Feeding the Beast

If you’re doing online marketing and you’re not leveraging RSS, what the heck are you waiting for? New technologies that both publishers and advertisers use to connect with online consumers are always continuing to emerge. From HTML to Macromedia Flash to streaming video, the arrival of distribution methods requires organizations to periodically reinvent how they speak to their audience.

And that’s just what RSS does, according to Amanda Watlington, a marketing consultant for Searching for Profit and co-author of Business Blogs: A Practical Guide. Tapping into this new distribution channel provides a great opportunity for marketers to connect with consumers.

“I have never been as excited about anything for the Web as RSS,” she says.

She’s not alone. The latest online communication format is the blog format, which features short personal commentaries about timely and topical issues. Driven largely by political and technology content, but rapidly expanding into every niche imaginable, the number of blogs is doubling every five months and is on pace to pass 20 million in late 2005, according to blog search engine Technorati.

While blogging won’t replace traditional Web publishing, it is fast becoming an important content delivery platform for reaching new audiences. However, capitalizing on blogging requires forgetting much of what you know about search engine optimization and following a new set of rules for content preparation, discovery and distribution.

That’s where RSS comes in. Many attribute the popularity of blogs to a handful of technologies such as RSS and Atom, which allow users to subscribe to feeds and also gives publishers more effective and efficient ways to deliver constantly updated information.

The Blog World Order

And while blogging is a relatively new frontier, it is not difficult for marketers to create RSS feeds that are easily distributed, says Watlington, who notes that RSS is misunderstood as being difficult to create even when there are many user-friendly tools for adding XML tags to structured text.

“It is a challenge of imagination, not implementation,” she says.

In addition to the personal and unfiltered nature of blogs, RSS feeds are growing in part because consumers are in control of the media. After finding a blog or news feed of interest, consumers subscribe to a feed through an RSS reader website or application. Feeds are then piped directly to their desktops. This has an advantage over newsletters since it is not being blocked by spam filters or lost within the volumes of email. For marketers this can be a valuable direct pipeline to consumers and a way to further establish loyalty.

According to an October 2005 study by Yahoo and consulting firm Ipsos Insight, 27 percent of people online have read content from RSS feeds. However, there is still an RSS learning curve for consumers as just 4 percent of those surveyed knew that they had interacted with RSS content; the remaining 23 percent had read RSS feeds through personalized home pages such as My Yahoo.

The demographic of those reading RSS feeds is also encouraging for marketers. According to the survey, those reading RSS feeds tend to be wealthier and more educated than the average person online. RSS feeds can also include advertisements, providing access to an audience that tends to spend less time browsing commercial websites.

Raising the RSS Flag

Launching an RSS feed in the preferred format of short commentaries is just the first step in creating a blog to expand your business reach (see Revenue Volume 2, fall 2005). In addition to writing compelling blog entries, capitalizing on blogging requires understanding new parameters, such as how to tell blog search engines that a blog exists. Also, like “Blanche Dubois,” blogging to a certain extent relies on the kindness of strangers, as others must link to your blog to spread the word and increase your search rank.

Also, for RSS feeds, timeliness is next to godliness. Unlike standard search, where a site with relevant content or keyword optimization can remain at the top of the search results almost indefinitely, the timeliness of blog posts factors heavily into blog search rankings.

Much like news searches (many of which are also based on RSS feeds), blog content has to be “bakery fresh” as most of the top blog search results are usually only hours old. Posting once or twice a week on popular topics will not likely be sufficient to penetrate the first page of search results.

In addition to being timely, blog content must be optimized for keywords. Rodney Rumford, co-founder of marketing consulting firm Leveraged Promotion, says bloggers have to walk a tightrope by including many references to the keyword in question without the content becoming obnoxious to readers or being identified by search engines as spam.

Blog searching has many players and no dominant force, so the strategy for optimizing keywords is less defined than traditional search engine optimization. For example, optimizing for one blog search engine may hurt a blog’s standing elsewhere. “No one knows exactly how their algorithms work,” Rumford says.

Blog publishers also must be proactive to be discovered by the blogosphere. While search engines crawl the known universe for content, blog search sites require new content to be submitted for their inspection.

Google and Yahoo’s blog search sites, along with competitors including Bloglines, Technorati and Weblogs, require bloggers to submit their URLs for consideration. Or, services such as Pingomatic or FeedShot can submit sites to many of the top blog search engines, but that may require paying a fee.

Sites such as Pingomatic will monitor your site for new content and send pings (a notification among Web servers) to the search engines every time new content is posted. A group of blog-interested companies is attempting to streamline what is currently a disjointed ping process through a central hub called FeedMesh.

Companies that receive pings will share data with FeedMesh members including Bloggdigger, Blo.gs, Google, PubSub, VeriSign and Yahoo. While some bloggers are skeptical about FeedMesh, the group effort has the potential to make blog searching more comprehensive and less complicated for newcomers to gain exposure.

Unfortunately, blog spammers have been quick to abuse the blog distribution process, and have created tens of thousands of spam blogs (see sidebar on page 71).

The hope is that once a blog search engine is aware of a blog, other bloggers who find the content useful will take notice and include links to your content on their sites. Tapping into the blog community (or blogosphere) can do wonders for a blog’s traffic. Being listed on sites such as Digg.com, Kottke.org or Waxy.org that blog the best blogs, or bookmark-sharing sites including Del.icio.us or Furl.net, can increase exposure more than search engines.

It’s Only the Blogining

Interest in blogging from the major search engines is likely to increase the number and readership of blogs by several magnitudes within the next year. The recent surge in interest and acquisitions by AOL, Google, Microsoft and Yahoo will rapidly bring RSS feeds to the majority of the general public. “We haven’t seen the hockey stick growth yet” in blogs, says Searching for Profit’s Watlington.

In recent months, VeriSign purchased blog site Weblogs, and Yahoo added blogs to its news search, while Google initiated a blog-specific search and a Web-based RSS reader. In May 2005, Google launched AdSense for feeds, which enables publishers to intersperse content- related pay-per-click ads within their feeds. Although few publishers are currently including ads with their feeds, that is likely to change because an increase in the readership of RSS feeds will enhance the revenue potential. One potential drawback for advertisers is the unfiltered nature of content on blogs, which some companies might be hesitant to support through advertising.

Microsoft’s embracing of RSS will likely have the greatest impact on the use of feeds by bloggers and marketers. Microsoft’s next Web browser update, Internet Explorer 7.0, due out in early 2006, will alert readers when RSS feeds are available for a website and will automate the subscription process. (Similar technology is currently included in Mozilla’s Firefox and Apple Computer’s Safari browser.) Microsoft is also adding visual cues to the browser to show when RSS feed subscriptions contain new data.

Microsoft Vista, the next version of the Windows operating system, will centralize RSS feed data and provide programming tools to make it available to applications. This paves the way for business applications to directly collect and organize data from RSS feeds, opening up a plethora of new uses for RSS feeds.

“Internet Explorer will fix RSS in terms of making it invisible” to consumers, says Ron Rasmussen, chief technology officer at KnowNow, an information infrastructure company. Microsoft’s endorsement of RSS could make it a mass-market technology within the next few years and may propel feed subscriptions to become as relied upon as search engines. “You don’t know what happens once you go to 95 percent awareness,” Rasmussen says.

After consumers become comfortable signing up for RSS feeds from blog and news services, they are likely to be more comfortable subscribing to feeds about items for sale, Rasmussen says. For example, consumers can track time-sensitive items such as concert tickets or real estate listings through RSS feeds. Craigslist.org and job site Monster.com are among the first organizations to produce listings as RSS feeds.

Pushing the Future

Building a business around sending content directly to desktops was attempted before without success during the Internet boom. However, “push” technology failed because most consumers at that time were using slow dial-up lines, and because the leading companies such as PointCast used proprietary technology that was licensed and required customizing content. RSS feeds have a greater likelihood of success because the format is free to implement.

A technical similarity between RSS readers and push applications are that both periodically (about once an hour) crawl websites looking for new content on the feeds. While bandwidth has greatly improved since the late 1990s, a rapid rise in the use of RSS feeds could take its toll on the Internet infrastructure. Having tens of millions of RSS reader programs continually querying blog websites for new content could dramatically increase Internet traffic and create a bottleneck.

Two subscription service companies are developing service that they say will reduce traffic by automatically pushing content as it is updated to subscribers. RSS subscription services from KnowNow and PubSub remove the need for each desktop to be continually polling for content by collecting new feeds and sending the data directly to consumers’ Web browsers.

The new services also have the potential to enable online merchants to streamline communications with their affiliates and customers. KnowNow’s Rasmussen says the subscription services consolidate all of the feeds about a given topic, such as golf, reducing the number of feed subscriptions.

PubSub works with publishers to push new content that matches consumer interests to their desktops. For example, when a blog publishes something related to antique cars, everyone who has subscribed to that feed would receive an alert to their browser. PubSub is currently delivering RSS feeds to more than 750,000 subscriptions, according to CEO Salim Ismail, adding that advertisements will likely be added in the future to pay for the free service. Under this model, consumers receive information more promptly, while publishers and advertisers get exposure to a focused audience.

PubSub and a group of blog services are developing a next generation of RSS that enable blogs to add styles to their feeds. Structured blogging includes formatting descriptions for common types of content such as movie reviews, journal entries, job postings and events so that each can be uniquely identified by search engines. Blog creation sites WordPress, MovableType, and Drupal have adopted structured blogging, and publishers could similarly create styles for distributing product information.

KnowNow is developing an RSS feed notification that will be marketed to merchants to provide timely updates to their affiliates, according to CTO Rasmussen. The company would push data such as product information or sales reports that are currently sent in batches through RSS feeds. RSS “takes that latency out of the business process,” he says. Marketers could respond to changes in demand or inventory within minutes instead of waiting for overnight reports.

These days of uncertainty and rapid change in implementing blogs and RSS feeds provide an opportunity to gain valuable experience that can be used to influence future developments. While diving in early has its risks, so does waiting until everyone else sets the agenda.

JOHN GARTNER is a freelance writer in Portland, Ore. He is a former editor at Wired News and CMP. His articles regularly appear on Wired.com, AlterNet.org and in MIT’s TechnologyReview.com.

Denied

On a cold Minnesota afternoon, affiliate marketer Connie Berg checks her email fearing the worst: a message from a dream merchant saying her affiliate application for either iShopDaily.com or FlamingoWorld.com has been denied.

You see, Berg’s sites post coupon information – a once-hot commodity now shadowed by merchant belt-tightening and recent incidences of customers getting expired or invalid affiliate-posted codes.

“No matter how much we try to convince them that 99 percent of the coupon sites are simply shopping sites that also post coupons, they don’t seem to want to give us a chance,” Berg says.

It’s certainly a frustration for Berg, still an ideal candidate with 90 percent of her traffic from direct bookmarks or type-ins and a “deal alert” newsletter going to thousands. But she’s been caught in a war between ideologies that surrounds many once-highly desired affiliate sites. Merchants are looking twice at any site that could potentially cut its profits, give the wrong idea about its brand or send an unapproved marketing message.

That’s why affiliate application turndowns extend even beyond coupon sites. Under fire are affiliate sites offering coupons, incentives, discounts, email marketing, heavy search buys, forums, downloads and even mass-market and cross-cultural appeal rather than the merchant’s defined niche.

“Five or six years ago, it was about who had the biggest affiliate program,” says Chris Kramer, media director of NETexponent. Kramer, who approves affiliate applications for The New York Times, Financial Times and others, says, “Now it’s more about ‘who is this affiliate, what are they doing and do I have to worry about what they are doing?'”

Performics, for instance, denies 20 to 40 percent of the applications it receives for programs including Bose, Eddie Bauer, Harry & David, HPshopping.com and Motorola. While AffStat 2005 found onequarter of its merchants still auto-approving applications, the buzz is that the remaining three-quarters of merchants are creating additional safeguards to determine who gets in, and who stays in.

“When we talk about this issue of merchants denying affiliates, it’s mostly due to brand sensitivity,” says Kraig Smith, co-founder of Chicago-based Media- Impressions.com. His clients include Apartments.com, Healthcare Media, HEE Corporation, LifeGem Memorials and Performics. “Many big-brand offline marketers are concerned about protecting their brand in affiliate marketing.”

After all, these days merchants can be more selective – mainly because there are plenty of affiliates to choose from.

“There’s a lot of filibustering going around about how many affiliates there are,” says Chris Henger, Performics’ vice president of marketing and product development. “There are legitimately probably 50,000 to 100,000 types of affiliates active at any point in time. While it used to be easy to stand out as an affiliate with a professional site, now you’re just one in the crowd.”

“The whole [affiliate] industry has gotten more sophisticated,” says Elizabeth Cholawsky, vice president of marketing for ValueClick, Commission Junction’s parent company. “These are real businesses with real employees working day to day to grow their revenues and customer base.”

Even Vinny Lingham, a Commission Junction super-affiliate and founder of Clicks2Customers.com, the affiliate search marketing technology provider that won CJ’s 2004 Horizon Award for Innovation, gets denied for about 10 percent of the programs he applies for.

“We’ve mainly been denied because of the fact that we’re search marketers,” he says. “From a search marketing perspective, 90 percent of the merchants realize they can’t market through search engines as well as the affiliates can.” The result, he says, is that some merchants pin search-oriented affiliates as the culprit if their own search campaigns don’t produce.

Perhaps, but Kerri Pollard, Commission Junction’s director of publisher development, says it’s more about being concerned with how an affiliate will fit into the merchant’s overall integrated marketing strategy.

“Paid search has become such a big component of all the affiliate programs,” Pollard says. “They want to make sure that whatever the publishers are doing doesn’t conflict with their own search campaign.”

Still, Lingham’s site takes top affiliate status in many programs, even globally, and Clicks2Customer’s parent company, incuBeta, is one of Business Day’s “Technology Top 100 Companies.” “In reality, if we or any other super-affiliates are not working for your company, we’re building your competitor’s business and market share instead.”

Why Deny?

Oklahoma affiliate Joel Comm has begun running DealofDay.com, a community of 125,000 bargain hunters, since he sold off ClassicGames.com to Yahoo in 1997. Three to 5 percent of his applications are denied, and the bulk of those come from financial-related merchants.

“Some merchants, like financial services, just don’t want to be part of coupon sites,” he says.

His response if denied? “I’ll just put someone else there instead,” Comm says. “There are some affiliate managers that just don’t get it, and others where the affiliate relationships are managed by the legal team – dotting their I’s and crossing their T’s. That ties their hands.”

That’s particularly apparent in the financial services arena.

“I don’t know if it’s as much price point as it is brand concern, but there is a correlation between higher price point products and brand concern; that’s not accidental,” says Peter Figueredo, CEO of NETexponent, the agency that manages the Financial Times’ affiliate programs.

NETexponent’s Kramer says one of the reasons is that financial service companies, ranging from American Express to mortgage companies, are governed by strict rules, codes and laws.

“They can’t have affiliates out there advertising ‘no-fee balance transfers’ when there really is a fee, because they can get fined,” Kramer says. “But when it comes to companies such as Financial Times, it’s more based on brand integrity. They’ve invested a lot of money in protecting and developing their brand,” and wouldn’t want “just anybody” representing that brand. Financial Times also “fits a tight demographic of highly educated, higher-income customers,” he says. “It doesn’t serve their needs to have their ads on sites where their ideal customers are not going to be.”

However, as a trend, “declines by merchants are on a case-by-case basis,” ValueClick’s Cholawsky says. “Some merchants are tiptoeing into affiliate marketing and are very restrictive. Others accept every application. We try to encourage merchants to be more inclusive, since we’ve seen that as one of the best practices. Otherwise, there is relatively little change” across the board.

Either way, the networks say tough requirements work both to the advantage of merchants and affiliates.

“Affiliates don’t want to be associated with a network that has a lot of fraud running rampant on that network,” says Danay Escanaverino, head of Global Resource Systems’ quickly growing affiliate network, Filinet.com. “If we allow fraudulent affiliates, generating bogus leads or clicks, that makes the program difficult to run for our other affiliates, and advertisers start losing faith in the program. It’s in everybody’s best interest for us to be a little bit more vigilant about who we allow in.”

Pay-per-click or pay-per-lead merchants, however, have higher rates of declines, attempting to weed out applications likely to send bogus clicks for quick cash. It’s an issue faced every day by Jonathan Miller, who approves applications for 27 affiliate programs managed by ForgeBusiness.com.

“We get inundated with affiliates trying to get into our programs,” says Miller, who since 2001 has received tens of thousands of applications, if not more. “We used to take just about anybody that signed up, but over the past year I’ve realized that things have become a lot more fraudulent and, in some programs we manage, as many as 90 percent of the applications in some periods are fraudulent.”

It’s usually only a temporary spike, made up by syndicates doing mass submissions from outside the United States, but Miller still usually denies 30 to 40 percent of the applications he receives, many of which are fraudulent.

Though common for pay-per-click or pay-per-lead sites, other merchants generally see fraud in no more than 5 percent of their applications, says a KowaBunga insider. (KowaBunga runs MyAffiliateProgram .com.) The rate of fraudulent applications often depends upon the type of merchant, the type of product, whether the merchant pays per lead or per click, and the dollar amount of commissions for average sales. “If you have lucrative offers,” Miller says, “it will be tested by forgers.”

So Miller, like other affiliate managers, is adding extra safeguards. He now has all the network fraud protections and verifies Social Security numbers and compares application info against the Whois.com registration information for the domain. Even after an application is approved, he watches for any telltale activities, such as lots of immediate clicks or changes in banking information at the end of the first month. Then, before paying out checks that are often in the thousands of dollars, ForgeBusiness.com requests not only a W-99 form but also additional proof of the affiliate’s identity, such as a faxed copy of a driver’s license, Social Security card or business license.

“We are willing to share our identity with our affiliates,” Miller says, “and we’re now requesting that our affiliates share their identity with us.”

Still, Miller says, “There is always a worry that we will be denying legitimate affiliate applications, which is why we call every affiliate that applies that makes it through the fraud software on our networks. If the affiliates can’t be contacted, then we either wait and hope to hear from them or their application is rejected.”

So while merchants of pay-per-click and pay-per-lead programs must still watch out for fake applications, ValueClick’s Elizabeth Cholawsky says – though the company hasn’t made an official statement – that she’s not seeing any more or less overall affiliate fraud than there was years ago. If the website is legitimate, the email address gets a response, and if the tax ID number checks out, then “the initial barrier [into CJ’s program] is fairly easy for a new affiliate.”

Though acceptance is easy, Commission Junction doesn’t cut a check until it’s reviewed by a “network quality team.” In June 2005, it redoubled its efforts, bringing in Cyveillance’s phishing, identity theft and corporate-brand-abuse protection software, which includes affiliate channel compliance and control features.

With more eyes on applications, Commission Junction can now relax some of its other requirements, such as denials of applications from affiliates in certain geographical areas: “We used to exclude all of Asia, all of Russia, but now we just exclude a couple of pockets,” Cholawsky says.

Meanwhile, officials at both Commission Junction and Performics say the number of applications isn’t going up, and the number of active affiliates are about the same even with new entrants (as new ones enter, old ones drop off). At the same time, the number of merchants with affiliate programs is growing year after year.

“As affiliate programs become standard, we’re starting to see it as part of every online merchant’s sales efforts,” Cholawsky says. This seems to say that the issue of perceived growth in affiliate denials isn’t a result of increasing competition for a limited number of spots.

So what is the answer? Though requirements and the number of applications remain stable, what used to slide is now inexcusable. “Three years ago you would see the ‘under construction’ symbols, and maybe that’s what kicked you out; today I’d be shocked to even see ‘under construction’ signs,” Performics’ Henger says. “We probably have a more discerning eye today as to what is a quality site that we want to let into the network.”

Other affiliate sites are being turned down because they’re missing something that could be easily fixed (see sidebar page 51).

Once you’re in the network, remember to reread your affiliate agreement on a regular basis.

“We put a lot of work into post-screening as well, checking month to month on the top sites to make sure they’re consistent with the rules we set,” Kramer says. As such, he says, affiliates are increasingly concerned about guidelines, especially regarding search or email marketing, once they get into the program. “Years ago, nobody cared about search and it was definitely a free-for-all, where you could do whatever you want,” he says. Now it’s a much different model.

These days, affiliates like Berg have to push for acceptance into the programs they want. But they are doing it.

“I’ve had some merchants that I was able to get into by really pushing it with the networks,” Berg says. “American Eagle was really hard to get into; I had to basically promise away my life that I wouldn’t do this or that. They gave me a data feed so I can post real-time products, but they were really particular about what they would allow on the site – and I follow it to a tee.” That means no coupons for American Eagle’s site and no inclusion of the words “discount,” “sale” or “coupon.”

And affiliates like Berg are learning to cut their losses.

“Sometimes I’ve actually dropped some merchants because they didn’t even want their name mentioned in the title meta tags, even when they are the only store on that page.” She’ll either find other merchants who carry the same products or chalk it up as a lesson learned. “Sometimes,” Berg says, “you get into their program, but the restrictions are so tight that you just have to walk away.”

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

Pitching a Fit

Sites related to health, fitness and total body wellness are humming at this time of year based on the good intentions of millions of people who make New Year’s resolutions to get in shape, shed unwanted pounds, start exercising more and devote more effort to their overall health and well-being.

But what happens when the resolve begins to dissolve and consumers begin the inevitable slide back into old habits that don’t include visiting sites promoting health and fitness?

Because there is a seasonal aspect to people wanting to get in shape – the start of each New Year, bathing suit season, wedding season – publishers have started flexing their marketing muscles to attract new customers all year round. Many are using interesting and innovative ways to keep consumers returning regardless of the time of the season.

Puttin’ on the Print

A surprising number of health-related entities are getting into the magazine publishing business. Magazines are expensive to publish, but some health and fitness sites think it’s a good way to attract new customers.

Curves, the fast-growing franchise of gyms for women, produces a print magazine called Diane, named after the company’s founder, Diane Heavin. Curves, too, relies on word of mouth or viral marketing for the bulk of its referrals. Customers talk to their friends and convince them to join the all-women gym, so that they have workout buddies to keep them accountable for sticking to their fitness regime. The company is venturing into online marketing, albeit slowly.

“We’ve only just begun our online marketing campaigns,” Lisa Hendry, manager of marketing technologies at Curves International, says. We’ve had some success with our email campaigns. “We haven’t established what the best has been. So we are experimenting and testing various offers online.”

WebMD also launched a print magazine. One million copies of the first issue were distributed free to doctors’ offices. The cover story in the premiere issue was about actress Brooke Shields’ experience with postpartum depression.

“We think there’s a tremendous opportunity to extend our brand offline,” CEO Wayne Gattinella says. The company also hopes to drive traffic to the Internet site, and many editorial pages contain links to the WebMD website.

BabyCenter.com, a site chock-full of information for expectant parents and new parents, relies on affiliates (who earn 6 percent commissions) and search engine marketing to lure new customers. But it recently launched a magazine called BabyCenter.

While BabyCenter.com does not face the cyclical issues of other sites promoting health, it still is looking to keep visitors loyal beyond the nine-month pregnancy period.

“Instead of TV ads, we have a physical representation in bookstores and the doctor’s office,” says Linda Murray, editor. “Even though it’s free to our members, the magazine serves the same function as paid advertising.”

But the tried-and-true means of supporting the BabyCenter.com site is still personalization and communication through newsletters, bulletin boards and chat.

“When someone comes to our site for the first time, they see an unpersonalized home page. We invite visitors to sign up for our emails. We want you to register for your stage. Then you get a home page that is just for you, whether you are pregnant or a mother of a two-year-old. If you go to another page, we have pop-ups (we are doing fewer and fewer because people don’t like those, and have blockers) but we invite people to sign up,” says Murray. “A fair number of people come specifically to get newsletter information. We do keyword buying on search engines – we show up prominently on searches.”

BabyCenter also has a partnership with MSN, in which BabyCenter.com provides MSN with content and MSN shows related links back to BabyCenter.com. “That is another acquisition mechanism for us. We don’t have TV spots. Early in our history, we did,” Murray says. “The most effective thing for us is really search engines. And people find out about us through word of mouth from their friends.”

Other health sites have found that billboards are their best bet for attracting customers and gaining new business.

Outdoor Adventures

Drugstore.com recently broke a $4.5 million outdoor advertising campaign. The creative for the campaign shows various customers’ orders; copy text says things like, “They carry 25,000 items. I carry nothing.” The ads are aimed at educating the company’s 1.9 million customers and attracting new shoppers.

“Our campaign will concentrate on locations around key ZIP codes and include outlets, such as train and bus stations, street furniture, laundry bags, coffee cups and sleeves and even yoga mats,” CEO Dawn Lepore says in a statement. Drugstore.com is heavily canvassing San Francisco, Chicago and New York.

But the interesting twist is that you can view the ads on the company’s website. If you surf over to Drugstore.com, you can look at each advertisement individually and then click to shop for the items in each ad. It’s one way of trying to get online and offline initiatives together.

Tight-Lipped

Although Drugstore.com might tout its outdoor advertising efforts, the company is much more reticent when it comes to discussing its online initiatives. LinkShare handles Drugstore.com’s associate program.

“We keep our methodologies pretty tight to our vest,” says Greg French, a spokesperson for Drugstore.com. “We are sensitive about our performance-based marketing because we feel like we are ahead of the pack and we don’t like to give a lot away.”

The paranoia in talking about performance-based marketing is hardly unique to Drugstore.com. Many top health sites declined interviews for this story. Executives from Weight Watchers were not available for interviews. Commission Junction handles the Weight Watchers Affiliate program; affiliates get $10 for every qualifying Weight Watchers Online or Weight Watchers eTools subscription.

Recently released research suggests there is a correlation between spending money online and acquiring new customers. The biggest spenders online are Weight Watchers and eDiets. During the week ending August 28, 2005, Weight Watchers had 116 million impressions or 20.5 percent of all impressions; eDiets.com had 61 million impressions or 10.9 percent of all impressions, according to Nielsen//NetRatings AdRelevance. Weight Watchers trailed only WebMD in terms of unique audience active reach.

Spreading the Good Word

Not all health and fitness companies can afford to produce expensive print magazines to complement their online initiatives, á la Curves and BabyCenter, or splashy billboards like Drugstore.com, but many can afford to offer affiliates a cut of the action if they bring in new customers. Many run affiliate programs to drive traffic to their sites. And most offer email newsletters to their customer base, to keep their audiences interested and immersed in their health, fitness or nutritional information.

For many it’s about knowing your audience. A recent study from Nielsen//NetRatings shows that women represent the majority at 55 percent when it comes to visiting health, fitness and nutrition sites. More than 54 percent of all those who go to health-related sites are over 45 years old and 27 percent have an average household income of between $50,000 and $79,000.

Many health sites have also found that their existing customers are their best salespeople. Conduct a quick search online and you’ll find dozens of women blogging about their attempts to lose weight with various programs like Jenny Craig, Weight Watchers and South Beach.

Perhaps one of the most interesting healthcare innovations of late comes from Richard Branson. His Virgin Group, the company known for its music, airlines and mobile phones, is teaming up with Humana to offer health insurance with a twist. This plan, called Virgin Life Care, is linked to gym memberships and will give discounts and bonuses to people whose workouts result in lower blood pressure, weight loss or a shrinking body mass index. Lower healthcare premiums and airline tickets will be incentives for people in the loyalty program. Tampa, Fla. and San Antonio, Texas are the first two cities where the product will be offered, beginning in early 2006.

‘Casting a Wider Net

Others in the health and wellness segments are looking to newfangled technologies such as podcasting that promise to make performance-based marketing a lot more fun.

So far, podcasts have been the domain of edgy brands like movie studios and those excluded from traditional advertising. Condom maker Durex introduced a line extension of lubricants called Play on the “Dawn and Drew Show,” an audio podcast that’s put out by a married couple of ex-punk rockers living in Wisconsin. Podcasts don’t fall under the rubric of traditional advertising, but Durex was pleased with the results.

“Being on the ‘Dawn and Drew Show’ worked for the Play launch. It’s done by a loving couple that have fun together, so they were the perfect spokespeople for our product,” says Pam Piligian, senior vice president of Durex’s advertising agency Fitzgerald & Company, which is based in Atlanta. “It was a leap of faith for us, but we definitely got our money’s worth.”

Piligian says traffic to the www.playlubricants.com microsite quadrupled during the 8-week sponsorship/product placement, the cost of which was “less than five digits.”

Many industry watchers agree that money spent on podcasts is cost-effective. “A sponsorship costs anywhere from $2,000 to $10,000 a month,” Barry Reicherter, senior vice president of public relations firm Porter Novelli, says.

But the medium isn’t huge. According to a study by market researcher Ipsos Insight, about 28 percent of Web users know what a podcast is but only about 2 percent of that group has actually listened to one.

Still, marketers are intrigued with podcasting because it offers a young, technically savvy demographic and a captive audience. The audio programming comes largely from amateurs, is unregulated by the FCC and is consumable on demand. Think of it as the combination of blogs (freedom of expression), MP3s (digital and portable files) and TiVo (time-shifting).

“The good news is there’s a lot of buzz about podcasts, and it’s also cheap to experiment with. But it’s over-hyped,” David Schatsky, senior vice president at JupiterResearch, says. The audience is small – according to Jupiter, just 7 percent of online consumers said they listened to or downloaded podcasts monthly. “And these folks tend to be young, male and rather geeky.”

But, as was the case with Durex, the benefits far outweigh the risks. Many advertisers are intrigued with the possibilities that a new video iPod presents. Apple introduced a video iPod in October and has deals to sell episodes of TV shows, such as Desperate Housewives and Lost, the day after they are broadcast.

“It’s great because you can hit a niche and get personalized,” says Sean Black of Beyond Interactive, which created a Paris Hilton podcast to promote the House of Wax movie. He admits that there isn’t yet full accountability but he is still a fan of the technology. “And now that videocasting has hit, it’ll be a whole new world.”

And performance marketers and affiliates are quick to embrace new technologies that keep their sites in tip-top shape.

DIANE ANDERSON is an editor at Brandweek. She was the managing editor for Revenue magazine for Issue 4 and previously worked for the Industry Standard, HotWired and Wired News.

Casting a Wider Net

Podcasting is emerging as an interesting and potentially lucrative opportunity for online marketers who want to reach a wider audience.

The figures for podcasting vary, but by all counts the podcasting market is poised to explode and online marketers want in. A report from The Diffusion Group, a technology research consulting firm, showed that the use of podcasts is expected to grow from an estimated 4.5 million users in 2005 to 56.8 million by 2010.

Also called audioblogging or blogcasting, podcasting is a term formed from the combination of the words iPod and broadcasting. Podcasting started cropping up with some frequency in early 2004 and, despite its etymology, an Apple Computer iPod is not required – any MP3 player or computer will play the audio files that are created and downloaded from the Web.

These audio files, which can be about a diverse range of subjects (from cooking to computers and religion to comedy), are posted online and, by subscribing to RSS feeds, can be automatically detected and downloaded to a user’s computer.

Until recently, podcasting, like blogging, was the domain of those with a desire to create whatever sort of content they chose without regard to advertisers’ preferences, editorial guidelines, format or demographic targets. They were even exempt from government regulators such as the Federal Communications Commission.

Then in 2005 several events occurred in the span of just a few short months that shone the spotlight on podcasting and pushed the grassroots movement into the mainstream consciousness.

In April some impressive data emerged that showed podcasting was a large and still-growing market. The Pew Internet & American Life Project reported that more than 22 million American adults owned iPods or MP3 players. Nearly 30 percent of them had downloaded podcasts from the Web to listen to audio files at their leisure. Then in May 2005 BusinessWeek put podcasting in front of the average business Joe by running a cover story and special report focused on podcasting.

By October, Apple had announced the integration of podcasting into its popular iTunes music service software. This made it easier for users to search for and subscribe to podcasts. The move struck a chord with users who signed up for more than a million free podcast subscriptions in just two days after the announcement.

Also in October, Apple launched its much-anticipated video iPod. Users were overjoyed to find out they would be able to download episodes of their favorite TV shows including Lost and Desperate Housewives.

Marketers began jumping on board just as quickly. Only a little over a month after the video iPod was unveiled, fast-food giant Burger King sponsored a set of comedic shorts that could be downloaded and played on the new device. The Burger King sponsorship entailed a branded page for video files specially encoded for video iPods.

Also just shortly after the device debuted, a group of users of Adobe Systems’ software launched what may have been the first podcast infomercial, a half-hour tour of the company’s popular photo-editing software, Photoshop.

All of this was bolstered by surveys, data, research and reports predicting huge gains for podcasting.

A November report by radio and media market researcher Bridge Ratings estimates that 4.8 million people have at some time during 2005 downloaded a podcast from either a radio station or other source. iTunes was referenced as the most often accessed portal for podcast downloads. This 4.8 million estimate is up from 820,000 podcast users in 2004.

By 2010, conservative estimates say that 45 million users will have listened to at least one podcast. Aggressive estimates place this closer to 75 million by 2010.

The study shows that approximately 20 percent of current users who have ever downloaded and listened to a podcast do so on a weekly basis. This group downloads an average of six podcasts per week and spends approximately four hours a month listening to those podcasts. More interestingly, on average less than 20 percent listen to their podcast downloads on an MP3 player or other portable digital device.

A lot has changed since a year ago when Allen Weiner, research director with market research firm Gartner, referred to podcasting as largely a hobbyist phenomenon, attracting “anybody who’s ever had a microphone or worked at a college radio station.”

Now this burgeoning podcasting market, which had already quietly developed a huge and fiercely devoted following, was the object of interest for venture capitalists, traditional media players, advertisers and online marketers – all working overtime to figure out how to make podcasting profitable.

And that is a polarizing topic for the podcasting community.

At the Portable Media Expo & Podcasting Conference in Toronto in early November, keynote speaker Leo Laporte said, “If somebody gives you money, you owe them something. I listen to my listeners, but I don’t want to listen to advertisers.”

Laporte, an author and high-tech guru, appears in advertising-supported radio and TV shows but shuns commercial advertising and promotions for his popular “This Week in Tech” podcast.

But for most the basic questions are no longer, Is podcasting an advertising vehicle or a marketing vehicle, or is it an art form or a commercial form? The discussion has moved beyond that to acknowledge that it’s all of those things and more. Now the real question is exactly how and who will make money from podcasting.

Add Advertising and Stir

Adam Curry, a former MTV VJ from the early 1980s, is widely credited with helping get podcasting off the ground. Curry was among the first to create a podcast by working closely with Dave Winer, a programmer, who is also often acknowledged as the first blogger, credited as the father of RSS and a former resident fellow at Harvard Law School’s Berkman Center for Internet & Society.

In November of 2005 Curry’s company PodShow, which promotes podcasts and finds sponsors for them, acquired Podcast Alley, a grassroots podcasting directory that played a big role in sparking the podcast craze. Many define success as a spot in Podcast Alley’s Top 10 list. Those with top rankings are often downloaded hundreds of thousands of times.

The acquisition comes less than a month after news that PodShow, which also helps mainstream companies produce and distribute podcasts, received $9.85 million in funding from Silicon Valley venture capital firms Kleiner Perkins Caufield & Byers and Sequoia Capital. Curry’s plan is to launch a podcast network with anywhere from 30 to 50 shows that will split ad revenues.

While Curry’s been in the podcast mix since the start – he often refers to himself as “the Podfather” – there’s no lack of jockeying for position among big tech players and some newcomers, many of whom are attempting to lay the foundation for selling shows and advertisements. Technology companies including America Online, Apple Computer and Yahoo are jumping into the mix with aggregation services that collect thousands of podcasts in a single location.

Apple’s iTunes offers 15,000 podcasts, and as of press time listeners had signed up for 7 million subscriptions. Listeners confirmed more than 10,000 podcasts can be found at PodcastAlley.com.

And there’s power in numbers. Once podcasts are aggregated it is likely to be easier to sell ads across a group of shows. A lot of different approaches are being tried, including placing advertisements in actual podcasts, offering subscriptions to individual shows and in some cases, getting podcasters to actually do shows devoted to specific products or talk them up, much like the early days of radio.

Curry plans to offer advertisers a variety of sponsorship possibilities, including spots where a podcaster tests a product and then devotes an entire podcast to that product or service.

Last November, the women behind Mommycast (part of Curry’s network), a weekly show hosted by two mothers from their homes in Virginia, secured a major sponsorship deal with paper products maker Dixie, a division of Georgia Pacific. In a 12-month, six-figure deal, and repositioning that will be happening this spring.

Another high-profile sponsorship deal was also inked just before Thanksgiving. Martina Butler, a 15-year-old podcaster, snagged sponsorship from Nature’s Cure, a top brand of acne treatment. Butler’s show, Emo Girl Talk, features the life and times of a teen girl who talks about her favorite music and interviews celebrities. Officials from Nature’s Cure said in a press release, “There are a number of teens now listening to podcasts. Sponsorship is an excellent way to increase our brand awareness in an environment that is meaningful and credible to them.”

Many say these deals prove the podcasting medium is starting to gain traction among advertisers, and not just those reaching out to early-adopter males.

Sponsorships typically involve a 15- or 30-second audio ad at the beginning of the podcast. In the past, the popular podcasts usually set flat rates ranging from a few thousand dollars a month to as much as $45,000.

For example: In early 2004, Volvo agreed to pay $60,000 for a six-month sponsorship of the monthly podcast of Weblogs Inc.’s Autoblog, as well as advertising on the site itself. Over that period, the show was downloaded 150,000 times.

Some industry watchers note that because the number of listeners is changing fast, a flat-rate sponsorship isn’t always such a good deal for advertisers.

KCRW, a public radio station in Santa Monica, Calif., cut a deal with Southern California Lexus dealers for a sponsorship this summer, when the station was getting 20,000 downloads a week. Since then the number spiked to 100,000. When the Lexus deal ends, KCRW plans to charge $25 per thousand listeners, according to Jacki K. Weber, KCRW’s development director.

That new rate is considered pretty high given that one morning radio show in New York City (America’s No. 1 market) often charges between $12 and $15.

Venture capitalist Mark Kvamme of Sequoia Capital says podcasting may end up diverting anywhere from $1 billion to $2 billion away from the $30 billion radio advertising market over the next three to five years.

To fend off that possibility, some in the radio business are getting into podcasting in a big way. National Public Radio, which offers 33 podcasts, pumped out 5 million downloads in less than three months. NPR grabbed Honda Motor Co.’s Acura division as sponsor and is wooing others.

Still, some like Laporte are seeking ways to support their podcasts without directly taking ads and instead are asking listeners for donations. Laporte’s “This Week In Tech” podcast has more than 200,000 listeners and asks for donations of $2 per month. It often takes in nearly $10,000 a month, he says.

Tools and Metrics

Once ads get placed, sponsors want to make sure they are getting exactly what they paid for.

The difficulty in tracking podcasts, however, goes beyond the number of downloads and instead is about the portability of the files. Because the player software is often on a mobile device, such as an iPod or other MP3 player that is not connected to the Internet, the marketer loses track of the downloaded file when it leaves the computer.

For that reason, some podcast advertisers are turning to techniques used for traditional media like radio, such as custom 800 numbers or offer codes. And since podcasting uses RSS feeds for distribution – the same syndication and distribution mechanism used by blogs – RSS-centric technology companies such as FeedBurner are leading the way to help podcasters build the format into a moneymaking business.

There are also tools that make it attractive to launch ad campaigns across various mediums including blogs, podcasts and RSS feeds. Blog and RSS advertising network Pheedo is developing a program for advertisers looking to launch integrated multichannel campaigns across blogs, RSS feeds and podcasts.

If your advertising message is in only one of these channels, there’s a chance it will be missed by part of the customer base, according to Bill Flitter, Pheedo’s founder and chief marketing officer.

Advertising buys will be a package deal, with guaranteed impression counts for the RSS and blog inventory, while the podcast portion will be measured by the number of average downloads from previous shows.

While Pheedo has been testing integrated campaigns for a few advertisers since June, the company is still developing technology for podcast ad serving and is building its podcast network. Pheedo’s podcast ad network currently offers ads on about 30 podcasts and has run campaigns for six advertisers. The RSS and blog components are already in place. To date, technology, video game and automotive advertisers and publishers have the most success with blog and RSS advertising, according to Flitter.

While many applaud the moves to provide some basic metrics, they admit that strategic marketers are always focused on the return on investment and need to know who’s viewing the page and who’s downloading the file in order to accurately measure the impact on their own end, according to John Furrier, founder of PodTech.net and host of the Infotech podcast series.

Shelly Palmer, president and CEO of Palmer Advanced Media, a marketing consultancy in New York, says, “If you think about podcasts as marketing vehicles, you would be taking advantage of all the tools available to Internet marketers: tracking software, affiliate marketing schemas, SEM (search engine marketing), and SEO (search engine optimization) methodologies, etc. This makes huge sense since, for the moment, podcasts require a personal-computer-based client and an Internet connection.”

Palmer adds that brand awareness, lift and purchase intent are three of the most common metrics that brand managers use when calculating return on investment for advertising and marketing dollars. “What’s nice about podcasting is that the Internet enables census-based metrics. Properly used, podcasting can tell you a great deal about how effective it is for your business.”

Furrier claims that better ROI calculations won’t be possible until the different systems involved are integrated.

Many are working hard to make that possible. At the Portable Media Expo & Podcasting Conference in November, much of the focus was on tools or ways for podcasters to count audiences, deliver ads and charge listeners.

Furrier’s startup, Podtrac, announced a demographics-and-advertising program that attaches a prefix to the name of MP3- formatted podcasts that will obtain an exact count of downloads per show, thus far a vexing challenge for podcasters because some podcast directories cache shows on their own servers. The company also plans to help podcasters create sales kits and then work to connect them with advertisers, with Podtrac taking as much as a 30 percent cut of the revenue.

Audible.com, which sells audio books and news programs online, has launched a new service called Wordcast that lets podcast creators chart listener usage behavior somewhat like the Nielsen ratings do for TV – a huge step for getting advertisers to make precise choices.

By providing a way to track not just how many times the show is downloaded, but also whether it is played and for how long, Audible hopes to give podcasters some audience information.

The company will charge 3 cents per downloaded podcast to report whether a downloader listened, and for how long. Audible will also offer tools that will stop the podcast from being emailed to others. It will charge 5 cents per download to track listening and attach the access restrictions. For half a cent per download, Audible will insert an ad relevant to the podcast. Audible also would take a 20 percent cut of any subscription fees it collects.

With the tools, “you can build a bona fide rate card” for advertising, says Foy Sperring, Audible’s senior vice president for strategic alliances.

BitPass, a 3-year-old Menlo Park, Calif., company, showed off a similar process that enables podcasters to sell their content, while Taldia unveiled its podcast-production service. The Altadena, Calif., company has a deal with the Associated Press and other news outlets in which Taldia’s army of voice talent, which is spread across the nation, records audio summaries of printed news reports. For $5 a month, subscribers can select what news topics they want to hear about, how many minutes of content they want and at what time of day they want it delivered to their computers.

Microsoft has also announced plans to integrate support for RSS throughout the Windows Vista operating system to make creating, viewing and subscribing to content of all types, including podcasts, easier. Microsoft is also working with companies like Doppler, a podcast aggregator, to ensure it can take advantage of the open architecture in Windows Media Player for its podcast applications.

Lukewarm

Still, not everyone is convinced podcasting is the next big, big thing. Many are tempering their enthusiasm with a healthy dose of skepticism.

Mark Cuban, owner of the NBA’s Dallas Mavericks and an avid proponent of blogging, wrote in one of his posts at BlogMaverick.com that he expects podcasting to level off soon.

Here’s the picture he paints: “The number of podcasts available individually or through aggregators will explode beyond where they are today.” Then, “that will create a massive dilution in the audience size of the early-entry podcasters. Everyone’s audience will fall as the marginal listeners find something they like better. Yes, there will be some podcasts that get more listenership than others, but most of them will be repurposed content that already has demand.”

Finally, “Individual podcasters who don’t have some other means of generating demand other than being on aggregators will fall off first and the fastest. They will just go away, the only trace remaining will be tiny Web pages on the Wayback Machine. So in about three years, the podcast phenomena will have run its course and will just be a normal part of the digital media landscape.”

Ted Schadler, vice president at Forrester Research, says, “Podcasting feels like the Internet first did: a whole new way of experiencing the world. But at the end of the day, radio is radio and consumers will only listen to things they find valuable.”

Schadler says there are many people with various agendas. “To the rising tide of podcast hosts, podcasting is better than blogging for becoming famous. To venture capitalists like Kleiner Perkins Caufield & Byers, Charles River Ventures and Sequoia Capital, podcasting is a bet on the next big thing. To commercial operators like Clear Channel, it’s yet another channel for selling advertisements,” he says. “Each of these groups expects podcasting adoption to mirror Internet adoption with giddily exponential growth. Alas, there is another precedent that all must consider: Push. Push exploded on the scene with Pointcast, landed faddishly on millions of desktops, and then just as quickly died away. (Of course, push has been rehabilitated as RSS, but push’s big problem – content overload – remains.)

Schadler’s bottom line: “Podcast listening will follow a natural progression: enthusiastic experimentation, disenchanted abandonment, and value-driven adoption.”

By the start of 2006, Schadler says, “Enthusiastic experimenters will find that most podcasts aren’t worth listening to and even the useful ones pile up unopened in the podcast corner of the hard drive. After all, who has an extra hour a week to listen to a radio show? Disenchanted, consumers will abandon most podcasts.”

However, it’s not all so grim, according to Schadler. “Somewhere in the midst of the experimentation and abandonment phases, podcasting will become valuable to consumers that want control over radio or access to niche content. Thus, value-driven adoption will characterize the mature phase of podcasting.”

And based on a historical analysis of Internet radio adoption and a forecast of broadband and MP3 player adoption, Forrester expects 12 million households to be regular podcast listeners by the end of the decade. That’s a far cry from Bridge Ratings’ estimates of 75 million users by 2010.

That kind of conflicting data is likely why some advertisers are also not jumping into the deep end with both feet.

A survey by the American Advertising Federation rated blogs, podcasts and Web-enabled cellular phones as newcomers in the market that are worth watching, but have yet to prove they’re worth major investments.

On a scale of 1 to 5, respondents rated the three new Internet-based channels in the middle of the scale, which is considerably lower than where they placed traditional media and other forms of online advertising.

An AAF representative says that because these media are so new, people are more cautious and are taking a wait-and-see approach. The “cornerstone” of advertising remains the 30-second spot on television, but consumer adoption of new technology is forcing ad execs and marketers to look beyond newspapers, magazines, TV and radio, and question their return on investment.

Pod Porn

One market segment that is always lightning fast to react to new media and new technologies is adult content.

Andrew Leyden, founder of Podcast Directory.com, is quoted in a Newsweek published report saying, “No matter what the technology is, sex finds a way to get involved.”

This shouldn’t be surprising since 85 percent of those who use the search engine’s podcast directory are men according to Yahoo senior product manager Joe Hayashi.

At PodcastDirectory.com, six of the top 20 shows are adult-oriented. On Apple’s iTunes store, “Open Source Sex” is No. 11 and climbing. “Porn” is the second-most-searched-for term at Podcast.net; “BBC” is tops.

Industry watchers also say the plentiful storage capacity, portability and privacy afforded by MP3 devices make it enticing to listen to such titillating adult content. The video iPod is only expected to increase the amount of X-rated content available for download since anyone with a microphone, a video camera, a computer and some privacy can create such adult content, according to Violet Blue, the host of the Open Source Sex podcast. “You don’t need big breasts or big advertisers.”

The flip side of the emergence of sex-related content is religious programming. There are already many religious-themed podcasts – often referred to as godcasting – including Dharma.net, GospelAudio.com, Catholic Insider, Pray-station Portable and Pagan Power Hour.

“Casting” is also being co-opted by all sorts of other industries, market segments and groups. There have also been suggestions of food marketers looking into gastrocasting, music marketing called rockcasting and pharmaceuticals delivering medical education to physicians via medcasting.

In the end, it looks like everyone, including God, is looking for podcasting to pay off in a big way.