Consulting – UtilitesDB

Kristopher B. Jones: The Small-Town Big Man

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

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

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

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

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

It Started With the Jam

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

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

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

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

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

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

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

Getting Into the Affiliate Game

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

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

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

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

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

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

Growth Spurt

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

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

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

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

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

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

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

Hire Up

Even the most traditional companies don’t need to be convinced anymore that Internet advertising and marketing is no longer optional. Today companies from the Fortune 1000 on down, which were reluctant to explore the Web in the late 1990s, are shifting their resources online.

The proven return on investment of Internet advertising is one reason; another is that user-generated content sites such as MySpace.com and YouTube.com offer new opportunities to reach customers more intimately and effectively.

Internet advertising growth has soared during the past three years due to improved advertising technologies and the spread of broadband Internet service. PricewaterhouseCoopers expects the Internet to receive 10 percent of total global advertising by 2010 compared with less than 3 percent in 2002.

Areas of Increased Spending in 2006 vs. 2007 eMarketer estimates that total U.S. Internet ad spend was $16.4 billion for 2006, a 30.8 percent gain over 2005’s $12.5 billion figure, and predicts that online ad spend will reach $23.8 billion by 2008.

EXPERIENCED EMPLOYEES ONLY

This drastic surge in online advertising has dramatically increased the need for skilled employees. Advertisers who have know-how selling and measuring online campaigns, and marketers who can create innovative Internet initiatives, are in high demand. And as companies understand the power of ROI-based online marketing efforts such as affiliate and search marketing, there has been a sharp increase in the demand to hire performance marketers.

Compounding this demand is the advent of Web 2.0 venues such as YouTube, Facebook and Second Life. Similar to the situation created by the late 1990s’ Internet boom, today there is a very small ready pool of experienced staff for the opportunities that Web 2.0 present because the venues are so new. Finding staff to manage the explosion in user-generated content, and leverage its marketing potential, is proving to be challenging.

This increased demand for qualified talent has recently been felt throughout the industry – from recruiters to employers to merchants. Smith McClure, division director of the Minneapolis branch of The Creative Group, is a recruiter for both traditional and online marketers. He says that demand is up and that the market for qualified talent for online marketing jobs is getting tighter.

Jane Paolucci, vice president of marketing for Coremetrics, a provider of on-demand Web analytics, agrees and says it is getting harder because business is growing at such a fast pace.

Todd Leeson, vice president of marketing for Jobster, says the number of searches for online marketing and online advertising jobs on the Jobster online recruiting site has increased threefold over one month – from October 2006 to November 2006.

During the fourth quarter of 2006, Sean Bisceglia, president of Aquent’s marketing staffing, a global marketing and creative services staffing firm, also noticed a major increase in the number of companies looking for online marketers. He says that 20 to 30 percent of his day-to-day job openings are for online marketing positions and that they are the hardest to fill because there are not enough specialized people.

In fact, an Aquent Marketing, Staffing and Spending survey found that the top three areas that corporate marketing departments planned to increase money for in 2005 were branding, Internet marketing and advertising. But in 2006, Internet marketing took the lead as the most sought-after position in the industry.

Two San Francisco Bay Area recruiters who are feeling the pinch are Sal Castillo, who owns his own group; and Marni Mires, a recruiter for the high tech executive search firm Quest Group. Mires says that Quest recently had candidates with multiple offers and that companies need to pull the trigger within two weeks or risk losing the candidate to another offer – a very different market than just a couple of years ago.

Castillo says that today’s online marketing jobs are very specialized: therefore, it is harder to find candidates that match all of the criteria: “Fifteen out of 100 resumes match the job skills that I am looking for.” Stephanie Schwab, vice president of marketing for Converseon, says “For every 100 resumes we get, there are about five or 10 that I’m interested in calling, and of those, about three to four that I want to meet.”

HIRING FOR SEARCH POSITIONS

According to Forrester Research’s report, The State of Retailing Online 2006, search marketing was responsible for 36 percent of new customers for online retailers in 2005. Search is the only advertising media where customers tell merchants what product they are looking for – and it is more effective than other advertising because the advertiser can tailor its targeting and message to each specific searcher’s need.

John Challenger, CEO of Challenger, Gray & Christmas, Inc., an international outplacement consulting firm, says “Companies cannot afford not to put their dollars in this area because it is so focused.”

FathomOnline’s CEO Dean DeBiase says, “If you’re not present in the search results, your competition will be.” This fear is causing companies to rush out and hire search marketers en masse.

Percent of New Online Customers for Online Retailers/Marketing Spend Mix (2005) Challenger says that SEO and search marketing are really hot markets for hiring. Jobster’s Leeson says they have seen an increase in the demand for search engine marketers by companies of all stripes “ever since Google revolutionized the way that people advertise through AdWords.” Quest’s Mires says that she gets a lot of requests for search marketers – especially for people who have established relationships with Yahoo, Google, MSN and have lots of online consumer experience.

Chris Raniere, CEO of Revcube, a software provider for multichannel online ad campaigns, says that the hardest job for him to fill is for search marketing. He says that anyone with more than six months of experience working with Google and running campaigns is very hard to find.

And recruiter McClure agrees: “People with big-scope experience from Yahoo and Google have their pick of positions because all of the Fortune 500 are doing search now.”

Coremetrics’ Paolucci says that experienced search people will get harder to find. A 2006 Coremetrics survey asked 120 marketing professionals in the U.S. and the U.K. about the methods they used to reach customers. It found that 31 percent of respondents think SEM is the most important skill in their current role and 60 percent of respondents feel that SEM skills have become more important over the past two months.

Data from MarketingSherpa’s Search Marketing 2007 Benchmark Guide finds that SEM professionals with zero to one year of experience can command $55,000 to $75,000 and those with three years of experience can get $80,000 to $100,000. Mid-level managers with SEM experience of just one year can fetch $85,000 to $100,000 and those with three years of experience can command $110,000 to $125,000.

Converseon’s Schwab says she can find junior-level people out of college with one year of Internet experience and hire them as account coordinators in their search group for approximately $40,000.

HIRING FOR AFFILIATE MANAGERS

Others say it’s much harder to hire affiliate managers. “Hiring for search employees is competitive but easier than hiring for affiliate managers,” Schwab says, explaining that it is the hardest position for them to fill because the skill set is so broad – including coding, graphics, communications and affiliate relations.

Three years ago, affiliate management was a one- or two-day-a-week job but today it’s a full-time job, according to consultant Shawn Collins, who does some outsourced affiliate program management. He says that hiring for affiliate managers “has been difficult for as long as I can remember” and says it is because the job requires experience and relationships, which take time to build.

Consultant Andy Rodriguez agrees that hiring an affiliate manager is challenging because the person has to wear many hats. He says that out of the 12 people he has hired, only two of them have worked out. “They were overwhelmed – it’s difficult – it is not a straightforward job,” he says. Rodriguez says that he spends 20 to 25 percent of his time reading during the week to keep up to speed on the industry.

LinkConnector’s CEO Choots Humphries says the qualities LinkConnector looks for in an affiliate manager include someone with a technical background so they can walk affiliates and merchants through code; the ability to communicate well in writing and speaking; strong analytical and problem-solving skills; and they must be smart enough to understand that the affiliate management industry is fluid and constantly changing and they have to want to keep up with it.

Humphries says being located in the highly educated population of Research Triangle has helped their hiring efforts. In addition to using staffing companies like Manpower and job sites like Monster, LinkConnector hired a full-time director (now LinkConnector’s COO) to be responsible for staffing their merchant and affiliate relations department. Humphries says this was key to their success in staffing because it is very difficult to convey the requirements of the job to someone outside the company – an in-house staffing person was “in a better position to know exactly what qualities would work well within our network and industry.”

Humphries says the company has hired 20 people and only two have not worked out because of the demanding and fast-paced nature of the industry.

Justin Johnson, affiliate manager at SierraTradingPost.com, looks for affiliate managers who have great communication skills, are enthusiastic and self-motivated. He says the technical aspects of the job can be learned. Johnson says his company has been able to find the majority of its personnel in the Cheyenne, Wyo. area, with some people willing to have a longer commute from Fort Collins, Colo., or Laramie, Wyo., which is 51 miles away.

Schwab notes that for senior-level people with affiliate experience, it is very hard for Converseon to hire because they have to compete in New York City where there are others like LinkShare and CPA organizations such as Azoogle and Neverblue, as well as tons of agencies and merchants.

One remedy for hiring affiliate managers is to outsource, a trend that consultant Collins anticipates will increase. Collins worked as an outsourced affiliate manager for Payless Shoes from 2001 to 2006 because of the limited pool of talent in Topeka, Kan., where Payless is based.

Most-visited Vertical Job Search Engine Websites A lot of the bigger brands outsource affiliate managers to agencies such as NETexponent, Converseon, PartnerCentric and Pepperjam. PartnerCentric’s CEO Linda Woods describes why outsourcing is popular: “Companies need an affiliate manager, so they run an ad on Monster.com. They can’t find talent in their town. They come to PartnerCentric. They don’t need to hire people, pay salaries, pay benefits or train people. We do it for them. The arrangement could go on for years.”

WORD OF MOUTH

It seems every company in this industry believes that word of mouth is the most powerful way to find top-shelf candidates.

Coremetrics’ Paolucci says, “The No. 1 way we find people is through referrals – there is a network out there.” PartnerCentric’s Woods adds that a lot of their employees encourage other people to join. Schwab says that Converseon’s best hires are always word of mouth and that the last senior-level affiliate they hired came through a referral.

In November 2006, The Conference Board, which follows business cycle indicators for the U.S. and eight other countries, found that almost half of all job seekers (49.2 percent) rely on word-of-mouth leads from friends, colleagues and other people in their personal network to find jobs. In fact, 27 percent of employers found their jobs from networking.

JOB SITES

Another method is the job boards, which are growing in popularity. In fact, in the first week of 2007, employment seekers increased job search Web traffic by 31 percent, according to market researcher Hitwise. Among the top employment sites for the first week of January were CareerBuilder with 13.73 percent; Monster with 11.51 percent and Yahoo HotJobs with 5.3 percent.

Schwab says Converseon has not found people through Monster or Yahoo because they are too broad, but do use MarketingSherpa, MediaPost, craigslist and Shawn Collins’ AffiliateManager.net for affiliate marketing positions, which PartnerCentric’s Woods uses as well.

Increasing in popularity is a number of niche job sites such as the aggregator site Indeed.com, Dice.com for technology jobs and some industry-specific sites such as OnlineMarketingJobs.com and its sister site JobsInSearch.com.

Hitwise reports significant increases in market share at vertical job search engine sites. Visits at Indeed zoomed 302 percent and Jobster’s share jumped 355 percent from July 2006 to January 2007.

Other sites that are changing the way people look for jobs are the social networking sites such as Jobster and LinkedIn. These sites enable companies to find passive candidates – those who aren’t looking for a job, but are interested in hearing about new opportunities.

Staffing firm Aquent uses Jobster to build online networks of contacts within the marketing community – it is a way for them to manage passive candidates and referrals. Jobster posts user-generated content by those who come to share their experiences – so employees reveal the real scoop on companies.

Many recruiters, such as Castillo, use LinkedIn on a daily basis because it is a good single resource. He says the personal information is updated and correct and consistent in quality across the board. Heidi Perry, vice president of marketing at gaming publisher PlayFirst, says her company found other candidates from LinkedIn and is trying it for an online marketing associate position because “online marketers tend to run in circles.”

LinkedIn’s subscriptions for accessing people outside of one’s personal network cost $20 per month. Big corporations, such as Microsoft and Salesforce, pay between $10,000 and $100,000 annually to let their internal recruiting staff use LinkedIn’s database for potential hires.

GOING VIRTUAL

Some companies are venturing into the virtual world of Second Life, which has grown explosively and is inhabited by more than 2.9 million people from around the globe. AKQA, a global marketing and technology services company, says that it will use Second Life as a hub for recruiting because they believe that the Second Life community is full of early adopters and trendsetters, which are the type of people they want to hire.

As the economy continues to bubble along and online marketing becomes ever more desirable, it will be important to watch if the supply of online marketers keep up with demand.

PartnerCentric’s Woods thinks it will: “There is more talent than there used to be. When I started my consultancy four years ago there were times when sales were exceeding the capacity to service them and it was quite a juggle finding experienced people.” But Woods says that is in the past. Now Woods thinks there are more affiliate marketers around in general, and because affiliate managers can work remotely there are more candidates to choose from nationwide.

Tracy Cote, executive director of human resources for the agency Organic, says that the market is hotter but they are receiving more applicants – she has seen a 65 percent increase in resumes from November 2005 to November 2006.

“Certainly more people are training as affiliate managers as more programs come online. But if the growth of programs continues, there will continue to be a shortage of qualified people. It’s a bit of a vicious cycle,” Converseon’s Schwab says.

One source of online marketers are the former Google employees who are reportedly leaving because they feel limited and restless in their jobs (and many received huge payouts and stock options when the company went public). This could be a tremendous source of talent although these smart people may start their own companies.

In just a few years, the face of the recruiting process has changed considerably. Niche and social networking job sites have dramatically altered how companies find talent – the pool of contacts has drastically widened and the days of reviewing resumes to learn an individual’s work history and level of education are disappearing. Today recruiters can “Google” an applicant’s name to find out if they are who they say they are and candidates can place on their resume a URL that links to campaign examples of their work.

Going Out Is In

Companies are outsourcing affiliate managers to fuel online marketing programs.

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

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

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

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

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

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

Others agree.

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

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

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

That’s the case with OAM agency PartnerCentric.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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