First Impressions and Beyond

What’s worse than a poor shopping experience? Rank it down there next to a really bad haircut, or waiting in line at the bank on Saturday morning. It’s not fun.

Affiliates and merchants should take note. Just because you have a Web site instead of a retail storefront, doesn’t mean that you have it easy. In fact, some would argue it’s more difficult to sell online than offline. Unlike a physical store at your local mall, your Web site is one among millions. An offline merchant knows his customers might have to drive across town to find a competitor. Your myriad competitors are just a click away.

In the online world, the first impression that you communicate through your design means everything. It’s how your customer decides if you’re what they want, or if you’re just another speck of sand in the great cyber desert. Once they’re convinced you have what they need, you can concentrate on fulfilling your promise to deliver it. It’s getting past that first hurdle that stops most sites from experiencing great sales.

Here are some ways to help your site stand out from others in the increasingly crowded online community:

Gone In 8 Seconds

As soon as your Web site begins to download onto your potential customer’s screen, the “shopping clock” begins to tick. Typically, you have about 7 to 8 seconds to convince them you have what they need. If you can’t convince them in that short time span, they will most likely be off to the next site on the list, which could be your competitor. So what are they looking for?

Unique Value Proposition

You must always assume that no visitor knows your brand. This is especially true for affiliates who focus on building niche sites that have little or no brand preparation or recognition. Therefore, you need to successfully introduce your unique value proposition (UVP). A clear UVP is essential. It should answer the one question that all online shoppers want to know: “Does this site have what I want? Because if it doesn’t, I’m outta here.”

Here’s a poor UVP for a fake company called ABC Co., and a preferred proposition that offers a bit more:

Poor UVP Statement: The ABC Co., a New York-based business established in 1908 and traded on the NASDAQ stock market, builds, distributes and ships widgets and widget-related products in the US and around the globe.

Preferred UVP Statement: ABCCo.com offers secure online shopping for widgets and accessories with international shipping.

Did you notice the differences? The biggest is that the poor statement is too long and focuses on too many topics, such as the company’s history and its stock. Customers want to know how the site is going to help them right at that instant. The other information can be provided later in the sales process.

The poor statement also incorrectly focuses on what the overall company does rather than what the Web site does. The preferred statement removes all mentions of anything except what the Web site can do.

Having a powerful UVP isn’t only for affiliates and small niche Web sites. Merchants must also be attentive to this, even if they have a well-established brand. Even large companies frequently review their UVP to make sure it is easily understood.

Logo

How you present your logo and tagline is also important to a customer’s first impression. Don’t get caught assuming that your logo or tagline effectively mimics your UVP. Logos are window dressing, and only truly effective in branding of your Web site over the long term. They are not a viable method of displaying your UVP. Lastly, to be truly thorough, try to keep your UVP message on every page of your site for visitors who may have followed a deep link into your site, or for visitors who are referred via an email link.

Home Page Makeover

What your site says isn’t the only thing to worry about when making a good first impression. What it looks like is equally if not more important. Don’t worry though; you can make huge adjustments with some tiny fixes. Let’s get started.

Speed It Up

Sure, more people now have high-speed Internet connections, but at the same time, those people now expect super-fast performance because of it. To give them anything less creates a poor first impression. Action: Optimize all home page images.

Focus and Display

You need a focal point upon which your customers’ eyes will naturally settle. Typically, online readers focus on the middle of a page first, and then move to the left side, then to the top and on to the right. Remember, it’s your job to guide them to your information, not their job to have to find it. Action: Learn from the successes of others. Look at sites like Amazon.com and notice how they focus their customers’ eyes into strategic points on each page.

Call To Action

Effective call-to-action statements should prompt your customer into taking an action. Whether it’s clicking through to your hottest specials of the day or signing up for your newsletter, it’s the best way to get your customer to see that you are trying to get their attention. Action: Use the main middle area of your page to create your most powerful call to action statement. Make sure that it provides some sort of value to the customer, or why would they bother to pay attention to it?

Heading Home

So now your customer believes you have what they need and have extended their “shopping clock” by another minute or so. Congratulations, you’ve gotten to second base. You’ve won the first impression battle that most Web sites strike out at. Now you need to concentrate on rounding the bases and getting back home with a sale. But do it quickly, because the clock is still ticking.

JIM F. KUKRAL serves as brand manager and director of e-marketing for KowaBunga Technologies, which makes My Affiliate Program tracking software.

The Spam Jam

What a mess. Jim Gordon is hell-bent on collecting some of the $600,000 or so he thinks Commonwealth Marketing Group owes him for sending more than 1,500 emails advertising credit cards. He says the emails had inadequate subject lines and the transmission paths – the list of computers that passed along the email – had been doctored.

Gordon, who runs an online health and nutrition business in Richland, Wash., said his email address was harvested, and now the spewing of spam is unstoppable. “I get roughly 1,500 emails every single day of my life,” he said. “Last summer, I got fed up and sent out a bunch of demand letters. Commonwealth was one.” This tactic, attempting to collect a charge from spammers for each email they send, then suing if they don’t pay up, is advocated by anti-spam activists. Activists encourage pissed-off consumers to strike back and try to hit the spammers where it hurts – in the pocketbook.

On Dec. 15, Gordon sued Robert Kane, the CEO of Commonwealth, in his home state. At that time, Washington had tough anti-spam laws that let individuals bring private suits against alleged spammers. We can relate, right? Who among us doesn’t have to wade through lines and lines of email subject headers cleverly disguised to look like they’re from a friend, or, perhaps worse, that stridently proclaim their icky content?

But wait. Robert Kane had a different story to tell. He said Commonwealth works with one Internet marketing company that maintains a network of affiliates. Some of those affiliates may have email marketing lists that they use to market Commonwealth’s credit cards. “We rely on the affiliate to provide opt-in information, and in other cases when [someone has complained], they’ve been able to provide the exact time and date when the person opted-in.”

Kane said Gordon is out to get him, that he’s making a business out of threatening to sue legitimate marketers, hoping to get a payoff. Indeed, Gordon does have suits against two other companies in the works. “I’m seeing an increase over the course of the last year where individuals will go out and sign up for a barrage of offers,” Kane said. “Then they file these actions saying, ‘You’ve been spamming me, and I’m entitled to X number of dollars, but I’ll settle for this.'” According to Kane, Gordon’s demand letter said he’d settle for $10,000. Kane refused, because he verified that Gordon had opted-in.

Where does that leave Gordon’s suit? Like we said, it’s a mess. The hearings go on. Gordon is trying a variety of legal maneuvers, such as complaining of harassment or unfair business practices instead of spamming, while Kane parries by dishing dirt on Gordon’s family. The only sure thing is that both are expending oodles of resources that could be better used trying to end world hunger. Let’s be glad we don’t have to decide who’s right.

But everyone has to be concerned about spam. It could kill the affiliate marketing industry. Incessant emails touting reputable products can tarnish the merchant’s reputation and turn consumers off to the brand in every channel. Merchants also run the risk of being legally liable for their affiliates’ illegal emailing practices. Irate consumers like Jim Gordon and trigger-happy state attorneys general show a tendency to press charges and let the courts sort it out. In February, the nations’ first criminal spam trial began, with a North Carolina man facing four felony counts of sending unsolicited bulk email.

Legal issues aside, spam is bad for business. The gush of stupid and offensive emails creates delete-happy customers. A recent study from the Nielsen Norman Group, a company that consults on making technology more usable, showed that, while the public is getting better at differentiating between opt-in newsletters and unsolicited messages, they’re feeling increasingly stressed dealing with their inboxes, and now have even less tolerance for newsletters they feel waste their time.

While few email marketers would admit to spamming, it’s clear that affiliates are a huge part of the problem. According to Brightmail, a provider of anti-spam services for corporations, products pushed by spammers are closely related to holidays. For example, last Valentine’s Day, 15 million messages hyped flowers, chocolate, dating services and sex toys – all categories that rely on affiliate marketers.

If you dare, open the next 10 pieces of spam you get and click on the links. Except for the ones advising you to “use this patch immediately” and infect your computer with a virus, they’ll be either affiliates linking back to a retailer, or affiliates linking to other affiliates in the Internet’s big Ponzi scheme.

When affiliate marketing consultant Shawn Collins polled affiliate managers in January 2004, 23 percent said they planned to forbid affiliates from sending email. At the same time, 60 percent of them hadn’t taken any steps to educate their affiliates about the issue, and 35 percent of them hadn’t even read the entire law.

That’s scary. Any marketer who uses email needs a crash course in spam.

Living Under the Law

The CAN-SPAM Act of 2003 whisked through the US Congress at the end of ’03, focusing the nation’s attention on legal retribution for spammers. Die-hard privacy advocates say it’s not enough. Marketers say they still can’t be sure they’re inside the law.

“Some of the spam problem is classic spammers, but the majority of it is not from people who are actually attempting to do anything fraudulent,” said Margaret Olson, chief technology officer for Constant Contact, a company that provides email-marketing services for small and mid-sized businesses. Unwitting spammers are merely naïve, she said. While the best practices for email marketing and rules to follow may seem clear to large corporations, affiliates are often new to the game, and many are part-time marketers. “If you have another whole job to do,” Olson said, “you probably haven’t been following the law that carefully.”

Olsen said legitimate affiliate marketers can shoot themselves in the foot with simple mistakes, such as failing to drop names from the list if they haven’t been contacted in the past year, or buying someone else’s list and assuming it’s okay to email everyone on that list.

This federal law supersedes state anti-spam laws where they’re contradictory -but states still have the right to sue spammers in federal court. And, although individuals will no longer have the right to sue spammers under state anti-spam laws, there’s a backlash movement teaching them how to bring suit under a variety of other laws, including harassment.

Ben Livingston, president of ISP Innovative Access, actually wrote a primer on using the courts to get back at spammers; it’s posted online. He’s won cases against spammers, junk faxers and telemarketers -although, he said, collecting is another story. “I know that people will fight back,” he said. “I don’t know how many, or if it will make a difference, but with all these litigious individuals, it could.”

Guys like Livingston are bad news for bad guys. If you’re reading this, you’re one of the good guys. But it can be all too easy to stray.

CAN-SPAM and You

Compared to some very stringent and punitive state laws, the CAN-SPAM Act is relatively marketer-friendly. In fact, it doesn’t prohibit unsolicited email ads at all, as long as marketers follow some guidelines.

The law focuses on three things: ensuring that consumers can recognize commercial email, see who it’s coming from and make it stop. To that end, affiliate marketers should use their business names in the FROM header and create a SUBJECT line that gives the recipient a solid clue as to the content. Within the email itself, the affiliate must provide a working email address where the consumer can ask to be removed from the list and a physical address for the sender.

These measures are no more than good marketing, said Anne Mitchell, president of the Institute for Spam and Internet Public Policy, a consultancy that advises marketers and public institutions. “Ethical marketers are already doing more than CAN-SPAM requires anyway. The reality is, no legitimate marketer who’s trying to do the right thing needs to worry,” said Mitchell, who is also author of “CAN-SPAM and You: Emailing Within the Law“.

One other aspect of the law may become worrisome in 2005, when the Federal Trade Commission, the government agency responsible for administering CAN-SPAM, is required to report to Congress on a plan to require subject-line labeling of all commercial email in the subject header. Some email advertisers already have begun starting their subject lines with ADV, one of the labels under consideration. (The FTC will devise a separate label for sexually oriented ads; that’s expected to kick in some time during 2004.)

Such prefixes make it easier for consumers to keep commercial email from ever appearing in the inbox. However, they would eliminate the ability of marketers to use email to prospect for new customers. Meanwhile, it’s unclear whether real spammers, who usually hide their identities, would comply with the rule.

The law does hold merchants responsible for affiliates’ spam, if it can be proved that they knew or should have known about it and did nothing to stop it, said Mitchell. Merchants who haven’t controlled their affiliates are responsible for polluting the affiliate model, she said.

“People were littering spam under affiliate programs with complete immunity because, while the company had a statement on the Web site that they wouldn’t tolerate it, nudge nudge, [sending spam was] just what they wanted people to do.” In those cases, the way the law gets at the affiliate spammers is through the principle company. Now, companies can’t just shift the blame to their affiliates. “If you have any control over the channel, you should exercise it,” Mitchell said.

One more worry: While the federal law supersedes state laws against spam where they conflict, said Mitchell, “it’s also absolutely true there are all kinds of other laws people can use. Marketers shouldn’t get complacent.”

It isn’t hard to imagine other prefixes that might follow. But how US authorities would stop offshore spammers is unfathomable.

SUSAN KUCHINSKAS has covered online marketing and e-commerce since their beginnings for Revenue, Business 2.0, and other media. She says she has already received her lifetime dose of spam.

Next Year Is Here

Right around now, the sun is shining, the days are getting longer, the garden is looking so great. And the dreaded tax deadline is behind you. The last thing you want to be thinking about is next year’s taxes.

Sorry, but you really shouldn’t let taxes off your mind. Especially now, while you have a chance to do everything right in the year ahead instead of making the same mistakes you made last year.

Oh, sure, you’re going to follow the advice of the great affiliate managers in your key programs, and you’ll have money pouring in. Sounds like success, doesn’t it? Well, my friend, quite often the consequence of success is failure when you don’t take care of your tax issues while you’re raking in the revenue.

Here are some tips that you can start using now to help you minimize your taxes in the year ahead.

Meals and Travel Separate these two costs as they occur in the coming year. All of your business travel is deductible. Your “meals” deduction gets cut in half on the Schedule C. Keeping track generates a bigger travel deduction than guessing. The costs of affiliate marketing cruises are considered travel, and you needn’t separate the cost of the meals. However, there are special rules for cruises. You may deduct up to $2,000 each year for attending cruise ship conventions that are directly related to your business.

To do this, the ship must be registered in the United States and must visit only ports in the US or one of its possessions. At least 51 percent of your waking time must be spent at the seminar and you need to include two supporting statements with your return, plus a statement by the cruise organizer with the schedule of business activities.

Bring the Kids Normally, the additional costs of having your family along on a business trip are not deductible. But as an affiliate marketer operating a home business, you’re in a special position. You certainly could have your spouse and children working with you, or for you. They may be an integral part of your marketing and networking presence on that cruise or trip. If you want to deduct their expenses, they must really be working like any other staff person would. And you must document what their duties are and what they did.

Hire the Kids If you hire your family, but fail to put them on your payroll, you will raise a BIG red flag in front of the tax authorities. There’s a lot of hype about this out there. And there are several multilevel marketing companies whose entire business is devoted to convincing you to deduct your home office and the costs of hiring your children. Frankly, most of that is a scam.

However, don’t let that discourage you from really hiring your children. Why should your teens go out to a burger joint and earn minimum wage, when you could use their services, train them to grow in your business, and be able to build a better relationship with them? If you’re going to hire your kids – do it right. Put them on payroll, have them use time cards, and have them document or summarize their work each day. Not only will this protect your deduction, it will help your teen learn to focus, get organized and communicate.

Putting children 18 or under on your payroll, you must file payroll tax returns. But you don’t have to pay Social Security or unemployment taxes. And you’ll get the deduction for all their wages and any benefits or expense reimbursements. Your children will have to pay taxes on very little of the money. After all, they get their own $4,750 standard deduction, tax-free.

If you pay your children, but don’t put them on your payroll, it will cost you. Your children will have to file tax returns with their own Schedule C. All the income you pay them will be subject to self-employment taxes – 15.3 percent. So even if they don’t have enough income to pay income taxes, those self-employment taxes get you every time.

Hire Your Spouse Hiring your husband or wife lets you use an IRC Section 105 medical reimbursement plan. Putting your spouse on payroll lets you provide family medical coverage as part of the compensation. You may deduct all your medical insurance premiums, as well as family medical expenses right out of your business.

Why bother with this when there’s a full deduction for self-employed health insurance on the front page of the tax return? Two reasons. First, you cut your income taxes and self-employment taxes on those medical premiums. Second, that front-page deduction is only for the premiums. The Section 105 plan also lets you deduct medical co-pays, dental expenses and all other types of out-of-pocket costs.

When it comes to hiring any family members, remember, IRS is watching for that kind of thing. Don’t do it unless they really work for the business. Don’t just talk the talk. Walk the walk.

Avoiding Errors

Hopefully, you have already filed your tax return for the past year. But if you haven’t, pay close attention. If you have, then stow the following information away for next year, because the following three common errors can delay refunds or credits to your account.

Wrong Names Be sure that all the names shown on your tax return match each person’s name as it reads on their Social Security cards.

Wrong Social Security Numbers Look for switched digits or mixed-up numbers.

Affiliate Income as Wages The income belongs on Schedule C – the business profit and loss schedule. Your profits will be subject to self-employment tax – 15.3 percent, which funds your Social Security account.

On the Record

Keeping track of all this throughout the year is much easier than you think. Even if you don’t have an accounting system, at least get an accordion file or two, labeled by category, and drop in your receipts as you get them. Simply add your receipts up at the end of the year and you’ll be all set.

EVA ROSENBERG, MBA, is publisher of TaxMama.com and an enrolled agent, licensed to represent taxpayers before the IRS. She has a quarter-century experience dealing with tax issues faced by small and Internet businesses.

Setting the Data Table

The last issue of Revenue gave an overview of databases and how they can be used. Let’s delve a little deeper into how you, as manager of an affiliate program, can use a database to improve your service and provide customized information for all of your affiliates.

When creating a database, the first step is to understand what information you want to record, and the important relationships among the data. Similar information is grouped into a table in the database. An affiliate will have a variety of contact information such as an email address, a postal address and perhaps even a separate payment address. All of this information could be placed into a single table. Let’s call this table affiliate_contact.

You may want to record certain accounting information about an affiliate, such as the date a sale was made, what item was sold, how much the affiliate earned and the total dollar amount generate by the sale. This information could be placed into the affiliate_contact table we already created, but we will place it instead into a new table called affiliate_sales. I’ll explain why later.

In database design, you want to create tables that group similar information and then link these tables together based on their relationships. This is where the term “relational” comes from when describing a database. Relational databases, such as Oracle, DB2, SQL Server and MySQL, provide very rich tools for extracting information based on these relationships.

Planning and mapping the information you have into tables is just the first, but perhaps most important, step in developing your database. You could change a database’s design once it is running, but if you have a lot of data, or a lot of code using the database, changes can be difficult and time consuming. So, it is worthwhile to take some time and care in planning your tables. In 10 years, my company, Epage, has gone through a few database redesigns, but there are some tables that have not changed structure since the first design.

Creating basic relationships between tables can be quite easy. Usually, it’s accomplished by having a common item such as a table column in related tables. If your affiliates all have a unique identifier, such as their contact email address, this can be used to link tables together. The affiliate_contact table and the affiliate_sales tables would both have an “email” column with the affiliate’s email address. If you want to retrieve information from both tables, like the affiliate’s first name and last sales date, you could query both tables using the same lookup key (the affiliate’s email address).

There are other ways to generate relationships among tables. We like to generate a unique number or string of characters to identify one of our users. This unique identifier is only used internally to form table relationships, and may never be seen by the user. This way, if a user needs to change their email address, it would only need to be changed in one table. In our example above, both tables, and perhaps many more, would need to be updated.

There are many reasons to break your information into multiple tables. Tables with many columns (email, address, phone, etc.) can be very difficult to manage. Database servers are designed to efficiently deliver results to your queries. But, they can get bogged down when you have a lot of columns that you might want to select from. For example, when you insert a new row, such as adding a new affiliate to the affiliate_contact table, the database must re-optimize the way it retrieves data from that table. The more columns that are in a table, the more work the database must perform.

Efficiency is another reason for multiple tables. Some tables may have only one row (entry) for each affiliate, such as the affiliate_contact table. Other tables, like the affiliate_sales table, may have many rows, one for each sale. If these two tables were combined, there would be a lot of wasted space for repeating the contact information for each sale.

Consider what unique information you want to record for each affiliate when planning your tables. You may want to know certain business information. For example, you may want to know whether the affiliate prefers to be paid by check or electronically. Or you may want to review the payment terms for certain affiliates, such as the percent of the purchase price they earn. A database can record these unique terms for each affiliate, allowing you to personalize how your program works. You might want to offer better terms to a desired affiliate or during a promotional period. When a sale is made, the percentage earned by the affiliate would be read from the database, and the result would be stored into the affiliate_sales table.

If you send multiple mailings to your affiliates, some might not want to receive all of the messages. You could store which type of messages they don’t want in the affiliate_contact table. Or, you might want to contact your top-performing affiliates. Each month you could query the affiliate_sales table to find those top performers.

Once you have the information recorded, how you use it is limited only by your imagination. You could send a special message on the anniversary of an affiliate’s signup. You could determine which affiliates had a big drop-off in month-to-month sales – perhaps they are having a problem you can solve. You could determine characteristics of your best affiliates – perhaps it’s their location – and target more like them.

Another good piece of information to record is how new affiliates found out about your program. If you use a tracking code in your advertising, you can record the code in the affiliate_contact table. Then you could determine not only how many affiliates were generated with a specific code, but how much revenue that advertising generated. One last idea to consider: If your users can refer new affiliates to you, then you could record who referred each affiliate. Offer an incentive to these users, such as a percentage of sales generated by the affiliate, and you have the potential for a huge force generating new affiliates for you, with almost no work on your part.

EDWARD ARENBERG, vice president and CTO of Epage, created one of the first fully dynamic Web sites. He manages and develops for EP.com, Epage.com and AdConnect.com.

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.

Guerrilla Affiliates

Because you’re reading Revenue, which is as focused upon affiliate marketing as you are, I doubt if I have to remind you of the glories of such marketing. If ever there was a win-win business proposition, this is it. If affiliate marketing is good enough for Wal-Mart, Amazon and eBay, I’m figuring that you realize it’s also good enough for you. Do you know what you have by the millions? Potential affiliates.

But (and my wife once warned me to listen extra carefully to everything that comes after the word “but”) like the Web, affiliate marketing does not do the job. It only helps to do the job.

“The job” is to market your program to planet Earth, especially to your own affiliates. They are well-meaning people, every last one of them, but they need you to show them how to cash in on their affiliation with you.

In addition to giving your affiliates a dynamite product or service, a generous commission and a vision of financial splendor, you’ve got to give them non-stop sales support. You’ve got to arm them with ultra-powerful marketing tools to help them sell your offering.

So send them ads that they can put in their e-zines, email letters they can customize for their customer lists, banners to add pizazz and profitability to their sites, even online audio marketing to keep your marketing fresh and up-to-the-moment. You’ll see the difference.

If you can create killer articles with a link to their site, they can send those articles to their newsletter readers. Traditional marketing is a full-spectrum affair, affiliate marketing is no different.

Set a time each month for a tele-class pep talk to your affiliates. Single out the ones who have done the best and share their secrets with your other affiliates. Let them know that you sincerely care about their success with your marketing support, your regular telephone presence, your tone of voice, your passion. Passion is contagious, you know. And you want passionate affiliates.

But mere passion isn’t quite enough. You also need solid marketing savvy, which means marketing your affiliate program anywhere and everywhere you can.

Guerrillas know that all the media work better if they’re supported by the other media. Feature your affiliate program on your Web site. Put your Web site onto your TV commercial. Mention your advertising in your direct mail. Refer to your direct mail in your telemarketing. Plant the seeds of your affiliate program offering with some kinds of marketing, then fertilize them with other kinds.

You’re not really promoting your affiliate program unless you’re cross-promoting it. Your trade show booth will be far more valuable to you if you promote it in trade magazines and with fliers put under the doors of hotels near the trade show. Guerrillas market their affiliate programs with the same zest and vigor devoted to their primary offering.

Multimedia

Your prospects, being humans, are eclectic people. They pay attention to a lot of media, so you can’t depend on merely one medium to motivate a purchase. You’re got to introduce the notion of your affiliate program, remind people of it, say it again, then repeat it in different words somewhere else. That share of mind for which guerrillas strive? They get it when they combine several media. They say in their ads, “Email, call or write for our free brochure.”

They say in their yellow pages ad, “Get even more details at our Web site.” They enclose a copy of their magazine ad in their mailing. They blow up a copy to use as a sign. Their Web site features their print ads.

Guerrillas are quick to mention their use of one medium while using another because they realize that their affiliates equate broadscale marketing with quality and success. They know that people trust names they’ve heard of much more than strange and new names; and guerrillas are realistic enough to know that people miss most marketing messages, often intentionally. (The remote control is not only a way for TV viewers to save their steps but also a method of eliminating marketing messages.)

No matter how glorious their newspaper campaign may be, guerrillas realize that not all of their prospects read the paper so they’ve got to get to these people in another way. No matter how dazzling their Web site, it’s like a grain of sand in a desert if it is not pointed out to an unknowing and basically uncaring public.

Cross-promoting your affiliate program in the media is another way to accomplish the all-important task of repetition. One way to repeat yourself and implant your affiliate program message is to say it over and over again. Another way is to say it in several different places. Guerrillas try to do both. Nothing is left to chance.

If you saw a yellow pages ad that made you an offer from a company you’ve never heard of and another with the same offer except that the ad said, “As advertised on television,” you’d probably opt for the second because of that added smidgen of credibility. I rest my case.

Psych ’em

The psychology of marketing an affiliate program requires basic knowledge of human behavior. Human beings do not like making decisions in a hurry and are not quick to develop relationships. They certainly do want relationships, which is what affiliate programs are all about, but they’ve been stung in the past, and they don’t want to be stung again.

They have learned well to distrust much marketing because of its proclivity to exaggeration. All too many times they’ve read of sales at stores and learned that only a tiny selection of items were on sale. They’ve been bamboozled more times than you’d think by the notorious fine print on contracts. And they’ve been high-pressured by more than one salesperson. In short, they’ve been used.

That’s why they process your marketing communications about your affiliate program in their unconscious minds, eventually arriving at their decisions because of an emotional reason even though they may say they are deciding based on logic. They factor a lot about you into their final decision – how long they’ve heard of you, where your marketing appears, how it looks and feels to them, the quality of your offer, your convenience or lack of it, what others have said about you, and most of all, how your offering can be of benefit to their lives.

Although they state that they now want to help you sell what you’re selling, and they do it in a very conscious manner, you can be sure they were guided by their unconscious minds. The consistent communicating of your affiliate program benefits, your message and your name has penetrated their sacred unconscious mind. They’ve come to feel that they can trust you, and so they decide to sign up and work their tails off for you.

Any pothole in their road to purchasing at this point might dissuade them. Are they treated shabbily on the phone or forced to wait for an email response? You’ve lost them. Do they access your Web site for more information and either find no Web site or find one littered with self-praise? They’ll leave. Do they visit you and feel pressured or misunderstood? They’re gone.

You’ve got to realize that the weakest point in the marketing of your program can derail all the strong points. Excellence through and through, start to finish, is what potential affiliates have come to expect from businesses, and these days, they won’t settle for less.

Understand Them

Just keep in mind that affiliate marketing is a 360-degree process, and you’ve got to do it right from all angles at all times. When it comes to affiliate marketing, people have built-in alarm systems, and any shady behavior on your part sets the bells to clanging, the sirens screaming.

It is very difficult to woo a person from the programs they support right now to your program. Although they are loathe to change, they do change. And when they do, they knock themselves out as high-energy affiliates and all because you’ve proven that you understand the psychology of human beings and the true nature of marketing. That depth of understanding is what they’re hoping for.

If you give your affiliates exactly what they hope for, there’s a strong chance they’ll help you get what you hope for.

Guerrilla marketers are able to get what they hope for because they know that the key to successful guerrilla marketing is in embracing not the concept of competition, but the beauty and advantage of cooperation. And cooperation is the lifeblood of affiliate marketing, it’s raison d’tre.

One of the most rewarding, inexpensive, underused and effective methods of all marketing is to align your marketing efforts with the efforts of others. In the

U.S. this used to be known as “tie-ins.” A Business Week cover article referred to it as “Collaborative Marketing.” In Japan and by guerrillas worldwide, this make-everybody-wealthy marketing tactic is called “fusion marketing.” Affiliate marketing is the highest form of fusion marketing because it is so performance-based and has mutual gain as its goal.

Fusion marketing is the guerrilla saying, “Hey Sara, if you enclose my brochure in your next mailing, I will enclose your brochure in mine. And I’ll give you $5.00 for every new customer who mentions your name.” And it is, “OK, Randy. And if you put up a sign for my store in your business, I’ll put up a sign for your business in my store. If I get a customer who says you sent them, I’ll give you ten bucks.”

Sara and Randy immediately see the wisdom in the guerrilla’s affiliate offer. Their marketing exposure has just been expanded. Their marketing costs have just been reduced. Hey, this is a good idea! Of course it is! Why do you think you’re watching all those McDonald’s commercials that turn into Coca-Cola commercials and end up as Finding Nemo commercials? Why do you think so many members of frequent flier clubs have learned that their airlines have fused with hotel chains, auto rental companies, even cruise lines? Because there’s a whole lot of fusing going on. And today, the majority of it is affiliate marketing, by whatever name you choose.

Gone Cyber

Now it’s online. It’s happening very visibly among the large businesses, but it’s happening more frequently among small businesses, even teeny-tiny businesses. The gas station fuses with the video store. The restaurant fuses with the clothing store. The sporting goods store fuses with the ski area and the tennis club and the golf course. It’s happening all over.

The purpose of an affiliate marketing arrangement is mutual profitability. Glad we’re clear on that one. Realize that almost everyone in your community and on your planet is a potential affiliate, that almost all of them will see the wisdom in your suggestion of a connection for mutual profit.

The key for you to keep in mind at all times is that your affiliate program is a lot like your product or service. It must spring from a basic marketing plan. It should adhere to your marketing calendar. It requires patience, repetition, consistency, and aggressiveness in your overall marketing effort.

It takes commitment to your plan, an assortment of marketing tools, constant testing, precise measurement of results, and your time, energy, imagination and knowledge. But it does not take your money. It provides you – and your affiliates – with money if you go about it the right way.

In this magazine, you’re learning how to go about it right. In this article, you’re learning how to market it right. You can’t ask your Dad or your college professor to help you on this one. Affiliate programs are too new for them. But they’re right on the money for you.

There is no real magic in marketing. And there is no real magic in affiliate marketing. But when you combine the two and season them with your own marketing insight, “abracadabra” might become your battle cry.

Jay Conrad Levinson, is the author of the Guerrilla Marketing series of books, the most popular marketing series in history, with 14 million copies sold in 39 languages. GuerrillaMarketingAssociation.com features marketing ideas and information about its affiliate program.

Bringing E-commerce Back Home

Jeannie Otero wanted to change her life. A single mom with two young daughters, she hated the three-hour round-trip commute to her job in Miami, time she would rather spend with her girls. She dreamed about starting her own business, thought about investing in real estate. But she had the age-old problem: You have to have money to make money.

Then, she heard that a good way to make money was to build a Web site that connected shoppers with online merchants. “I put up this funky little site called PartyClowns.com,” Otero laughed. “I didn’t know what I was doing at all. It had a bunch of links to coupons, and it didn’t actually have anything about party clowns.” But it was the first step in her road back home.

Otero had entered the world of affiliate marketing, a sort of parallel economy in which anyone at all can become an online retailer with almost no investment or experience. Two years later, she’s generating a good supplemental income and looking forward to quitting her day job. She’s discovered that all an affiliate needs is a combination of some smarts, some personality, some common sense and a ton of ambition.

Affiliate marketing has quietly become a booming industry, involving thousands of U.S. corporations, millions of affiliates and hundreds of millions of dollars in transactions. If you haven’t heard of it, here’s the deal: You sign on as a commission-only salesperson for an Internet retailer. You use all the creativity, intelligence and perspiration you can muster to get customers for that merchant – customers it might not find on its own. For every customer you refer to the merchant, whether it’s for a paid purchase, a new subscription or a name for its email-marketing list, you get a commission. Because merchants pay only for results, they consider affiliate programs a form of advertising called pay-for-performance.

Affiliates have the whole world of commerce at their fingertips. They can put together an array of products from global selection of retailers and offer them to their own customers. They typically build one or more Web sites that mix content with links to products on merchants’ e-commerce sites, and sometimes feature products in email newsletters or place ads on others’ sites. They never see or touch the merchandise themselves; the merchant handles all aspects of payment, warehousing and shipping. They get paid once a month, or whenever their commissions reach a pre-determined threshold.

Sounds easy, doesn’t it? It’s not. While just about anyone can sign up for an affiliate program and put up a site, earning those nice commission checks is another story. While figures are sparse, the Internet Affiliate Marketing Association estimates that fewer than 5 percent of Internet affiliates have revenue of over $100 a month. That’s because affiliates face some of the same challenges as any other entrepreneur. Inexperience and a lack of basic business skills short-circuit some people’s attempts. Others don’t have the drive to persevere without a boss standing over them.

According to AffTrack, a service provider that aggregates statistics about the industry, 2 percent of affiliates make 98 percent of the commissions. “Affiliation is so easy to get into, that you might only have 10 percent of people who sign up actively promoting merchants, and a smaller amount still might be making any real money,” said AffTrack CEO Scott McNulty.

Like any other frontier, the affiliate world is rambunctious and confusing. There’s more than a whiff of the old envelope-stuffing scam to this industry, where you’ll find site after site promising that you can earn thousands of dollars working at home a few hours a day. It’s also gotten a bad rap from unethical affiliates, who bear some guilt for contributing to the spam deluge. When evaluating affiliate programs, don’t forget to apply the rule that if something sounds too good to be true, it probably isn’t true.

Retailers know affiliates can drive sales and keep customers coming back, but they give most of their attention to the top producers. “Retailers have begun to think about the way affiliate programs will work for them in a more efficient way in terms of driving quality traffic and repeat traffic,” said Carrie Johnson, senior analyst with Forrester Research.

This doesn’t mean that there’s less opportunity for you as an affiliate. But it does mean that you’ll have to work smarter and better to be part of that successful 2 percent. Like everyone else in this tight-fisted era, online retailers expect more for their money.

While there’s more competition, there is still plenty of opportunity. Affiliate marketing is the second wave of transformation in the global marketplace. The first wave, the rise of the commercial Internet, put the power of information in the hands of consumers, letting them compare prices among merchants anywhere in the world. This second wave has leveled the playing field between huge conglomerates and individuals who represent online merchants.

Raison d’Etre

Sending traffic to merchants’ sites is the affiliate’s major goal. While you’ll find plenty of affiliate sites that are just lists of links, many experts say that it’s unique content that draws visitors and keeps them there long enough to get interested in your merchant’s offerings. “Your site has to have a reason to exist,” said Brad Waller, vice president of affiliate and business development for EPage, a content syndicator. “It’s rare that someone can create a site and make money from affiliation without doing anything himself. No one will look at it because it’s not original.”

This doesn’t mean that you have to be a professional Web designer or an experienced writer. Most affiliate sites are highly personal; like Otero’s, they’re often sparked by a personal interest in a particular subject.

“The personal touch makes a big difference,” Otero said. For example, she created a special Web page with a rave review of one baby item, just because she thought it was so neat. “I had eight visitors and made $20,” she said. Now, she writes introductions and personal notes for most of her Web pages and plans to write a personal review for the best product in each category for her BabyShoppingGuide.com site.

A smart way to decide what your first site should be about is to choose an audience, according to Robert Bennett, an affiliate with eight years’ experience who also runs affiliate programs for several ISPs owned by his company, Archieboy Holdings. “Do you have any connections in any industry, or any opportunity to market to a certain group that other individuals don’t?” he asked. “Identify the market you’ll target, then figure out what products they might be interested in.” For example, if you lead a youth organization, you could look for products related to school or sports, then build your site content around those products. Ideally, the products become part of the content.

Creating your site is a lot like merchandising a store. You could go broad or deep. For example, you might spend time finding absolutely everything anyone could ever want for camping and put it all in one place. From freeze-dried food to sleeping bags to flashlights to first aid kits, you’ve got links to it. On the other hand, like Jeannie Otero did, you could identify a niche, and then scour the Web for every baby Halloween costume available. In either case, the work you do to find and maintain fresh, working links and to gather or create interesting content is the value you add – and the way you make money.

It’s easy to find affiliate programs:

Just search for the merchant’s name plus “affiliate.” Many programs are completely automatic. “Just grab any banner, fill out the form, add the code to your

Web site, and you’re done!” one vitamin retailer promises.

If you’re working with many different merchants, maintaining one-to-one relationships with them all could get hairy. You’ll need to check that the merchandise you feature is still available, and then keep track of what they owe you and when they pay. While most merchants are honest, the message boards are rife with complaints and feuds about payments and other problems.

For more hand-holding and help, you could join an affiliate network. Networks are services that help affiliates and merchants find each other. Then, what’s more important, they manage the process of keeping track of commissions and paying the affiliate. There are several advantages to joining a network:

  • You can get organized and comparative information about a number of merchants without having to search through individual e-commerce sites;
  • In some cases, the network will act as a matchmaker, suggesting partnerships or products that make sense;
  • Some offer support, productivity tools and forums to help newbies learn;
  • They may offer reporting tools that let you analyze your various relationships and see how much income they produce; and
  • They back up your bookkeeping. Instead of keeping track of commissions and payments from multiple merchants, you get a single check each month from the network.

There are many different networks, and affiliates tend to choose them based on the merchants in the network; many work with multiple networks in order to get the range of products they want. Despite the growing interest in the

business and concomitant number of affiliates, “Good affiliates are always in demand,” said Hayley Silver, director of affiliate development for LinkShare, a network that offers tools and services for merchants and affiliates. “[For merchants], they’re your salespeople. No one is ever going to turn down a strong salesperson.”

Content Connection

Once you have an array of products and services to sell and an audience to address, it’s time to flesh out your Web site to make it a true destination. While everything on your site could be considered content, most of it will be in the form of text. That includes your original writing, articles that you reprint, classified ads and user-generated content in the way of forums and message boards. You can arrange to receive automatic updates of syndicated articles and news feeds, either free or for a charge. There are even content sites that offer affiliate programs. They provide free content and, if a visitor to your site clicks back to their site and pays to subscribe or read premium content, you get a little lagniappe.

According to affiliate marketing guru Ken Evoy, your site must satisfy the needs of visitors, the search engines and the merchants; if you serve visitors well, you’ll go a long way toward satisfying the other two players. Site visitors want outstanding information and interesting, highly relevant links. Lots of fresh, relevant content encourages visitors to bookmark the site, come back, and tell their friends.

After all, people who want a book on a particular subject or a recipe could go directly to an online bookseller and search its inventory. They also could plow through literally thousands of entries returned by a search engine. “If someone was searching for information and finds your editorial [content], that person feels smart for having found you, and you become a trusted source of reference,” said Evoy. “By the time that person arrives at the site of a merchant you recommend, she is presold.”

That doesn’t mean your content should consist of plugs for products. Quite the contrary. If your content simply hypes products, your readers won’t trust you. If you write a book review, for example, tell your readers what you really think of the book – good or bad. You’ll earn their respect with your honesty. Then they can decide whether to click on the link you provide to an online bookseller. If all your reviews are positive, your visitors will probably end up looking for a more objective Web site.

High-Traffic Destination

The most authoritative site on the Web is wasted if no one sees it. So, your next task is to lure visitors. If you’ve started with a pre-existing audience or circle of influence, provide them with valuable information and your traffic will grow by word of mouth. Others will find you through search engines.

There are two approaches to increasing your site traffic via search. Some people focus on optimizing pages for the different search engines, while others approach their Web sites as writers and editors, assuming that if the site seems relevant, search engines will find it without extra effort.

Optimizers geek out over page statistics and the workings of various search engines. They analyze how many times key words appear in each page and use them over and over to get a higher ranking for the page. They religiously check how high their pages rank in searches, then tweak pages in order to get them higher still. There are lots of software applications that help automate this process. Optimizers often engage in arcane practices such as “cloaking” or coding phantom pages that exist only to fool search engines. In order to play these games well, you’ll need to know HTML and even some programming languages like PERL.

Experts, on the other hand, focus on becoming the go-to resource for people interested in something specific. This approach requires a passion for the topic; a smidgen of previous experience won’t hurt, either. Instead of trying to trick the search engines, they create focused pages and pack them with information that “appeals to humans, not search engines,” as Evoy said. Because search engines are designed to help people find what they’re looking for, this method can create pages that rank high in search results with much less work.

But successful affiliates say you should never sit back and wait for traffic to find you. Be prepared to constantly expand your customer base with shrewd marketing. “There are lots of different tactics and techniques,” said Hollis Thomases, president of Internet marketing services company WebAdvantage. Affiliates can place banner ads on other Web sites, buy keywords on search sites, exchange links with appropriate sites, send emails to existing customers or contact the media and try to get press. Some affiliates spread their content around the Web by writing articles for other Web sites, making sure to include a link to their own sites. “All publishers tend to try all of them at one time or another, refining and tweaking to see what works best,” Thomases said. “That’s where the art comes in.”

Now, can you sit back and watch the checks roll in? Uh uh. Prepare for steady work to make your site better. Whether you go the optimization route and spend your work time fiddling with keywords and links to improve your ranking in the search engines or take the expert approach and create a series of new pages, treat your Web site as a living thing. Nurture it and the fruit of your labor will be financial success and the pride of owning your own thriving business. And, maybe, spending more time with your kids.

Susan Kuchinskas, managing editor of Revenue, has covered online marketing and e-commerce for more than a decade. She is also the co-author of Going Mobile: Building the Real-time Enterprise with Mobile Applications that Work.

A Nose For Data

As a canny entrepreneur, you’ll want to monitor all aspects of your business. On the Internet, that comes down to tracking data, all kinds of it.

Remember, an affiliate is really an Internet marketer and successful marketers of all persuasions love data. Marketers burn to know who their customers are, where they heard about the company, what makes them come back, what makes them buy. One of the key differences between Internet marketing and the bricks-and-mortar kind is the amount of actionable data the Net can provide.

Keeping track of all that information can seem overwhelming. When she launched bargain shopping site DealHunting.com in 2000, Maggie Boone spent 16 hours a day trying to keep up with stores, products and coupons Ð for a grand total of $2,000 a month. “It’s really hard and very time-consuming,” Boone said. “If anyone thinks it’s easy, well, it’s the opposite.” That careful tracking paid off. Three years later, although she still puts in the hours, Boone has four full-time employees and an income that lets the family live comfortably without her having to work outside the home. She has enough profits salted away that her husband can retire whenever he wants to.

Get ready to become a data hound. If you want to be as successful as Maggie Boone, you’ll need to keep track of four different areas: sales; merchants and their offerings; traffic to, from and within your site; and your advertising and marketing.

How deeply you have to get into tracking data depends on what kind of site you have and how many programs you run. To offer one example, Rotten Tomatoes is a site for film buffs, packed with movie reviews, news and gossip. Visitors can buy DVDs, posters and games. Because the site is so targeted, Rotten Tomatoes works directly with just a handful of merchants. “A lot of these groups have their own ways of tracking,” Rotten Tomatoes CEO Patrick Lee said. “We can either log in to see them, or they send us reports.” Lee trusts the reports, although he might check how many clicks the site is sending over to a merchant, to make sure the numbers make sense.

Compare that simple approach with CouponMountain, a site that strives to help people “live a little above their means” by getting discounts on all sorts of stuff. Founded in 2001 as an after-work hobby by Talmadge O’Neill and Harry Tsao, it now draws 1 million unique visitors every month and reports that it sends more than $100 million in sales each year to approximately 500 merchant partners. CouponMountain, which now has a staff of 11, employs a mix of third-party services and homegrown software applications to keep close track of merchants, referrals, coupon expirations and advertising. The company has one person dedicated to checking merchant reports each day, using AffTrack, an Internet-based service that aggregates reports from networks and individual merchants.

The bottom line

Sales are, of course, top-of-mind for affiliates, because they’re the main influence on the bottom line. Each merchant program may have a different basis for commissions: One might pay for clicks through to its site, another for site registration, and another for sales of products.

Affiliate networks and individual merchants offer other Web-based reports where their partners can check sales and revenue. Reports may be real-time or updated daily or weekly. While many affiliates like to check their reports once a day, most wait at least a month or two to drop under-performing programs. Tracking of sales and commissions happens automatically and reliably, according to Chris Henger, vice president of sales and marketing for affiliate marketing company Performics, because each affiliate’s traffic comes to the merchant via a unique link. “Affiliates don’t have to monitor whether tracking is working,” Henger said. “[There are typically more issues] around, ‘What sales volume am I getting from this merchant, and how do I improve that?'”

Successful affiliates focus not on gross revenues, but on earnings-per-click, or EPC. (See the sidebar “ABCs of EPCs.”) “The most important metric you can get from any network or software is the EPC,” said Shawn Collins, director of affiliate marketing for resource site ClubMom. For example, someone might send a thousand clicks to a bookseller and only 120 clicks to a clothing store, each of which pay the same commission. If you looked only at the commission, you might assume the two programs were equally lucrative. You’d be wrong.

“They don’t pay attention to the fact that it took a lot less traffic to make that same amount of money from one of the merchants,” Collins said. “They don’t take the time to crunch the numbers to see what they actually earn. They’re just stupefied by the [gross] numbers.”

Tracking EPC can help you put your efforts into programs that return the most profit for the least amount of effort. Some network reporting tools and third-party software can automatically calculate and compare EPCs from a variety of programs. Some can also let affiliates create custom reports that compare merchants and programs in different ways so they can identify trends or compare conversion ratios. DealHunting and ClubMom use tracking and analysis tools from AffTrack. There are a lot of reporting options that people don’t take advantage of, according to Collins. Those who don’t, he said, “don’t see the real story.”

Merchant-dizing

When it comes to keeping an eye on all the different merchants, offers and promotions, top-producing affiliates can expect personal service from affiliate managers with the networks and merchants. For a smaller fry, it’s more self-serve. Boone said most of her time is spent on this aspect of her business. “We get a lot of our sales info from the customer channel,” she said. “A handful of merchants keeps us really informed; the rest we deal with as a customer to know what’s going on. We subscribe to the email newsletters that go to their customers, and we literally get hundreds of emails a day from different merchants with sales and bargains.”

Boone turned to a programmer friend to create a database of stores that automatically tracks coupon codes and deletes them as they expire. She can query the database to find out, for example, which stores don’t have any current offers. CouponMountain also built its own tool to track coupon expirations. And it has a content team that spends its days checking to make sure that offers are still good.

Aside from keeping an eye on expiring offers, affiliates have no control over their visitors’ experiences when they arrive on merchant sites. The more you make clear your role as a referrer, the less likely your visitors will blame you if things go wrong with a merchant. Working with trusted partners can ease your mind. Networks protect you by vetting merchants, and they’ll pull the plug on deadbeats. When dealing with established retailers, you can rely on their reputations to some extent. That doesn’t mean you shouldn’t explore less established brands. “There are always different new companies,” said Collins of ClubMom. “I’ll go to different message boards and ask around, ask who’s considered to be the most trustworthy vendor of a product.” Collins warned that you should take such advice with some caution, however. “There’s always a risk that a competitor might try to send you to a bad company. People are helpful and friendly, but they have their competitive interests.”

Still, it’s wise not to take remove yourself too far from consumer-merchant relations. Daniel Washburn, director of merchant development at CouponMountain, says consumer feedback is an important part of his business. “I’m in contact with merchants on a daily basis,” Washburn said. “But in an online business, customers aren’t walking in your front door. So having some sort of communication with them is very important in building a successful site.”

Every time a visitor requests a coupon from CouponMountain, a popup box asks, “Did this coupon work?” There are many places on the site that request feedback, and the company gets as many as 50 customer emails a day. These are not just complaints but also requests for particular coupons or items. But don’t ask for feedback unless you’re willing to respond within two days, the industry standard for good customer service. Wait any longer, and your customers will get impatient and either contact you again with more irritation or go elsewhere to find out what they want.

Positive attributes

Tracking offers and merchants is just the beginning. You can go deeper. Consumers on the Internet are often searching for product information to help them make choices. You need to understand why they make the choices they do on your site, so that you can encourage them to make choices that lead to sales. At the same time, as in the real world, not all shopping choices are based on objective considerations. Merchandising and presentation play a big part in decisions. Therefore, you should carefully track what Lisa Riolo, vice president of client development for affiliate network Commission Junction, calls “attributes.”

Offer attributes may be actual features of the product. To use credit card offers as an example, the product attributes include the introductory APR and annual fee. If you ran a financial information site, analyzing the attributes of your best-performing credit card offers might show you that your audience preferred cards with no annual fee, Riolo said.

How products are described and displayed are also attributes. A retailer might offer several different photos of the same product, in different sizes, with and without backgrounds, from different angles. If you keep track of which photos or descriptions you use, you can understand what works best with your unique site.

Traffic jamming

Another element to come to grips with is internal traffic: how do visitors move through your site? Large corporate Web publishers use complex applications to track visitors’ movements. Many affiliate networks let you put extra information into your links so that you can see which pages do the best job of getting visitors to click. This information lets you move ads and links to the pages visitors like and delete pages of no interest.

Tracking the comings and goings of Web visitors is as important as monitoring revenue. After all, it’s the traffic that makes you money. Check your ads, including banners, link exchanges and paid search results, to see what it is that drew people to your site.

Playing the search keyword game is an art and science unto itself, and many affiliates devote the majority of their time to scrutinizing and massaging their word lists. Search engines Google and Overture have tools that let advertisers observe how their paid search advertising performs. Some networks have management tools that let you incorporate paid search advertisements into your analysis of your overall activity within the network. Some site-building or management applications will let you compare results across search engines and networks.

When you’re ready to become more sophisticated, look for software tools that let you map everything we’ve discussed. “You may want to track all the events that led up to a sale, not just what ads got the most response,” said Commission Junction’s Riolo. Look at where the visitor landed on the merchant’s site, where and when people converted from shoppers to customers. Compare that to which product image you used, the product description and any keywords you bought to advertise on search engines and the text of your ad. “The combination of all this drives the consumer,” Riolo said.

This may sound like a lot of work, but it is worth your time. By tracking all these nitty-gritty details, you’ll get the big picture. Like a well-trained hunting dog, you’ll be able to anticipate the movements of your customers and sniff out the most profitable deals before they get away. n

SUSAN KUCHINSKAS, managing editor of Revenue, has covered online marketing and e-commerce for more than a decade. She is also the co-author of Going Mobile: Building the Real-time Enterprise with Mobile Applications that Work.

Cyber Creeps

When thousands of consumers got emails asking them to help electronics retailer Best Buy combat Internet fraud, they were eager to help. But those who clicked on the link and entered credit card and Social Security numbers learned the ugly truth too late: They’d been had.

The link took them to a “spoof” page that looked just like Best Buy’s home page but was actually operated by thieves. “The trust we worked so long to achieve was threatened by this rip-off,” said Dawn Bryant, a spokeswoman for Best Buy. “This is some- thing a business should never have to contend with.”

Neither should consumers. But the reality is that identity theft, predatory advertising, spamming, spying and other sleazy practices have left Internet shoppers understandably wary of buying goods on line. The number of complaints of Internet fraud nearly tripled last year to more than 48,200, according to data from the Internet Fraud Complaint Center operated by the FBI and the National White Collar Crime Center. The Federal Trade Commission says the Internet is now the focus of almost one-in-five of the complaints it receives.

“If these kinds of practices continue, it will run the whole thing out of business,” said Ray Everett-Church of the Coalition Against Unsolicited Commercial Email (CAUCE), an activist and lobbying organization.

Honest affiliate marketers face a double threat. Not only do they have to overcome consumer skepticism, but they have to compete with unethical rivals. Several industry organizations have teamed up with consumer groups and government agencies to educate affiliates and corporate program managers about ways to build consumer trust while combating ethically bankrupt practices.

All the ugly horses

One notorious practice involves Trojan horse software that bundles one or more secret programs along with an application that an Internet user desired.

“A surfer might go to a site and download something that looks interesting or might be fun,” said Jim Sterne, the author of five books about online marketing, including World Wide Web Marketing. “Unbeknownst to them, the download includes a piece of spyware, parasiteware, or thiefware as it is sometimes called.”

In its most benign form, a program might serve ads in a window within the application interface. For example, Cydoor is an ad-serving application that rotates ads in a window on the user interface of applications such as file-sharing software from Kazaa and Grokster.

“No one really likes ads, myself included,” said Robert Regular, Cydoor’s vice president of sales and marketing. “But we are just an ad delivery mechanism showing ads only when you’re in the application, to make money to pay the developers who wrote the software.” He said that Cydoor does not gather any personal information on its uses.

Advertising-supported software gets on shakier ground when it includes technology to track people’s movements on the Web. People who provide this software say this tracking technology improves their ability to show more relevant marketing messages. The problem is, most consumers wouldn’t know they’re being watched.

“The user agreement might have a buried reference, or there might be a box to click to accept the other software, only it doesn’t fully explain what is being accepted,” said Jason Catlett of Junkbusters, a privacy advocacy group. Catlett said this is “another example of junk consent creeping into the fine print of transactions. Even if it’s buried somewhere in the legalese, ethical marketers should not give customers stuff from others that [the consumers] don’t expect.”

What really infuriates affiliate marketers are hidden programs that pop up advertisements for competitors while someone is shopping on the affiliate’s site. Sterne said Gator, a marketing company that offers a free electronic wallet for consumers, “waits quietly until the surfer goes to a merchant site that sells a product that is competitive to one of Gator’s clients. Gator then pops up their client’s ad.”

Conceivably, shoppers might benefit from a better deal, but it is a bit like waving an ad for Fords in front of someone test-driving a Chevrolet. Affiliates call this predatory advertising because they feel their commission has been stolen after they converted the shopper into a buyer.

Sterne noted that many people intentionally download Gator, but said “the sticky part is when Gator comes included in something and the surfer is unaware they agreed to install it.”

Gator executives declined to be interviewed. A company representative referred questions to a FAQ on the company’s Web site, where the home page clearly states that users must agree to see ads in return for the free software.

Can the spam

Unsolicited commercial email now accounts for more than half of all messages, but nobody seems to want it. That leads to a curious question: Why would anyone want to send out emails that nobody wants to read? The answer may stem from the type of commission offered to affiliates by merchants selling those products.

“If a program rewards the affiliate for clickthroughs and not sales, it’s more apt to be abused,” Everett-Church said. “If all [the affiliate has] to do is get the person to go to a site, you are more apt to spam.” On the other hand, he said, programs that pay only for leads that result in sales don’t experience the same kind of abuse, because affiliates must add value in the form of information before users will click on their links.

Everett-Church recommends that affiliate programs that pay commissions based on clickthroughs institute checks and balances to make sure users aren’t gaming the system. “If you’re rewarding people for volume but there aren’t controls in place, you’re unwittingly encouraging abuse,” he said.

The worst spammers buy CDs containing millions of email addresses, then use software to automatically spew out millions and millions of ads touting prescription drugs, low-cost mortgages or what-have-you. But the problem doesn’t end there. If you send your email newsletter to someone who didn’t specifically ask for it, you could be in trouble.

“Spamming is against the law in most states,” said Marc Rotenberg, president of the Electronic Privacy Information Center in Washington, D.C. “Most affiliate agreements have clear usage guidelines on how you can advertise them. If you’re caught spamming, you could be fired as an affiliate for the merchant on whose behalf you spammed.”

The fallout can radiate beyond your network and get you into hot water with your Internet service provider, said Brian Huseman, a staff attorney for the Federal Trade Commission. “Your ISP may shut you down, and then you can’t send any email at all,” Huseman said. Worse, you could be placed on a blacklist so that even if your ISP reinstated you, your emails would be bounced by many other ISPs.

“An affiliate marketer who intends to be around for any length of time can’t use these kinds of marketing approaches,” said David Nielsen, founder and principal of consumer information resource FightIdentityTheft.com. “Overall, they’re a threat to the legitimacy of the industry.”

Got ethics?

It’s not the technology that’s to blame, industry experts say. It’s the unethical or uneducated businesses that abuse that technology. Unfortunately, it can be hard to know where to draw the line.

“What makes the difference between ethical and unethical is, the person has to know what is happening. You have to be straight with your customers as to why you collect information [like email addresses] and what you use it for,” said Rotenberg from the Electronic Privacy Information Center.

Smart affiliates use their tech tools wisely. For example, there’s a very simple guideline for email marketing. “If the person has asked for an e-mail, it’s okay, but otherwise, don’t send it,” said Steven Salter, director of operations and administration for BBBOnLine, the Internet arm of the Better Business Bureau in the United States.

Huseman agreed e-mail ads are fine on an “opt-in” basis where the user makes a choice to receive messages. That can happen when a consumer makes a purchase or registers on a Web site. Typically, a box will be provided with the prompt, “Click here to receive messages about promotions from this merchant.” The very best approach is double-verification, when users who sign up for promotions get a second email that confirms their interest.

BBBOnLine and other groups are anxious to help rebuild consumer trust. “The whole BBBOnLine program was created as a way to give online businesses a way to show they can be trusted,” said Salter. BBBOnLine.com has a reliability seal for Internet businesses. To qualify, affiliates must join the BBB chapter where their company is headquartered and agree to participate in the BBB’s advertising self-regulation program.

You can also bolster consumer confidence by designing a professional-looking site. “If your site doesn’t pass the visual inspection, users will think it’s not very credible,” said B. J. Fogg of Stanford’s Persuasive Technology Lab, author of a study on Web credibility conducted in partnership with Consumer WebWatch. According to Fogg’s research, design was the top factor consumers used when deciding how trustworthy a Web site appeared to be.

To differentiate yourself from spoofers, it’s a good idea to let consumers know who you are. Be clear in your advertising and on your Web site that you’re an affiliate of the merchants you mention, not the merchant itself. To maximize credibility, it’s a good idea to provide actual contact information, not just a “contact us” form, on your site, according to Leslie Marable, research project manager for Consumer WebWatch.

It’s not enough to have your heart in the right place. Ethical affiliates must constantly monitor their own activities to make sure they stay firmly on the side of the good guys.

And if the affiliate marketing industry doesn’t cleanup its own act, others will likely step in to do the job.

Abused consumers are taking up arms against unethical merchants and affiliate marketers, encouraging state and national legislators to consider tough laws to prevent spam and to punish scamsters. The question for affiliates and program managers is whether to work with them or against them.

JANIS MARA covered interactive advertising and marketing as a senior writer for Adweek. Her articles have appeared extensively in a variety of print publications.

No Free Lunch For Merchants

It sounds like a no-brainer: Tap into a sales force of self-employed affiliates who’ll handle everything from producing product information to Web design to advertising. Let them do all the work, and pay them anywhere from a few pennies to a few dollars – but only if they produce to your exact requirements. What’s not to like?

It’s a strategy that works for Bluefly, the online retailer of discounted designer clothing. In 2003, sales from its affiliate program ranged from 11.5 to 16 percent of the total each month. “We’re really excited with the progress we’ve made. We’re still early on in the process of refining our affiliate program, but I don’t see any reason why affiliates couldn’t contribute more than 20 percent of our sales,” said Bluefly executive vice president Jonathan Morris.

While Bluefly’s total expenses were up, its marketing expenses actually decreased 17.4 percent. The company chalked that savings up to a switch from advertising to email and pay-for-performance marketing, including affiliate sales. As a result of this change in focus, Bluefly’s cost to acquire a customer dropped nearly 38 percent, down from $16.20 to $10.05 per customer.

“The beauty of affiliate programs is that they’re performance based. The amount of commission you pay is dependent on the amount of sales you drive – not always the case in advertising,” Morris said.

But it’s something of a misnomer to describe affiliate marketing as pure pay-for-performance. It’s not exactly a free lunch. In fact, overhead costs can eat into profits, while there’s a danger that inept or unethical affiliates can hurt the brand and actually drive customers away. To really get a handle on the upside to an affiliate program, a merchant must uncover the hidden costs – and risks.

Micro Management

Few affiliate programs are truly self-serve. Amazon.com’s is a good example of one company with proprietary technology that lets affiliates sign themselves up, quickly and easily. Yet, even with the hundreds of thousands of pay-for-performance marketers hyping everything on the site from books and DVDs to toaster ovens, every affiliate must be individually approved before starting, a process that typically takes less than 24 hours.

Merchants can outsource most of the affiliate management to network services such as BeFree, LinkShare and Performics. Networks provide the software infrastructure and varying degrees of human oversight to handle automated sign-ups, link generation and the pushing of special promotions and information. Their staff will sometimes untangle snafus and soothe irate affiliates.

But none of the companies contacted by Revenue put their affiliate programs on automatic. Instead, they devoted anything from a couple of staffers to a full-blown department to managing the program. “For probably the first two years after we started our affiliate marketing program in 1998, we didn’t do a whole lot with it, didn’t dedicate internal resources toward it. We just expected it to run on auto-pilot,” said Bruce Matthews, vice president of business development for electronics retailer Tiger Direct. As a result, affiliates brought in a few sales but the revenue they generated wasn’t exactly eye-popping. The program was floundering.

Then, Tiger Direct decided to commit. “We dedicated more resources, and started to pay attention and make it work,” Matthews said. In 2001, the company added a staff position devoted to affiliate relations, began fixing problems in the program and added tools for the affiliates. The result: Tiger Direct affiliates now boost the bottom line by over $1 million a month in sales. Matthews said it took a year of solid work to bring Tiger Direct’s affiliate sales from under $100,000 to that million-dollar mark.

Online department store outlet Overstock.com saw a similar boost when it got serious about affiliate marketing. After it revamped its program and made it a strategic initiative, the company saw its top-line revenue generation from affiliates grow eightfold in 17 months. But the program needs a lot of attention, said Shawn Schwegman, CTO and vice president of sales and marketing. “You’re developing relationships, and that takes relationship management.” Overstock.com has a five-person team responsible for 30,000 affiliates, headed by the company’s director of marketing.

Hidden Costs

Whether or not the retailer has staff whose sole job description is affiliate relations, overhead for the program is spread throughout the entire company, from the accounting department that cuts the checks to the janitorial service that hauls off the coffee containers emptied by night owl employees.

The true cost of an affiliate program, said Prakash Bharwani, senior manger in interactive marketing for 1-800-Flowers, is, first of all, the salaries of his staff. “Then, there’s the indirect staff members, my IT team, my accounting team, my creative team, my colleagues. Then the infrastructure costs, server space. There’s a customer knowledge team, and we use up their time to understand how the affiliate program is working.” Bharwani said that promotions offered through affiliates should be added directly to the revenue share to get a true picture of how much the affiliate program costs the company.

The first task of the affiliate manager or team is recruiting and approving new affiliates. Many large retailers approve each application by hand, paging through the affiliate’s site, making sure it’s professional and a good representative of the company. Even though 1-800-Flowers works with LinkShare, Bharwani said the first 30 or 40 minutes of his day is devoted to approving affiliate applications.

Merchants will differ on what’s acceptable, they all share the risk of having their brand value diminished by its appearing on a shoddy affiliate site. Rick McGrath, director of e-commerce partner development for auto parts merchants J.C. Whitney Co., said, “Everybody starts someplace, and I try to maintain a low barrier of entry. But I need to see a clear commercial intent.” Sites that have pictures of the family vacation or someone’s favorite rock band will get the boot. And McGrath has no interest at all in sites that offer get-rich-quick-through-affiliate-marketing offers or multi-level marketing schemes.

Next, he screens for downloadable applications like the Gator eWallet or WhenU, another deal-breaker. “That’s objectionable. I see that as undermining the affiliate program, in my humble opinion,” said McGrath.

Bluefly’s Morris said he scrutinizes affiliate applications closely, and then continues to monitor the affiliates in the program. “We make sure they use the creative we provide and that the environment in which our creative appears is appropriate.” Bluefly staffers manually check affiliate sites, focusing on the ones doing the most business, but also performing random checks on less active affiliates. Besides a general level of professionalism, Bluefly makes sure the sites have adequate privacy policies and disclosures, and, he said, “are legitimately providing a service to their customers by promoting Bluefly.”

The Creative Touch

Affiliates aren’t professional designers, and even the sharpest affiliate can’t compete with the full-blown creative teams that retailers have in-house. Bad product photos scanned from a magazine, misspellings and incorrectly colored logos can make the merchandise look shoddy. To counter this, retailers end up creating special ads, content and images especially for affiliates.

“You don’t want to just keep telling them, ‘Don’t do this,'” 1-800-Flowers’ Bharwani said. “You want to tell them, ‘Do this. If you want to send out an email, don’t send it with those ugly orange and pink colors, use this instead.’ We not only give them creative, but also help them with things like email templates.”

Whether it’s producing separate-but-equal ad campaigns or simply reformatting existing digital assets, this work can stress the company’s resources or add to the overhead. It has the potential to divert time and attention from other forms of advertising. Overstock.com, with over 30,000 affiliates, has a dedicated designer producing materials for affiliates to use. Because the company buys limited lots of products, it instituted data feeds that every night automatically update dynamically displayed products on affiliates’ sites.

Crying Game

Good communication like that is important when working with affiliates, merchants say, not only to help affiliates succeed but to stave off problems. When affiliates feel they’ve been treated unfairly, they can strike back and really dent the merchant’s reputation. Internet message boards are rife with backbiting and flaming recriminations against merchants who disappointed.

“If you have a few disgruntled affiliates or an issue that comes up, you have to be very proactive in resolving it,” Bharwani said. Merchants must deal with a wide range of personalities and operations, from highly professional types to loners in dark rooms. “There are guys who are big corporations and guys who are running it out of their homes. And each person matters.”

Affiliate marketing may not be for every merchant. To avoid damaging the brand or siphoning off resources from critical projects, merchants must have the resources and culture to manage the program well. “You have to allocate resources, absolutely,” says Tiger Direct’s Matthews. “I believe you get out of it what you put into it. The key, he says, is to “balance what they want with what makes sense for you in a business case.”

The bottom line: While there are risks, there are also rewards.

SUSAN KUCHINSKAS, managing editor of Revenue, has covered online marketing and e-commerce for more than a decade. She is also the co-author of Going Mobile: Building the Real-time Enterprise with Mobile Applications that Work.