No Check, Please

Whether it is for spring to begin, for Godot or for a commission check, no one likes waiting.

The 30 to 90 days that affiliates – especially those outside the U.S. – must wait for commission checks to arrive can seem like a lifetime, and waiting in line at the bank to cash it is so 20th century.

While merchants might not be as anxious to see the money leave their accounts, replacing lost checks and answering calls about payments wastes time and money, and paper leaves an expensive trail. For recipients, being paid by check requires a trip to the bank and then waiting (there’s that word again) 24 hours or more for the check to clear.

Paper checks are also permanent – a discrepancy in the amount must be resolved by another check, or possibly returning the original draft. When merchants are issuing dozens or hundreds of checks per month, the cost of resolving disputed checks can pile up in a hurry. "Receiving a check is one of the more inconvenient payment methods," says Ron Hynes, vice president of product development of Prepaid for the Americas at MasterCard Worldwide.

Enter the electronic payment. No sitting by the window looking for a delivery person, currency exchange fees or checks that disappear into the ether. The other advantages of electronic payments – including faster processing, greater accuracy and lower transaction fees – all but guarantee that the paper check will soon become an endangered species in the online marketing space.

For the issuing party, there’s the printing (where errors occasionally happen), verifying and signing of the drafts and the stuffing of envelopes – all time-consuming tasks. Direct deposit to a recipient’s bank account is the most popular form of electronic payment, and it is increasingly being used for business-to-business transactions. B2B automated clearing house (ACH) payments grew by 10.9 percent between 2005 and 2006 to 2.3 billion transactions, according the Electronic Payments Association.

Alternative electronic payments that do not require a bank account for deposits are also on the rise, with services including PayPal and PaidByCash becoming commonly accepted methods of payment. In all, electronic payments represent more than 10 percent of online commerce transactions, and similar technology is being applied to B2B financial transactions. Adding to their attractiveness is their "green" quality, as eliminating paper checks saves trees, while fewer trips to the bank means less time behind the wheel.

Electronic payments have grown more rapidly in the consumer arena, but B2B is catching up, according to Edward Kountz, a senior analyst at JupiterResearch. "There’s more pent-up demand on the B2B side" of electronic payments, Kountz says. The lack of a unified payment standard has held back adoption, but more businesses are moving to paying electronically for the same reasons as companies accepting electronic payments – "to eliminate friction," he says.

Catching On With Networks

Performance networks are moving to electronic payments to eliminate the costs and administrative hassles of paying with paper. DoubleClick Performics began paying affiliates electronically through direct deposit in 2001, according to Ed Fleming, the company’s finance manager. DoubleClick Performics developed software that is integrated with its reporting and accounting system to streamline generating direct deposit payments. "It costs us about half the price of a stamp to process" a direct deposit payment, he says.

Currently DoubleClick Performics’ payments are split evenly between checks and electronic deposits, Fleming says. Affiliates that generate the most revenue are the most likely to participate in direct deposit. Fleming estimates that 90 percent of commission dollars are sent out electronically.

DoubleClick Performics regularly contacts affiliates to recruit more to accept being paid electronically, but some still prefer to be paid by check. Affiliates may decline to participate in direct deposit because they fear identity theft. "They don’t want to give out their banking information," Fleming says. DoubleClick Performics has had internal discussions about offering alternative electronic payment options, but there has been "no outcry or huge demand" from affiliates, according to Fleming.

Commission Junction currently offers direct deposit and is evaluating offering PayPal as an electronic payment option for affiliates, according to Dave Osman, the company’s vice president of Client Services. "There doesn’t seem to be a clear leader" in B2B electronic payments, he says. While electronic payments would save the company, "Our desire to eliminate [checks] is based on customer needs, not cost," Osman says.

LinkShare recently announced a new payment plan for publishers, which pays them weekly from the first dollar earned. By moving to a weekly payment schedule, LinkShare reduces publishers’ wait time to receive commissions and doubles the number of paydays. The new plan intends to help publishers improve their cash flow so they can invest resources in their growing businesses. LinkShare officials declined to comment for this article about its payment options.

PayPal, the eBay company that has popularized online funds transfers in the consumer realm, has developed software called MassPay for automating the processing of electronic B2B payments. MassPay can be integrated into payroll and reporting programs through a free application programming interface (API), according to Michael Oldenburg, Associate Manager of Corporate Communications for PayPal. T here are now 18 affiliate software applications that incorporate MassPay, including Affiliate Guerilla, AffiliateShop and MyAffiliateProgram.

Transaction fees for MassPay are up to 2 percent of the value of the transaction to a maximum of $1 per transaction and are paid by the issuing party, according to Oldenburg. Money can be transferred without cost from the online account to a PayPal debit card for off-line spending, he says.

Alternative Payment Options

As an alternative to direct deposit, networks are beginning to roll out debit cards that are linked to online accounts and accept electronic transfers. These cards, also known as "prepaid," "stored value," "reloadable," or "payroll" cards, do not require affiliates to provide bank account information – only a valid address is needed to initiate an account.

Prepaid cards have the same efficiencies as direct deposit without requiring a complex sign-up process, MasterCard’s Hynes says. Prepaid cards enable companies to eliminate commission checks altogether when used in combination with direct deposit, says Hynes, which works with banks and payment processing companies to distribute MasterCard-branded cards.

Payment companies Payoneer and Ecount as well as network Axill offer prepaid card services that have no start-up fees to the network, and the cards are free for the affiliates.

These cards offer the security of gift cards (if you lose the card there’s no access to a bank account) with the added benefit of third parties, such as networks being able to deposit funds electronically. Payoneer, of New York, offers MasterCard debit cards that can be used for shopping or to get cash through an ATM, according to Yuval Tal, CEO of Payoneer.

Although the cards are free to affiliates, there are fees of up to $2 for withdrawing funds through an ATM. Affiliates who are part-time workers and use commissions as discretionary income can find it advantageous to separate their earnings from their primary bank accounts.

Just as with direct deposit, the funds are available the same day of the funds transfers, Tal says. However, if a balance is kept on the card at the end of the month, Payoneer charges a fee. While paying a fee for someone to hold onto your deposit might seem counterintuitive, Tal says that the cost of tracking and administering held-over balances is more than any interest the company could make.

Electronic Payment Options

Merchants looking to accelerate their payment processing while eliminating the cost of paper and accounting hassles have several options for going electronic. Transaction fees vary to a maximum of a few dollars per transaction, but they are all superior to the cost of paper checks.

Direct Deposit It’s easy, universally understood and safe. However, it requires validating an affiliate’s bank account number. Finding international banks to participate can be costly and time-consuming.

PayPal Many affiliates already have existing accounts so they can be very comfortable in getting on board. Little to no information is required to recruit affiliates, and PayPal can pay out in 17 currencies.

Prepaid Debit Cards Ecount and Payoneer, along with many banks backed by Visa or Mastercard, offer cards linked to online accounts. With a minimal of software integration, publishers can issue payments from within their affiliate software. Affiliates can get cash through ATMs using a card with the network’s branding.

Affiliates who set up a Payoneer account can also direct funds from any network, even if Payoneer does not have a relationship with the network, according to Tal. Each Payoneer account includes a routing number that can be used for direct deposit, similar to a brick-and-mortar bank. Affiliates can also mail endorsed checks from Google, and Payoneer will deposit the funds into their debit account, Tal says.

Debit cards can be set up so that the networks pay most or all of the transaction fees. Tal says the per-transaction fee depends on the volume of funds that the network processes. Networks that use Payoneer include AmieStreet, ROI Rocket and JoeBucks. Gary McNelly, CEO of JoeBucks, a health and beauty affiliate network, chose Payoneer because the transaction fees are less expensive than implementing PayPal. Integrating Payoneer into his reporting system required just one hour of technical staff time, he says.

Ecount of Conshohocken, Pa., offers electronic payment systems that can be used by networks to compensate affiliates and for affiliates to offer rebates to consumers with minimal administrative costs. Jay Levin, senior vice president of consumer payments at Ecount, says companies can build loyalty by offering MasterCard debit cards with their branding. "Online marketers can be tough to get off-line branding," Levin says. Offering a branded card "will give them that viral feel." As an added benefit, affiliates that work with several networks are more likely to remember and positively view a network if the logo is on a debit card that they use for discretionary income.

Ecount requires a database or XML file from the network that can be submitted via FTP or email to generate electronic payments. The company creates a custom-branded website that cardholders access to check their account balances and payments.

Ecount’s debit cards can also be used as periodic rebates for signing up for a service, Levin says. Wireless phone carriers and cable companies have issued debit cards to new customers as an incentive for signing up. Part of the cost of a new phone or cable box is returned to the customer via monthly payments to a branded card, which builds consumer loyalty at a lower cost than issuing paper checks, according to Levin.

Axill, an international network located in Piscataway, N.J., has been aggressive in pursuing the expediency of electronic affiliate payouts. The company, which is a subsidiary of online marketer Northgate Technologies of India, offers same-day payouts to affiliates who sign up for the company’s Visa debit cards. However, same-day payouts are limited to affiliates that accrue a minimum of $25 in commissions. As with other debit cards, funds can be withdrawn at ATMs from the Axill-branded cards.

International Payment Options

Paying affiliates outside of the U.S. is often costly in transaction or currency exchange fees, and affiliates who are paid by check do not have immediate access to funds. Wire transfers can cost up to $50 each, and checks from U.S. banks can take up to a month to clear out of the country – if affiliates can find a local bank willing to cash them. Recipients living outside the U.S. may also be required to pay additional fees to exchange U.S. dollars for their local currency.

DoubleClick Performics’ Fleming says making payments to foreign banks "is by far the biggest issue" in using direct deposit. The fees (associated with foreign bank transfers) "are a drawback for using electronic payments" outside of the United States, he says.

PayPal’s MassPay enables publishers to issue payments in 17 currencies to 190 countries, with transaction fees of 30 cents each plus up to 2.9 percent of the balance, according to Oldenburg. A single batch of up to 250 payments can handle multiple currencies.

Since approximately 98 percent of his affiliates are outside of the U.S., JoeBucks’ McNelly says minimizing the cost and complexity of international payments was a must. Most of his new affiliates in India, Russia and Asia choose to be paid via a Payoneer account, and they like being notified by email of a funds transfer, he says. "We haven’t had many complaints [about using Payoneer], which is unusual, because [affiliates] complain about everything," he says.

Ecount can issue electronic payments to only U.S. and Canadian residents and will add three European markets in 2008.

Payment methods will continue to evolve with technology as merchants and online marketers look for ways to create efficiencies.

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.”

Looking for a Few Good Affiliates

Linda Woods, CEO of PartnerCentric, an outsourced affiliate program management group, says that affiliate recruitment is the hardest thing affiliate managers have to do.

“There is no software that spits the names of affiliates out,” she says, adding that there is no easy way around the arduous process of finding, meeting and building a relationship with the appropriate affiliates.

The process is time-consuming and multifaceted, and the AffStat 2007 Report confirms that recruiting is definitely an issue for affiliate managers. Nearly one-third of respondents said their biggest challenge is recruiting new affiliates. And even when affiliate managers do find the right affiliates, it does not mean they will join or implement the program actively.

When researching affiliates for their programs, managers should apply common sense regarding the products’ audience and industry. For example, Woods says that an affiliate manager for a high-fashion merchant should not look for coupon or discount affiliates (because they can cheapen the brand). Instead she suggests they look to loyalty/incentive sites, such as MyPoints or UPromise, which do well with big brands.

However, loyalty affiliates are a hotly debated topic in the industry. While some affiliate managers find them useful in helping with repeat customers, others question some of their practices. Many claim they often override or subvert other affiliates’ IDs, which results in affiliates not being credited for sales, commissions and leads.

The conventional wisdom behind recruiting affiliates has been that merchants should focus on the top-performing affiliates that fall within three concentrated categories: incentive/loyalty shopping, coupon/deal sites and search. For this reason, there are top-heavy programs, with a small group of affiliates representing a huge majority of traffic.

Unconventional Wisdom

But David Delisle, principal of The Partner Maker, a contact management and recruitment system developed specifically for the online marketing community, believes the “focus on the top affiliates” approach has done more harm than good for affiliate marketing. That’s because top producers are continuing to break away from being compensated as CPA affiliates (on pure revenue share). These affiliates are compensated for access to their audience, which consists mostly of repeat customers.

The result is that affiliates like eBates, Upromise and MyPoints look and act more like media companies than affiliates, Delisle explains. If merchants are interested in new-customer acquisition, they should be weary of these types of affiliates.

Delisle points out that when merchants focus only on the top-producing affiliates, they are ignoring the rest of the Web, and recommends marketers shift gears and pursue smaller affiliates in order to tap into the long tail.

The amount of smaller affiliates is positioned to grow, because today virtually anyone who uses the Web has a means to become an affiliate, with tools like PopShops – a product catalog “research tool” where affiliates can find relevant products to their niche. It allows an element of discovery based more on relevant inventory to an affiliate’s niche and less on criteria such as commission structure.

Angel Djambazov, marketing and business development manager of PopShops, says that an affiliate manager can use their PopShops product catalog as a recruitment tool to gain new niche affiliates by seeing the activity within the tool set among certain products.

The emergence of social networks offers another way for affiliate managers to recruit affiliates who are ambassadors of their brand. CEO of Molander & Associates Jeff Molander says This- Next and Stylehive are social networks that focus on the discovery and sharing of new items and offer marketers an upside that is “tremendous and untapped.”

Molander says marketers need to understand some products work better than others for social media strategies because they are natural fits for the “word of mouth” or “wisdom of crowds” models. For example, Wine.com’s community site works well because people buy wine using recommendations, and Patagonia’s community site is effective for its “highly conscious” consumers. But for a retailer like Gap, a social networking model could be less compelling, Molander explains.

Networks as Necessity

Another way to find affiliates for a program is through networks such as Commission Junction, LinkShare and ShareASale, because the networks can offer exposure to lots of affiliates and provide a wide reach.

But PartnerCentric’s Woods points out that “reach” is a misleading word – “what they have is a pool of affiliates, which is better than nothing.” Woods says most inexperienced managers rely on networks to find affiliates, but there are problems with this strategy. For one, some networks only promote new programs in front of affiliates one time, such as in a newsletter mention. The rest of the time the program is simply listed as a text link within a category.

Another problem is that networks list programs by performance – so a new program is ranked at the bottom because there is no performance data, such as the earnings per click (EPC), until the data shows up, which can take up to three months. If an affiliate is choosing a new program from a category, they will select the one that offers the most potential.

Linda Buquet, president of 5 Star Affiliates, an affiliate marketing consultancy, says another consideration is the 95/5 rule, which means that only 5 percent of the affiliates pulled from a network will be productive and active. And once these affiliates are recruited, to a large degree, they still require hands-on personal contact.

Affiliate managers cannot be dependent on networks, and Molander warns that affiliate managers cannot recruit affiliates by plugging into a network and walking away, because that strategy leaves money (affiliates) on the table.

Although networks are not in Roger Snow’s top three ways to go about finding affiliates, the director of marketing at Snow Consulting, says there are advantages. Networks are beneficial because they allow managers to use keywords to target specific affiliates as well as for starting programs because they announce the program to all affiliates.

Once affiliate managers launch their programs, they have the challenge of proactively building and retaining their publisher base. Networks can help affiliate managers who do not possess the business development and affiliate marketing skills necessary with these early recruitment tasks.

Depending on their vertical and brand, merchants must understand the overall online marketing landscape and whether or not a performance-based relationship will result in sales/leads. Kerri Pollard, general manager of Commission Junction, explains that Commission Junction has built a successful publisher sales team and sales engine that helps with this time-consuming work.

Another reason to work with networks is they can provide an affiliate manager with background regarding the ranking and quality assessment of a publisher. Pollard explains that Commission Junction designates qualified top performers as CJ Performers – noting that such insight isn’t available when managing an in-house program.

Most of the networks hold events with the core objective of getting merchants and affiliates together so productive networking can occur. LinkShare has its Partnership Summit and Symposium; ShareASale’s annual meeting is ThinkTank; DoubleClick Performics has its annual Client Summit; and Commission Junction puts on its annual Commission Junction University (CJU).

Research and Relationships

For finding affiliates, there is also good old-fashioned search engine research. A good way to find potential affiliates is to type the keywords pertaining to a product into Google and check out the results on the first few pages of natural search results. Snow says one of the ways he finds affiliates for his client, DiscountWatch- Store, is to Google terms like “watch review sites” to fi nd highly ranked and highly trafficked sites regarding watches.

Snow also looks for affiliates who use PPC as means to drive targeted traffic to their site because it shows they are actively marketing their site.

Woods agrees managers need to look for sites that come up in a search for particular keywords – “if they are advertising your competitors, reach out with your affiliate plan.” Woods also recommends finding affiliates through software tools such as Syntryx, which show sites that are linked to your competition.

But the easiest way for managers to recruit affiliates is to tap into the relationships that they already have established. Woods explains it’s important to have an experienced full-time manager who knows people in the industry because affiliates enjoy working with people they know. To foster the relationship, managers need to recognize affiliates who do well by giving them kudos, like financial rewards or tickets to a sporting event.

According to Snow, one of the ways affiliate managers can get to know affiliates is to join communities where the best players are – and recommends that managers become vocal participants in a large online marketing forum such as ABestWeb.com, where lots of savvy affiliates participate in discussions.

Affi liates are more eager to join programs they trust, according to Haiko de Poel, Jr., president of online affiliate marketing forum ABestWeb.com, which has more than 39,000 members.

de Poel says ABestWeb is an excellent recruiting medium because it is in almost real time and there are no spam filters. He also says that trust is a big issue in recruiting and ABestWeb works hard to overcome that challenge. According to de Poel, a couple of years ago some affiliate managers did not give out their real names on ABestWeb and the community reacted negatively. Now affiliate managers post on ABestWeb with their real first and last names. de Poel says that sometimes affiliate managers will come into a forum to ask a question and the community won’t talk to them until they state their real name.

There is an accountability factor when an affiliate manager reveals their name and the company they represent. “There is a trust that is built and affiliates feel like they are partners and not just affiliates,” he says.

Once a user gets involved and posts regularly, others see where that person stands on issues. He says this translates well to the real world because once they meet in person, there is instant credibility and a symbiotic relationship.

Many use forums and blogs to recruit affiliates. Buquet, who was an outsource affiliate manager but now specializes in recruitment and promotion, explains that word of mouth is instrumental to her success for finding affiliates – she recruits through her blog, her forum, her main site and through affiliate and online marketing forums.

By only representing tried-and-proven affiliate programs that have been tested, Buquet says she has earned a loyal following of affiliates and a good reputation. She says she turns down 99 percent of merchants that want her help recruiting affiliates because she’s looking for programs that have high payouts, long cookies, good conversions and high-integrity marketing practices.

There are outsource affiliate program management companies that can offer marketers access to top affiliates – companies like PartnerCentric, GTO Management, NETexponent and AMWSO.

Chris Sanderson, director of AMWSO, uses The Partner Maker, a contact management and recruitment system. He says the system allows him to build his own affiliate base so that when he launches a new program, he can review the affiliates in the system and contact those partners that would be a good fit. And because he can store multiple sites and marketing profiles for each partner, it also means he can contact the correct partner and not send a generic email.

Cold Contacting

The most popular methods for cold-contacting affiliates are email and the telephone.

Snow says he thinks most affiliates don’t want phone calls, and suggests sending emails that won’t be perceived as spam. “Don’t send them 4,000 words – just point out the benefits of the package [like commission, cookie duration, product data feed]. You only have one or two seconds – it’s just like selling door-to-door.”

The AffStat report showed that 30 percent of respondents believe email is the most effective method for recruiting affiliates, and 18 percent believe it is through the phone.

Affiliate Summit co-founder and affiliate program manager Shawn Collins says if sites don’t include an email on their contact page, affiliate managers can get the email addresses by looking up the WHOIS record for the domain.

Top affiliate Scott Hazard says that as a high-profile affiliate, he receives multiple emails per day from affiliate managers who want to recruit him – about half are personalized emails and about half are bulk emails. Hazard says some ask him what it would take to get them into the program – they try to find his pain point.

Make an Impression

To stand out, affiliate manager Collins has found fun items to send affiliates. In the past, he’s mailed postcards and has had good results with “Send a Ball,” which is an alternative to a greeting card. The ball is delivered via the USPS with the address, postage and personalized message right on the ball.

PartnerCentric’s Woods says face-to-face contact is essential for meeting new affiliates. She suggests affiliate managers get out to events and conferences like the two-yearly Affiliate Summit and Webmaster World. “If you sell lawn chairs, you need to go and meet the top home and garden sites,” she says.

When attempting to attract affiliates to a program, most experts agree money is a big motivator, although Woods claims it is not always the most important factor. The commission has to be at least as good as what the competition is offering, but affiliates look for programs that offer a variety of elements.

For one, a program needs to be well-managed because it’s important that affiliates are serviced and have their commissions paid. “The bane of affiliates’ existence is to have to chase down their commissions,” Woods says.

Often affiliates join programs because they trust the manager and they know the program won’t become “stale” – meaning that applications will be approved, new links will be put up and there will be email communication back and forth as needed, according to Snow.

Based on feedback received at ShareASale’s ThinkTank conference in October 2006, shoe retailer Chinese Laundry made changes to its affiliate program, including better ways to link, promotional banners and affiliate specific coupons. Chinese Laundry’s CIO, David Wright, says they starting seeing improvements right away and their conversion rate went up 600 percent – “from a couple of affiliate sales a month to 15 in one day.”

The conversion rate has to be good because many top affiliates are constantly evaluating the real estate on their site. Snow explains “it’s all about conversion,” and top affiliates do a lot of research because it is their livelihood.

Affiliate Hazard is a firm believer in doing extensive research before joining a program. For programs in the ShareASale network, he can look up the EPC and the average commission and then figure out the conversion rates. He also notes that it’s important for affiliates to try out the buying process before they start promoting a program. If the merchants make the buyer enter personal information before they state the shipping charge, if the production descriptions are poor or if things are hard to navigate, the chance of sales abandonment increases, which can ruin affiliates’ commissions and reputation.

To help merchants understand problems with their site from an affiliate perspective, Hazard recently began offering a site evaluation service to merchants. He looks for hiccups in the checkout process and analyzes the commission structure to see if a competitor pays more. When joining a new program, Hazard’s most important criterion is a very unique product line – something not readily available at other sites. He also looks for programs that fit into his themed websites.

With new offerings for connecting affiliates and merchants, and new tools that make it easier for publishers to become affiliates, in some ways affiliate recruitment is becoming easier.

Collins thinks recruitment is easier today than when he started 10 years ago. At that time, every person he approached had to be sold on the overall concept of affiliate marketing. He says, “it’s just a matter of breaking through the clutter and selling the reasons why the affiliate program is best.”

Still, Collins says it’s the activation and retention of affiliates – not the recruitment – that is the hardest part of being an affiliate manager. He says he believes that because most affiliates don’t focus on activation and retention, they “think” recruiting is the hardest task. But according to Collins, once you’ve got the affiliate, you have to know how to keep them and ensure they are productive.

Passing the Test

In the May/June Affiliate’s Corner column, I wrote about the ways super-affiliates prefer to be approached by affiliate program managers and merchants for the purpose of program recruitment.

Wooing a super-affiliate over drinks and dinner with offers of exclusive landing pages, significantly higher-than-advertised commission rates, or showering them with free product samples will certainly get their attention, but it does not guarantee that you will get the heavy hitters to join your program, however.

Even if your product is a fabulous fit for the affiliate’s audience and your commission rates are more generous than your competitors’, no super-affiliate will send copious amounts of targeted traffic (read: their highly valued subscribers with whom they’ve worked hard to develop loyal and lasting relationships) to your site unless it first passes an affiliate’s Merchant Site Test.

This test evaluates many aspects of the site from both the affiliate’s and a visitor’s perspective. I personally start with factors that will affect a visitor’s experience, and keep the following questions in mind as I peruse a merchant’s site for the first time.

Does the site load quickly or does the server bog down under graphic-laden pages? If there is a Flash home page, is there an obvious “skip intro” link or am I forced to watch the video to the bitter end? Is the site attractive and professional in appearance or are there broken links, graphics and scripting errors? Is the sales page comprehensive and well written, or is it fraught with spelling and grammatical errors or “holes” in the sales copy?

I also check to see whether the site uses excessive newsletter sign-up popups or advertising fly-ins. Do site preview pop-ups such as Snap Shots block my view of the text each time I cursor over a link? Does a new window open every time I click a link? Although I may understand a merchant’s motivation for using such tactics, I am more concerned that visitors to the site will find such intrusions confusing and/or annoying to the point that they are likely to exit the site and kill any chance of a sale.

Appearance, functionality and copy rarely pose problems with professionally designed and maintained sites. Nor are they an issue for ClickBank affiliates who can code links to send traffic directly to the order form. However, having to bypass a merchant’s home page means that pay-per-click arbitrage isn’t an option for some affiliates, while others will have to write sales copy rather than a product review. Although some affiliates may be willing to make that effort to promote one exceptional product, most will pass on the program if the merchant offers a diverse or large selection of goods.

Another significant factor that I will evaluate is search functionality. Visitors must be able to search for and find what they want quickly and easily. For example, does a clothing site let visitors drill down to choose between designers, color and function, or does a click on the “Dresses” link slowly load a page that displays 50 thumbnails of cocktail, evening and wedding dresses?

If the visitor can find a product that she wants to buy, good affiliates will check to see whether the order process is functional, intuitive and secure. Does the site post a “Hacker-Safe” logo and a privacy policy? Are shipping policies and prices easy to locate, or does a customer have to go through the entire order process to determine the cost to ship to Canada or if GST and PST will be added to her order? Can the customer ship to an address different from the billing address and can she have that dress gift wrapped for her cousin in Amsterdam?

What happens if our customer has questions about either the product or her order? Is there a sizing guide or a customer FAQ? Does the site offer order tracking? Is there a contact link, Live Help badge or telephone number displayed on every page for support?

I’d be thrilled to see all but the last item on that list, as a prominently posted telephone number that encourages phone orders means that potential commissions will be lost through traffic leakage.

Traffic leakage occurs at any point on a site that allows visitors to leave the site without making a purchase through the affiliate’s link. Affiliates that pay for their traffic are particularly sensitive to this problem, and most affiliates will not join a merchant’s affiliate program if there is any leakage at all.

Phone orders must therefore be tracked to the referring affiliate – which does not mean asking your customers from which site they originated. Merchants who aren’t equipped with the technical wizardry to track phone orders should allow affiliates to send their traffic to a version of the site that does not post a phone number, and trust that their super-affiliates’ promotional efforts will more than make up for any sales that may be lost by doing so.

Most traffic leaks occur when merchants link to other sites that may be of interest to their visitors, or to partner sites with which they have reciprocal link agreements. Traffic leakage also occurs when a merchant with two or more online stores links to those other sites without compensating affiliates for sales from any and all of their stores.

The most offensive type of outbound link traffic leaks are affiliate or contextual advertising links (i.e., Google Adwords ads) from which the merchant hopes to profit. Most affiliates consider this practice more “traffic theft” than traffic leakage and will not only not join the program, they will also warn other affiliates of the merchant’s commission-stealing practices.

That’s not to say that as a merchant you shouldn’t promote other merchants’ products. You should. But do it on the back end or from within the secure area of your site, only after your own affiliates have had a fair chance to earn a commission for sending traffic to your site.

As you can see, the Merchant Site Test is comprehensive and super-affiliates are picky to the nth degree! If any aspect of the site misses the bar, most super-affiliates will go on to consider your competitor’s offer and promote their products without so much as a TYBNTY (thank-you-but-no-thank-you) note for your time and treats.

If you’re lucky enough to have a super- affiliate take time from her busy promotional schedule (or lounge chair) to explain why she’s chosen not to join your program, consider implementing her recommendations as soon as possible – and let her know as soon as the changes have been made.

Don’t stop there

Visit a Web developer’s forum and ask for feedback about your site. Ask your site visitors for their comments and suggestions as well. Check the affiliate networks for clues about what your competitors are doing right. For example, ask yourself how a merchant that pays only 8 percent commissions has an EPC that is triple that of the merchant who pays 12 percent. Do your own Merchant Site Test to find out why affiliates love to promote their program.

Getting just one super-affiliate on board can substantially increase a program’s earnings. The first super-affiliate in a program will generally use this advantage to heavily advertise the site or product using pay per click.

As other super-affiliates join the program and competition between affiliates increases, most will rise to the challenge and step up their promotional efforts using a diverse array of creative methods. Exposure to both the product and the affiliate program tend to increase exponentially at that point – which makes for very happy merchants and managers.

When you design your site with a view to building long-term relationships with visitors and potential super- affiliates, you too can get that kind of happy – perhaps even rich.

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 best-selling book is available on Amazon and www.SuperAffiliateHandbook.com.

Double Down: Q & A with William Cooper

As the CEO of TradeDoubler – a Swedish performance network with a vast European presence – William Cooper has his eye on global expansion. TradeDoubler, with its local offices in 15 countries across Europe, is known as the biggest affiliate marketing network in the U.K. Cooper was appointed president and CEO in March of 2007, riding a wave of first-quarter revenue for 2007, up 30 percent. Previously, Cooper, a six-year veteran of TradeDoubler, was COO of the company for a year. Before that, he oversaw the company’s U.K. operations. Currently, TradeDoubler claims a network of more than 100,000 website publishers and has more than 1,000 advertisers across Europe, including a mix of local and international companies such as Apple Store, Dell, TeliaSonera, eBay and Kelkoo. Revenue Senior Editor Eric Reyes asked Cooper about affiliate marketing in Europe and the rise of globalization in an ever-shrinking business world.

ERIC REYES: Since the Sweden-based parent company seemed to launch its affiliate network almost simultaneously across Europe in 2000, was affiliate marketing considered a risky business back then?

WILLIAM COOPER: It was risky from the perspective that it was untried and untested across Europe; it was a concept that was almost completely unheard of. However, it had clearly gained some notable success in the U.S., and this gave us the confidence to succeed in Europe.

ER: Compare the opportunities and volume of affiliate marketing in the U.K. with its popularity in the U.S.

WC: I think it would be foolish of me to think that I knew enough about the market in the U.S. to make a direct comparison. However, with regard to the U.K. it is a very competitive market, and affiliate marketing is generally perceived as one of the most valuable digital marketing channels, and definitely the most cost efficient. It is held in high regard by the majority of e-commerce players.

ER: Do you run a network in Europe differently than you would in the U.S.?

WC: There are many more complexities to running an affiliate network in Europe compared to the U.S. In Europe we have to deal with different languages, cultures, tax regulations, currencies and constantly changing rates of Internet, e-commerce and broadband penetration. All this means that the need for local people in all the markets in which we operate is essential.

ER: Tell us a little about the growth of TradeDoubler UK. Have you been surprised by the interest in the affiliate space in the U.K.?

WC: No, we haven’t been surprised. We believe that we have been part of the process of raising the level of awareness and the importance in this channel. We have positioned it as “premium” channel and not a mere commodity. Affiliate marketing, if performed correctly, can be a dominant driver of e-commerce for any advertiser, so it is right that it is so well-respected.

ER: As affiliate networks become more international, are you seeing competition from U.S. firms such as Commission Junction or LinkShare, and what are you doing to keep your lead?

WC: Commission Junction has always been present in the U.K. market since we have been here. They are a very good competitor and we hold them in high regard. At present we don’t see the presence of Link- Share in our markets to any great degree but they are clearly a ver y knowledgeable and successful player outside of Europe, so it will be interesting to see how they try to gain market share in this already- competitive market.

ER: Is TradeDoubler planning to enter the U.S. market, and what would the challenges be?

WC: There are no plans at this stage.

ER: What are the regulatory and legal challenges of setting up networks in so many different European countries?

WC: There are numerous regulatory and legal challenges of setting up in all these markets. I will not make it easier for our competition by naming them!

ER: Would you consider TradeDoubler more publisher-focused than your U.S. counterparts? Why is that better?

WC: It is too difficult for us to sense that. I believe that we are more publisher-focused than most of our competitors and I believe that this is one reason for our success.

ER: Are there U.S. competitors entering your market that give you cause for concern, and why or why not?

WC: At the moment they do not give us concern, as it is a very competitive market. I just hope that players entering this market respect where we have tried to position the product since 2000. This is not just a technology play; there is much greater value that we can add as network operators to ensure an affiliate program fulfills its potential and reaches the expectations of the advertisers.

ER: What are the concerns of your U.K. merchants? Do they worry about the same things U.S. merchants fret about – trademark bidding, brand management, quality affiliates, etc.?

WC: I think they all worry about very similar types of issues. I would like to think that TradeDoubler is very proactive in trying to address these concerns, many of which can be easily managed.

ER: Are there plans to enter the Asian and Indian markets?

WC: There are no specific plans at this stage.

ER: Do your U.K. affiliates do business outside of Europe, such as with America or China? What percentage? Is it encouraged or are there stumbling blocks?

WC: Some of our U.K. affiliates work outside the U.K. and in our other European networks. We actively encourage it and there are some great revenue opportunities for them in these emerging markets. We help them address any legal issues that they might face, but in general it is an easy process for publishers wanting to work in multiple markets.

ER: Do you think specializing in certain vertical markets in the U.S. would benefit a European network?

WC: There are various ways to approach a mature market like the U.S., and becoming a vertical specialist is definitely one of them. However, the ultimate aim for any network should be to cover as many sectors as possible. This is driven by the fact that we all have interests covering many different sectors, and therefore a publisher that can deliver good results in consumer electronics can also deliver effectively across other sectors as well.

ER: Is there special technology TradeDoubler uses to track and monitor transactions and affiliates? Does technology play a role in serving geographically specific content?

WC: We developed our own proprietary technology back in 1999 and we constantly update and refine that technology. We have separate affiliate networks in all the 18 markets in which we operate; therefore, we don’t need to rely only on technology to target a specific region.

ER: What qualities make up a really good publisher?

WC: A strong publisher in the affiliate world must have a well-defined target audience, i.e., one that is interested in a particular market sector such as travel or financial services. This is why credit card comparison sites, for instance, work well. The audience is visiting with a specific aim in mind and the site is fulfilling their expectations. A loyal user base is also essential – publishers will earn more if they don’t have to buy all of their traffic. They must also have good content to allow them to feature highly in the natural search rankings. The site owner obviously has to be Web-savvy, knowing what links will work well in what place, what affiliate links work better in some places than others and they should complement rather than compete with other advertising that they’re running. The best publishers have open minds and strong ideas of what they’re looking to achieve.

ER: What qualities make up a really good merchant?

WC: A good merchant is prepared to invest time and resources into their affiliate program. As well as ensuring that their website is functioning well with a clear customer journey and reasonable conversion rate before launching a program, there are many factors which will help to ensure that their program does well. A good merchant is committed to building longterm relationships and trust with publishers. They communicate regularly with their publishers to keep them informed about all upcoming activity and will often communicate directly with top performers. They will set commission rates at the right level to ensure publishers are incentivized to promote their program while still ensuring they receive cost-effective returns. They regularly update creative and ensure that it is engaging and sales-focused. They respect their publishers and pay them on time!

ER: While online gambling is a big no-no in the U.S., gambling sites in the U.K. are OK. What types of sites do TradeDoubler frown on and why?

WC: TradeDoubler does not work with any sites featuring dubious content such as violence or pornography.

ER: Are there any new ways to monetize performance marketing?

WC: One example of how the model has adapted in response to advertiser and publisher demands is demonstrated through the pay-per-call concept. At TradeDoubler we have developed a pay-per-call product called td Talk, which enables companies to advertise more complex products online, which may require a telephone conversation to complete the sale (insurance products for example), and pay for the telephone calls that are generated. This model is also appealing to smaller companies that may not have a website of their own but want the opportunity to use the reach of the Internet to market their products or services. On the publisher side, they can ensure that they receive commissions for calls that were generated as a result of advertising on their site.

ER: AOL’s recent attempt to buy TradeDoubler’s Swedish parent failed. Is this good for TradeDoubler UK or bad?

WC: This does not impact on the performance of TradeDoubler UK in any way.

Legendary Outlook: Q & A with Todd Crawford

More than a year ago, Todd Crawford created quite a stir in the affiliate community when he departed Commission Junction, a company he helped found in 1998. He emerged at Digital River’s oneNetworkDirect as its vice president of sales and business development, where he oversees affiliate recruitment and development, has profit and loss responsibility, and develops the technology road map and overall strategic direction for the company.

Although Digital River is headquartered in Minnesota, Crawford lives and works just south of Santa Barbara in Ventura, California, where he can ride his motorcycles and drink the local wine in Southern California’s year-round sunshine.

During his tenure at CJ, he was the vice president of sales. His main responsibility was new advertiser acquisition, but he also handled other business initiatives including industry relations and CJ’s international expansion in Europe and Asia.

Revenue’s Senior Writer Alexandra Wharton asked Crawford about a variety of topics including why an affiliate program for the software industry makes sense, the constantly evolving affiliate industry and the making of industry legends.

Alexandra Wharton: oneNetworkDirect is part of Digital River. How do the two entities fit together?

Todd Crawford: oneNetworkDirect is Digital River’s online affiliate network – a network that specializes in providing Digital River software publishing clients with affiliate marketing services and technologies as well as access to a channel of more than 70,000 affiliates.

AW: What is the reason to start an affiliate network for only software products?

TC: Since 1994, Digital River has focused on e-commerce and the digital delivery of software products, so it was a logical progression to launch an affiliate network focusing on these types of products to help our clients drive more sales.

AW: Has this been a long-standing opportunity or is it the result of changes in the marketplace?

TC: With broadband penetration where it is today, more and more consumers are opting to download their software purchases, and I believe this trend is only going to continue to increase. Affiliates can benefit several ways from offering digital downloads: 1) When sold online, downloads have a lower cost of goods than physical products, which means there are more margins to pay affiliates higher commissions; 2) software is a natural fit for affiliates to promote since the computers consumers are using to shop online run on software; and 3) consumers can begin using the software as soon as the download is complete, so affiliates do not have to wait for physical products to ship before receiving their commissions.

AW: During the eight years that you’ve been in the industry, what are some of the most significant changes that happened in affiliate marketing?

TC: The first thing that comes to mind is how much the entire industry has matured. In 1998, affiliate marketing was a great idea but did not generate significant revenue because most companies did not take it seriously. From 1998 to 2002, it seemed like affiliate marketing was trying to earn its wings as a legitimate marketing channel. Fortunately, the dot-com bomb accelerated this shift as it forced companies to make smarter decisions on how to spend their marketing budgets and eventually moved affiliate marketing to the front of the line.

The next big change was the emergence of search arbitrage. I remember the day we were doing some networkwide analysis on recent unexplained growth trends and saw a lot of referring URLs coming from Google and Overture. We looked into it deeper and figured out what was going on. It seemed like such a simple idea that obviously was working very well. Today of course, search arbitrage is a huge part of affiliate marketing. I believe that the success and popularity of paid search today is due to the early innovators in affiliate marketing.

AW: Over the next year, what are some of the biggest challenges facing oneNetworkDirect?

TC: The greatest challenge is taking advantage of all the opportunities in front of us. We have been growing at a tremendous rate since we launched in November 2005. During the past six months, we have made great progress on the affiliate interface, reporting and tool set. Prior to Affiliate Summit in Las Vegas, we re-branded and launched a new home page at www.oneNetworkDirect. com. We have a road map of new features and functionality and have been doing regular releases. During the past year, we have created more affiliate mindshare, which is also attracting more attention and interest in oneNetworkDirect. Some of our affiliates have found great success as part of our network and we are hoping that their success stories will drive even more interest in the industry.

AW: How many merchants are in your network?

TC: Currently there are more than 50 programs in oneNetworkDirect, including programs from leading publishers of digital products and software applications. We typically add several new programs each month.

AW: How many affiliates are in your network?

TC: More than 70,000 affiliates have signed up to participate in oneNetworkDirect.

AW: Can you talk about how you will focus on recruiting and developing affiliate relationships?

TC: Affiliate recruitment and development is our primary focus at oneNetworkDirect. We have a dedicated affiliate development team. Half of the team is responsible for recruiting new affiliates, and the other half of the team is responsible for managing top-performing af- filiate relationships. I recognized years ago that world-class affiliate service is the key to growing a network. We are very active at trade shows where we attract new affiliates and further develop our relationships with existing affiliates. This year we will be exhibiting at the Af- filiate Summit conferences in Las Vegas, Miami and London; Ad:Tech in Paris, London, San Francisco, Chicago and New York; eComXpo; SES; and at Digital River-hosted client events around the world.

AW: Can you explain what oneNetworkDirect’s product, trialTracker, does?

TC: trialTracker is a new conversion-monitoring technology that allows affiliates to promote “try before you buy” versions of software titles by integrating the affiliate ID dynamically into the download. Because the affiliate ID is actually in the software trial, any subsequent upgrades to paid versions will be credited to the affiliate that initiated the trial download. It is a great product offering because many software titles offer free virus or security scans that require the consumer to pay for the product to resolve any identified issues. Affiliates can offer something valuable and free for their users to try out and benefit from the eventual paid upgrades. trialTracker is exclusive to oneNetworkDirect.

AW: What are some of the incentives oneNetworkDirect has in place to attract top affiliates?

TC: oneNetworkDirect has several incentives that are designed to both attract and retain affiliates. Like most affiliate networks, we encourage all of our merchants to offer coupons and promotions to affiliates, including exclusive coupons for select affiliates. These coupon links can be accessed when searching for creative by type through the af- filiate interface. We also list promotions and other program-specific opportunities on our blog, which can be accessed at our website. Affiliates also can find a list of current coupons from top programs on the oneNetworkDirect site. In addition, we offer networkwide promotions on a regular basis. Currently we are offering the oneNetworkDirect Rewards Program that pays up to an additional 2.5 percent when affiliates achieve certain goals or thresholds. For more details, affiliates should visit our site.

AW: Can you tell me about oneNetworkDirect’s Achievers’ program?

TC: The oneNetworkDirect Achievers Program is targeted to our topperforming and high-potential affiliates. Through the Achievers program, affiliates are offered dedicated account management resources to help them gain access to special creative, offers, promotions and custom landing pages as well as receive help obtaining approvals for certain promotional opportunities, such as email or paid search. The Achievers Program also provides affiliates with special perks and opportunities tailored for this exclusive group, including VIP passes to conferences, free software and dedicated marketing dollars for individual bonuses and promotions. Affiliates can learn more about how to become a member and benefit from all the perks of the oneNetworkDirect Achievers Program on our website.

AW: What are some of the long-term goals for the company?

TC: To further increase the value we provide our clients, two important areas of focus for Digital River will be the continued expansion of our global footprint and strategic marketing services. In the end, we are committed to driving pay-for-performance results for our clients.

AW: In three years, what will the performance marketing space look like?

TC: What makes affiliate marketing interesting is the constant innovation and change. Just like with paid search, affiliates are eager to explore and take advantage of new opportunities. Right now, Web 2.0 is the big trend. Three years from now it will be something else.

AW: At CJ you were sort of the face and voice of the company in the affiliate space. Do you feel you have the same level of influence over the community in your role at oneNetwork Direct?

TC: I continue to play a very active role in the industry. I have a network of people that I interact with on a regular basis and we all influence each other. At oneNetworkDirect, we have an active trade show schedule, we frequently participate on panels and speak at industry events, contribute to blogs like ReveNews and ABestWeb and regularly meet face-to-face with affiliates, technology providers and marketers in the affiliate community.

AW: At January’s Affiliate Summit, you won the 3rd Annual Wayne Porter Affiliate Marketing Legend award. Rumor has it that you won because you are always willing to share your knowledge. Why do you think that’s important in this industry?

TC: If you want a young industry to grow, you can’t keep a lot of secrets. I like to talk to people about things I feel passionate about – and affiliate marketing is something I feel very passionate about. I’ve found that some of the best ideas come from open dialogue and conversations with other people. It’s by working together that we can build and develop the best ideas and solutions.

AW: In your opinion who else is a legend in the affiliate space?

TC: That is a tough question because there are so many people who have contributed to this industry to get it where it is today. I know developers, program managers, affiliates and other network executives who have worked very hard while keeping their heads down and consequently have not been in the industry spotlight to get the recognition they deserve.

Learning Outside the Box

Many of today’s online marketers have unrelated backgrounds and have learned their profession through on-the-job training and supplemental offerings.

The situation is similar to the first iteration of marketing on the Web in the 1990s. But unlike 10 years ago, there are more ways to learn and get information such as webinars and online courses; enrichment classes such as weekend training, conferences and boot camps; countless websites; and dozens of books and videos.

Because online marketing has become a bona fide career path, it seems reasonable to expect that university business schools would be offering undergraduate and graduate students a specific online marketing course or devoting a lot of time to its importance. But that’s not necessarily the case.

Over the last several years Choots Humphries, co-president of LinkConnector, an affiliate marketing network, has been a guest speaker at an M.B.A. program at a university on the East Coast where he addresses the incoming first-year grad students regarding online marketing. He has been “dumbfounded” at the lack of understanding of basic concepts. “They don’t know what AdWords is or what a merchant is,” Humphries says.

And he’s surprised that these new business school students know so little about such an important part of the economy. After all, according to Forrester Research, online retail commerce represents about 10 percent of total U.S. retail sales, and it is expected to grow to 13 percent by 2010. That begs the question: Are universities teaching the basics about such a vital aspect of commerce, or is online marketing still the domain of specialized education?

1. College 101

At the University of San Francisco’s Masagung Graduate School of Management, courses in finance, management and accounting all include readings and case studies that describe the impact of technology and online marketing in that discipline, according to Associate Dean Eugene Muscat. He believes the concepts of online marketing have achieved the same academic critical mass as the study of globalization and ethics and says that these three subjects should be included in each course of study as essential business literacy skills.

Muscat says USF does not teach a separate online marketing course because “to have a separate course in online marketing would run the risk of implying that the topic is only relevant to students majoring in marketing.”

Heidi Perry, vice president of marketing at gaming publisher PlayFirst, who graduated with an M.B.A. from Oxford University in 2004, says she took a marketing elective that had a section on online marketing. Perry thinks that certain graduate schools will eventually offer an online marketing course as an elective, but most schools will try to combine online marketing with other topics to give a candidate a more holistic view.

Although the University of Texas’ McCombs School of Business does not offer a specific online marketing course, Andrew Whinston, director of UT’s Center for Research in Electronics, says it makes more sense to teach entrepreneurship because the Web moves extremely fast.

“Think about how much the social networks have impacted online marketing just in the past year ” and if you look at some case studies of Internet companies from three years ago, it is like teaching history,” Whinston says.

However, there are many non-degree programs for learning about online marketing that are geared for people who want to enter the profession. Recruiters, such as The Creative Group, are encouraging traditional marketers who are trying to get into online marketing to take such courses to round out their skills and increase their marketability, according to Smith McClure, division director of the Minneapolis branch of the company.

NYU’s School of Continuing and Professional Studies (SCPS) offers dozens of non-degree marketing courses that can be applied toward a certificate in digital marketing. In the fall of 2006, consultant Shawn Collins was brought in to guest lecture at SCPS’s eight-week Strategic Search Engine Marketing class and gave a top-level overview of how affiliate managers should run programs. Ben Kirshner, founder of New York-based Elite SEM, taught the course and says that the students were extremely enthusiastic because they could apply the tactics they learned in an evening’s class to their jobs the next day.

Because Google sponsored the class, students were given a $50 credit to set up an AdWords account to learn how it worked, and were given the opportunity to take the Google AdWords professional exam for free, which is normally $50. Some of the students were able to put on their resumes that they passed the exam, a leg up for those who are applying for jobs at Google or Yahoo or an interactive agency. Kirshner says the class encompassed a mix of people – some were employees of companies who sent them there so they could better understand how to manage their online campaigns.

2. On the Company’s Dime

Many companies offer their employees online marketing training – through classes and in-house sessions – because of the shortage of qualified online marketers and because the industry changes so fast. Michael Taylor, founder of OnlineMarketingJobs.com, says companies hire people with existing account management skills and then train them for the online marketing techniques pertinent to their company.

So how do companies teach online marketing skills to their employees? PlayFirst’s Perry says that her company balances formal with informal training, and it does a lot of its training through group collaboration and brainstorming. The company also tries to send each marketing employee to the conference of their choice every year.

Dean DeBiase, CEO of Fathom Online, a search marketing and Web analytics company, says they are obsessed with training and view it as a strategic weapon to keep up with the constant changes made by Google, MSN, Yahoo, Ask.com and MIVA. Fathom Online offers two types of training – a 60-day, in-person training program for new recruits and ongoing training through modules to train employees on the latest topics such as analytics, in-game advertising and mobile search. This training is deployed through voice conferencing, video conferencing and WebEx.

Bob Chatham, senior vice president of education at WebSideStory, a provider of on-demand digital marketing applications, says that its employee and customer training program, Digital Marketing University, is a three-day course that teaches WebSideStory’s HBX analytics and Visual Site applications, which help marketers to optimize their search campaign by seeing how their paid and organic search terms are converting.

Chatham says he has seen courses relevant to digital marketing offered through e-commerce programs at schools including Babson College and Northeastern University – both in the Boston area – but has not seen any semester-long Web analytics courses. He notes that there are strong professional training programs on the subject such as one at the University of British Columbia.

3. Learn From the Masters

Chatham stresses that a lot of the good practical expertise lives with the consultants, such as Jeff Eisenberg and Bryan Eisenberg from Future Now; Gary Angel from SEMphonic; and Jim Sterne, who created the Emetrics Summit. Chatham notes that these same experts who speak at the University of British Columbia’s programs also speak at WebSideStory’s Digital Marketing University and other industry conferences. “I think the best way to get up-to-date information and the best training is through industry expert workshops,” Chatham says.

Attempting to fill a knowledge gap, Aaron Kahlow, managing partner of Business OnLine, created the Online Marketing Summit, which was held in San Diego in February. “I have spoken at many conferences including Ad:Tech and the DMA Conference and I am always surprised at how little industry folks know.”

He says that other industry conferences do not offer training or improve attendees’ understanding. He says they are all “either too technical or all about the future and predictions. This is great for investors but how does that help a tactical day-to-day marketer?”

Kahlow says that the industry needs to focus on education. “We are just getting to a point where best practices are established and the amount of change is slowing,” he says, adding that the most popular sessions at his show include workshops on search engine marketing and performance metrics.

However, if you want to be an affiliate marketer, formalized educational avenues are very limited. Stephanie Schwab, vice president of marketing at Converseon, thinks professors are in their ivory towers and are not aware of affiliate marketing. Consultant Andy Rodriguez says that he is surprised to not find any colleges teaching affiliate marketing in southern Florida. Consultant Colin McDougall has had similar findings in his area of British Columbia. But Rosalind Gardner says she is aware of a professor who was using her book, The Super Affiliate Handbook, to teach affiliate marketing in his university class.

The most convenient and least expensive way for newcomers to get their feet wet is to read the many websites, blogs and forums (message boards) related to affiliate marketing. “The best place that I have learned about affiliate marketing is from the community at ABestWeb.com,” says Kristin Collier, founder of MadHatter Consulting.

Consultant and author James Martell cautions that those looking for information must rely on credible sources such as the websites of Commission Junction and LinkShare, along with forums including http://affiliate- blogs.5staraffiliateprograms.com/ and AffiliatePrograms.com. Martell warns that forums can be good and bad because “they can take you down the wrong path” and says it is important to follow a person who is an affiliate and not just a writer.

McDougall says that there is a ton of “how-to” books on the market for teaching affiliates how to earn a living but warns that many of the “silver bullet” books sold teach how to manipulate holes in the Google algorithm, which can quickly become out of date. For this reason, Gardner says that her book is updated almost monthly and “every so often I offer previous purchasers a totally updated version of the book at a steep discount.”

4. Mentoring

McDougall recommends that affiliates find a mentor; a practice that he believes will become more popular in the near future. He says there a re some Internet and phone-based seminars today, but very few provide individual attention, and explains that assisting an affiliate in devising an individual plan of attack is very helpful – “some people struggle with time management while others struggle with technical issues.” McDougall says that he provides some complimentary mentoring but mainly it’s a paid relationship. Gardner says she has never participated in a mentoring program although she has done telephone consultations, which she calls short-term coaching.

5. Podcasts, Training & DVDs, Oh My!

Podcasts are a good way for people who haven’t quit their day job yet to learn about affiliate marketing. And there are plenty to select from. On WebmasterRadio, there is Good Karma by Greg Niland; Affiliate Marketing Today by Jeremy Palmer and Robin Walsh; and Net Income by Jeremy Shoemaker. Affiliate Thing features Revenue’s Lisa Picarille and consultant Collins on WebMasterRadio.com.

For those who want more interaction, Martell recommends videos. He has an eight-video program that corresponds with the eight steps outlined in his book, Affiliate Marketers Handbook. Anik Singal’s The Affiliate Classroom is a Web-based step-by-step training program to help people launch and grow their own affiliate Internet business. It reaches over 35,000 active affiliate marketers through its magazine and newsletter and is in the business incubator program at the University of Maryland. Another popular training program, Stomper Net, is offered by Brad Fallon and Andy Jenkins, and comprises DVD training and an online forum.

Nearly all industry experts recommend attending as many conferences as possible such as the twice-yearly Affiliate Summit, WebMasterWorld and e-Tail; along with the invite-only network events such as CJU and the LinkShare Summit.

“Affiliate marketing is an extremely social industry and we learn from each other. It is good to sit down and have face-to-face conversations with affiliates, managers and merchants. The sessions can be valuable as well,” MadHatter Consulting’s Collier says.

6. Experience vs. Classroom

Affiliate manager jobs are in high demand – so how can they obtain the training they need to do the multifaceted duties required – everything from HTML to creative to sales? Most think it is a learn-by-doing job. For one reason, managers need to have established relationships. “It is not about an M.B.A., but a person who can pick up the phone and leverage their contacts,” says Shawn Collins. Also affiliate managers need to understand “in the trenches” challenges like how they stack up again their competitors in terms of metrics like conversion rates, average order sizes and earnings per click. And most employers want to hire managers with specialized skills – and techniques learned in formal training can be too broad. Moreover, Converseon’s Schwab says that many classes only teach strategy and not tactics and “we need to hire people who can do the job.”

However, a background in marketing is helpful and there are aspects that can be taught in a course such as how the networks operate and the fundamentals of how to recruit, how to activate and how to retain affiliates. Still, PartnerCentric’s Linda Woods says that there is no way she would hire an inexperienced affiliate manager: “I wouldn’t hire anyone just because they took a couple of courses on Internet marketing.” She believes managers need on-the-job training and the training that is offered through seminars.

7. Affiliate Management Seminars

Industry experts like Rosalind Gardner recommend attending conferences such as Andy Rodriguez’s Affiliate Manager Certification Seminar and Anik Singal’s Affiliate Manager Boot Camp to learn affiliate management skills.

Rodriguez’s program is a three-day course and attendees are certified upon completion. Rodriguez and guest speakers teach attendees about formulas that work and promotional ideas as well as warn them about potential pitfalls such as identifying spyware that could affect program performance.

In 2006, Singal had a four-hour, in-person boot camp the day after the Affiliate Summit and he plans more for the future. Like Rodriguez’s program, it was created in response to demand by merchants who needed managers for their programs. Singal says that the attendees include new merchants who are trying to get in the game, merchants who are trying to fix their programs, affiliates who want to be managers and managers who want to improve their abilities.

8. Looking Ahead

Currently there are many options to learn about online marketing that fit into everyone’s schedule: You could attend a weekend boot camp, listen to a podcast on the way home from work, pop in a video on Saturday morning, watch a webinar during your lunch break or find a mentor to walk you through a challenging process.

Most university programs only touch on online marketing as part of entrepreneurship but do not teach it as a separate course for several reasons. One is that the industry’s fast pace has challenged the development of an up-to-date curriculum, which is needed to add a course to a degree program.

Another is that the real industry knowledge lies with the experts, who are busy leading companies and are limited to speaking and teaching at conferences and workshops. Some think that college professors would have trouble keeping abreast of this constantly evolving industry; although if the changes slow down and best practices are established, this may change.

Perhaps most importantly, it is all about up-to-date training: Employers desire employees with tactical online marketing skills from real-world experience, and they would rather hire someone who was trained through last month’s professional training program than someone who studied affiliate management as part of an undergraduate degree in marketing three years ago.

It’s all about training and educating the future generation of online marketers so the space can continue to grow and flourish.

How Do Companies Train Affiliate Managers?

Converseon starts by having new employees review hundreds and sometimes thousands of affiliate sites for approvals because Converseon does not do auto-approvals. The new employees examine sites to determine if they are good – how they are designed, to whom they link and how they are promoting their competitors. Vice President Stephanie Schwab says they encourage their employees to read industry blogs as much as possible, like Scott Jangro’s, Shawn Collins’ and ABestWeb. She likes to send employees to conferences like the Affiliate Summit, so affiliate managers can understand the business from a macroview, and to webinars like eComXpo because of its convenience.

PartnerCentric’s Linda Woods says that they train their employees for PartnerCentric processes, reporting and practices through weekly telephone conference calls among the account managers and staff of approximately 25 people. “Once a month, we have a training call where they are learning something like a new way of reporting to a client, a new activation campaign idea or a new technical tool that we will be using.”

Kristin Collier, former director of marketing at Batteries.com, credits consultant Andy Rodriguez with helping her become a successful affiliate manager. She is now the owner of MadHatter Consulting.

Q: How did you meet your mentor, Andy Rodriguez?

A: I actually met Andy virtually at first on ABestWeb.com. Batteries.com had recently opened a program on ShareASale due to LMI (link management initiative) and I noticed a thread on ABW about newsletters on ShareASale. Andy was hinting at a hidden secret about how to make these newsletters powerful so I sent him an email and he passed me a little information.

This was shortly before the Orlando Affiliate Summit in 2006, which is where I met him in person for the first time. I spent some time with him and many others, and asked as many questions as I could and then he offered to mentor me. I learned a lot from him in a very short amount of time and we still trade emails.

Do you think mentoring is important to this industry and do you think it is common?

A: I think mentoring is somewhat common. I know a few affiliates that mentor other affiliates if they see the passion, drive and thirst for knowledge in them. Andy is not my only mentor – other affiliates mentor me so I can learn more about PPC or about being a manager. I also help other affiliates and merchants learn the skills of good affiliate marketing and online marketing.

Do you think mentoring is mostly unpaid or paid?

A: When I think of mentoring, paid is not something that comes to mind. I do teach my clients about affiliate marketing but I am not mentoring them, I am consulting with them. Mentoring to me is taking the time out of your day to help someone else who truly wants to learn something that you know well, just to help them succeed.

Social Meets Business

An affiliate marketing experiment used Twitter to connect the community at a recent show.

As an idea, Twitter is nothing new – a method of communication between various parties. However, as a real and practical application, Twitter is revolutionary. It has the potential to reinvent communication between affiliates, networks and merchants.

Twitter was a side project of Odeo in March of 2006 and is a part of San Francisco-based Obvious Corp. Users of this new social messaging service are able to post messages 145 characters in length to answer one basic question, "What are you doing?"

These short snippets can be sent to Twitter through the Web, via instant messaging (Jabber, Gmail’s chat service, and AIM) or through text messaging on a mobile phone. When people that you have added as your contacts on the service post messages, you can also receive their messages via those avenues.

Even for the non-bloggers and nonforum participants, this invitation to share details about daily life and experiences seems to be too much to resist. According to Twitter’s creator Jack Dorsey, the service currently has about 20,000 daily active users and is growing by over 1,000 new members a day. While small in some metrics, those active users include some of the most influential bloggers and businesspeople in the online marketing world.

Interestingly, Twitter is expanding our own notions of instant communication. Companies such as the BBC, CNN, Technorati, 30 Boxes, Microformats, Ma.gnolia and even the conference Macworld have all begun to make use of Twitter’s ability to reach people instantly and efficiently with important news or service updates, wherever they happen to be at the time. Highly influential websites such as Technorati have begun to send out alerts of service outages or upgrades that were once only issued on the company’s blog.

Affiliate marketers and affiliate networks are beginning to notice the benefit of the service as well. For example, Brian Littleton, founder and CEO of ShareASale, recently began a "Twitter experiment" with his affiliate network in an effort to judge Twitter’s ability to transform network-to-affiliate communication. Brian announced the experiment both on the ShareASale blog and on ABestWeb and offered affiliates a chance to join Twitter and receive instant updates from him regarding network offers, payouts and other news from his network.

The ShareASale team has attracted dozens of affiliates to its Twitter network since the middle of January. These affiliates are regularly posting and communicating about industry news, offers and their own lives and they have created quite a unique community in just a few short weeks.

Here’s what Littleton had to say about his Twitter experiment: "Improving communication between affiliate managers and affiliates benefits both parties, as well as ShareASale, who stands in the middle. We are constantly looking for new ways that we can facilitate good communication, on a level playing field. Affiliates don’t like to be constantly harassed, and merchants often don’t know to what extent they should extend their help."

With the Affiliate Summit upcoming, we felt it was a great opportunity to get both parties interested in a new tool that could become a new way for managers and affiliates to communicate. We’ll be illustrating some of the instant effect of Twitter communication by giving away time-sensitive prizes at our booth as well as updating attendees on the whereabouts of various ShareASale team members. I think by the time we are done with this experiment you’ll see quite a few affiliate managers setting up little Twitter networks for their programs," Littleton says.

His comments point to what was the true tipping point for Twitter’s early adoption in the affiliate world: Affiliate Summit West in Las Vegas on Jan. 21–23. By the end of the summit, Littleton had over 40 influential affiliates who had signed up for his updates on Twitter. Those affiliates included some of the best and brightest in the industry. From the Friday before the summit to the days following, these affiliates were using Twitter as a way to find each other for meals, locate each other at industry parties, share information of where to find tickets to the events at night, critique speakers on the various panels and share interesting schwag finds at the booths. Dozens of "twitters" poured in through cell phones and IM clients at all times of the day and night. The web of communication and information sharing created was impressive and a unique experience.

Industry conferences provide an excellent demonstration of Twitter’s potential. Network representatives, affiliates, merchants and press reporters are constantly (and sometimes hopelessly) attempting to reach one another in the vast sea of faces and booths. While the cell phone is a great aid, it is often difficult to contact someone on a call during the heat of battle on a conference floor. Using Twitter, an individual would be able to post their location, schedule or need and have that message sent out to either just one person or a marketing team, or even a large number of contacts.

As for the ShareASale experiment, the company was able to effectively drive the affiliates on their Twitter network to their booths for special giveaways, prizes and news by sending out certain announcements throughout the summit. Littleton also used the service to locate members of his own team and arrange meetings with affiliates and clients. As an instant information sharing platform, Twitter met all expectations at the summit, and in some ways exceeded them.

However, the implications for affiliate marketing don’t end with conferences. ShareASale’s experiment with Twitter is an interesting start to what could become a revolutionary platform for instant, yet nonintrusive communication regarding offer updates, new payout structures, new coupon codes and just about any type of update a network could make aimed at participating affiliates.

Email correspondences between networks and affiliates have been lagging in terms of deliverability and the many snares and traps that an HTML email must avoid in order to reach the intended recipient. Along with that, changes in Microsoft’s new Outlook in the Vista OS will considerably hamper the use of affiliate newsletters. Some merchants have moved to blogging and reaching affiliates through such means as RSS feeds. However, affiliate adoption of RSS has been slow, and only about 30 percent of merchants and networks are blogging (with a much smaller percentage regularly updating their blog).

As more affiliate networks discover the advantages of using this type of communication to augment their existing efforts through email or RSS, I expect adoption by affiliates to continue to rise. Social communication, which blurs the pre-existing line between personal and business communication, will be this year’s hot topic in reaching and activating affiliates. Keep an eye on the growing group of affiliates using Twitter for social and business communication.

SAM HARRELSON runs CostPerNews.com, a weblog about online marketing, specifically CPA offers, programs and networks. He has held positions at Rextopia Network, PrimeQ and Aluria Software.

The Posh Payoff

Diamonds, private jets, multi-million-dollar mansions, haute couture, luxury vehicles and high-end handbags – customers looking for upscale goods and services could probably find all these items in posh places like Beverly Hills or they could just head to the Web.

The online shopping environment for upscale merchandise has been robust in recent years.

Websites such as NeimanMarcus.com, with annual sales that jumped 30 percent in fiscal 2005, and Diamonds.com, are flourishing.

This climate of vigorous sales is driving merchants, including fashion icons DKNY and Prada, to unveil e-commerce sites in the coming months and incentivizing affiliate sites like American-Luxury.com and Splendora.com to promote high-end merchandise to their niche audiences.

Initially luxury merchants had trepidation about the effect the Internet would have on their brand equity. eMarketer’s senior analyst, Jeff Grau, says, “Because the Internet is often thought of as the place to go for bargains, luxury merchants were concerned that it would cheapen their brand. Luxury brands’ emphasis is on quality and fashion rather than price ” they did not want to be associated with a channel that was for bargain hunters.”

But lucrative benefits have outweighed these concerns – the Internet not only offers a new source of sales and higher profit margins, it is a way for merchants to avoid high overhead costs of paying employees and expensive rents in tony areas. And many luxury merchants that have moved online say they did so to meet increased demand.

LUXE FOR LIFE

That demand is evident in several categories. In 2005, Forrester Research found that jewelry/luxury goods, apparel and health/beauty were making the most inroads into total sales – and the market researcher forecast apparel and home products as the two categories to grow the fastest between 2005 and 2010.

Traditionally the categories that have sold the best online have been computer hardware/software, books, and toys/video games. ComScore Media Metrix found that for the 2005 holiday season, the jewelry and luxury goods and accessories categories showed a 22 percent gain in visitors in December over November.

Apparel: The conventional wisdom about e-commerce was that apparel never would sell well online because people want to try things on before they buy. But more familiarity with a brand’s size and quality expectations as well as easier return policies are causing consumers to buy more apparel online every year, which accounts for a large segment of high-end merchandise.

“People are becoming more and more comfortable buying apparel online. For example, denim is one of our top categories – we keep adding more brands due to the demand of what clients are asking from us,” Carel Hearon, eLuxury.com’s marketing and affiliate manager, says.

Accessories/Handbags: According to comScore Media Metrix, the percentage of Internet visitors to Coach.com increased 117 percent in 2005, and a 2005 Women’s Wear Daily poll found that a large percentage of women (48 percent) buy accessories online. Accessories such as handbags and scarves sell well over the Internet because they are not restricted by size or fit requirements.

“Handbags and accessories are our strongest categories. You don’t have to try on a handbag, so there is a lower return rate,” Hearon says. Others agree.

“We get lots of winning bids for eBay on terms like Balenciaga Le Dix and Chloe Paddington for handbags,” says Michelle Madhok, who runs SheFinds.com, which focuses on shopping and fashion. Madhok notes that such handbags retail in the $1,000 range.

Shoes: Madhok adds, “We sell tons of shoes – especially from Zappos Couture” – with an average price point of $250. She says the reason is, “No matter your size, shoes always fit – that makes them especially attractive for Internet shoppers.”

Trisha Okubo, founder of Omiru.com, a style and fashion affiliate, says, “Our best categories are shoes and other accessories, likely because the fit issue is minimized in these categories. Our experience with high-end shoes is that brand name matters. Bluefly has worked for us because it provides discounts on well-known designer names.”

Lingerie: The 2005 Women’s Wear Daily poll found that women like to purchase intimate apparel online such as lingerie because they enjoy the privacy of shopping from home. Underwear is SheFinds.com’s No. 1 category. SheFinds.com partners with BareNecessities, which offers brands such as La Perla and Cosabella that sell bras that typically cost more than $100.

Jewelry: According to comScore Media Metrix, the increase in the percentage of Internet visitors heading to Diamonds.com was 223 percent, and the increase to Zales.com was 163 percent from November 2004 to November 2005.

Eddie Bakhash, president of AmericanPearl.com, which has been in business since 1997, says it has experienced a steady growth of approximately 20 percent annually for the past five years. The top-selling items are rings, earrings and necklaces, and the average price point for a product is $1,000. Brad Matson, chief marketing officer for Bluefly, says it added jewelry “based on demand,” adding, “It is an important and growing segment for Bluefly.”

Home Decor: Forrester predicts that home products will grow 8 percent between 2005 and 2010. Marilyn Olsen, who runs four sites, including American- Luxury.com and French-Luxury.com, sells a wide range of high-end merchandise including furniture, kitchenware, interior design and gardening essentials and is an affiliate for upscale furniture merchants such as Design Within Reach, Frontgate and Horchow.

She explains the success of these categories:

“As people furnish their kitchen, they want to be able to cook and entertain casually in as much style as they do in other parts of the house,” Olsen says. When people visit American-Luxury.com to buy leather armchair barstools that retail at $729 each from Horchow, they can see a Jura Capresso Impressa espresso machine that retails for $2,399 from Sur La Table.

Other Items: The definition of a luxury item is something that adds to pleasure or comfort but is not absolutely necessary – an indulgence. Merchandise in all sorts of categories could match this description – such as spa treatments, luxury travel, upscale baby clothes, gourmet foods and high-end gifts.

For the 2005 holiday season, the leaders in the luxury segment were RedEnvelope with its December traffic (2.4 million visitors) seeing a 62 percent increase over the previous month; and Tiffany & Co., up 47 percent over November with 2 million visitors, according to comScore Media Metrix.

Luxury shoppers, who make up a mere 2 percent of all online buyers, account for nearly 7 percent of online retail sales. According to Forrester, the online shopping revenue reached $170 billion in 2005 – $12 billion (7 percent), was sales luxury sales.

Indeed, some online luxury shoppers are affluent people. In March 2006, Time magazine found that of adult Internet users with household incomes of at least $150,000, 12 percent of respondents said that the Internet was their primary place to shop for apparel and 18 percent said it was their secondary place. And upper-income shoppers have been driving sales for the past two years, noting that luxury goods retailers were the strongest performers during the 2005 holiday season, according to Ernst & Young Consumer Trends Center.

Forrester finds that luxury buyers are comfortable with Internet and Web technologies and have shifted a great part of their spending to the online channel as usability has improved. Luxury buyers, in fact, are 36 percent more likely to be comfortable with online transactions involving their credit cards and are 25 percent more likely to be technology optimists than average online shoppers.

CONVENIENCE IS KEY

And the Internet is an excellent way to reach lucrative clientÃ¨le – high earners who work long hours and have little time to shop. American-Luxury’s Olsen attributes part of the growth of her site to this. “I think a lot of it is time constraint,” she says. “The sophisticated customer is increasingly very, very busy and they don’t have time to go to the mall.”

Forrester found that convenience-driven consumers make up approximately 31 percent of all online shoppers and represent nearly 35 percent of all online spending. And many of these convenience shoppers are buying upscale merchandise.

“It turns out it is a convenience thing – most of our customers live in major metropolitan cities – they could have gone to the stores,” says eLuxury’s Hearon. “We thought our top buyers were going to be in places like Des Moines, Iowa, where there were not stores to buy the latest Rock & Republic jeans.”

And for people who live in more rural areas, it is certainly more convenient to shop online than to take long trips to metro areas. eMarketer’s Grau says, “The Internet makes it easier – it brings into reach the items that people in small towns cannot get.”

Jeremy Palmer, QuitYourDayJob.com’s CEO, says he has worked with Zappos.com, and was surprised that there was a market for expensive shoes but reasons that “people in fly-over states like Utah [where he lives] want luxury shoes but are limited in what they can buy – the audience is smaller but there is demand.”

Olsen agrees. “In some areas of the country, it is harder to find upscale merchandise. I think they tend to appreciate Internet shopping more than someone who has access to brick and mortar,” she says.

In addition to convenience, Grau says the growth in luxury online sales is due to the maturation of e-commerce where consumers feel more comfortable buying very expensive things online, so there are more items offered to meet demand.

“Merchants started out with books and CDs and gained confidence to where consumers buy a watch or a ring, whereas a year earlier they never would have. There are three main reasons: trust, education and presentation,” he says.

TRUST BUILDING

The biggest tool for building trust is improved customer service with excellent phone representatives, consistent delivery of quality products and better shipping policies for easier returns.

Madhok says, “Shoe companies are great with free shipping and free returns, so there’s no risk in ordering.”

Hearon adds that, “For apparel, such as denim, people will buy two sizes and keep one and return the other so they can avoid the hassle. We have great shipping policies to do that.”

Grau explains that merchants make it possible to enter into a live chat so there is more hand holding when it comes to buying a high-end product.

“You see on jewelry sites lots of educational information that explain what to look for when buying a diamond ring – how to evaluate quality and what carats mean. They [service representatives] help a customer shop and they gain more trust in the brand that takes the time to educate the customer about how to buy a diamond ring.”

Another important component to luxury shopping online is the presentation of merchandise that websites offer.

Consumers visit websites after they have been in a store since they can often find a great range of color and sizes. Online shopping is not only about pre-shopping, but securing exactly what you want, according to Grau.

Olsen says, “I work like a personal shopper and make it easier for people to find things. I am able to show them all of the options in one place and make their decision making more simple.”

Luxury shoppers do not think of the Internet as limited or the lesser alternative to off-line shopping but as a unique way to shop, according to Bluefly’s Matson.

“At Bluefly, you can see 100 dresses in one color very quickly – you would have to go to 10 stores to see that,” he says. “Bluefly has an engine that lets you look at all of the dresses that are black, size four and between $200 and $400, from more than 365 designers.”

There are some e-tailers that allow customers to enter their physical dimensions and the site will in turn offer up styles that are suited to your figure, Grau says.

Online shopping also serves consumers who want to stay on top of the trends, making it easier to achieve a certain look. Hearon says many of eLuxury’s customers “have high household incomes but some are willing to live in a shoebox to have the latest Louis Vuitton bag and shoes. They are very fashion-conscious and are aware of the trends and want to wear them and will do whatever it takes.”

Celebrity gossip and style watcher websites have brought the demand for “it” labels to cyberspace.

“Now women want the bag they see Jennifer Aniston carrying. Before, to get their hands on the designer item, they’d have to shop in a big city. Now designer labels – even discounted designer labels – can be found on eLuxury, Neiman Marcus, Yoox and Bluefly’s websites,” Madhok says.

Omiru.com’s Okubo says that, “the growing status-consciousness of our culture encourages the gravitation towards luxury brands. What you buy and what you wear is seen as an extension of your personality, really; an extension of you. What does this mean for retailers? People want Prada or Polo, not a private-label brand. Luxury brands have an automatic stamp of approval on them.”

NICHE IS NICE

This phenomenon provides an opportunity for publishers to focus on an area of their expertise, become an evangelist for a brand and reach potential customers – whether it is for premium watches, fine crystal or evening handbags. Moreover, luxury purchasers tend to be passionate and loyal and showy about their brands and this lends itself well to merchants looking for loyalists to endorse their products.

Liane Dietrich, vice president of Merchant Services for LinkShare, attributes the increase in luxury-brand sales online to affiliates.

“There are lots of niche and content sites that are playing the role of ‘recommender’ – they recommend products and merchants to consumers and that is paving the way for luxury brands to take their place.”

Clearly affiliates are attracted to upscale merchandise for the high commissions – many luxury sites do not offer discounts and have limited “sales” or “clearance” sections. Luxury merchants report that paying full price does not deter consumers from buying.

Another reason affiliates promote luxury products is the cache that luxury items offer them.

“I think it’s very important to note that affiliates are attracted to luxury merchants for the perception of high-average- order value and high conversion, as well as the visual value that the luxury connection adds to the affiliate’s site,” Dietrich says.

But affiliates need to be sure they offer the brand that leads a potential customer to their site. Shawn Collins, president of Shawn Collins Consulting, warns, “If unchecked, affiliates will exploit the brand – they will leverage the brand names like Gucci or Dior even if they don’t sell those products. Affiliate managers should kick them out after one or two ‘outs’ if affiliates mess around with the branding. For example, in paid search arbitrage, affiliates can bid on trademarked names such as Dior but these keywords frequently get abused and affiliates drive traffic to their sites when there is no product there.”

SELECTIVE, EXCLUSIVE, DISCRIMINATING

Affiliates should be aware that in exchange for potentially high commissions, the programs are not easy to get into and will require that affiliates not only have a highly trafficked site, but a well-designed site that features other upscale sellers. And they will be closely monitored with their keyword buys and how they present brands on their site.

“Luxury affiliate managers are pretty brand-protective. They are looking for a reduced level of discounting; a clean, visually appealing site; and possibly some other merchants on the site that would help raise the legitimacy of the website,” Grau says.

“Obviously, Rolex doesn’t want to see an advertisement for Rolex watches on a Wal-Mart affiliate site,” Palmer says. “The terms and conditions of luxury programs spell out how they want their brands advertised.”

Hearon says, “We are very selective – we have 300 people apply per week and I let in three. I evaluate the ‘look and feel’ of the site and I have an intern look at every affiliate. I make sure we are not on coupon sites.”

“You have to be cautious with affiliate marketing – if you are selling a fine-quality product, you want it to be showcased in the best possible light,” AmericanPearl.com’s Bakhash says. “Consumers evaluate the company and product based on where it is – which is why we really like Yahoo Shopping and Amazon.com.” AmericanPearl is on dozens of other sites through Yahoo Shopping, and Yahoo Shopping is their best affiliate.

Sak’s Fifth Avenue and Neiman Marcus are private programs and currently Neiman’s must approve all photos used on a site, according to Madhok. “I’m hoping as they begin to trust us, this requirement will go away since it impedes the speed of Internet publishing.”

But not all luxury brands are strict.

“Every luxury merchant is going to have a different tack on it. Some luxury merchants are very open to driving revenue that is valuable additional traffic for them – whether it comes from a very high-end affiliate or a small niche affiliate might not be as strong of a concern,” Dietrich says.

Matson says Bluefly has “hundreds of affiliates, which is helping Bluefly to grow. We get 60 [applicants] per week and take 20 or so. We look at quality and fit and examine each affiliate on a case-by-case basis.”

Hearon attributes the success of eLuxury’s affiliate program to “partnering with the right companies and making sure we send out newsletters once a week and communicate as often as possible with our top affiliates [such as] ShopAmex and American Airlines.”

These types of membership and loyalty sites work well for luxury brands by playing up the benefits of being a member in addition to getting the points or rewards. In addition, it plays into the idea of a luxury brand – because of membership, because people are often getting the first crack at a newly released item.

Each of the affiliate networks has a share of luxury merchants. Commission Junction has Bluefly; Performics has RedEnvelope and Frontgate; and LinkShare has eLuxury and Blue Nile. Merchants are looking for networks that are sensitive to where their brands might be, and how their brands are portrayed in any sort of marketing. For this reason, the networks offer a variety of tools that provide merchants with the reassurance that their brand is being marketed correctly.

The days of thinking that companies such as Overstock and eBay, which sell mass-market products like books and iPods, epitomize online shopping are over. The Internet is no longer incompatible with the exclusivity of luxury goods. Retailers of upscale merchandise are and will continue to look to online shopping as an essential sales and marketing channel.

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.