Tag: 02 – Spring 2004

Been There Done That: Q & A with Shawn Collins

It’s very difficult to find anyone in affiliate marketing better known than Shawn Collins, who earned his first commissions more than seven years ago.

Wearing his newest hat, as president/CEO of Shawn Collins Consulting, he provides outsourced affiliate program management. But he is, perhaps, better known as a co-founder of Affiliate Summit, as the author of the top-selling book Successful Affiliate Marketing for Merchants and for launching the highly successful affiliate program for ClubMom, a membership shopping site.

As a result of his numerous roles, Collins has not only become ubiquitous, but has helped to shape the industry through its childhood. He’s emerged as an expert for spotting new trends. Indeed, Revenue Editor-in-Chief Tom Murphy discovered some surprises when he interviewed Collins about where affiliate marketing is headed.

TOM MURPHY: You’re very well known in the industry as a superaffiliate, a guru, an association leader, a leader of an industry summit and, most recently, as a program consultant. How do you really define yourself these days?

SHAWN COLLINS: I guess I’ve been on every angle of the industry, working as an affiliate and affiliate manager. I worked with First Directory Preferred years ago. I guess, overall, I’d probably characterize myself as a cheerleader of the industry as well as a shepherd trying to push it in a direction that I think will be helpful for the industry.

TM: Do you think there’s a chance of spreading yourself too thin?

SC: I don’t think so, but my wife thinks I spread myself too thin a long time ago.

TM: You recently published your AffStat survey, which had some very interesting statistics in it. I’d recommend it to anyone who wants to know what’s going on in affiliate marketing. I had heard, for example, from a number of sources, that only about 5 percent of affiliates make any real money and only about 2 percent fall into the superaffiliate category. But your AffStat report shows 20 percent of affiliates making more than $2,000 a month. Do you think that’s an accurate figure?

SC: Yes. I had a pretty good cross-section here who were participating in the survey, from the very small mom-and-pops to some of the really big players. And I know who contributed the answers, so I think it’s a very accurate depiction.

One of the things that skews the numbers when they talk about 5 percent or 2 percent is that, in the past, there was a very big emphasis on quantity over quality of affiliates. And people are very proud to claim they had 75,000 or 100,000 affiliates. But naturally, you’re not going to have 15 percent of those being too powerful. These days, you see a lot more of a boutique approach to it, where people have 1,000 or 5,000 affiliates, so it’s much more realistic to have a good 20 percent or more be superaffiliates.

TM: I’d like to hear your thoughts on a few of the issues facing affiliates, including PPC, predatory advertising, Froogle and things like that. But, first, do you think these things taken together are really just symptoms of an evolving industry?

SC: Yeah, I really think they’re inevitable. It’s a more sophisticated industry than it was back in the ’90s. I think they’re good things. They’re hurting some of the smaller affiliates, but they’re making things easier for the affiliate managers because they’re shrinking the number of affiliates they have to deal with.

TM: It sounds almost like a natural, evolutionary process where there’s a survival of the fittest. Do you think that’s what is taking place?

SC: Absolutely. Back in 2000, and earlier than that, you really didn’t see any superaffiliates out there. You had SchoolPop and some others, but there’s been a big emergence of these sites over the past couple of years – various sites that have a tremendous amount of traffic, with membership sites and things. They’ve really taken a big bite out of the industry. They account for a big portion of the activity that goes on.

TM: Predatory advertising seems to be perceived as public enemy No. 1 in the community. Do you see that as a problem that’s getting better or worse going forward?

SC: I think it’s been limited to a degree over the last year or so, but it’s still a very relevant issue and I think it will be around for a while. Certainly, some of the affiliate managers have taken a cue from the networks. I think the affiliate managers have to be more proactive in their approach to stopping it instead of just sort of waiting for something to happen.

It is sort of a double-edged sword because a lot of the affiliate managers on a moralistic level would like to get rid of predatory advertisers. But when they have pressure from their bosses on the bottom line, they end up having to take those (predatory) affiliates because they’re seeing higher numbers with them. It puts them between a rock and a hard place. They want to do the right thing, but they want to keep their job[s].

TM: There’s a similar thing with spam. Nobody likes it. It hurts the image of the community. It hurts the consumers. And, arguably, it hurts the merchants and manufacturers, who spend a lot of time building up brand names. Do you think that’s also a double-edged sword for the merchants?

SC: With the parasites, there are some good adware products. But I think with spam, there’s never a good spammer. I think that has really hurt the industry tremendously because it’s resulted in the CAN-SPAM Act and that changed the face of affiliate marketing in one fell swoop this year.

TM: You wrote about the CAN-SPAM Act recently in a brief and in your blog. Could you reiterate your key points?

SC: Basically, a lot of the CAN-SPAM [requirements] are logical things, like you have to have an unsubscribe option and take care of things that any permission mailer always takes care of. But one of the things that makes it very difficult for affiliate marketing is the need to have a suppression list. If I’m an affiliate and I usually feature four different merchants in my newsletters, I’m now going to have to crush my entire subscriber list against their list of unsubscribes who never want to hear from them again. That makes it awfully challenging, not only to get that technology and make it work, but it throws some hurdles in front of affiliates who run email promotions.

TM: Some affiliates are feeling deeply threatened by Froogle, Google’s spider-driven shopping service. What kind of impact do you see from that in the affiliate area?

SC: Just from the power of Google, I think it’s certainly going to have a greater and greater impact on the smaller affiliates. A lot of the merchants like it because it gives them more exposure, the same as Shopping.com or Yahoo’s comparison-shopping engine. I think it’s a very positive thing in terms of affiliate programs getting more exposure and more penetration, but it’s definitely one of the things leading to a smaller world of affiliates out there.

TM: From what you said, it sounds like the number of people making some real money is on the rise, but the overall number of affiliates is declining. Is that right?

SC: Yes. Through a sort of natural selection, I guess. Since people used to take all comers, you’d get tons of sites from Geocities, and the free sites on AOL, and different free hosting services. So a lot of affiliates would be made up of free services where they never even bothered to put a link up. I wouldn’t even characterize them as affiliates because they didn’t know how to put a link up.

TM: I saw you referred to a lot of affiliates as “dead affiliates” in your report, people who haven’t provided a click in the last month or so. What sort of proportion do you think that is of the total number of affiliates out there?

SC: For the larger programs that haven’t done any sort of maintenance to clean out people who’ve been inactive for a while, they probably fall into that 95-5 rule (where only 5 percent of affiliates are making money). But (for) people who’ve tried to communicate often with the inactive affiliates, and sweep them out if they haven’t been active, it’s a much different percentage. But I think 80 percent of the programs probably have the 95-5 rule going on.

TM: That’s a pretty high proportion. And it’s contrary to a lot of other things we’re seeing going on with big business today. Most businesses in the last two years or so since the recession have been trying hard to maximize their efficiencies. And it seems like the affiliate program may be one of those areas that’s been overlooked. At the same time, I see affiliate programs contributing a bigger proportion of top-line growth to corporations these days. What’s your advice to corporations in general?

SC: It makes all the sense in the world to shrink the number of affiliates to just those affiliates who are going to be performing and who show some promise. But affiliates who have emails that bounce back and haven’t shown an impression in six months, I don’t think it’s worth carrying them on the affiliate roles. One of the reasons you see this perpetuating is that it’s all performance-driven. So even though they may be taking up some bandwidth, they’re really not costing anything for the companies that are keeping them on. But it makes more sense to me to shrink the size of the affiliate program so you know who’s promoting you and how they’re doing it, and you have a relationship with them.

TM: How do you think pay per click is changing the world for affiliates?

SC: In the last couple of years, there were a whole lot of affiliates basically using PPC – not even having their own Web sites. It was quite a successful tactic. I did it myself for quite a while, just driving activity right to the merchant. But in the last six months, a lot of merchants have been clamping down and adding a lot of restrictions because they found they’ve been bidding against their own affiliates and paying more than they have to. They’ve been concerned that a lot of searches normally would have ended at their site anyway. When an affiliate buys the keywords for a trademarked name, it’s a waste of money for the merchants because it would have been organic traffic for them.

TM: Do you think that’s an issue that will go away on its own because merchants will put a stop to it?

SC: I think what a lot of them are doing is damming the ability to bid on trademark names. Then they’re selecting certain generic keywords and saying, if you want to be in our program you can only bid a certain amount for these terms. And if you don’t like it, you just can’t do any pay-per-click promotions with us. Eventually, it will just sort of fade out and the affiliates will still do it successfully because there are a ton of words you can use without having to infringe on their trademarks. So I think that will be a strong channel for affiliates for a long time to come.

TM: Another interesting statistic in the AffStat report – I’m combining a couple of categories here – says 40 percent of affiliates have negotiated higher payments from programs. Does that fit with your anecdotal experience? And does that present a headache for affiliate managers?

SC: I was actually surprised by that figure myself. I’ve found, in personal experience, even for some smaller sites of mine, if I approach affiliate managers and tell them what I think I can do for them, a lot of them are willing to negotiate and make a special deal for you. So I think it’s really possible for just about any affiliate to do that. A lot of them never ask because they don’t realize it’s a possibility. But I don’t think the average affiliate manager would mind being asked, because then they know it’s an engaged affiliate and they can get more activity out of them.

TM: As a consultant, would you recommend to affiliate managers that they keep the door open to negotiations with affiliates? Or is there a time constraint that may limit their activities and put a lot of pressure on them?

SC: It’s something you’d have to model for. You just can’t put out projections for a year expecting to pay the rate you advertise on your site – say, a 7 percent commission. If you do that, you’re going to end up blowing out your budget. Because if you say you’re going to pay a 7 percent commission for everybody and you give 10 percent to superaffiliates, you might spend twice as much as you expected on commissions. If you don’t model for that, you’re going to be in trouble.

TM: How do you see the future for networks versus in-house programs? Do you see a bigger share for networks, or a bigger share for in-house programs?

SC: The networks still have the bulk of the activity in the space. When I did the AffStat report at the end of 2002, I think the networks had about 80 percent of the market share. But I think we’ll see an expanding role for in-house programs such as My Affiliate Program and DirectTrak. They’re getting more and more of the network programs to switch over, and they’re very aggressively recruiting new clients. I think in the next couple of years, we’ll see more prevalence of that kind of program.

TM: What do you think that means to the affiliates out there?

SC: It makes things a little more challenging to them in some ways if they have to go to a lot of different places to log onto their stats. But, otherwise, it’s a good thing for affiliates because it’s a little cheaper to run in-house programs so, theoretically, the affiliate programs can pay more to the affiliates in commission.

TM: The merger between Commission Junction and ValueClick is now a done deal. Nobody is sure what will happen to CJ in the future. What do you think is the future for big networks? And do you think this merger and other trends in networking open more opportunities for niche networks?

SC: It’s exciting to see this happen. It sort of validates the way the industry is moving, that it definitely has a future. It’s sort of surprising to some people that it took this long for there to be some consolidation because there have been rumors about various companies getting together for years and years. But it definitely sets the stage for some niche players out there who can take care of certain types of clients, with certain levels of start-up fees, because right now the bigger networks are not really an available resource for some of the mom-and-pops who are out there. It leaves an open door for ShareASale and MyAffiliate programs to capitalize on anyone who’s not in the Fortune 500.

TM: There are always new technologies coming down the pike, and I think we can all agree that’s a good thing. There wouldn’t be affiliate programs now if there hadn’t been technologies in the past few years that make it possible. Some technologies, such as the Norton firewall product introduced recently, block banners and can make links unclickable. Are there ways the affiliate community can change things when a company introduces a product that creates obstacles to what they do to make their living?

SC: I think the individual affiliates are powerless. We really have to rely on the networks banding together and going to Norton or whoever might make a similar product. One of the prime targets of these products are the domains that are serving all the banners and the clickable URLs for affiliate programs. The products are going after the URLs for LinkShare and Commission Junction and other companies, so it’s certainly in their best interest to get their hands dirty and try to take care of this as soon as possible. (See ReveNews.)

TM: Do you know if they’re doing that?

SC: I don’t know. I know in the past that was going on. Then, the end-user was asked if they wanted to block ads, and now it’s a default that I’ve just heard about. I don’t know how active the networks are. I would imagine they’re out there trying to find some sort of resolution for it.

TM: What will be coming up at your summit this year?

SC: The plan for the whole agenda is to be very focused on networking. We’ll certainly have our share of speakers and panels. But for every conference I’ve gone to during the last decade, it seems like the feedback from the people is always that they wished there was more networking, and nobody seems to be catching on to that. Every time you go to a conference you see the same cast of characters up there on a panel and running some PowerPoint, and it seems like it’s boring everybody. But the organizers aren’t seeing that. So my partners, Missy Ward and Ryan Phelan, and I figured we’d create a conference for people who hate conferences. We’ll have an emphasis on the things people love: the formal and informal networking as well as the educational sessions. And so we’re sort of expanding beyond what the past affiliate marketing conferences have been to make it more of a performance-marketing conference for affiliates.We’re also bringing in the experts on email and search to all get together for a four-day event. I don’t know if you ever heard of speed-dating, where people date for 30 seconds and then move on. We’ve sort of adapted that goofy concept to speed-networking, where you sit opposite another person for 30 seconds and give them your card and have these mini-meetings. You get a lot more comfortable and have a lot more interaction on a level that you can’t really see. (Note: For more information about the upcoming summit, please visit AffiliateSummit.com.)

TOM MURPHY, editor in chief of Revenue, has been writing about business and technology for more than 25 years. He is also the author of Web Rules: How the Internet is Changing the Way Consumers Make Choices.

Bad Guerrillas

The biggest mistake of all is launching an affiliate marketing program without knowing perception from reality.

THE PERCEPTION is that you’ve been running your affiliate program earnestly and professionally. That’s why you have lots of affiliates. You don’t feel you’ve got to be very aggressive with your marketing because all the affiliates already know about you.

THE REALITY is that very few of your own affiliates know about your business. Even if you’ve been in the same business for five years, if you assume your affiliates know what you sell and why it’s terrific, you’re making a major misjudgment.

THE PERCEPTION is that you can’t treat your affiliates any better than you do right now. Each one of them is happy and delighted with the rewards of their service. You don’t have to improve your affiliate program.

THE REALITY is that your affiliate base represents a teeny tiny percentage of the potential market. Treat them like royalty but start to focus upon those affiliates who are proving to be above the rest. Zero-in on finding more just like them. Need I tell you that all affiliates aren’t created equal?

THE PERCEPTION is that all of your business is repeat business and that you’re doing everything right. Your focus is 100 percent on your existing affiliates.

THE REALITY is that if you’re not growing, you’re on the way to going out of business. No business can rely solely on its existing affiliates.

THE PERCEPTION is that you get a great deal of your business strictly by the energy and resourcefulness of your affiliates, so you don’t have to invest in real marketing.

THE REALITY is that when you invest in affiliate support materials in all shapes and forms, then provide them to your best affiliates, you’ll realize that those tools are some of the best marketing investments you’ll ever make – and you really don’t have to invest much money.

As a marketing phenomenon, Internet affiliate marketing is one of the new kids on the block. Whenever marketers flock to a new marketing medium, they seem to repeat the same mistakes.

A big mistake made with Internet affiliate programs is failing to consistently market the program and the products to the affiliates. These are not ordinary people. These are the extraordinary ones who made a conscious decision to participate in your program. Somehow, you conveyed a vision to them, and they saw themselves in that beautiful picture. You showed them how to be an important part of it. They paid rapt attention. They signed up to carry your banner forward into the fray.

And suddenly a monster of a mistake was made. Nothing happened.

You told your story once but once was not, is not, never is enough. Your affiliates have to see that vision again and again to incorporate it into their essence. Unless you consistently stay in touch with them – email, telephone, online chats, snail mail, regional meetings – they are not going to be the evangelists that the best of them can be with the proper care and feeding.

Of all the people who sign up for your program, only a very few will be true Rolls Royce affiliates. Your biggest job is to learn who they are, then treat them the way deities deserve to be treated. Forget the 80/20 rule. In Internet affiliate marketing, you need to remember instead the 95/5 rule. You’ll get 95 percent of your program profits through the efforts of only 5 percent of your affiliates.

It’s a mistake of the highest order to treat all your affiliates the same. Guerrillas are very adept at playing favorites. Your affiliate marketing program has a better chance of coming through for you if you understand what affiliate marketing really is and also exactly what it is not.

Guerrillas know that affiliate marketing is just a fancy phrase for helping people earn money by selling your offering, then treating those people exceptionally well.

It is more common sense and patience than anything else. But too many people make the boneheaded mistake of thinking that affiliate marketing is also a bunch of things it isn’t, such as:

  1. Affiliate marketing is not email. Some companies think they can get all the affiliate support they need with email. A microscopic number of those companies are right. Most businesses need a plethora of other marketing weapons in order for their email campaigns to succeed. If you are doing email only, you’re no guerrilla.
  2. Affiliate marketing is not telemarketing. For business-to-business marketing, few weapons succeed as well as telemarketing. And telemarketing response rates can be improved by augmenting it with advertising, yes, advertising, and email, even snail mail. But marketing is not just telemarketing.
  3. Affiliate marketing is not having a Web site. Sure, you’ve got to have a Web site to provide information, answer questions, reassure, take prospects to the next level and deepen the relationship between their lives and your company. But you must remember that a Web site only helps with the job. It does not do the job. Not hardly.
  4. Affiliate marketing is not producing brochures. Many companies rush to produce a brochure about the benefits they offer, then pat themselves on the back for the quality in the brochure. Is that brochure marketing? It is a very important part when mixed with 10 or 15 other very important parts – but all by itself? Forget it.
  5. Affiliate marketing is not show business. There’s no business like show business, and that includes marketing. Think of affiliate marketing as help-to-sell business, create-a-desire business, inspire-a-vision business, expand-a-company business, generate-motivation business. But don’t think of yourself as being in the entertainment business because affiliate marketing is not supposed to entertain your customers.
  6. Affiliate marketing is not an invitation to be clever. If you fall into the cleverness trap it’s because, unlike the guerrilla, you don’t realize that people remember the most clever part of the marketing even though it’s your enticing offer they should remember. Cleverness is a marketing vampire, sucking attention away from your primary offer.
  7. Affiliate marketing is not complicated. It becomes complicated for people who fail to grasp the pure simplicity of marketing, but affiliate marketing is user-friendly to guerrillas. They begin with a seven-sentence guerrilla affiliate marketing plan, create a marketing calendar and select from 100 weapons, over half of them free. Not too complicated. The full list appears online at www.GuerrillaMarketingAssociation.com.
  8. Affiliate marketing is not a miracle worker. More money has been wasted due to marketers expecting miracles than to any other misconception of marketing. Affiliate marketing can be the best investment you’ll ever make – if you do it right, and doing it right requires knowledge, commitment, patience and planning.

Value Proposition

With the many affiliate offerings out there, why would anyone want to align himself or herself under your banner? The answer is: your value proposition. You must structure your referral fees with a fair percentage to make it worth their while. It should be generous to make them sense that they are, indeed, earning a passive income.

And it must be simple to make their lives easy. You must offer them the tools of today’s technology: auto-responders, hyperlinks, team-building techniques, incentive programs, contests, sweepstakes, and training materials.

Affiliate marketing is an opportunity so new and unlike what your daddy did that it intimidates many business owners, who then steer clear of it. For guerrillas, affiliate marketing is a ticket to ride first class, avoiding the potholes, on the road toward financial well-being.

But even as you avoid the potholes, you’ll still see affiliate road kill littering the landscape. That’s because it’s so easy to make a mistake with a new concept such as Internet affiliate marketing. Our pioneers made their share as they settled our nation. Why should it be any different among pioneers in marketing? Mistakes are part of the deal, but if you know them ahead of time, perhaps you can sit out that hand.

As all affiliates are not equal, neither are all stupid affiliate marketing mistakes. Stupid mistakes in horrid abundance have been made by otherwise bright companies when testing the affiliate marketing waters. Because guerrillas can learn from these blunders, it’s worth your time to know the most notable:

  • Failure to attract attention during the announcement of a program dooms many brilliant affiliate efforts before they have a chance to shine. Opening lines, email subject lines and first impressions are the gates to your offer. Open them wide.
  • Not facing the reality of an affiliate marketing explosion relegates your attempt to the ordinary, which means the ignored. Guerrillas say things to rise above the din, to be noticed and desired in a sea of affiliate marketers. If you were the only game in town that would be a different story, but there are many games. Act and market accordingly.
  • Focusing your message on yourself instead of your affiliate will usually send your effort to oblivion. Affiliates do not think of themselves as affiliates. They think of themselves as people, husbands, wives, brothers, parents, sports fans, business owners, professionals, consultants. They care far more about themselves than they care about you. So talk to them about themselves ” and help them to see themselves as affiliates. Expect magic if you can do this.
  • Not knowing precisely who your market is will send your affiliates off in the wrong direction. Research into pinpointing that market will be some of the most valuable time you devote to your affiliate marketing campaign. Those hard-working affiliates of yours need all the help they can get. Guerrillas are helpers supreme.
  • Marketing to other than honest prospects wastes your affiliates’ time. If you make your offer to people who don’t really have a need for your offering, it will be an incredibly tough sale. As in all direct marketing – and make no mistake, affiliate marketing is direct marketing – the target market is the most important factor, followed by the offer and then by the way that offer is presented.
  • Initiating affiliate marketing programs without specific objectives gives you too hazy a target for bull’s-eyes. Begin by setting the goals you wish to attain, then the steps you’ll take to reach those goals – and the benchmarks you’ll use to measure your progress. Without benchmarks, you’ll be affiliate marketing in the dark.
  • Featuring the benefits of your product or service to your affiliates first is telling them what they don’t want to know yet. First, your job is to make them see how they can gain financially. Then, they’ll pay rapt attention to the vehicle that will convey them to that promised land. To a hungry man, the most important benefit is the promise of a good meal. To a business, it’s profits. To an affiliate, it’s financial independence.
  • Failing to test all that can be tested is a goof-off of the highest order. Test your commission structure, price points, benefits to stress, contact times and mailing lists to know the real winners. Test various marketing weapons with your affiliates so you can provide them with the most lethal. Guerrillas test everything they can, constantly subjecting the results to the litmus test of profits.

There. Now you can never say that you weren’t warned. You can never plead ignorance when you commit a monumental boo-boo. On the other hand, perhaps you can take a deep breath of relaxation knowing that others have made the really moronic errors for you and that there are no more to be made.

Guerrillas giggle at that idea. When it comes to Internet affiliate marketing, as new as it is, they operate according to a single mantra: “Don’t make the same mistake once.”

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

Wanted: Affiliate Manager

Here in the midst of the fearsome jobless recovery, one job remains hard to fill: affiliate manager.

And nobody seems surprised. After all, online affiliate marketing is still a relatively new field. While thousands of corporations have established affiliate programs, many still haven’t figured out the skills required to manage the programs well, much less what they’re worth.

Can you blame them? Anyone who has ever tried to explain affiliate marketing to a friend knows the very concept can be, well, a bit abstract. But now some very large companies are starting to notice there is real money flowing in from that strange little group of people in the affiliate marketing area. And the pressure is on to find someone who can lead them to greatness.

But what exactly goes into that job description? What skills are required? What experience is needed? And how much, exactly, should the affiliate manager earn? Is this a technical job or a marketing position? Or does it require an MBA?

We set out to answer those questions after we discovered salaries spread out, pretty evenly, from $40,000 to $250,000 – a range that reflects a great deal of confusion. (About one in eight AMs makes more than $120,000 annually.) With the help of many experts, we also learned there are some common elements to great affiliate managers. Revenue is proud to present the top 10 traits that the folks in HR absolutely must list when placing an ad that reads: “Help Wanted – Affiliate Manager.”

1. Great Communicator

Perhaps the No. 1 skill desired in an affiliate manager is the ability to communicate well through many media to many affiliates. Affiliates need to know about your products, prices, promotions and a whole lot more. “Tell your affiliates when you’re having a promotion, tell them what your hottest products are,” said Matt Ranta, affiliate manager for electronics retailer Vann’s. “Don’t make them go out and find it.” Monthly or weekly newsletters and regular emails are key to that communication.

Carolyn Tang, AM for CollectiblesToday.com, uses informal, usually weekly, text emails to communicate affiliate stats, merchandising ideas or details on the merchandising manager’s “hot product” picks. “Communication isn’t just the writing,” Tang said. “It’s the ability to communicate with affiliates on different levels, from casual to complete professional, like making sure checks get paid on time and problems are solved.”

Since affiliates come from many backgrounds – single parents with children at their feet, retirees, home-based entrepreneurs and companies sometimes larger than the merchants themselves -“we put marketing tips in the newsletter, from ‘How to increase conversion rates’ to ‘How to increase your average order size,'” Driscoll said.

“I am in contact today with 400 to 450 affiliates that I consider to be the top producers in the industry,” said Andy Rodriguez, an outsourced affiliate manager and owner, Andy Rodriguez Consulting in Miami, Fla. “Our conversations include ‘How’s your family, how’s your dog?’ It’s that information I can draw upon when I bring a new affiliate aboard.”

2. An Entrepreneur

In true entrepreneurial form, AMs must be self-motivated innovators who can create a custom blueprint for growing the merchant’s affiliate program, follow and forecast revenue, select affiliate tracking technology, understand contracts, manage data feeds, and represent the merchant’s brand and interests through the affiliates – often with little support from others within the company.

“The affiliate manager is basically CEO of this little slice of pie within the bigger program,” Driscoll said. “They basically get to run their own show, their own business, with their own sales force through the affiliates.”

Todd Daum, vice president of marketing for Overture, added, “Being able to recognize an opportunity, such as a high-potential affiliate or an opportunity for a new promotion, will go a long way in helping differentiate one affiliate manager from another.”

3. A Bit of a Nerd

Of course, it’s not enough just to be a hotshot entrepreneur. Great AMs should also be, well, a little geeky. They’ll need to understand html, search engines, coordination of search keywords and search URLs. They’ll need to provide quality control for the Web site, as far as researching availability of images, scanning images and uploading images.

It also pays to have hands-on experience with BeFree, Commission Junction, LinkShare and/or Performics management interfaces. And, of course, the AM should be a whiz at communications tools such as instant messaging, PDAs and online chats. Online forums are great learning tools for uncovering current tech issues, such as new parasites and new pop-up or anti-virus software. So managers may want to hang out in some.

Many AMs also are affiliates themselves, giving them the experience of working with technology from the affiliate’s point of view. “Have your own affiliate site, or set up a test account in Commission Junction [or other network interface],” Ranta said. “Go in and see what an affiliate has to go through to get a text link, a banner or individual product links. That way, [you] can walk new affiliates through the process.”

4. A Marketing Maven

Hear ye, hear ye: AMs must be able to sell affiliates on using their program, and sell internal Web designers on creating a site that makes sales once people discover it. “If you’ve got the qualifications [for being an AM], and it’s apples to apples, what breaks the tie is chemistry – someone who could really keep the affiliates motivated and pass on that enthusiasm for our products to them,” Driscoll said.

Marketing goes one step further: “You want to give your affiliates good sales tools – not just banners – that really work,” said Jim Gribble, an outsourced AM and managing director of LinkProfits.com and PartnerIndustry.com. That includes links coded to product tracking information, so affiliates don’t have to log onto a management interface and go through the rigmarole of downloading each individual product.

It also includes having real, personal relationships with at least your top 20 affiliate partners, Gribble said. “Then spend at least 25 percent of your time prospecting for partners. Even if the program is going well, [you should] always be looking for new partners.”

5. Resourceful

AMs face constantly moving challenges: forming alliances with key players who can move the merchant’s program forward and finding creative ways to reach decision makers on the sites they want to partner with. “Maybe pick up the phone, or use regular mail to get their attention,” Gribble said.

The AM also has to know how to adjust quickly to increasingly sophisticated affiliates. “There’s more and more (affiliates) who are really getting smart about their business,” said Michael Brucker, affiliate manager for Yahoo. “They are placing the search engine bids. They’re coming in and asking really targeted questions, and they’re challenging us: What’s our conversion? What are our proprietary keywords?”

6. Good with Numbers

It pays to keep track of sales numbers. “I monitor that on a daily basis,” said Jack Boulant, affiliate manager for InsureMe.com. “We have an amazing IT department, so we can really see the affiliates that are drivers for us.” How does Boulant reward his superaffiliates? “Increase their payouts,” he said. “A fair thing is to pay them 45 percent of what we make – so we’re both making a profit. Together we are growing this company.” AMs also must take care of financial reporting, figure commissions, cut the checks, and analyze what clickthroughs are legitimate and what could be fraudulent.

7. Graphically Inclined

An AM must come up with fresh banner ads and provide design input for Web sites in order to increase sales. “They must know how to work with a designer, or have Photoshop experience,” Ranta said, “and be able to do quite a bit yourself or communicate what’s needed to the design staff.” A 30-day version of Adobe Photoshop can be downloaded for free at Adobe.com. AMs will need to create special storefronts for seasonal events, size and process new images, research and load missing images, and coordinate photography of new products with the photo studio and designers.

8. Respectable

AMs must have a commitment to doing the right thing: being truthful, ethical, and quick to resolve problems. “Be true to your word,” Ranta said. “Your word is your bond.” For instance, Ranta recently made a mistake in a contest he was running and errantly told one of his affiliates that she was the winner. “I gave her the prize anyway, and told her in person that I had made a mistake,” Ranta said. “If you tell your affiliates you’re going to have a new data feed available, or you’re going to go in and do new creatives, you need to follow through in a timely fashion. Don’t say something just to get them off your back.”

Because affiliate managers are salaried plus commission, rumors abound that “doing the right thing” with affiliates is held back if that means AMs could lose money on their sales charts. “But it’s been proven that once they do the right thing, such as dropping parasitic relationships, the sales numbers just blow up,” de Poel said. “It doesn’t matter what your competition is doing; it doesn’t matter what search engine optimization guys are doing. It matters what you are doing for your channel, treating your affiliates appropriately and rewarding your affiliates for the business that they drive.”

Remember, said Tang, “We all make mistakes. The ability to say, ‘I’m sorry,’ and make up for it is where all the respect comes in.”

9. Contactable

By returning toll-free calls, emails, forum questions or instant messages within 24 hours, affiliates feel like telecommuters and part of a team. Even if the affiliates aren’t contacting you, it’s a good idea to be checking in with them: “I always check in with my affiliates, some more than others,” Boulant said. “I at least try to do it on a monthly basis; some of our top affiliates I talk to on a weekly basis, some more than that.” But what about those affiliates who don’t like to be bothered and are happy just being paid on time? “It’s all part of the relationship process: you have to learn what your affiliates want,” Boulant said. “What I do is I send new affiliates a welcome-mail, and then leave them a voicemail just to introduce myself so they know that there is someone here just to help them. If I get a response by email, I know they’re more responsive to communication that way. Some call, and I respond the same.”

Said Rodriguez: “You have to be able to go home at night, and think that you have people working until 2:30 or 3 in the morning for you, placing links and banners on their pages to sell your products. Be accessible to them, even at that time.”

10. A Team Member

The best AMs can work with cross-functional teams including customer service, sales, technology and administration. “Excellent affiliate managers should have the ability to work closely and effectively with account managers,” said Daum at Overture. “Taking the time to develop those relationships is imperative.”

AMs must also treat affiliates well, be good relationship builders, and know how to reward but not “manage” their affiliate sales team. “The long and the short of it is maintaining and building a relationship with an affiliate,” Boulant said. “Good or bad, it should be ‘Tell me and I’ll take care of it.'”

It boils down to this, said Rodriguez: “Be sure that the merchant and the AMs are on the same page. Treat your affiliates as partners, they are your salespeople. Be sure you have open communications to build a level of trust, so that when everything is going great, everyone is on the same page, but when you have a problem, you can go to them and say, ‘Everything is going to be fixed’. It’s no different than a marriage, [except] the goal here is for everybody to make money.”

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

The Spam Jam

What a mess. Jim Gordon is hell-bent on collecting some of the $600,000 or so he thinks Commonwealth Marketing Group owes him for sending more than 1,500 emails advertising credit cards. He says the emails had inadequate subject lines and the transmission paths – the list of computers that passed along the email – had been doctored.

Gordon, who runs an online health and nutrition business in Richland, Wash., said his email address was harvested, and now the spewing of spam is unstoppable. “I get roughly 1,500 emails every single day of my life,” he said. “Last summer, I got fed up and sent out a bunch of demand letters. Commonwealth was one.” This tactic, attempting to collect a charge from spammers for each email they send, then suing if they don’t pay up, is advocated by anti-spam activists. Activists encourage pissed-off consumers to strike back and try to hit the spammers where it hurts – in the pocketbook.

On Dec. 15, Gordon sued Robert Kane, the CEO of Commonwealth, in his home state. At that time, Washington had tough anti-spam laws that let individuals bring private suits against alleged spammers. We can relate, right? Who among us doesn’t have to wade through lines and lines of email subject headers cleverly disguised to look like they’re from a friend, or, perhaps worse, that stridently proclaim their icky content?

But wait. Robert Kane had a different story to tell. He said Commonwealth works with one Internet marketing company that maintains a network of affiliates. Some of those affiliates may have email marketing lists that they use to market Commonwealth’s credit cards. “We rely on the affiliate to provide opt-in information, and in other cases when [someone has complained], they’ve been able to provide the exact time and date when the person opted-in.”

Kane said Gordon is out to get him, that he’s making a business out of threatening to sue legitimate marketers, hoping to get a payoff. Indeed, Gordon does have suits against two other companies in the works. “I’m seeing an increase over the course of the last year where individuals will go out and sign up for a barrage of offers,” Kane said. “Then they file these actions saying, ‘You’ve been spamming me, and I’m entitled to X number of dollars, but I’ll settle for this.'” According to Kane, Gordon’s demand letter said he’d settle for $10,000. Kane refused, because he verified that Gordon had opted-in.

Where does that leave Gordon’s suit? Like we said, it’s a mess. The hearings go on. Gordon is trying a variety of legal maneuvers, such as complaining of harassment or unfair business practices instead of spamming, while Kane parries by dishing dirt on Gordon’s family. The only sure thing is that both are expending oodles of resources that could be better used trying to end world hunger. Let’s be glad we don’t have to decide who’s right.

But everyone has to be concerned about spam. It could kill the affiliate marketing industry. Incessant emails touting reputable products can tarnish the merchant’s reputation and turn consumers off to the brand in every channel. Merchants also run the risk of being legally liable for their affiliates’ illegal emailing practices. Irate consumers like Jim Gordon and trigger-happy state attorneys general show a tendency to press charges and let the courts sort it out. In February, the nations’ first criminal spam trial began, with a North Carolina man facing four felony counts of sending unsolicited bulk email.

Legal issues aside, spam is bad for business. The gush of stupid and offensive emails creates delete-happy customers. A recent study from the Nielsen Norman Group, a company that consults on making technology more usable, showed that, while the public is getting better at differentiating between opt-in newsletters and unsolicited messages, they’re feeling increasingly stressed dealing with their inboxes, and now have even less tolerance for newsletters they feel waste their time.

While few email marketers would admit to spamming, it’s clear that affiliates are a huge part of the problem. According to Brightmail, a provider of anti-spam services for corporations, products pushed by spammers are closely related to holidays. For example, last Valentine’s Day, 15 million messages hyped flowers, chocolate, dating services and sex toys – all categories that rely on affiliate marketers.

If you dare, open the next 10 pieces of spam you get and click on the links. Except for the ones advising you to “use this patch immediately” and infect your computer with a virus, they’ll be either affiliates linking back to a retailer, or affiliates linking to other affiliates in the Internet’s big Ponzi scheme.

When affiliate marketing consultant Shawn Collins polled affiliate managers in January 2004, 23 percent said they planned to forbid affiliates from sending email. At the same time, 60 percent of them hadn’t taken any steps to educate their affiliates about the issue, and 35 percent of them hadn’t even read the entire law.

That’s scary. Any marketer who uses email needs a crash course in spam.

Living Under the Law

The CAN-SPAM Act of 2003 whisked through the US Congress at the end of ’03, focusing the nation’s attention on legal retribution for spammers. Die-hard privacy advocates say it’s not enough. Marketers say they still can’t be sure they’re inside the law.

“Some of the spam problem is classic spammers, but the majority of it is not from people who are actually attempting to do anything fraudulent,” said Margaret Olson, chief technology officer for Constant Contact, a company that provides email-marketing services for small and mid-sized businesses. Unwitting spammers are merely naïve, she said. While the best practices for email marketing and rules to follow may seem clear to large corporations, affiliates are often new to the game, and many are part-time marketers. “If you have another whole job to do,” Olson said, “you probably haven’t been following the law that carefully.”

Olsen said legitimate affiliate marketers can shoot themselves in the foot with simple mistakes, such as failing to drop names from the list if they haven’t been contacted in the past year, or buying someone else’s list and assuming it’s okay to email everyone on that list.

This federal law supersedes state anti-spam laws where they’re contradictory -but states still have the right to sue spammers in federal court. And, although individuals will no longer have the right to sue spammers under state anti-spam laws, there’s a backlash movement teaching them how to bring suit under a variety of other laws, including harassment.

Ben Livingston, president of ISP Innovative Access, actually wrote a primer on using the courts to get back at spammers; it’s posted online. He’s won cases against spammers, junk faxers and telemarketers -although, he said, collecting is another story. “I know that people will fight back,” he said. “I don’t know how many, or if it will make a difference, but with all these litigious individuals, it could.”

Guys like Livingston are bad news for bad guys. If you’re reading this, you’re one of the good guys. But it can be all too easy to stray.

CAN-SPAM and You

Compared to some very stringent and punitive state laws, the CAN-SPAM Act is relatively marketer-friendly. In fact, it doesn’t prohibit unsolicited email ads at all, as long as marketers follow some guidelines.

The law focuses on three things: ensuring that consumers can recognize commercial email, see who it’s coming from and make it stop. To that end, affiliate marketers should use their business names in the FROM header and create a SUBJECT line that gives the recipient a solid clue as to the content. Within the email itself, the affiliate must provide a working email address where the consumer can ask to be removed from the list and a physical address for the sender.

These measures are no more than good marketing, said Anne Mitchell, president of the Institute for Spam and Internet Public Policy, a consultancy that advises marketers and public institutions. “Ethical marketers are already doing more than CAN-SPAM requires anyway. The reality is, no legitimate marketer who’s trying to do the right thing needs to worry,” said Mitchell, who is also author of “CAN-SPAM and You: Emailing Within the Law“.

One other aspect of the law may become worrisome in 2005, when the Federal Trade Commission, the government agency responsible for administering CAN-SPAM, is required to report to Congress on a plan to require subject-line labeling of all commercial email in the subject header. Some email advertisers already have begun starting their subject lines with ADV, one of the labels under consideration. (The FTC will devise a separate label for sexually oriented ads; that’s expected to kick in some time during 2004.)

Such prefixes make it easier for consumers to keep commercial email from ever appearing in the inbox. However, they would eliminate the ability of marketers to use email to prospect for new customers. Meanwhile, it’s unclear whether real spammers, who usually hide their identities, would comply with the rule.

The law does hold merchants responsible for affiliates’ spam, if it can be proved that they knew or should have known about it and did nothing to stop it, said Mitchell. Merchants who haven’t controlled their affiliates are responsible for polluting the affiliate model, she said.

“People were littering spam under affiliate programs with complete immunity because, while the company had a statement on the Web site that they wouldn’t tolerate it, nudge nudge, [sending spam was] just what they wanted people to do.” In those cases, the way the law gets at the affiliate spammers is through the principle company. Now, companies can’t just shift the blame to their affiliates. “If you have any control over the channel, you should exercise it,” Mitchell said.

One more worry: While the federal law supersedes state laws against spam where they conflict, said Mitchell, “it’s also absolutely true there are all kinds of other laws people can use. Marketers shouldn’t get complacent.”

It isn’t hard to imagine other prefixes that might follow. But how US authorities would stop offshore spammers is unfathomable.

SUSAN KUCHINSKAS has covered online marketing and e-commerce since their beginnings for Revenue, Business 2.0, and other media. She says she has already received her lifetime dose of spam.

Next Year Is Here

Right around now, the sun is shining, the days are getting longer, the garden is looking so great. And the dreaded tax deadline is behind you. The last thing you want to be thinking about is next year’s taxes.

Sorry, but you really shouldn’t let taxes off your mind. Especially now, while you have a chance to do everything right in the year ahead instead of making the same mistakes you made last year.

Oh, sure, you’re going to follow the advice of the great affiliate managers in your key programs, and you’ll have money pouring in. Sounds like success, doesn’t it? Well, my friend, quite often the consequence of success is failure when you don’t take care of your tax issues while you’re raking in the revenue.

Here are some tips that you can start using now to help you minimize your taxes in the year ahead.

Meals and Travel Separate these two costs as they occur in the coming year. All of your business travel is deductible. Your “meals” deduction gets cut in half on the Schedule C. Keeping track generates a bigger travel deduction than guessing. The costs of affiliate marketing cruises are considered travel, and you needn’t separate the cost of the meals. However, there are special rules for cruises. You may deduct up to $2,000 each year for attending cruise ship conventions that are directly related to your business.

To do this, the ship must be registered in the United States and must visit only ports in the US or one of its possessions. At least 51 percent of your waking time must be spent at the seminar and you need to include two supporting statements with your return, plus a statement by the cruise organizer with the schedule of business activities.

Bring the Kids Normally, the additional costs of having your family along on a business trip are not deductible. But as an affiliate marketer operating a home business, you’re in a special position. You certainly could have your spouse and children working with you, or for you. They may be an integral part of your marketing and networking presence on that cruise or trip. If you want to deduct their expenses, they must really be working like any other staff person would. And you must document what their duties are and what they did.

Hire the Kids If you hire your family, but fail to put them on your payroll, you will raise a BIG red flag in front of the tax authorities. There’s a lot of hype about this out there. And there are several multilevel marketing companies whose entire business is devoted to convincing you to deduct your home office and the costs of hiring your children. Frankly, most of that is a scam.

However, don’t let that discourage you from really hiring your children. Why should your teens go out to a burger joint and earn minimum wage, when you could use their services, train them to grow in your business, and be able to build a better relationship with them? If you’re going to hire your kids – do it right. Put them on payroll, have them use time cards, and have them document or summarize their work each day. Not only will this protect your deduction, it will help your teen learn to focus, get organized and communicate.

Putting children 18 or under on your payroll, you must file payroll tax returns. But you don’t have to pay Social Security or unemployment taxes. And you’ll get the deduction for all their wages and any benefits or expense reimbursements. Your children will have to pay taxes on very little of the money. After all, they get their own $4,750 standard deduction, tax-free.

If you pay your children, but don’t put them on your payroll, it will cost you. Your children will have to file tax returns with their own Schedule C. All the income you pay them will be subject to self-employment taxes – 15.3 percent. So even if they don’t have enough income to pay income taxes, those self-employment taxes get you every time.

Hire Your Spouse Hiring your husband or wife lets you use an IRC Section 105 medical reimbursement plan. Putting your spouse on payroll lets you provide family medical coverage as part of the compensation. You may deduct all your medical insurance premiums, as well as family medical expenses right out of your business.

Why bother with this when there’s a full deduction for self-employed health insurance on the front page of the tax return? Two reasons. First, you cut your income taxes and self-employment taxes on those medical premiums. Second, that front-page deduction is only for the premiums. The Section 105 plan also lets you deduct medical co-pays, dental expenses and all other types of out-of-pocket costs.

When it comes to hiring any family members, remember, IRS is watching for that kind of thing. Don’t do it unless they really work for the business. Don’t just talk the talk. Walk the walk.

Avoiding Errors

Hopefully, you have already filed your tax return for the past year. But if you haven’t, pay close attention. If you have, then stow the following information away for next year, because the following three common errors can delay refunds or credits to your account.

Wrong Names Be sure that all the names shown on your tax return match each person’s name as it reads on their Social Security cards.

Wrong Social Security Numbers Look for switched digits or mixed-up numbers.

Affiliate Income as Wages The income belongs on Schedule C – the business profit and loss schedule. Your profits will be subject to self-employment tax – 15.3 percent, which funds your Social Security account.

On the Record

Keeping track of all this throughout the year is much easier than you think. Even if you don’t have an accounting system, at least get an accordion file or two, labeled by category, and drop in your receipts as you get them. Simply add your receipts up at the end of the year and you’ll be all set.

EVA ROSENBERG, MBA, is publisher of TaxMama.com and an enrolled agent, licensed to represent taxpayers before the IRS. She has a quarter-century experience dealing with tax issues faced by small and Internet businesses.

Setting the Data Table

The last issue of Revenue gave an overview of databases and how they can be used. Let’s delve a little deeper into how you, as manager of an affiliate program, can use a database to improve your service and provide customized information for all of your affiliates.

When creating a database, the first step is to understand what information you want to record, and the important relationships among the data. Similar information is grouped into a table in the database. An affiliate will have a variety of contact information such as an email address, a postal address and perhaps even a separate payment address. All of this information could be placed into a single table. Let’s call this table affiliate_contact.

You may want to record certain accounting information about an affiliate, such as the date a sale was made, what item was sold, how much the affiliate earned and the total dollar amount generate by the sale. This information could be placed into the affiliate_contact table we already created, but we will place it instead into a new table called affiliate_sales. I’ll explain why later.

In database design, you want to create tables that group similar information and then link these tables together based on their relationships. This is where the term “relational” comes from when describing a database. Relational databases, such as Oracle, DB2, SQL Server and MySQL, provide very rich tools for extracting information based on these relationships.

Planning and mapping the information you have into tables is just the first, but perhaps most important, step in developing your database. You could change a database’s design once it is running, but if you have a lot of data, or a lot of code using the database, changes can be difficult and time consuming. So, it is worthwhile to take some time and care in planning your tables. In 10 years, my company, Epage, has gone through a few database redesigns, but there are some tables that have not changed structure since the first design.

Creating basic relationships between tables can be quite easy. Usually, it’s accomplished by having a common item such as a table column in related tables. If your affiliates all have a unique identifier, such as their contact email address, this can be used to link tables together. The affiliate_contact table and the affiliate_sales tables would both have an “email” column with the affiliate’s email address. If you want to retrieve information from both tables, like the affiliate’s first name and last sales date, you could query both tables using the same lookup key (the affiliate’s email address).

There are other ways to generate relationships among tables. We like to generate a unique number or string of characters to identify one of our users. This unique identifier is only used internally to form table relationships, and may never be seen by the user. This way, if a user needs to change their email address, it would only need to be changed in one table. In our example above, both tables, and perhaps many more, would need to be updated.

There are many reasons to break your information into multiple tables. Tables with many columns (email, address, phone, etc.) can be very difficult to manage. Database servers are designed to efficiently deliver results to your queries. But, they can get bogged down when you have a lot of columns that you might want to select from. For example, when you insert a new row, such as adding a new affiliate to the affiliate_contact table, the database must re-optimize the way it retrieves data from that table. The more columns that are in a table, the more work the database must perform.

Efficiency is another reason for multiple tables. Some tables may have only one row (entry) for each affiliate, such as the affiliate_contact table. Other tables, like the affiliate_sales table, may have many rows, one for each sale. If these two tables were combined, there would be a lot of wasted space for repeating the contact information for each sale.

Consider what unique information you want to record for each affiliate when planning your tables. You may want to know certain business information. For example, you may want to know whether the affiliate prefers to be paid by check or electronically. Or you may want to review the payment terms for certain affiliates, such as the percent of the purchase price they earn. A database can record these unique terms for each affiliate, allowing you to personalize how your program works. You might want to offer better terms to a desired affiliate or during a promotional period. When a sale is made, the percentage earned by the affiliate would be read from the database, and the result would be stored into the affiliate_sales table.

If you send multiple mailings to your affiliates, some might not want to receive all of the messages. You could store which type of messages they don’t want in the affiliate_contact table. Or, you might want to contact your top-performing affiliates. Each month you could query the affiliate_sales table to find those top performers.

Once you have the information recorded, how you use it is limited only by your imagination. You could send a special message on the anniversary of an affiliate’s signup. You could determine which affiliates had a big drop-off in month-to-month sales – perhaps they are having a problem you can solve. You could determine characteristics of your best affiliates – perhaps it’s their location – and target more like them.

Another good piece of information to record is how new affiliates found out about your program. If you use a tracking code in your advertising, you can record the code in the affiliate_contact table. Then you could determine not only how many affiliates were generated with a specific code, but how much revenue that advertising generated. One last idea to consider: If your users can refer new affiliates to you, then you could record who referred each affiliate. Offer an incentive to these users, such as a percentage of sales generated by the affiliate, and you have the potential for a huge force generating new affiliates for you, with almost no work on your part.

EDWARD ARENBERG, vice president and CTO of Epage, created one of the first fully dynamic Web sites. He manages and develops for EP.com, Epage.com and AdConnect.com.

Wooing the Lonely Hearts

With thousands of dating sites on the Web, it can be as hard for surfers to find the right site as it is to find the right mate.

Affiliates are the matchmakers of the online dating world, bringing lonely hearts to dating service merchants who can light the path to true love, or at least some warm companionship. In a space Jupiter Research projects will more than double to $642 million annually by 2008, it’s no surprise that affiliate marketers are falling in love with the sector.

“Over the past one or two years, the stigma [about Internet dating] has fallen away,” said Graham Mudd, analyst for comScore, a Virginia market research company. “It’s a cycle that builds upon itself. The more people that use it, and have positive experiences with it, the more it’s talked about and used.” And, said Mudd, that usage is “at least partially driven by the fact that it tends to work.”

That’s right. People are actually finding real love on the Internet. Seventy percent of couples that meet online – and survive the first face-to-face meeting – are still in love and together two years later, reports scholar Aaron Ben-Ze’ev, who conducted the first full-length study of cyber-mating, Love Online. Additionally, dating sites tap into the very real, emotional needs of their members: to discreetly find like-minded individuals with similar interests willing to share a date, a sexual encounter or a life together. Jewish sites are a great example of this, as are sites for those with STDs, gays, religious groups and even couples seeking a third.

A few dating service affiliates claim they make as much as $500,000 per month. Our research found superaffiliates in the dating service arena make anywhere from $1,500 to $50,000 per month. Take LovingYou.com, an affiliate with three staff members and a reported 40 million page views in peak months. The site earns $10,000 per month from dating service commissions alone. Its secret, said LovingYou.com Vice President Bob Narindra, is “to not only have good content, but [get the visitor to] perform some kind of action – submit a poem, read an idea and do it, send a postcard – actually do something. Once you get them to actually do something in your site, you’ve created a connection.” Narindra said that connection is what leads people to buy.

The potential buyers are out there: Dating sites drew 20 million unique visitors in December 2003, reports Nielsen//NetRatings (55 percent men and 45 percent women). Some went for curiosity’s sake, others went for the free trials, and roughly 1.2 million plunked down $8.95 to $19.95 per month for paid memberships. Commissions vary widely. Merchants pay referring affiliates anywhere from a nickel to $3 for every click-through, and 15 percent to 110 percent of member fees if the site can convert those visitors from free registrants to paid subscribers.

Online dating is among the biggest paid-content categories on the Internet. “For the foreseeable future, it will be at or near the top in the paid ad category,” said Nate Elliott, an analyst who monitors online dating for Jupiter Research. The trick for affiliates is to get those looking for love to their sites first. That’s a task particularly hard for new entrants, who don’t have the advantage of the flush of media publicity that followed 1998’s “You’ve Got Mail” nor the virtue of being a top-ranked link in search engines. “The top-10 [dating] sites normally get between 32 and 50 percent of the search traffic when combined,” said Drew Jackman of 10x Marketing, a Utah Internet consulting firm (see chart).

Niche Monogamy

So how do affiliates of dating service sites survive and succeed?

“When you talk about online dating, you really need to talk about niche markets,” said Michael Jones, CEO of Userplane, which makes software for the dating industry. “Does it operate like a small bar that caters to regional interests? We’re finding so many of our clients, and so many small dating sites, exist very happily with less than 20,000 users.”

Even the big dating services, like Match.com, which is listed by Hitwise as the second-highest dating-traffic generator, see value in aligning with carefully niched sites. “We can only serve a certain number of markets ourselves, so having an affiliate network that’s willing to go out and present unique niche opportunities that are relevant to a certain number of members in a category [is a big plus],” said Gerard Sample, Match.com’s affiliate program senior manager. “Our best affiliates always find that niche and present personals relevant to that niche.”

Niche categories are definitely a growth area, said Elliott at Jupiter Research. He’s seeing dating services targeting alumni groups, ethnic groups, sexual preference, religion, language and geographical locations. Those affiliates are creating high-traffic sites just by affiliating with 10 dating services in their category. “They don’t need that many users,” Jones said, “before they become comfortable and are making money.”

Fresh Content

With so many different services out there, affiliates must do something to set themselves apart. “The most commonplace strategies are affiliates that take the time to describe, in editorial fashion, the nature of their site,” said R. J. Lynch, senior product marketing manager for Matchmaker .com. Though many dating services offer free content that affiliates can post, the most profitable affiliates come up with their own, posting free content two or three times per week. “When people find content on your site that they can’t get anywhere else, they build an affinity for your site,” said Narindra.

Here are some value-added features that can be used in various combinations to help differentiate sites:

Newsletters LovingYou.com has 16 double-opt-in newsletters, one for each demographic it targets, ranging from its 180,000-opt-in Daily Expression of Love (a romantic quote, idea or gift of the day) to its 450,000-opt-in LoveWire. Its founder and president, Jennifer Good, writes the copy.

Reviews Rosalind Gardner at Sage- Heart.com, a superaffiliate making up to $50,000 per month who was profiled in the last issue of Revenue, writes reviews of the various dating services she promotes. Other affiliates write movie or book reviews for those sappy romantic titles.

Articles Article ideas come from emailed questions, chat room topics or frequent site search requests. Rather than hire costly magazine freelance writers, insiders recommend recruiting a talented writer who can be more proactive to users’ needs by producing regular articles in-house.

Visitor contributions Many sites post poems and love stories submitted by visitors. Others offer online forums, which provide ready reading material for visitors interested in a particular thread.

Companion affiliates Successful affiliates don’t just stop at dating service sites. They branch out by affiliating the site with related retailers offering romantic gifts, lingerie or flowers. People in every income bracket and lifestyle, ranging from very conservative to the swinger set, are actively looking to buy on the Internet. This means a ready supply of residual income for both affiliates and dating services themselves. Gay.com, a dating service for gays and lesbians, reports that its members are twice as likely to have household income of more than $60,000, twice as likely to have graduated from college, and more than twice as likely as the national index to be professionals or managers. It uses those figures to sell premium-advertising packages to companies targeting the gay and lesbian market.

Multimedia Many offer downloadable love songs, video welcome emails or e-cards. “We extensively use viral marketing in our site,” Narindra said. “Visitors to our site can send online postcards, and the person they sent it to comes to us to look at the postcard.”

Cutting-Edge Marketing

An active marketing campaign is what gets date seekers into an affiliate’s site. “If we know one particular site is hot at the moment, that’s our focus – to promote that one,” Rauschenbach said. “And it changes a lot.” Banners are readjusted on pages, keywords are updated to reflect the most popular search terms, and easy bookmark and active-channel options are added to a site to make it easy for first-time surfers to return.

Meanwhile, high search engine rankings still can be achieved. “It boils down to collecting as many reciprocal links as you can [and] getting as much original content as you can,” said David Hayden, owner of Rabbit Rabbit Ltd., which runs DrDating.com. These strategies, plus a few more Hayden guards closely, seem to be working. He’s grown the site to No. 9 in the search rankings without pay-per-click search engine tactics.

Another way affiliates boost profits is by working with merchants to improve pay-per-click or pay-per-membership commissions. When LoveSites.com signs up to be an affiliate, “we do it in the traditional way, and send out an email afterwards letting the [dating service] know we’re a superaffiliate and we’re looking to promote your program at a higher-than-normal level,” said marketing manager Brian Rauschenbach. “We tell them we’re going to be taking a couple of different approaches to marketing their program, but we want to have a custom program set up first.”

The key to negotiating with merchants, Rauschenbach said, is to not just send them an email. He follows up by phone, and asks to speak directly to the affiliate manager. The net result: “We have a couple of companies that we actually have contracts with,” he said. “In case we get sold to another entity, we still have those contracts.”

Conversion Rates

Since most affiliate profits are made through membership fee commissions, it’s key to partner with dating services that have high ratios of registrants who convert to paid members after a free trial. Matchmaker.com, for instance, reports conversions of roughly 7 percent of visitors from general sites and 15 percent of visitors from dating-specific sites. That’s higher than industry standard, which pencils out to 8 percent conversion rates for males and 2 percent conversion rates for females, according to a December 2003 Nielsen//NetRatings study.

Dating service sites typically pay affiliates if that visitor returns to make a purchase within 30 to 60 days. Some services are sweetening the pot even more. Matchmaker.com, for instance, now offers unlimited return days. Its software records where visitors come from, even if those visitors don’t sign up for a service, and gives credit to the original affiliate if that visitor comes back at anytime during the course of their life. “Giving the affiliate the ability to earn commissions during the length of a subscriber’s time with us mirrors what we’re trying to achieve with our subscribers,” said Lynch. And that’s creating long-term relationships.

Looking Forward

While some product categories are tightening or dropping affiliate partner programs, experts say that won’t happen any time soon in the dating realm. Match.com, a Forbes 2002 and 2003 “Favorite for Dating,” soon will roll out affiliate features now offered only to big-name partners, including advanced searching capabilities, customized channel designs, personality tests and seven-day free trials directly from affiliate sites. “We’re continuing to find new ways to connect affiliates with our users,” said Gerard Sample, senior manager of Match.com’s affiliate program.

Meanwhile, Matchmaker.com will become one of the first dating service sites to offer automatically updated banners: “Traditionally, affiliates would grab new creatives from BeFree and implement them on their site,” Lynch said. “Now the change can be made automatically. This not only simplifies the day-to-day execution of their site, but it also allows them to take advantage of things we do promotionally.”

There are also buyouts afoot. Companies such as Match.net are purchasing smaller services with 50,000 to 100,000 member profiles, said Jones at Userplane. “They either buy you directly or set you up as a portal into their site.”

Increasing competition is causing consumers to act more fickle. “About a year ago, the average lifetime of a subscriber used to be three months,” Narinda said. “Now, with all the competition, the timeframe has dropped to two months.” That means affiliate sites either have to refer more potential members by bringing more people to their site, or come up with additional revenue streams such as books, gifts or even background checks. MatchPatrol.com, for instance, has signed up 25 affiliates for its new fee-based program that gives online daters an identification number that proves they are who they say they are.

Even with all the changes, insiders see online dating revenues getting bigger and better. “There are so many single people out there,” said Gardner, “and everyone is looking for love.”

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

Searching for Your Site

Unfortunately, many folks create a Web site and then sit back and wait for the orders to start pouring in. That strategy doesn’t work in the field of Internet marketing any more than it does in the offline world. With millions of new Web sites being added to the Internet every month, the old days of hanging out your shingle and waiting for customers to beat a path to your door are long gone.

Effective search engine marketing (SEM) is what separates winners from losers in the world of Internet marketing. And when it comes to SEM you have two choices. The first option is to optimize your site so that search engines find you easily and give you good ranking in their index. The second choice is to buy higher placement on search engines using paid inclusion or pay-per-click (PPC). In other words, you can pray for clicks or pay for clicks, the choice is yours.

Praying for clicks is better known as Web site optimization. When taking this approach, it helps if you offer the search engine gods a peace offering by making it easy for their spiders to find and index you. (Spiders are programs that crawl all over the Web searching for pages.) Whether you choose to optimize your site yourself or pay a search engine marketing firm to do it for you the same strategy will apply, and you should be involved in every step of the process.

Keyword Selection

Choosing the right keywords and phrases for optimization is crucial. If you choose keywords that few people search for, then you can achieve a lot of top search engine rankings, but won’t get any customers. If you choose keywords that are too competitive you’ll find the competition won’t allow you to achieve any decent rank. You should also choose keywords that are attractive to your customer demographic; otherwise visitors will arrive at your site but never make a purchase. Simply make a list of relevant keywords that balance both popularity and competition. Use a keyword research tool like Word Tracker or Overture’s Search Term Suggestion feature to do this quickly and easily.

Measure Your Rankings

Before you can improve your position, you must know where you rank for the keywords and phrases that relate to your business’s products and services. If you did a good job in picking keywords, you should now have a list of highly relevant words and phrases that your customers are using. Use a tool like Web Position Gold, or my company’s free tools at TrafficMentorSEO.com/tools .html to determine where you rank for your targeted keywords on the major search engines.

Page Content

One of the easiest ways to attract both search engine spiders and qualified traffic to your Web site is to create Web pages that are appealing both to the user and to the spider. Spiders like to see short pages with lots of text and few graphics. People probably like to see more pictures. After all, any picture is worth a thousand words, just not to spiders. Balance is what counts. Creating pages that are attractive to users and spiders and free of annoying distractions like flash and frames is the name of the game. Try to create one page for each keyword or phrase you are targeting, and develop quality content that will bring users back to your site again and again.

Optimization

This is the main focus of search engine marketing and the piece that makes all the difference in your Web site’s ability to compete effectively. Simply stated, your goal is to give the search engine spider fodder. The easiest way to determine what it wants is to study pages already ranking in the top 10 and to emulate key aspects of those pages on your own site. Don’t copy your competitors’ source code and content line for line, just learn from their example. Study the basic statistical elements of the page such as meta tags, keyword counts, link popularity, word counts, etc. A good free tool to keep you on track and ensure that your page is spider-worthy can be found at InstantPosition.com.

Submitting

Don’t try to use a submission service to submit your pages to thousands of search engines and directories. These services are a complete ripoff. There are only a few search engines that count in terms of traffic, and you are better off submitting to them manually or using a tool like Web Position. Once you develop some third-party links to your Web site, most engines like Google will re-spider your pages regularly without the need to re-submit.

Traffic and Revenue Tracking

Ultimately, it isn’t just top rankings you want, but more targeted traffic and sales. This is where your investment in search engine optimization really pays off. Once you get your traffic-building pages set up, the pay-off comes in consistently. Utilize one of the many good tools out there for tracking visitors and revenues. You can use these solutions to track both PPC campaigns and organic visitors and you will learn a lot in the process about your site’s usability and its ability to convert visitors into customers.

Follow Up

While some pages may rank well for a long time without changes, most pages will require fine-tuning as the search engines change their ranking algorithms, and index new pages. It’s important to measure your rankings at least monthly. Re-optimize any pages that drop in rank and then resubmit or wait for the engine to revisit the page.

The search engine marketplace can be daunting as things are constantly changing. In order to keep up your top rankings you need to stay informed. Read as much as you can. Sign up for the many search engine newsletters and forums and apply the tips in them religiously.

After that, just sit back and smile as you watch all the visitors coming to your Web site. The best part is that all that traffic is free, and highly targeted. Yes, sometimes even the gods can be friendly.

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

The Pay Per Click Dance

A few years ago, if your site wasn’t listed in Yahoo you might as well have given up. Yahoo was practically the only game in town, being the search engine of choice 75 percent of the time. There were all sorts of secret ways to get a better listing, and you had to know these and implement them or your site was invisible. Then, along came a little company called GoTo.com with its cheeky idea to let sites bid on better positioning in search results. A revolution was started.

GoTo.com morphed into the king of pay-per-click search engine marketing, Overture.com., which was just purchased by Yahoo. When you couple that with the near-psychic accuracy of search results returned by Google through its Google Ad Words, you had better know how to tame these behemoths or once again you’ll be invisible. Once you have mastered the strategies, your top-placed search results will send anxious buyers streaming to your site. Within 48 hours, your return on investment on specific keywords can be analyzed, judged and tweaked to improve your bottom line.

This is where affiliate marketing gets interesting. For as long as people have been commissioned to sell other people’s products, cleverness and innovation have produced the top sellers. I remember years ago a charismatic salesman came to my family’s house with an array of shiny new pots and pans. He proceeded to make a delicious meal, accompanied by never-ending sales patter. Before he left that night my dad had parted with a significant portion of his hard-earned cash for these magical pots. A very clever marketing tactic indeed.

Affiliates have grasped this concept from the get-go. These days, good money can be made by going beyond banners and cleverly investing in and managing a pay-per-click search strategy. But what if both the merchant and the affiliates are both doing PPC marketing? That’s the big question every company that operates an affiliate program ought to be asking itself these days. In fact, good affiliates do use PPC and in many cases they’re doing it better than the merchants.

So, how does that affect your business model and what kinds of policies should you establish around this issue? Well, it depends on what your marketing strengths and weaknesses are and it depends on how well you have analyzed your own marketing dollars’ ROI. To simplify it, there are basically three different ways to approach this issue: 1) Let your affiliates do anything they want with PPC search engines, 2) Prohibit affiliates from doing any PPC marketing, or 3) Compromise, and develop a strategy that allows you and your affiliates to divvy up the PPC traffic.

Let’s look at the pros and cons of each of these models.

1. Anything Goes

If you let your affiliates do anything they want, you’ll get the same results as if you have NO policy. Good affiliates will research low-cost, high-traffic keywords relating to your site and products and will actively manage these bids to leverage what they pay for the words against what you pay them for the sale or lead. The “pro” is that the affiliates are bearing the cost of this marketing strategy. The “con” is that you are possibly paying more for that sale than you have to.

2. Nothing Goes

The second option is to prohibit affiliates from doing PPC marketing. Why? Because the knee-jerk reaction to No. 1 is, “Well now, wait a second, I could be getting all that traffic instead of them and paying less for it.” So you decide to pour your marketing dollars into PPC traffic on not only your brand name but on all your products and every keyword imaginable to “corner the market.”

But the “con” of this approach is that your spending will go up dramatically, your management resources will go up dramatically to stay on top of thousands of words daily (sometimes hourly) and, worst of all, good affiliates who are good at this kind of marketing will drop out of your program.

3. Compromise

Finally, there’s the idea of compromising on a strategy that allows both sides to engage in PPC marketing. Helping affiliates make money will help you make money in the long run. How do you develop a good plan? You simply have to evaluate what you can manage and pay for effectively and what affiliates could do better and more profitably.

For example, let’s say you have tested and done well in Overture with 300 top keywords and trademark names relating to your business. You’ve analyzed the stats and you’ve proved that staying in the top position for most of those returns a healthy margin between bid price and sales/lead volume. But you’re maxed out in terms of marketing budget or marketing staff to double or triple your buys.

This is where your affiliates come in handy. Provide them with proven keywords and let them “have at it” on Google Adwords or any of the other PPC engines, like Findwhat or Kanoodle. Also, in order to keep competition between you and your affiliates to a minimum, ask that they not outbid you on Overture and police this aggressively. Take space No. 1 and No. 2 and let your affiliates take bids that place them at Nos. 3, 4, 5 and so on, and you have effectively shut out your competition on valued keywords and phrases.

The main thing is to evaluate and then articulate a well-thought-out policy for you and your affiliates. Decide on the best use of your resources and budget, and then help your affiliates use this powerful sales channel to their best advantage. It will benefit you both.

LINDA WOODS helps companies start and manage affiliate programs. Long known as the Affiliate Goddess, her new company, PartnerCentric.com, offers strategy consulting, training and outsourced program management services.

First Impressions and Beyond

What’s worse than a poor shopping experience? Rank it down there next to a really bad haircut, or waiting in line at the bank on Saturday morning. It’s not fun.

Affiliates and merchants should take note. Just because you have a Web site instead of a retail storefront, doesn’t mean that you have it easy. In fact, some would argue it’s more difficult to sell online than offline. Unlike a physical store at your local mall, your Web site is one among millions. An offline merchant knows his customers might have to drive across town to find a competitor. Your myriad competitors are just a click away.

In the online world, the first impression that you communicate through your design means everything. It’s how your customer decides if you’re what they want, or if you’re just another speck of sand in the great cyber desert. Once they’re convinced you have what they need, you can concentrate on fulfilling your promise to deliver it. It’s getting past that first hurdle that stops most sites from experiencing great sales.

Here are some ways to help your site stand out from others in the increasingly crowded online community:

Gone In 8 Seconds

As soon as your Web site begins to download onto your potential customer’s screen, the “shopping clock” begins to tick. Typically, you have about 7 to 8 seconds to convince them you have what they need. If you can’t convince them in that short time span, they will most likely be off to the next site on the list, which could be your competitor. So what are they looking for?

Unique Value Proposition

You must always assume that no visitor knows your brand. This is especially true for affiliates who focus on building niche sites that have little or no brand preparation or recognition. Therefore, you need to successfully introduce your unique value proposition (UVP). A clear UVP is essential. It should answer the one question that all online shoppers want to know: “Does this site have what I want? Because if it doesn’t, I’m outta here.”

Here’s a poor UVP for a fake company called ABC Co., and a preferred proposition that offers a bit more:

Poor UVP Statement: The ABC Co., a New York-based business established in 1908 and traded on the NASDAQ stock market, builds, distributes and ships widgets and widget-related products in the US and around the globe.

Preferred UVP Statement: ABCCo.com offers secure online shopping for widgets and accessories with international shipping.

Did you notice the differences? The biggest is that the poor statement is too long and focuses on too many topics, such as the company’s history and its stock. Customers want to know how the site is going to help them right at that instant. The other information can be provided later in the sales process.

The poor statement also incorrectly focuses on what the overall company does rather than what the Web site does. The preferred statement removes all mentions of anything except what the Web site can do.

Having a powerful UVP isn’t only for affiliates and small niche Web sites. Merchants must also be attentive to this, even if they have a well-established brand. Even large companies frequently review their UVP to make sure it is easily understood.

Logo

How you present your logo and tagline is also important to a customer’s first impression. Don’t get caught assuming that your logo or tagline effectively mimics your UVP. Logos are window dressing, and only truly effective in branding of your Web site over the long term. They are not a viable method of displaying your UVP. Lastly, to be truly thorough, try to keep your UVP message on every page of your site for visitors who may have followed a deep link into your site, or for visitors who are referred via an email link.

Home Page Makeover

What your site says isn’t the only thing to worry about when making a good first impression. What it looks like is equally if not more important. Don’t worry though; you can make huge adjustments with some tiny fixes. Let’s get started.

Speed It Up

Sure, more people now have high-speed Internet connections, but at the same time, those people now expect super-fast performance because of it. To give them anything less creates a poor first impression. Action: Optimize all home page images.

Focus and Display

You need a focal point upon which your customers’ eyes will naturally settle. Typically, online readers focus on the middle of a page first, and then move to the left side, then to the top and on to the right. Remember, it’s your job to guide them to your information, not their job to have to find it. Action: Learn from the successes of others. Look at sites like Amazon.com and notice how they focus their customers’ eyes into strategic points on each page.

Call To Action

Effective call-to-action statements should prompt your customer into taking an action. Whether it’s clicking through to your hottest specials of the day or signing up for your newsletter, it’s the best way to get your customer to see that you are trying to get their attention. Action: Use the main middle area of your page to create your most powerful call to action statement. Make sure that it provides some sort of value to the customer, or why would they bother to pay attention to it?

Heading Home

So now your customer believes you have what they need and have extended their “shopping clock” by another minute or so. Congratulations, you’ve gotten to second base. You’ve won the first impression battle that most Web sites strike out at. Now you need to concentrate on rounding the bases and getting back home with a sale. But do it quickly, because the clock is still ticking.

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