Tag: 12 – July/August 2006

Jeremy Palmer: The Million Dollar Man

Jeremy Palmer knew he had the entrepreneurial spirit. He just hadn’t found the right thing to let it soar.

He knew there was more to life than his mid-level job at a small financial services company. As a Web developer, in 2002 he launched website MeetYourMatch.com in hopes that it could generate a little extra cash for his wife and two kids in Utah and give him an outlet to pursue his independent business ideas.

He sold things on eBay. He sold some of his possessions just to get his affiliate sites off the ground. He wasn’t exactly sure of what he was doing. That was 2001. Fast forward to his current life as an affiliate marketer and he would say his wings are no longer clipped – in fact, in 2005 he made $1 million in commissions.

He will be the first to say that he had never envisioned this life for he and his family. In the beginning, he worked part time at night and on weekends on a dating site but it wasn’t making much money. He loved building websites but didn’t see a lot of cash in assembling other people’s sites. His original dating site went up in 2002, a time when dating on the Internet was just about to explode and Palmer felt like he had a killer domain name – with MeetYourMatch.com. “I was naive to think I could compete with Yahoo personals,” he says. “It was a great failure for me.”

Meanwhile, his wife had a good career in the financial services industry – had her own office and at one point was the breadwinner for the family. The company he was doing Web design for had an affiliate program through Commission Junction – but he wasn’t involved in that part of the business. The guy who ran it, though, started to tell him the numbers. Some of these people were making up to six figures a month. “So I threw up some links on my site,” he says, and in six months he was matching his salary in commissions.

He had finally touched that entrepreneurial magic and he dove into it head first. Today Palmer has a network of more than 100 websites (he doesn’t even know the exact number), an e-book on how he made it and is Commission Junction’s 2005 Horizon Award Winner and a Yahoo Search Marketing Ambassador. His domains include FreeBudgetingSoftware.com, DatingSiteCritic.com, CreditRepairGuy.org and, of course, the site for his e-book: QuitYourDayJob.com (see page 44).

How does he do it with so many sites? The key, he says, is to work with templates that need very little manual tweaking. He has 50 dating sites that are virtually the same – they are just targeted by geography. But, Palmer says, it’s not about how many websites you have or following a more-is-more philosophy. “Each page should do just one thing,” he says. “You don’t want to overwhelm the customer with choices. You know, like when you go to call Dell and the first thing you hear is 30 options to direct your call. It takes you forever or you hang up before you get an answer.”

The other main reason Palmer claims he’s successful is because he goes the extra yard to reach out to the merchants. It satisfies his social nature, he says. He typically spends a few hours a day just talking to the merchant reps.

“I have their cell phone numbers and they have mine.” He says that just talking to people is crucial to getting help and getting what you want from a merchant. Sometimes Palmer will fly out to see the merchant or the company will send someone to meet with him. Of course, Palmer admits merchants don’t do this for everyone, but, then again, he makes six figure commissions – that puts him in the upper stratosphere of earners. It’s no wonder merchants will roll out the red carpet for him, especially when 80 percent of most merchant’s affiliates are not earning enough to register a blip.

He says being a big earner just takes hard work. His day really isn’t much different from most affiliates. Typically, Palmer starts his day by viewing his stats on CJ, LinkShare, etc. Then, he logs into Google AdWords to check on his costs. “I do have some spreadsheet systems that I made up to make it easier on myself and this way I can make bidding decisions based on that and see where my ROI from the previous day was.” All of this, he says, is a way of tailoring your existing sites to make them better. “It is far easier to improve on existing websites than to launch a brand new site.”

He’s always looking for ways to improve things. “I probably differ from most in that I will build a website around a merchant’s product and services instead of just throwing a link on my site – then throw a couple of hundred keywords at it.”

Once traffic looks promising, he will expand. It could take few days to a few weeks to see if it is worth it. He claims that he’s got more patience than most affiliates and he believes that’s what helps him to see if ROI kicks in and to wait for the results.

Palmer then spends the rest of his work time building relationships – over chat, email or by phone talking to the merchants. It’s his favorite part of the job.

“You want to know the dirty little secret of affiliate marketing?” he says conspiratorially. “I gained 30 pounds because you don’t get a lot of exercise just sitting, building websites.” He says it took a lot of hard work and sacrifice. He says he sold a favorite – and very expensive – racing bike and some of his personal gadgets – a road bike, Palm Pilot and cell phone – to get the business started.

“People buy into the hype and hope. I want to retire by the time I’m 30. So, in the beginning I was doing 20-hour days and still do some of those sometimes.” The reason so many affiliates don’t turn over the big numbers, according to Palmer, is because they are unwilling to do the tough work. He says you have to put in the labor on optimizing your site and making it eye-catching. He’s constantly experimenting – putting up a site and throwing a few hundred keywords at it to see if it can bring numbers. It’s fun for him.

Palmer proudly states he still has no employees on his payroll. His wife doesn’t receive a paycheck, although he can count on her to give him advice on design and the content. “She’s kind of my quality assurance person and will say she doesn’t like a graphic or will brainstorm on keywords.” Sometimes she even reads his emails before he sends them to make sure he’s being coherent.

He keeps an office about 10 minutes from home but goes in when he needs to concentrate on something or make important calls – otherwise he’s pretty content working from the home office. Plus, they live near a great park and ball field where he loves to take his two kids, who are 5 and 3 years old.

“I can spend all day there.” Currently, he does a kind of week on, week off. Works on the sites for a week and then spends a week riding his bike, going to the park, reading business books and magazines – Forbes or Fortune. “I can read those like some would read Harry Potter.”

It sounds idyllic and it is, but the journey wasn’t without emotional bumps. The hardest decisions he and his wife made about quitting their day jobs was what to do about his wife’s career. She had been a full-time worker since she was 16 years old, Palmer says, and changing to a stay-at home mom was jarring. It was a big step for her to quit her job but the decision was made easier by the fact that the income from the affiliate sites mandated they convert to full-time affiliates.

“The sites were growing so much,” Palmer says, “that the only thing holding them back was our time investment. So, we had to spend more time.”

Quitting their jobs was the no-brainer – it was clear on paper that the commissions were paying way more than their day jobs.

Equally unsettling was what to do with their success.

“Some guys get a little cash and they go out and buy a Mercedes or a new house,” he says. But in the end, quality of life won out. As a born and raised Utahan, Palmer is definitely very family-oriented just as they teach in the Mormon church, even though Palmer says they don’t go to temple as much as he did when he was young. But the luxury of having more free time now allows him to get more involved in the kids’ extracurricular activities like sports and gymnastics.

While Palmer did upgrade his home and put the kids in private school, he and his wife thought pretty rationally about what to do about their new-found wealth. They kind of played a spinning globe game – if we could live anywhere, where would it be? They thought Austin, Texas, looked attractive and the San Francisco Bay Area certainly was a consideration. But in the end they decided to stay right where they were in a suburb of Salt Lake City. They knew it to be family-friendly and the pace of life was perfect for them.

Things have been so idyllic, in fact, that Palmer decided to share his secrets. His recently available e-book, High Performance Affiliate Marketing, pretty much recounts how he did it and with the right elbow grease, anyone can do it.

He says the book is practical and not one of those “get-rich” books. “I basically wrote it because I think there was a need for it,” he says. Most of the books on the market, he adds, seem so dated even when they are only a year or two old. “I wanted to know if my knowledge was transferable. I led this internship with five other affiliates and they are doing Ok. I just sat down with them for five hours and two of them have quit their day jobs.” He says one even worked for NASA, surely a dream job for many, and yet this guy gave it all up to become an affiliate.

One of the unique things about the book – available at QuitYourDayJob.com – is that when you buy it you get all the updates for free in perpetuity. As Palmer adds revisions to the book as the markets dictate, all buyers get those revisions too.

Why essentially give away his secrets? “I think the Internet is a big place,” he says, “and lots of people wonder why I give the secrets away but I believe in karma. Since if I give something to the community I will benefit from it.” He even offers a free support forum for the book so that if readers have questions, they just email him directly to his personal email account.

“As an affiliate I just build websites and go over numbers,” he says. “But I really enjoy the face-to-face, so that’s why I reach out to the merchants. And as I operate on an island over here, the book feeds my social needs.”

While he said he wants to retire at 30, his version of retirement would be to only work a few hours a day. “I’ve always had the entrepreneurial spirit,” he says proudly. “You know, I had worked at a huge call center here and was answering tech support calls for Microsoft. By the end of my stay there I was overseeing 80 employees but was really turned off by the red tape of big companies. I said I would only work for small companies from then on, where I could make an impact. You see, there is always a ceiling and I figured if I worked for myself, there would be no ceiling.”

The Lure of Youth

They’re wired, they’re affluent and they are a largely untapped market. This prized group is teens. They are often referred to by a variety of different monikers including Echo Boomers, Millennials, Netizens, Generation Y, Trophy Children (because of the strong impact that parents have in their decision-making process) and Generation N (for Net).

When analyzing this group, market researchers often slice and dice things in slightly different ways, but one common thread among all the facts and figures is that the group’s size is on the rise and its spending power is awesome and undeniable.

Northbrook, IL,-based Teenage Research Unlimited (TRU) put the current U.S. population of teens (age 12 to 19) at 31.6 million. TRU says this population, which has increased steadily since 1992 as children of baby boomers entered their teen years, spent $155 billion in 2005.

Alloy Media says 10-to-24-year-olds are a demographic said to be 60 million strong with annual spending power of as much as $250 billion. Alloy expects the number of teens to reach 35 million by 2010, while Forrester Research says there are 73 million people under the age of 18 in the U.S.

JupiterResearch reports that teenagers spent over $158 billion in 2005 and are expected to spend $205 billion in 2008.

A recent Harris study reports that American kids, teenagers and young adults, aged 8 to 21 years old, have annual incomes totaling $211 billion and they are spending 81.5 percent of their earned income – a whopping $172 billion per year.

Younger kids, the so-called “tween” set between ages 8 and 12, spend $51 billion per year, according to Alloy (see sidebar, page 58).

Futurist Jim Taylor, vice chairman of the Harrison Group, says boys under 18 have an average of $525 to spend each month, while girls have $430.

U.S. teens controlled an estimated $169 billion in disposable income last year – or $91 per week per teen – according to a study by TRU.

So where do these kids get their money? The major sources of teens’ income are: parents on an as-needed basis (47 percent); odd jobs (41 percent); gifts (41 percent); parttime jobs (28 percent); regular allowance (25 percent); and full-time jobs (11 percent), according to TRU. The average young consumer spent $84 per week. Some $57 of that was their own money, while they received the remaining $27 from their parents.

And unlike kids of the past, they are free to spend; 22 percent of U.S. teens have credit cards while in high school.

Getting Hip to the Kids

But this group is hard to get a handle on. Maybe that’s why researchers have devoted a lot of effort to trying to understand this highly coveted group. Here are some basic things you need to know about teens.

  • They are very wired and likely to stay online for longer periods than adults.
  • They are more likely to access the Internet from different locations.
  • They participate in a wider range of online activities.
  • They are more likely to adapt quickly to new technology, and embrace its changes.
  • They multitask while online.
  • They are fickle and not necessarily brand loyal.
  • They are savvy and often distrustful of traditional advertising methods.

No other age group matches teens’ enthusiasm for the Web or their use of broadband connections. About 21 million or nearly 87 percent of the 12-17 age group is online, many at least twice a day, according to a recent Pew Internet & American Life study. That’s more than the activity of 25-to-29 year olds, which have an 85 percent penetration. And 49 percent of teens have high-speed connections at home. That’s more than any other age group.

A Burst Media survey from June of 2006 reports that 69 percent of Web users (13 to 17 years of age) said if they had no Internet access outside of school it would “ruin” or make their day “not as good.” Bummer, dude. Among teens who go online from home, friends’ homes, libraries and other locations outside of school, more than one-third (37.4 percent) say they spend three or more hours per day on the Internet.

Teen males are more likely than teen females to say they spend three or more hours per day on the Internet – 39.9 percent versus 34.7 percent. Additionally, nearly one in five (17.9 percent) say they spend between two and three hours online; one-quarter (25.1 percent) say they spend one to two hours online; and 19.6 percent say they spend less than one hour per day online outside of school.

What Teens Are Doing Online

And while spending all this time online kids are multitasking – Web surfing, watching TV, sending emails, listening to music, sending instant messages and doing homework (see sidebar, page 54).

“Corralling these distractions to minimize their disruption is a significant challenge for marketers,” Chuck Moran, Manager of Market Research for Burst Media, says. “Marketers should use the Internet to create a central content point for teens on a variety of subjects and interests. By doing so marketers can then develop integrated marketing campaigns with advertising creative and programs referencing a central platform and working in tandem to get teens’ attention.”

One way to do that might be look to the growing popularity of social networking sites. Three out of five (61.4 percent) respondents in the Burst Media study had visited a social networking website. Of those, 60.7 percent joined the site and created a profile. Teen females are significantly more likely than teen males to say they have visited and joined a social networking site (67.5 percent versus 53.7 percent).

And MySpace leads the pack when it comes to social networking. From April 2005 to April 2006, the overall number of teen visitors (between the ages of 12 and 17) to MySpace grew from roughly 3 million to 7.8 million. That was up 162 percent, according to comScore Media Metrix. MySpace currently has approximately 85 million members.

Like Google, MySpace has spawned a cottage industry of sites that provide support and services to teen subscribers. Sites like MyGen.com.uk, Coshed.com and Poqbum.com, help kids create profiles, layouts, graphics, games, icons and quizzes for MySpace blogs.

But once something gains popularity there is usually some backlash – MySpace has drawn fire from parents and teachers – and now many teens are looking to newer, edgier social networks, such as Bebo.com, Tagged.com and MyYearbook.com. Tagged.com grew to half a million teen visitors in April 2006, from a virtual unknown, according to Nielsen//NetRatings. Also a newcomer, MyYearbook.com blossomed to 1 million visitors over the last year.

Marketers value these virtual communities for a number of reasons: They attract a very specific target audience; visitors return again and again; they provide a place to promote and sell products; it’s fairly easy to collect demographic and product- use information; and they provide a place to interact one-on-one with teens.

However, it’s not going to be easy for affiliates to crack.

“It’s an interesting market opportunity that has everyone salivating,” Blagica Stefanovski, affiliate program director at PartnerCentric, says. “But it’s difficult for affiliates to make headway on those social networking sites like MySpace or FaceBook. I think an affiliate would need to have a niche site that caters to teens or be a MySpace superstar with a large network of friends. It’s going to be hard for affiliates to get credit for driving registration and sales in that environment.”

She adds that there is significant opportunity for merchants on social networking sites as long as the merchant can get all 0f its divisions on the same page to drive success.

Consultant Shawn Collins agrees that it’s difficult to acquire teen-centric affiliates. He found this out in his role as the affiliate manager for Payless Shoes, which has several lines of shoes geared toward young women and teens.

“I tried to reach out but there were not a lot of savvy affiliates for the market,” he says. “Most teens aren’t serious affiliates or aren’t taking it as seriously as people who do it for income. They are not as diligent and business like. Also it’s a hard market to crack according to Collins, because it’s so community oriented and many of the popular online communities don’t do performance ads just CPM ads.

Teens also use such social gathering spots like MySpace to talk music. That means the social network is ripe with independent bands promoting free MP3s. But other music sites are also feeling the beat. Apple.com, for example, increased its teen visitor base by 68 percent to 3 million from April 2005 to April 2006, according to ComScore. A study by the Pew Internet & American Life Project reports 47.1 percent of teens download music (see Music story, page 68).

That same study from Pew also reports nearly half (49.3 percent) of the respondents play online games, which provide marketers with a great vehicle for keeping kids in the marketing loop with integrated product promotions called “advergames” (See video gaming story, page 74).

Another thing that teens love to do is talk, and online communication reigns as the preferred method of chat. A recent Lycos survey showed that once the school day ends, 45 percent of the teens surveyed preferred to communicate via Instant Messenger (IM) outside of school. Although public teenage chat rooms have become stomping ground for spammers and other unscrupulous prowlers, legitimate marketers can still be heard above the din.

And when they are not chatting online, teens are talking on their cell phones. In fact, 70 percent of teens own a cell phone. Many claim that creating online branded content for teens or reaching young buyers through their cell phones is the way of the future.

“Seen as the next frontier, mobile marketing appears to infiltrate teens at a rate much higher than adults,” a Forrester report says. In addition to buying ringtones, Web-enabled phones will make it possible to watch video clips and shop via cell phone.

And while the average teen spends seven hours a week on the Net, they spend 10 hours a week watching TV, a difference more pronounced than for online adults, according to JupiterResearch. Many suggest that a multichannel mix of online and television would likely reach the teen population.

Blogging is also something that has captured the attention of teens. More than half of all teens and 57 percent of teens who use the Internet have created a blog or Web page, according to Pew Internet & American Life Project. The most active segment among teenage bloggers is girls aged 15 to 17. One-quarter of online girls in that age group blog, compared to 15 percent of online boys of the same age, the study says.

But blogs can be tricky territory for online marketers because many blog sites are owned or run by individual users. These sites are often highly personal journal- based pages that are updated with no regular schedule and subject to the whims and opinions of the users. Many don’t even accept advertising. All this combines to make them a less attractive opportunity for marketers.

Hook, Line and Sinker

Many industry watchers characterized teens as fickle, cynical and not particularly brand loyal.

That’s a claim Forrester Research analysts dispute. “Although they admit to shopping around before making a purchase, more than half of both younger and older teens agree that when they find a brand they like, they stick with it,” the Forrester report says.

However, when it comes to trends and what’s new – the brand is not the issue – it’s all about what’s hot at the moment.

Still, for the most part, teens are incredibly marketing savvy and by the age of 19 the average teen has seen roughly 300,000 advertising messages, according to Peter Zollo, author of Getting Wiser to Teens: More Insights into Marketing to Teenagers. Zollo is also co-founder and president of market researcher TRU.

To cut through the clutter-marketers need to develop marketing that doesn’t seem like marketing, according to Boston College sociology professor Juliet Schor, author of Born to Buy: The Commercialized Child and the New Consumer Culture.

And while there are some common traits among teens, observers note that teens are profoundly accustomed to marketing and they can easily detect messages that are less credible. Most say resorting to stereotypical images will backfire. There needs to be a keen understanding of teen culture to develop messages that resonate with them. Marketing to teens is all about inspiring positive involvement. That takes clever creative and a commitment to delivering value.

“It’s important to speak the right language and use the right people,” Ron Vos, founder and CEO of Hi-Frequency Marketing, a street marketing company, says. “If you stay true to their culture, it can be very effective.”

Parry Aftab, executive director of WiredSafety.org says marketers tend to approach teens in one of two ways. “Either they treat teens as kids, in that they should do what they’re told, or they treat them like smaller versions of adults, in that they assume kids have the same values as adults,” Aftab says. “Neither approach works with teens.”

Because teens are especially adept at avoiding advertising through the use of pop-up blockers, marketers have gotten more creative in their delivery of their messages to this younger audience, according to a report by Forrester Research that highlights advergames, instant-win games, online coupons, streaming video ads and cell phone promotions as things that work with teens.

Under the Influence

 Teens have already been identified as music influencers and often the primary decision makers for consumer electronics purchases within their family’s household, according to Jupiter Research. But the real key to connecting with teens is to find the influencers within their peer community. The Jupiter report revealed that 17 percent of the online teens would qualify as highly active online “influencers” who spend roughly eight hours per week on the Internet, engaging in the broadest range of activities. More than half (53 percent) of the influencers are girls who actively shop and spread the word to friends about trends and products.

That’s why viral marketing and word of mouth seem to be working. A recent study from eMarketer says, “For the most part, it works. Teens are active users of viral marketing tools like forwarding video clips to friends, using ‘e-mail a friend’ links, and sending e-greetings. They use tools like ‘e-mail a friend’ links on retail sites, wish lists, and IM when shopping to get purchasing help from friends.”

Often marketing companies, such as Hi Frequency Marketing, will use an extensive network of teen influencers who are rewarded for promoting brands to their friends and acquaintances. But that can backfire if the promotion is uncovered or deemed fake.

Still some claim too many teens exhibited concerns that companies would steal their friend’s emails if they used a “forward to a friend” feature common in many viral marketing campaigns. Teens have also expressed concern about cluttering up friend’s inboxes as well as a reluctance to waste their friends’ time by forwarding jokes and other things found on the Net.

Instead, Vikram Sehgal, research director for JupiterResearch, recommends search engine marketing as an effective tool in reaching this age group.

Google is already part of teens’ online routine. According to comScore, Google got a rise from teens in the last year as the number of teen visitors to Google jumped 24 percent to 10.7 million from April 2005 to April 2006 (see sidebar, page 54).

The comScore report states “it’s clear that there are benefits to providing realtime inventory information to sites like Google when it comes to capturing young consumers. They’re three times more likely to use Google to find local businesses than online yellow pages from a phone company.”

According to a study by A Couple of Chicks Marketing firm, the younger generation is very patient when searching. Fifty-three percent of those surveyed by A Couple of Chicks say they go to as many pages as they need until they find the answer, with only 18 percent sticking to the first page. With 79 percent of the teens stating they have never clicked on a sponsored ad, most said they believe most of what they see on the first page is some sort of advertising – whether it is not.

Other findings from that report showed Expedia has clearly done the best job of building their brand with Gen Y. Over 56 percent of the respondents said their families had booked a vacation on Expedia. Hotels.com came in second at 28 percent. Identical statistics were cited when asked if they had ever visited any travel sites. From a marketing perspective, teens were not at all familiar with Travelocity, Priceline, Hotwire or even the ability to book travel on Brand sites. The survey concluded these habits will have an influence on future purchases as this group ages and begins to book their own travel.

Getting to customers early is what many are shooting for. In April, Toyota started a campaign to promote its Scion car in an unusual place – Whyville.net an online community that caters to 8-to-15 year olds. These kids can’t reach the pedals, let alone buy the car. The hope is that they will influence their parents’ purchase or grow up and have some brand loyalty to Toyota.

Toyota claims that just 10 days into the campaign, the word “Scion” was used in Whyville.com’s online chats more than 78,000 times; hundreds of virtual Scions were purchased, using “clams,” the currency of Whyville; and the community meeting place “Club Scion” was visited 33,741 times. These online Scion owners customized their cars, drove around the virtual Whyville and picked up their Scion-less friends for a ride. Cadillac has used similar tactics and incorporated its cars in a game for Microsoft’s Xbox.

What some say works is to reverse the marketing process from aiming for awareness to achieving shared network respect. Let teens have an influence in shaping your brand’s identity. Build trust with teens by using words and images that make your website feel like a place (a destination or world); create friendly characters that encourage kids to identify with products and companies; develop Interactive games and activities that get kids to return; develop clubs that teens can join; offer contests, quizzes and brand-related games; and use bold graphics.

Just remember there are a host of issues to consider when dealing with highly impressionable teens. Parents are clearly worried about internet access exposing their children to sexual predators, to values they do not agree with or to ideas that their children are not ready to see or understand.

A nationwide poll conducted by Common Sense Media in 2006 found the No. 1 media concern for parents has shifted from television to the Internet. Currently, 85 percent of parents say the Internet poses the greatest risk to their children among all forms of media, compared to 13 percent who consider television the biggest risk.

So, if you don’t want parents to use parental controls to block your site, be sensitive to what might be considered parental concerns and that way you’ll keep the parents happy and the kids coming back.

Follow Up or Fall on Your Face

Guerrilla affiliates know well the importance of customer followup and prospect follow-up because they know what it takes to succeed in business.

Why do most businesses lose customers? Poor service? Nope. Poor quality? Nope. Well, then why? I say, it’s apathy after the sale. Most businesses lose customers by ignoring them to death. A numbing 68 percent of all business lost in America is lost due to apathy after the sale.

Misguided business owners and affiliates think that marketing is over once they’ve made the sale. Wrong, wrong, wrong. Marketing begins once you’ve made the sale. It’s of momentous importance to you and your company that you understand this. I’m sure you will by the time you’ve come to the end of this article.

The Guerrilla Way to Follow Up

First of all, you need to understand how guerrilla affiliates view follow-up. Although, affiliates are not actually making the sale, the merchant they promote is; often the customer doesn’t really understand that. So, a good affiliate makes it part of their DNA to have good follow-up because they know it costs 10 times more to sell something to a new customer than to an existing customer.

They have a follow-up strategy, just as they have a marketing strategy. That follow-up strategy dictates what they’ll do in the way of follow-up and how often they’ll do it. It helps them stay on track. It helps them remember that follow-up is part of their day-to-day business.

When a guerrilla affiliate makes a sale, the customer receives a followup thank-you note within 48 hours. When’s the last time a business sent you a thank-you note within 48 hours? Maybe once? Maybe never? Probably never. Now that email is part of business, the answer should be “always” because email follow-up is so easy. I buy things online and usually get a thank-you email not in two days, not in one day, not even in two hours, but often in two minutes. Technology makes that possible. Your customers know it, so they’re learning to expect it.

The guerrilla affiliate sends another note or email or perhaps makes a phone call 30 days after the sale. This contact is to see if everything is going well with the purchase and if the customer has any questions. It is also to help solidify the relationship. Guerrillas know that the way to develop relationships – the key to survival in an increasingly entrepreneurial society – is through tenacious customer follow-up (and prospect follow-up, which we haven’t even addressed yet).

Guerrilla affiliates send their customers another note within 90 days, this time informing them of a new and related product or service. Possibly it’s a new offering that the guerrilla business now provides. And maybe it’s a product or service offered by one of the guerrilla’s fusion marketing partners (those who enter into business agreements such as mutual links and advertisements).

Guerrilla affiliates are very big on forging marketing alliances with businesses throughout the community and – using the Internet – throughout the world. These tie-ins enable them to increase their marketing exposure while reducing their marketing costs, a noble goal. More marketing, less expense. That’s a pretty healthy formula to follow.

After six months, the customer hears from the guerrilla again, this time with the preview announcement of an upcoming sale. Nine months after the sale, the guerrilla sends a note asking the customer for the names of three people who might benefit from being included on the guerrilla’s mailing list. If the company chooses to use surface mail for this, a postpaid envelope is provided. Because the guerrilla has been keeping in touch with the customer – and because only three names are requested – the customer often supplies the names.

After one year, the customer receives an anniversary card celebrating the one-year anniversary of the first sale. Perhaps a coupon for a discount is snuggled in the envelope or attached to the email.

Fifteen months after the sale, the guerrilla sends the customer a questionnaire, filled with questions designed to provide insights into the customer. The questionnaire has a paragraph at the start that reads, “We know your time is valuable, but the reason we’re asking so many questions is because the more we know about you, the better service we can provide you.” This makes sense. The customer completes and returns the questionnaire.

Perhaps after 18 months, the customer receives an announcement of still more new products and services that tie in with the original purchase. And the beat goes on. The customer, rather than being a one-time buyer, becomes a repeat buyer – the kind of person who refers others to the guerrilla’s business. A bond is formed. The bond intensifies with time and follow-up.

Let me put this in numeric terms to burn it into your mind. Let’s say you earn a $200 profit every time you send a customer to a merchant and they make a big sale. If you send the customer a thank-you note, the one-month note, the three-month note, the six-month note, the nine-month note, the anniversary card, the questionnaire, the constant alerting of new offerings, the customer, instead of making one purchase during the course of a year, might make three purchases. That same customer refers your business to four other people. Your bond is not merely for the length of the transaction but for as long as say, 20 years.

Because of your follow-up, that one customer is worth $400,000 to you (assuming three purchases per year and the referred sales, both initial and repeat). So that’s your choice: $200 with no follow-up or $400,000 with follow-up. And the cost of follow-up is not high because you already have the name of the people with whom you’ll be following up.

Following Up With Prospects

Some wise affiliates have already figured out the crucial importance of customer follow-up but still haven’t got a clue about prospect follow-up. Heed the words of author Harvey Mackay, who wrote, Swim with The Sharks Without Being Eaten Alive. At a 1992 presentation in Calgary, Harvey faced the audience of more than 1,000 people and claimed, “We have never failed to close the sale with a person we have identified as a prospect.”

I admit that I was shocked to hear that. A 100 percent close rate. I knew that Harvey was a great closer, but 100 percent? Then I heard what he said next: “Sometimes, we close that prospect within two weeks. Other times, it may take as long as seven years.” Seven years?

Prospect follow-up is not a single act, but a process that goes on and on. That proves to prospects that you really care, that you really will work hard satisfying them because you’re working so darned hard to get their business. The truth is that prospect follow-up is lush terrain for guerrilla affiliates. Prospects who have been contacted by others and then ignored are ripe and ready for the company that will contact them and stay in touch. They know when they are being ignored and they know when their favor is being curried.

The cost of prospect follow-up is also not high – for the same reason as with customers. Prospect follow- up, however, is different from customer followup. For one thing, you can’t send a thank-you note – yet. But you can consistently follow up, never giving up and realizing that if you’re second in line, you’ll get the business when the business that’s first in line messes up. And they will foul up. Know how? Of course you do. They’ll fail to follow up enough.

JAY CONRAD LEVINSON is the acknowledged father of guerrilla marketing with more than 14 million books sold in his Guerrilla Marketing series, now in 41 languages. His website is guerrillamarketingassociation.com.

Search Marketers Target iPod Users

Discover how your business can leverage podcasts before it’s too late.

Everyone’s talking about podcasts, those audio files downloaded from the Web and played on demand using an Apple iPod or any MP3 media player. Many podcasts are just for fun, but marketers are discovering they’re also a promising new way to deliver advertising.

In a sense, there’s no difference in what you can do with a podcast than with radio airtime. You can record a speech, an interview, a commercial or any other audio. But podcasts are used differently than radio because of their immediacy, low cost and flexible time duration.

First off, podcasts can cover the most unusual subjects. If, for example, you want to target a few hundred people, it’s cheap enough to do with a podcast, whereas a radio broadcast or a mailed CD would be unaffordable. Go ahead and record a podcast interview with a famous photographer about digital cameras. Mention your company a few times as the sponsor. Maybe you’ll sell a few cameras to serious photographers.

Many marketers use podcasts to reach the seemingly unreachable. Folks listening to iPods are walking around or stealing time they’d otherwise use to sleep on the train – time when they are beyond the access of most advertising media. Podcasts are also favored by those under 30 years old, who are becoming harder to reach through traditional print and broadcast advertising.

In addition, podcasts provide longform messages that were previously possible only with infomercials or public relations opportunities. And you can make one fast: Record it today and stick it on your website and your message is out there. For these and many other reasons, podcasts are the cool new way to deliver your marketing message.

The Search Marketing Angle

By now you may be asking, “What does all this have to do with search marketing?” Sure, podcasts broadcast your message, reach market segments that are tough to access, help your company seem trendy and keep your teeth flossed and pearly white, but they don’t benefit your search marketing, right? Wrong.

Podcasts are a great way to get links to your site, and search engines just love links. They especially love one-way links – links from websites to your pages that are not reciprocated. Those links seem to be the most unbiased votes for the quality of your content, telling the search engines to rank those linked pages highly for searches that match the pages’ words.

To get those precious one-way links, you need to offer content that causes other sites to voluntarily link to yours. Podcasts are a great way to do so. Audio is naturally more engaging than text and your podcast can contain up-to-the-minute, fresh information from experts with a strong point of view. Done well, podcasts act as link magnets for your site.

You can also use podcasts to give yourself a link. If you submit your podcasts to specialized directories, such as Podcast.net, you’ll automatically get a link back to your website. Every little link adds up to help your search ranking.

Podcasts and Search Engines

Podcasts attract links as we’ve seen, but that is just one of their many talents. Podcasts are also full-fledged members of the content community, so why can’t searchers find your podcast and discover your site that way? After all, you create Web pages to attract links, but search engines easily find those pages. Unfortunately, Google doesn’t really “see” your podcasts yet.

You’re probably familiar with Google’s image search, in which you can enter a keyword and find pictures that match that word. Enter “zebra” and see pictures of zebras, but Google does not truly recognize those pictures as containing zebras. In fact, Google is using occurrences of the word “zebra” to find the pictures. So it will find pictures stored in files named “zebra.gif” and it will find pictures that are described with alternate text that contains the word “zebra,” but Google has no clue whether the picture is truly that of a zebra. That’s why you can sometimes see weird-looking results in image search.

For Google and many mainstream search engines, searching for podcasts is much like searching for images. Google can find a searcher’s keywords on the Web page that describes a podcast, but can’t find podcasts that contain those same words in the spoken audio. That means that a searcher will find your podcast from words in the title or the description that you place on your landing page, but not from any other words said inside the podcast audio file.

Some podcast search facilities, such as Podcast.net, allow you to provide a title and description to their directory. Similarly, Odeo.com lets you claim your podcast and offer a description. No matter the mechanism, make sure you provide the right search keywords so that search engines find the landing page for your podcast. You do that the same way you’d choose which words to use when optimizing any Web page: by choosing the most popular relevant keywords and ensuring they appear.

Audio Search Engines

You might suspect that trying to find 15- to 20-minute podcasts using only the words in their titles and descriptions would leave a lot to be desired. Search engines are just beginning to expand their bag of tricks to look for the actual words spoken in the podcast audio. To do so, the engines translate those spoken words into text.

Nexidia.com company executives claim that the best way to make speech searchable is to convert it to phonemes, the speech sounds that correspond to each syllable spoken. While experts agree that the phonemic approach can be useful for proper names, many believe that true speech recognition (converting audio speech into the actual textual words) provides far better searchability.

One of these experts, Marie Meteer, the vice president of commercial speech for BBN.com, says searching for the name “Stern” might match the phonemes for the words “best earnings,” even though searchers would find this a strange result (it occurs because combining the end of “best” and the beginning of “earnings” results in a sound similar to “Stern”). Speech recognition techniques avoid this kind of error by matching the audio to the words “best” and “earnings.” Nothing is ever 100 percent accurate, but useful audio search engines based on speech recognition technology are beginning to appear.

Podzinger.com is a new search engine that uses the BBN speech recognition technology to find the words inside the podcast audio (for a full interview with the BBN crew behind Podzinger, visit MikeMoran.com and check out the June issue of my newsletter).

SingingFish.com, owned by AOL, also uses speech recognition techniques to find words spoken in audio and video files, including podcasts. Despite this interesting technology, however, none of these audio search engines draws many searchers.

What are the mainstream search engines doing? Yahoo Podcasts is a beta offering that searches explicitly for podcasts, but offers no speech recognition capability yet. Reports are rampant that both Google and Yahoo are hiring speech recognition experts, so stay tuned. Before long, the major search engines may be finding the words inside your podcasts just as they find the words on your Web pages. When they do, expect your podcasts to require the same attention to search optimization that you provide your Web pages today.

So get ahead of the game now. Perform keyword research before your podcast so that you use titles and descriptions on your search landing page that reflect what searchers are seeking. Moreover, carefully choose the vocabulary of the podcast to reflect searchers’ keywords. That way you’ll be ready for the speech recognition techniques from audio search engines as they become mainstream.

MIKE MORAN is an IBM Distinguished Engineer and the manager of IBM.com Web Experience. Mike is also the co-author of the book Search Engine Marketing, Inc. and can be reached through his website MikeMoran.com.

Mistakes Lead to Success

Learn from your missteps and the path to affiliate success will be paved with opportunity.

Lurk around any affiliate marketing forum for more than a few minutes, and you will surely encounter a post that reads much like this: “Affiliate marketing sucks! I’m not making ANY money and I’ve tried EVERYTHING – Google AdWords, AdSense and affiliate programs. NOTHING works. My sites have loads of content and I even started a blog. I get a ton of traffic, but for every dime I spend on PPC, I’m lucky if I make a penny. More often than not I earn squat.

I followed the advice of those so-called affiliate marketing ‘gurus’ and coaches, but at this point I don’t believe ANYONE is really making money as an affiliate. Those success stories are a total scam. ~Disgruntled FORMER Affiliate”

Affiliate marketing success stories are a “total scam”? No one is making money? Our disgruntled former affiliate must have missed the keynote address at Affiliate Summit 2006 West last January by Anne Holland of Marketing Sherpa, and failed to get the information from any one of about 100 blog entries.

Here’s a brief recap. Ms. Holland said affiliate marketing bounties and commissions will reach $6.5 billion in 2006 – and that figure didn’t include projected earnings from contextual ad networks such as Google AdSense.

Although it may be hard to believe that thousands of affiliates will share $6.5 billion dollars in earnings when your ROI is in the red – believe it. The affiliate commissions’ pie gets bigger every year and anyone who is willing to learn what it takes to be a professional affiliate can take a slice.

If you really want a piece of that pie, review your site and ask yourself the following questions. Determine whether your site needs improvement. Success could be as simple as making one or two of the changes recommended below.

Do you lack knowledge or experience in your niche market?

Just because your auntie had a double hip replacement 10 years ago does not qualify you to give advice on that topic, unless you are an orthopedic surgeon.

Anyone searching for “hip replacement surgery” on Google wants and deserves information published by medical professionals. If your credibility isn’t immediately shot by that double-hip-replacement-4-you.com domain address, it will be as soon as your visitor attempts to confirm your identity and credentials on your “About Us” page.

People buy from people they like and trust. Build credibility with your visitors by working with topics about which you are knowledgeable, or about which you are willing to gain expertise.

Does your site’s appearance or lack of order turn people away?

Does that olive-on-pink color scheme really appeal to the Prada crowd? If visitors can look beyond the amateur “look and feel,” will they find what they want easily from amongst the 50 banner ads on your home page?

You have approximately three seconds to engage your visitor. Greet them with a pleasing appearance. Also make sure that your site’s theme and objective are congruent and immediately apparent. Navigation should be categorical and consistent throughout your site.

If you find it difficult to make an objective assessment, ask for a brutally honest review of your site from an experienced webmaster, preferably a super-affiliate.

Do you rely on a single source of income?

Affiliate programs can and do change their terms of agreement. I’ve seen commission rates cut in half and some affiliate programs shut down with no advance warning. “Google AdSensers” should also beware. Many experienced surfers now click Back buttons rather than support sites whose only purpose is to promote Google’s advertisers.

Hedge your bets. Successful affiliates build comparison or review sites that help visitors make informed choices about a variety of products offered by different merchants.

Do you sell rather than endorse products?

“ABC Widget is the BEST-ever widget in the whole history of widgets! No other widget even comes close. Buy ABC Widget NOW!!!!!”

You wouldn’t buy in to that kind of hype and neither will your visitors. Give your visitors credit for knowing that no product or service is ever perfect. Be honest. Endorse your merchants’ products with informative and balanced product reviews.

Do you waste time promoting two-tier programs to other affiliates?

For every $1,000 dollars I earn promoting a merchant’s products as an affiliate, I may earn a buck through the efforts of webmasters I referred to the program.

Invest your time and effort relative to your earnings. Promote those products and services that make you money and let other affiliates find their own programs.

Are you burning up rent or grocery money on pay-per-click campaigns?

The fastest way to the PPC poorhouse is to use generic ad copy that sends all traffic to your home page.

Prequalify visitors by mentioning a specific product or type of product in your ad title, then send them to a landing page that promotes that product. Test your campaigns by sending 250 to 1,000 clicks to the page. Determine your conversion rate then, set your maximum cost per click. Control advertising expenditures by setting daily budget, keyword targeting and negative keywords options.

Are you wasting good traffic?

Do you want to quintuple your earnings and your conversion rate? Then build a list.

Create an auto-responder series and encourage visitors to sign up for a free downloadable report or weekly tips. Invite subscribers to revisit your site by following up with topical information, new product and discount offers.

Invest an hour or two each week to communicate with your current subscribers. It is cheaper, more valuable and more fun than building new PPC campaigns to attract more nameless traffic.

Does your site fail to stack up against the competition?

What sets super-affiliates – the 5 percent of affiliates who sell 95 percent of a program’s products – apart from their peers?

Low-earning affiliates use the same old merchant copy or private-label rights articles to save time and energy; super-affiliates write their own articles, reviews and endorsements. Super-affiliates provide contact information and answer visitors’ questions. They create forums to build community and improve visitor retention rates. Super-affiliates survey their visitors and then give them what they want.

Give your visitors more than they expect and they’ll return the favor.

Do your visitors know you? Although your site may be hugely informative, it may lack repeat visitors because it fails to entertain or provoke curiosity.

The remedy is simple: Brand yourself. Stand apart from the vast majority of sites on the Web, which are completely boring and anonymous. Inject your humorous, witty or even curmudgeonly personality.

Are you working from a plan? Are you patient and persistent?

As the old saying goes, “Fail to plan, plan to fail.” Plan your site from the ground up before registering a domain or opening your HTML editor. Act on and stick with your plan.

Also, when you give up on a project too soon, you guarantee failure. So, put any unrealistic expectations of overnight riches aside, accept that there is work to do and stay with your project for the long haul.

Use the points above to determine whether your site hits or misses the mark. Implement the recommended solutions if required.

Don’t be afraid to make mistakes. It’s a safe bet that you will make some along the way. It’s not likely that any one mistake will kill your affiliate business. Simply correct the error and go on. The worst mistake a new affiliate can make is not to learn from their mistakes. The best thing that you can do, however, is to learn from the mistakes of others.

All mistakes are just opportunities in disguise.

ROSALIND GARDNER is a super-affiliate who’s been in the business since 1998. She’s also the author of The Super Affiliate Handbook: How I Made $436,797 in One Year Selling Other People’s Stuff Online. Her bestselling book is available on Amazon and SuperAffiliateHandbook.com.

Over-the-Counter Advice for a Healthier Home Page

A double dose of design is not nearly as potent as performance for a site that needs a checkup.

What does design mean to you? Since the goal of this column is to teach website owners, Internet marketers and developers how to design home pages and landing pages that meet business objectives, it’s important that we are on the same page, the same line – the same word – as we explore our latest makeover. So let me just begin this month’s column by defining the term design.

I actually have an issue with the word design. The problem is that most people automatically associate design with art. Too many website owners mistakenly assume that the definition of a well-designed website is one that looks good. Let me set the record straight: A well-designed website is one that performs. Making the site look good is often part of the process of developing a site that performs – but aesthetics are only a piece of the puzzle.

I use the phrase conversion design to describe what I do. I’ve defined conversion design as the deliberate arrangement of elements such as salesmanship, copywriting and visuals to produce an intended outcome. The idea is to encourage users to take a desired action, and the end result is always the same – increased conversions.

That leads me to a second reason for defining design. You may notice that this issue’s makeover isn’t as visually dramatic as previous columns. That’s because we wanted to focus on how simple changes (as opposed to complete visual makeovers) can go a long way toward making your home page more effective. The step-by-step changes we review in this edition of By Design are improvements that any website owner can implement. Now on to the show.

For this issue, we chose to redesign StudentDoc.com, a resource website for medical students that generates the majority of its income from CPA and CPC placements. Naoum Issa started StudentDoc.com shortly after graduating medical school because he recognized a lack of online venues dedicated to helping medical students find the information and resources they need. Naoum has developed a website full of useful resources and is generating a fair amount of traffic and income. Now what? Eventually, every successful website owner wants to take their site to the next level.

Heal Thy Site

StudentDoc.com currently provides salary information, medical test preparation and advice, a medical industry job search and a host of other features that harried med students would find essential. While most of the traffic goes directly to the lower-level pages through organic search, Naoum wants StudentDoc.com to be imprinted in the minds of young medical students. Unfortunately, his current home page just isn’t having that effect. Instead, it functions more like a site map for search engine spiders.

The challenge is to redesign the home page so that it accommodates both the visitor and the search engines. As with any website, the home page should inspire confidence and make the site’s purpose immediately clear. In this case it should also encourage return visitors so that med students who may not have an immediate need for the content offerings will be inspired to return later, like when they need to prepare for their MCAT exam or when they’re ready to look for a job to pay off those student loans.

When we showed the site to our team members, the initial reaction was, “What do they do?” When a group of people looks at your website and has to ask that question, you’re in trouble. At first glance, our group thought the site offered some sort of document services for students. Since the site has no tagline and lacks the imagery to convey that it serves the medical industry, our group assumed that doc was short for documents, not doctors; hence the name StudentDoc.

Next, the site didn’t offer much in terms of encouraging users to come back for a second or third visit. There’s no way to bookmark it, register for updates, send it to a friend or any other tool that might encourage that type of action. Adding these elements will help increase the repeat traffic the site receives.

So let’s get to our step-by-step review of the changes we made:

First, we added a nice photo of medical students. Imagery can quickly set the tone for a website. Since our brains can process images faster than text, the photo makes it clear that the site is targeting medical industry students and recent grads.

Next, we updated the logo by changing the mark. We chose an image that people will readily identify as medically oriented and added a simple, yet clear tagline under the logo: “The Medical Student’s Resource Guide.” These steps solidify the messaging and prevent any confusion about the site’s purpose.

Naoum informed us that his banners weren’t particularly strong income generators. To remedy that issue we pulled them and added text links in the top banner area and forum excerpts in place of the skyscraper (728×90) ad. These text links are a quick way for users to find popular content within the site. The potential downside to this is that it seems to make the site slightly more cluttered. In this case, however, it works because the site is highly targeted so users aren’t as quick to leave. That is a good example of how conversion design chooses performance over looks.

We kept the same general color scheme, but removed the unnecessary traces of red and made the blues a little darker. The lighter, brighter blues gave the site a fun and playful emotion, whereas the new colors give the site a stronger feeling and add to the site’s credibility.

Finally, we added a row at the top of the page to house the “get people to come back” links like Bookmark Us, Register for Updates, etc. We also added a more prominent search function. These changes will encourage one-time visitors to become regular visitors and ultimately increase site traffic and sales.

While we did make some minor graphical updates, all of our changes are simple enough for any website owner to implement. These basic elements are important to keep in mind when designing a site because they will build the foundation for further tweaks and improvements. Remember, design doesn’t have to put fashion over form. Conversion design is about bottom- line results.

Would you like to get a free home page or landing page design for your website and see it featured in this column? To be considered, send your name, company, contact information (phone, email, etc.), a brief description of your business and its goals, and, of course, your URL to bydesign@sostreassoc.com. Please put “Revenue’s By Design Makeover” in the subject header.

PEDRO SOSTRE is principal and creative director at Sostre & Associates, an Internet consulting, design and development firm, which also promotes affiliate programs on its network of websites. Pedro is currently working on a book about his new concept of conversion design. For more information, visit SellNowBook.com.

Going Out Is In

Companies are outsourcing affiliate managers to fuel online marketing programs.

Former London-based freelance writer Rob Palmer knew he was on to something when he launched the affiliate program for his FreelanceWorkExchange.com subscription site. For several years he ran the program in-house; revenues were decent, affiliate applications were steady, but “there simply weren’t enough hours in the week for me to manage the program and deal with all the other management issues which required attention,” says Palmer from his new home in Australia. Plus, “the freelance market is massive and growing fast, but most affiliates hadn’t realized this can be a very lucrative source of commissions. I felt there was huge potential in the affiliate sector that we were not making the most of.”

His solution? Like the employers that use his site to outsource writing, programming, design and other freelance functions, he set out to find an external source of his own: an outsourced affiliate manager. Palmer found it with affiliate-turned-OAM Greg Rice.

Outsourcing isn’t new. Companies have done this for years, primarily to – according to a Dun & Bradstreet study – maintain competitive edge, focus on core business and improve service quality.

“But it’s new in comparison to the overall market that we’re in,” says Andy Rodriguez, an OAM and affiliate management consultant who will host a third OAM training conference in Chicago this August. “There just aren’t that many [OAMs] around. In the past, a lot of merchants hired a manager and said, ‘Here’s the affiliate program.’ Then they discovered what they really needed was someone that can lead a virtual salesforce, managing a large group of people by phone, by email and by instant messaging, who has a background in technology and knows how the Web works. That’s why so many merchants are now correcting their mistake of just hiring anyone in-house, and going out and hiring the best [OAM].”

Industry watchers informally estimate there to be a few hundred OAMs – either on their own or as part of an OAM agency – worldwide. And that number seems to be on the rise.

“The demand for OAM is large,” says Linda Woods, former Commission Junction affiliate manager and founder of the six year- old OAM agency PartnerCentric in Santa Barbara, Calif. “Our biggest challenge over the past year has been to find top-quality, experienced AMs.”

Others agree.

“Outsourced affiliate program management is a very new and, hence, an extremely exciting sphere to be working in these days,” Evgenii “Geno” Prussakov, a St. Petersburg, Russia-based OAM who manages programs for such U.S. clients as RussianLegacy.com and FantasyJewelryBox.com, says. “Many online businesses are in need of good affiliate program management, yet the number of experienced [OAMs] around the world is very limited. The competition between [OAM] firms is certainly growing, but the market is still very new and fresh.”

PartnerCentric’s OAMs hail from affiliate teams at Orbitz.com, Gap.com, 1800flowers.com and other “upper echelon” merchants; each having at least one year of full-time AM experience.

Even the term “outsourced affiliate manager” is somewhat nebulous. Few OAMs operate on their own; many have staffs of three or more assisting with new clients. “To find one person with a blend of all the skill sets needed is pretty rare: recruiting, selling ability, keywords, optimization,” says Peter Figueredo, CEO and co-founder of NETexponent, a NYC agency running affiliate programs for NYTimes.com, FinancialTimes.com, PuritansPride.com and others. (He has 13 on staff, and is hiring more “online media managers” to fit the OAM bill.) “We approach it as a team, bringing different people with different skill sets together to work with our client accounts.”

That’s the case with OAM agency PartnerCentric.

“Very few [merchants] have the internal expertise to run an affiliate program to the level that it needs to be run today,” says Woods. “It’s incredibly complex now because of all the new issues involved: fraud, spyware, conversion rates, EPC, competition. Two years ago, there were one or two furniture companies with affiliate programs. Now there are 40. Affiliates used to have a few hundred merchants to choose from in a network; now it’s a few thousand. The tracking has become more complex. And there’s even competition for clients from OAMs, especially if a merchant feels one AM can give them more exposure. That’s the kind of complexity we face every day, so managers have to really know what’s going on.”

In April, PartnerCentric acquired AMWSO, a Thailand-based OAM agency led by Bangkok-based Chris Sanderson. “By being able to work with a U.S.-based OAM agency, we can benefit our team here,” says Sanderson, pointing to programs his team already runs for Shopster.com, WesternUnion.com and 18 other international merchants. “That’s the personal touch we wanted.”

PartnerCentric manages affiliate programs for about 50 merchants, including TheCompanyStore.com catalog company, NationalGeographic.com, DigitalRiver.com (a half-billion-dollar e-commerce software company) and recently ClubMom.com. It’s had 300-percent-per-year revenue growth for the past three years, and Woods expects to double its revenue in 2006. PartnerCentric now has 20 on its team, plus eight other staffers; a move Woods says is “definitely moving towards the big boys.”

Some affiliates, however, are often going it alone until they’ve built up enough business to start adding staff.

For instance, the new outsourced program manager for FreelanceWorkExchange.com, Greg Rice, was once a superaffiliate for TigerDirect.com. He’d been an affiliate for seven years running a shopping mall site, and made the switch after going through Rodriguez’s mid-2005 OPM training. Currently, Rice owns CommerceMC.com and manages four programs, including ITHeadhunter.net.

“Working as an affiliate, you have contact with a lot of affiliate managers,” Rice says. “You get to see firsthand what works and what doesn’t work – and you get to see firsthand the opportunities that exist because most AMs don’t have a clue other than putting links up there and walking away from it.”

Another affiliate who’s going the OAM route is Kevin Webster, owner of outsourced B2B affiliate marketing agency OPMWeb.com, near Rochester, NY. For five years he ran a site called CorporateLeverage.com, stocked with his own articles on business-to-business sales and affiliate links to relevant products. In late 2005, he left his day job selling Cingular and Verizon cell phone plans to businesses, sold his affiliate content “for a scant $1,500” and launched OPMWeb.com.

“The rumor is that this industry is underpopulated,” Webster says. “It’s my intent to grow this organization slowly and smartly, ensuring that each new client receives all the focus their program deserves. That’s critically important at the launch of an affiliate program, and never really changes.”

Webster’s first client is SimpleGuardian.com, a notification security and medical alarm company targeting real estate agencies and arenas; two other contracts are in the works, he says.

“Simple Guardian had a very traditional brick-and-mortar sales model before this point,” Webster says. The company is very new to e-commerce, so this is a real test of a lot of things. Our main focus is B2B, which in my opinion has only been done with limited success up until this point. Plus, the merchant uses a content management system where I’m able to log in on the back end to tweak things for those landing pages. They’ve given me access to basically their entire organization – I can pick up the phone or send an email to just about anyone, from their database guy to their graphics department to their sales team. Not all merchants are going to be like that.”

While some OAMs fulfill otherwise-disregarded fundamentals, others are using technology as their edge. From a home office with a DSL connection, AvantLink co-founder Gary Marcoccia works with three other home-based OAMs in the Salt Lake City area to distribute data feeds from 16 merchants to several hundred affiliates. They do it all thanks to an integrated “deep-linking tool center” supported by Web service technology, RSS publication of affiliate ads and content and a simplified management interface. New merchants include ToolKing.com, Altrec.com and CampSaver.com; tools are free for affiliates to use, and merchants pay a flat $1,200 for its “start-up package.”

“Merchants really warm up to the start-up package,” Marcoccia says. “Once they realize that they really do need someone to manage the affiliate channel, it can be somewhat terrifying. Unless someone has deep pockets to justify hiring us as an [OAM] at $3,000 per month, it’s daunting. A start-up package should get them off the ground.”

The package includes program detail pages that are searchengine- optimized to be crawled and indexed; “buzz” on AvantLink’s AbestWeb.com’s forum; program announcements to AvantLink’s affiliate opt-in list; a few hand-picked “quality affiliates” to start; and, soon, a press release on the merchant’s new program sent through one of the PR news wires.

“We have tools that are pretty advanced,” Marcoccia says. “We’ve identified effective conversion methods, and kind of promise them five quality affiliates that will get going with the program, use the tools effectively and get the program running. That’s a pretty powerful service to offer a company that’s in limbo. We solve that catch-22; these merchants are interested in starting an affiliate program, they have a good niche but they don’t have to pay an in-house AM $10,000 per month to get the program off the ground.”

Technology is also the foundation for San Rafael, Calif.- based WatchDog Affiliate Managers, which runs programs for such merchants as InteriorExpress.com, Yoox.com and MadisonAvenueMall.com.

“Lately, we’ve been writing contracts starting at around $2,100 for the smaller guys that we think have a product that will grow and where the affiliates will be attracted to because the commission is good,” co-founder Christina Lund says. “For that low of a rate though, we would ask for a little bit more in commission; maybe 1 or 2 percent more than the 2 to 5 percent we usually charge.”

This bare-bones package includes all of its full-service offerings: recruitment of program-specific affiliates; newsletter writing and distribution; use of a WatchDog-branded administrative software system that allows advertisers to make changes to creatives that are automatically fed to all of their affiliates in real time; XML-based coupon feed so affiliates automatically get up-to-date offers; plus its “Merchant Express” multilingual data feed software, which uploads up to 2,000 product descriptions and photos and feeds the results in real time to affiliate-tuned storefronts with only the types of products that affiliate wants.

“It’s a whole store in one line of Java script,” says Cory Lund, WatchDog’s vice president of product development. “The whole part of this game is to really nurture these affiliates, and make their job a lot easier. With technology, we can offer everything in the big package, but the hours are shaved a bit ” it may be 20 hours per week for an OAM to manage instead of full time.”

WatchDog has nine freelance OAMs in its fold – spread out in San Francisco; Ventura, Calif.; Minnesota; and Kansas City, Missouri.

With technology being a selling point in the OAM world, it makes sense that some of the networks are jumping on the OAM wagon. Six-year-old affiliate network ShareASale, which is historically a place where merchants run “self-serve” programs, recently started managing the programs for clients. On its OAM to-do list: day-to-day administrative management, including affiliate approval and review; coupon and promotion distribution; newsletter creation and distribution; regular traffic and sales reporting; assistance with product data feeds and basic banner creation and management; and providing unique content, keyword lists and custom merchandised storefronts for the merchant’s top affiliates.

“Management of programs is only a small part of what we offer; ours does require membership in the ShareASale network, and is really more of an ‘add-on’ to our basic service, as opposed to a true outsourced solution,” says Brian Littleton, president and CEO of ShareASale.com. “But for small-to-medium- sized business, where ShareASale concentrates their efforts, [our OAM] services can be extremely helpful in allowing merchants to focus on their best practices, while allowing the [OAM] to assign best practices to the affiliate channel based on their expertise.” Though Littleton won’t divulge the total number of accessible affiliates in ShareASale’s network, Littleton says they’ll “often research categories for merchants who inquire about joining the network in order to give them rough ideas as to what to expect.”

Meanwhile, at LinkShare, “we really go out to market with our account management and client services,” says Liane Dietrich, vice president of merchant services for LinkShare. “Most of our merchants are working with in-house AMs or outsource their program management to LinkShare.”

Still, for Chris Henger at affiliate network Performics, outsourcing is a loaded word. “We prefer to look at it as an extension of the merchant’s marketing team. ” Yes, clients rely on their Performics’ program manager to administer the program, negotiate with affiliates, field inquiries and optimize the program,” Henger says, “but we don’t view our approach as outsourcing. The advertiser maintains control and still has to make critical decisions, particularly in regards to promotions and customer quality.”

The addition of network outsourcing of affiliate program management is an interesting hurdle for OAMs.

“A lot of people go directly to the networks because they don’t realize there’s a whole region of independent managers out there that can manage their program independently as well, if not better,” says OAM Shawn Collins, who runs affiliate programs for PaylessShoeSource.com and Snapfish.com. “Yet I get a lot of calls from headhunters wanting affiliate managers to run a program inhouse, and they’re just not around. The in-house talent pool has been moving to the agency side – because they can manage multiple programs which can potentially be more lucrative.”

Which brings up the subject of money. OAM firms usually work on monthly retainers of anywhere from $2,000 to $7,000 for only a few products, and up to $35,000 for rollouts of a big-merchant range of affiliate-sold products. Remember, however, that the retainer could be funding the cost of several managers and, in the case of NetExponent, even OAM health benefits.

While the numbers may seem large, merchants are recouping that several times over from affiliate sales. The highest-paid OAMs also often come with the most to offer: “All that money that was spent in the dot-com blowup went toward educating a lot of staff people,” says former BarnesAndNoble.com AM Stephanie Agresta, who’s now an OAM at Commerce360, a Pennsylvania-based agency that guides merchants through the LinkShare platform. “You can’t replicate that just anywhere, for any price. If you live in Kansas, you may be able to find someone who can work for $30,000 per year – but in areas with lower labor cost, there’s more of a chance you won’t be able to find the expertise. At a minimum, we’re talking salaries of $60,000 to $100,000. For that same amount of money you can buy an OAM solution that comes with expertise and relationships.”

For now, costs continue to climb, as the existing OAMs in greatest demand gain more experience and more relationships with super-affiliates that they’ll bring in tow, observers say. In time, costs are likely to level out as more OAMs enter the market.

No need to fear, says Prussakov. “Competition only benefits the industry. It constantly makes OPMs think of new ‘outside the box’ ideas to enhance affiliate performance and draw more quality affiliates to their programs.”

The advent of aggressive outsourced program managers brings certain advantages to affiliates, namely the ability to work directly with managers who’ve once been affiliates themselves.

“It’s absolutely imperative to have affiliate experience,” Rodriguez says. “You cannot help someone build a house unless you’ve built a house before. You can’t help someone ride a bike unless you’ve ridden a bike before. At the same time, in no case should an affiliate manager compete in the same business as their affiliates. They have access to very sensitive information, and this is a trust industry.”

Given recent flap over affiliate managers at the big networks leveraging affiliate strategies to start competing affiliate sites, this is a fair warning. If you’re concerned, simply ask your OAM to add a noncompete clause to your contract. Many already include it. Some avoid even the appearance of a conflict of interest by working with only one client in each type of industry. Others count their expertise with multiple, similar programs as their strength. The choice is yours. Meanwhile, the lure of the money that can be made from the OAM price tag is already leading to some problems, as a few OAMs overload their plates and end up shortchanging everyone.

“You need two people full time, or four people half time to fully service one affiliate program,” Figueredo says. “The quality of work required to have a really robust and aggressive program comes out to that amount of work, at least.”

For FreelanceWorkExchange.com, adding one more was the perfect number. “Greg [Rice] has done a great job of taking on all the important tasks that had been neglected in the past, from liaising closely with affiliates and managing bonus schemes, to writing our affiliate newsletter and recruiting new affiliates,” says FreelanceWorkExchange.com’s Palmer. “The hardest part of the process was making the decision to let an outside party handle such an integral part of our business. But once that decision had been made, the only issue was choosing the right consultancy for the job. I didn’t want to find myself paying high fees to a company that just delegated our account to a junior with little experience. We were looking for someone who could deliver high-level expertise at a reasonable cost, and that’s what we found with CommerceMC. In every other respect, it has been pluses all the way – we now have a more professional and more efficient program that is attracting new affiliates daily.”

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

Summer Reading Extravaganza

Forget about what Oprah’s recommending. Put away the latest from Philip Roth and that potboiler from James Patterson. It’s summertime and what’s really sizzling is online marketing. So, now’s the time to catch up on your reading about a variety of hot topics including affiliate marketing, performance marketing, online advertising, search optimization and more. And there’s no shortage of choices. Heck, there are currently more than 200 books for sale on Amazon with the word Google in the title. Here are some books that sound like great reading for the beach, the vacation home or the patio. Don’t forget the sunblock.

Buzz Marketing with Blogs for Dummies

Susannah Gardner (For Dummies) | 360 pages | $24.99

Another entry in the popular and wildly useful “for dummies” series, this one’s specifically on how to get blogs to do the buzz marketing for you. As we all know by now blogs have become an essential part of selling on the Web and this volume helps you get your head around the blog space – such as what a blog is going to do for your product, how it can change the way people think of your product and how the exchange of ideas that is essential to blogging can help you sell.

Newbies also get a pretty good tutorial on blogs – how to set them up, maintain them and what you should say on them. The book also covers, to a lesser degree, the legal issues, design for a better- looking blog and how to get your blog noticed.

Farce to Force:
Building Pro E-Commerce Strategies

Sarah McCue (South-Western Educational Pub) | 240 pages | $27.95

Need an e-commerce strategy? McCue walks you through the best ways to formulate a strategy and even gives you some useful templates to overlay your business model on. She outlines marketing techniques that work well and how to build programs from the ground up. Although the title is a little jokey, the author is well-versed in online marketing.

Go BIG or Go HOME

Wil Schroter (Go BIG Media) | 276 pages | $24.95

Serial entrepreneur Schroter takes a look behind the veil at companies such as Google, Skype and PayPal. He examines what these companies are doing right and what they haven’t done. Having launched nine start-ups makes him a kind of perfect spokesperson for entrepreneurship. He is currently CEO of SwapAlease.com, an auto-leasing marketplace. The companies he started include Blue Diesel, an interactive marketing agency; Kelltech Internet Services, a technology consultancy; and Atomica, a nonprofit arts organization.

Google Advertising Tools:
Cashing in with AdSense, AdWords, and the Google APIs

Harold Davis (O’Reilly Media, Inc.) | 366 Pages | $29.99

Like “Winning Results with Google AdWords” this O’Reilly book takes a stab at making sense (and dollars) from Google’s AdWords. Davis talks about the different associate programs in addition to Google, which provides great context. Topics include how to read AdSense metrics, managing AdWords campaigns, as well as hints on optimization.

Google’s PageRank and Beyond:
The Science of Search Engine Rankings

Amy N. Langville, Carl D. Meyer (Princeton University Press) | 234 pages | $35

This provides a different take on the search dilemma by answering the questions about what goes on behind the Google curtain. This book won’t tell you how to optimize or raise your rankings but will tell you the technical aspects of search. This can be valuable to the geek in us all. The author covers: How do those other Web pages that don’t have your name in them always appear at the top? What creates these powerful rankings?

The reason this book is even on this list is that the early chapters are very accessible and it is only in the later chapters that the hard, mathematical, geeky stuff is discussed. Even so, the authors say there is something for the hardcore audience and the casual one.

Internet Marketing and e-Commerce

Ward Hanson (South-Western College Pub) | 496 pages | $113.95

Even though this is written by an academic, expect ?reworks. “Rigor instead of hype” is how the book wants to be known, illustrating practices that leading companies use, showing how research results can be used to support conclusions and, of course, pointing out the unique qualities of online marketing.

No one is shortchanged here. Hanson looks at Internet marketing from the point of view of large and small business and online startups. It’s a great study in the balance of power that is even now continuing to shift in retail markets as the Web gets more powerful.

The Irresistible Offer:
How to Sell Your Product or Service in 3 Seconds or Less

Mark Joyner (Wiley) | 240 pages | $21.95

Using examples of companies such as FedEx, Columbia House Records and Domino’s Pizza, Joyner explains how to create an “irresistible offer.” As the former CEO of Aesop Marketing Corp., he has seen what kind of marketing works from the trenches. He uses real case studies to make it easy to apply it to your own business. The book is a kind of how-to that shows you how to manipulate your offer so that customers find it more attractive.

Maximum Marketing, Minimum Dollars: The Top 50 Ways to Grow Your Small Business

Kim T. Gordon (Kaplan Business) | 240 pages | $18.95

While not specifically about Internet marketing, any small-business owner can learn from someone on staff at Entrepreneur magazine. Among Gordon’s advice is how to stay on budget but still use expensive-looking marketing; how to tell which niches are right for you; and how to use technology (email lists, websites, etc.) and traditional marketing venues (trade papers, radio, TV, etc.).

Online Marketing that Works!

Catherine Seda (McGraw-Hill) | 256 pages | $21.95

This book hits the shelves on August 1, 2006 and exuberantly wants to introduce you to “cutting- edge Internet technologies” that mean low-cost, high-performance marketing opportunities for ventures of any size. Seda points out the effective online marketing strategies and shows how to get results for little or no cost. Seda has her own marketing consulting firm and is also the author of Search Engine Advertising

Pay-Per-Click Search Engine Marketing Handbook: Low Cost Strategies to Attracting New Customers
Using Google, Yahoo & Other Search Engines

Boris Mordkovich, Eugene Mordkovich (Lulu Press) | 196 pages | $22.95

The mouthful of a title pretty much says it all. This book attempts to crack open the genie’s bottle on getting new customers through search, and illustrates just how it can be done at a cost of only pennies to you. Along the way the book outlines basic concepts, like how pay-per-click works and why it is effective. It also has some advice on how to design a campaign, how to determine what works and how to maximize your return on investment. It also tells you about must-do’s such as get- ting listed on thousands of websites without paying a penny, targeting a specific local area through search engines and how to prevent click fraud.

The book also offers reviews of over 20 search engines, and includes tips on how to get the most out of each one. Experts in the industry also weigh in with their advice on how you can improve your search engine advertising efforts.

Put Your Business Online: How to create and promote a successful, low-cost Website

Al Kernek (Lulu Press) | 172 pages | $19.95

This book is truly for the newbie who wants to get all the nuts and bolts in one place. What you get is everything you need to know in a step-by-step structure designed to leave you at the end of the day with “a low-cost website and some affordable traffic generators that target your specific audience.” This book is written in very straightforward language and is not overloaded with “tech talk.” The “real world” tips and information can also help those who already have a Web presence.

High Performance Affiliate Marketing

by Jeremy Palmer | $49.95

This e-book is unique because the author – a 2005 Commission Junction Horizon Award Winner – updates it constantly. He covers how to find profitable products and services to promote; strategies for keywords; rankings secrets; and how to spend less money for the most traffic. In addition to the e-book, you get access to an exclusive members’ area with original content. He says all over the website that he made more than $1 million in commissions last year, so he must be doing something right.

search analytics: A Guide to Analyzing and Optimizing Website Search Engines

Hurol Inan (BookSurge Publishing) | 56 pages | $19.99

For those of you who plan a very short beach vacation, this lean and mean e-book can probably be read in just a couple of hours. It “explains how and why people search, provides detailed guidelines on analyzing the behavior of search users, and offers valuable search-related marketing insights.” The author interviewed many industry experts and website managers and presents detailed metrics and the required tools to get you started.

Search Engine Marketing, Inc.: Driving Search Traffic to Your Company’s Web Site

Mike Moran, Bill Hunt (IBM Press) | 592 pages | $49.99

This heavy tome has just about everything to do with search marketing in it. There are chapters on how search engines work, developing your search marketing program, measuring your website’s success, defining your search market strategy, how to get your site indexed, choosing keywords, how to attract links to your site and other must-have/must-know stuff. In addition, the book tells you about what people are looking for when they search, how best to sell to the kinds of visitors you’ll get and what to avoid in the way of questionable methods to get better rankings.

Search Marketing Strategies:
A Marketer’s Guide to Objective-Driven Success from Search Engines

James Colborn (Butterworth-Heinemann) | 208 pages | $37.95

Concentrating on the strategic and not the procedural approach, this book goes through all the search standbys: paid search, site side optimization and analytics. Then it talks about branding, sales and customer acquisition. The focus is on marketing strategy and not just on optimization.

Winning Results with Google AdWords

Andrew Goodman (McGraw-Hill Osborne Media) | 376 pages | $24.99

This is a title that should really get most readers’ hearts pounding. Goodman outlines some great strategies for “writing successful ads, selecting and grouping specific keywords, increasing conversion rates and maximizing online sales.” He goes over advice such as “ways to expand ad distribution, why testing ad effectiveness is crucial and how to effectively track results.” Goodman is founder of Page Zero Media, provider of search engine marketing services and strategic advice to companies seeking an online presence. He also co-founded Traffick.com.

Recess Is Over

Back-to-School promotions can lead to big bucks if online marketers start early.

Back to school is a big deal for affiliates – it kicks off the part of the season between June and January where many earn the majority of their annual revenue. The overall “back to school” season refers not just to shopping for kids in grades K through 12, but other spending periods including “back to college,” new fall wardrobe, family vacations and sending the kids off to camp. Many affiliates find it second only to the holiday season in terms of sales.

Traditionally, many people consider the back-to-school (BTS) shopping season as a week or two before school starts in August and September. But according to a July 2005 National Retail Federation (NRF) report, 16 percent of consumers start their back-to-school shopping at least two months before school begins and 45 percent begin shopping between three weeks and a month before school starts. With school start times creeping back to mid-August and even earlier in some states (such as Hawaii), it would benefit merchants and affiliates to start their back-to-school efforts as early as May or June.

Chris Henger, vice president of affiliate marketing for Performics, suggests, “Merchants should initiate programs in early June – that is when placements should be secured.”

Irv’s Luggage, which sells backpacks and bags for back to school, starts its season in June. Mary Beth Padian, senior director of Upromise, an affiliate that is partnered with over 430 online retailers, says “most of the merchants we work with start their BTS promotions during the first and second weeks of July.” For example, OfficeMax starts its BTS season in July and Payless Shoes starts their efforts off-line and online in mid-July.

Overall Market

In August 2005, the retail researcher NPD Group predicted overall back-to-school spending would rise 1.4 percent over 2004. They estimated consumers were planning to spend $372 per child this year, up from $367 last year.

The NRF had a higher prediction. The August 2005 Back-to-School Consumer Intentions and Action Survey, conducted by Ohio-based market intelligence firm BIGresearch, found that families with school-aged children would spend an average of $443.77 on back-to-school items. It estimated that for K-12 students, back-to-school spending would see sales of $13.4 billion.

The NRF 2005 Back-to-College Consumer Intentions and Actions Survey, also conducted by BIGresearch in August 2005, predicted that college students and their parents were planning to spend 33.8 percent more in 2005 than in 2004 – a whopping $34.4 billion on returning to campus this year.

The $47.8 billion combined predicted spending on back-to-school and back-tocollege merchandise falls behind the Christmas/winter holiday in terms of seasonal sales. Total consumer spending for the 2005 holiday season was $438.6 billion, according to the NRF.

School Supplies

What items are included in back-toschool shopping? In August 2005, NPD Group predicted that the best-selling items would be apparel, school supplies and footwear. According to the chief industry analyst of NPD Group, Marshal Cohen, denim would top the list of mostpurchased apparel item.

For back-to-college merchandise, BIGresearch predicted that spending would rise in all tracked categories; they forecasted that parents and students will spend $11.9 billion on textbooks, $8.2 billion on electronics, $3.0 billion on school supplies, $5.7 billion on clothing and $2.0 billion on shoes.

Shopping Online

So how much of back-to-school shopping occurs online? The 2005 NRF survey found that 32 percent of back-to-school shoppers plan to shop online and that number is expected to grow. One of the main reasons, explains Phil Rist, vice president of strategy for BIGresearch, is that “many store-based retailers are expanding their online offerings ” in many cases, creating broader selection online than they carry in their stores.”

The 2005 “Back to School Shopping Survey” from AOL’s InStore, conducted by Digital Marketing Services, reported higher online spending than the NRF. Parents anticipate spending nearly half of their back-to-school shopping budgets online; 53 percent say online shopping makes back-to-school purchasing easier. The survey also found that most shoppers (58 percent) prefer to research their purchases in advance, as opposed to making impulse buys (42 percent).

Targeting Teens

With the projected growth of back-to-school shopping online, online merchants and affiliates should prepare accordingly. Given teens’ growing number and purchasing power, it makes sense for merchants and affiliates to reach out to them online.

In fact, Web merchants, responding to a June 2005 survey sponsored by the online trade publication Internet Retailer, found that the third most frequently cited growth driver was the growing buying power of today’s Web-savvy teens and young adults.

Jeffrey Grau, senior analyst for eMarketer and author of February 2006’s “Retail E-Commerce: Future Trends” reports that, “Credit goes to a cadre of digitally literate young adults who are replacing older Internet shoppers in the e-commerce marketplace.”

A 2005 report by Pew Internet & American Life Project detailing a survey conducted in 2004 found that 87 percent of American teens age 12 to 17 used the Internet, up from 73 percent in 2000, and found that 43 percent of teens who go online purchase items.

One opportunity to reach teen and young adult consumers is for marketers to take advantage of their inclination for using consumer electronics and entertainment devices and for visiting websites about gaming (see story page 74). According to a 2005 Forrester Research report, over 90 percent of consumers age 12 to 21 in the U.S. and Canada own a gaming device and 75 percent play online and off-line games on their PC – marketers could integrate ads about back to school into the games themselves.

In addition, marketers would be wise to advertise about back-to-school shopping on a variety of websites. Young consumers spend more hours per week on the Net than adults, and Forrester found that almost 80 percent of teens visit game sites, almost 50 percent visit movie sites, and over one-third visit music sites.

Social networking sites are another opportunity for merchants to reach teens and young adults. Debra Aho Williamson, senior analyst for eMarketer, says, “Teens are the consummate word-of-mouth consumers; they discuss their likes and dislikes in blogs, text messages and posts on social networking sites. There are two caveats, however. The atmosphere is freewheeling and merchants may need to cede some control over their brand image. The other caveat is that teens feel no qualms about exposing a company if their motives seem suspect.”

Of course, another core audience for back-to-school promotions is the parents of school-age children. AOL’s InStore’s Back to School Shopping Survey found that parents plan to spend 47 percent of their back-to-school shopping budget online.

Affiliates may want to reach out to men in their 30s and 40s (fathers of school-age children) because AOL’s InStore’s survey found that fathers plan to spend nearly 25 percent more money on back-to-school shopping than mothers – an average of $336 compared to $270. It also found that fathers are more lenient, allowing their children more freedom to shop on their own and influence final purchases. The survey also found that dads expect to do more than two-thirds (68 percent) of their back-to-school shopping online compared to 42 percent of moms.

Be the Teacher’s Pet

Merchants are finding that in addition to parents and teens, teachers make a good target for back-to-school shopping promotions. According to a 2004 study conducted by Quality Education Data, each year, teachers in the U.S. spend more than $1 billion of their own money on classroom supplies. The study found that only 40 percent of the money spent on classroom supplies in this country is provided by school districts; 60 percent of those supplies are purchased by individual teachers for their own classrooms.

John Serpa, president of Maps.com, says, “Maps.com’s product mix has found that teachers are the core back-to-school audience. It has been reported that teachers spend an average of $458 per year of their own money to purchase bulletin board and other classroom-type materials, so our promotions are geared toward teachers.” It seems to be working, as Maps.com has realized a 38 percent increase in sales in August 2005 over August 2004.

Sally Graham, senior manager of ecommerce for OfficeMax, says “teachers and those who are college age are seeing OfficeMax as the place to shop for back to school.”

What Sells

According to Craig Cassata, president of Mr. Rebates, “There is a whole multitude of back-to-school items that are top sellers such as the obvious products like school supplies (pens, paper, etc.) but we’ve seen a marked increase in laptop sales before school as well as a good amount of apparel and clothing sales too.”

Although eMarketer’s Jeffrey Grau does not have the numbers to quantify it (because merchants tend to only break down their Christmas holiday numbers), he believes that the apparel and accessories category makes up the lion’s share of BTS shopping. A February 2006 comScore Networks report found that sales for apparel grew 41 percent in 2005 from 2004. According to a June 2005 survey by Internet Retailer, 23 percent of respondents believed that the apparel and accessories product area would see the greatest growth in online sales in the next five years.

AOL’s InStore’s Back to School Shopping Survey found that the No. 1 backto- school item parents plan to purchase online for their children is apparel, followed by books, with accessories and computer equipment tied for the No. 3 position.

However, it seems consumers still have doubts about buying apparel online. An August 2005 Gallup poll, which surveyed 7,000 adults, found that over threequarters prefer to buy clothes in stores rather than online – only 9 percent said they preferred to shop online for clothes rather than in stores for reasons such as concerns about the fit and shipping costs.

Affiliates who sell apparel might do well selling items that are trendy for fall and/or are “hard to find.” Michelle Madhok’s SheFinds.com is an affiliate site for fashion and shopping whose audience skews toward younger women including college students. She says her site has “an advantage over the magazines of being able to jump on the trends – if there is something that is really hot – we will bubble it to the top so people can get it before it is gone.”

Examples of apparel that can be hard to find or are very trendy are specific brands of jeans. Right now, Angelina Jolie is making JBrand jeans very popular but they can be hard to find in Peoria. So people tend to buy denim online, and for this reason, SheFinds.com puts out a denim guide in time for fall fashions. “We don’t do as well with stores [merchants] that have an off-line presence. For example, I have heard that people print us out and go to the Gap off-line,” Madhok says.

Another potentially lucrative back-toschool area for affiliates is selling electronics to teens and college students. According to NRF’s Back to College survey, the average freshman, moving away from home for the first time, plans to spend $1,151.68, with a big chunk of that ($540.35) on electronics.

“There are three items no self-respecting 21st-century teen wants to be seen without: a mobile phone, an iPod and a computer. Back-to-school shopping lists will no doubt include these items,” says eMarketer’s Williamson.

In August 2005, the NRF predicted that although 44 percent of consumers plan to purchase electronics for back to school, the average spend was expected to fall to $68.08, compared with $101.03 in 2004. However, in October 2005, market researcher IDC found that strong back-to-school sales helped boost sales of mid-tier vendors, including Apple, Gateway and others. In June 2005, HP introduced a new back-to-school PC and monitor with new features, lower price and one full year of technical support.

Additional evidence that suggests electronic sellers are doing well: Circuit City reported that results from their second quarter of 2005, which includes June, July and August, were up 7.1 percent to $2.42 billion from $2.26 billion in 2004. (Circuit City does not break out off-line and online sales.)

Textbooks are another strong online shopping area, particularly for students heading off to college in the fall. “Parents who once browsed the shelves of a used bookstore will definitely be able to find the same great deals online,” says Williamson.

The National Association of College Stores Foundation sponsored a Student Watch’s study of 16,000 students at 21 campuses. It reported that 23 percent of textbooks college students purchased are through the Internet, up from 16 percent in 2004. The study showed that 61 percent of students who shop online chose that route because they could find books at bargain prices.

Dustin Rideout, manager of online marketing for AbeBooks.com, says, “The market has rapidly developed in the last few years. August and September plus January have become the peak seasons for book sales ” period. All of that is driven by the increased sales of textbooks on our website.”

Getting on the BTS Bandwagon

Making the most of the narrow promotional window for back to school is crucial. Performics’ Henger explains that the first step in planning back-to-school promotions is to make sure that marketing messages are coherent – he says that merchants need to keep creative and messaging consistent from a branding perspective. “A multichannel marketer like Sears has a back-to-school marketing strategy that permeates all channels. There is a consistent theme in all advertising channels – free-standing inserts (FSIs), television and online advertising.”

Stacy Ferguson of affiliate Upromise says, “Starting in early July we combine a unique and customized mix of on-site, in the form of a BTS page and themed banners; offsite, which includes direct mail to a million members with children under 12; and weekly and monthly BTSthemed emails. These are personalized to reflect our members’ personal preferences and interests.”

AbeBooks.com’s Rideout explains, “We work hand in hand with the marketing department and have developed other offline promotions solely focused to the student demographic. We employ large on-campus direct marketing campaigns, which includes street teams, collateral, contests, etc. We also have a dedicated student area called Textbook Central, which includes lots of other resources and information for the student textbook buyer. The majority of our campaigns focus on promoting this micro area of our website.”

Some savvy merchants set up ad groups specifically for back to school, according to Renee Silverman, marketing director of Irv’s Luggage.

“We set up, with ad copy that has our ‘back to school’ offer in it,” Silverman says. “The keywords that we associate with these ad groups are given special source codes that identify which ad group they are from. When the sale is made, we can easily see from the source code which keyword and ad group the sale came from. We keep track of this closely so that we can determine when to raise or lower bids on certain keywords, based on their performance. It’s a bit tricky because the average order is smaller for ‘back to school,’ so the spend can easily surpass revenue (and lead to a diminished ROI) if we don’t monitor closely.”

Mr. Rebates’ Cassata, one of Irv’s Luggage’s top affiliates, says, “Usually, a merchant like Irv’s would highlight their best sellers for a seasonal marketing opportunity within their affiliate email newsletters. For example, they would give the creative and linking code for a Jansport backpack so that it is easy for an affiliate to place onto their site or into their content management system.”

“We send out a newsletter with tips, trends and promotional opportunities to our affiliate network,” says Maps.com’s Serpa. “We communicate every month via email and phone with our top affiliates, identifying targeted link and promotion opportunities.”

And if that’s not enough, there are always incentives, according to Henger. “As a way to boost affiliate sales during the back-to-school season, retailers consider exclusive offers for the affiliate channel; for example, making a promotional code only available to affiliates and not using that code in other channels. Obviously affiliates love these types of promotions as it gives them edge in converting sales – it gives shoppers a reason to buy through the affiliate site.”

Henger suggests retailers consider “incenting” top producers through a special bonus or commission, noting that many super-affiliates warrant premium pricing because of the high volume they drive. For example, a retailer might have a 5 percent commission rate (revenue share) for their affiliates but they may pay some top producers an extra 1 percent. Some large affiliates have slotting fees or other premiums available to merchants who want to optimize sales during the back-to-school season.

OfficeMax runs an affiliate program that rewards its top affiliates. Megan O’Donnell of OfficeMax says “with some publishers we may provide additional cash back during this time frame or additional bonus miles or bonus points for the loyalty sites.”

No Excuses

Given the range in products and audiences, there is no excuse why the majority of affiliates don’t tap in to the more-than $40 billion back-to-school market. Over the past year, studies have found that there has been an increase in the amount of money spent on back-toschool shopping and more parents are shopping online for back-to-school items. Affiliates that cater to teens, college students, mothers of nursery school kids, fathers of elementary school kids, and teachers can all get a piece of the action selling items that vary from fall fashions to the latest computers.

Because retailers are launching more products specifically for the audience and time of year, the value of affiliates will increase as online merchants look to their affiliates as one of their core strategies for sales. But affiliates do need to start as early as June to maximize their returns and prepare their promotions accordingly. Communication with affiliate managers is imperative to take advantage of relevant product promotions and to ensure that they are receiving maximum payment, if warranted.

ALEXANDRA WHARTON is an editor at Montgomery Research Inc., Revenue’s parent company. During her four years at MRI, she’s edited publications about CRM, supply chain, human performance and healthcare technology. Previously she worked at Internet consulting firm marchFIRST (formerly USWeb/CKS).

Music Needs Tuning

The complex space needs some harmony before online marketers start to sing.

Imagine you’re a publisher trying to parlay your expertise and passion for vacuum cleaners into a performance- based business. You are shocked to learn that sellers don’t compete on price, that you aren’t allowed to see what is in the manufacturers’ catalogs and that if you want to sell in volume, there’s only one partner.

Although this scenario seems somewhat over the top, it approximates what publishers looking to participate in the market for digital music downloads and subscription services now face. While online music sales are rapidly rising, the companies with distribution rights will have to revamp the way music is marketed to reach its revenue potential.

The sales of digital tracks rose by more than 150 percent from 2004 to 2005 (to 353 million songs), according to Nielsen SoundScan. That is a growth rate that any industry would be proud to have. Global revenue to the record companies from digital music sales nearly tripled, from $400 million to $1.1 billion in 2005, according to the International Federation of the Phonographic Industry (IFPI).

Great news, right? Almost. From a glass-is-half-empty perspective, however, the total sales of recorded music (both physical and digital) fell by 3 percent last year, or not in the direction that the folks at Sony BMG, EMI or the other major labels want things to go.

Apple at the Core

Most of the growth in music download sales can be attributed to Apple’s iPod player and iTunes store. The two most visited online music sites for the final week of January 2006 according to Nielsen//NetRatings NetView, were Apple’s iTunes store, and AOL Music, which also sells iTunes. Depending on which analyst you ask, Apple’s share of music download sales is between 75 and 90 percent. “If you want to be successful [selling downloads], you have to partner with Apple,” says Tim Bajarin, president of analyst firm Creative Strategies.

iTunes may be delivering sizable revenue for Apple and the major music labels, but publishers aren’t getting much of the action. Apple, which has sold more than 1 billion tracks via iTunes, pays its affiliates a 5 percent commission on the sales of its $0.99 tracks. The company does not have a subscription service.

Bajarin says the status quo is likely to continue in music downloads for the foreseeable future. “I don’t see anyone touching [Apple],” says Bajarin, adding that the company has created a “digital ecosystem to acquire, manage and distribute digital content” to iPods that is without competition.

Apple declined to be interviewed for this article.

AOL Music offers iTunes downloads and a subscription service (AOL Music Now) that is billed separately, according to Erik Flannigan, vice president and general manager of AOL Music, Movies and Television.

The confusing structure has AOL Music (music.aol.com) sending traffic to the iTunes store for download purchases, while AOL Music Now (aol.musicnow.com), which will officially launch this summer, is the home of its $9.95-per-month subscription service. AOL Music Now also sells Windows Media format downloads.

The company hopes to someday have a single service. “We believe in both models, and would love to see them both together,” Flannigan says. He is hopeful that Apple will someday enable subscription service listeners to enjoy music on their iPods.

Affiliates aren’t jumping at the opportunity to earn a nickel per sale for downloads when they are accustomed to earning just as much from mere clicks in other industries. Lisa Riolo, senior vice president of business development at Commission Junction, says few affiliates have contacted the company looking to partner with download sites. “We haven’t heard a lot of demand from affiliates for downloads,” she says.

Subscription services, which can pay between $5 and $15 commissions when a consumer signs up for a trial, can be much more lucrative for publishers, Riolo says. Commission Junction manages the affiliate programs for subscription-based RealNetworks, Yahoo and eMusic, which all offer subscriptions and downloads.

Subscription service revenues may not be growing as fast as music download sites, but the number of consumers paying a few dollars per month to listen to catalogs online almost doubled, from 1.5 million to 2.8 million globally in 2005, according to the IFPI.

Like Apple, RealNetworks sells tracks for $0.99 each, but the company does not offer affiliate incentives on downloads, instead paying commissions for trial subscriptions, according to Rachel Lazar, the director of consumer marketing for RealNetworks.

Focusing on subscriptions provides a better opportunity for publishers to generate revenue than making a few cents per download, Lazar says. RealNetworks recently raised its bounty for trial subscriptions secured by a credit card, from $12 to $15. “It would take a huge volume to make up the money they could do with subscriptions,” she says.

Although she would not disclose how many affiliates RealNetworks has, Lazar says that during a few recent quarters the number of affiliates doubled.

Subscription services have been hampered by a lack of consumer understanding about how they work and the lack of a solution for mobile users. Subscription services allow access to a catalog of music through channels or stations that focus on genres. If consumers want to access music after a subscription is terminated, they must purchase tracks separately.

“There is a lot of education that is yet to be done when it comes to subscription music services,” and publishers could aid in clarifying that, RealNetworks’ Lazar says. Publishers who are involved in marketing other media, such as movies or audio books, are a good match for promoting music, according to Lazar.

Creative Strategies’ Bajarin says consumers aren’t accustomed to paying to listen to music and are more comfortable with owning music. “When you quit [RealNetworks Rhapsody service], your music is gone,” he says.

“The problem with the subscription model is portability,” music industry consultant Barry Sosnick, president of Earful.info, says. Consumers have a “strong desire to have ownership when it comes to music,” so having access to songs end with a subscription is a “critical shortcoming,” he says.

However, music publishers including Napster and AOL Music have addressed this concern with higher fee services that allow consumers to listen on portable devices during the time that they are subscribers.

Publishers also have an opportunity to help distinguish competing music subscription services. While services like Rhapsody, EMusic and Napster all claim to have catalogs of more than 1.5 million tracks, identifying which if any service has a majority of an individual’s favorite artists can be a challenge. For example, Rhapsody has an extensive collection of tracks from Indie singer-songwriter Bob Mould, but no albums from classic rock stalwart Bob Seger.

The subscription services only permit consumers to search their catalogs after they have subscribed, but affiliates are now getting tools to differentiate the subscription services. Services such as RealNetworks and Yahoo Music are now working with affiliates to promote artists as a method of marketing their catalogs.

RealNetworks’ Lazar said the company is now allowing “select publishers” to see the data feed so that they can incorporate track information and album art on their websites. However, Lazar says affiliates cannot publish all of the data online or make it searchable.

Similarly, Yahoo Music recently made its product catalog data feed available to affiliates to “allow affiliates to link directly to individual song pages on our music pages from either a search engine or their website,” according to Eva Hung, who manages Yahoo’s affiliate programs. “We think this will significantly improve conversions …,” she says.

For example, publishers can now create collections, such as the best grunge rock tracks, to showcase the depth of Yahoo’s catalog.

Earful.info’s Sosnick says publishers can aid the purchasing process by acting as a filter, recommending artists and “separating the wheat from the chaff.” He says consumers don’t want to scroll through pages and pages of artists, but prefer to be guided. “If consumers have too many choices, they revolt.”

Subscription services are attempting to increase their reach by encouraging publishers to participate in search marketing. Both Yahoo and RealNetworks support publishers’ acquiring traffic by purchasing artists’ names or genres on search engines.

RealNetworks also encourages publishers to bid on Google for its branded terms such as Rhapsody, according to Lazar. The company works with publishers to build custom landing pages from paid search ads that showcase genres or artists, she says.

One Price Gives Fits to All

Most online music services have followed the lead of Apple (and its CEO Steve Jobs) in offering the majority of music tracks for $0.99 and albums for $9.99. The rigid pricing strategy has frustrated music executives who prefer a tiered structure, and limited the ability of publishers and marketers to differentiate the services.

The “coincidental” pricing across services also has the attention of New York Attorney General Eliot Spitzer and the U.S. Department of Justice, so a change in pricing strategy may occur this year.

The $0.99-per-track standard has also prompted inconsistencies in the value of albums versus individual songs. While some albums with 15 or more tracks are a bargain at $9.99, it is sometimes cheaper to buy tracks individually (as in the case of the six-track album Animals from Pink Floyd) than it is to buy the entire album.

According to the Online Publishers Association, the percentage of music downloaded as individual tracks rose from 15.4 percent in 2004 to 21.6 percent.

While music industry executives would like to raise the ceiling on tracks above $0.99 and lower the prices of other tracks, Earful.info’s Sosnick says consumers would be willing to pay $0.99 for less-in-demand tracks too.

“If a consumer is looking for a niche product, chances are they are willing to pay for it,” Sosnick says. However, variable pricing would enable publishers to promote related songs as less expensive “impulse buys,” according to Sosnick.

Publishers are also generating revenue by creating content related to digital music distribution. AOL Music is videorecording concert performances of artists including the Rolling Stones to generate advertising revenue and traffic. Social networking sites such as MySpace, while not selling music directly, have greatly increased their ad revenue by allowing music enthusiasts to create websites and playlists about their favorite artists.

Yahoo’s Hung says that music is critical to the company’s affiliate program, so the company consolidated all of the programs to simplify cross-promotion with other services including personals and instant messaging. For example, if a publisher is successful in getting a consumer to try the music subscription service, when consumers download the Yahoo Music Engine and also download Yahoo Messenger or the Yahoo Toolbar, publishers can earn additional commissions.

The next musical horizon for publishers is to promote unsigned artists, according to Commission Junction’s Riolo. User-generated videos and commentary are attracting large audiences online, and Riolo says music is a likely progression. She says affiliate programs could generate considerable revenue if they can figure out how to market music from amateurs to a mass audience.

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