify for that? Well, requirements vary. It helps if you can show you have relevant traffic, focused content, high traffic and a professional look and feel.

Pay-Per-Click Search

Another way to generate income is to get accepted in a content network for contextual advertising. You drop a piece of code onto your pages, and the advertising network will serve to your site text-based ads that are relevant to your content. Take a look at pay-per-click engines such as Google, Overture, Kanoodle and FindWhat.

You will then tap into a pool of advertisers who might not even have a standard affiliate program, but who are willing to pay a premium to get the clicks your pages have to offer.

Most pay-per-click networks only display the top three to four bids on a specific keyword on syndicated sites like yours. This ensures that you always get the highest earnings per click that the search engines have to offer for a specific keyword.

Even after you split the revenue, it can turn out to be a very good deal.

Also, the classified ad format that pay-per-click engines uses tends to work very well. Why? Users like them. They have blue links. And blue hyperlinks are the only ad formats that have consistently worked since the early days of the Web.

Sometimes you might make more from the revenue from the contextual text links than the main offer you’re promoting on the page. You need to test and watch your numbers carefully though.

Build A Quality Email List

If you only make money by driving traffic to advertisers who pay you on performance, then why not get some repeat revenue from them?

Build an email address list to make repeat offers. Good email is not dead. If you have a visitor to one of your sites, you should provide them with enough value so they give you their email address to stay in touch. Make sure your visitors opt in, so that you’re not contributing to the notorious spam problem.

Think about what would appeal enough to your visitors to make them want to hear from you again. Is it content on a particular topic? A special report featuring a buyer’s guide of the top 10 gadgets in your particular space? Special offers or coupons from your advertisers? Getting names and addresses for snail mail is even better.

Add Quality Coregistrations

What are coregistrations? Basically it means that you’re adding a number of checkboxes to your email form so that partners or advertisers can feature their offers. You get paid for every name your form generates for your advertisers.

There has been quite a bit of trading and selling of names with coregistrations that has diluted the quality of coregistration data and has sometimes given coregistrations a bad reputation. But the basic concept works as long as you don’t abuse it with 15 or 20 prechecked boxes on your form like many sweepstakes sites did in the past.

The best route to go is probably outsourcing. A number of companies let you add coregistrations to your registration path that completely blend into your own design.

That means your visitors will both sign up for your list and be added to a number of other lists through a third-party-hosted registration script. You’re basically outsourcing the whole management of coregistrations on your site to a company that will get advertisers and manage the data for you.

Bottom Line

You deserve to get paid as much as possible, don’t you? Try adding these other revenue streams in addition to the standard CPA ad. You might be pleasantly surprised by the results.

OLA EDVARDSSON has extensive experience as an affiliate. He is also CEO of the Internet marketing agency Performancy Inc.

Keeping Design Simple

When building a Web site to convert sales, one must make the visitor very comfortable and try to avoid the frustrating pitfalls that commonly plague online merchants.

It’s important to remember that keeping visitors on a Web site and guiding them through the sales process is just as important as getting them there in the first place. Here are several simple tips for attracting visitors, retaining them and getting your site to make money and reach profitability.

Design

Aesthetically, a site should be clean, clear and attractive to the eye, saving bright colors only for important sales process features such as the headlines, offers, important details and purchase links. Avoid offending visitors with vibrant animated GIFs or flash advertisements. They are not only disruptive of the sales process and may lead visitors away from your site, but they also distract and annoy the visitor causing many to abandon your site before buying. That is not what you intended.

Dimensions

Different screen resolutions require that you test your site to make sure that all relevant information is available at as low as 800 x 600 pixels. Make your site no wider than 750 pixels to ensure that no side scrolling will be necessary. A visitor that has to scroll for every line of text will likely leave. Use your space wisely. It’s probably better to have a small amount of empty space than to cram every detail into a small area. On the other hand, you don’t want to leave out any valuable information.

Load Time And Compatibility

Be sure your site loads efficiently and correctly on all the major browsers over a dial-up connection. Many novice site designers are reviewing their work over broadband connections. Just because an image is small does not mean the file size is also small. It is recommended that you compress your images so that your site loads in less than five seconds on dial-up when it is not cached on your drive. Try using JPEG format for images containing gradients or many colors such as photographs. Use GIF-formatted images for buttons and text art containing only a few colors. Also, try to use HTML color whenever possible instead of images.

Sales Process

Clearly present an attractive offer such as a discount or free sample and establish a sense of urgency. Your offer is your hook. Make certain it is attractive or you have nothing to help you stand out against your competition. Accompany your offer with a testimonial or guarantee to establish trust and summarize the features and benefits of the product. You can provide more details about the product on a different page for those who want to know more, but it is advisable to keep the front page of your site simple and sales oriented. Purchase links should always be visible.

Purchase Process

Be sure your purchase process is simple. Remember, at this point you have the sale. You should be doing everything in your power not to lose it. A visitor should be able to get from your home page to an order confirmation in no more than three clicks. This may sound difficult, but it can greatly increase your conversion. A huge mistake that is being made in online marketing is the long and involved registering process and subsequent requirement of customers to log in. The so-called benefits of this feature are to save customer information and acquire opt-in information. However, this process can greatly affect conversion. If you must have customers register, gather their information after they have entered their credit card number and avoid having them enter the same information twice.

Billing information should always be gathered first. Make the customer commit to the purchase prior to entering shipping information or upselling to other products.

Monetization

Monetization means squeezing additional revenue from sources on your site other than your primary offer. Unfortunately, many have misconstrued this concept to mean that one should place affiliate banners throughout the site through which commissions can be earned. This is a huge mistake. Try placing related offers on the order confirmation page or exit pop-under window. This way you can sell your product and make affiliate commissions without disrupting the sales process. Additionally the purchase can be followed by auto-response emails with special offers or reminders on a periodic basis to retain customers.

You can also earn additional revenue or gather valuable information from a non-buyer. For example, if customers do not have a cookie in their browser indicating they purchased from your site, a pop-up could be displayed which offers them an entry to win a product if they sign up for a newsletter. This is an offer many can’t refuse. Choose something you can afford for your sweepstakes, and don’t give it away until you know that the information you’ve gathered is worth the wholesale price of the product. You can then promote your product in your newsletter and retain the ability to promote your offer in the future.

Monetization can also be achieved through the use of an upsell. Upselling items allows you to offer the visitor a complementary item during the purchase process. These items should require a minimal commitment on the part of the customer and minimal explanation on the part of the merchant. For example, if a customer were purchasing a snowboard online, a snowboarding magazine could be offered at the point of purchase. This should only require the customer to click on a single button indicating that they want the additional product. The information can then be fed securely from the form on the merchant’s site to the purchase form for the product on the partner’s site through an affiliate link so that the merchant can earn commissions and thus monetize the site.

GREG SHEPARD is CEO of NetTraction, an online marketing company found at GotRevenue.com. He has eight years of experience in online marketing and 16 in business development.

A Show-Stopping Performance

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

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

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

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

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

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

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

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

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

Not So Simple

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

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

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

Seeing Through New Glasses

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

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

Embrace And Adjust

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

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

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

Killer Content Brings in Money

There are three main factors that determine the success of your Web site:

  • Effective site optimization;
  • Site popularity; and
  • Great content.

Site optimization is the process of placing your keywords in the right places and making sure your Web site is accessible to search engine spiders so that they can find you and index your content more easily.

Site popularity can be achieved by online and offline marketing (mainly good PR) and the number of people who link back to you. This is often confused with page rank, but page rank is only one factor in determining your site’s popularity.

The best long-term solution for high search engine ranking, and the factor that is easiest to tweak, is to create first-rate content. You don’t have to be a Pulitzer Prize winner to do it. You just need to focus on addressing the needs of your customers, and by doing that effectively you will also attract search engine spiders in droves.

Many search engine marketers would have you believe that the best way to get high search engine rankings is to stuff your pages full of keywords and use tiny text at the bottom of the page to create great spider fodder. They don’t focus on the usability of the page or think about how users want to view your copy.

This may be a good short-term strategy, and may get you good rankings, but in the long term that’s not a good idea. Spiders are getting smarter. They know when you are trying to spam them. From your customers’ perspective this also does a lot to minimize the credibility of your Web site.

We have all been to sites where the copy was poorly written and grammatically incorrect. It looks sloppy and leaves customers questioning the wisdom of giving you their credit card numbers. It doesn’t matter how many clicks you get or what your rankings are if you can’t convert a visitor to a buyer. First-rate copy serves all of your audiences – spiders and customers alike.

As far as high quality content goes, remember that it should offer significant value to your customers and other sites. Why other sites? Because they’ll link to your site. Good content should also be unique and be updated regularly, so that people will come back to your site often to see what’s new.

Structuring Your Content

When thinking of how to structure your page to make it usable for both spiders and customers, a good rule of thumb is to start to think like a newspaper publisher. The same rules apply when determining what your Web site copy should look like. The newspaper editor focuses on the way readers like to view content. The editor knows that users typically scan the headlines first and then, when something piques their interest, they zero in on the content they want to read.

If you structure your pages the same way, it will increase the usability of your site and also make it more spider friendly. Make good use of headline sizes to clearly identify to your readers what is the most important copy on your pages. Direct them to where you want them to go by allowing them to see at a glance which items are the most important. Include your keywords in your headings to reinforce the focus of the page for both users and spiders.

The same rules apply whether you are building landing pages to submit to paid search engines or for organic traffic. Users and spiders want clear, grammatically correct copy that helps them to find the value in your pages fast. You only have about 13 seconds to catch your users’ attention, so every page on your site should focus on one message, and include a clear call to action. It’s really just following the basics of direct response marketing and applying that to your Web site.

Once you have created great headlines, pick one topic per page and write decent articles that appeal to your users. More pages equal more spider food and more specific landing pages where you can send users for one-click information. What works for one Web site in terms of content may not work for another, so you’ll have to keep testing until you see what mix of copy makes users want to stay on your site, return again and convert to a sale.

Here are some examples to help you start thinking about what valuable content might look like:

  • CD retailer: Provide reviews of new releases and bands;
  • Accounting: Offer regular updates about legal changes that affect your clients;
  • IT trainer: Show IT folks how to train their internal clients, or offer some free online training or white papers;
  • Gardener: Show beautiful gardens from around the world, and offer tips on gardening;
  • Travel agent: Offer reviews of hotels, restaurants and attractions on different areas.

As you may have realized by now, creating and updating your content is a lot of work. It’s also hard to stay motivated if you don’t see immediate gains. It takes a very long time for word to spread about your Web site. Just as with paid placement, you have to test creative frequently. With paid placement you can see results immediately whereas with this, you need to wait a long time to get feedback. You need to hang in there and over time you will see that it really does pay off.

Another relatively pain-free way to offer frequently updated content is to create a blog. There are many great inexpensive blogging tools out there that will integrate well with your Web site and allow you to update your content on the fly. Savvy search engine marketers are rushing to add them to their sites. But be sure the quality of your blog is high. Blogs are easy to set up and are proving to be very spider friendly. After all, what the search engine wants to see is just what your users want: frequently updated, quality, relevant content. Nobody wants to read yesterday’s news, least of all search engine spiders. Increasing conversion is what it’s all about, and that’s what makes a successful Web site.

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

Affliates Wanted

With 8.2 million Americans looking for jobs, Jeff Testerman isn’t worried about losing his. He’s co-founder of brokerhunter.com, a job site for the insurance and securities industries that features affiliate links to everything from resume writing to trade journals.

“Hiring started to pick back up in the last quarter. ” Hiring is definitely in the forefront now and in the future,” Testerman says with confidence, and he may be right. Analysts predict the first quarter of 2005 will be the best time for job-related Web sites, with some predicting growth of up to 15 percent.

Jupiter Research found that online job postings accounted for $923 million in revenue in 2003, and it expects revenue will climb to $1.1 billion for 2004. And a wide variety of job sites are offering affiliate programs, including the big three: Monster, CareerBuilder and HotJobs.

In the struggle to be No. 1, both CareerBuilder and HotJobs are revamping their affiliate programs, adding new benefits and promotions for affiliates to drive traffic their way instead. It’s a good move, considering the underlying level of power that affiliates – a virtual salesforce of thousands – can have on a company’s bottom line. To compete, less recognized sites are strengthening the additional services they provide to job seekers, most of which offer additional commissions back to affiliates.

Beneath it all, a new type of online job search strategy is emerging. A few sites are offering all-in-one service: Job seekers post their resumes there, and the site will use its advanced technology to almost instantly repost the resumes, in correct format, to every related job site, corporate recruiting site or job board out there. Consequently, it’s never been a better time to be a job-search-site affiliate.

“I’ve seen our network grow from 60 partners in February 2000 to more than 1,500 Web sites that drive traffic through Commission Junction (CJ) and another 400 integrated partners that we have today,” says Amado Izaguirre, CareerBuilder’s vice president of affiliate partners. Some of those 1,500, he said, are making more than $10,000 per month. “We have created an environment on CareerBuilder .com and all our affiliate sites that encourage users to search for jobs and apply online without having to register on the site or deposit a resume into a database,” Izaguirre says. “We want users to concentrate on finding the best jobs. In turn, our affiliates benefit because CareerBuilder users are encouraged to perform the activities that they are compensated on.”

Through CJ, CareerBuilder pays 50 cents on applications rather than resumes; job seekers can send as many applications, for free, as they like. Affiliates are paid $1 for job alert sign-ups, $50 for one job posting and $175 for four. They can also post any article the company owns, like ones on writing great resumes, top interview mistakes, coping with a bad boss, starting a job search or managing your career. CareerBuilder also occasionally runs special affiliate promotions.

HotJobs, meanwhile, has seen double-digit percentage increases in resume postings each year. “I think we’re going to be the big one when the dust settles, because we’re the only one that is wholly owned by one of the biggest brands in the country and one of the leaders in search,” says Marc Karasu, HotJobs’ vice president of marketing. Its new union with Yahoo gives it a big leg up in the name recognition department: HotJobs is featured in an “Inside Yahoo” box above the paid listings on a job-related Yahoo search.

Ads Trumped

HotJobs is also doing a lot of conventional advertising these days: from TV ads to billboards. In September it launched a two-season co-branding campaign with The Apprentice, the hit career television show featuring Donald Trump. Applications and behind-the-scenes footage can be found at the HotJobs site, and fired contestants get into a HotJobs-branded cab at the end of each episode. Cabs sporting HotJobs toppers have also rolled into service in eight urban areas: New York, Miami, Washington, Boston, LA, San Francisco, Atlanta and Philadelphia.

“We’re thinking of ways to pull parts of our affiliate program into The Apprentice promotion,” Karasu says. HotJobs pays $1 for resume postings and pays $50 for employer job postings. It’s now focusing on building strategic affiliate relationships with sites that are focused on health care, information technology and human resources.

Despite losing its planned purchase of HotJobs to Yahoo, Monster.com has retained the top position among job search sites. It offers worldwide job search capabilities, centered around Asia/Pacific, Europe and North America, and boasts more than 490 of the Fortune 500 companies as clients. Of the big three, Monster.com has the most commissionable items. It pays $50 for job postings, $1 for resume postings, 70 cents for Monster Networking Accounts and $15 for Networking VIP membership, all through CJ.

Then there are those sites that aren’t yet a household name but provide solid services and have good affiliate programs. There’s FlipDog (encroaching on the big three), SoloGig, Brass Ring, Jobvertise, Job.com, Vault, Freelance Work Exchange, The Ad Net, Employment911 and many others with products and commissions across the board. FlipDog, which searches corporate sites and claims it has “five times more employers each week than other job sources do in a year,” pays 50 cents only for visitors creating a FlipDog.com membership.

Jobvertise.com, on the other hand, focuses on employer listings. “Turn your Web site into an instant community jobs board and charge others to post jobs to it!” it pushes on its site. “Anyone browsing your Web site can enter job and credit card information for instant authorization – the jobs are automatically posted on your Web site.” Affiliates decide how much they will charge users. Jobvertise handles the entire transaction and, once total commissions top $50, cuts quarterly checks for 50 percent of the total revenue.

Employment911 has perhaps the widest selection of commissionable career-related services. It started as a small, 5,000-circulation magazine for employers in 1997 and moved to the Web later that year. Today it’s still a homespun site, but its internal software gives Employment911 the searching and resume posting capability to make it one of the largest job posting networks online, pooling from 7,000 employer Web sites and employer-industry-specific news groups. So, although it’s not a Monster, it does provide strong services for job seekers and employers. Affiliates are paid between 12.5 and 25 percent, based on volume, for job seekers buying its resume writing services, resume distribution service or resume blasting tool. They also receive a payment per job posting and 25 to 50 cents per resume posting lead. “Web people are earning substantial revenues just by promoting our resume posting,” says owner Jake Fannin. Employment911 also has free job search articles for posting and an HTML job search box that can be put right on an affiliate’s site. Searches not only cover Employment911, but also 21 other sites, including the big three.

“Anyone who has a small amount of traffic, of any type of targeted market, should receive at least $100,” Fannin says. Employment911 has 5,000 affiliates and counting. Its top affiliates have earned more than $5,000 a month, and up to $9,000. “Those are people that have a real targeted audience, they have prominent links or they’re in a co-branded relationship with us.” Employment911 affiliate BrokerHunter.com, for instance, generally pulls 30 cents or more per click.

Job Securities

Recently voted by TopJobSite.com as the No. 1 securities industry job site in the US, BrokerHunter.com runs its own insurance and security industry job list with 40,000 job seekers and a couple of thousand job postings from security and insurance companies all over the US. Its affiliate income then, comes from auxiliary services, like Employment911’s resume writing. It promotes resume writing in a banner at the bottom of its home page, and includes a pitch for the service in its monthly newsletter to 70,000 insurance industry job seekers (its 40,000 members plus 30,000 more that have come to the site and opted in). “The services go hand in hand,” says Testerman, from BrokerHunter. “We’re such a niche job board, that it’s really of benefit to the job seekers out there. Being able to put their skills effectively in a resume is why this is such a good fit.”

There’s also the new breed of job search sites that don’t post jobs at all. Instead, they send users’ resumes to the sites that do. “ResumeRabbit will post your resume to over 100 job boards,” says Lee Marc, president of ResumeRabbit parent company eDirect Publishing. “If you’re looking for a job, you probably should put your resume on Monster.com, HotJobs, CareerBuilder and a hundred other Web sites that employers and recruiters search every day to find candidates. What ResumeRabbit does is one-stop resume posting to 100 career sites.” ResumeRabbit.com pays $20 for every order.

What sites benefit most from this type of service? “Clearly sites that are catering to job seekers are a natural fit,” Marc says. “However, we find that there are a lot of sites on a variety of topics that seem to promote ResumeRabbit solely because there are a lot of people in the world that are looking for a job or are unhappy with their current one.” It’s posted more than 1 million resumes for more than 100,000 time-crunched job seekers since 1999. “And they’re all real happy,” Marc says. Interested in email or longer copy? Just ask for it. ResumeRabbit has 3,000 affiliates through CJ, and consistently ranks in the top three for CJ’s career category commission in terms of revenue per click.

Insiders say that it’s fairly easy to make the most of job site affiliate programs. After all, nearly everyone who visits any Web site is a potential user. CareerBuilder’s stats show that 2 percent of a site’s front door traffic will engage in some sort of career activity, if it’s offered and if the banner is at “the top of the fold.” “Above the fold” was once a newspaper-only term, describing the part of the first page that’s seen at newsstands. It now holds true online as well. If you want conversions, make the job search option one of the first things site visitors see. HotJobs even suggests an L rack or “monster-sized” banner.

Productive affiliates send confirmation emails to job seekers, outlining merchant offerings they may have missed at the site. And they have a dedicated following of visitors loyal to their cause, employment related or not. “The more niche you can carve out for yourself, the more successful you become,” Testerman says. The best sites are industry-specific sites, focused on nursing, accounting, IT or any variety of professional topics. Those easily convert, say insiders, with just the addition of a “Career” page with an article on finding careers in that profession and a link to a tracking merchant site. But even general sites can tap into the 2 percent conversions by adding a career section.

When it comes to creatives in this industry, “banners alone don’t work,” Fannin says. Instead, draw users in with articles provided by merchants or job seeker testimonials, and convert using text links. “This provides content for search engine optimization and provides the best possible method for sales and conversion rates,” Fannin says. Affiliates who do the best take the time to study their merchant’s sites to really understand the product – it doesn’t take much time – and find a way to describe it in their own words for their own audience.

While many people are looking for jobs around the country, many people are also looking for a job around the block. Research from Belden Associates found that 65 percent of job seekers check their local newspaper sites, while only 55 percent hit Monster.com. Hence, the industry is responding by “going local.” Yahoo’s new Local product, in beta testing, will roll out HotJobs postings specific to a city or region. Other programs are expected to follow.

The online market for job-related services is going strong, and some would say it’s booming. Merchants and affiliates are starting to think long term. Rather than focusing solely on short-term metrics such as clickthroughs, registrations and purchases, they’re tracking long-term metrics such as predictive behavior, referrals and branding. This should play out as increased traffic and better conversions for affiliates. In the interim, the big three – Monster, HotJobs, CareerBuilder – will continue to fight it out to be the biggest job site out there. With Yahoo’s HotJobs scooping up top search engine placements, one might ask if there will be room for new entrants. “There is absolutely room for new entrants,” says Karasu at HotJobs, which doesn’t prohibit its affiliates from buying search words in its category.

And analysts predict further consolidation among the second-tier sites. “In the meantime,” says Fannin at Employment911, “we’ll just continue to try to produce good results.” It’s a motto echoed throughout the burgeoning online job search market, and one that will serve affiliates well.

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

Coupon Hoopla

You’ve been there. You’re at the grocery store to buy one single item. You have your groceries on the counter, your cash in your hand. But the person in front of you has a never-ending stash of coupons. The cashier enters in code after code. You start looking for an open clerk, cursing the customer ahead of you.

Well, coupons aren’t nearly as annoying online. Frugal shoppers can save money in the privacy of their own homes, redeeming as many coupons as their hearts desire. And it doesn’t slow other shoppers down one bit. Everyone wins. Especially people like Mike Allen.

Allen not only has an eye for a bargain, he loves to offer good deals to others. “I saw that coupon codes sure could save you a lot of money,” says Allen, who speaks in a slow, soft Southern accent. “But they sure are hard to find.” That’s why he decided five years ago to devote an entire Web site to online coupons. Shopping-Bargains.com features 500-plus merchants.

Coupon sites say their revenue varies widely month to month, but some gross more than $10,000 a month and the ones contacted by Revenue say they’re expecting a whopper of a holiday season. EdealsEtc says months in the fourth quarter sometimes result in six-figure revenue.

“Q4 is always good for us,” agrees Joel Comm, who runs DealOfDay.com. “But 2004 is gonna be the best year for coupons so far.”

The uncertain economic outlook combined with a long-running trend toward value shopping has created vast opportunities for affiliates to promote sales by providing coupons to people who just can’t live without them. In 2002, according to Forrester Research, consumers downloaded 242 million grocery coupons, coupons they print out and take to brick-and-mortar stores. That’s almost one coupon per American, and that’s just for groceries.

A raft of online coupon sites exist. Large sites like CoolSavings and CouponCart.com let you print coupons to redeem in offline stores. Others like FatWallet, UPromise, Spree.com, eBates and KeyCode offer cash-back incentives or rewards to shoppers. If a merchant gives an affiliate, say, a 5 percent commission, the affiliates might pass on 2 percent of that to their customers.

But even the sites that offer savings on online purchases range from small niche hobby sites to larger companies like CouponMountain, which employs eight people in Los Angeles, has 750 merchant partners and does a lot of marketing. And with about two-thirds of the US households now online, there’s still plenty of room for affiliates who can build a site that rises above the crowd.

Adam Schwartz and Craig Nelson were eating sushi in San Francisco and saw an ad on the window that read: “See our coupon on the Internet!” They thought online coupons were a great idea and started CouponSurfer in September 1998.

Brad Wilson started DealsDuJour.com with his brother Campbell in 2001. The 20-something brothers bought things, mostly electronic gadgets, online and when they scouted a good deal, they told their family and friends about it. Their hobby started as a pastime, soon blossomed into an email newsletter and then later became a business.

How many sites are devoted to online coupons? A lot. DealzConnection tries to list destinations for online bargain hunters. It lists 42 with forums, 41 that have price comparisons and 232 other bargain sites, plus 104 dead sites (not all coupon sites survive).

Site Design

As in many other areas of affiliate marketing, design is critical. Having a home page that is fresh every day is a great start. The best coupon sites list the deals in a variety of ways so that consumers can easily find what they want.

Many have current deals ranked and listed by popularity. New coupons occupy their own space; expiring coupons are placed somewhere else, so users can find deals before they’re no longer valid.

Many sites let you search alphabetically by merchant to find the store you prefer. And most have a category breakdown, so you can scan that to find a coupon for a gift for your Aunt Hilda’s birthday, whether you are looking to get her a karaoke system or a trip out of town.

Affiliates need to think more about aesthetics and the user experience. “Sites aren’t making it appealing and clean and idiot-proof,” says Wilson. “I sit my mom down. She is absolutely useless online. I see if she can make it through the user interface and if she can navigate, then we go with it.”

“A simple interface that has agreeable color schemes is important,” agrees Travis Bowman, president of EDealsEtc.com. “You also need to optimize for speed and test for speed and multi-browser compatibility. A good logo is also critical.”

But design and navigation aren’t the only considerations. Deals are ever-changing, and keeping up in the coupon biz definitely isn’t for the faint of heart.

Update Your Deals

“You cannot neglect it for one minute. You have to be on top of it,” warns New Yorker Abe Rapaport of JumpOnDeals .com “There are merchants whose coupons are expiring. Others are putting new deals out there. Customers contact us with their concerns. We have to keep up with all of them.”

Keeping up and using legitimate coupons is a full-time job. There’s nothing more frustrating to consumers than taking the time to pursue an offer that already expired. Burn your customers, and you’ll burn yourself.

“You need to link deals into a searchable database,” offers DealOfDay’s Comm.

Shopping-Bargains.com’s Allen and his wife revamped their site and hired ColdFusion programmers to help make the static site dynamic with a database that automatically schedules coupons to expire. Since they relaunched in January, keeping the site updated has been “dramatically easier,” says Allen.

“Users expect accurate and current deals,” says Allen. “They want a comprehensive listing. It’s very hard work to keep merchants happy and users happy.”

But once you have a site that is designed well and is updated regularly, you’re ready to tell people about it.

Marketing Moxie

Sites that focus on online deals must do a lot to separate themselves from the pack. Wilson says his goal is to give consumers the better things in life at a better price. The company’s motto: “Shop smart, live rich.” Wilson says it still takes a lot of work to get attention.

“Paid search can work but you really need the right metrics,” says Wilson. “Search engine optimization is incredibly competitive but it’s always worth the effort.”

Many of the affiliates contacted by Revenue simply love search engine optimization. Tagging pages properly isn’t easy, and getting someone with expertise to help can be expensive. Bidding keywords and buying PPC advertising – Google has a 5 cent cost-per-click minimum; Overture has a 10 cent minimum – are also tested tactics. But they aren’t for everyone.

“Keyword placement is too expensive for this niche,” argues Comm. Instead, he’s syndicating content. That way, his site gets double the exposure, and search engines are twice as likely to pick up his pages.

A few sites like PhatDeal.com and eDealsEtc.com say they are even considering buying offline advertising -newspaper ads, billboards or radio time in their local markets to attract traffic, a tactic described in Issue 3 of Revenue (Beyond Search Engines).

The smart coupon sites also let you sign up for an opt-in newsletter that gives shoppers links to popular deals, turning first-time visitors into repeat buyers. And many use “Tell a Friend,” which lets users click on a link and do the viral marketing for them.

“The best is when an affiliate manager recommends us to other merchants,” says Bowman. “Word of mouth works for consumers as well as retailers.”

A few sites have added email notification systems that help convert browsers into customers. Bedford, Mass.-based CouponSurfer.com has set up a “Coupon Butler” service that informs users when a particular product they are interested in is available at a discount. Such newsletters and notices help.

But the best means of attaining visibility? Word of mouth. “The goal is for people to have an easy experience, become repeat visitors, sign up for emails and tell their friends and family about us,” says Wilson. “One of these visitors is worth five of the other kind.”

Everyone loves loyal customers. That’s why many sites encourage visitors to click a link to bookmark their sites as a favorite, sign up for an opt-in newsletter and tell a friend.

DealsDuJour.com recently received the Titanium award at the LinkShare awards ceremony, which Wilson says has helped it to garner a lot of positive attention. Mentions in the press don’t hurt either. Dan Baxter founded DealCatcher.com, which gets 3 million page views per month and promotes more than 500 merchants. He says appearances in the The Wall Street Journal, PCWorld and USA Today have been boons to his business.

But even if you get the best media attention and the greatest industry awards, you are still going to have to work hard. Your challenge is to get people interested and coming back. Content is important, too.

“You have to save your members either time or money or both time and money,” says CouponSurfer’s Schwartz. “You have to offer them value.”

Thinking about your audience is the key to success in the discount game. Luckily, online retailers are always trying to invent and offer new promotions. DealsDuJour.com’s Wilson has witnessed an increase in merchants in 2004 getting their holiday marketing plans in place earlier this year.

Work With Merchants

“I’ve been impressed. Merchants were already concerned in July about Q4,” says Wilson. “The usual suspects think ahead. Overstock.com and those guys are really focused on affiliate channels.” Then again, Overstock.com has 10 people focused on affiliates (see story page 40). But other merchants would be wise to think about offering discounts and disseminating deals.

“Merchants mistakenly think people will buy no matter what,” says Rapaport. “But if you aren’t offering deals, your competitor is. So you really need to offer coupons to people.” Rapaport suggests giving visitors a variety of coupons from which to choose – whether it’s a dollar amount off, a percentage off or free shipping. “Test and see which codes do better,” he says.

So what sorts of deals perform the best for merchants? Rapaport thinks free shipping offers are better than no special offer at all, and JupiterMedia’s Patty Evans hails them as a great deal to offer, especially this time of year.

“Free shipping is the master plan. It is consumers’ top concern; they react to it better than other discounts, even if they aren’t saving as much as they could with different offer,” says Evans. “It’s tangible and definitely priority around the holidays.”

Work Around The Clock

“It’s a juggling act,” says Joel Comm of DealOfDay.com. “It’s nearly impossible to keep up with all the offers. There are so many merchants and there’s so much competition.”

Maintaining a coupon site is so much work that Mike Allen realized last year he needed to make a choice between his job as a marketer and his job as a governmental training specialist at Mississippi State University. So he quit his university job and devoted himself full time to being an affiliate this year. Because he has four kids at home, he had to rent office space. “It’s too noisy at home,” he laughs.

And the business has ups and downs. Online savings affiliate sites see their business fluctuate with retail cycles. It’s not predictable income, and you have to be prepared to work when the shopping fevers strike.

“This is the hardest easy money you’ll ever make,” says Allen. “It’s only easy because you aren’t sweating.”

Keep in mind if you want to dance in the discount disco, you better be ready to work your tail off. There’s no break in this business. Says Rapaport: “We will be here on Christmas and the day after doing the after-holiday sales.”

DIANE ANDERSON is managing editor of Revenue.

The Craze Of Holidaze

Amin Mirza is nervous about the holidays.

“I’m not going anywhere,” says Mirza, an affiliate who started PhatDeal.com in his home this May. “I plan to stick by my computer.”

Mirza hasn’t experienced the holiday rush before, because this is his first year as a fledgling affiliate. Last year his family journeyed to California. But this year he wants to keep an eye on his business and so he isn’t taking any trips during the holiday season. He will stay firmly planted in Chicago.

Mirza isn’t alone. Even seasoned affiliate veterans worry about the last three months of the year and stay glued to their machines 24/7. Many forgo travel during October, November and December.

Yep, it’s that time of year again when online retail goes crazy. Most affiliates are fretting over how to get the biggest bucks from the mightiest merchants. The opportunity is enough to stress anyone out. “Three words,” answered an affiliate when asked about the holidays. “Sleep is overrated.”

Unfortunately, you can’t stay awake for three months straight. Whether you live by yourself or have a large family living in a crowded city apartment, the holidays present challenges and opportunities for affiliate marketing. But just because you work from home doesn’t mean you have to sacrifice the season. Yes, being self-disciplined is a challenge, especially during the holidays. Here are a few tips to keep in mind.

Don’t Take Your Work Home

“Working from home is tough!” says Dan King, founder of Career Planning and Management Inc. in Boston. “The mailman comes, the fridge calls. It’s hard to mesh, particularly if you have kids.” To be sure, your home may be where your office is, but that doesn’t mean you can’t compartmentalize. It’s difficult, but doable.

“We have this huge predicament,” says Julian Redwood, a life coach and counselor based in San Francisco who works with many entrepreneurs. He says his clients struggle to establish a structured schedule. “When you work for a company you have a lunch hour and a quitting time of 5 p.m. Self-employed people end up eating meals at their computers. Our computers suck us in, in an amazing way.”

But Redwood emphasizes that working- from-home stress is manageable. He suggests that people decide when they are going to work, when they are going to exercise, when they’ll have social time, when they’ll have time to just veg.

Philip Humbert, a personal success strategist in Oregon, agrees. He suggests that affiliates first get clear on their values. “I don’t wanna mess with dinner for money!” says Humbert, who is an Amazon affiliate. But he recognizes that other people might feel that it’s important to spend time away from family to generate revenue for the family.

Whatever you decide, first get clear with yourself, then inform the appropriate people in your life. That way, you manage everyone’s expectations. “Once you’ve decided how much time you are going to dedicate to your business and to your personal obligations, clearly communicate your decision,” advises Humbert. “Clarity is power.”

Other experts agree that communication is key. Those who decide to take 10 days off, for example, need to tell loved ones that the decision costs money but provides time. Likewise, those who decide to work through the season should describe the tradeoffs. “Explain to your kids that the vacation they went on last summer was paid for by your work,” says Michael Angier, president and founder of SuccessNet.org. “Don’t assume people understand; give them a vision of your business and enroll them in the dream.”

If you have kids in the house, keep your workspace sacred. Everyone should know that when you are at your desk, you are working and working for a reason.

After you make your decisions and spell out your priorities, stick to them. You might have to log on from your in-laws’. You might have to take a break to entertain if you stay at home. Either way, you can’t be at your machine all day. But try to make a little time to maintain your site.

Learn From History

You may feel overwhelmed because the holidays are starting earlier every year. “It used to be that consumers started shopping only four weeks before Christmas,” says Jupiter Research’s Patty Evans. But last year saw an expanding of the holiday season, a trend she believes will be repeated this year.

If consumers are shopping earlier this year, you’ve got to be ready to offer them the goods they want when they want them. That means you must do your retail research now. Think about which merchants you have had the best results from in the past. Generally, the companies that are doing well for you now will do well throughout the holiday season. Then see what they have planned for the end-of-the-year deals and closeouts. Look at what e-tailers have to offer, figure out what products are popular and heavily promoted.

Then, weed out the winners. Think about your audience and try to figure out what has appealed to them in the past and what might appeal to them this year. Then you can select the best stuff for your site. Figure out what the killer deals are. Don’t try to give space to every promotion. You have to pick and choose which babies you are going to nurture.

You can also give yourself a gift this year by learning from your own work history. Michael E. Gerber, author of The E-Myth, encourages people to document everything they do throughout the day – made this call, put up that link, did x, y, z – so they gain a clear perspective of how they really spend their time. You might be surprised at how you organize your day and might even retool how you organize your business.

Be An Ant, Not A Grasshopper

Luckily, you can prepare in advance. Remember the story about the ant who worked in the summer to prepare for the winter? Affiliates should be getting their holiday game plan figured out well in advance of the onslaught.

Promos won’t be spidered if you do it all at the last minute; point out numerous affiliates. They create shells of pages so they can be in the search engines. You can always fill in a particular deal as it happens or changes. This method works to let you relax during the fun season.

Pay attention to which merchants are offering bonuses. You might want to plug them in your email newsletter or do something to promote them. After all, they are offering you a nice incentive to do so.

Affiliates complain that the downside to holiday e-tailing is that merchants often put time limits on their deals. They might have something that is good “through the weekend” or good for “two days only.” Depending on what is going on in your offline life, you might not want to put the energy into the deal just to remove it a couple days later. If something is a hassle, skip it and pace yourself.

The top advice from affiliates Revenue talked with? Make lists. Prioritize. Work ahead. Have a to-do planner calendar. Write everything down. Commit to tasks that are mandatory. Then follow through.

Don’t Fly Solo

If you don’t have a busy social calendar, you can probably devote more time to improving your site and gaining on your competition. If you are feeling isolated, get connected.

If you are stressed and sick of staring at your own walls, take your laptop and cell phone and head to a coffee shop. It’s a great way to be around other people who are working for themselves or working through the holidays. If you are ahead workwise and moping because you are missing out on holiday office parties, throw a party for some colleagues or even volunteer at a soup kitchen and you’ll feel better.

You might also want to do a little online networking. Chat with online friends. You could learn something new or hear about a great new merchant or deal. And knowing that other affiliates are out there in the same boat can do a lot for your psyche. Check in with a friend and keep each other accountable for keeping work and personal commitments.

Set Up Boundaries

Many people feel compelled around the holidays to do too much. But affiliates cannot do it all or do it perfectly. Accept your limitations and focus on what you really want to do.

Many merchants increase affiliate contact during the holidays to announce special deals, offers and sales. Many affiliates who normally get one notice a month from a merchant, which is standard, get three or four around the holidays. So they need to be near their in-box to easily check on merchant’s notices and to switch out graphics and post links on specials. The payoff? Many affiliates say their businesses jump three or four times its norm during the holidays.

However, you still need to take time off. Redwood recommends stretching and yoga as stellar stress-busters.

“We have this misconception that if we work more, we’ll be more productive,” says Redwood. “You don’t have to set aside huge chunks of time. Even five minutes away from your desk every hour can go a long way toward sanity. Even three deep breaths away from a monitor can make a difference.”

“It’s hard to say no because we want to do it all,” says Redwood. “In our society, it’s hard to disappoint people. We feel like we have to show up to every party and bring the egg nog.” It is the season of giving, but you need to give to yourself, too.

Be Loving To Yourself

Expect that the one person who won’t be happy is yourself. You might think, “Oh, if I only had 20 minutes more…” You need to have self-discipline but you also need to hold yourself accountable and work only during the time that you’ve allotted.

All the life coaches interviewed emphasized that you need to take care of yourself and your health. Maintaining a healthy diet will do wonders. You’ll have a better immune system, you’ll handle stress better, you’ll have more energy.

“Watch out for sugar, alcohol and caffeine. Those things decrease our ability to deal,” says Redwood, who suggests moderation. “Tell yourself, ‘Tonight I’ll have one sweet thing, but no drinks!’ or ‘One drink, but no sweets.’ Sometimes you’ll want to go all out on everything. That’s OK every once in a while, but notice how your body handles it, listen and be aware.”

And don’t forget you are supposed to be enjoying life, too. So schedule time for shopping, wrapping gifts, decorating and sending out season’s greetings. Your personal life is more important than your business life sometimes.

“You can’t spend every waking moment on your business,” agrees Rickey Gold, a Chicago-based marketing specialist. “You still need a life of your own. Otherwise, you’ll burn out.”

But you can do bill paying or holiday shopping online, which will keep you close to your business. But at a certain point, the game is over.

“You have to do a lot of work before the onslaught,” suggests affiliate consultant Linda Woods. She knows a lot of affiliate managers who never leave their desks around the holidays. But she thinks that the affiliate managers themselves have an advantage, because they can plan in advance and then enjoy all the wonderful holiday festivities.

Merchants are incredibly busy around the holidays because they have fulfillment worries. “Affiliates don’t fulfill, they just drive traffic,” points out Woods. “So the really good affiliates decide in October which merchants they are going to promote and spend time getting Google rankings. Once the links are in place, which should be done by mid-November, they can sit back and work on optimizing.”

But affiliates, whether they are ahead of the game or working assiduously through the new year, need compassionate employers.

“Be a good and gentle boss to yourself,” says Humbert. “After all, what sort of Scrooge would expect you to work on the holiday? Why do that to yourself?”

DIANE ANDERSON is managing editor of Revenue.

Five Who Drive

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

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

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

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

Mondera.com

Name: Chris Sanderson
Title: Affiliate Manager
Business: Jewelry

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

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

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

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

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

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

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

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

Shoes.com

Name: Brook Schaaf
Title: Affiliate Manager
Business: Shoes

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

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

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

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

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

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

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

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

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

T-shirtking.com

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

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

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

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

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

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

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

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

“It’s amazing.”

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

Redenvelope.com

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

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

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

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

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

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

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

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

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

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

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

Urbanscooters.com

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

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

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

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

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

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

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

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

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

Land Rush

Suddenly, Joe Speiser’s phone rings more often than it used to.

The calls are coming from venture investors and executives at some “very familiar companies” who’ve taken a sudden interest in buying all or part of AzoogleAds.com, the performance marketing company that Speiser co-founded four years ago.

“It just kind of started,” he says, somewhat stunned by all the attention. “A lot of advertisers right now are just getting used to the idea of performance marketing. A couple of years ago, they didn’t understand the concept.”

Speiser is hardly alone. Since Revenue last looked at the consolidation trend six months ago, mergers of online marketing firms have created the sort of frenzy that hasn’t been seen in the online universe since the dot-com explosion of early 2000. Suddenly, large portals and advertising networks seem intent to acquire affiliate networks, search engines and interactive ad agencies in a quest to create end-to-end performance marketing products.

The numbers explain why. The online ad market, which was pronounced dead in 2000 when the average CPM rates dropped by more than 90 percent, rose like Lazarus to claim $6.6 billion during 2003, according to JupiterResearch.

What’s more, it’s expected to reach $16.1 billion by 2009 thanks largely to the emergence of marketing techniques that give marketers a low risk, highly measurable method to draw in new customers. Simply put: If a big advertising company can’t offer performance marketing to its clients, it won’t be big online.

“If you look at the marketplace today, I would say all the other players out there – the Yahoos, the Googles, the traditional ad guys – are feeling the pressure of what the affiliate marketing world has created, which is the ability to actually give back an ROI and to give back measurable success,” says Steve Messer, CEO of LinkShare, the largest privately controlled affiliate network. “You can’t get away with CPM alone anymore.”

ValueClick helped light the bonfire by purchasing the BeFree network just before snapping up Commission Junction. In other high profile deals of the past year: DoubleClick snared Performics; AOL bought Advertising.com; Yahoo acquired Overture; aQuantive grabbed Go Toast and SBI.Razorfish; Digital Impact took over Marketleap; and Agency.com absorbed Exile On Seventh.

While those names represent a diverse mix of online businesses, together they represent a crazy quilt that patches together every facet of performance marketing. From New York’s Madison Avenue to San Francisco’s Multimedia Gulch, companies are courting one another as the long-elusive promise of online marketing moves closer to reality.

“More and more players are looking at companies that survived and thrived in the downturn and are seeing them as great opportunities for the future,” says Jeff Pullen, general manager of CJ, now part of ValueClick.

While this activity may result in substantial rewards for determined entrepreneurs who built better models for online marketing, it also raises questions about the effect such mergers will have on affiliates, the companies, their services, the public, ad rates and competition in the marketplace. Are the lofty valuations offered in these acquisitions justified given the fast-changing nature of the performance marketing field? Will the lack of competitors result in higher rates and fewer options for performance marketers?

The real benefits (and drawbacks) of these mergers won’t be known for years. But our survey of industry executives found agreement on two points. First, it’s highly unlikely that a few big players will dominate online marketing the way they have dominated radio, billboards, TV and print publications because, unlike other media, cyberspace isn’t bound by frequency spectra and distribution channels. Second, the performance marketing space will continue to evolve for at least another decade, suggesting that some of today’s acquisitions may turn out to be tomorrow’s folly.

To be sure, mergers represent enormous gambles. If expensive acquisitions don’t perform, the strategies behind them can turn into nightmares for senior managers, employees, customers and, of course, the shareholders who financed the gambit. Case in point: the AOL-Time Warner debacle.

After the companies announced their plan to merge in the fall of 1999, Time Warner shares soared to an all-time high in the upper 90s. By mid-2002, Time Warner shares had fallen below 10. More recently, they’ve been trading in the upper teens, off about 80 percent from their highs. Over the same period, the Dow Jones Industrial Average has lost only about 12 percent.

Driving Forces

As philosopher George Santayana pointed out, those who forget the lessons of history are doomed to repeat them, and some companies will pay too much for too little. But the financial motivations for buying performance-based companies overshadow the risks for some industry players.

“Performance marketing is an enduring trend that is going to force the marketing community and their advertising agencies to embrace performance. It’s a different DNA set than the traditional advertising agencies have embraced,” says Rich LeFurgy, who serves on the executive committee of the Interactive Advertising Bureau, the group he served as founding chairman. LeFurgy’s view may be biased by his position as the principal of Archer Advisors, a San Francisco-based marketing firm. Still, he makes a strong argument for long-term change in the way advertising is valued.

As a stop gap measure, LeFurgy says Madison Avenue firms are working with consulting firms to develop economic models that show traditional advertising is returning an acceptable ROI, but that model won’t work for long. “I think it’s very much the lobster in the lobster pot where the heat is slowly being turned up in terms of performance expectations from marketers,” says LeFurgy.

As more media properties acquire performance- based expertise, media buyers negotiating ad contracts will demand more empirical evidence that ads are working. “That is going to trickle down from the marketer to the agency to the media property. There are companies, for example, that are looking not just for performance and ROI, but whether ads run at all,” says LeFurgy.

Another force driving consolidation is the economic recovery. To survive the downturn many performance marketing firms became lean, mean, competitive machines. They pared excess costs, closed offices, developed efficient technologies and bid jobs with a focus on winning and retaining top clients. As a result, these firms are attractive takeover targets because it’s faster for bigger players to buy them than to develop those capabilities internally.

“As the established players look to expand, they’re doing it through acquisitions, and these [performance marketing] guys are pretty close to the top of the list,” says Gary Stein, senior analyst for Jupiter Research. “They figured out a way to make the ads more effective, whether it’s through behavioral targeting or through an affiliate network where the affiliate guys are going to reach into niche audiences or do something clever with the brand.”

The most attractive targets, Stein says, are those that offer search-driven features or performance marketing abilities such as affiliate networks. Performics, recently taken over by DoubleClick, offered both.

“As any industry picks up, one of the methods for growth for larger companies is acquisition,” says Performics CEO Jamie Crouthamel. “So they look to acquire things that are complementary or additive to what they’re doing. In the case of affiliate marketing, it was additive in CJ’s case. It was complementary in our case.”

The Limitations

Aligning expectations with realities is a challenge following any merger and, without exception, there are surprises on both sides. Integration is always tricky. Perhaps the cultures don’t mesh, or the technologies prove problematic or the talents fall short of expectations. Quite often, the acquiring company will expect to save money by scrapping redundant operations, or by cutting back unprofitable lines of business. Other times, the acquiring company will invest more capital to grow certain capabilities faster than the smaller company could have grown on its own. Crouthamel says that is what’s happening now at Performics.

“In our case, DoubleClick had neither search marketing nor affiliate marketing,” he says. “So you wouldn’t reduce any services or people in a business that’s growing as fast as our segment is growing. You actually see more resources put against it.”

In the case of ValueClick, the acquisition of both the BeFree and CJ networks raised the potential for consolidating the two into a single, more efficient network while reducing redundant operations. “Commission Junction and BeFree have been integrated. ” We’ve done away with the BeFree brand name,” says Pullen, who now leads the combined entity.

“My personal sense is [ValueClick] is going to sunset the BeFree technology. Then you’ve got a lot of people who thought they bought the Maybach but found out they got a Mazda,” says LinkShare’s Messer. “People who picked BeFree actively chose not to pick CJ, and now it’s being imposed on them. So it will be interesting to see over the next few quarters how that plays out.”

Pullen notes ValueClick is still delivering BeFree products, which include the BeFast platform, and adds: “We’ll continue to do so. But at the same time we’re looking at ways to improve upon it and operate it more cost-effectively.”

The shifting dynamics in the affiliate arena mean good news and bad news for Messer. First the good news: He’s got two big competitors instead of three. Now the bad news: The two remaining competitors are backed by bigger companies. Still, he seems confident, almost to the point of being cocky.

Messer also takes a shot at DoubleClick, saying, “They’re talking about Performics as their great white hope for a company that’s struggling.” However, Crouthamel responds like a man preparing for a war, promising his affiliates a cache of new weapons as a result of the DoubleClick- Performics combination. “You’ll continue to see innovation and other things available to affiliates because the marketers want it,” he says. “Consolidation isn’t always a bad thing.”

Beyond Affiliates

The intramural sniping isn’t limited to the affiliate space. At Adteractive.com, Diego Canoso, the agency’s vice president of sales, raises questions about AOL’s decision to acquire Adteractive’s bigger competitor, Advertising.com. He noted the deal changed the playing field because Advertising.com has historically bought ad inventory from many companies and now may face limits.

“The interesting question now is whether Advertising.com can continue to structure big bulk contracts with the other big portals. Is MSN wanting to sell their inventory, essentially, to AOL?,” he asks. AOL declined to comment on that question, but in a June news release announcing the acquisition, the company appeared more concerned with building a performance marketing monolith than with buying remnant inventory from AOL’s competitors.

“We now have all of the pieces in place – premium inventory, a strong and growing search business and the ability to deliver customized pay-for-performance programs,” Michael Kelly, president for AOL Media Networks, said at the time.

Questions about the value of search engines also exist. Just five years ago, Yahoo was the undisputed heavyweight champ, then Google showed up. Yahoo’s purchase of Overture appears intended to make up some lost ground, but there are literally hundreds of smaller search companies fighting for market share.

“We’ve met with a number of publishers in the past couple of months who are coming up with Web-based, contextual-based platforms designed to compete directly with the Google AdSenses of the world, and some of these contextual models are desktop based,” says Tom Storm, VP for online sales with VentureDirect Worldwide, a marketing company. “If that model continues to play out, I think it will take market share away from some of these search engines who probably have more than they should.”

Executives at Yahoo and Overture declined to discuss their strategy for coping with that, but previously have spoken about Yahoo’s focus on building “the largest position in the rapidly growing Internet advertising market.” Between Yahoo’s bravado and Google’s rapid growth, the niche engines will need to fight to maintain their positions or grow, according to Scott Delea, a senior vice president of the Web management consultant DigitalGrit Inc. Delea also sits on the search engine committee of the Interactive Advertising Bureau.

“Look at Google’s mission statement – ‘to organize the world’s information,'” Delea says. “If I were an engine, I’d feel threatened. ” For a niche engine, as long as their content is unique, or their audience is unique, they will survive. Other than that, I don’t think they have too much to stand on.”

Who’s Next?

Enterprises such as VentureDirect, Adteractive, AzoogleAds and, of course, LinkShare all may be candidates for consolidation, along with dozens of others. But none would admit the prospect of sudden riches has altered the way their companies are run. “Everybody has a price,” says LinkShare’s Messer, “But that’s not what we’re looking at. We have a mission, and we’re executing very well on our mission.”

Meanwhile, Hagai Yardeny, editor of the marketing newsletter Digital Moses, points at a possible side effect as the merger craze rolls forward, one that portends more challenges for affiliates.

“With any kind of consolidation, there is less choice,” he says. “With less choice, there is less competition. It could adversely affect affiliates by lowering the bounties for the different advertisers.”

Tom Murphy is Editor in Chief of Revenue.

The Overstock Obsession

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

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

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

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

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

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

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

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

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

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

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

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

The Art Of Affiliates

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

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

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

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

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

Industry Advocate

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

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

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

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

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

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

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

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

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

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

Less Than Perfect

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

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

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

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

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

‘Smitten’ Buyers

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

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

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

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

Special Treatment

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

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

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

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

Spoken like a true believer.

DIANE ANDERSON is managing editor of Revenue.