A Failure to Communicate

There’s plenty of communication, but most of it’s ineffective.

Communication at its most basic level is the exchange of ideas and information. Seems simple, right? Like most things that involve people and processes, it’s not always as straightforward as it appears. Communication is part art, part science, part X factor. Getting it right is not easy. And when things go awry, it can be a hugely frustrating experience for all involved.

This appears particularly true in the online marketing space where the ability to clearly and effectively convey and share information between various groups is hampered by complexities, technology and just plain information overload.

In order to operate effectively, publishers need to get creative materials and up-to-date offers from hundreds of advertisers. Merchants and advertisers often rely on affiliate networks to act as the middleman in contacting their publishers. Publishers need to deal with online agencies and communicate with the networks to track their commissions. The networks have to stay on top of both their advertisers and publishers. It’s very complex and can become difficult.

“The state of communication and general communication throughout the industry is a big problem. It always has been,” according to Linda Buquet, an affiliate management consultant and president of 5 Star Affiliate programs.

That sentiment is prevalent.

“I believe in communication advocacy and relationship marketing – affiliate marketing is lacking that,” says Richard Lewis, president of ReturnOnAffiliate.com.

“Communication is a big issue in the community,” says Adam Viener, president and CEO of search marketing firm IMWave. “On one hand, each affiliate manager wants to communicate better and more often with affiliates. But affiliates want to deal with hundreds of merchants and yet they do not want to have to deal with everyone.”

Viener adds that there is information that is critical to his business that needs to be more effectively communicated to him, but it is often buried in a mountain of other communications that are informational but not urgent or necessary.

“I need to know if there is a change in the terms of an agreement or if someone I’m dealing with is moving – those are the kinds of messages that if I don’t see, I’ll lose money. But many of the messages I get are about opportunities to make more money,” Viener says.

Email Overload

There’s no lack of information available to everyone and methods abound for getting your message directly to your intended recipient, including email, RSS feeds, instant messaging, blogging, newsletters and even the telephone.

If you’re like the average connected person, or the average online marketer, email is your preferred mode of communication and your inbox is overflowing – even after the junk and spam mail filters have done their jobs. The average online marketer is likely to receive hundreds of emails per day.

IMWave’s Viener claims that at one point in early February, his inbox had more than 2,100 unread messages – dating back to November 2005.

“Every once in a while, I miss an important message and I’m not notified when there is a new message. That’s why instant messaging is so good for me,” he says.

That’s what prompted him to create the Affiliate AIM List (affaimlist.com), a list of the AOL Instant Messenger handles of people in the performance marketing space. Members opt to sign up and are then added to the buddy lists of all other members. That allows everyone on the list to see who is offline or logged into IM and then contact them directly (see Revenue March/April issue).

The Affiliate AIM List was created by Viener to facilitate communication among the many different parties comprising the affiliate community. Viener, a longtime fan of AOL Instant Messenger, thought the communication tool would be a great way to foster better and more frequent communication between people.

The list is not a moneymaking vehicle but more of a community service, Viener says. To date, it’s been well-received, and has 250 members. In April he launched AffiliateSkypeList.com as another way to boost communication.

“There has been a dichotomy between merchants, who want the most communication, and the affiliates, who want the stuff, but feel it’s very hard to control the volume,” Viener says.

Getting Personal

Instant messaging works for many, but Shawn Collins, president of Shawn Collins Consulting, says that IM is a more personal communication tool and that using it to send out mass IMs is irritating, impersonal and turns him off.

What irks 5 Star Affiliate’s Buquet is spam. “First and foremost with affiliates is reading emails and not knowing if they are spam they should be filtering or an important program announcement,” she says. “Then you end up having to go through the junk filter.”

Buquet adds that even with all the email rules and filtering offered by most applications, many affiliates still complain of being overwhelmed and bombarded with emails and unfortunately, “some affiliates aren’t very good at organization.”

On the flip side, most program managers don’t think beyond using email. They continue to contribute to the flood of email as it’s the easiest way to communicate quickly with a large group of people.

“With a lot of the affiliate managers, it never occurs to them to go beyond email and that thinking is flawed in so many different ways,” Collins says. “People are not opening email. How about picking up the phone more and engaging affiliates? Also, there’s RSS or direct mail. Just touch base with affiliates on a regular basis.”

He says that it’s also easier to catch less-than-scrupulous people on the phone. “If you have a reason to believe that someone is doing something questionable with affiliate links, you should call and ask them questions,” Collins says. “You can tell by the tone of their voice and the way they deal with you. It’s a much easier way to get a read on someone when you are communicating with them by phone than when they are sending you a prepared statement in an email.”

According to ReturnOnAffiliates’ Lewis, it’s not about how many parties you have to communicate with, but rather the effort that is put into those relationships. “Affiliates often feel like they are just a number,” he says. “I believe affiliate managers will get more out of affiliates if they communicate on a professional level and understand the person they are dealing with. There needs to be more respect for each other’s needs and that includes communicating in a way that is best for each affiliate. For some, that might be a phone call. For others, it might be email and still for others, newsletters.”

There are several things Lewis is unsure of when it comes to the fine art of communication, but one thing he’s sure of, “Communication is the end and the start, and it has to be free.”

Monkey in the Middle

But sometimes it’s hard for any two parties to interact directly with the networks, which are often acting as the middlemen between merchants and publishers.

“The networks get in the middle of merchant-to-affiliate communication to impede direct communications,” Buquet says. She suggests RSS as a way to get around that problem.

“One of the solutions that is an important piece of the puzzle is that the networks and the merchants aren’t using enough RSS,” Buquet says. “But it’s a chicken and egg thing. Not that many affiliates are using RSS feeds, because not that many merchants offer them. And merchants aren’t offering them because affiliates aren’t using them.”

LinkShare also noted the communication gap as an issue at the company’s annual LinkShare Symposium, held in January. Then senior vice president Steve Denton, who has since been named president, offered up some possible solutions from the affiliate network. One of these was a future version of its platform that requires publishers to read their messages right after logging in to the interface, and would not permit them to check other things until they view the messages.

Utilizing the Forums

Many industry watchers claim that forums offer a good way to communicate with partners. A multitude of them exist, and most often companies with big programs have their own designated spaces on these forums to directly relay information to their affiliates and partners.

But some say that many of the bigger, more established forums have taken on a culture of mean-spiritedness. Many blame anonymity for that. While the ability to post under a screen alias provides some freedom – especially if you are criticizing a company you do business with – it also can be abused by others to make unsubstantiated claims.

“If you are saying something on a board, you need to let people know who you are to be taken seriously as a professional and have others value the board as a business tool. Otherwise, it’s just a lot of people trying to point blame rather than debating important issues. There’s no real value to that kind of communication when you don’t know who is asking the questions and who is providing the answers,” ReturnOnAffiliates’ Lewis says. His social networking site started in January 2006 as an alternative to existing forums.

Several sources declined to speak on the record about specific forums for fear of public recrimination. However, many sources that requested anonymity cited ABestWeb.com as an example of a space they did not consider overly friendly or tolerant.

“There are all different types of forums and the mood of the forum is usually much like the personality of the forum leader. It’s like corporate culture based on leadership. If the guy at the top of the company is mean and hard to deal with, then likely so is the company. On the other hand, if someone is an empowering leader, that filters down. The culture is not only that of the forum owner and administrators, but the moderators as well, since they typically have the same ethics as those that hired them,” says one source, who asked not to be named.

Buquet, who is the founder and moderator of the WebProWorld affiliate forum, as well as the moderator of the affiliate forum at Search Engine Watch, posts regularly on approximately 30 affiliate and webmaster forums per month, answering affiliate marketing questions from both affiliates and merchants.

Often called the “Forum Queen,” she says it’s a well-known fact in the community space that one of the best ways to gain attention and notoriety for a forum is with flaming and saying something negative about a popular person or figure. “Sometimes the nice forums are not dicey or exciting enough for some people,” Buquet adds.

For merchants to cut through the clutter and noise in forums, she says, the most basic rule is to choose to participate in a forum that is moderated. Otherwise, the forum can turn out to be a “spam house” and merchants will just be lost in the promotional noise.

One idea currently floating around is working with the bigger affiliate networks to create their own proprietary mini-social networks. The way it might work, according to one proponent at an affiliate network who asked not to be named, is that the networks would offer all the communication facilities and tools used in the existing industry forums (blogs, mail, message boards, etc.). But the main topic of discussion would be issues related to the network rather than general performance marketing subjects.

“It could build value for affiliates and bring the merchants and network closer to affiliates,” the source says.

However, if you have an opinion or information that you’d like to communicate, but aren’t interested in expressing in a more public forum setting, there’s always blogging.

Blogs don’t need to be public. Merchants or affiliate managers can set up a blog with an RSS feed that is sent out only to a specific set of individuals. Many likened this approach to an updated version of a newsletter. Such blogs can be used to convey information about a program, announce changes in creative, publicize new promotions, highlight top performers or offer tips.

Personal blogs by people in the industry also allow communication of ideas.

“Anyone can blog,” Lewis says. “There’s no gatekeeper and the blogger can share their feelings about their work and the industry without too much worry of backlash.”

Sharing Is Caring

Still, many in this market space claim that giving up any information about their business is harmful. Because the barriers to entry in the online marketing space are relatively low, revealing the secrets of exactly how you achieved success is not seen as smart business (see Revenue Volume 2, Issue 7).

But others believe by sharing information you will help the industry grow and thus ultimately achieve even bigger success for your own company. Collins, Buquet and Lewis all claim that is not just part of their personal philosophy, but a key component in how they conduct their respective businesses.

Buquet, who launched her forum in July 2005, says it’s “goal oriented” to promote “positive success.” She wants her members to work together and share ideas.

“It’s an interesting human phenomenon to do things for the right reasons,” Buquet says. “The more you give, the more you receive. I try to empower people.”

Collins agrees. “People don’t really see the need or benefit to help people. It’s way too easy to be selfish and keep secrets. But sharing really does pay off. Giving benefits the overall industry and leads to more quality programs,” Collins says.

He attributes much of the success of the twice-yearly Affiliate Summit conferences he co-hosts to helping others. “I think I did the right thing,” says Collins. “I shared with people, without giving too much away and my business is growing. It’s a pay-it-forward thing.”

Be a Mentor

Collins has been helping people on an informal basis for years and now he’s working to formalize a mentoring program that would have industry leaders working directly with others. The idea is that the leaders would share their experience and knowledge, acting as role models and offering inspiration.

Collins says it’s a grassroots effort that started in 2001, when 30 online marketers in the New Jersey area would get together and simply talk about issues. He claims it spread to other regions, but was never formalized and eventually sort of faded away.

“It would be great to resurrect it. It became too onerous to organize people for the meeting, the meeting space, the food, etc., so it just fell off,” Collins says.

With the explosion of social networks, Collins believes that people are looking to connect in a more personal way with other like-minded folks. This time around, he’s looking for a more one-on-one connection and likening the new idea to the Big Brother Big Sisters mentoring programs.

His idea is to get industry leaders in various geographic locations to agree to participate and then connect them with someone within a 20-25 mile radius. The two would meet periodically to discuss whatever business issues they choose. Of course, people in competing businesses would not be paired up.

“It sounds like a wonderful idea. People respond best to people they can relate to, as well as if they care about you as a person,” says ReturnOnAffiliates’ Lewis. Beth Kirsch, group manager of affiliate programs at LowerMyBills.com, is working with Collins to get the program off the ground. “I’m happy to do anything that will improve communication between parties in the online marketing space,” says Lewis.

Collins is also pairing up people at his conferences. He’s attempting to facilitate the schmoozing aspect of the conference by holding formalized social networking sessions that allow attendees to request mini-meetings with other attendees they would like to meet. It’s like speed dating for the business conference crowd. By starting a dialogue between the attendees, Collins believes he’s helping improve industrywide communications.

Most agree that despite the lack of communication in the industry, things are looking up. There are many vocal performance marketing players from all areas working hard to rectify the problems using a combination of existing tools, new ideas and emerging technologies. This could bring some much-needed sanity and repair the communication breakdown.

Winning the Seasonal Race

Managing a seasonal program is akin to drag racing – lots of hard work goes into the preparation, the light turns green, then it’s over.

For a seasonal program to be successful, it’s crucial for its managers to think like affiliates. If you were a top affiliate looking for a program, where would you go and what would you want to hear? If you can get into the head of an affiliate, you can gain the perspective of a top performer, understand the tools necessary for success and learn how to win.

Attracting Valuable Affiliates

All of your affiliates are valuable, but the top performers will give you the highest return on investment. Forget the 80/20 rule (80 percent of revenue comes from 20 percent of affiliates). In 2005, for example, only 1 percent of TaxBrain.com’s affiliates generated 80 percent of affiliate revenue. Obviously some affiliates were better prepared before the season began. They most likely used the following steps to success.

Find the best program. Check out resources such as search engines, affiliate networks, directories, forums, events and other networking opportunities. Within these, look for the most compelling stories on potential earnings in terms of conversion rates, clicks per sale and commission structures.

Use the right keywords. Your program’s online presence begins by building affiliate pages optimized for keywords in your niche. Online marketing success means ranking high in the search results for your particular niche (such as "tax affiliate program"). Searching on Google for "affiliate program" yields 134 million organic results as opposed to 74 million for "top affiliate program." Paid search has a decent ROI, but you can also achieve meaningful results by site-targeting popular affiliate and webmaster hangouts, as well as home businesses and small-business portals.

Spread the word. Take advantage of communication opportunities available through your affiliate network. These include multiple category listings, newsletters, conferences and email marketing. Top-performing seasonal programs are often overlooked by the Big 3 affiliate networks (Commission Junction, LinkShare and Performics). This is because their indicators are heavily weighted with off-season trends. To overcome this, capture your performance results when it’s your time of the year and trumpet that information all year long.

Get listed. Affiliate directories work well, so get listed in as many as possible and pay those that are worthwhile. Often, reciprocating links are all you need to offer. To attract the best performers, talk payouts, highlight impressive stats or try catchy headlines like "Top Affiliate Earned Enough Last Season to Take Rest of Year Off!" Most directories don’t offer much listing space, so make your sales pitch count.

Use the forums. Forums are a beautiful thing – think of them as the eBay feedback mechanism of affiliate marketing. They allow you to monitor affiliate concerns and provide an excellent opportunity to market your program. Buzz around the forums, abide by the rules, post when appropriate and be sure that your signature promotes your affiliate program.

Make it personal. Personal relationships with affiliates often begin at trade shows and other industry networking events through direct contact. When online, you can gather contact information by using freebies and give-aways as motivation. For example, offer T-shirts or publications in exchange for direct contact information.

Optimizing Your Program

With thousands of seasonal programs all claiming to be the best and attempting to clear obstacles such as being overlooked by network indicators, it’s imperative that awareness of your program rises above the noise. For a seasonal program to be a winner, it must be well-tuned. To achieve maximum performance, managers can use the following ideas:

  1. Evaluate all existing affiliate communications from sign-up to acceptance. Review and revise your program listing to sell the opportunity, not just the product. Adjust your welcome letter and carefully craft your first message so they are appealing.
  2. Review competition in and out of your own network. Sign up as an affiliate and join your competition’s programs. Examine messaging and compensation within those programs for strengths and weakness. Implement strategies to exploit the weaknesses of your competition. Use the information to increase the appeal of your program while reducing your competition.
  3. Determine the lifetime value of a customer and create the highest commission structure in your niche. Pay more and pay faster. Pay your best affiliates the most. Provide additional strategic information and offer customization. PPC players don’t have much time to test a seasonal program, so you can accelerate their acceptance and understanding by releasing specific ROI stats from your own PPC performance.
  4. Create program offers that are appropriate for differing business models. Loyalty, incentive, shopping and content sites may have different needs than those of email marketers. To help accelerate sales during the season, create tiered offers that reward affiliates with additional commissions when well-defined revenue targets are achieved. Be sure your reward structure is attainable and measurable.
  5. Assess and build compelling creative. Ensure that initial messaging and associated landing pages match for consistency. Eliminate extra clicks or distractions at registration and preserve the initial click through messaging throughout the experience to checkout.

With your engine tuned for best performance, it’s time to put team dynamics into play.

School Your Affiliates

Once you have affiliates, you must teach these new business partners how to sell your product effectively. They have the ability to generate traffic, but you have to show them how to deliver it for maximum conversion. Here are some helpful tips to get the job done.

Organize your approach into complete campaigns – define targets, duration and exact message, using your affiliate Web pages for emphasis. Produce a matching keyword list. Promote each campaign individually.

Separate affiliates into meaningful groups to quickly spot trends. Create "watch" groups so you can track performance and monitor activity. Consider grouping by like business models or by special promotion. Continue to reorganize and regroup as business conditions change.

Communicate specific selling opportunities and develop a messaging strategy around each campaign. Start a blog enabled with RSS, in lieu of an emailed newsletter, to keep affiliates informed. Give your affiliates sufficient notice to put a new campaign into play (some need up to a month’s lead time).

Motivate your affiliates. Contests make things fun, but more importantly they help keep your program top of mind all season. For maximum exposure, create a contest that anyone can win. Have a daily prize throughout the selling season.

Try to identify demographic shifts or new trends that might be happening, then communicate this new information quickly. As an example, Hurricane Katrina created new government initiatives that benefit survivors, which could affect the way consumers search for tax products. This made new keyword combinations such as "hurricane tax," "katrina tax relief" and "hurricane katrina tax forms" valuable.

When managing a seasonal affiliate program, remember it’s the off-season that’s critical to next year’s success. That’s when you should learn from the experience, evaluate performance, incorporate new technologies and make all necessary changes. Recruit, optimize and communicate – these are the keys for managing a topperforming seasonal program.

 

TODD TAYLOR manages business development for TaxBrain.com from Petz Enterprises in Tracy, Calif. He is a technology veteran and entrepreneur with more than 20 years in the industry. He studied economics at Carleton University and is a graduate of computing from St. Lawrence College.

Managing a seasonal program is akin to drag racing – lots of hard work goes into the preparation, the light turns green, then it’s over.

For a seasonal program to be successful, it’s crucial for its managers to think like affiliates. If you were a top affiliate looking for a program, where would you go and what would you want to hear? If you can get into the head of an affiliate, you can gain the perspective of a top performer, understand the tools necessary for success and learn how to win.

Attracting Valuable Affiliates

All of your affiliates are valuable, but the top performers will give you the highest return on investment. Forget the 80/20 rule (80 percent of revenue comes from 20 percent of affiliates). In 2005, for example, only 1 percent of TaxBrain.com’s affiliates generated 80 percent of affiliate revenue. Obviously some affiliates were better prepared before the season began. They most likely used the following steps to success.

Find the best program. Check out resources such as search engines, affiliate networks, directories, forums, events and other networking opportunities. Within these, look for the most compelling stories on potential earnings in terms of conversion rates, clicks per sale and commission structures.

Use the right keywords. Your program’s online presence begins by building affiliate pages optimized for keywords in your niche. Online marketing success means ranking high in the search results for your particular niche (such as "tax affiliate program"). Searching on Google for "affiliate program" yields 134 million organic results as opposed to 74 million for "top affiliate program." Paid search has a decent ROI, but you can also achieve meaningful results by site-targeting popular affiliate and webmaster hangouts, as well as home businesses and small-business portals.

Spread the word. Take advantage of communication opportunities available through your affiliate network. These include multiple category listings, newsletters, conferences and email marketing. Top-performing seasonal programs are often overlooked by the Big 3 affiliate networks (Commission Junction, LinkShare and Performics). This is because their indicators are heavily weighted with off-season trends. To overcome this, capture your performance results when it’s your time of the year and trumpet that information all year long.

Get listed. Affiliate directories work well, so get listed in as many as possible and pay those that are worthwhile. Often, reciprocating links are all you need to offer. To attract the best performers, talk payouts, highlight impressive stats or try catchy headlines like "Top Affiliate Earned Enough Last Season to Take Rest of Year Off!" Most directories don’t offer much listing space, so make your sales pitch count.

Use the forums. Forums are a beautiful thing – think of them as the eBay feedback mechanism of affiliate marketing. They allow you to monitor affiliate concerns and provide an excellent opportunity to market your program. Buzz around the forums, abide by the rules, post when appropriate and be sure that your signature promotes your affiliate program.

Make it personal. Personal relationships with affiliates often begin at trade shows and other industry networking events through direct contact. When online, you can gather contact information by using freebies and give-aways as motivation. For example, offer T-shirts or publications in exchange for direct contact information.

Optimizing Your Program

With thousands of seasonal programs all claiming to be the best and attempting to clear obstacles such as being overlooked by network indicators, it’s imperative that awareness of your program rises above the noise. For a seasonal program to be a winner, it must be well-tuned. To achieve maximum performance, managers can use the following ideas:

  1. Evaluate all existing affiliate communications from sign-up to acceptance. Review and revise your program listing to sell the opportunity, not just the product. Adjust your welcome letter and carefully craft your first message so they are appealing.
  2. Review competition in and out of your own network. Sign up as an affiliate and join your competition’s programs. Examine messaging and compensation within those programs for strengths and weakness. Implement strategies to exploit the weaknesses of your competition. Use the information to increase the appeal of your program while reducing your competition.
  3. Determine the lifetime value of a customer and create the highest commission structure in your niche. Pay more and pay faster. Pay your best affiliates the most. Provide additional strategic information and offer customization. PPC players don’t have much time to test a seasonal program, so you can accelerate their acceptance and understanding by releasing specific ROI stats from your own PPC performance.
  4. Create program offers that are appropriate for differing business models. Loyalty, incentive, shopping and content sites may have different needs than those of email marketers. To help accelerate sales during the season, create tiered offers that reward affiliates with additional commissions when well-defined revenue targets are achieved. Be sure your reward structure is attainable and measurable.
  5. Assess and build compelling creative. Ensure that initial messaging and associated landing pages match for consistency. Eliminate extra clicks or distractions at registration and preserve the initial click through messaging throughout the experience to checkout.

With your engine tuned for best performance, it’s time to put team dynamics into play.

School Your Affiliates

Once you have affiliates, you must teach these new business partners how to sell your product effectively. They have the ability to generate traffic, but you have to show them how to deliver it for maximum conversion. Here are some helpful tips to get the job done.

Organize your approach into complete campaigns – define targets, duration and exact message, using your affiliate Web pages for emphasis. Produce a matching keyword list. Promote each campaign individually.

Separate affiliates into meaningful groups to quickly spot trends. Create "watch" groups so you can track performance and monitor activity. Consider grouping by like business models or by special promotion. Continue to reorganize and regroup as business conditions change.

Communicate specific selling opportunities and develop a messaging strategy around each campaign. Start a blog enabled with RSS, in lieu of an emailed newsletter, to keep affiliates informed. Give your affiliates sufficient notice to put a new campaign into play (some need up to a month’s lead time).

Motivate your affiliates. Contests make things fun, but more importantly they help keep your program top of mind all season. For maximum exposure, create a contest that anyone can win. Have a daily prize throughout the selling season.

Try to identify demographic shifts or new trends that might be happening, then communicate this new information quickly. As an example, Hurricane Katrina created new government initiatives that benefit survivors, which could affect the way consumers search for tax products. This made new keyword combinations such as "hurricane tax," "katrina tax relief" and "hurricane katrina tax forms" valuable.

When managing a seasonal affiliate program, remember it’s the off-season that’s critical to next year’s success. That’s when you should learn from the experience, evaluate performance, incorporate new technologies and make all necessary changes. Recruit, optimize and communicate – these are the keys for managing a topperforming seasonal program.

 

TODD TAYLOR manages business development for TaxBrain.com from Petz Enterprises in Tracy, Calif. He is a technology veteran and entrepreneur with more than 20 years in the industry. He studied economics at Carleton University and is a graduate of computing from St. Lawrence College.

Educating and Informing Your Publishers

As anyone managing an affiliate program knows, educating your network of publishers is a vital and often daunting part of building and growing an affiliate program.

This is definitely true for RealNetworks’ program, which focuses on digital media subscriptions, including Rhapsody, with more than 1.3 million songs, GamePass with hundreds of games and SuperPass with premium news and entertainment content.

Though thousands of publishers may have joined our affiliate program, some may not even be familiar with the products, let alone the tools and tactics for successfully marketing them. So with the limited resources available to manage and grow these programs, it’s important to be efficient in your efforts to educate your publishers.

The keys are constant communication with your network, listening to your publishers’ feedback and implementing change from it and sharing best practices and insights on marketing your products.

Your welcome email, the first correspondence your publishers receive upon joining your program, is extremely important. This is your chance to provide new publishers with helpful information on tools available in the program, as well as to present information on your products and tips for successfully marketing them. Many publishers won’t read your welcome email, but it’s worth making it good and helpful for those who do.

It is also important to communicate with the entire network via an email newsletter on a consistent and ongoing basis. These mailings should include broad information such as updates and tips on marketing your products. Again, many publishers will ignore these e-newsletters, but you should make it as educational and informative as possible for those that take the time.

Next is the important step of segmenting your publisher network. Your top-volume drivers will have needs that differ from your mid-tier publishers, which also have needs that differ from those who’ve barely begun promoting in your program. The size of your segments is also likely to vary. Your top-tier group is typically the smallest, while the largest segment is often made up of newcomers and non-performers (for those who keep them in the program).

How much time should be allocated to each segment is really a matter of preference and experience with the individual program. Some managers might find that working to increase a top publisher by a small percentage has a greater impact on revenue than seeing each mid-tier publisher grow by one transaction a month. Others may find the opposite to be true. That’s why it’s extremely important to test both tactics in your program and at different points throughout the year.

Again, the main elements to the education process are constant communication with your network, listening to your publishers’ feedback and implementing change from that feedback, along with sharing best practices and insights on marketing your products.

So let’s start with the big guys. These publishers are invaluable partners to the company and key players in your affiliate program. For RealNetworks, they are the ones who continue to amaze and impress us with their constant innovation and online marketing savvy. They often build, test and optimize faster than we can and move quickly to implement new products and offers. We stay in constant contact with these publishers, keeping them informed of upcoming launches, providing them with new products and offers first, granting their requests and requesting their feedback.

We provide our top publishers with tips on top-performing search keywords, any new knowledge we’ve acquired through recent testing, customized creative and updates on the constantly changing and increasingly competitive digital music and entertainment space.

Requests coming from these publishers have helped to shape our program and have greatly influenced the development of the tools and processes we have in place.

The mid-tier publishers can be defined in a number of different ways and may even be split into multiple tiers depending on the size of the program and the amount of management resources available. In our program, we consider the mid-tier publishers to be those who have shown some success in generating revenue, but have not reached a certain threshold to be considered a top performer.

There is a great deal of opportunity within the mid-tier, especially since these publishers have already put some time and energy into marketing your products and have started testing and gaining knowledge. One helpful way to gauge the potential of these mid-tier publishers is to keep a spreadsheet showing their best week. This key metric provides a benchmark and an opportunity to understand the potential impact of focusing on this group.

Working with mid-tier publishers often entails a combination of a one-to-many approach as well as a certain amount of individual attention. Consistent, ongoing e-newsletters and email messages to these publishers are a great way to let them know about new promotions, products, tools and tips. Since they probably already have a basic understanding of the products and tools available in the program, we try to focus our communications here on new information.

In addition, we also designate certain times throughout the year when we reach out to our mid-tier publishers by phone or direct email. For those who are interested in taking the time to speak with us, we find it invaluable to understand what is and isn’t working for them, and give them tips and ideas for growing their volume and finding greater success in our program.

And finally there’s the low-tier publishers – those who have barely begun or have not had much success promoting our product, or have joined the program but have not successfully driven a transaction. While some programs choose not to allow inactive or nonperforming publishers to remain in their program, we view them as an opportunity to activate a publisher who has shown enough interest in our program to at least complete the registration process. We take a purely one-to-many education approach with this tier, using similar tactics of sending e-newsletters and emails to educate them on our products, as well as alerting them to tips and tools in our program to help successfully market our products.

I believe that there is a large opportunity within this tier, particularly because it’s one of the biggest segments. For example, our program can, within one quarter, get 5,000 inactive publishers to drive one Rhapsody trial; we that as a fairly significant lift.

There is one important caveat to the segmentation model: If a large publisher joins your program, reach out right away to ensure they are aware of the data feeds and other tools in your program.

By continually informing and educating your publishers, you can ensure success and a long-term, mutually beneficial partnership.

RACHEL LAZAR is a consumer marketing director at RealNetworks. She previously worked at Amazon.com in online advertising and launched the Inshipment Marketing Channel. She holds a B.S. in psychology from Santa Clara University.

Managing Affiliates in a Rapidly Growing Market

Over the past two years, the online real estate traffic volume has increased exponentially. Part of this dramatic growth is driven by the low interest rate environment, but a bigger reason for the increase is the rapid shift in realtor marketing dollars away from offline media – such as print – toward online advertising venues.

Affiliates play a large role in the success of online real estate. While this rapid growth has led to new opportunities, it also brings significant challenges. Merchants who match consumers with professional service providers must maintain a consistent flow of only the highest-quality leads. Low-converting traffic will frustrate the service provider and may eventually result in unwanted churn. The observations following are true in particular for any merchant who matches consumers with professional service providers.

A good affiliate manager must connect the dots from consumer inquiry to affiliate sites prior to approving any potential affiliate. You should strive to determine the main sources of traffic that a potential affiliate brings to the table. Affiliates can generate traffic a number of ways. The most common methods are cost per click (CPC) campaigns, search engine optimization (SEO) and email marketing.

These are all generally accepted practices of online marketing and can be verified by the savvy affiliate manager. For example, if the affiliate is using CPC campaigns to generate traffic, you can verify this by typing in keywords and looking for the affiliate’s ads. If the affiliate is unable or unwilling to provide at least some examples of how the traffic is generated, then you should assume the worst. If you are unable to connect the dots, then it’s possible the affiliate is driving traffic using means such as spyware, incentivized clicks or link hijacking. Connecting the dots is important not only to prevent approving a fraudulent affiliate, but also to gauge the quality and potential volume they can deliver.

In addition to connecting the dots, a good affiliate manager should be able to make the best of a bad situation whenever possible. If a particular affiliate or campaign is under-performing, you need to investigate all possibilities to salvage some or all of the relationship. This can be done by adding, removing or modifying product offerings. You can change pricing. Perhaps most importantly, you can change creative and integration techniques.

For example: an affiliate promoting our brand at a national level wanted to drop the program due to poor results. We offered the affiliate a series of custom city-specific links better suited to his network of local sites and were able to improve the affiliate’s performance significantly.

In another case an affiliate was promoting one of our products but didn’t match the consumers with the appropriate buying service. To turn this around we encouraged this affiliate to start promoting a more appropriate home listings product. This change sent revenue climbing sharply.

In addition to understanding the affiliate- generated consumer traffic, good affiliate managers possess a keen awareness of all consumer traffic channels. To state the obvious: free traffic (SEO or brand recognition) is preferable to inexpensive traffic, which is preferable to expensive traffic.

If free traffic volume increases, the merchant providing professional services should focus more on optimization of existing affiliates and less on recruitment. Aside from ranking traffic by price, you also need to factor in quality. For instance, if SEO traffic is higher quality versus comparable channels, then you should recruit new affiliates that consistently show up well in the search engines for large-volume, relevant searches.

To gain large market share in times of rapid growth, you need to have a flexible affiliate program. One way to do this is to allow affiliates to participate on several different platforms. Affiliates who prefer the online reporting and payment structure of affiliate networks can join under either of those programs. For larger affiliates who want to partner directly, consider offering higher payouts and direct links. On the product side, flexibility could mean offering regularly updated data feeds, including XML feeds and co-branded forms as well as forms of different layout or length. On the payment side, you could let direct affiliates choose between cost per click, cost per lead or even revenue sharing arrangements. This flexibility in terms of platforms, products and pricing is paramount in helping your program expand.

With the recent explosion in Internet advertising, affiliates are bombarded with merchant offers from all angles. To rise above this noise, you need to be an extremely effective communicator. New value propositions such as better payment tiers, contests, fresh creative, case studies, new products and affiliate testimonials must be communicated regularly to existing and potential affiliates. Due to spam filters and overflowing inboxes, email newsletters are becoming a less effective communication method. Try to communicate one on one with larger affiliates whenever possible.

With so many new affiliate applicants each day, it is inevitable that a few bad apples make it through the approval process. To prevent affiliate fraud, you have to routinely deny affiliates that do not respond to initial contact. While the vast majority of existing affiliates play by the terms and conditions of the affiliate program, there are instances where you’ll need to take disciplinary action. In cases where affiliates purchase trademarked broker keywords or if an affiliate violates the CANSPAM Act, action must be taken quickly.

Other challenges include taking steps to monitor cost-per-click fraud. CPC management requires additional time for analysis and closer contact with the affiliates. Each month you need to look closely at the revenue generated per click for each affiliate. Unusual behavior is typically easy to spot and must be corrected quickly. New affiliates – especially those who start on the CPC program – can be given a monthly budget cap to your company’s exposure to any potential click or lead fraud. As trust builds with an affiliate, this cap can be raised or removed altogether.

Merchants offering CPC products should also have analytics tools with robot filtering mechanisms in place, as well as the ability to track click patterns funneled down the merchant’s site. For CPA products, you should monitor each affiliate’s lead-to-close rates and raw lead data on a monthly basis to ensure lead quality.

Implementing tight controls will ensure you have a good handle on your existing base of affiliates, which makes it easier to expand your program as your company grows.


MARIE NILSSON is the affiliate manager for HomeGain, a wholly owned subsidiary of Classified Ventures, based in Emeryville, Calif. She has a background in project management for the telecom and chemical industries and holds a Master of Science degree from Lund Institute of Technology in Sweden.

A Show-Stopping Performance

In times when change comes quickly, many things can keep online marketing managers up at night. The question is: What should keep them up?

Some grapple with balancing their own search marketing efforts against affiliates’ or understanding which marketing strategy delivers a better yield in terms of marketing cost as percentage of sales (CAPS). Others struggle with an increasing need to spend on customers more than once, through multiple advertising venues, in order to earn the final purchase.

Looking forward, e-commerce executives must plan to actively deal with two critical issues: embracing integrated performance marketing and adjusting their goals, success metrics and tactics. While this sounds simple enough, the risks behind making the wrong choices continue to rise.

Performance marketing surrounds us and has converted Web marketing from a grand experiment into a must-have for direct, retail and brand-focused marketers. Given this hyper-focus on performance, savvy marketers and the agencies they employ are playing in multiple facets of online marketing ranging from traffic-focused cost-per-click, to awareness focused barter arrangements, to cost-per-sale/action campaigns.

Other interesting trends include the emergence of geographically targeted and “day part” search buys wherein pre-set business rules help to automate decision making behind campaigns. Contextual marketing technologies like the UK’s Vibrant Media or Quigo also offer potential leveraging strategies that employ text-based ads and use content relevancy to place them.

If they could, marketers would choose a single, reliable, integrated technology or agency partner that offers vital insights, reduces friction and streamlines media buying. Centralization of campaign data across multiple advertising strategies offers the potential of an information-rich environment to make short- and long-term decisions. It also opens the door for rule-driven automation that enhances the productivity of already constrained human resources. This is integrated performance marketing, or IPM.

Moving forward on such an approach requires an appreciation for complex legislative, technical and operational issues that shape today’s performance-focused strategies. Many marketers have surface-level perspectives on how, as an example, affiliates actually generate legitimate (or illegitimate) sales or return on advertising spending on key search terms. Making the leap to IPM will provide marketers with insights needed to streamline decision making.

Until then, reality demands marketers must plan, execute and optimize their campaigns with fragmented tools. Marketing managers responsible for numerous performance initiatives will continue to be at the mercy of disparate technology solutions. Tracking campaign performance within individual spheres – email, affiliate programs, CPC media buys, etc., – is simple. But centralizing data is difficult, making it harder to work smarter or faster. Search marketing company iProspect created iSEBA to address these needs.

Concurrently, in an environment filled with change, executives are forced to come to grips with mergers and acquisitions among vendors. (See story, page 60). Industry consolidation inside the affiliate, search management, ad-serving and comparison shopping spaces serve as examples. As companies like ValueClick, DoubleClick and aQuantive continue to cobble together performance-focused technology and service providers, the market is forced to ask itself, “Why?” and “What’s in it for me?” Time will tell, but IPM looms on the horizon.

Not So Simple

There is agreement in that performance strategies are not as simple as they look. Marketers are suffering through the intertwining of performance strategies such as affiliate and search marketing. A more sophisticated approach to measuring and benchmarking the effectiveness of individual strategies is needed.

As an example, although affiliate marketing is perceived as purely performance based, experience dictates otherwise. Specifically, what appears on the surface to be affiliate-generated sales oftentimes result from multiple customer behaviors, unscrupulous tactics or other marketing campaigns. Efficacy of each is clouded.

By assuming an integrated perspective and focusing on how customers end up arriving on their Web site, savvy marketers are discovering that customers are being driven to purchase based on multiple online and offline ad/marketing spends. As an example, individual orders generated by customers may involve multiple media interactions such as radio advertising, a shopping comparison portal and, finally, a cash-back affiliate site. Today without the proper tools, it’s difficult to see such trends. With an IPM approach, it is possible both to spot them and to adjust media spending accordingly so as to significantly lower marketing CAPS.

Seeing Through New Glasses

Brand awareness and direct response advertising can coexist and must plug into corporate goals shared across the e-commerce team. IPM can help. Inside these different marketing realms, campaign-level spending and objectives are measured in different terms yet both intersect with overarching business objectives such as CAPS and lifetime value (LTV) of customer. These measures drive strategic decision making (i.e., media budget allocation) offline and online; they must be understood clearly.

By aggregating data cross-strategy, decision makers can hold various types of media spends up against each other using a common, business rule-driven yardstick specific to their goal. The marketer may be interested in hitting a predetermined marketing CAPS and/or LTV number. In either case, centralizing results data yields new perspectives on cost efficiencies of each particular strategy. While a handful of marketers are able to engage in such an approach and reap the benefits, costs may very well outweigh the benefits.

Embrace And Adjust

More and more, we see the need for technology solutions to facilitate streamlined IPM. In order for marketers to develop smarter media spending plans, a cross-strategy viewpoint aimed at good, better and best strategies is needed. Yet many struggle by integrating existing and homegrown solutions.

Search management and performance-marketing agencies like Advertising.com, AvenueA and iProspect are beginning to roll out solutions in which business rules drive media buying decisions under a single strategy. In order to make the best media spending decisions, it is paramount to measure effectiveness across multiple types of performance campaigns in real time. This requires a tactics-level understanding of the details of each strategy, such as how affiliates generate sales numbers. Equally important, marketers are being forced to identify quickly which marketing vehicle delivers results better than others and why.

JEFF G. MOLANDER is CEO of Molander & Associates Inc., a Chicago-based publishing and consulting firm that helps multi-channel retailers, catalogers and service companies to manage their affiliate programs.

The Overstock Obsession

Every so often, there’s a company, a person or a philosophy that attracts such a rabid following it can be only be described as a phenomenon.

In music, the Beatles and Elvis come to mind. It’s hard to think of either without envisioning ecstatic throngs of screaming, teary-eyed fanatics who would do anything for a souvenir to link them forever to their idol.

In technology, Apple Computer has survived as much (or more) on the strength of its zealous customers as on more mundane considerations like operating efficiencies or distribution channels. A piece of advice: Never try to tell a Macintosh user there are any advantages to using a PC.

In dieting, the current rage is Atkins. Eat all the protein and fat you want, but lay off the bread and pasta. Want to know more? Just ask someone who’s on it. They’ll talk the pounds right off you.

Overstock is like that in the affiliate world. Although it’s a nascent company that is far from perfect by some business measures, its customers, affiliates and employees simply ooze adoration for the fast-growing e-tailer and its undeniably magnetic CEO, Patrick Byrne. It’s not just that they like the company. This is unbridled zeal. It’s the kind of blissful rapture one expects from saffron-robed monks selling flowers at the airport.

The numbers show the love. Gross merchandise sales jumped 88 percent to $96.6 million in the company’s second quarter from the year before. And more than 3 million consumers have now bought something from the site, thanks in large part to Overstock’s 35,000 evangelistic affiliates. To put that last number in perspective, Macys.com has only 2,000 affiliates, or less than one for every 16 that Overstock claims.

After only five years in business, Overstock has blossomed into the 18th largest e-tail site. It attracted 9.3 million unique visitors during July alone.

Much of that success can be attributed to Byrne, a sort of existential capitalist whose top-tier schooling (BA at Dartmouth, MA at Cambridge, PhD at Stanford) has left him with a penchant to quote philosophies ranging from the Bible to Sun Tzu to Obi-Wan Kenobi. He often speaks in adages colored by a metaphysical hue.

“If you treat people well and customers well, you’ll be rewarded,” he says describing the “virtuous circle” of the retail world. “You can’t cheat karma. The karma police will always get you.”

He’s first to admit his company’s shortcomings in a way that enhances his credibility. In the company’s last earnings report, for example, he expressed his disappointment with Overstock’s “Daily Deals” promotion. “I am not giving up,” he said, “but this has been a dud.” He also admits to worrying about “bottlenecks” and declared outright that “B2B has been a disappointment.”

“Cynics claim that my candor is but an attempt to pump my stock by drawing investors looking for someone who does not pump his stock,” Byrnes wrote in the company’s recent earnings report. “I am flattered to have attributed to me such Machiavellian subtlety!”

Byrne grew his company the hard way after “getting turned down by 55 VCs (venture capitalists)” in his quest for funding. Overstock went public in 2002, using the same Dutch auction process that Google adopted this year.

The Art Of Affiliates

He’s so dedicated to building his affiliate program that he’s given Affiliate Manager J.T. Stephens a force of 10 assistants to build it. Byrne required them all to read Sun Tzu’s The Art of War, which he views as the “textbook on Internet affiliate marketing.” And, although Overstock’s commissions are relatively low at 3 percent to 7 percent (many merchants pay 10 percent to 12 percent), affiliates love the company for its highly personalized support.

“It isn’t always the commission,” says Sandy Breckenridge of SlipCovers- Fabric.com. “Higher commission sites don’t come near Overstock when it comes to support and personal attention.”

Another devout affiliate, Asif Malik of Plaza101.com, strayed from the Overstock flock for a while until one of its managers came after him like a shepherd looking for a lost lamb. “For a while, I dumped them,” says Malik. “But I got a call from Adam Russo and that changed.” Now the two work closely on updates, sometimes talking several times a day to make sure Malik is doing all he can for Overstock.

“It makes a difference,” says Malik. “I email or call and they respond right away. I email or call other companies and sometimes never hear from them. Or I get a message back telling me they don’t provide tech support.” Malik scoffs. “I don’t need tech support. I have technical know-how. I am just trying to help generate revenue for them. They are fools and I drop them. If they are too busy to talk to an affiliate like me, they lose.” And Overstock wins.

“No other merchants are calling them,” says Stephens. “We call them. We’re like a free marketing consultant, and affiliates are all ears.We tell them our best sellers and suggest placement. We give them the resources and tools to make money.”

Industry Advocate

The company also won admiration from many affiliates for filing the first suit under Utah’s groundbreaking Spyware Control Act. The suit alleged rival SmartBargains created ads that popped up over the Overstock Web site. (SmartBargains had filed its S-1 for an IPO. At the time of publication, it was in a quiet period and could not comment.)

“I love them,” said affiliate Connie Berg of FlamingoWorld.com, who recently shared LinkShare’s award for “Most Vocal Advocate” with Overstock’s affiliate team. “If they can get some spyware stopped, it helps people in other programs, not just Overstock’s.”

Byrne sees his raft of affiliates as his not-so-secret army to do battle with larger rivals like Amazon.com. “It’s a war of the fleas against the elephant,” he says. “A few years ago, affiliates did $150,000 in sales a month. Now they do millions It’s not yet $10 million a month, but it will be by the end of this year.”

While many companies trim inactive affiliates from their ranks to concentrate on their top producers, others see them as a source of potential growth. LinkShare CEO Steve Messer, for example, believes that once an affiliate shows interest in a company, “there’s always a chance to reactivate them.” (See Issue 3, Share And Share A Link.)

Overstock never cuts affiliates, meaning many of those 35,000 soldiers are ghosts that occasionally come back to life. One “inactive” affiliate who hadn’t generated any sales for Overstock in more than three years recently turned in $10,000 in one month.

Overstock champions the little guys, small affiliates who generate between only $500 and $3,000 in sales per month. The superaffiliates may generate more sales per affiliate, but they also demand higher pricing, flat fees and enhanced commissions, which makes them more expensive and harder to work with.

“We like the medium and small affiliates. I’d rather have 10,000 of them anyway. We try to do well by our affiliates. At this point, we think of them as jedis and padawans,” says Byrne, referring to the fully trained warriors in Star Wars and their young apprentices. “They are a mercurial bunch and they react quickly to good treatment.”

Stephens, meanwhile, translates the focus on the smaller affiliates to hard cash. “When you work to get 50 affiliates to add even $1,000 to $2,000 each in sales each month, it ends up affecting the bottom line,” he says. “Everyone else is cutting down and we are building out. Other companies limit themselves. But their loss is our gain.”

And the company does try to treat them well. “You can never lose sight of the fact that affiliate marketing is a symbiotic relationship,” says Stephens. This focus on affiliate appreciation seems to be paying off for Overstock. Affiliates like knowing they are talking to someone who specializes in their category (see list).

“Overstock is one of the easiest ones to set up and start earning money with,” says Gabriel Lam, who runs GotApex.com. “They have a wide range of products and very good pricing.”

Less Than Perfect

Of course, just as Elvis had a weakness for fried peanut butter and banana sandwiches, Overstock has a few flaws, too. Its immense expansion had led to some growing pains, and the company has yet to achieve profitability.

Some affiliates report that Overstock’s coupons get posted but don’t work right away, which they say happens very infrequently with other merchants. And Overstock spends a lot on advertising: $5 million in 2003 and $2 million in January through July 2004. It acquired 744,000 customers during 2003, but the cost was high – $13.30 per customer.

Overstock handles all advertising internally, a risky venture for a company dependent on brand awareness and national media buys. (It had to back off its “Big O” campaign after Big O Tires complained.) And Wall Street analysts remain wary. Only two analysts follow the stock and both are from investment banks that do business with Overstock.

In a research report published in July, analyst Tom Underwood of Legg Mason Wood Walker rated the stock as a “hold,” roughly the equivalent of a grade of C in school. “Success is not only still unassured,” he said, “we can’t quantify potential financial results around the business with any accuracy.”

And then there’s the area of search engine ranking. Overstock does its own optimization and could use some improvement. In a recent Google search for “discount shopping,” Overstock didn’t even appear on the first page for sponsored or unsponsored links. (The sponsored links included Target and SmartBargains. Curiously, Connie Berg’s FlamingoWorld .com topped the unpaid list.) Because Overstock describes itself as selling “name-brands at clearance prices,” Revenue ran a search for “name-brands clearance prices.” Again, Overstock was a no-show, paid or unpaid.

‘Smitten’ Buyers

Some affiliate managers find that some of their best customers are their own affiliates. It makes sense given that affiliates want to support their merchants and earn a commission on their own purchases. But Overstock’s cultish shoppers have been known to turn that model around by becoming affiliates simply because they love shopping at Overstock.

That’s the case with an affiliate named Beverly C. Lucey, editor of the blog WomanOfACertainAgePage.com. She has affiliate links to Amazon because, as an educator she wants to encourage reading. She turns down other business ventures offered her – from manufacturers of Viagra, weight loss products and “anti-aging goop.” But she decided to provide a link on her site to Overstock.com. “They didn’t ask me to,” Lucey wrote in an e-mail interview. “I’ve been a happy customer for the last four years.”

Of course, she swoons, there was another factor: After hearing an NPR interview with Patrick Byrne, she became “smitten.”

Byrne seems to have that effect. “Everything he touches turns to gold,” gushes Stephens. And Marketing Vice President Kamille Twomey says, “He is an exciting and convincing man. ” I came in to talk to him and a few minutes later, I was working for him.”

Special Treatment

The company runs network-wide promotions with tiered bonuses, but it also brokers one-on-one deals with Web sites, letting affiliates sell, say, a Burberry scarf, for less than Overstock does. Many affiliates who Revenue interviewed said special deals were a great incentive.

“I call Overstock and Amazon the Masters of Promotion,” says Michael Conley of Amazing-Bargains.com, who has been working with Overstock since 2000. He also likes their dependable and cheap shipping, which is usually $2.95 whether users buy a book or a couch, and sometimes is free. The symbiosis should help around the holidays.

The holidays are critical to Overstock. “In 2003, half our sales were in the fourth quarter,” says Twomey. In the late summer, the company employed about 500 people. With seasonal help, that number will jump to 2,500, up almost 80 percent from the 1,400 working for Overstock last holiday season. Clearly, the company is preparing for sales of biblical proportions.

“We’ve been thinking about the holiday season since January,” says Byrne. “In past Novembers we finished the ark by wading in waist-deep water pounding nails in the rain. This year our ark will be complete before the first raindrop falls.”

Spoken like a true believer.

DIANE ANDERSON is managing editor of Revenue.

Five Who Drive

It takes a special something to be among the best in your field, especially when the field is as competitive as affiliate marketing. We all know it takes more than commission checks and banner ads to rise above the crowd.

Revenue decided to take a look at five strong programs and the people who run them. Of course, convincing program managers to talk about their success is rather like getting Grandma Virginia to share her famous cherry cobbler recipe. But there are some commonalities in these programs that deserve attention.

The first thing we found is that each is led by a strong manager with a clear vision of how that company differs from its competitors. And all these managers demonstrate great respect for their affiliates, although they may show it in different ways.

You’ll see other similarities, to which we’d like to offer one more: You don’t need to be one of the top 100 retailers to see a big increase in your affiliate sales. But it never hurts to think big, as did these five individuals.

Mondera.com

Name: Chris Sanderson
Title: Affiliate Manager
Business: Jewelry

Mondera.com found its crown jewel in affiliate marketing, which generates 30 percent of the online jeweler’s income in an average month, according to program manager Chris Sanderson. During the holiday season, the percentage climbs even higher.

Mondera sells a wide range of wedding and engagement jewelry, such as diamond engagement rings and wedding bands. It also sells a wide range of support jewelry for birthday and Christmas presents, with prices ranging from $30 to more than $500. The average sale at Mondera totals $1,250. Affiliates can earn from 5 to 20 percent per order.

To help drive sales, Sanderson said the company began a modest affiliate program on BeFree in 2000, but “we left it to manage itself.” The company switched over to LinkShare in July 2002 and ramped up its efforts. The extra work has paid off smartly. Sales started rising about three months later and reached their peak after 18 months of Mondera’s continuous effort.

Sanderson attributes the success of Mondera’s affiliate program to four important factors: constant, dedicated support, an easy-going, accessible approach to affiliate management, a firm stance against parasitic activities and, of course, commissions that most affiliates only dream about. “Who doesn’t dream of getting a commission on a $10,000 diamond sale?” he asks.

Sanderson is quick to note the benefits of affiliate marketing and has lots of advice for other managers.

“Affiliates put in the same amount of effort that you put in,” he says. “Providing affiliates with fast, friendly support is very important. When things go wrong, put your hand up. Affiliates respect trust and honesty – and a high conversion rate – above all other things.”

He also notes affiliates can be a great source of feedback about a merchant’s site, and can even become a valuable pool of customers. “If they promote your products and like your products they will also buy from you. Ten thousand happy affiliates means 10,000 potential customers,” he says.

“There are a number of affiliates who don’t add value, intercepting traffic before it arrives at your site and inserting tracking to make it look like they are driving sales. Merchants need to review their partners carefully to ensure they are adding value,” he says, adding one final piece of good advice: “Always pay on time.”

Shoes.com

Name: Brook Schaaf
Title: Affiliate Manager
Business: Shoes

Shoes.com had an active affiliate program in place from the moment the site launched in 2001, and Affiliate Manager Brook Schaaf says the program started generating sales in the six figures after just half a year.

The affiliate program has been a very comfortable fit for the shoe merchant, which doesn’t use traditional media. “We like programs we can measure. CPA and CPC are our big revenue generators,” says Schaaf, who is also delighted at how the program has given the business a good deal of trend reporting.

“We see an increase in sales beginning with back-to-school and climaxing with the holiday season, then again in the spring – very strong in the spring,” Schaaf says. “Taking program growth into account, we did 40 percent more business in the last half of 2003 compared to the first half.”

Schaaf gives affiliates most of the credit for Shoes.com’s affiliate marketing success. Affiliates earn 10 percent on each sale, but Shoes.com has been known to run promotions that increase the base commission rate for affiliates.

“My favorite affiliates are mom-and-pop-type operations; often literally a husband and wife team working from home. They’ve got good control of their sites, are responsive and easy to work with,” Schaaf says. “With thousands of affiliate programs out there, part of the challenge is staying on top of people’s minds. Our network, Commission Junction, has also given us a lot of credibility and visibility.”

His advice for other merchants just getting started with affiliate marketing?

“Consider your tracking needs carefully,” Schaaf said. “I am partial to Commission Junction. Performics is good, too. Most important: Hire a full-time manager and empower him to make decisions for the program. Know how much you can afford to pay and what your competitive advantages are. Communication and consistency are important.”

And Schaaf notes that it’s important to look out for your affiliates.

“Remember that affiliates – real affiliates – are making a living off of sales, so you have to speak to their heads as well as their hearts,” he says. “Say, ‘You’ll earn more money with me’ and coordinate internally to make this a reality. Listen to everyone but listen closely to the people who are sending you big sales because they talk the least.”

T-shirtking.com

Name: Bill Broadbent
Title President
Business Retail Sales/T-shirts

T-shirt King President Bill Broadbent isn’t new to the business of selling T-shirts. He’s been doing it – quite successfully – since the 1970s.

T-Shirt King was recognized this year as one of the “Best of the Web Top 50 Retailing Sites” by Internet Retailer magazine. Broadbent continues to see consistent growth in his company’s online presence and brand recognition. That’s surprising when you consider that the company houses only 18 selftaught employees and is considered to be one of the largest employers of tiny Mountaineer, NM.

Although he didn’t enter the affiliate marketing arena until 1998, affiliates already account for a third of the company’s sales. He now views his decision to start an affiliate program as a turning point for the company.

“We saw results in six months, because that’s when we got serious about it,” Broadbent said. “Affiliate marketing can bring you results immediately if you take a serious approach and invest time into it,” he says.

Ian Larson, who manages T-Shirt King’s program at PartnerCenter, says much of the success of this program lies in the product. “The T-shirts sold by T-Shirt King are marketable because they are officially licensed and represent such a broad range of interests, from music to favorite bands to politics. T-shirts are most people’s way of expressing who they are quickly and succinctly without having to even say a word.”

During the holiday season, T-Shirt King rakes in 40 percent of its annual sales. So the company’s Web site offers publishing partners a 365-day cookie that allows affiliates to make the holiday season last all year long.

Broadbent says the benefits to his company go beyond mere revenue. “Even if we were not making sales with our affiliate program, our message is out there,” he says. “People see us, they become familiar with us. The exposure is a great benefit. We are reaching an international audience from rural locations.

“It’s amazing.”

Broadbent has advice for other retailers who are considering an affiliate program: “Don’t do it unless you are serious about it. Be proactive and committed to the program.”

Redenvelope.com

Name: Myles Felsing
Title: Director of Interactive Marketing
Business: Luxury Gifts

Although RedEnvelope didn’t launch its affiliate program until September 2002, the program now accounts for half of sales for this online retailer.

But RedEnvelope’s quick success didn’t come without extensive pre-launch legwork, and they want to make sure other merchants realize this before diving into affiliate marketing.

“Do research before beginning an affiliate program,” says Myles Felsing, director of interactive marketing. “Evaluate the marketing channels you currently have in play. Make sure it’s a good fit for your business.”

RedEnvelope learned the importance of doing research the hard way. Originally known as 911Gifts.com, the company was launched in 1997 as a way for last-minute male shoppers to find the perfect gift.

Two years later, it went through a high profile restructuring, with a new name and a new mission: to sell upscale, luxury gifts starting at $20. In addition to its affiliate program and online sales, the company is now planning to launch a catalog company backed by traditional marketing in the coming months.

The company’s revenue was $79.3 million for its last full fiscal year. Per-order sales were $72 million in the first quarter of the current fiscal year, with a profit of $38 million. The company went public during 2003, trading under the ticker REDE.

Affiliates earn between 8 to 12 percent per sale. RedEnvelope also offers incentive plans based on demand volume. This makes it possible for its best affiliates to have an overall effective revenue share of 20 percent.

“Affiliate marketing appealed to us because of its performance-based structure and broad reach into areas where we did not have internal recourses to manage direct relationships. By introducing an affiliate program into the marketing mix that operated at a high efficiency, we were able to not only scale our online marketing efforts significantly and increase our overall ROI for online programs, we were also able to extend our direct marketing efforts as well while attaining our overall efficiency goals as a company,” says Felsing.

What advice does Felsing have for other merchants? Start communicating.

“We focus on fresh creative and keeping our affiliates up to date on promotions and new items,” he says. “We reward our top affiliates by giving them a higher commission during peak seasons, or establishing a revenue goal with the affiliate prior to a peak season, and if they meet that revenue threshold, a bonus is paid out. These arrangements encourage our top affiliates to promote us even more.”

Urbanscooters.com

Name: Frank Minero
Title: CEO
Business: Electronic and gas scooters

Motorized scooters may not pop into your mind as a hot item for online sales, but Frank Minero has been in the business since 2001. He first heard about affiliate marketing about a year later.

As it turns out, he stumbled across a forum on ABestWeb.com and liked what he read. “I dug in and learned all I could,” he says.

He launched his affiliate program in the fall of 2002 and, within the first few months, started seeing steady sales of his gas and electric scooters, which go for $99 to $1,000 each. By Christmas 2003 he had doubled his sales from the previous year Affiliates earn 7 percent on Internet sales and 5 percent on telephone sales.

“I believe the success of our program boils down to open and honest communication, good information and a bit of fun,” Minero says. “I simply ask myself, ‘Self, if you were an affiliate, how would you like to be treated and what information would you need to get the job done?'”

That soul searching helped him understand that affiliates need incentives, but that they also have a lot to offer in return. “We offer an affiliate contest annually and reward our top affiliates with cash and prizes,” Minero says. “We have some pretty knowledgeable affiliate partners, and through the course of sharing information I’ve learned things that have greatly benefited our business.”

In addition to an affiliate program, Urban Scooters also uses other measures of Internet marketing such as pay-per-click advertising and organic search engine optimization. “In the last two years we’ve tried other traditional methods of advertising and found these three methods to be the best,” says Minero.

Minero says managers who are thinking about launching an affiliate program must be ready to make the kind of commitment it takes to be successful. “Give it a shot, but make sure you allow the time to provide your affiliates with the information they need to effectively sell your products,” he says. “It does take a good amount of time to effectively manage an affiliate program. Unlike Ronco’s Rotisserie, you can’t just ‘set it and forget it.'”

LAURA SCHNEIDER is the marketing editor for About.com. Her articles have been published by more than 4,000 Web sites and magazines. She also serves as operations manager for PartnerCentric Inc. and owns a consulting firm, ZealSpin Inc.

Indie Labels

As the affiliate manager for Calendars.com, Hilary Poseski hawks more than 6,000 different calendars. They feature dogs, fashion models, families, folk art, God, teens, transportation, lesbians, history, cooking, ethnic groups, patriots, sports, cars, photos, travel, nature, music and wild animal tamers. Among many other things.

“Whatever your hobby is, we have a calendar for it. These all translate into niches to find affiliates to work with us,” said Poseski. “Since we focus on affinities, the customers our representatives generate for us are highly responsive to the additional marketing that we do. Affiliates who come in are highly qualified, with great conversion rates because they come from Web sites that have a strong affinity for our product.”

Her success is not only due to having great affiliates, it has to do with how she finds them. Unlike the vast majority of companies, Calendars .com runs an independent affiliate program with the help of off-the-shelf software, shunning the popular option of paying a network to run its program.

From retail giant Amazon.com to smaller players such as ABCLeads.com and ChoiceShirts.com, there are hundreds if not thousands of companies that choose to take on the task of running their own programs. And they have no problem finding affiliates. Sixteen percent of affiliates prefer to work with indies instead of networks, according to AffStat, a statistical study published by Shawn Collins Consulting. Another 41 percent said they have no preference.

Of course, there are drawbacks. It’s more work for both the affiliate manager, who has to make payments, recruit affiliates, fix technical glitches and handle myriad other tasks. And it can be harder for affiliates to work with a lot of different managers instead of collecting a single check through a network representing multiple programs.

Networks are quick to point out the positive things about working with them. “As a trusted party, we offer value much greater than the cost of the network,” said Elizabeth Chowalsky, vice president for marketing and product development at Commission Junction. “Certainly the software that allows you to do it in-house handles the technical issues, like tracking. But when you run a network there’s a relationship between the advertisers and the publishers, and we make sure they all abide by the rules of the advertisers.”

And then there is the sheer bulk of the networks. CJ, for example, claims 70,000 “active” publishers, which the company defines as affiliates who’ve earned commissions within the last six months. LinkShare claims 10 million “partnerships,” but Ð by policy Ð doesn’t purge inactive affiliates from its ranks (see story, p. 38).

Nine of the 10 leading online retailers work with CJ, Link Share or Performics, including such giants as Sears, JCPenney, QVC and Gateway. For affiliates who depend on big brand names to lure customers, that’s a big incentive to work with networks. The notable exception is Amazon.com, a pioneer of the affiliate marketing industry that set up its own “associates” program in 1996.

“A company deciding whether to out- source this or do it in-house has to decide whether having expertise in online marketing is important,” said Sara Spillman, senior manager for Amazon.com Associates. “For us, understanding consumer buying behavior is most important, along with encouraging Web sites to merchandise our products. That’s our key to success.”

Amazon has a whopping 900,000 affiliates. Spillman said the percentage of active associates is “healthier than average,” but wouldn’t say how much revenue the program generates. “We are very intent on optimizing the experience and creating a compelling program. We continue to invest in this program, which should tell you that it’s very successful,” she says.

Part of Amazon’s success stems from the number of authors who promote their own books, then steer customers to the Amazon site. “I get more money on Amazon clickthroughs buying my book than I get in royalties from the publisher on the same sale,” said Michael Dean, who writes textbooks and novels. His titles include $30 Film School and $30 Writing School. “I make $1.10 per book from Amazon.com, and $1 from my publisher,” said Dean.

Some affiliates see a bit more risk working with indies, depending on the nature of the affiliate and the time they have to work on their programs. Take PhillyBurbs .com, a local news site that supports itself in part through both independent and network revenue sharing programs. “Affiliation is a small portion of our revenues, so investing too much time into one of them isn’t good,” said Executive Editor Karl Smith. “When you’re dealing with networks, the real upside is consolidated payments. But the downside is that some of their affiliates use predatory tactics that can steal business away from us. If the company is an indie, it’s much easier to know for sure what their practices are.”

CJ’s Chowalsky chafed at the notion that networks are havens for predators. Her company monitors all of the links from affiliates and, if they catch anyone redirecting traffic from other affiliates, the fraudster gets the boot, she said.

The single biggest consideration in deciding whether to work with networks or remain independent is, of course, the cost-benefit equation. Networks charge fees, often large fees. The fees may be thousands of dollars a month, since the cost structures are as high as 30 percent of total payouts. So the question becomes: Are the services rendered worth it?

ABCLeads.com didn’t think so. The company generates sales leads for licensed long-term care insurance agencies. It started out paying network fees that kept the company from paying its affiliates more than $7 per lead referred. After it brought the program in-house, ABCLeads was able to raise payouts to $8 and to keep more money for itself.

ABCLeads Marketing Manager Karen Hudgins said network rules also prohibited it from paying recruitment bonuses. Now it pays affiliates 50 cents for each lead generated by an affiliate they’ve referred to the program.

Control is another big reason that indies go it alone. At DomainDirect.com, Affiliate Program Manager Bessy Nikolaou noted that 20 percent of her 2,400 affiliates produce 90 percent of her sales, so she likes to shower affection on them.

“The small mom-and-pop shops that are listed with the mega-networks have never proven profitable with us,” she says. “I want to have control over who can participate in our partner program. My main focus is on identifying potential partners whose product offerings complement our domain and hosting services.”

Likewise, says Pat Matthews, CEO and affiliate manager for WebMail/Excedent. “We almost went with a network, but I didn’t like their managed model,” he says. The network “works with a lot of regular retailers as affiliates. We prefer to recruit webmasters and consultants for our enterprise email solutions. You have to find the right affiliates to promote your products and services.”

Poseski said Calendars.com’s customer acquisition costs are much lower as an indie than they were when the company was in a network four years ago. The cost of software is quickly offset by the lowered costs of being independent, she says. Another tradeoff is the time it takes to run an independent program.

“The biggest challenge is the time and effort that it takes. But this is also what makes the program successful. I stay really involved. It’s grass-roots marketing,” says Poseski. It helps that Calendars.com is part of a larger company, CalendarClub, which has its own accounts payable and customer service departments.

Kerri Kaufman, the affiliate manager at ChoiceShirts.com, found some affiliates aren’t very “sophisticated” when it comes to promotional and technical issues Ð a potential time drain. “But once we get in touch with them and help them get going, it’s easier to get them to stick around,” she says. “A lot of prospective affiliates apply to a bunch of programs at once, so once you approve them, you want to get them to come to you rather than to another merchant.”

Kaufman says the time factor also helps to make sure her affiliates are productive. “We deactivate a lot of affiliates who don’t become active because we can’t spend the time trying to work with a small affiliate who won’t generate enough revenue,” she said. That limits the program size to several hundred affiliates, but Kaufman boasts that two-thirds of them are active.

Being independent can also save time. At ABCLeads, Hudgins said they were seeking leads for long-term care insurance, but many network affiliates would ignore the very important adjectives before the word insurance. “One affiliate drove 12,000 leads to our site seeking health insurance, and we had to get refunds [from the network] on all of those. That kind of thing happened more than once,” she says.

Now, if affiliates send any mismatched applicants, it’s much easier to eliminate them from consideration, in part because Hudgins is in direct communication with the affiliates Ð she requires affiliates to list their contact information on their sites. “This fosters stronger relationships and makes it easier for us to get in touch with them,” she says.

Under the network system, the only way she could contact affiliates was through the network’s messaging system.

Rapid communications often translates into quick profits. For example, when illusionist Roy Horn was mauled by a tiger during his Las Vegas show, Siegfried and Roy souvenirs started selling, well, like wild. Calendars.com’s Poseski quickly got in touch with the operators of fan sites, alerting them to push for sales of calendars based on the famed duo.

“We understand the multitude of niches that we market to, and no network can do that for us,” she says. “We retain the ability to respond really quickly when a new affinity catches on. Trends come out of nowhere, and you have to capitalize on them.”

Running an indie site just might be one of those trends.

JACKIE COHEN has been covering affiliate marketing since 1998. She previously edited the Net Returns section at The Industry Standard.

Bad Guerrillas

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Value Proposition

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

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

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

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

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

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

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

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

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

What’s Mary Kay Got To Do With It?

One of the most common myths about the Internet is that this new-fangled technology makes business mysterious, complex or risky. The truth is that the basic laws of doing business still apply. Sure, there are some new technical concepts to grasp, but business is still business. That has not changed. Case in point: affiliate marketing and the Internet.

During the dot-com boom-bust cycle, thousands of businesses failed, primarily due to bad business models, not bad technology. The silver lining is that online merchants became more conservative, resulting in a shakeout of most of the idiotic ideas. Darwin would be proud: The fittest companies survived. Business on the Internet is here to stay. Online spending has grown quarter after quarter. Most American homes now have Internet connections. The number of high-speed connections is skyrocketing. Even stodgy old brick-and-mortar companies with online sales channels are experiencing solid growth.

A large and growing chunk of those online sales are coming through affiliate marketing. Why? Because affiliate marketing is based on a very well-established sales strategy – the outside sales force. Affiliates are very much like the troops of lipstick-wielding Mary Kay consultants or the ubiquitous Tupperware party animals.

Technology may be what makes it cool. But a powerful sales force is what makes it work. If you have a good product, an outstanding compensation plan, a well-thought-out incentive system, personal relationships and excellent sales materials, your business will explode behind zealous salespeople who are eager to evangelize the greatness of your company and its products.

Technology may be great for checking on the number of ads served through your Web site, but it ain’t going to sell your stuff. That’d be like asking the sweaty guys at the Mary Kay fulfillment center to go door-to-door hawking skin softener. No sale.

What works in affiliate marketing is the same set of strategies that works in direct sales. Focus on recruitment. Offer reasonable compensation. Add incentives. Build loyalty. Provide great service.

What won’t work is relying on technology to run your affiliate program.

If an offline company wanted to expand its outside sales force, it wouldn’t think of hiring people without interviewing them and assessing their capabilities. The company also wouldn’t think of sending that person off to sell the product without great sales collateral and constant motivational support. Conversely, a good salesperson wouldn’t consider helping a company that didn’t pay good commissions punctually, offer good customer service or market a credible product.

If your online company wants a successful affiliate program, it needs to stop trying to attract every affiliate on the face of the planet. Be selective. Do your homework. Look for the good ones. Find the sites that have something complementary to your product offerings. Make your commission offer exciting, fair and extremely reliable. Think up great motivational offers. Mary Kay saleswomen work their fannies off for a pink Cadillac. This also works wonders in the online gambling world where top affiliates sometimes drive away with Ferraris. That may not be appropriate for every program, but every program could consider an extraordinary reward for top performers.

Money isn’t the only thing that motivates the salesperson in the direct sales model. There are weekly motivational meetings with recognition given for success. This can be done easily and inexpensively with tele-seminars, regular newsletters and bonuses handed out to top producers. Or, by giving your affiliates top-notch custom-made Web pages with your products data-fed onto their site, like an Amway catalog with the salesperson’s name, phone number and affiliate ID dynamically generated on it.

Treat your affiliates like valued salespeople and they will be loyal and productive. But this can’t be done with thousands of faceless ID numbers on a statistics report.

You’re probably thinking: “Oh, I can’t do that! I have 5,000 affiliates and not even one whole staff person focused on it.” Fine. Then, you need to rethink your affiliate marketing strategy. If you don’t assign human resources to this powerful force, you won’t see the results. Period.

If you expect to join a network, get 2,000 affiliates overnight and then watch the sales explode, you are sadly mistaken. It takes constant and creative effort to nurture this kind of sales channel. Try focusing on less than 100 who are really devoted to your program and work with them personally to build their traffic and sales. If you can’t afford a full-time, experienced and well-paid affiliate manager, consider farming out the management tasks to an outsourcing company that specializes.

Technology is not the most important thing here. Human beings are. Yes, you should use the best tracking interface you can afford. But if you really want to have the best affiliate program you can afford, you’d better start with the best affiliates you can find.

LINDA WOODS helps merchants to start and manage affiliate programs. Through her company, AffiliateGoddess.com, she and her team offer strategy consulting, training and outsourced management services.