Tag: Demographics

Scrutiny on the Bounty

As every good bounty hunter knows, capturing your target requires exacting execution of a well-designed plan. But unlike intrepid fugitive hunters such as reality television star “Dog” Chapman, earning sizable rewards by corralling customers online doesn’t require risking life or limb.

Instead of offering commissions paid in nickels and dimes, bounty programs attract a growing number of publishers by handing out dollar rewards of tens and twenties. Programs offering substantial bounties for acquiring customers and qualified leads are now among the most lucrative opportunities for publishers. However, the increasing competition among bounty programs requires publishers to rigorously scrutinize leads and to be more aggressive in pursuing consumers.

“The biggest money in affiliate marketing is bounty programs,” says Beth Kirsch, group manager of affiliate programs at LowerMyBills.com. Kirsch, who says publishers can earn up to $75 for delivering a credit card customer, says bounties provide the greatest opportunity for rapidly increasing revenue “without going for porn or gambling.”

Companies on the hunt for consumers will pay hefty premiums “because advertisers are willing to pay up front for the lifetime value of the customer,” Kirsch says. Unlike retail sites that focus on capturing a single transaction, the companies paying bounties are looking to build an ongoing relationship with a customer. The most popular industries utilizing bounty programs include real estate, personal finance (such as credit cards and loans) and subscription services, according to Kirsch.

Kirsch says that while most bounty programs pay commissions after a transaction is completed, companies such as Netflix and Audible.com will pay out merely for getting people to sign up for free trials. “The amount of money flowing through [bounty programs] is amazing,” she says.

Leading to Search

The prospect of earning lucrative commissions is prompting companies to increase their online advertising as well as the incentives offered to attract consumers. Sites such as FreeiPods.com that are relying on search marketing to acquire new customers now make up 6 percent of total online advertising revenue, according to the Internet Advertising Bureau. During the first half of 2005, online advertising revenues for lead generation and customer acquisition rose by more than 200 percent over the prior year to $347 million.

“Paid search is a focus for customer acquisition,” says Shar VanBoskirk, a consulting analyst with Forrester Research. VanBoskirk says that search marketing is an effective tool for bounty sites in industries such as travel because it “captures a person at their point of interest.” The increased spending is raising the cost of keywords and encouraging companies to become smarter at search marketing, she says.

To earn these bounties, publishers are aggressively pursuing consumers by promising cash incentives and free popular electronic devices such as iPod music players and Xbox 360 game consoles to those who will fill out a credit application or subscribe to a publication or service. These sites have found that consumers are willing to provide personal information as well as refer several friends in order to receive a device worth up to $400.

However, VanBoskirk says that while some marketers do not seem to be concerned with how their publishing partners attract an audience for their subscription or financial service, they may be putting their customer relationships at risk. “You could turn away a loyal customer if you were associated with a bad brand or screwed-up message,” says VanBoskirk, who recommends that marketers retain some control over the incentive process.

Service and subscription companies looking to acquire customers are among the top individual Internet advertisers. According to Nielsen//NetRatings AdRelevance advertising data for November 2005, telephony company Vonage spent more than any other company in online advertising, while LowerMyBills.com, BellSouth Corp., Netflix, Verizon and QuinStreet were also in the top 10.

Interest in bounty programs has spurred the development of specialty performance networks, such as QuinStreet, Adteractive, AzoogleAds and MetaReward, that are focused on customer acquisition and lead generation. These networks are bypassing the largest networks and offer generous bounties to publishers who can funnel traffic to their clients.

“To the extent that you can deliver more quality leads, advertisers are willing to pay for them,” says J.B. Orecchia, president of MetaReward.

Detailing the Demographics

Orecchia says the increasing competition among bounty programs is prompting marketers to collect more extensive demographic and lifestyle information so that they can match consumers with advertisers. MetaReward collects date of birth, gender and address information as part of their registration process. The company, which along with Lower MyBills.com and PriceGrabber.com are subsidiaries of Experian Interactive, analyzes the information and delivers targeted advertisements for its advertising clients.

“Deriving positive return on investment from cost-per-lead/account programs relies on the marketer’s ability to match the consumer profile with the type of customer the advertiser is looking for,” according to Orecchia. “It all comes down to yield management,” he says. “Marketers must identify the characteristics of the programs that maximize the quality of the leads.”

Orecchia says his clients do not want to filter out bad data themselves, so publishers must scrub the lead data at the same time it is being collected. MetaReward relies on technology developed by parent company Experian to verify the authenticity of address information as well as remove duplicate leads in real time so that the consumer experience is not disrupted.

Publishers need to be diligent in filtering consumer data because consumers are being more creative in trying to scam companies out of free goods, according to Greg Morey, executive vice president at marketing consulting firm GR Wyse. “The free iPod generation prompted people to [find new ways] to beat the system.”

Morey says despite improvements in screening submissions, there is “still a high amount of bad data” being submitted to lead-generation sites. He says the additional techniques for weeding out spurious information, including email verification, double opt-in steps and survey questionnaires, are increasing the cost of processing leads. In recent years the cost to publishers of verifying a lead has risen from approximately 50 cents to more than $2.

Data verification companies such as TARGUS info use multiple databases to check the authenticity of information in real time. These databases not only verify that the phone numbers and addresses are valid, but also that they match the names of the person filling out the form, Morey says. After a form is submitted, TARGUS info checks the data and, if it is valid, consumers are sent to a landing page from the advertiser.

Morey says competitive verticals such as travel companies, vitamin supplements and mortgage lenders are willing to pay the additional cost to reduce the number of bogus leads.

Media Get Their Share

Publishers and broadcasters are also receiving bounties by converting audience members into leads. Technology from LiveDeal enables newspapers and radio stations to host classifieds on their websites and receive commissions for leads, according to Steve Harmon, vice president of corporate development at LiveDeal.

Harmon says publishers that are losing revenue from classifieds to companies such as Monster.com and Craigslist can earn between $10 and $30 for a lead on a vehicle, and between $30 and $300 for a real estate lead. LiveDeal partnered with radio and advertising giant Clear Channel Communications to create classified site SFBayAuto.com. ClearChannel promotes the classifieds on its six San Francisco Bay area radio stations, and the media companies receive a bounty when someone clicks on a vehicle listing and then fills out a form with her contact information.

LiveDeal provides all of the technology, including the classified listings, e-commerce and images of the items for sale, according to Harmon. The lead-generation service, which went online in 2005, enables media companies, which already collect extensive demographic information about their audience, to connect their fans with products that are likely to be of interest.

Turning Leads to Clicks

Performance network Kanoodle has developed a program for niche publishers who can earn small bounties by sharing information about their site’s visitors with larger publishers. BrightAds, which became available in December 2005, is a third-party cookie program that uses information collected on a website to generate relevant ads on another, according to Doug Perlson, Kanoodle’s chief operating officer.

For example, a golf blog or enthusiast site will install BrightAds software, which places cookies on consumers’ computers to record their activities while on the site. Should that consumer then go to a Kanoodle partner site such as MSNBC.com to check the weather, the cookie information would be retrieved, and they would be shown a golf-related advertisement.

“Third-party cookies are going to be the lifeblood of publications that offer free content,” Perlson says.

When a consumer clicks on an ad, Kanoodle gives 5 percent of the revenue from the publisher to the referring web- site, according to Perlson. Because BrightAds has no exclusivity requirements and does not conflict with existing advertising programs, publishers can earn additional revenue without having to modify their current relationships, he says. And while getting a sliver of the PPC commission (Perlson says the money comes from Kanoodle’s share, not the publisher’s) may not sound like much, third-party cookies can be delivered to all consumers who don’t actively block them.

This “stealth” referral program leverages the information collected by niche sites with dedicated audiences to deliver ads to general interest sites, according to Perlson, who expects consumers to become more comfortable with third- party cookies as they realize the benefits of being exposed to more targeted ads. To address privacy concerns, Kanoodle deletes the cookie information after a maximum of 30 days, and sometimes in less than a week.

Forrester’s VanBoskirk says that while BrightAds helps larger publishers to optimize the yields from the ad programs by targeting customers, some consumers may be concerned when they realize that behavioral information is being shared among sites. Consumers are gradually learning that visiting sites utilizing cookies can provide a better experience, but the cookie placement has to be made known to consumers. “Responsible publishers will want to explain that they are collecting cookies,” VanBoskirk says.

She also notes that some small publishers may have reservations that participating in third-party cookie programs could help competitors. “The biggest concern is that a third party will be selling data to another advertiser,” she says.

Going Offline

Publishers in industries that are completed by offline transactions have been limited to pay-per-lead programs, but new technology allows bounties also to be paid on a pending-sale basis. Because advertisers control the offline sales process, fraud is a concern for publishers, according to Jackie Bates, Web marketing director for affiliate network LinkConnector.

LinkConnector’s pending-sale technology enables publishers to follow a campaign’s performance by tracking the progress of the consumer-seller activity until it is completed, Bates says. LinkConnector monitors the progress when leads become pending sales, such as vacation packages or jewelry where sales representatives are often needed to close the deal, she adds.

LinkConnector passes a completed call form from the publisher to the seller, which initiates the monitoring process. The network provides publishers with status reports and processes the payments to guarantee that publishers are compensated, according to Bates.

Bates says the technology gives merchants that do not have online shopping carts more flexibility in setting commission structures. LinkConnector “enables more merchants to come into the affiliate marketing game,” Bates says.

Bounty programs are popular with publishers because of the substantially higher commissions offered for capturing new customers. New tools that clean up lead data and collect more extensive demographic information will make them more useful both to advertisers and consumers.

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

Lost in Translation

Ten years ago, Jaime lived outside Managua, Nicaragua, worked in a shoe factory and took college classes. The then-35-year-old did not own a car and shared a house, a TV and a stereo with his parents, along with his brother and sister- in-law. Both Jaime and his brother helped his parents pay the rent, and the rest of Jaime’s paycheck went toward saving for a move to the United States.

Now Jaime lives in Daly City, Calif. He works as a bookkeeper in San Francisco and rents a house with his girlfriend, Aura, and her 12-year-old son, Juan. Together they share a car, own a TV, a computer, a stereo and cell phones.

They got on the Internet five years ago and Jaime spends about two hours a day online, surfing the Web and doing email. Aura has difficulty reading and does not use the computer at all, but her son spends about an hour a day playing computer games.

Jaime reads news about Nicaragua at the La Prensa website and reads U.S. national and local news in Spanish at the Univision and StarMedia sites. He also regularly reads the Latino Channel on AOL, especially for entertainment and sports news.

The La Prensa site also helps keep him up to date with his favorite baseball team, El Boer, as well as delivering news about his other hobbies – following the Brazilian soccer team and seeing what’s happening in the boxing arena. To follow news about his new local sports teams – the San Francisco Giants and the 49ers, he watches TV. He also uses the Spanish version of Western Union’s website, geared for U.S.- based Hispanics, to check exchange rates, but he goes to the physical location to send money back home.

For his past two trips to Nicaragua, Jaime bought plane tickets at Expedia.com, a site he visits often to check prices. As time passes, he says he feels more comfortable with the security of purchasing online, but he has only bought plane tickets from the Web so far because he likes the experience of shopping in a brick-and-mortar store so he can check the quality of products and walk around.

Because of the financial opportunities in the United States, many of Jaime’s relatives also now live here. Jaime feels that he is living the American dream. He does not know that he is quickly becoming a marketer’s dream. As a 45-year-old bilingual male with a combined household income of more than $50,000 – 8 percent of it disposable – Jaime and his household are part of a U.S. demographic with a purchasing power that dwarfs all other minority groups.

By 2007, the Selig Center for Economic Growth projects that disposable income in the Hispanic market will approach $1 trillion, which represents 9.4 percent of all disposable income in the United States.

Hispanics in America

Understanding the untapped opportunity of Hispanics online requires knowing more about the U.S. Hispanic population. And these days, there is no shortage of research, reports and studies examining this group.

In 2002 the U.S. Census Bureau announced that Hispanics are the largest minority in the United States with 13.4 percent of the population – or 38.8 million people. By 2020, Latinos are projected to be 21 percent of the population, and a third of them will be under age 18, which is another highly desirable segment for marketers.

But it’s not just the size of this group, it’s how much money they are making and where they are spending it. Hispanics are increasingly the major driving force behind revenue growth in consumer product and service markets, a $690 billion market that has attracted the attention of online marketers and retailers.

And while the median income for American households increased just 6 percent between 1996 and 2001, the median income of Hispanic households rose by 20 percent, from $27,977 to $33,565, during the same period. As of 2002, 31 percent of U.S. Hispanic households had an income of $50,000 or more, according to Scarborough Research and Arbitron.

So, as the Hispanic population is making more money, larger numbers of Hispanics are also getting online. Market researcher Centris found that the number of Hispanic online households in 2003 was 5.5 million.

A study by AOL/Roper reported that Hispanics go online 13.8 hours per week at work and 9.5 hours at home, compared with 8.4 hours at home for the general online population.

Hispanics Internet users tend to be younger than the overall population. Research from comScore Media Metrix shows that 60 percent of Hispanics online were 34 years old or younger, compared to 50 percent of the total Internet user population.

As Hispanics get greater Internet access, they are also starting to shop online more. According to Scarborough Research and Arbitron, 33 percent of online Hispanic adults made at least one purchase in 2002. Although that is significantly lower than the 56 percent of all Internet users who bought something online in 2002, as estimated by eMarketer, it is still increasing year-over-year. Still, according to Scarborough Research and Arbitron, only 13 percent of Hispanics purchased something online 10 or more times.

When U.S. Hispanic adults get involved in e-commerce it’s typically travel and banking, according to the AOL/Roper U.S. Hispanic Cyberstudy. Also, Hispanics tend to consume more types of entertainment, including purchasing tickets, than Internet users overall.

The study also found that Hispanics engage in online communications and other forms of communications at a high rate. A study by the UCLA Center for Communication Policy reports that substantially more Hispanic users than non-Hispanics consider the Internet an extremely important source of information – 44 percent versus 32 percent.

An Untapped Market

Considering the growing purchasing power of Hispanics, the higher-than-average amount of time they spend online and the categories that they spend in, there is a surprising lack of affiliate programs aimed at Hispanics.

Geoffrey Gonzalez, president of Ahorre Marketing, a Hispanic marketing services company, agrees. “I think it is a tremendous opportunity,” he says, but adds that the programs are “pretty much nonexistent.”

In September 2000, affiliate consultant Shawn Collins wrote about the potential of the affiliate marketing industry for Hispanics in Latin America in an article on ClickZ.com, “Brave New Affiliate World.”

Collins admits that the market has not taken off as he projected. “I thought it was about to explode five years ago, but it never happened,” Collins says. “The Hispanic market is a very under-served area for sure.”

Linda Woods, president and CEO of Partner Centric, agrees. “We have been waiting for this to happen; I think a lot of money is being left on the table,” she says.

There are many theories as to why the online marketing community has yet to seize this seemingly huge opportunity. Some believe the merchants need to lead the effort, while others claim it is the affiliate networks that need to act first to facilitate the opportunity. Still others say that the affiliates need to create demand in order for programs to take off.

Language Barrier

However, most agreed it is a language issue and that the expense and commitment associated with developing a Spanish language infrastructure is deterring the merchants and the networks from moving first.

Spanish language is very important to 67 percent of Hispanic Web users, according to the AOL/Roper U.S. Hispanic Cyberstudy, which reports that 40 percent of all Hispanics consider themselves bilingual, 40 percent consider themselves Spanish-dominant and 20 percent are English-dominant. For those who are bilingual, their preference for English or Spanish depends on if they are native- or foreign-born.

Some experts say there cannot be affiliate programs aimed at Hispanics until there are complete Spanish-language versions of major merchant websites. Many company websites, such as Target.com, offer a bit of Spanish, but pages of merchandise, site navigation and the shopping cart are in English.

“Some companies have a landing page in Spanish, and then the rest of the site is only in English,” Collins says. “What kind of ridiculous user experience is that?”

Most major e-commerce sites, such as Sears.com and Wal-Mart.com, do not even have Spanish landing pages. AOL offers channels such as news, entertainment and sports channels in Spanish, but their e-commerce channel, called Shopping, is in English only.

“A merchant company can create a great conversion engine, but when Hispanics get to the shopping cart, all of the instructions are in English and the customer support is in English,” says Matias Perel, CEO of Miami-based interactive agency Latin3. “If an affiliate brings the 20 percent [of the Spanish-dominant Hispanics] to the site, it’s going to be hard for the affiliate to see a positive return on investment.”

Brian Littleton, president of affiliate network ShareASale.com, agrees. “The merchants have to be the first people to step on board. If they determine that it is a market that is available and should be targeted, then that is the basic first step in selling. Obviously the network platform and the affiliates need to be there, but that is down the road. E-commerce came before affiliate marketing.”

Some industry watchers wonder if merchants are worried that focusing on one group will have other growing ethnic groups feeling left out. “Perhaps merchants think it is a slippery slope where if they create a site for Spanish-speaking Hispanics, they will need to create a site for many other ethnic groups and languages,” says Kathryn Finney of TheBudgetFashionista.com.

What About the Networks?

Another theory suggests it’s possible that merchants are waiting for demand from the affiliate networks and publishers before they go through the expense and commitment of building Spanish-language capabilities.

“It’s something of a chicken-and-egg thing,” Collins says. “Why go through the trouble and expense to convert everything if there is not a network to bring you down there? They need Commission Junction, LinkShare, etc., to invest there. Affiliates haven’t gone there because there are no programs to promote.”

In addition, the traditional networks, such as Commission Junction and LinkShare, are not set up to accommodate Spanish-dominant affiliates.

For example, at Commission Junction, when a publisher searches on “Hispanics” for programs to promote, the search yields several programs including Amigos.com, Date.com, FriendFinder.com, SpanishToys.com and Yahoo Personals. But like many of the shopping carts at big online retailers, the interface is in English only; Spanish-dominant affiliates cannot sign up if they can’t navigate the English-only site.

Many merchants describe their affiliate program, or “programa de afiliados,” in Spanish but switch to English once the user reaches the enrollment pages.

Ahorre.com’s Gonzalez points out, “You can’t walk a user through in Spanish until page 9 and then switch to English when it gets to page 10. It’s misleading. It’s very similar to mortgages. You can promote, market, talk, speak and write everything in Spanish for mortgages, but the bottom line is that the contract is in English, and that hasn’t been changed by our laws.”

For example, the bookseller Ofertón de Libros has two complete versions of its site and two complete descriptions of its affiliate program, as well as contracts for both. However, the affiliate contract on the Spanish site is non-binding, but links to the English contract, meaning that the user needs to sign the contract in English to join.

A Spanish-language interface at the networks’ sites would facilitate the enrollment of Spanish-speaking affiliates into Spanish-language affiliate programs. But if the affiliates can’t sign up, the networks can’t know that the demand is there.

“The affiliates who can’t speak English would not know how to join,” says Linda Buquet of 5 Star Affiliate Programs. “My guess is that the networks won’t do it until they know the affiliates are there.”

To date, none of the major affiliate networks (Commission Junction, LinkShare, Performics or ShareASale.com) offer outreach in Spanish. ShareASale’s Littleton says, “These things are definitely in the plans for companies like ourselves and, I am sure, other networks as well.”

Affiliate Demand

Each group seems to be looking at the other to get the ball rolling. From the networks’ view there is also concern about whether there will be demand from affiliates to make a program successful, according to Partner Centric’s Woods.

“I think a lot has to happen before affiliates get into it,” she says.

Littleton agrees. “It is hard to put a lot of resources and work behind a product when the majority of affiliates are not ready and the majority of merchants are not ready,” he says. “All of the pieces are needed for a successful push into any market, whether it is Hispanic or European or Asian.”

Latin3’s Perel says, “The last thing you want to do is build an affiliate program directed to Hispanics and then find that you fail on the transaction part.”

A Need for Content

An affiliate program cannot work if there is not enough relevant content. So, the key to a successful affiliate program is to recruit affiliates with contextually relevant sites that have a proven track record for driving traffic, according to Buquet.

“Until they know the relevant content is there, the networks won’t do it,” she says. Page views are up 30 percent in the U.S. Hispanic market, but they’re up only 6 percent in the U.S. general market, according to comScore Media Metrix. Some point to this as proof that Hispanics are spending more time on the same sites because there is a lack of good Spanish content on the Web.

According to the AOL/Roper study, more than half of all offline Hispanics (56 percent) cite lack of Spanish content as a reason for not going online at home. About half (49 percent) also say it is because there aren’t enough sites and activities online that would interest Hispanics.

It’s in the Works

Regardless of whom you speak to – merchant, network or affiliate – there is a sense that the development will happen with time. But there is trepidation expressed as well as optimism by all parties.

“Everyone knows that Hispanics are a vast audience, but I don’t think that anyone is doing it well yet,” says John Ardis, vice president of business strategy at ValueClick. “Everyone is still scratching their head. There is no shining example to point to. There is a paralysis about when to step forward. It is not just a translation job; whole concepts have to be translated to do it right. It can affect the offline merchandise – if we build it online, do we have to have duplicative merchandise in our offline world?”

Joseph Anthony of Vital Marketing says, “In time, with the proper commitment and appropriate research, these brands will find a lot for them to target. They just can’t sit back and keep doing what they are doing.”

Mark Lopez, publisher of AOL’s Latino, agrees. “As the market develops and companies see the potential of this market and see the Internet as a really mass medium to reach these audiences, I think there’s going to be more investment in the back end to make sure the whole interactive product is in the same language.”

Targeting Hispanics

The research and the online experts say the opportunity to reach the Hispanic market is huge and the development is in the works. Meanwhile, affiliates are scratching their heads about how to tap into this market.

Language is the first concern for any potential affiliate. Other advice from experts in the field includes translating concepts, not just words; being culturally sensitive to the target audience (realize that Mexicans are different than Cubans); targeting the appropriate products with appropriate price points; and testing and retesting the market.

Some experts claim that companies may be wrongly assuming that if customers have an Internet connection and a credit card, they can understand English well enough to make a transaction. A Feedback Research study found that 79 percent of Spanish-speaking Hispanics who have used the Internet for five years or less are already highly engaged in online activities.

There is evidence that it is important to reach out in Spanish even if the user is bilingual. comScore Media Metrix found that 49 percent of the 12.6 million U.S. Hispanic Internet users prefer sites that are either in Spanish or bilingual. “While English content can and does reach large numbers of Hispanics, marketers must also provide relevant Spanish-language content to fully reach U.S. online Hispanics,” the report stated.

There are programs that do target the 20 percent Spanish-dominant U.S. Hispanic market. For example, 21st Century Insurance supplies its affiliates with creative in Spanish for car insurance deals. Partner Centric’s Dan Fink, who manages 21st Century, says the “Spanish creatives represent about 15 percent of our creative content and do bring in a good amount of quotes as well.”

Pedro Sostre of Sostre & Associates is a design consultant and an affiliate who owns several sites that provide creatives to affiliates in Spanish. Sostre’s FreeBookClubs.com promotes two Spanish-language book clubs – Mosaico and Circulo.

“The Spanish-language clubs are on par with some of the other niche clubs,” says Sostre, who also notes that his book club targeted to the African-American market does extremely well, as does the Large Print book club (aimed at the older market).

In addition, Sostre helps run the affiliate program for ServerPronto.com, which also provides its creative in Spanish. Most of the affiliates that use those creatives are targeting a South American audience. Because the company serves clients internationally, ServerPronto’s Spanish-language website and marketing are not specifically geared for U.S. Hispanics.

Be Bilingual

While there are many sites, including Mexgrocer.com and Amigos.com, that also offer some Spanish-language pages, some claim the experience does not need to be entirely in Spanish – it is sufficient to reach out with a bilingual message that leads the user to a Spanish-language page at an English-language site.

Many companies are targeting Hispanics with bilingual messages. Ahorre.com advertises its Household MasterCard credit card in English and Spanish on the same page. Target.com has banners on its Spanish landing page that mixes languages to say “Nuestra Gente – Hispanic Heritage. Discover the Cultura and Tradicion.”

Reebok used this “Spanglish” this year in its much-hyped BarrioRBK campaign, which was produced specifically for the U.S. Hispanic youth market. The site is marked with Spanish and English tag lines as well as Spanglish tags directing visitors to “Volver a Home” or “Return to the Home Page.”

Latin3’s Perel, who designed the site, explains, “We created this website in Spanglish because we realized that young Latinos are bilingual or, because they came here very early, they are English dominant. Because we want to connect with them, we give it a Spanish flavor, so the key here was to have copy writers who have a clear understanding of when to use English and when to use Spanish.”

But there are other reasons not to reach out solely in Spanish. Research firm Cultural Access Group found that Hispanic youths prefer English-language television and radio programming over Spanish-language fare by a margin of nearly two to one, and overwhelmingly prefer English-language Internet sites.

“I think a lot of younger Hispanics are more comfortable in English,” says Sostre. “I am in my 20s, and if I see a site that is completely in Spanish, I think it is targeted at my mom or my grandmother.”

He warns that you might risk insulting a potential user if you communicate with them only in Spanish. “A lot of Hispanics find it offensive if you assume that they don’t speak English.”

A Question of Culture

Affiliates may find that language is less important than culture. Lopez, the AOL Latino publisher, says “the Hispanic audience definitely has cultural dimensions that are really different than the general market.”

For example, Reebok’s BarrioRBK site features a Reggaeton dance game, a music area that includes the top 10 Latino artists, and information about famed Mexican soccer team Chivas.

Because Hispanics online skew younger, Ahorre’s Gonzalez claims affiliates might also do well to target them with lower-priced items. “The growth in Hispanics online is in the youth market, and the youth market is into music – they are into iPods and they are into CDs. Try to sell reasonable price points; if you target up to $99 you should do well.”

Not everyone agrees that low-price items are the way to go. According to Lopez, Hispanic demographics tend to be younger than the general market, but he adds that their buying power is increasing year to year. “Hispanics are becoming more sophisticated just like the general market.”

Nacho Hernandez, president of iHispanic Marketing Group, says, “U.S. Hispanics spent $5.6 billion in 2003 purchasing on the Web.” In fact, Sharper Image, which is known for its high-end electronic goods, has a Spanish-language version of its website targeted at Hispanics in the U.S. and has a “programa de afiliado.”

But some argue that the current research and demographics don’t tell the whole story. Many claim the Hispanic market is not that distinct and will become less distinct over time – much like the offline world where Hispanics become acclimated to American lifestyles and habits.

“In recent years, there has been a shift in online advertising – less of a focus on demographics and more of a focus on psychographics or behavior,” wrote Barry Parr in his MediaSavvy blog. “Demographics are usually the wrong way to target online advertising. You may believe that the most likely user for your products is a woman between the ages of 25 to 44, but what you’re really looking for is anyone who might want to use your product. ” On the Web, you can target users by context and behavior. That’s a lot more powerful than demographics. “”

Vital Marketing’s Anthony concurs. “I think that marketers may be overanalyzing the Hispanic market in terms of feeling that Hispanics are only going to go to sites that are relevant to Hispanic cultural content or contain some type of concentrated cultural information,” he says.

The debate continues about how to target this growing Hispanic group, but for now many agree that for affiliates to succeed, they need to recognize that the Hispanic segment is one with unique requirements – including differences in language, culture and spending habits. Reaching out with cultural references that appeal to Hispanics, and experimenting with Spanish, bilingual and Spanglish messages, are some of the ways to get started. Programs will have better conversion rates if they can demonstrate that they have considered the wants and needs of Hispanic shoppers.

The best way for affiliates to determine the appropriate way to drive traffic is through experimentation. “Top affiliates must be committed and continually test, measure results, make adjustments and retest the market,” Hernandez says.

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

Pitching a Fit

Sites related to health, fitness and total body wellness are humming at this time of year based on the good intentions of millions of people who make New Year’s resolutions to get in shape, shed unwanted pounds, start exercising more and devote more effort to their overall health and well-being.

But what happens when the resolve begins to dissolve and consumers begin the inevitable slide back into old habits that don’t include visiting sites promoting health and fitness?

Because there is a seasonal aspect to people wanting to get in shape – the start of each New Year, bathing suit season, wedding season – publishers have started flexing their marketing muscles to attract new customers all year round. Many are using interesting and innovative ways to keep consumers returning regardless of the time of the season.

Puttin’ on the Print

A surprising number of health-related entities are getting into the magazine publishing business. Magazines are expensive to publish, but some health and fitness sites think it’s a good way to attract new customers.

Curves, the fast-growing franchise of gyms for women, produces a print magazine called Diane, named after the company’s founder, Diane Heavin. Curves, too, relies on word of mouth or viral marketing for the bulk of its referrals. Customers talk to their friends and convince them to join the all-women gym, so that they have workout buddies to keep them accountable for sticking to their fitness regime. The company is venturing into online marketing, albeit slowly.

“We’ve only just begun our online marketing campaigns,” Lisa Hendry, manager of marketing technologies at Curves International, says. We’ve had some success with our email campaigns. “We haven’t established what the best has been. So we are experimenting and testing various offers online.”

WebMD also launched a print magazine. One million copies of the first issue were distributed free to doctors’ offices. The cover story in the premiere issue was about actress Brooke Shields’ experience with postpartum depression.

“We think there’s a tremendous opportunity to extend our brand offline,” CEO Wayne Gattinella says. The company also hopes to drive traffic to the Internet site, and many editorial pages contain links to the WebMD website.

BabyCenter.com, a site chock-full of information for expectant parents and new parents, relies on affiliates (who earn 6 percent commissions) and search engine marketing to lure new customers. But it recently launched a magazine called BabyCenter.

While BabyCenter.com does not face the cyclical issues of other sites promoting health, it still is looking to keep visitors loyal beyond the nine-month pregnancy period.

“Instead of TV ads, we have a physical representation in bookstores and the doctor’s office,” says Linda Murray, editor. “Even though it’s free to our members, the magazine serves the same function as paid advertising.”

But the tried-and-true means of supporting the BabyCenter.com site is still personalization and communication through newsletters, bulletin boards and chat.

“When someone comes to our site for the first time, they see an unpersonalized home page. We invite visitors to sign up for our emails. We want you to register for your stage. Then you get a home page that is just for you, whether you are pregnant or a mother of a two-year-old. If you go to another page, we have pop-ups (we are doing fewer and fewer because people don’t like those, and have blockers) but we invite people to sign up,” says Murray. “A fair number of people come specifically to get newsletter information. We do keyword buying on search engines – we show up prominently on searches.”

BabyCenter also has a partnership with MSN, in which BabyCenter.com provides MSN with content and MSN shows related links back to BabyCenter.com. “That is another acquisition mechanism for us. We don’t have TV spots. Early in our history, we did,” Murray says. “The most effective thing for us is really search engines. And people find out about us through word of mouth from their friends.”

Other health sites have found that billboards are their best bet for attracting customers and gaining new business.

Outdoor Adventures

Drugstore.com recently broke a $4.5 million outdoor advertising campaign. The creative for the campaign shows various customers’ orders; copy text says things like, “They carry 25,000 items. I carry nothing.” The ads are aimed at educating the company’s 1.9 million customers and attracting new shoppers.

“Our campaign will concentrate on locations around key ZIP codes and include outlets, such as train and bus stations, street furniture, laundry bags, coffee cups and sleeves and even yoga mats,” CEO Dawn Lepore says in a statement. Drugstore.com is heavily canvassing San Francisco, Chicago and New York.

But the interesting twist is that you can view the ads on the company’s website. If you surf over to Drugstore.com, you can look at each advertisement individually and then click to shop for the items in each ad. It’s one way of trying to get online and offline initiatives together.

Tight-Lipped

Although Drugstore.com might tout its outdoor advertising efforts, the company is much more reticent when it comes to discussing its online initiatives. LinkShare handles Drugstore.com’s associate program.

“We keep our methodologies pretty tight to our vest,” says Greg French, a spokesperson for Drugstore.com. “We are sensitive about our performance-based marketing because we feel like we are ahead of the pack and we don’t like to give a lot away.”

The paranoia in talking about performance-based marketing is hardly unique to Drugstore.com. Many top health sites declined interviews for this story. Executives from Weight Watchers were not available for interviews. Commission Junction handles the Weight Watchers Affiliate program; affiliates get $10 for every qualifying Weight Watchers Online or Weight Watchers eTools subscription.

Recently released research suggests there is a correlation between spending money online and acquiring new customers. The biggest spenders online are Weight Watchers and eDiets. During the week ending August 28, 2005, Weight Watchers had 116 million impressions or 20.5 percent of all impressions; eDiets.com had 61 million impressions or 10.9 percent of all impressions, according to Nielsen//NetRatings AdRelevance. Weight Watchers trailed only WebMD in terms of unique audience active reach.

Spreading the Good Word

Not all health and fitness companies can afford to produce expensive print magazines to complement their online initiatives, á la Curves and BabyCenter, or splashy billboards like Drugstore.com, but many can afford to offer affiliates a cut of the action if they bring in new customers. Many run affiliate programs to drive traffic to their sites. And most offer email newsletters to their customer base, to keep their audiences interested and immersed in their health, fitness or nutritional information.

For many it’s about knowing your audience. A recent study from Nielsen//NetRatings shows that women represent the majority at 55 percent when it comes to visiting health, fitness and nutrition sites. More than 54 percent of all those who go to health-related sites are over 45 years old and 27 percent have an average household income of between $50,000 and $79,000.

Many health sites have also found that their existing customers are their best salespeople. Conduct a quick search online and you’ll find dozens of women blogging about their attempts to lose weight with various programs like Jenny Craig, Weight Watchers and South Beach.

Perhaps one of the most interesting healthcare innovations of late comes from Richard Branson. His Virgin Group, the company known for its music, airlines and mobile phones, is teaming up with Humana to offer health insurance with a twist. This plan, called Virgin Life Care, is linked to gym memberships and will give discounts and bonuses to people whose workouts result in lower blood pressure, weight loss or a shrinking body mass index. Lower healthcare premiums and airline tickets will be incentives for people in the loyalty program. Tampa, Fla. and San Antonio, Texas are the first two cities where the product will be offered, beginning in early 2006.

‘Casting a Wider Net

Others in the health and wellness segments are looking to newfangled technologies such as podcasting that promise to make performance-based marketing a lot more fun.

So far, podcasts have been the domain of edgy brands like movie studios and those excluded from traditional advertising. Condom maker Durex introduced a line extension of lubricants called Play on the “Dawn and Drew Show,” an audio podcast that’s put out by a married couple of ex-punk rockers living in Wisconsin. Podcasts don’t fall under the rubric of traditional advertising, but Durex was pleased with the results.

“Being on the ‘Dawn and Drew Show’ worked for the Play launch. It’s done by a loving couple that have fun together, so they were the perfect spokespeople for our product,” says Pam Piligian, senior vice president of Durex’s advertising agency Fitzgerald & Company, which is based in Atlanta. “It was a leap of faith for us, but we definitely got our money’s worth.”

Piligian says traffic to the www.playlubricants.com microsite quadrupled during the 8-week sponsorship/product placement, the cost of which was “less than five digits.”

Many industry watchers agree that money spent on podcasts is cost-effective. “A sponsorship costs anywhere from $2,000 to $10,000 a month,” Barry Reicherter, senior vice president of public relations firm Porter Novelli, says.

But the medium isn’t huge. According to a study by market researcher Ipsos Insight, about 28 percent of Web users know what a podcast is but only about 2 percent of that group has actually listened to one.

Still, marketers are intrigued with podcasting because it offers a young, technically savvy demographic and a captive audience. The audio programming comes largely from amateurs, is unregulated by the FCC and is consumable on demand. Think of it as the combination of blogs (freedom of expression), MP3s (digital and portable files) and TiVo (time-shifting).

“The good news is there’s a lot of buzz about podcasts, and it’s also cheap to experiment with. But it’s over-hyped,” David Schatsky, senior vice president at JupiterResearch, says. The audience is small – according to Jupiter, just 7 percent of online consumers said they listened to or downloaded podcasts monthly. “And these folks tend to be young, male and rather geeky.”

But, as was the case with Durex, the benefits far outweigh the risks. Many advertisers are intrigued with the possibilities that a new video iPod presents. Apple introduced a video iPod in October and has deals to sell episodes of TV shows, such as Desperate Housewives and Lost, the day after they are broadcast.

“It’s great because you can hit a niche and get personalized,” says Sean Black of Beyond Interactive, which created a Paris Hilton podcast to promote the House of Wax movie. He admits that there isn’t yet full accountability but he is still a fan of the technology. “And now that videocasting has hit, it’ll be a whole new world.”

And performance marketers and affiliates are quick to embrace new technologies that keep their sites in tip-top shape.

DIANE ANDERSON is an editor at Brandweek. She was the managing editor for Revenue magazine for Issue 4 and previously worked for the Industry Standard, HotWired and Wired News.

Analyze This

Affiliates are capitalizing on the predictable behavioral patterns of consumers by using Web analytics tools to decode customers’ habits and boost revenue.

So if you’re a publisher and want to know who exactly is visiting your site, how different types of visitors come back, what they are looking for when they arrive and what specifically makes them want to leave, you should be thinking about tools that help you sort, analyze and understand your customers.

Web analytics is an emerging category of software that purports to answer all those questions and many more that could help you identify the steps for your site to reach the top of its game.

“Affiliates have tremendous opportunity,” says Barbara Poole, a revenue improvement consultant at PoolResources.com, “because they already understand what it is to drill down to the specific customer relationships.”

And if you find the right software to help with that decoding you’ll already be ahead of the curve.

That’s what Miami-based affiliate Pedro Sostre did. Through a collection of analytics software that includes AWStats, ClickTracks Pro and WebSideStory’s HitBox, he has determined the success of ad campaigns, discovered new opportunities based on analyzing what keyword terms are being searched and routinely improved overall performance for his sites including FreeBookClub.com, iTravelMagazine.com, AudioBookDeals.com and Tax-Stuff.com.

“We use Web analytics every day,” Sostre says. “When we found that 88 percent of that search engine traffic wasn’t converting, we where able to save $2,000 per month at FreeBookClub on pay-perclick advertising alone.”

These tools don’t cost much: AWStats is free, HitBox is $30 per month and Click- Tracks’ basic level is a one-time license of a few hundred dollars.

“Eliminating pay-per-click listings at Aha and Kanoodle alone saved me the cost of the software,” Sostre says. “And then there is the value you get from seeing what people are looking for as far as clicks and what campaigns are working. I absolutely could not do what I do without being able to analyze the sets.”

New analytics tools actually create a snapshot of who your ideal customers are and what makes them tick. And it even can determine the different types of customers your site might draw. Once you can do that, “you get the ability to really use that information,” says Brent Hieggelke, vice president of software analytics company WebTrends.

Merchants and affiliates are catching on to this power. The Web analytics market grew 13 percent in 2004, marking what global market researcher International Data Corp. calls a “second coming.”

Analytics has officially grown up from its beginnings a decade ago, when eyeballs and unique page impressions were all that mattered, or at least all that were measured. “Who really cares if someone is sitting on a page for 20 minutes? People have realized how dirty those metrics are,” says SAS Web Analytics’ Richard Foley. “Basic metrics just aren’t cutting it.”

So what is? There are several Web analytics advances, some still in beta, that could be huge for affiliates. Segmentation, intuitive analysis and 360-degree views are among the latest advances that have affiliates applauding.

“We just started using [analytics], and we’re just blown away by the power of seeing day-to-day metrics,” says Joe Beruta, director of interactive marketing for Jenny Craig, which gets anywhere from 5 to 10 percent of its online registrations through affiliates. “We used to look at the month after the fact, with no real-time metrics. Now we’re looking at things like clients versus non-clients as they come to the site – and we haven’t even gotten into segmentation.”

Segmentation

Segmentation is the hottest way to analyze customers on the Web, and at as little as $35 per month it’s finally affordable for small publishers. The technology records and visually tracks a single visitor’s interactions at every touch point. Assigning each visitor a unique identifier, it compares its findings with its growing database of other users’ patterns. Similar users are grouped into one segment. The more a visitor interacts with your site, either by clicking links or making purchases or answering questions about interests, the more data the technology collects on what makes that segment tick.

“It’s a little bit like taking a helicopter and flying over a freeway to see where the bottlenecks are,” says Michael Chavez, vice president of analytics maker ClickFox. “It’s not about predicting a user’s behavior; you’re looking at what they actually did. And you now can link that to actual demographics.”

One of the first companies to make segmentation accessible is WebTrends, which rolled out version 7.0 of its program a year ago. The latest version includes actual breakdowns of how profitable each link is and all of its segmentation tools. There’s a free 14-day trial at WebTrends.com.

Today “this broad, comprehensive picture of the process is one of the absolute hot spots in the market,” says WebTrend’s Hieggelke.

This type of analytics can even help you find new merchants or improve the deal you have. “You get to know based on buying habits what someone wants from your company,” says Mark Bradley, vice president of product shopping at shopping comparison engine NexTag. “If you know people are heading off to buy another product from a third party, then you negotiate with that merchant to get a special deal to sell it yourself.”

Intuitive Analysis

With intuitive analytics, you also get recommendations specific to respective goals for sales, IT, marketing and Web design. Now, if a certain segment of customers are spending three times more time on your site, but buying half as often, the software automatically searches for commonalities like coupon codes, free shipping offers or site navigation and tells you what about your site or where the customer came from influences their buying behavior. It tells you what to keep doing to get more customers (including determining the best advertising avenues) and what to start doing to get them to shop more often.

“That’s what analytics is,” says Stephen Messer, CEO of LinkShare, which in May launched its Synergy Analytics application for its network of affiliates. “It says: ‘Let us do the analysis that you would otherwise do on your own.'”

With basic analytics, you may conclude you bought the wrong keywords if your search engine results are down – with nothing in your reporting to tell you exactly what you did wrong. Intuitive analytics will point out six, nine, maybe 10 different things that might be affecting why search engine returns were low. It may be that your landing pages were too slow or down, it might be the time of day, it might be that you actually do have some keywords that aren’t effective. Intuitive analytics does a report for each and more of these things, providing an immediate blueprint for what steps you could take to improve search engine conversions.

360-Degree View

The third big analysis development builds its reports not only on your site’s Web data, but also on all of your other campaigns. Email, direct mail, traditional advertising, search engine placements and keyword buys are all cataloged online using distinctive links, coupon codes, SKU numbers, even unique telephone extensions. It integrates offline and other marketing and sales data for a complete view of your business activities and a complete read on what works and what doesn’t. It is, however, the most expensive of the Web analytics tools: SAS, which released its 360-degree SAS Web Analytics product in mid-2004.

“A 360-degree view can really determine what people are doing on your site, by digging through and mining the Web data so you can see ‘these are my specific segments,'” says Evan Shelby, product manager for SPSS’s Web analytics products.

SPSS bought NetGenesis several years ago and has integrated it with another SPSS product – Web Mining for Clementine – to offer a 360-degree view. Its SPSS for Windows 13.0 is $1,499 for a business customer and $599 for a single academic user. SPSS server licenses start at $15,500.

“We look at things like affinities, segments, what activities might be associated for cross-selling and upselling – really digging into the data,” Shelby says.

In the end, most site publishers use a combination of tools like Urchin and ClickTracks, says Chris Winfield, president of 10e20, which concurrently manages hundreds of search engine marketing campaigns for clients like Virgin and Coldwell Banker. Other than high-end analytics like SAS, “there isn’t one package yet that we’ve found to truly meet the need to really be able to track all of these things at once,” Winfield says.

Analytics in Action

“It’s a very unusual combination of sophisticated technology and sophisticated math and analytics, when integrated together with merchandising and marketing communicating,” says Matt Moog, president and CEO of CoolSavings, an online direct marketing and media company.

Using analytics software from SAS, SPSS and Coremetrics, CoolSavings was one of the first to give online retailers a holistic view of customers that includes strategies for acquiring consumers, lowering churn and retaining consumers.

“It all starts in knowing what data to collect about the consumer, and storing that data – whether self-reported, behavioral or transactional data – in such a way that it can be used for those purposes,” Moog says.

It’s something Erick Barney, marketing manager for Medford, Ore.-based MotorcycleSuperstore.com, knows well. He added WebTrends 7.0 one year ago. “It’s amazing to see what kind of product you get from a company where that’s what they do,” Barney says. “It’s just leagues beyond what we had. We had all the basics. We knew where we stood, but we didn’t have the nitty-gritty. We didn’t know all the screws to tighten, all the design elements to tweak or all the things to do better – bidding on keywords or writing sales copy. Now, we dream up our metric and [our analytics provider] help[s] us put together the reports to analyze it.”

Using WebTrend’s overlay feature, which shows click-through and revenue numbers above the actual links on a screen capture of each page, Barney has been able to analyze everything from the placement of tables to clickthroughs on email communication links and automatically sees a red flag on those pages with frequent cart dropouts. Since adding WebTrends, MotorcyleSuperstore.com’s revenues have jumped nearly 50 percent.

“I’ve had access to most of the analytics from one source or another, but I had to log in to Overture, extract the numbers and build my own report to compare programs and make decisions,” Barney recalls. “This puts it all in front of you. I go ‘Campaign Drill Down’ and it’s all right there, and it’s really cool.”

On the other side of the coin are the affiliate sales that can be made on a product like this.

“Many of our partners use our technology to not only optimize their marketing efforts, but also complement their service offerings,” says Dan Shapero at NetApplications.com, which integrated Alexa Data Services into its Hitslink analytics tool in late-2003. Hitslink includes pay-per-click conversion tracking, click fraud analysis, referrers, search engine keywords and page navigation paths. It can track an Overture listing, for instance, all the way to orders and revenue, plus it sends out email traffic alerts when your traffic spikes. (There’s a free 30-day trial, good for up to 20,000 hits, at Hitslink.com/trial.)

Already taking statistics for a reported 40,000 publishers, most of Net Application’s customers come through its affiliate and private-label partner programs, Shapero says. “A big part of our vision is if we can enable these partners to use our technologies to market our products, they become our biggest evangelists.” Most of its 3,000 affiliates not only get 40 to 50 percent of every $9.95- to-start monthly hosting fee their users pay, but also get up to 50 percent off the price of using the software for themselves. (Hitslink now has $20 sign-up incentive.)

Meanwhile, Sostre is helping other sites master the analytics tactics he has learned as an in-the-trench affiliate. Using intuitive analytics reports, he helped one site change small things like the color of the button, where the sign-up is and what copy they put next to it. The results, reports a company spokesperson’s blog, were a 60 percent jump in EPC.

“These days,” reminds website strategy consultant Philippa Gamse, “you have to get into the behavior patterns – what you want to do better and what you want to stop doing – to be successful.” These new innovations in Web analytics, at a price range affordable to smaller sites, may be just what ROI ordered.

“The money there is real,” WebTrends’ Hieggelke says. “It’s the kind of thing that shows running your business by the numbers can absolutely have a fast payoff.”

JENNIFER D. MEACHAM‘s stories have been featured in The Wall Street Journal, Kiplinger’s Personal Finance, AARP The Magazine and at CBSMarketWatch.com. She’s a former reporter for The Seattle Times.

Going Global

Affiliate Networks are striving to extend their reach by entering foreign markets, but local challenges threaten their chances of international stardom.

If the affiliate model is effective for selling necklaces in Nantucket, shouldn’t it also work to move wurst in Wittenberg and mobiles in Manchester?

U.S.-based affiliate networks are hopeful that taking their business models to all four corners of the globe will translate into the same kind of success that they have enjoyed in North America. The networks see nations that have lagged behind the U.S. in embracing e-commerce as fertile ground for sowing the seed of performance marketing.

Commission Junction set down roots in the U.K. and Germany, while LinkShare put out its shingle in Japan. Both companies, as well as their European counterparts, have designs on extending their global footprint sooner rather than later. Commission Junction, LinkShare and Performics are the leading U.S. affiliate networks.

Going Gangbusters Globally

"My prediction for 2005 is that this will be the year that affiliate marketing truly goes global," says Heidi Messer, president and COO of LinkShare. Messer says the company "will be aggressive in expanding into Europe" and is interested in participating in the burgeoning economies of China, Korea and Australia.

LinkShare began its global odyssey three years ago, according to Messer, when it partnered with Mitsui & Company, a leading Japanese retailer. LinkShare provided the marketing platform while Mitsui contributed the business relationships and knowledge of the local requirements. "Going it alone wasn’t a possibility," says Messer, because each country has its own buying pattern, laws and culture.

Messer says LinkShare is evaluating opening networks in European countries on an individual basis. "We are very methodical and will not enter markets where we are not 100 percent committed," she says.

The increasing willingness of Europeans to purchase goods and services online makes the region a likely destination for American marketers, according to Hellen Omwando, an analyst with Forrester Research’s consumer markets group. Omwando says that within the first year of going online, 16 percent of Europeans now buy items such as travel and clothing, whereas in years past only 2 percent would have purchased commodity items such as CDs or books online in the first 12 months.

Omwando says that affiliates’ potential audience is also growing – 55 percent of Europeans online now participate in ecommerce. "It’s all good news from a consumer perspective," she says.

The United Kingdom and Germany are driving most of the growth in Europe and account for two-thirds of all e-commerce, according to Omwando. Not surprisingly, Commission Junction launched its first two European affiliate initiatives in those two countries.

"We are up to our eyeballs in international expansion," says Elizabeth Cholawsky, vice president of marketing and product development at Commission Junction. She adds that the company will next launch in France in mid-2005, and that Spain and Italy are also priorities for expansion.

By entering new markets, the company would be able to better serve its advertisers through an international network of websites, says Cholawsky. In addition to Europe, Commission Junction has launched eBay in India and Australia, and has China on its radar.

The most difficult aspect of Commission Junction’s European launch was not technological or cultural, but bureaucratic, according to Cholawsky. She says that because European tax officials are not well-versed in the intricacies of e-commerce, the company hired auditing firm PricewaterhouseCoopers to work with government representatives in the U.K. and Germany. The European Union’s adoption (with the exception of the U.K. and Switzerland) of the euro has simplified currency exchange.

The company hired a design firm from Germany and a language translation firm from Washington, D.C., to create a website acceptable to local affiliates, according to Cholawsky. She says launching in the U.K. first simplified establishing a presence in Germany. "Europe has more things in common than different," she says. "Culturally it’s similar all around."

European expansion has contributed to Commission Junction’s rapid growth. The company’s revenue jumped from $24 million in 2003 to an estimated $54 million in 2004, says Cholawsky.

Affiliate network Performics is unlikely to join the European fray this year, according to Chris Henger, senior vice president. He says Performics is focusing on integrating its resources with new parent company DoubleClick. "In the longer term you could see us moving in that direction, but it’s not an immediate strategy," Henger says. 

Navigating the Potholes

Ashley Friedlein, CEO of London-based E-Consultancy.com, says that incumbent local companies have the upper hand over Americans in attracting retailers. "European merchants want to deal with companies who understand their markets," he says.

Citizens of each country have their own preferred methods of purchase, revenue model, topselling products and legal requirements, according to Friedlein. Europeans are much more likely to purchase products through their mobile phones, and the laws for online data protection and privacy protections vary from country to country, he says.

European e-commerce trends run about six to 10 months behind the U.S., Friedlein says. And European affiliates continue to use the pay-per-click revenue model that Americans have largely moved beyond, according to Friedlein. Search engine marketing in Europe requires local expertise, especially for American companies used to operating in a Googlecentric universe.

Europeans have their own searchengine marketing techniques, and affiliates and merchants are working out how to cooperate with search partners, according to Friedlein. He says that affiliates and retailers have been in a bidding war over getting priority for brand names in search engine rankings. "It’s a bone of contention," he says.

One similarity with American affiliate marketing is that merchants depend on a few affiliates for most of their revenues. "I reckon that 90 percent of sales come from 10 percent of affiliates," Friedlein says.

Affiliate marketing’s rapid growth in Europe has made it difficult for retailers to find in-house expertise to manage their programs, according to Friedlein. Many large retailers do not have a dedicated affiliate manager, so the responsibility is either part of the marketer’s job, or it’s outsourced.

European sales generated through affiliates during 2004 are estimated at $1.1 billion, a 100 percent increase over the previous year, Friedlein says, and he expects similar growth this year. Friedlein says 3.5 percent of all e-commerce sales in Europe are generated by affiliates.

Forrester’s Omwando warns that while affiliate marketing in Europe is in a comparatively early stage of development, Americans looking to land on the Continent in 2005 may have a hard time forging relationships. Europe already has three significant networks in place: Zanox in Germany; TradeDoubler, which has operations in 16 nations; and Commission Junction, which began its U.K. operation in 2001.

She says retailers unfamiliar with affiliate marketing are unlikely to partner with a foreign entity. "Marketing at the end of the day is very localized, and anyone participating has to understand the nuances and cultural sensitivities," Omwando says.

For example, to work with German companies, networks must first establish relationships with the local trade associations, Omwando says.

"I really don’t see what the opportunity is for American companies," she says. To have any chance at attracting European retailers, American companies must bring with them an impressive roster of international advertisers, according to Omwando.

Inevitable Intersection

The American networks’ grab for affiliates abroad will put them in direct competition with European companies that also have designs on expanding into Asia, and perhaps even in the U.S.

TradeDoubler poses a formidable challenge to foreign competitors. The company has been in operation since 1999 and has a presence in 16 European countries.

It is assessing possible expansion into Asia, and clients have frequently asked TradeDoubler to consider opening an office in the U.S., according to Will Cooper, chief marketing officer.

"Having a pan-European footprint has given us access to the world’s largest advertisers," says Cooper, who counts Dell, Apple, Sony and Reebok among his clients. TradeDoubler’s network includes more than 800 advertisers and 450,000 publishers across Europe.

Cooper says the challenge of starting networks in several European countries should not be underestimated. Each country has a unique cultural and business climate that requires networks to retool their business model, he says. "Every market is so incredibly different in terms of things such as broadband penetration, size of market and payment models," Cooper says.

While Spain and the U.K. are both large markets with populations of more than 40 million, their e-commerce demographics are quite different, according to Cooper. The U.K. has the most mature e-commerce marketplace, and the costper- action revenue model works well. But Spain has very different characteristics. "The culture is not to buy online. People prefer being able to touch the products," Cooper says, and cost-per-click is the preferred commission structure.

Heavier reliance on mobile phones provides another opportunity for networks looking to move into Europe. TradeDoubler developed a program for Swedish mobile phone users who are more comfortable with brick-and-mortar purchases. Customers can download coupons that contain an identification number for the referring affiliate to their mobile phones, which they take to the checkout counter where scanners read the coupons.

Another example of a TradeDoubler affiliate program designed for a specific country is its British lottery program. After registering online, Britains text message their Lotto picks, which takes advantage of the U.K.’s interest in mobile phone e-commerce.

Zanox, an affiliate network based in Germany that spans 22 European countries, launched the ring-tone download service Jamster in the U.S. and Australia. "You cannot compare Europe and the States," says Holger Kamin, Zanox’s executive account director.

Kamin says his company has an advantage over American networks because it has already established relationships with major retailers in Europe and provides many affiliate services, including consulting, email permission marketing programs and a transaction platform.

The cultural differences between countries that share a common language can be difficult for non-Europeans to understand. "You can’t think that because they speak the same language in Austria, Switzerland and Germany that the culture is the same," Kamin says.

To succeed in the long term, affiliate networks must have international reach, according to Kamin. "This business is global," he says. Kamin predicts that the market will consolidate to five top-tier international affiliate networks that will compete with smaller regional players.

 Northern Exposure

American affiliate networks are not alone in their hemisphere in seeking a share of the international marketing dollars. Canadian affiliates are enjoying success selling products such as prescription medicine, adult content and sports books in the United States.

Nicky Senyard, CEO of Montreal-based network ShareResults.com, says merchants in her country are significantly behind their southern neighbors in understanding affiliate marketing. "Online merchants don’t know what they are or how they are to be used," Senyard says. Many Canadian affiliates are currently selling American products, but her company and others are educating Canadians on the possibilities of selling their goods in the U.S.

Just as Commission Junction and others are now operating networks in Canada, she expects that Canadian networks will increasingly do business in the U.S. "[Opportunity] flows in both directions," Senyard says.

American networks that wait until 2006 to launch European initiatives may find the window of opportunity closed. Local companies who become established with retailers now will have a definite advantage, according to Gary Stein, a senior analyst with Jupiter Research. "The advantage is to the incumbent," Stein says. U.S.-based advertisers who are expanding their European online marketing programs have to weigh the factors of familiarity with American networks versus local expertise, according to Stein. "There are arguments on both sides of the equation."

 

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

E-Tailing Wrap-Up

SIX WEEKS. That’s all it takes for many merchants to make or break the retail year. From the day after Thanksgiving – Black Friday – to the Friday after Dec. 31, the holiday rush generates a major part of year-round sales. That translated to $135 billion in gift sales last Christmas, according to the US Department of Labor. An estimated 8 percent of those sales occurred online, leaving affiliates with a superb opportunity to give themselves a nice little holiday bonus.

Take toy and apparel affiliate SchoolPop.com. "The gift buying season has a significant impact on our sales," says Mary Beth Padian, the site’s vice president of merchant development. "Toy merchants are in our top 50 merchants throughout the year. Every fourth quarter – especially with Disney and eToys – they are in our top 10."

SchoolPop is a donation site that encourages buyers by promising to return a portion of each commission to a school or nonprofit of the buyer’s choice. Yet even it doesn’t rely on feel-good power alone when it comes to cashing in on the holidays. This year, it’s publishing a holiday edition of its new triannual magazine, distributed to 1 million parents through partner schools. "Our editor is writing an article about the hot toys and gadgets for the holiday season, and she’s talking to merchants to get a sense of what is really going to be hot this year," Padian says. "The product impact, especially when it’s contextual like that, should show us a significant lift in our sales over last year." Of course, holiday sales aren’t reserved for toys. Electronics, apparel, music, movies, books, airline tickets and collectibles are all huge holiday categories, often offering deep discounts to help promote holiday sales. For example, top affiliates for Ross-Simons, which promotes itself as selling "life’s luxuries for less," saw their sales double during last year’s holiday season and the company is hoping for a similar experience this year, said affiliate manager Felicia Lesnett. To encourage affiliates, Ross-Simons offers commissions of up to 10 percent for top affiliates during the holiday season – that’s double the program’s base commission during the rest of the year. Affiliate sales make up about 20 percent of the company’s total online revenue.

Just two years ago, the Internet was still viewed as a relatively high risk channel for Christmas shopping. Who can forget the horrors of Christmas past when sites crashed, orders weren’t processed and Santa missed the big day? The cybermalls have gained a lot of respect since then, according to Patrick Gates, AOL’s senior vice president for e-commerce. "We are finally seeing a true shift from offline to online," he says. "The pie isn’t getting bigger; people are shifting share."

ComScore Networks estimated online sales increased 35 percent to $18.6 billion in 2003, up from $13.8 billion in 2002. Sixty-four percent, or $12 billion, of that was made between Nov. 1 and Dec. 23. "November and December are humongous, humongous months for us," said Jennifer Willis at ShopForChange.org, the affiliate sales site for Working Assets. For the past few years, it has promoted its seasonal clothing – things like books through Powells.com and apparel through LandsEnd.com, of which half of the affiliate commissions go to nonprofit causes – through a holiday newsletter. The newsletter is stocked with listings for merchants, descriptions of promotions, free shipping options and a reminder to shop there first. This year, even without a newsletter, its now-established reputation as a site for gifting means that if people need to do holiday shopping "they sort of know to click over to us at ShopForChange," Willis says.

Certainly, Internet shopping is cutting into department store sales thanks to such features as convenience, wrapping and shipping. But the online market itself is also shifting. Home entertainment and travel are heating up while apparel and toys are losing share. Gift cards, offered by nearly every major merchant, are a dominant trend. Now that merchants have seen the strong improvement to their bottom lines as a result of gift cards, the push is on for holiday 2004. But watch out: Some merchants offer little or no commission on gift card sales.

"Gift cards were a $20 billion business last holiday," says Lauren Freedman, president of The E-tailing Group in Chicago. "No one returns a gift card." And when you sell these, chargebacks can become a thing of the past. You can increase dollar amounts on card sales by pushing specific cards for specific uses, such as an entire January back-to-school wardrobe from Old Navy or a complete computer system from Office Depot. You can also promote gift cards as "the perfect gift for the undecided."

The Humbug Factor

Although the 2004 gift buying season looks strong, sales may still be affected by the economic outlook. When times are tight, so are wallets. That’s why comparison sites are predicted to be the biggest winners during the 2004 holiday season. Affiliate Ben Chui predicts sales through his comparison shopping site BensBargains.net will be "huge" in November and December because of his reputation as a bargain hunter. "I find the best price on any particular day on numerous products, and that resonates well with people right now," Chui says. "If you go into a store and everything there is the cheapest you’ve ever seen it, I guarantee you they will be coming back." He doesn’t have a newsletter, doesn’t send out emails and doesn’t pay for search engine placement. His firsttime visitor traffic is driven by natural search, message boards and word of mouth. The rest comes from people that have his site bookmarked. Yet he’s still able to pull in an excellent income from the work he does finding promotions and searching for best prices by hand, without the aid of software. Although he holds a master’s degree from Berkeley, he’s now "doing this full time."

Even with the uncertain economy, the number of first-time shoppers on the Internet continues to grow with the richest households expected to register the largest increases in holiday expenditures. "Here we’ve got, now more than ever, more people familiar with how to buy online and more ways of doing it than ever," says Carol Baroudi, an analyst at Baroudi Bloor International in Arlington, Mass. "More and more people see less and less reason to go to the mall in a crunch."

The way to a holiday shopper’s heart is in the details. Holiday Retail Strategies 2004 from Packaged Facts, a publishing division of MarketResearch.com, concludes the things that will help e-tailers are: unique products, wide variety, a strong reputation, a holiday atmosphere and a consumer confidence in their ability to take orders securely and ship them in time for the holiday.

Shopping For Shoppers

Of course, getting people to your site takes work, but try the five key strategies suggested by Packaged Facts. Differentiating your site can be done through links or landing pages specifically for your audience. "We help people find science fiction and fantasy books that are hidden in plain sight on the merchant’s site because they don’t know how to get there," says Olivier Travers, owner of Portugal-based SciFan.com. December is SciFan.com’s peak selling month. "We spend a lot of time hunting for books in a series, and finding the reading order. That’s information you hardly find anywhere. It’s very important for us not to just be another price and comparison tool, because we think you can find that in other places. What we want to do is provide some context on the books that you can’t find in other places." This brings up another differentiation strategy: offering products not readily found elsewhere. Your site could either be the only one with a hot toy, for instance, or the only one that still has it. "A lot of times what happens is shoppers buy the hot product early, and it starts to sell out," Freedman says. "When it gets down to Christmas, you could be the little guy that has it."

Try to develop a decidedly holiday atmosphere. Change site background colors or selected text to red and green, or apply other holiday color themes like white and silver or gold. Create a catchy gift-oriented phrase to use on the home page and all email/newsletter promotions for the holidays. Add themed art such as wrapped gifts, big red bows or evergreen foliage. Place decidedly holiday merchandise on the home page, and replace year-round merchant banners with new ones that focus on the holiday theme. World-Luxury.com is one affiliate that has seen better sales after adding holiday products and services to its home page, ranging from ornaments to Christmas teddy bears. "I start to feature newly released, especially limited edition [holiday] items on my home page as soon as they become available," says Marilyn Olsen, publisher of World- Luxury.com, American-Luxury.com and French-Luxury.com. "Last year I started in September and had good sell-through immediately, particularly in the smalledition, hand-crafted items." Olsen uses product photos provided as affiliate creatives at Gumps.com and Macys.com, which also takes the holiday theme one step further for its affiliates. "Our whole site will have a holiday theme, with gifts being the main focus," says Alison Zemny, Macys.com’s director of marketing. "We’re known for our in-store Holiday Lane, hundreds of different trees decorated in different themes. This year, we’re taking that online, with holiday dinnerware and servingware, ornaments, decorations and home décor – even more selection than we have in the stores."

Increase selection beyond one product category. In books, add upsell items like bookmarks and reading lights. In apparel, offer ideas for ensembles down to jewelry and shoes. In home, offer complete holiday table settings from napkin rings to centerpieces. In electronics, cater to every age group on the gift list. Macys.com took this suggestion. This holiday season it has added several new merchandise categories, many not found in its stores, including MP3 players, TiVos, DVD players, a wide selection of children’s apparel, toys and gourmet food gift baskets. "What we will be working on with affiliates is some sort of special holiday gift promotion for them that focuses on our holiday gift assortment," Zemny said.

Lesnett, the AM for Ross-Simons, says her top affiliates smartly position her links in multiple categories, which makes sense because the company sells a wide range of gift ideas ranging from tableware to jewelry. "A lot of times, opportunity is missed because affiliates think you’re only in one particular category. So we’re looking at where we’re placed on their sites and we’re trying to optimize their sales, and our sales," she says.

Build consumer confidence. How do you get it? The merchants you work with will obviously need to use a secure server for the credit card process. They’ll also want to have a posted shipping policy and a reputation for shipping on time. You can check out how consumers have rated shopping sites at Shopping.com’s Epinions section or BizRate.com’s "Store Ratings" search drop-down option. "Merchant ratings can really be a factor," Freedman says, noting that if there’s "a product that’s $50 cheaper, but from a site that’s rated only one star, then consumers don’t want to chance it."

Consumer confidence also comes from having a site that’s easily navigated and quick to respond, with merchants who offer the same. "We have to pay more attention to the behavior of a site at peak; if people get frustrated, they leave," said retail analyst Baroudi. "Seconds count in terms of transactional fortitude." Make sure the site is optimized and graphics are at the lowest DPI or the most effective resolution. Mitigate extremely heavy traffic by bringing functions closer to the user with intelligent routing software such as Akamai’s EdgePlatform, or by allowing seasonal capacity with on demand infrastructure from providers like IBM or DEA. "This is the season that makes or breaks," Baroudi says. "If you can’t handle the peak load in season, you may as well not bother."

Another factor to consumer confidence is guaranteed pre-Christmas delivery. Macys.com, for instance, guarantees Christmas delivery if ordered by midnight Dec. 21. "We’ve worked very hard with our fulfillment centers so that the customers can order up to the last minute," Zemny says. Consider posting holiday shipping cutoff points by your merchant links, then capitalize on late buyers by posting which sites offer express shipping. Consumers will be looking for that.

Customers also use a slew of other factors to judge whether they’ll shop your site or your merchants’ sites for gifts. These factors are product availability, gift wrapping, good return policies, Web research, informational pieces, whether or not they get help with gifting ideas and shipping options. One e-tailing study found only 30 percent of gifting merchants offer gift wrap or boxing.

"Make your suggestions, merchandise by price point and recipient type and have an aggregated gift center on the site, so there is one specific location for gifting," Freedman says. "Then it gets down to things like gift cards and gift wrap, but that really depends on the merchant."

Establish your site as a destination for gifting. Gap.com did that with its 2003 theme: "Get it. Give it. Gap." Barring a snappy slogan, there are a number of ways that affiliates can effectively lure gift buyers. The biggest producers use "gift idea" newsletters, gift suggestion pages on the site and the purchase of gift-oriented keywords in major search engines. Eighty percent of the gifting merchants in a recent E-tailing Group study already had gift centers and provide gift suggestions. This year, even sites like SciFan.com may take advantage of this feature.

It’s considering the addition of an online "gift list" of science fiction books site regulars could buy to introduce their children to the genre. It also helps to affiliate yourself with sites already known for their gifts. Affiliates for The Sharper Image, a quintessential gift buying destination, "tend to give us premium placement during the holiday because it pays off," says Roger Benton, its senior vice president of marketing. "And because we have an eclectic assortment that covers many shopping categories, we often get multiple placements."

You can also build your reputation as a gifting site, and your email list, with automated or personalized messages – similar to standard refer-a-friend features – that let buyers send notes to recipients alerting them that their gift is on the way. Seventy percent of the gifting merchants reviewed by E-tailing Group already offer this service, but affiliates have been slow to take advantage of this opportunity.

Another idea is to change the text on your search bar to "Gift Search" during the holidays. An E-tailing Group survey of 10 well-known gift-oriented Web sites found that all 10 had a keyword search, six offered advanced search and six also specifically offered gift search. If you don’t already have a search bar, consider adding one. Many merchants now offer them as part of their creatives. Search bars that will look for related text on the site can be downloaded for free or at minimal cost online. If you are building your site in FrontPage, Microsoft also includes a search option as part of the program.

Your sales don’t have to conclude when you reach Dec. 23. Thanks to gift cards, January is a huge month for continued sales. Packaged Facts reports that price points aren’t as big of an issue during this time, because gift cards are often treated as "found money." Drive traffic with "Use your gift cards here" promotions, and make it easy for your visitors to redeem their cards by grouping products by standard gift card price points: $10, $25, $50, $100. Hunt your merchant sites for markdowns and any after-Christmas shipping or discount promotions. Some merchants are even getting ahead of the game by feeding discount codes for after-Christmas sales to you. The Sharper Image just instituted a program called "Hot Deals," which feeds its coupon affiliate sites with closeout offers on specific "end-of-life" products. It also offers closeout deals in its outlet store at SharperImage.com.

The weeks after Christmas aren’t just a time for closeout sales. It’s also a time for fresh merchandise. Found money, after all, often goes toward trendy items – and trendy translates to hot merchandise not offered pre-Dec. 25. For instance, AmericanEagle.com rolls out its spring merchandise on the day after Christmas – a savvy and intentional move to capture gift card sales from the trend-conscious set. "The most important thing is constantly updating, usually daily, and featuring the best that I find on my home pages," says Olsen, who maintains three luxury apparel and gift sites. That also means removing any out-of-stock items.

Whatever type of site or categories of product you have, the same rules for successful 2004 holiday sales still apply. Those sites that want to improve holiday sales will have: different products from their normal year-round assortment and their competition; a gift destination identity; a decidedly holiday atmosphere; multidepartment gift participation; and customer confidence in an affiliate’s site and their merchants.

SchoolPop, meanwhile, is already taking these lessons to heart. It launched its first gift-themed section for Mother’s Day, followed by back-to-school. It’s the same tab at the top of the page, but with the title and content changed for each promotional period. "So far this promotional page has worked really well, so I’m excited to have it for the holidays," says Mary Beth Padian from SchoolPop. "For anyone running around shopping for the holidays, it’s always good to have some place to go to get ideas."

 

JENNIFER MEACHAM is a freelance writer who has worked for The Seattle Times, The Columbian, Vancouver Business Journal and Emerging Business magazine. 

The Secret to Being Super

They’re called superaffiliates, but there are no secret powers behind their amazing sales. They follow the same path every other affiliate does: They publish a Web site, sign up for affiliate programs, download the affiliate codes and troll on the search engines.

But they work a little smarter, make a few more calls, send a few more emails and do a lot more testing. And what they do better than anyone else is integrate all of the standard affiliate marketing pieces – email lists, merchant relationships and showcased products – to get more people to their site and more people to buy. Their efforts net results only dreamed of by other affiliates: transactions by the thousands, and monthly commissions often measured in six figures.

To illustrate the point, Revenue decided to introduce our readers to Bob DiCerbo, a Chicago resident who never dreamed he would be working just 20 hours a week to make a very comfortable living. He started ClearSave.com with his wife in October 2002, affiliating with merchants such as Overstock.com, Nordstrom.com, QVC.com, Land’s End, FoodSmart.com and Pet Food Direct. Now he does little more than chat up affiliate managers, tweak keywords and cash checks.

ClearSave is a “check here first” site, where visitors come just to see if any of the merchants they regularly patronize are offering discounts, sales, coupons or bargains. The 2-year-old site gets a whopping 300,000 hits per day. Merchants drool over that kind of traffic. And DiCerbo and his wife pull in enough commissions to pay themselves salaries and hire a part-time assistant. Eventually, they expect their “super” efforts to send their kids to college.

What exactly is a superaffiliate? Well, it’s not one particular thing. It could be one person or 100. It could be an individual or it could be a company. It could be a site offering discounts, rebates, rewards, funding for charities, dating services, apparel, travel arrangements, downloadable music or any of the Internet’s hot products. One thing they all have in common is that they’re treated well – even heavily recruited.

Being a big dog has its benefits. “Merchants reach out and help us put together creatives just for us because we’re doing so well,” said DiCerbo. Many affiliates also get higher commissions, special offers and other assistance from merchant partners.

Here are some ideas from DiCerbo and others on how you can get similar treatment.

Find the best programs.

DiCerbo believes one reason he does better is simply by keeping the lines of communication open with the right merchants. “Only a handful of merchants – Overstock, Avon, Sierra Trading Post, Blair and Eddie Bauer – will actually reach out and call and talk to you to see what it is you actually need,” he said.

Glenn Sobel, founder of AffiliateAdvisor.com and webmaster for DatingTek.com, said some of the best programs offer lifetime commissions. “The key is to look for programs that pay residual income – I’m just kicking back right now and enjoying my Internet income,” he said from his Vegas retirement home. Dating sites are a prime example. When an affiliate refers someone, many programs give a commission for the new member and each time that person renews the membership.

To help choose great merchants, would-be superaffiliates should read contracts carefully before signing up. Contracts should spell out exactly what earns a commission, when commissions are paid, how long affiliate referrals are tracked and what happens if buyers come from more than one affiliate site. If the contract doesn’t spell it out, then add it in writing. “There are a lot of issues like that that really matter,” said Sobel. “They greatly impact your income.”

Provide only those products your visitors want.

This may seem elementary, but many new affiliates spend months discovering it. A site posting sports scores, for instance, should have links to sports magazines and sports betting, not printer ink.

“We wouldn’t promote Overstock as hard as we do if our audience didn’t think it … met their needs for discounted products,” said DiCerbo. “The proof is in the pudding.” That pudding consists of $40,000 to $50,000 in monthly sales, resulting in commissions of $2,800 to $3,500 for ClearSave.

Loyalty site FreeRide.com, which gets 30,000 hits per day and affiliates with hundreds of merchants, asks visitors for demographic information when they register. “But a lot of the way we figure out our demographic is by watching their activity – What are they buying?” said FreeRide.com director Corey Newhouse. FreeRide then beefs up selection for that audience.

“Once you’ve found the ideal types of products, choose one or a handful of really good quality products and promote those well,” said Internet Marketing Center founder Corey Rudl, who built his one-man affiliate operation into a $6.6 million-per-year company. Top affiliates in his program use this strategy to earn $4,000 to $8,000-plus each month.

Email your site visitors.

Superaffiliates always collect email addresses when visitors come to their sites. They have visitors sign up for free offers, newsletters or access to more information already on the site. More than 200,000 of ClearSave’s visitors have filled in their email addresses when prompted to “sign up for exclusive deals, bargains and coupons.” DiCerbo blasts them carefully honed emails once or twice a month. Jermaine Griggs, the superaffiliate featured in our story on religion sites (see page 68), credits his email list for the success of his piano lesson sites. Visitors enter their first name and email address anytime they want to pick a free lesson, see a full music score or add a comment to the lesson forum. The options are free anyway, so Griggs turns them into selections that require visitor input: “I could automatically direct them to all 60 lessons, but ‘Choose a free lesson’ is better than saying ’60 free lessons,'” Griggs said. “This way they enter their information. We have a 60 percent conversion rate with that list, and we’re building it by 6,000 people each month.”

Finally, if you really want to win big, produce a newsletter and promote the heck out of it. Have site visitors subscribe through an opt-in section of the site’s home page, and load the newsletter with advice, news or updates on your industry. Affiliates can work great deals with merchants just by the breadth of their newsletter subscription base.

Hire help when needed.

DiCerbo has part-time help finding new coupons and codes to post on the site. He also has an IT person on retainer. Superaffiliates must either be webmasters or have one on hand. These days, even knowing HTML may not be enough. “We found that XML is much more search engine friendly,” said Rick Schneider, VP of business development for World Choice Travel, an all-affiliate travel merchant. “XML lets you more deeply integrate an affiliate product with the merchant’s brand.”

There are even small companies that are really superaffiliates. They run virtual online stores with lots of customer support, information, great design and other labor-intensive elements. That’s what FreeRide.com – which uses “tokens” redeemed for merchant gift cards to reward visitors for purchases, surveys or Web surfing – does. It’s a four-employee loyalty site run by New York-based Endai Worldwide, an online marketing and technology company with 20 employees of its own. From his loft office overlooking downtown Manhattan’s South Street Seaport, Newhouse knows this isn’t an ordinary affiliate company. But it could be a glimpse at what in just a few years might be the norm. Major affiliates are already being acquired by their merchants – Hotels.com owns hundreds of affiliate sites.

Help searchers find your site.

Keywords, search engine placement, refer-a-friend programs, viral marketing – these are a few of the steps to bringing new viewers to your site. Pay-per-click search engines let affiliates quickly test search words. Through Google AdWords, DiCerbo creates his own ads, chooses keywords to match the ad to his target Google audience and pays only when someone clicks on the ad. He said his site has the most success with high commission products like perfume and footwear. He tries words often provided by his merchants and then tinkers with different landing pages – those pages that actually advertise the product, rather than directing people to the home page – to find out which word and page combinations would help to make the most sales.

Griggs gets even more distance from his hosting service, which gives him unlimited email accounts with his domain name. “If you have an attractive domain name, you can easily offer free theirname@your site.com email addresses to site visitors,” Griggs said. “I’m getting at least 1,000 [viral] impressions a day with that strategy, because my site names appear at the bottom of every email they send out.” Griggs also suggests that affiliates search out the forums or online chat rooms where their ideal customers congregate.

Meanwhile, FreeRide.com is trying its hand at co-registration campaigns, where visitors to other sites can check a box and be added to FreeRide’s list. “So far so good,” Newhouse said.

Once visitors get to your site, keep them there through easy navigation, great design and an established sense of community. “The bottom line is, you’re selling ideas and you’re selling community,” said Web site designer Dean Peters. One way to establish community is through personal endorsements and testimonials. Place them well and make them convincing pieces of friendly advice rather than an obvious cash grab. Testimonials “could increase the response you receive by 400 percent or more,” said Rudl, who has trained 75,000 affiliates in his strategies.

Roll up your sleeves.

This is a day-and-night business. Click-through problems aren’t reserved for 9 to 5; if not cared for immediately, these problems can harm sales. Affiliates must be able to respond as soon as problems occur. That doesn’t mean you actually have to work 24 hours a day. Many successful affiliates grow with just 40 hours per week of combined staff time. But they’re regularly checking their stats, regularly checking their site operations, regularly testing new promotional methods and regularly working with merchants to improve their affiliate offerings. “It’s definitely roll up your sleeves and a lot of grunt work to see what works and what doesn’t,” DiCerbo said.

Test response rates for different affiliate banner ads and text links. Put them in different spots on your site. Try different articles and newsletters. Use different autoresponders. Test promotions on the small scale before taking them to your mass list. “While this might seem like a lot of work, it will ultimately increase their traffic and their affiliate commissions,” said Rudl.

Newhouse at FreeRide.com seconds that: “Giving people a variety of ways to take an action helps a lot.”

Be ready to respond to changes.

“I never look too far out into the future,” DiCerbo said. “The e-commerce landscape changes so quickly that I’m not going to say that the way we’re doing business now is the same way we’ll be doing it next year. Paid search is a new thing that has just taken off. The spam area is closing down. It’s hard to say what’s going to happen.”

In the end, the superaffiliate must be committed to working regularly on its site, must talk frequently with its merchants, must constantly be in touch with its customers and must be able to wait for its efforts to pan out. The buyers often don’t come running. But with the right products and the right customer capture mechanisms in place, at least they’ll be following the right tracks.

JENNIFER MEACHAM has worked for Revenue, The Seattle Times, The Columbian, Vancouver Business Journal and Emerging Business magazine.

Collecting Your Share

Paul DeMoney is an affiliate marketer’s dream: a shopper who is always ready to buy. Anytime, anywhere. He wants, no, he needs Star Wars action figures, and he doesn’t care where he gets them. Your site. Another e-commerce site. The nearest toy store. Whatever.

He just wants the new toys wherever he can get them. And whenever. No need to wait for the holidays. He’s always looking for new toys. It’s a year-round passion.

“Collecting is much easier nowadays with eBay and all the vendor sites out there,” DeMoney said. “I am no longer at the mercy of toy stores. On the Net, you can always find what you want if you know where to look.”

DeMoney is more than an Internet customer. He is what we call a collector – someone with a passion for product. And what more could an affiliate marketer want?

Imagine marketing to a niche where the shoppers are passionate about buying the items you promote. Envision being rewarded with the lofty commissions that are offered through the different programs offered, with the potential of earning a five-figure monthly income as a top-producing affiliate.

What’s more, these collectors aren’t ruled by season or reason. They will buy anytime, anywhere as long as the item is something they want. Meet your dream niche – collectibles, and your dream target audience – the collectors.

Carolyn Tang understands the collectible industry from the affiliate manager’s perspective. She manages the affiliate program for CollectiblesToday.com. “The collectibles segment is really a lot of fun, and if you like marketing, you’ll love marketing to collectors,” said Tang. “Our consumers are so passionate that it keeps conversion rates healthy.”

Industry Rising

The collectibles industry is growing fast. According to CollectiblesToday.com, in the year 2003, the total retail sales reached $3.9 billion in the collectibles niche. A survey done by eBay showed popular items to collect include pottery, glass, dolls, holiday items and sports memorabilia. Popular antique items include fishing nets, weathervanes, metal picture frames and quilts. The number of collectible merchants have increased in the last two years, giving affiliate marketers options to be creative and the ability to earn more when marketing this niche.

“The industry’s continued growth can largely be attributed to Internet sites that sell collectibles,” according to collectibles expert Barbara Crews. “The Internet has completely changed the world of collectibles. Things that we once thought were rare or hard to find are now easily available through online auctions or Internet venues. It’s been the boon and the bane of collectors everywhere. Perceived values have usually dropped as a result of more items becoming available, but the collector is now able to find those bargains and hard-to-find items.”

Unity Marketing’s latest research shows that about 40 percent of US households collect some item. In other words, 43 million American households actively collect something.

“The desire for people to collect things is deep-seated and something that transcends time and place,” said Pam Danziger, president of Unity Marketing and author of the book Why People Buy Things They Don’t Need. “People will spend money to acquire items that they keep, cherish and collect.”

Why They Buy

Creating a profile of the typical collector is no easy task, with good reason.

“A typical collector? There’s no such animal,” said Crews, who is About.com’s collectibles guru. “Many folks collect things that bring back memories of childhood, such as toys they might have had that Mom threw away. Or the cookie jar that sat on their grandma’s counter.”

It is said that collectors have addictive personalities. And their addiction leads to shopping that borders on compulsive. “You’ll find collectors will want one of everything,” Crews said, “every Barbie that’s been made or every Ty Beanie Baby.”

To understand the collector, affiliate marketers must identify what moves the collector to buy. “Today’s collector is younger, smarter, more sophisticated, more affluent and shops in a much wider range of retail venues than yesterday’s collector,” said Danziger. “Reinventing the collectibles industry means getting in touch with the new collector, understanding their wants and desires and creating products based on that.”

Know Your Audience

As with any marketing niche, you must know your audience if you are to succeed. This is critical to success for anyone entering the collectible marketplace.

“If you’re trying to market to a Precious Moments collector, take some time to research the topic and stay updated on product developments,” said Tang. “Know which lines are coming down the pike and keep your finger on the pulse of the collector. Continually ask yourself, ‘What is the collector looking for now?'”

Research conducted by Unity Marketing in 2002 suggests that men are the future of a market once thought to have been dominated by women. “Since the Beanie Babies craze died down, women have turned their attention to decorating rather than collecting,” Danziger said in her book. “While the collectibles industry has sprung up largely serving a female audience, the collector market today is becoming more and more dominated by men with their different collecting interests and passions.”

Men, the Unity study revealed, tend to start collecting at a much younger age than women. “Men carry their collecting passions right from childhood through early adulthood and then on into maturity, while women tend to delay active collecting until they reach 35 years or so,” it said. This is great news for affiliate marketers in the collectibles arena. Not only are more people collecting, they are starting young and shopping into their middle age.

Risk in Rarity

Along with the enthusiasm and excitement that surrounds the area of collectibles, you will find a specific interest in antique and rare collectibles. Using the Internet and online auctions, it is now easier to find items that were once limited and/or hard to find.

How does one protect oneself from purchasing items that are counterfeits and have no value? “Ultimately buyers should make sure they purchase from a well-known dealer in order to protect themselves,” suggests Bill Ferrol, owner of BillBam.com.

The antique market is limited in available merchants for affiliates. This is often due to the fact that rare and valuable items have higher price tags and take longer for a sale to take place. This can require more time and effort on the side of the affiliate marketer. While the commission may be higher – say, 15 percent of $20,000 – the time it takes to make that sale has to be weighed against the profit. Affiliate marketers who do chose to market these rare and valuable items should work with merchants who offer a certificate of authenticity. This will ensure that you protect your credibility and gain repeat orders from customers.

Start Small, Think Big

BillBam.com Affiliate Manager Chris Sanderson recently entered the collectibles marketplace but says there is plenty of room and opportunity for anyone interested in entering the field.

Sanderson encourages more people to enter the niche and offered tips for how to do so. “The market sector of collectibles is very big. There are a fair number of merchants selling collectibles and the sector itself breaks down into a wide range of niches, ranging from plush toys to pins to cards. So there is room for a lot of affiliates to be involved at different levels,” stated Sanderson.

“Start with a small focus on a selection that you are interested in,” said Sanderson. “Mix the collection with items from other stores that fit the selection, add some value to your presentation with some content.

“For example, if you like Star Trek, then start with that selection, find books, videos and posters from other merchants to complement the site and add some content to the site, not only to make it more search engine-friendly, but so that visitors feel that your site is ‘adding value.’ Your content might be about Star Trek, or it might be about the products or the merchants.”

That doesn’t mean the market space isn’t full of competitors. A suggestion from all affiliate marketers that are playing in this space is to pick something you are interested in, have fun with it, and expound on it. This formula, along with some basic skills, will enhance your chance of success.

Competition is Plentiful

“Competition is fierce,” said BillBam’s Sanderson. “There’s a lot of overlap and often it comes down to first to market and largest product range. The price can be a secondary issue for the consumer and affiliates on what is bought.”

Carolyn Tang confirms that competition is fierce but is quick to note the positive in that. “I’m one of those armchair economists who believes that competition makes for a healthy marketplace, so I think it’s a good thing to have,” Tang said. “It also provides an affiliate with options.”

As with any marketing venture, it falls upon the affiliate to establish a niche or specialty in the larger niche. “I haven’t seen any indication that the affiliate market for collectibles is anywhere near saturation,” Tang said. “There are still a lot of niches out there that can be developed.”

Starting is Easy

“Almost any kind of site can be successful,” said Sanderson. “There are obviously the ‘shop store’ style sites that promote the full product range, but also you have sites that might be focusing on a particular TV show, like Star Trek, that can sell collectibles focused just on that niche.”

Creating your own affiliate success within the collectibles industry doesn’t require skills any more advanced than those used in other niches.

“Knowledge of search engine optimization or pay-per-click marketing, or other methods of site promotion would be good to have,” said Sanderson. “No traffic, no sales. For affiliates who want to do datafeed-powered sites, skill in ASP/PHP is useful, as well as potential MySQL.”

Ongoing Interest

“There’s an odd perception out there that the collectibles market is seasonal,” said Tang. “This isn’t completely accurate because collectors are always collecting. They don’t just work on their collection during the holiday season. It’s a year-long hobby for them.”

On the other hand, affiliate marketer Andy Derrick started marketing collectibles in the third quarter of 2003 and enjoyed the rewards he saw over the Christmas season. “There are some serious collectors always buying, but holiday sales offer the most opportunity in this market from my perception,” he said.

Not only do collectors carry on through rain, sleet or snow, they also continue to collect even when the economy is slow. “Even when the economy takes a downturn and their disposable income is squeezed, you’ll see a lot of collectors switching to generic brands to save money for the third issue in a five-part series of, say, plates,” Tang said.

Affiliate marketers who tap into the year-round shopping habits of collectors earn great rewards. For example, Tang’s Collectibles Today just opened a jewelry storefront. Top-performing affiliates average $10,000 to $12,000 a month, while those who might spend a few hours a week tweaking their site pull in a couple hundred dollars a month. Affiliate marketer Pat Hartray of LightHouseStore.com agrees with Tang on the financial benefits: “Commissions for collectibles are above average for the industry. You can find collectible affiliate programs offering anywhere from 5 to 20 percent on sales.”

Because there are so many niches within the collectibles marketplace, there is enormous potential for affiliate growth. In order to experience that growth, take some time to research the products and stay updated on product developments. “Collectibles are fun and entertaining. They have mass appeal,” said Hartray.

The trick is to know what will catch the eye, and the dollars, of the collector. Continually ask yourself, “What is the collector looking for now?”

LAURA SCHNEIDER is the marketing editor for About.com. Her articles on marketing have been published by more than 4,000 Web sites and magazines. She is also partnership development and marketing manager for Revenue Partners where she has developed and managed online marketing ventures for a decade.

Online Travel Takes Off

Schlepping his burgundy leather briefcase and navy canvas travel bag through the Portland airport, George Bragg doesn’t care as much about how he gets his ticket as how soon he’ll get home to Dallas. He’d happily buy tickets from affiliates, discounters, travel agents or airlines.

With travel representing the single largest source of Internet commerce, travelers like Bragg have so many options "it’s hard to keep up with them any more," drawled the weary business traveler with five frequent-flyer cards in his wallet. Airlines and hotels sell directly from their own sites. Discounters offer an array of fares. Travel agencies – hit hard when airlines stopped paying commissions – offer online fares and more. That leaves affiliates with a hearty marketing challenge: reaching consumers and agents already bombarded by messages from the big brands and the discounters that resell the brands. But there’s hope in the numbers: "Close to 100 million people have purchased travel online at some point over the last year," said Melissa Derry, a spokeswoman for Expedia. "While there are 20 million people coming to Expedia’s site each month, there is still a huge number of people who are out there looking for a place online to get these services."

Though higher fuel prices may put a crimp in auto or jet travel, industry watchers still predict record years. Online bookings have never been more popular. Out of all flight and hotel reservations, 30 percent come from online bookings, reports travel researcher PhoCusWright. By 2005, it predicts half of all flight and hotel reservations will be made online. "It just continues to grow," said Bill McGee, a consultant who watches the sector for Consumer WebWatch. "A few years ago, it was mostly business travelers, but now it’s really across the board. It’s used by leisure travelers, by families, by just about everybody."

Airlines, hotels, cruise lines, rental car companies and travel discounters see this huge market, and know their marketing can’t capture it all. So they turn to affiliates. "We think of them as an extended sales force," said Blagica Stefanovski, online marketing and affiliate manager at Orbitz.com. Nearly any site can sell flight, hotel or rental car bookings, whether it’s a sophisticated rewards site or a simple Web page put up by a neighborhood association to fund speed bumps or stop signs. "There are so many opportunities for travel on the local level," said Jason Price, vice president of marketing at Hospitality eBusiness, an Internet consultancy for hotels. "You can post local news or sports information, and provide a travel link to help fund the site. Maybe some kid in his basement wants to talk about high school sports in the area – why not have a Marriott button there for the hotel around the corner?"

Whatever the site, now is the best time for sales. "We’re [in] our best seasonality – the peak summer travel season – so it’s a great time for affiliates of travel merchants to promote their travel options and improve their placement or for new affiliates to give it a try," said Veronica Young, affiliate marketing manager at Hotwire.com. "The winter holidays are another big travel season: Thanksgiving, Christmas, New Year’s."

Travel is perhaps the easiest entry for new affiliates. They are credited for sales up to 30 days after customers click through their links, even if customers don’t go through the affiliate when they actually buy. New banner and link codes are sent within emails so affiliates don’t have to log into an interface. Many travel affiliates don’t even update their codes anymore. Their merchants do it for them using dynamic rich media. Travel merchants often have teams of "program managers," rather than one affiliate manager, to give personalized service to affiliates. "It’s certainly an ongoing challenge to stay on top of all the changes," said Michael Bauer, senior vice president of affiliate marketing for Hotels.com, which offers an online "university" for new affiliates. "What we offer affiliates is we are the eyes and ears of our industry. If there’s a swing, we identify it."

Travel merchants also actively help affiliates convert the curious into buyers. Interactive banners, for instance, are the hottest buzz in this industry and are offered by most travel merchants: Customers input their destination and dates at the affiliate’s site first, moving them further into the search and committal process.

Since the peak summer travel season is in full throttle and holiday travel is just around the corner, these perks should prove beneficial to affiliates trying their hand at the high-flying online travel industry.

Hotels

So what’s the hottest-selling travel product now? Hotels top the list. Eighty percent of active business travelers and 73 percent of active leisure travelers went online for hotel reservations in the past 12 months, according to the 2004 National Travel Monitor (NTM).

Affiliates could work directly with the brands, but few offer affiliate programs. "Only two or three brands have actually launched an affiliate program – only in the past two or three years and with moderate success," said Price, who cites Accor Hotel’s worldwide affiliate program with 3,700 hotels. "The rest of the brands have not embraced the affiliate market. As soon as these early adopters come out with performance, the others will jump on." Individual hotel properties may be willing to negotiate with affiliates who can give them Web bookings. Try it.

Affiliates can work with discount sites that show fares for dozens of hotel partners, ranked by price or brand. They can work with "opaque" sites like Priceline and Hotwire, which rank unbooked hotel rooms – along with excess airline seats, car rentals, vacation packages and cruises. Both pay 2 percent commissions to affiliates. "We’re kind of the Costco of the online travel industry," Young said. "Any affiliate that has a site where customers are going to be looking for cheap prices is a great fit for our program: a travel site, a discount site, a coupon site."

Affiliates also can work with affiliate-only networks like World Choice Travel. World Choice offers fully branded travel search pages, with an underlying software that combs the Web for lowest fares. World Choice pays 5 to 10 percent on hotel bookings, plus half of any transaction fee.

Flights

Nearly 75 percent of consumers who researched travel online bought their airline tickets online in 2003, reports NTM. The incentive for online bookings is there: Internet fares are now, for the first time, the cheapest way to buy airline tickets, according to Consumer WebWatch.

Affiliates can sign up with specific airlines like Alaska Airlines/Horizon Air, which pays $2 for every ticket booked. Affiliates can sign up with discount sites that rank searches by price, flight times or airline. The largest are Expedia, Orbitz, Travelocity, CheapTickets, OneTravel and TravelNow. Consumer WebWatch found that Expedia leads in the greatest number of lowest fares but Travelocity, which has the best booking tools, has the largest array of flight times and low fares.

There’s also World Choice’s branded program, which searches anywhere in the US, Canada, UK or Europe for the lowest prices from about 30 airline and booking sites. Affiliates earn 5 percent on online sales and 3 percent on call center sales.

Car Rentals

Forty-five percent of active business travelers and 32 percent of active leisure travelers went online to rent a car during the past 12 months, reports NTM. Those numbers should only grow, as insiders predict that more than 20 percent of all car rental bookings will be made over the Internet this year. Alamo’s program pays 3 percent of time and mileage, with checks mailed monthly (no minimums). Expedia and Travelocity pay 2 percent commissions, and Orbitz pays a flat $2 per rental. World Choice Travel searches 28 worldwide car rental companies for best fares and pays 5 percent on any of those booking. Plus affiliates can split the optional $2.99 to $6.99 transaction fee.

Cruises

In the first quarter of 2003, more than 2.2 million travelers worldwide took a vacation with major cruise lines – a whopping 23 percent increase over 2002, reports the Cruise Lines International Assoc. (CLIA). "As the cruise industry has grown and as more people take cruises and become confident with the components of the cruise, they’re becoming more confident with booking online," said Brian Major at CLIA. "A lot" of affiliates, he said, have benefited as a result – most notably CruiseCritic.com with 110,000 registered members, as well as affiliates CruiseMates.com and Cruise Addicts.com.

Packages

Packaged travel is emerging as a solid moneymaker. More than 68 percent of online travel buyers buy more than one component, reports PhoCusWright. Among active leisure travelers during the previous 12 months, 20 percent went online to book a complete vacation package with flight, hotel and often car rentals in one transaction. "If you look at the online travel space, 2003 was the year of the package," said Joel Frey, a spokesman for Travelocity. Sites like Expedia have even added theater reservations, sports tickets and transportation to and from the airport. Flights are now "like the milk at the back of the store," said Derry at Expedia.com. "By packaging options together we can afford customers better pricing and affiliates better commissions." Now affiliates can get paid for the whole trip and not just one flight.

Affiliate Options

Affiliates have a number of ways to get into the travel industry.

Link or banner: You don’t have to be a travel site to make use of affiliate links. Webmasters with sites touting everything from book reviews to financial advice have travel banners on their home pages, suggesting that the appearance of having advertising support from a big travel provider has its benefits.

Powered by: More travel-specific sites often go with co-branded versions of the merchant’s site. Visitors make their reservations on a page of the affiliate site that is "powered by" a merchant. After typing in their destination and time frame, their travel options are displayed on the merchant’s site.

Private label: With this option, affiliates can carry their own site design onto every one of the travel reservation pages. And affiliates can offer personalized call center services to buyers. Options are either a generic toll-free number, where the call center asks for the discount code or special Internet code from the affiliate’s site, or a dedicated private toll-free number answered on behalf of the affiliate and its brand. "We are usually the ones that come to the affiliate and say, ÔI think it’s a good time to offer this customized toll-free number,’ which doesn’t cost any additional dollars," said Bauer from Hotels.com. World Choice Travel’s private label program even puts the affiliate site’s name on consumer credit card statements.

Trends

The implementation of account management teams is enabling more personalized services for new and existing travel affiliates. "There’s a lot of competition, so merchants have to differentiate themselves from the competition," said Young of Hotwire. "Part of that is how they treat their affiliates."

Globalization is another big trend. The Internet has no borders, so these days an affiliate in Europe can be a merchant’s top producer of US travel bookings and an affiliate in the US can produce great bookings for an Italian air travel site. "We encourage our affiliates to think outside of their boundaries," Bauer said. "No matter where they are in the world it’s up to them what region they want to target." Hotels.com supports five different languages and 13 different currencies through its US, European and Asia/Pacific affiliate networks.

Meanwhile, last-minute bookings are moving online. Several integrated sites like Travelocity offer cheap rates up to three days prior to a trip.

Bus and train bookings online are still in their infancy in the US. In Europe, Euro Railways is ahead of the game, offering 5 percent affiliate commissions on discount rail passes.

"For me," said businessman Bragg, ready to board a flight to Dallas for the 12th time this year, "it’s all about price and convenience and the simplicity of the site." Affiliates or not, sites offering those features have the potential to get him, and 100 million others, on board.

JENNIFER MEACHAM is a freelance writer who has worked for The Seattle Times, The Columbian, Vancouver Business Journal and Emerging Business magazine.

Wooing the Lonely Hearts

With thousands of dating sites on the Web, it can be as hard for surfers to find the right site as it is to find the right mate.

Affiliates are the matchmakers of the online dating world, bringing lonely hearts to dating service merchants who can light the path to true love, or at least some warm companionship. In a space Jupiter Research projects will more than double to $642 million annually by 2008, it’s no surprise that affiliate marketers are falling in love with the sector.

“Over the past one or two years, the stigma [about Internet dating] has fallen away,” said Graham Mudd, analyst for comScore, a Virginia market research company. “It’s a cycle that builds upon itself. The more people that use it, and have positive experiences with it, the more it’s talked about and used.” And, said Mudd, that usage is “at least partially driven by the fact that it tends to work.”

That’s right. People are actually finding real love on the Internet. Seventy percent of couples that meet online – and survive the first face-to-face meeting – are still in love and together two years later, reports scholar Aaron Ben-Ze’ev, who conducted the first full-length study of cyber-mating, Love Online. Additionally, dating sites tap into the very real, emotional needs of their members: to discreetly find like-minded individuals with similar interests willing to share a date, a sexual encounter or a life together. Jewish sites are a great example of this, as are sites for those with STDs, gays, religious groups and even couples seeking a third.

A few dating service affiliates claim they make as much as $500,000 per month. Our research found superaffiliates in the dating service arena make anywhere from $1,500 to $50,000 per month. Take LovingYou.com, an affiliate with three staff members and a reported 40 million page views in peak months. The site earns $10,000 per month from dating service commissions alone. Its secret, said LovingYou.com Vice President Bob Narindra, is “to not only have good content, but [get the visitor to] perform some kind of action – submit a poem, read an idea and do it, send a postcard – actually do something. Once you get them to actually do something in your site, you’ve created a connection.” Narindra said that connection is what leads people to buy.

The potential buyers are out there: Dating sites drew 20 million unique visitors in December 2003, reports Nielsen//NetRatings (55 percent men and 45 percent women). Some went for curiosity’s sake, others went for the free trials, and roughly 1.2 million plunked down $8.95 to $19.95 per month for paid memberships. Commissions vary widely. Merchants pay referring affiliates anywhere from a nickel to $3 for every click-through, and 15 percent to 110 percent of member fees if the site can convert those visitors from free registrants to paid subscribers.

Online dating is among the biggest paid-content categories on the Internet. “For the foreseeable future, it will be at or near the top in the paid ad category,” said Nate Elliott, an analyst who monitors online dating for Jupiter Research. The trick for affiliates is to get those looking for love to their sites first. That’s a task particularly hard for new entrants, who don’t have the advantage of the flush of media publicity that followed 1998’s “You’ve Got Mail” nor the virtue of being a top-ranked link in search engines. “The top-10 [dating] sites normally get between 32 and 50 percent of the search traffic when combined,” said Drew Jackman of 10x Marketing, a Utah Internet consulting firm (see chart).

Niche Monogamy

So how do affiliates of dating service sites survive and succeed?

“When you talk about online dating, you really need to talk about niche markets,” said Michael Jones, CEO of Userplane, which makes software for the dating industry. “Does it operate like a small bar that caters to regional interests? We’re finding so many of our clients, and so many small dating sites, exist very happily with less than 20,000 users.”

Even the big dating services, like Match.com, which is listed by Hitwise as the second-highest dating-traffic generator, see value in aligning with carefully niched sites. “We can only serve a certain number of markets ourselves, so having an affiliate network that’s willing to go out and present unique niche opportunities that are relevant to a certain number of members in a category [is a big plus],” said Gerard Sample, Match.com’s affiliate program senior manager. “Our best affiliates always find that niche and present personals relevant to that niche.”

Niche categories are definitely a growth area, said Elliott at Jupiter Research. He’s seeing dating services targeting alumni groups, ethnic groups, sexual preference, religion, language and geographical locations. Those affiliates are creating high-traffic sites just by affiliating with 10 dating services in their category. “They don’t need that many users,” Jones said, “before they become comfortable and are making money.”

Fresh Content

With so many different services out there, affiliates must do something to set themselves apart. “The most commonplace strategies are affiliates that take the time to describe, in editorial fashion, the nature of their site,” said R. J. Lynch, senior product marketing manager for Matchmaker .com. Though many dating services offer free content that affiliates can post, the most profitable affiliates come up with their own, posting free content two or three times per week. “When people find content on your site that they can’t get anywhere else, they build an affinity for your site,” said Narindra.

Here are some value-added features that can be used in various combinations to help differentiate sites:

Newsletters LovingYou.com has 16 double-opt-in newsletters, one for each demographic it targets, ranging from its 180,000-opt-in Daily Expression of Love (a romantic quote, idea or gift of the day) to its 450,000-opt-in LoveWire. Its founder and president, Jennifer Good, writes the copy.

Reviews Rosalind Gardner at Sage- Heart.com, a superaffiliate making up to $50,000 per month who was profiled in the last issue of Revenue, writes reviews of the various dating services she promotes. Other affiliates write movie or book reviews for those sappy romantic titles.

Articles Article ideas come from emailed questions, chat room topics or frequent site search requests. Rather than hire costly magazine freelance writers, insiders recommend recruiting a talented writer who can be more proactive to users’ needs by producing regular articles in-house.

Visitor contributions Many sites post poems and love stories submitted by visitors. Others offer online forums, which provide ready reading material for visitors interested in a particular thread.

Companion affiliates Successful affiliates don’t just stop at dating service sites. They branch out by affiliating the site with related retailers offering romantic gifts, lingerie or flowers. People in every income bracket and lifestyle, ranging from very conservative to the swinger set, are actively looking to buy on the Internet. This means a ready supply of residual income for both affiliates and dating services themselves. Gay.com, a dating service for gays and lesbians, reports that its members are twice as likely to have household income of more than $60,000, twice as likely to have graduated from college, and more than twice as likely as the national index to be professionals or managers. It uses those figures to sell premium-advertising packages to companies targeting the gay and lesbian market.

Multimedia Many offer downloadable love songs, video welcome emails or e-cards. “We extensively use viral marketing in our site,” Narindra said. “Visitors to our site can send online postcards, and the person they sent it to comes to us to look at the postcard.”

Cutting-Edge Marketing

An active marketing campaign is what gets date seekers into an affiliate’s site. “If we know one particular site is hot at the moment, that’s our focus – to promote that one,” Rauschenbach said. “And it changes a lot.” Banners are readjusted on pages, keywords are updated to reflect the most popular search terms, and easy bookmark and active-channel options are added to a site to make it easy for first-time surfers to return.

Meanwhile, high search engine rankings still can be achieved. “It boils down to collecting as many reciprocal links as you can [and] getting as much original content as you can,” said David Hayden, owner of Rabbit Rabbit Ltd., which runs DrDating.com. These strategies, plus a few more Hayden guards closely, seem to be working. He’s grown the site to No. 9 in the search rankings without pay-per-click search engine tactics.

Another way affiliates boost profits is by working with merchants to improve pay-per-click or pay-per-membership commissions. When LoveSites.com signs up to be an affiliate, “we do it in the traditional way, and send out an email afterwards letting the [dating service] know we’re a superaffiliate and we’re looking to promote your program at a higher-than-normal level,” said marketing manager Brian Rauschenbach. “We tell them we’re going to be taking a couple of different approaches to marketing their program, but we want to have a custom program set up first.”

The key to negotiating with merchants, Rauschenbach said, is to not just send them an email. He follows up by phone, and asks to speak directly to the affiliate manager. The net result: “We have a couple of companies that we actually have contracts with,” he said. “In case we get sold to another entity, we still have those contracts.”

Conversion Rates

Since most affiliate profits are made through membership fee commissions, it’s key to partner with dating services that have high ratios of registrants who convert to paid members after a free trial. Matchmaker.com, for instance, reports conversions of roughly 7 percent of visitors from general sites and 15 percent of visitors from dating-specific sites. That’s higher than industry standard, which pencils out to 8 percent conversion rates for males and 2 percent conversion rates for females, according to a December 2003 Nielsen//NetRatings study.

Dating service sites typically pay affiliates if that visitor returns to make a purchase within 30 to 60 days. Some services are sweetening the pot even more. Matchmaker.com, for instance, now offers unlimited return days. Its software records where visitors come from, even if those visitors don’t sign up for a service, and gives credit to the original affiliate if that visitor comes back at anytime during the course of their life. “Giving the affiliate the ability to earn commissions during the length of a subscriber’s time with us mirrors what we’re trying to achieve with our subscribers,” said Lynch. And that’s creating long-term relationships.

Looking Forward

While some product categories are tightening or dropping affiliate partner programs, experts say that won’t happen any time soon in the dating realm. Match.com, a Forbes 2002 and 2003 “Favorite for Dating,” soon will roll out affiliate features now offered only to big-name partners, including advanced searching capabilities, customized channel designs, personality tests and seven-day free trials directly from affiliate sites. “We’re continuing to find new ways to connect affiliates with our users,” said Gerard Sample, senior manager of Match.com’s affiliate program.

Meanwhile, Matchmaker.com will become one of the first dating service sites to offer automatically updated banners: “Traditionally, affiliates would grab new creatives from BeFree and implement them on their site,” Lynch said. “Now the change can be made automatically. This not only simplifies the day-to-day execution of their site, but it also allows them to take advantage of things we do promotionally.”

There are also buyouts afoot. Companies such as Match.net are purchasing smaller services with 50,000 to 100,000 member profiles, said Jones at Userplane. “They either buy you directly or set you up as a portal into their site.”

Increasing competition is causing consumers to act more fickle. “About a year ago, the average lifetime of a subscriber used to be three months,” Narinda said. “Now, with all the competition, the timeframe has dropped to two months.” That means affiliate sites either have to refer more potential members by bringing more people to their site, or come up with additional revenue streams such as books, gifts or even background checks. MatchPatrol.com, for instance, has signed up 25 affiliates for its new fee-based program that gives online daters an identification number that proves they are who they say they are.

Even with all the changes, insiders see online dating revenues getting bigger and better. “There are so many single people out there,” said Gardner, “and everyone is looking for love.”

JENNIFER MEACHAM, managing editor of Revenue, has been writing about business and technology for more than a decade. She was named the Region X Journalist of the Year by the US Small Business Administration in 2002.