Tag: Affiliate Marketing

Key Cogs in the Affiliate Machine

In May 2008, JupiterResearch analyst Patti Freeman Evans published a study on affiliate marketing that indicates online marketers will spend $2.1 billion on affiliate marketing fees, with U.S. online affiliate marketing spending reaching $3.3 billion in 2012. That figure includes the aggregate cost of running an affiliate program: affiliate network fees and affiliate commissions. Evans estimates that the affiliate space is growing at 9 percent.

A report from Evans in December 2008 says a growing number of retailers will increase spending on holiday sales-driving tactics like promotions and online advertising. Twenty-seven percent of online retailers will increase spending on affiliate marketing (a 14 percent increase over the previous year) whereas 18 percent will increase spending on banner advertising.

Sitting smack-dab in the middle of that affiliate equation are the networks. The networks’ job as trusted third party means they are acting as an intermediary between advertisers and publishers. Serving multiple constituencies requires being a lot of things to a lot of parties. The networks are partners, matchmakers, facilitators, data keepers and more.

The major networks have many things in common and perform most of the same basic functions, including tracking technology, reporting tools, payment processing and payment aggregation.

The networks each use slightly different terminology to deal with e-tailers selling products and those that receive the commissions as part of the programs. Commission Junction, LinkShare and Google Affiliate Network all refer to them as advertisers and publishers, while ShareASale calls them merchants and affiliates. All of the terms are acceptable and interchangeable within the industry.

While each network also has its own specific terms and conditions that must be adhered to by advertisers and publishers, most of the networks have agreed to some basic rules about overriding affiliate commissions and what constitutes flagrant violations of the basic tenants of affiliate marketing.

However, each of the major networks has developed a slightly different flavor. Some are geared towards big e-tailers, others focus on lead generation and still others tend to work with major catalogers. The reasons why an advertiser or publisher chooses a specific network can depend on a variety of factors.

It’s like having a choice, between Pepsi, Coke, and RC Cola – and in some cases, Fresca.

For advertisers, the choice to work with one network over another can depend on a range of factors, including additional services offered, the technology platform used, the cost of setting up a program, the customer service and the quality of publishers in the network.

Each network has its share of loyal advertisers – large and small. Although there is some amount of churn, where merchants switch their programs from one network to another, that process can be complicated, disruptive and time consuming, so it’s not all that common (like customers switching mobile phone carriers). Some advertisers run programs on multiple networks, but in most of those cases one of the networks seems to act as the primary one. LinkShare is the only major network that requires merchants to sign an exclusivity contract and work only with them.

Most affiliates tend to maximize their earning potential and work with several, if not all, of the major networks. Some affiliates work with just one or two based on preference about payments, advertisers in the network and commission rates.

One of the biggest jobs of the networks is to facilitate relationships between advertisers and affiliates. All of the Big Four networks do that in some form through annual face-to-face gatherings, and most have facilities within their respective platforms to allow contact between those two parties. Commission Junction is the only big network that does not provide merchants with the names and contact information of their affiliates. While merchants can use a variety of techniques to get around that and also have contact with publishers, they are not given direct access through the CJ platform.

Some of the other differences – and the most hotly debated – often surround the issue of network compliance.The major networks have teams of various sizes that work to ensure advertisers and publishers are not in violation of their respective terms and conditions. However, those levels of policing infractions and ejection from the network varies widely. In addition, each network seems to have its own ideas about what activities are acceptable within the network. ShareASale stands alone as the only network that forbids merchants from offering any type of downloadable applications or software. That stance means affinity and loyalty merchants are not allowed within ShareASale. It also means that the company has greater control over ensuring that its affiliates are being fairly credited for commissions.

Increased competition from ad networks and vertical networks are forcing the major networks to step it up with their offerings, which is likely to result in increased innovation and better service for advertisers and publishers. That should be a boon for the entire industry.

Merchant Advantage: CSN Stores

When Brent Elias began working at CSN Stores.com in 2002, the Boston-based online home furnishings retailer didn’t have an affiliate program. Elias began his career at CSN working in the advertising department on the keywords team. Like many e-tailers, CSN Stores was afraid that affiliate marketing would cannibalize sales from its main online store.

But as the privately-funded company grew, it began to see that affiliate marketing might add some value. No one at the company knew much about affiliate marketing, so Elias, who showed interest, started researching the best way to start a program.

Beginning in July 2005, Elias spent several months researching all of the major networks and which would best fit with the unique business model of CSN Stores. He knew that it would have to be a long-term relationship and didn’t want to jump into anything. He did his homework looking at sites that discussed affiliate marketing and pouring through online forums such as ABestWeb.com to help educated himself and make a better decision.

By October of that year, CSN Stores was ready to dip its toe into the waters of affiliate marketing. The company chose ShareASale as its network. Elias says that he spoke with all of the other major networks but none was able to accommodate CSN’s desires to have a single merchant ID that let affiliates work with any of the company’s 250 online stores. Most of the networks claimed that the stores would have to be grouped together by categories and CSN would end up having something like 20 or more accounts.

Make it Simple

Elias knew that would be too confusing and troublesome for affiliates. He also couldn’t imagine how his company would log into and manage so many accounts efficiently. Elias says ShareASale was the only network willing to host all 250 stores under a single merchant ID – giving affiliates a single place to get creative. It also allowed CSN to set things up so that affiliates could work with the main CSN store or just pick the niche stores – like CSN Rugs or CSN Baby – that they were interested in promoting.

ShareASale was also willing to work with CSN Stores to create custom data feeds, along with a unique tracking system and custom designed analytics. Elias says that level of personal service was “a breath of fresh air” and won CSN over.

Wanting to jump right into things, Elias attended ShareASale’s first annual ThinkTank retreat in 2005, just two weeks after launching the CSN Stores program. He says it was an eye-opening experience and set the tone for how he deals with his affiliates.

“It wasn’t that we were doing things wrong, but we were still figuring out what affiliates wanted,” Elias says. “At ThinkTank when everyone gets into a room and seasoned affiliates lay it on the line and don’t hold back, you take that information and feedback to heart.”

Elias says he learned right off the bat about being fair to affiliates, and that the merchant-affiliate relationship is a partnership. “I don’t think all merchants see it that way,” he notes.

Because ShareASale is a smaller network and many of its merchants and affiliates prefer to work exclusively with them, Elias says that was a selling point. He figured that the network’s stance on adware and downloadable applications (it doesn’t allow it) meant he wouldn’t have the headaches of policing a lot of issues related to cheating and bad traffic. “In addition, I figured that it would also give our affiliate peace of mind that cookie were set for them and that there would be no cross-tracking problems with other networks.”

By inviting feedback from affiliates, Elias learned CSN’s affiliate interface was confusing and he was able to work quickly to get that changed. He was also told that CSN’s data feeds were overwhelming and contained way too much information. He worked closely with SAS to change the data feed structure so affiliates could get only the information they wanted – whether it was by product category, specific stores or master feeds.

Forums, Feedback and Facts

CSN Stores has an active forum on ABestWeb.com and Elias is always there to post information and answer questions, or just take feedback. “I love it and have learned a lot there,” Elias says. “It has a family atmosphere. It can be rough around the edges, but what I love is that people put their heart into affiliate marketing. In the end, I respect that.”

A while back, CSN Stores made a decision to pay coupon sites a 2 percent commission on an order when they were last in the click stream. That decision did not go over well with all his affiliates. Elias says that for CSN’s business model it wasn’t an ideal situation to partner closely with coupon sites. He’s not convinced of the overall value of the traffic the couponers bring to him, but CSN decided they deserved a small cut of the commission on an order. On ABestWeb, CSN took some heat, but Elias says that he was able to give his reasons for the change in policy, “talk people down from the ledge,” and be honest and forthcoming about the business decision.

As an affiliate manager, he believes it’s important not to get defensive or mad, but instead to be open and honest and communicate with affiliates. “That way it remains a discussion rather than a fight,” he says.

He also claims that taking accountability and admitting mistakes is also key for affiliate managers. “Everybody makes mistakes. We are human. Affiliates know that. And if you approach situations positively and honestly and make moves to set things right, then affiliates are forgiving – they respect that. Of course, you can’t make everyone happy but you do what is best for affiliates while balancing the concerns of your business.”

That attitude has served CSN’s affiliate program well. In 2008, the affiliate program will bring in more than $10 million for the company – a significant jump over last year. He says that winning the Affiliate Summit Pinnacle Award in 2008 for Most Ethical Merchant also helped boost the company’s reputation and bring in more affiliates. The program now has more than 4,000.

Growth of the program has slowed a bit, but Elias attributes that to the economy and the natural stages of growth. “You can’t grow 100 percent year-over-year forever. I’m happy with our growth, which continues to be steady month-over-month. The program has really got some steam.”

The growth of the CSN Stores affiliate program has not gone unnoticed within his own company. Elias says that every now and again, he’s forced to field questions from his bosses about expanding the program even further and possibly doing that by switching to a bigger network. All of the big networks have tried many times to lure him away from ShareASale.

But Elias is adamant that ShareASale helped him achieve success and he has no plans to leave. “I’m not budging. The selling point of the program for affiliates is that we are exclusively with ShareASale. And from my perspective, we have their attention. When I want something done there are no questions asked. Plus, I never have to question the type of traffic I’m getting. I know I’m not being cheated or that cookies are not being dropped. With one of the bigger networks, I would have to take a huge chunk of my time to police the program and I don’t want to do that.”

And for Elias, time is at a premium right now. After three years of running the affiliate channel on his own, he’s also recently added SEO Manager to his duties. However, Elias says CSN has shown its continued commitment to the affiliate space, by recently hiring an assistant affiliate manager to help out.

That’s a good thing, because CSN Stores has some new projects on tap for its affiliate program over the next 12 months. The company wants to continue refining its data feeds by partnering with Golden Can. There are also plans to create an affiliate Web page. Currently, the most complete information about the company’s program can be found on ABestWeb, but Elias says CSN needs a formal affiliate spot on its own site as well. The company is also beginning to expand beyond the U.S. into the U.K., Canada, Australia and Germany, which could represent even more opportunities for affiliates.

For Elias, running a good affiliate program means understanding affiliates and what issues are important to them. “I feel an obligation to support those affiliates that have put their faith in my program to help them make a living. It’s all about being comfortable and trust. You can give affiliates all the tools they want, but if you don’t have their trust, you won’t have success.”

Commission Junction: Putting the Pieces in Place

Kerri Pollard took over the helm of Commission Junction as general manager over a year ago. Pollard’s rise through the ranks – starting at BeFree back in the day and then at CJ as director of publisher services – gives her a wide variety of network experience to draw upon. Since Pollard took over, CJ has undergone some changes.

Lisa Picarille: You’ve been running Commission Junction for over a year now. What’s changed at CJ?

Kerri Pollard: It seems like a cliche, but the first order of business was to get the right people in place. Our emphasis is customer focus on the advertiser, publisher and agency side of the business. We didn’t spend a lot of time on agencies in the past. Making sure we had the right people gave us greater focus. Everyone is now aligned and focused. On the agency side, we have a support team and the resources on the sales end. I’m happy to say that coming off CJU we’ve gotten positive feedback about the increased support and partnership. Also, both the advertiser and publisher sides made alignments in the marketing and products teams. There is ownership and accountability within their teams. That is reflected in the product groups. I grew up on the publisher side of the business at BeFree and we have added more support on that side of the business. Mike Ouellette, a former BeFree-er from back in the day, has also joined us as director of publisher developments.

LP: What has resulted from the personnel changes?

KP: Those changes give us a couple of different things. In this business, it’s all about bringing in new advertisers to the CJ Marketplace and retaining them. Organizationally, we are focused on retention and acquisition. We are really trying to re-emphasize customer outreach.

LP: And the biggest changes?

KP: They’ve been on the technology side and the marketing and product sides. We are becoming better at product marketing. We hadn’t been marketing ourselves. We are also able to focus on Web Services. We launched that two years ago, but there are more opportunities for third party developers and to get traction with developers.

LP: Have the changes allowed you to attract more developers, advertisers or publishers?

KP: We tend to err a little more on the conservative side. But we continue to bring in new clients in each quarter when you look at the year-over-year numbers. It’s all about how we track it and we are also very conservative about sharing that data.

LP: Has the fact that Performics is now part of Google impacted your ability to bring in new clients?

KP: No. It’s been no different thus far. That could change. But it hasn’t impacted the sales process of anything with our existing clients. As far as we are concerned, it hasn’t changed from when they were Performics.

LP: Now, the inevitable question about the impact of the economy on your business?

KP: Because our business is tied to the online process we have been looking at the forecasting process. A lot of people are in the dark about what the holidays will bring. Analysts are all over the place with predictions – anywhere from 12 to 13 percent growth, but we’ve also seen numbers as low as just 3 percent growth for online sales. On the positive side, we are seeing that companies are definitely redirecting money from other channels into affiliate marketing because it is cost effective. Even if a company or retailer has laid off workers, they can’t shut down that channel. But they need our help on the services side of the business – especially if they don’t understand that when they pay out more to publishers, that’s a good thing. That it’s tied to increased sales. But it all comes back to the consumer. More and more consumers are coming online and shopping, and the adoption rate will continue to increase. Will that fact offset what is happening with the economy? Not sure. And we definitely won’t know for sure until a couple of weeks into 2009. We are doing what we can, but things like Citi Bank filing for bankruptcy and more consolidations at financial institutions are beyond our control and they do have an impact.

LP: What’s the impact been on affiliate marketing overall?

KP: I do know affiliate marketing is the safest business. It’s measurable and cost-effective. But businesses are also in hunker-down mode. But I think we can grow the affiliate marketing pie. We are helping our existing clients with greater education, so they can really understand performance marketing. We are also looking to areas like BtoB. People tend to take a shot and need the support for publishers. That business can be tracked and we are looking into what role we could play. We are also looking at doing more tracking retail outlets and VARs (value-added resellers). We are having conversations about how, as a business and technology platform, we can track other things within an organization.

LP: And you have the technology to do that?

KP: We have a lot of technology initiatives. We were the first to launch Web Services domestically. We are revitalizing that initiative, making it more of a community and a mashup. We want third party developers and others to make widgets. We are also working closely with some of the other ValueClick properties to leverage their technology – Media Convergence and MediaPlex. We want to move beyond the methodology. ValueClick is already doing behavioral and contextual targeting. The biggest challenge is the amount of heavy lifting involved.

LP: Are you leveraging other technologies as well?

KP: We want to make it easier for existing clients to do business with us. Publishers get excited when it comes to optimization. Big publishers have made a significant investment. We need to make things easier for the great diversity of publishers. We are looking at creating more push network features for new publishers. So, we are looking at the core fundamentals. This is a relationship-based business. There are social networks out there and communities. We also want to have more automation on the reporting side. We are open to leveraging other developers. We don’t have to build everything ourselves. We just launched a pay-per-call beta test with CallWave. It has a branded CJ look and feel.

LP: There have been issues around network compliance and those that continue to override affiliate commissions.

KP: Network quality is important to us and we are very diligent about it -maybe more than anyone else. We’ve put an increased focus on it. Jeff Randall is handling our network quality and developing that even more. Adware and spyware have been difficult and more egregious, but when it comes to adware, there are customers that are still supporting it. We will still continue to watch it and stay one step ahead. In addition, trademark bidding is a big piece to monitor. The focus for us is staying on top of it. To do that, we are adding more regulations and policies.

LP: A while back, you were expanding into countries outside the U.S. Is that something CJ will continue?

KP: ValueClick has a big global presence. CJ launched in Spain this summer. We also have offices in the U.K., France, Germany and Sweden. We are looking to continue expanding in 2009 and looking at different ideas. We are also seeing more client interest in the Asia-Pacific.

LP: What are some of the specific goals for CJ in 2009?

KP: There are economic factors in play, but we’re focusing more on what we can control. In general, we are seeing greater focus on profitability and margins for our customers. We think that by educating our clients and being focused on technology we can grow distribution beyond the scope.

LP: Are you seeing larger affiliates get bigger and the gap between the largest and smallest affiliates get wider?

KP: Large publishers – especially couponers – are having their best year ever. But double digital growth year-over-year is going to be more difficult. It’s getting more difficult to be successful in this business. The small guys are trying to compete, but it is survival of the fittest and there is a huge increase in competition. The changes to search engine policies this fall hit hard for a lot of people. Search engines determined that content was ranked higher based on what was compelling to consumers. That hit the smaller guys hardest.

LP: Do you feel pressure from the CPA networks?

KP: No. Not really. It’s just arbitrage to an extent. They have not made an investment. It’s not a relationship. I see them as here today, gone tomorrow. They are ankle-biters. I think when you think about networks it really comes down to the Big Four.

LP: What are the other major challenges for CJ over the next 12 months?

KP: It’s been an interesting year. I’m excited about all the things that we’ve been able to do. It’s like we’ve been cleaning up the stable and the horses are ready to hit the racetrack. We are making sure that we stay focused on the customers and the products and services they need the most.

ShareASale: Size Doesn’t Matter

ShareASale.com founder and CEO Brian Littleton runs what is considered to be the fourth largest performance network in the United States. Littleton has earned the respect of the industry and garnered a dedicated following of merchants and affiliates by taking a firm stand on issues. His company is the only network that does not allow downloadable applications of any kind. His personal style and outspoken views on important issues are reflected in this wide-ranging interview.

LP: How does that impact the company?

BL: We want to be very approachable to clients, merchants and affiliates. The feedback has been that everyone wants to be able get a hold of a real person to get their questions and concerns answered. We want to serve everyone and not just those that are making super-affiliate type of revenue. Even if an affiliate is making a few hundred dollars, we want to be able to answer their questions. Now we have beefed up and are able to do that. It is a core thing that is very important to me.

LP: What about the growth of the sales team?

BL: We are working to grow our base of merchants and need sales people to handle that. Right now we are at 2,588 merchants. Getting over the 2,500 mark was a big milestone for us and we are looking to continue that growth. Of those, 2,435 are retail pay-per-sales commission-based merchant programs. We are a retail-focused network, which is very different from the large variety of CPA networks dealing with lead-based offers. We have 244 lead-gen merchants. They are not the core of what we do. We are adding nearly 100 merchants every month – of course, there is always some churn in the math. But unlike the other networks, we are targeting a different type of merchant. They are smaller, non-Fortune 100 companies. We want to help anyone, no matter what size, that wants to take a shot at performance-based marketing. It’s not easy to provide a system that works for everyone – whether it’s a Fortune 500 company or a two-person company.

LP: Are you leveraging technology to help with that scalability issue?

BL: One of our main focuses is technology. It’s a big differentiator for us in the space. We are always coming up with new ways for merchants and affiliates to leverage technology – like our widgets for video. They are unique across the board.

LP: What are some of the goals for SAS in 2009?

BL: We are very focused on networking. We are always trying to find a better way for affiliates and merchants to talk to each other. It’s difficult in the network model. Often, merchants are over-eager. Merchants tend to think their offers are the best. Affiliates are more selective. They don’t want offers all the time. We are looking at better ways to make that happen. We want to let the merchants interact more without so much material that it’s impossible for affiliates to read it all. It’s a big thing for us to get it right.

LP: What are some of your challenges over the next 12 months?

BL: I think the industry will be faced with many more complex compliance issues in 2009. There will be more toolbars in 2009. Merchants are looking at a lot of different types of affiliates – coupon affiliates, PPC affiliates and loyalty affiliates. As a whole, questions will be answered as the individual networks take their own routes. We are working on PPC issues. We introduced a PPC Violation Report which allows merchants to upload a screenshot of those they feel are in violation. We then do more research into the allegation. Because merchants don’t always know if an affiliate is really bidding. We dig deep and decide if there has been a violation. We have a three strikes and you’re out policy. If the affiliate is in violation of a merchant’s PPC policy, then we remove them from the network. We give the affiliate a three month grace period to get in compliance, but if, after that, they have are not in compliance, they are out. The goal is not to cut out those that made an honest mistake but those that are continually abusing the rules and praying on merchants that have difficultly policing that activity. Toolbars and loyalty go together. More and more toolbars are coming out. It’s like everyone is seeing their competitors doing it, so they do. More are popping up. Whatever has been the position of those in the past, adware and toolbars present a unique set of challenges because they all do different things – notifications, pop-ups, etc. We feel that we need to look at each one.

LP: That sounds like a Herculean effort.

BL: There is not an easy way around that, to maintain quality inside a network. You have to make sure a toolbar’s behavior doesn’t violate the rules you have. It’s not something typically that individual merchants can keep up with. Maintaining compliance is on the network side, because we have the data. We allow the merchant to have a say, but the network should be handling those issues. It’s a lot of work, but it’s part of the network role to keep on top of emerging technologies. It happened with PPC and coupons, and happened with toolbars as well. They’ve been around for years. It’s nothing new, but there seems to have been an explosion. I’m basing that on the number we’ve seen lately and the perceived success merchants see with competitors’ toolbars. They see them working for others, so they want them. I think it will be a huge challenge in 2009.

LP: What impact have you seen on the performance marketing space because of the current economic conditions?

BL: I think affiliate marketing will increase in profile because of the depression of the CPM or ad marketing. We won’t know for sure for a while. Some merchants will look to affiliate marketing to fill gaps. That’s traditionally what affiliate marketing has been best at. That’s been a strong point of the affiliate marketing industry since the beginning.

LP: Do you have any specific goals for SAS that you can share?

BL: We don’t have any specific goals as of yet. We set our goals more broadly. It’s a personal style of mine. I prefer to say things like, “we like to get closer to our publisher base, rather than we are going to do X a specific number of times.” The main thing we will be doing is continual work on the technology; it is at the core of what we do. We want to come up with new tools and technology for not only those who have a greater understanding, but for the first-timers who join the network. We want to make it simple for newer merchants and affiliates to understand. It’s a back-to-basics approach. I think that will make us more attractive. On the relationship side, we are looking to get closer to our affiliate base. We are targeting affiliates that we feel historically have been aligned with other networks. We are also letting our existing base of affiliates know that we have even more stuff they might be interested in.

LP: Has style been a big differentiator for the company?

BL: I don’t know. I don’t like to make presumptions. I like to highlight what I think we do the best. Certainly, there are clients on every network that are happy as clams. But we do focus on the results and quality of what a merchant is getting out of their relationship with us. This shows in the adware discussion. We are the only network that doesn’t allow adware. I know it’s a loaded works and there are discrepancies over exactly what adware is. Years have been spent hashing that out in the industry. But for me, it comes down to making sure that the quality of sale is just as important as the volume of sales. Sales tied to adware are not true growth. It’s important to report these activities to the networks and that the networks do something about it. But that’s a choice that’s being made by each network. Not keeping up with compliance is detrimental to the industry as a whole, over the short and long term. That’s our stance.

LP: By not accepting certain types of merchants, ShareASale hasn’t grown to the same size as the some of the other networks.

BL: The size issue has forced us to be good, if not better, with our technology. You can’t be the small size we are and have that number of merchants with bad technology. You need automation. Our datafeeds are automated and registration is automated. You can’t have bad technology. Everything needs to be smooth to support that volume of merchants. We are doing things faster. We are a different type of company. There is a big difference between us, a small company, and a privately-held company.

LP: But you are competing against companies with huge resources. Have things changed for your company since Performics was bought by Google?

BL: Not really. It’s business as usual. I know people there and we have a good relationship with them. Of course, it’s important for any company to know what’s going on with their competitors. People brought up the possibility of conflict, but Google sold off Performics’ search division. The name and backing of Google may help them, but in the end I think it’s a positive for everyone in the industry – especially if the largest brands get interested in joining the performance marketing space.

LP: Would you consider offers to buy SAS?

BL: Our technology is built inside the company. I would rather build in-house. We get more value that way and so far we have built everything we have. There could be minor exceptions – if there is new technology we could get faster through an acquisition – but I like to think that building it in house gives us long-term value. I’m conservative with our assets. We have grown organically and we are profitable. I’m not going to put that at risk for a new technology.

Social Networking Bailout

Our politicians, along with Wall Street, a few bankers and some mortgage firms may be able to take our money, but they can’t take away our friends. In fact, our friends may be all we have left someday. There’s no doubt that the crisis we face today financially and otherwise will test our mettle as small business owners and brands.

So in tough times what can we do? Well, if you’re like me you turn to quoting Lennon/McCartney and say, “We’ll get by with a little help from our friends.” Once again, the Beatles solve all the world’s problems.Of course, you see where I’m going here,right? Social media will save us, if we use it wisely. Think about it. Social media at its core is simply friends and associates, using media tools to connect with each other in different ways – online.

It’s nothing new. Well, the “Web” part is. But in all actuality, social media always existed, even before the Web. Think about neighborhood watch meetings where everyone in your community came together at someone’s house to discuss crime in your neighborhood. It’s still happening, but today, that kind of thing can be done on Facebook, Myspace, or Ning, virtually as well. What about getting together with your friends at a local coffee shop to chat with each other about your lives, or to recommend an auto mechanic or dentist? That’s still happening, but now it’s also happening on Twitter and Pownce.

Social media extends our interactions and widens the net so we can have even more friends and even more discussions. And that’s a good thing. Especially if you’re wise enough to build a diverse and strong network of people who you can count on in times of trouble.

Here’s how I think social media, and the power of friends can get us through tough times.

Career Advancement

At the time of writing this article, 4,000 jobs were just lost, here, in Cleveland, Ohio due to a bank that is closing down. That puts 4,000people scrambling to find a replacement job,with many looking in the same industry. But there are only a few available jobs in the area and now there are 4,000 more unemployed workers vying for those positions.

In such a competitive job market, I believe those that leverage social media will emerge with a job. For example: let’s says that Joe the Banker and Sarah the Banker are both seeking employment. Joe never bought into the whole social media scene. He never thought it was important to have “friends”online so he ignored building connections.Sarah, however, realized long ago the power of social media. She’s amassed hundreds of Twitter followers, and has just as many Facebook friends and LinkedIn connections.Not to mention her blog where she has a complete resume of her skills and full contact information.

The first day after Joe loses his job; he heads out to grab the morning newspaper and begins to scan the want ads. Maybe he also calls a few friends who might know of something, and he might even call a professional recruiter. His job search has begun.

Sarah, on the other hand, started the job search minutes after she was laid off. She immediately told all of her followers about it on Twitter. Minutes after that, she updated her profile on LinkedIn and notified every contact there that she was available and looking. Then she updated her Facebook status and wrote a blog entry about her experience and what kind of work she was looking for.

So who got the job quicker? Of course, it was Sarah. The power of social media enabled her to sneeze her message out to more people,faster than Joe could. Her associations with”friends” also enabled her to be recommended personally by someone who might have a connection inside a company she is hoping to work for. Joe, on the other hand, is still checking the classified ads.

Sales, Leads & Publicity, Oh My!

Small businesses are feeling the crunch too. Now, more than ever, it’s a challenge to keep your business going strong. Today, the stakes are higher with challenges such as making payroll and providing health benefits for your employees. Oh yeah, and while the same time finding a marketing budget to advertise your business.

The good news is, social media can help with that ad budget and do things for your small business that a billboard can’t. Online footwear retailer Zappos as an example of this. Tony Hsieh, CEO of Zappos, actively uses Twitter to communicate with thousands of customers about his brand. Visit www.twitter.com/zappos to follow him. He also encourages his employees to use Twitter.There are more than 400 Zappos employees on Twitter.

At the time of this writing, Zappos on Twitter has just over 15,000 followers. That means that at any given moment, Zappos can instantly send out an update about their company to 15,000 people who are interested in their business – and it costs nothing. Let’s see, if you wanted to reach 15,000 targeted potential customers on radio or television,what do you think that would cost, and could you even measure it?

About 100 west of Boston there’s an Argentina Steakhouse called Caminito. http://www.caminitosteakhouse.com/ Justin Levy runs the restaurant and realizes the power of social media. “Since we are a small restaurant in Northampton, Mass. we don’t have the ability to spend a lot on traditional print marketing. We allocate some funds to newspaper ads, travel books/guides, etc. but I tend to focus my energy on Internet-based advertising, social media, etc.”

That includes having a blog and actively using Twitter. Plus having a MySpace and Facebook page where they can post events,photos, menu items, specials and videos to let customers feel part of the experience.The results for Justin and his steakhouse(in addition to a lower ad spend) is a 20to 30 percent increase in customers since implementing the social media strategy.

There’s Still Time

I rejected social media when it first exploded onto the scene a few years ago. I was like Joe the Baker in my example above.I already had friends in the real world. I didn’t need more online. I rejected Twitter at first, and refused to setup a Facebook profile. I saw them as distractions.

It wasn’t until six months later I realized the enormous error in my judgment. Being social online using social networking tools is more than just having new friends to chat with. It’s about finding effective ways to build your brand and grow your business or your career through the immense power of friends.

You still have time. Don’t be Joe the banker. You can, in minutes, create many social media profiles and begin to help yourself through tough economic times.

Growing in an Unhealthy Climate

Economists, politicians and media types are no longer arguing whether or not the economy is in a recession. Instead most are debating how long it will last.

If recent trends continue, the prognosis is relatively dismal for real estate values, gas prices and the unemployment rate. And as corporations and consumers grow frugal, cutbacks in advertising threaten the vitality of everything from cable operators to newspapers. Internet analysts, wondering about the ripple effect on the industry, offer a variety of opinions. While some think a recession would not have any affect on online advertising and marketing, others feel that it could have a significant impact – negative or positive – on the sector.

Slashed traditional advertising budgets are already apparent. TNS Media Intelligence found that ad spending in the fourth quarter of 2007 declined .1 percent from the fourth quarter of 2006.

But a Direct Marketing Association’s Quarterly Business Review survey in the fourth quarter of 2007 uncovered good news for online marketers: 50 percent said they would increase email marketing, 44 percent would increase database segmentation and 35 percent would increase spending on search engine optimization in 2008. And PQ Media found that spending on alternative media such as social networks, lead generation advertising and consumer-generated media is expected to grow by 20.2 percent in 2008 to $88.24 billion.

These findings reflect a long held belief that there will be a shift of marketing dollars from traditional media to the Web. Some believe this move would protect online companies from feeling the effects of a recession. Standard & Poor’s Internet analyst Andy Liu noted at the company’s 2008 Media Summit that he expects online ad revenues to grow by 20 percent this year – recession or not.

However, not all indicators (or analysts) are so bullish. In March, market researcher eMarketer lowered its estimates for U.S. online advertising market by nearly $2 billion, predicting that it will grow $25.8 billion, as opposed to $27.5 billion, in 2008.

Ability to Measure

Advertisers are shifting online to not only reach their audience, but because Internet advertising costs less and is trackable. Founder of Seer Interactive, Wil Reynolds, predicts a trend where any medium that offers less tracking will lose dollars to areas that offer more accountable results. Effectiveness can be measured by clicks, impressions, registrations and purchases, which are very attractive to bean-counting advertisers.

Brad Waller, vice president of business and affiliate development for AdJungle.com, points out that General Motors, the country’s third largest advertiser, announced it is shifting half of its $3 billion budget into digital and one-to-one marketing within the next three years. He claims this is the beginning of things to come, noting that the market online is growing faster than any other spend.

Founder of FatWallet.com, Tim Storm, says online advertising can be measured but offline initiatives, like direct mail, can’t be tracked. Online campaigns offer ROI down to the penny – so advertisers don’t wonder where their budgets were spent.

Paying for Performance

Even more appealing during belt-tightening days is performance marketing, where advertisers only have to pay when there is an action that is commissionable or measurable. Storm says he thinks there will be a shift of spending toward performance marketing, as opposed to advertising on a CPM basis. He doesn’t think Internet advertising will be affected by the recession as long as advertisers don’t look at the spending as a budgeted line item – which tips the scales in favor of performance marketing.

Online marketing consultant Sam Harrelson agrees that CPM big budget ad buys will suffer in 2008 and performance marketing will continue to increase its reach, effectiveness and popularity.

In fact, the Interactive Advertising Bureau statistics for the first half of 2007 indicate that "CPM deals" were replaced by "performance deals" as the leading pricing model for Internet advertising. In 2006, CPM deals comprised 48 percent of the overall total while performance deals (such as CPA) were at 46 percent. However, in 2007, performance deals made up 50 percent of deals while CPM fell to 45 percent.

There is evidence that performance marketing initiatives such as paid search are becoming more popular. OneUpWeb.com found that 48 percent of all U.S. online advertising spending in 2007 went toward paid search, and predictions are even higher for 2008.

Paid Search

Although paid search is considered more resistant to cuts than other advertising because it’s performance based, some think it is not immune to decreased spending. Advertisers could reason that people are less likely to surf the Internet for potential purchases during an economic downturn.

In March, comScore, the Internet ratings firm, reported that Google’s paid clicks fell .3 percent between January 2007 and January 2008, even as the number of searches rose 40 percent in the same period. As recently as April, Google’s ad clicks were rising at a 60 percent clip.

The industry panicked that Google, considered a bellwether for the overall sector, was being affected by the cyclical economic forces of the overall market.

It’s possible that Google is tightening the reins on clicks to combat click fraud and generate better clicks in general. And Hitwise found that the percentage of traffic going from Google to retail shopping sites is actually increasing. Since the bulk of paid search advertising is shopping related, the Hitwise data draws a different conclusion than the comScore data.

But cost per click has its challenges – there continues to be big inflation numbers. As more folks jump in, the costs get higher.

It’s possible that there won’t be less activity in paid search but there might be less money spent on bids. Seer Interactive’s Reynolds offers an example: the same number of marketers could bid on a term like "mortgage" but spend less money doing it. So if in the past a marketer paid $1,000 for 10 leads that convert, today that $1,000 dollars would only buy five leads.

Reynolds doesn’t believe this will cause marketers to abandon paid search, but thinks it could cause them to lower their bid to spend $750 for those five bids – reasoning that "smart marketers always will spend up until they max out their ROI." Interestingly enough, Reynolds says the saved $250 isn’t likely to go to buy radio or display ads. From what he has seen, people looking to rein in their paid search move into SEO as their next step.

Reynolds has seen shopping and e-commerce people moving from paid to SEO – and believes the affiliate space might have a good fallout as well because the closer a marketing channel is tied to results, the easier it will be for managers to get funding for it.

Survival of the Fittest

Google has boomed over the past few years because of search engine marketing – so it is possible that search engines will fare well during an economic downturn if paid search continues to be popular. Yahoo, Google, MSN and AOL have worked to become one-stop shops for advertisers by building up ad networks with targeting and tracking capabilities. David Hallerman, eMarketer senior analyst, notes that when "the portal is both destination and network, perhaps advertisers can get all they need without straying – at least that’s what the Big Four hope for."

Many niche sites have flourished while they get better at improving targeting to meet the needs of their clients. Reynolds says that vertical sites, if they can show ROI for marketers (even with less traffic) will start to get dollars if markets like Google become to expensive to play in.

Specific verticals that offer people a way out of a bad situation such as employment sites, job training sites, and mortgage refinance loans and debt consolidation sites like LowerMyBills, could become more in demand. Also well positioned are sites that offer people efficiencies in a weak economy such as comparison shopping engines and coupon sites.

FatWallet’s Storm believes that coupon sites could fare well this year – he points out that some of FatWallet’s best years were during the last downturn of 2001 and 2002. When the economy is in a slump, people gravitate towards being more cost conscious. For example, Storm has read reports that the craft industry does well because people make their own quilts – it is both entertainment and fulfills a need.

So far this year, Storm has not noticed any spending shifts – booms or drop offs – for FatWallet. Electronics and technology continue to be FatWallet’s strong categories as do other categories like Health & Beauty and eBay.

Insurance is another sector well positioned to weather an economic storm. Jon Kelly, president of SureHits, an ad network for insurance and loans, thinks it could increase because consumers are adopting the Internet as a primary means of buying insurance. Even technology laggards, who in the past surfed the Internet to find the best quote but picked up the phone to complete the transaction, are purchasing through e-commerce.

Another reason for Kelly’s bullish prognosis: "When the economy turns rough, people start looking for the best deals on insurance and they turn to the Web to do it." Kelly explains that auto and home insurance look particularly strong over the next few years because consumer demand for them does not drop in a recession – car insurance is mandated by law and home insurance is mandated by mortgage companies.

Kelly predicts that there will be increased Internet spending by insurance companies as the battleground for customers moves online. He thinks the areas where they will increase spending are paid search and affiliate and ad networks with a strong vertical focus like IndustryBrains, Quigo and SureHits Ad Network.

AdJungle’s Waller has seen record growth on its classifieds site, EPage – with 30 percent growth in revenue with January 2008 over January 2007 and an increase in the average revenue per user. He has seen growth in areas that want to get rid of excess inventory and says that in a tight market, people buy more items used than new. Listings for home-based businesses that offer ways to earn extra income are popular – like "how to make money from your laptop."

EPage makes money from advertisers paying for more exposure, as opposed to getting a cut of the purchase price. Advertisers pay to have their ad ranked higher on the page – when advertisers have success; they are willing to pay more.

Conventional wisdom would suggest that real estate would be hard hit in a recession. But Michael Stark, the founder and president of PostYourProperty.com, says that just because the housing market is tanking doesn’t mean there will be a negative effect on the online real estate vertical.

His real estate sites focus on the for-sale-by-owner (FSBO) market, which accounts for approximately 15 percent of U.S. real estate and says that traffic to his sites continues to grow despite the recession because of the focus on enabling the "do it yourself " FSBO movement. In fact, the crumbling prices, slow sales and a credit crunch in 2008 will make the FSBO option attractive to an increasing number of buyers and sellers.

Foreclosures are good for Stark’s sites because more postings mean more inventory, which means more advertising for his sites. Advertisers on Stark’s sites include people trying to sell their house, brokers, agents and lenders looking for new business.

Waller says that lead generation companies like Epic Advertising (formerly Azoogle), XY7, CPA Empire and Leadpiles could do well because people are buying and selling leads for real estate.

Performance marketers should feel confident that their industry is well positioned to weather a recession although things could get a bit tougher. Affiliates might get scrutinized more heavily – marketers don’t want to pay affiliate commissions if they find evidence that a paid search campaign created the sale. "Many marketers are estimating the ‘influence’ of their affiliates and zeroing out commission when other marketing campaigns are involved," Lee Gientke writes on ReveNews.com.

Some industry watchers say that marketing will move more in-house as knowledge of how to do search or affiliate marketing continues to spread out into wider communities instead of just specialized networks or agencies.

Affiliates are Bullish

With the U.S. dollar sinking to new lows, oil and gold attaining new heights, and both food and gasoline prices rising quickly: corporate CEO’s, the media and government officials finally acknowledged what millions have seen coming for years – the U.S. economy is in BIG trouble – and the future looks bleak.

As expected, those hit hardest by the current downturn are working people. During uncertain financial times, people without jobs don’t spend money, while those who do have jobs tend to cut back on discretionary spending and postpone larger purchases, which doesn’t sound like a happy prospect for those of us who want to sell to them.

However, there are many ways for affiliates to survive and even thrive during a recession and diversification is typically the first key to continued prosperity. Fortunately for most affiliate marketers, making the leap from promoting luxury items to recession-proof products that consumers use regardless of their economic status or level of income is fairly simple. We can add new products to our current mix or start pumping out content on a new domain, join some affiliate programs, ramp up the marketing and be in a new business in relatively short order.

So, if your commissions from the sale of cars, diamonds and fur coats have been falling off of late, here area number of recession-proof product and service suggestions for your consideration.

Job Search: Although the employment market is perpetual, during a tough economy, mergers, acquisitions and layoffs all inevitably lead to more job seekers. Point your visitors to career websites such as Monster.com where they’ll find millions of job postings along with general career advice and help to prepare for interviews. Monster.com pays a buck for each new resume posted and 50 cents for each new My Monster account created.

Resume Preparation Services: As many of your job-seeking visitors will find it difficult to get an interview because they don’t have experience or their resume is out-of-date, you should also tell them how they will benefit by using a service to beef up their resume. Some services, such as Employment911.com, have market-specific offerings such as military transition resumes, a niche which CEO Frederic Thom reports was marked by a sudden increase in February. Employment911.com pays commissions of 12.5 percent to 25 percent and their resume writing package prices top out at $357.90 for executive level positions. ResumeEdge.com, which pays 12 percent and powers the resume writing services of The Wall Street Journal, Yahoo, HotJobs, and The U.S. Air Force is another option to consider.

Education: After all the stops have been pulled out and the job search still fails to pan out, many people choose to stay in school or return to school to beef up their education and subsequent chances for finding a job. Companies with affiliate programs in the education field include those that help with college and university placements as well as scholarship search, which provides direct assistance to students with college education funding. Online training to improve basic computer skills or those which are geared toward technical certifications like Microsoft, Oracle, Cisco and Novell as is offered through TechnieCert.com (ShareASale) are becoming increasingly popular. You might also consider promoting language-learning programs such as Rosetta Stone (available through CJ) for those of your visitors who decide to flee the country in search of brighter economic prospects.

Business Opportunities: While there is never any shortage of those seeking business opportunities, an increasing unemployment rate makes this market even more potentially lucrative, especially for those who have had business success and can teach others how business is done. In addition to selling instructional information products in the form of ebooks, podcasts, webinars and conferences to new entrepreneurs; affiliates can make bank promoting productivity and marketing tools as well as office supplies. Almost every business needs business cards and PsPrint, a CJ merchant that pays 15 percent commissions, has a staggering 3-month EPC of $521.15. When individuals eventually decide to form their own business and incorporate, you can promote American Incorporators $299.00 incorporation packages for a tidy 34 percent commission.

Tax Preparation and Filing Services:Economic slowdown or not, the tax man cometh every year and helping your visitors find additional spending money through deductions can be very lucrative. With more than 138 million taxpayers filing taxes online in 2007, industry experts expect 2008 to be the most popular year for filing federal income tax online – until the 2009 tax season. Several IRS authorized merchants can be found at Commission Junction, including TurboTax, H&R Block and Tax Brain, the latter of which pays a 30 percent commission on all their products, including a premium tax preparation service which costs $69.95.

Health Care: Workers that have just lost their employer-sponsored health plans will need to buy health insurance while they have no preexisting conditions and are still eligible. When you partner with eHealthInsurance.com, which has relationships established with over 160 health insurance carriers, you’ll earn $40.00 for each health insurance application submitted for an individual or family. Assurant Health pays up to $78.00 per lead and both Commission Junction merchants have 120-day cookies.

Budgeting and Debt Reduction:Helping folks reduce or consolidate their debt load and save money is always appreciated and the subject matter is relevant to almost any niche in which you are currently working. Partner with merchants that offer secured credit cards, debt consolidation services and help with foreclosures; and consider converting your weekly newsletter to a daily “Money-Saving Tips” or “Coupons and Deals” broadcast to gain additional traffic and branding for your site.

Entertainment and Vices: While the wise eliminate frivolous expenses during tough times, those less disciplined tend to seek more escape from reality through various forms of entertainment. So, if you were ever inclined to go the porn route, now might be the time. If that holds no appeal for you, try adding sports, concert, and theater tickets to your mix. TicketsNow.com (CJ) pays 7 percent commissions on gross transactions that are typically in the $450.00 range.

While the suggested items above don’t represent an exhaustive list of recession-proof products and services, it should get you thinking about options that will at least keep your affiliate business profitable during the recession. So, ignore the purveyors of doom and gloom. There are always ways to thrive during the hard times, if you are perceptive and swift. Choose to see opportunity and profit where others see only potential for loss and failure and use the recession as a compelling reason to diversify and grow your affiliate business.

Taxing Issues

“I love NY” may be the famous motto of the Big Apple, but as of late, it’s not the mantra of any New York-based affiliates.

That’s because in April New York Governor David Paterson (D-NY) signed into law the state’s 2008 – 2009 fiscal year budget that included a provision – initiated last fall by former NY governor Eliot Spitzer – requiring out-of-state Internet retailers to collect sales tax on deliveries made into New York, based solely on a link to a marketer’s website.Called the New York Internet Sales Tax, the law went into effect on June 1, 2008 and is expected to raise $50 million in revenue each year for the state of New York.

The new regulation is causing consternation among the community of online marketers and affiliates. Because the tax laws are complicated and it’s still unclear about the full implications of the New York State Internet Sales tax, many skittish merchants are opting to drop all their New York-based affiliates in an effort to avoid any hassles and taxes. Most U.S. states already require online retailers to collect sales tax if they have a physical presence in the state that the customer is from – it is called nexus. Therefore, if an online retailer has a physical store in New York, or even an office or warehouse, they must collect sales tax from a customer in New York.

However, this new law is broadening the scope of that to say that a business having any affiliate presence in the state of New York is akin to having “an agent or a representative,”thus establishing a physical presence or nexus in New York, which requires taxation.

Merchant Confusion

Prior to the law going into effect, Amazon immediately filed a lawsuit against the State of New York. The online retailer claims the new rules violate the equal protection clause of the constitution because it specifically targets Amazon. “It was carefully crafted to increase state tax revenues by forcing Amazon to collect sales and use taxes,” the complaint says, noting that “state officials have described the statute as the ‘Amazon Tax.'”

Other merchants simply deactivated their affiliates based in New York – many without notice or explanation. Melanie Seery, a New York affiliate, was so outraged by being dropped by merchants that in June she started a blog called NYAffiliateVoice.com to speak out about the taxation issue and its implications for affiliates.

Overstock, which has a large affiliate program that brings in over $100 million annually, was among the first wave of high-profile merchants to unceremoniously drop its NY-based affiliates.

“We had to drop the affiliates because of the risk of not collecting the affiliate tax and then someday having New York win,” Patrick Byrne, CEO, Overstock.com, says. “We would get dinged for that. So we had to drop the affiliates immediately.”

However, Overstock did a quick turnaround and less than a month after deactivating affiliates; they followed Amazon’s lead by filing a suit against New York State.

According Byrne, the Supreme Court has previously ruled – as it related to catalog retailers – that the burden of collecting taxes cannot be put on the out-of-state retailer. “Therefore, I think New York’s law is directly unconstitutional,” Byrne says. “We’re not suing the state for any money. We’re suing to enjoin them from ever acting upon this law, and we’re trying to get the Court to throw out the law.”

He says that decision to seek an injunction is the right, long-term thing to do and that Overstock is putting hundreds of thousands of dollars into this lawsuit. Byrne has suggested that affiliates write a letter to their state legislators claiming that such grassroots campaigns can really make a difference.

Affiliates Take a Stand

That’s what the large community of vocal affiliates on ABestWeb.com is aiming for. Many affiliates at ABW are getting together in New York to examine the issue. At the meeting, to be held on July 28 (after press time), they will discuss the tax issue and talk about obtaining legal services to help better understand the issue and the potential recourses for affiliates. Several ABW affiliates are also participating in a special panel session at the Affiliate Summit East in Boston in mid-August to discuss the issue.

And it’s not just affiliates in New York that are watching this closely. Both affiliates and merchants are concerned that large states seeking to generate additional revenue by collecting similar taxes may follow if New York is successful.

“We just think it’s a bad idea for New York. Additionally, other jurisdictions are going to watch us fight this in New York. Based on how it plays out in the Courts there, they’ll then decide whether or not to go ahead with it as well,” Byrne says.

Affiliate Scott Jangro, CEO of MechMedia, based in Massachusetts, recently gave $250 to a group of New York affiliates to help cover the costs of meeting and legal services.

“I’m not from NY, but these guys are taking it on the chin for the rest of us,” Jangro wrote on his blog. “There’s a lot of money in this industry and I hope that many of us will consider helping out.” You can donate at NYAffiliateVoice.com.

Currently, two Technical Service Bulletins (TSB) related to the law have been released. The latest was issued on the June 30, 2008. The TSB, titled” Additional Information on How Sellers May Rebut the New Presumption Applicable to the Definition of Sales Tax Vendor as Described in TSB-M 08(3)S,” imposes additional requirements that a remote seller must satisfy to rebut the presumption of “vendor” status.

It is no longer sufficient for merchants and networks simply changes the terminology of their contracts with affiliates to include explicate language barring them from activities other than direct linking to websites, according to the Direct Marketing Association’s (DMA) Tax Counsel George Isaacson.

The new TSB says that “each resident representative must submit to the seller, on an annual basis, a signed certification stating that the resident has not engaged in any prohibited solicitation activities in New York State, as described above, at any time during the previous year.”

These activities are listed in the TSB as “distributing flyers, coupons,newsletters, and other printed materials or electronic equivalents; verbal solicitation (e.g., in-personal referrals); initiating telephone calls and sending emails.”

The prior TSB noted that direct marketers could defeat the presumption of nexus if that marketer is not engaged in other solicitation activity on behalf of a company beyond a Web link. “A pure vanilla affiliate marketing arrangement” with only a referral link will be sufficient to defeat the presumption of nexus. Many suggested that networks and vendors simply changed their terms and conditions to reflect this.

Observers say that PPC marketing will not give rise to the presumption of nexus because it is a set fee based on the number of clicks, therefore, falling under the heading of advertising, which is not subject to taxation. Lead generation activities appear to be closer to the definition of advertising under the new law and would not be subject to nexus.

The Networks

Thus far, the networks have mostly been mum – issuing only basic information about the law and instead advising their merchants to seek legal counsel to sort things out. LinkShare held a conference call in conjunction with the DMA to have the DMA’s legal team interpret the regulations. Commission Junction issued a notice to its affiliates, “We are actively monitoring the law and will use reasonable efforts to protect ourselves and our publishers as we deem appropriate. The application of the law is dependent on particular business and factual circumstances, and Commission Junction is not in a position to provide legal and tax advice regarding this law. However, we encourage you to perform the appropriate due diligence as it relates to your business.”

However, ShareASale President and CEO Brian Littleton wrote a little more in depth in his blog, “our first response to this will be to provide this report which will allow merchants to know where they stand regarding the law. Our plan at this time is to treat any case where a merchant wishes to terminate NY affiliates with great care and caution. If a merchant requests to do this, there is little we can do to stop them – but ShareASale will be performing the task so that merchants aren’t accessing information which traditionally is considered private within the network.”

Littleton went on to say, “There is a chance that this plan will not work. My hope is that we can warn merchants that terminating NY is a bad plan – and one that needs rethinking. If our plan doesn’t work – and we end up needing to provide more information to merchants, we may end up having to do so. I say this as a heads up to affiliates because while we don’t like to give out info, we also don’t want to put merchants in a place that makes it difficult to adhere to the laws of their state or others.

We can’t offer legal advice to merchants and/or affiliates regarding these laws. But I can offer my extreme dissatisfaction with the State of NY for their short term thinking and complete disregard for their citizens. I am personally confident that this will all be reversed and I am hopeful that for those affiliates in NY – it comes sooner rather than later.”

Meanwhile, it’s a game of wait-and-see for affiliates and merchants as the legal wheels slowly turn. Many observers say it will be a while before we find out if this law is declared unconstitutional or is upheld and other states begin adopting similar regulations as a means of generating state revenue.

Kristopher B. Jones: The Small-Town Big Man

His speech is peppered with “awesome” and “ready to rock and roll,” as if he were fresh out of high school. He’s only 32 but he feels luck has a lot to do with his good fortune. He took what was basically an idea to sell jam and turned it into a successful online marketing company.

But we’re jumping ahead. Jones is a small-town fellow. He grew up around the quiet northeastern Scranton, Pa., region – in towns with quaint names like Forty Fort and Wilkes-Barre. He still lives in basically the same area where he was raised and headquarters his business not far from those same stomping grounds.

He knew early on that he wanted to be in public service – drawn to the tantalizing returns of politics. After graduating high school in 1994, he got a full scholarship to Villanova University to study experimental psychology in 1998 after graduating from Penn State, but questioned whether he really wanted to be a clinical psychologist.

During that period, his brother Rick called and asked, “What do you think about selling grandma’s Mississippi mud over the Internet?” Jones says while he was the resident computer guru in school and was sitting on a lot of school and credit card debt, he was pretty committed to going to law school. He decided he would finish out his law degree and start this gourmet food business.

Grandma’s Mississippi mud was actually a kind of jelly he had eaten as a kid. He calls it a kind of gourmet dip. He typed the ingredients into the Web and out came the popular Northeast dip called pepper jelly. But Jones didn’t want to sell just another pepper jelly. In the end – and after consulting a friend in the food business – they decided on “Grandma Jones’ Originals Pepper Jam.”

It Started With the Jam

That, Jones says, was when his entrepreneurial spirit came out. He could point to other adventures in his business past – the lawn business he had in school and the 1-900 psychic service he started, even day trading – but they never really made any money.

The pepper jam, on the other hand, had legs. Through contacts in the gourmet food business, it started to get some traction. The business was started in 1999. “My brother was the creative side and he had all these flavors he wanted to do,” Jones says. “It all happened pretty quickly. I was going to do all the marketing. I drove the branding and launched the website called pepperjam.com. We personalized it with pictures and stories.”

Soon they realized in order to get traffic and sales, they needed to rank higher in the search engines. The most obvious way at the time was to cycle in fresh content. So, they then came up with the idea to interview famous chefs and put those up on the site. In the end, they posted interviews with the likes of Paul Prudhomme, Emeril Lagasse and Jorge Bruce, to name just a few.

Bruce sampled the product and loved it. At the time Bruce was looking to hire a consultant to get his brand and other chefs online, Jones said. “I will try to cook with this product,” he told Jones. “He may have thought we had offices when we were really operating out of a kitchen,” said Jones. Bruce suggested QVC. “I went into shock,” says Jones, “and had to put the phone on the bed and take a breath a minute. At the time, he was the highest-grossing chef on QVC.”

The chef interviews were getting a lot of traffic now and the question of how to monetize it all became important. That’s when Jones joined LinkShare and started adding affiliate links (his first check from ValueClick was for something like $37). He was just about to leave for law school and was trying to make money through affiliate marketing when in early 2000, he says he began his marketing journey in earnest. “I still own 50 percent of the gourmet food business,” he said. His brother told him to take the marketing business and he’d handle the product. “I knew that the Net marketing side of this requires work. I just started to build out websites – build out content based on a theme. My first was cookware.”

Also in 2000, he adds, Google came out with AdWords. “I was generating close to $100,000 per month in affiliate profits,” he said. He was doing this while doing his consulting work and serving as law school class president two years in a row.

“Once I had money, I wanted to do something with it,” he says. He put all the cash he had been earning while in school into this single idea – to turn his super-affiliate status into a new kind of marketing business – pepperjam.com. “We got an office. I hired my best friend as COO. We knew we could hire smart, young professionals and could help these businesses that were coming online and had no clue what affiliate marketing was,” Jones says.

Getting Into the Affiliate Game

2003 was the breakout year. Jones didn’t realize the impact his company was having until he went to his first LinkShare symposium (they got invited through Overstock.com). “We went to this event not knowing anybody and thought no one knew who we were,” he says. “My attitude was, ‘I’m a super-affiliate, let me manage your affiliate program.’ We were blown away.” When a merchant rep found out who he was, she hugged him. “You’ve been making us so much money,” she told him and introduced him to a whole bunch of merchants. “We were very well received,” he says.

With that boost in his pocket, Jones parlayed that excitement into a new small office and started to hire employees. From 2003 to 2005 he built his client list. From 2005 on, he says, it took on a life of its own. In 2006, the company was about 28 employees. Then pepperjam made Inc. magazine’s list of the 500 fastest-growing companies in the U.S. It was the only affiliate marketing company on the list. “As a search engine marketing agency, we were one of three with iCrossing and MoreVisibility.” All he could say was, “It was just a big party. We’re pepperjam, we’re in the black and we’re an Inc. 500 company.”

While still nurturing a desire to serve in a public way, he was invited to speak at a conference for the first time in 2004. He’s been hooked ever since and speaks quite often all over the country. It kind of feels like he’s class president all over again.

Somewhere amid all this work, he did manage to get married – to someone who works for the company. He said while his wife, Robyn, and he did attend the same high school, they weren’t pals. One night when home from school for a spell, his COO and he went out for a drink and spied her. They remembered her from high school. Jones sat back and watched his COO walk over and try to flirt with her. Finally, Jones joined them and he said they hit it off right away.

“She kind of asked me out after 60 seconds,” he says, “and here she was talking to my friend for the last 15 minutes; but we’ve pretty much been together ever since.” She wasn’t happy at her other job and Jones asked her to work for Pepperjam.

“I know you don’t want to work for your boyfriend, but I’ll have you work from home and write an employee manual or something. We can have you write out some client case studies,” he remembers telling her. After about a month, she began to come into the office and has been with the company for two years.

Growth Spurt

Jones says there has been a lot of interest to be acquired and from venture capital money. Last year, with about 50 employees “we had to think about crossroads – and decided to focus on our own technology,” he says. The company decided communication in this industry was the problem. “It is difficult to get in touch with your affiliates to admonish or to praise them,” he says. There was a lack of affiliate transparency. “We said, ‘We will tell you who are the key affiliates and can protect your brand.'”

This led to the notion of launching a Pepperjam network. Jones worked and consulted with hundreds of affiliates and merchants to preview the network – robust players such as Affiliate Classroom’s Anik Singal, and super-affiliates Lee Dodd and Jeremy Schoemaker, to name a few.

In January 2008, he launched pepperjamNETWORK. This essentially turns Pepperjam.com into a technology company with exclusive merchants such as luxury brand Judith Leiber, clothier Ben Sherman and Jelly Belly. Jones sees this as a super-transparent network that can be an alternative to the big three – LinkShare, Commission Junction and Performics – as well as an alternative to ShareASale. “We are not going up against the big three networks,” he added. “They are much better financed than us and bigger. There is still only one investor in pepperjam and that is me.”

Jones proudly says pepperjam.com now has about 105 employees in a 13,000 square foot floor of a building in Wilkes-Barre. He has five executives and 15 senior-management-level people. He has divisions now – online media planning and buying, search engine marketing, pepperjamNETWORK and full-time salespeople – their first. In the next 18 months, he predicts 300 employees. But he thinks of everyone as family. His wife is director of affiliate marketing; his bulldog is in the office every day. He doesn’t want it to be a corporate environment – there’s Free-Pizza Fridays, ping pong and “Guitar Hero” on the floor. In early 2007, they launched a corporate blog where a randomly chosen employee is given less than 30 seconds’ advance notice to come up with a presentation to be videoed and then posted to the site (some can be found on YouTube; some featuring Roxy the bulldog).

Amid all this success, Jones was approached in the early summer of 2007 by publisher Wiley to write a book on SEO and search marketing. “Search Engine Optimization: Your Visual Blueprintâ„¢ to Effective Internet Marketing” will be published this spring. “In fact,” he said, “I had always dreamed of writing a book in college. I always thought, how can you make a difference? I can join the clergy, be a great father or write a book.”

If that isn’t enough on his plate, Jones and his wife are expecting their first child in August. That’s not going to slow him down. “We are very focused on building out what we are creating,” he says. “We have a bunch of families now; we’re not just a small family anymore. I’ve always been the kind of person that believes that my time hasn’t come yet. I want to focus on being a great father, and from a business standpoint we want to become a great affiliate network. I want to see where we take it.”

While the future seems like a busy one, Jones notes that “pepperjam has just started.”

Rexanne Mancini: The Free Thinker

Mancini says she thought the Internet was the wave of the future and wanted a way to connect and be part of it. She waited to get on the Internet until after her younger daughter’s third birthday because she had the feeling that once she got on it she would never get off. And she was right.

Although she knew she wanted to sell something online, she had no idea what. She says she just had a feeling that “the Internet was going to be the place to be.”

In the beginning, Mancini wanted to reach out to other parents about her unique parenting philosophy, so she covered topics ranging from spanking to setting limits for children to self-esteem issues. As she built a community with returning visitors, her site gained traffic and she won several awards, including AOL’s Page of the Week.

Early on, she included a link to Amazon as part of their early affiliate program, Amazon Associates, which is how she discovered affiliate marketing. Her first sale was an Amazon book that she recommended, called Parents Please Don’t Sit on Your Kids. Although Amazon helped her figure out the business model of affiliate marketing, her beginning days were filled with trial and error.

She was aware of the wants and needs of parents because she was a stay-at-home mom. Mancini wrote about issues that came up in her day-to-day life and then researched retailers that sold merchandise appropriate to the topic. She tried merchants she thought would make sense for a family-oriented site like hers, such as Disney and Hallmark, but found those did not convert.

“I learned about affiliate marketing by the seat of my pants at first,” Mancini says. She didn’t start to make “real” money until she found and joined the online marketing forum ABestWeb.com. By participating in the various discussions on the forum and reading advice from others, she learned why she wasn’t making money and how “to turn traffic into gold.” In 1998, she built out her website into sections to offer holiday items for Halloween and Christmas.

But then in 2000, Mancini decided to take a full-time job and began working for an online traffic school. After a few months, another Internet company doing online video made her a much better offer. Even though she was managing everything from shipping to customer service, the company allowed her to work from home. That freedom gave her time to build out her own site.

Mancini says that both companies were very successful online, and having the firsthand opportunity to “see the power of Internet marketing from different angles was very exciting.”

Still, Mancini realized if she devoted the huge amount of energy she was putting into the online video company into her own effort, she could really be successful. That’s when she quit her job and jumped into affiliate marketing full time. Leaving her day job wasn’t her goal at the time, but when she began to make more money with affiliate marketing, she knew she had to concentrate on her own business.

Around that time, she decided to get her own domain in order to start a newsletter. Because Mancini had a somewhat unusual first name, she thought that might work well for building a brand. Even though the domain name had nothing in it to indicate that it was a family site, Mancini went with her instincts and bought www.Rexanne.com.

According to Mancini, the newsletter turned out to be an instrumental way for her to build community and keep people coming back. Currently, her site continues to get a surge in traffic when she sends out a newsletter. She says it is a great way to keep her in front of her visitors. One successful tactic she uses is to introduce a theme in the newsletter and then carry that same topic over to the forums on her website for people to debate.

Against the Grain

Not one to shy away from controversy, Mancini writes about topics not typically in line with mainstream thinking, and she’s not afraid to take a strong position on issues. She often ends up being “quite controversial without trying to be.”

When she writes about topics like immunizations, fluoride in toothpaste and talking to your kids about sex, debates among her audience ensue. For example, she was surprised to find out that 64 percent of her audience believes in spanking, because to her it seems so archaic. “It was shocking to be in the minority.”

Mancini also found out that her beliefs about childhood vaccinations and inoculations are the minority. Her father was a holistic doctor who started a movement against the polio vaccine and was instrumental in making sure that parents know their rights regarding mandatory inoculations in schools. She believes that vaccines can damage kids’ immune systems and thinks it’s crazy for infants to be exposed to an onslaught of disease. She feels the same about circumcision – infants should not be exposed to that type of pain when they don’t understand it.

Many of her ideas for what to write about stem from what to her seems like common sense. Mancini says she didn’t know anything about children before having her own – except that she had absolute beliefs about parenting and raising a sane, healthy child. “I found myself wanting to be the type of mother I wish I had had and wanting to protect my kids from a lot of mainstream beliefs and parenting advice that I felt was wrong and dangerous.” Her strongest belief is that children need to be loved and cherished and filled with positive self-images.

La Dolce Vita

Mancini’s own childhood was unique. She was born and raised in Los Angeles and lived there until she was 10 years old when her family moved to Rome, Italy. Mancini stayed in Rome for more than a decade before she returned home to the States at 21. She likes to embrace the spirit of the Roman culture – she loves life and thinks it should be enjoyed. One of Mancini’s mottos is that life is supposed to be fun and she doesn’t like to do something unless it is fun.

Her positive outlook and sunny disposition transcends to all aspects of her life. She lives with her two daughters, Justice, 19 years old, and Liberty, 13; Frankie the dog; and her cats, Holiday and Sage, in Studio City in the San Fernando Valley. She loves living in Los Angeles because of the weather, people and the opportunities that it offers.

Although Mancini loves her affiliate marketing job, she also has a passion for music, and sometimes freelances as a music supervisor for films and television. She’s careful only to take on music jobs that allow her to do some of the work at home so that she can keep up with her sites. It’s the creative process behind fitting the perfect music with a film that she loves and she says her specialty is finding unpublished songs and building a soundtrack of great unknown music. Before she started doing music supervision, she ran a music publishing and production company where she discovered new artists and songs for current recording artists.

In addition, she’s had a small acting role in the 2004 film, “Yard Sale.”

Her love of creativity and freedom makes her well-suited for affiliate marketing. She has also made lots of friends and enjoys the camaraderie of the affiliate marketing community. She’s a vocal and active poster on ABestWeb.com and enjoys friendships with many others involved in the forum. She counts many ABWers as close friends and some she considers her family. She’s also forged relationships through conferences and events like the Affiliate Summit and ShareASale’s annual Think Tank gathering of affiliates and merchants, which she “wouldn’t think about missing.”

Mancini is a big fan of ShareASale because she finds the network to be “honest and honorable.” It doesn’t hurt that ShareASale’s merchants also convert well on her site. She really noticed the difference in her traffic when she switched to ShareASale. Mancini doesn’t work much with LinkShare anymore because she claims she did not have much success with the merchants converting for her. AvantLink is her No. 2 choice in networks.

Secret to Her Success

For Mancini, one of the most important traits needed by an affiliate marketer is the ability to write well. Whether it is ad copy or telling a story – she says marketers need to be able to relay information effectively. She’s been successful at starting and growing a parenting site, even though there is so much competition online, because she has a unique voice. That has earned her a loyal audience that continues to come to her site for advice on issues like baby showers, teacher appreciation, how to care for infants, and birthdays. She matches these pages with affiliate links.

She says the products that sell the best for her today are Halloween costumes and holiday items for Christmas. Although she knows that apparel is a big online seller, she has not yet found a niche that works well for her, and she also has not had much success with learning products. Among her best sellers are Barbies, because they never seem to go out of style and girls love them – and grandparents and parents love to buy them.

Rexanne.com has more than 500 pages, and 10,000 visitors per day. The site gets up to 50,000 page views per day during the height of major holidays. Mancini allows advertising on most pages in the form of text links or buttons and banners. Because she has years of experience with affiliate programs, she understands what works and sells on her site and how and when to best reach visitors, and enjoys working with advertisers to help them achieve success on her site.

Because she loves to help people and finds it very satisfying, her site features parenting articles on topics like school overplacement, sex offender laws, and routines and schedules for children. Two years ago, she added forums to her site and found that they are a great way to build community. Topics include family photo albums, humor, prayer requests, and parenting issues like pregnancy and adolescence.

One area of her website she is building out is devoted to raising young ladies, and it focuses on topics such as how to be articulate, and improve appearance, confidence and grooming. However, Mancini points out that she doesn’t recommend any products or services she doesn’t believe in. For example, she will not promote an acne product if she doesn’t think it works.

Her honesty and straightforward attitude is another reason her site is successful, she believes. It’s a comfortable place for parents because she is a real person and not a corporation that is pushing products or an agenda on them.

Despite her Roman upbringing, Mancini is a Buddhist. The Buddhist philosophy plays a big role in her outlook on raising a child with kindness and compassion. Her signature line in forum postings is “loving everyone’s child creates magic.” She is truly caring about the world’s children and believes that adults should be open and honest with them. She sends her kids to private Catholic high school because it is a blue-ribbon school close to where she lives, but talks with them after school regarding what they learn philosophically to make sure it is in step with her beliefs.

In the future, Mancini plans to follow her heart into one of her other passions – and start a separate food and cooking site. She already has a separate section of her site devoted to recipes and gourmet cooking as well as a forum devoted to topics where users can exchange recipes. Enjoying food as well as family is definitely in step with her life philosophy.