December 1998 Links to Sales Journal:
The Insider Perspective

The Insider Perspective is a monthly column for insights and innovation. You are invited to participate. Email declan@linkstosales.com with your suggestions.

Scientific Internet Advertising:
Internetworking Your Business

If you have read your Complete Insider's Guide to Associate Programs, you know what it takes to set up an affiliate network online.

As with any other business efforts, one rule applies:

"There are two types of businesses; those who test and those who lose money."

Affiliate programs are an excellent example of people falling in love with an idea and then failing to test it. Just because you can sign up 200 affiliates doesn't mean you are making sales; those affiliates have a multitude of values, but only if you empower them to act, to succeed.

If you leave them alone, have them sign up, and ignore them, you are building failure. Why even bother to sign these people up if you don't support them?

Now let's show you how to put that into action in even more detail by sharing the aspects of what has been coined "Internetworking"; creating an online sales network of affiliates that deliver results your business.

The key is to keep evaluating and testing your sales channel, honing it so that you get optimal value, as do your affiliates.

The first questions you must ask are:

1. What are the primary goals of your business in terms of time and money?

2. What will you do to achieve your results quickly?

3. How can I adapt and test this?

At Links to Sales, we've received many inquiries requesting more details in setting up your affiliate network online. It all begins with selecting your affiliates by building your Area of Influence (AOI) and measuring your results, or your return on investment (ROI).

I thank you for your feedback and hope this issue answers a few more of your questions.

Peace,
Declan Dunn

Selecting Your Affiliates
How To Create Your Area of Influence (AOI) in 30 Minutes or Less

In a recent consultation with Mercedes Benz, an interesting term arose which is central to affiliate programs:

Area of Influence (AOI)

Mercedes Benz laser focuses its effort on a geographic, local audience. They analyze the local customer base and build their area of influence, their circle, those customers most likely interested in buying them for a long time.

Mercedes understands that their customers will likely be customers for life if they do everything right. I wish everyone had that attitude. By creating the circles of influence, they embrace the customer and invite them to become a long term customer.

The client could describe his Mercedes owner by age, income, hobbies, related products they enjoyed, where they lived, where they vacationed, and all the other demographic components that lead to a well targeted message.

They know what their customer looks like, where they go, and what they like. You should apply the same logic to your Area of Influence, the related Web Sites, mailing lists, newsgroups, discussion boards, the topics they like, the books the read, their hobbies, their interests, and their passions.

It is quite simple; the more I know about my customer, the better I will do in locating them and finding the affiliates that are giving them what they need. Ezines can be affiliates, sharing information; Web Sites can be affiliates, entertaining and providing services.

Your area of influence on the Internet is rapidly filling up; affiliate programs take these sites and coordinate them into a sales channel. In a few years you will not be able to simply pick and choose; the best ones will be taken and you will be left fighting for survival.

Most people go out and sign up affiliates like they are gathering nuts in the woods. They pile a bunch of them in a bag and go around bragging how many affiliates they have. The result is a random shot at generating sales, when they could be planting these seeds to grow your own forest of long term revenue.

An area of influence is simple; what are the related topics, hobbies, and special interests of your target customer base? What Web Sites do they frequent? You need to create:

A. Market research which reveals the places your customers are meeting, including a list of the best portals, community sites, and niche Web Sites to target your affiliate program towards.

B. List of newsgroups, e-zines and targeted mailing lists which can be used to promote your clients business.

C. Samples of banners, endorsement letters, and testimonials for affiliates to use in promoting your products and services.

As outlined in the guide, selecting your affiliates is the most important part of your online process. Most Web Sites still offer affiliate programs to anyone that signs up. For commodity items like books and musical CD's, this model seems to be working well. Their goal is to sell volumes of product and spread the word.

But comparing the sale of a book to the sale of a loan, or of travel, is like comparing apples and oranges. What works best for your business depends on what you offer; no matter what you do, setting up a sales force that can move product is the most important goal.

But to really get the kind of affiliates you want, it is a good idea to target the interests, hobbies, and related topics to what you are offering. You can approach this two ways; announce your program and open it up to anyone, or carefully build your lean network of effective affiliates.

If you target many affiliates, you bring unique challenges. Usually this leads to loads of affiliates signing up, with the impression that more is better. And that is not necessarily untrue; affiliates have multiple values they can bring to the table for your business. But they also bring along an administrative nightmare at times.

For example, an article in the New York Times reported about a Web site offering lobsters, which had something like 400 affiliates. The owner of the site kept bragging until the reporter found out that he made only 4 sales from those affiliates per week. That is 1% of his affiliates. He kept insisting that having all these people helped his business, and it may have.

He may be generating traffic. He may be getting "branded" with his company name. Or he may be doing something sillyÉonly time will tell. For you to build your Area of Influence, you should begin by understanding your affiliates, your customer base, and find a way to target them and contact them.

The following 5 Phase Plan can help you get started quickly:

Phase 1: Take Ten Minutes to Inventory What Your Affiliates Do (And Hopefully Like to Do) Best

Time: 10 minutes

Goal: Make a list of the following:

• Every job they may have had

• Every hobby they may have, or would like to have

• Every personal interest, hobby, related topic, business, or special interests they may have

High profit ideas can be found with a little fishing. Don't think too hard, just write it down. And limit yourself to 10 minutes.

Phase 2: What Areas Could Yield High Profits?

Time: 10 Minutes

Goal: Take each item from Phase 1 and ask:

1. What are the major problems facing people interested in this subject?

2. What are the important goals that people interested in this subject would like to achieve?

Do this as quickly as possible, 10 minutes only.

Phase 3: Picking the Ideas with the Most Profits

Let's start judging what you wrote. Which ideas are worth your time and which are wasted time?

Go back through your list from Phase 1. Ask two questions of each:

A. Can I write about the solutions or goals these people want to achieve?

People who write about something based on their own experience put out more interesting materials than "experts". Don't think of yourself as an expert, can you simply write their goals and solutions from experience? If you can, customers will pay for it. The real challenge is to provide a new twist to the subject that no one else has.

B. Can I provide products/services to supply my customers and affiliates? Is anyone else doing what I'm doing?

This question is usually assumed by most businesses; if no one is selling what you are, you have to create a market. If too many people are selling what you are offering, your competition may hinder your results. Be honest and don't use your own opinion only; get feedback from others. It is often easier to take part of an existing market than creating your own.

Phases 1 and 2 are for letting your ideas go. Use Phase 3 to sort your ideas, check them out. Do this for yourself and work with a partner. Make sure you are honest in Phase 3 and take only those ideas that are workable, and throw out the rest.

Phase 4. Market Research: Start Thinking About Your Affiliate

The first step was brainstorming exactly what it is you are selling:

1. A solution to the problems your customer has.

2. Supplies to help them solve the problem..

Now comes the simple step; find out who your affiliates are. This is the time to start looking among your current clients, their vendors, associates, and others. Can they generate any leads for you? Where is your target market:

1. At other Web sites, competitive or not?

2. At newsgroups?

3. On other mailing lists?

4. In print media?

5. At trade shows, association gatherings, large group meetings about a specific subject?

6. Are they someone else's clients that you can be endorsed to? How?

Phase 5. Contacting your affiliates

Now that you have targeted your affiliates, you need to invite them to join you. It will quickly become evident that the Internet is broken into several sections

1. Sites with lots of traffic (50,000 plus visitors a month) who are selling advertising: major search engines are an example of this. These sites are tricky to approach.

2. Sites with lots of traffic that are not selling advertising space (the majority); you have to prove that your efforts will yield value for their dead advertising space

3. Sites with medium traffic (10-25,000 a month)

4. Sites with medium traffic and ezines lists they regularly mail to

5. Sites with little traffic, the lemonade stands of the Internet

6. Ezines and email mailing lists that have 1,000-60,000 or more members who read these messages regularly. Even without a Web site, the trust and reach these email publications have can far exceed the power of a Web site waiting for visitors to come.

Once you have defined who your affiliates are, it is time to contact them. You should know the Web Sites they meet at, the mailing lists they frequent, the places they go on the Internet. If you want to sign up lots of affiliates, you can simply invite anyone.

If you want to qualify your best salespeople, measure their traffic and their ability to sell. After all, if they don't have traffic, they cannot generate sales. It is all about extending your reach into your customer base. Take care not to assume that having lots of affiliates means you will get lots of sales.

The Web Sites with traffic are the most valuable, under utilized resource on the Internet. Ezines are another underused form of advertising that few people take advantage of. A good ezine can actually pull more leads and sales than a Web Site if it is read frequently.

An interested audience who wants to communicate with you is essential. Let's continue and investigate how to reach them.

How to Recruit Your Affiliates: The Selection Process

Once your affiliate system is ready to go and you have done the market research on your affiliates, it is time to contact them. Here are some of the best ways to recruit them for your network.

1. Identify and Qualify Those People Most Likely to Offer Your Product

Before you begin contacting them, try to look at your offer from their viewpoint. What are the main benefits you provide? Why should this get them excited? Is it a unique product, one that can be sold to a diverse audience? Is it a product or service tailored to a niche audience? Who would be most interested in what you have to offer?

Instill a sense of excitement in your message; don't try to oversell it or hype it. Most people have a simple outlook on life; they rarely expect to make the best choice.

Think about that; how many times in life have you made the absolute, best choice? It is extremely rare. If you tell them it is the best decision they could make, you limit your success because it loses believability.

Address them as you would in person and read your copy out loud; listen to what you have written. Read it to someone else; what do they think? Reading out loud is one of the best tricks to getting your message across. If it sounds weird out loud, it will likely sound weird in their heads.

2. Contact Prospective Affiliates via ezines, email, phone, and fax

These are the communication tools of the Internet and should be used wisely. Ezines are an excellent way to get your message out to many, interested readers. You can target your niche and get your message out.

Email is also an effective tool; the funny thing is, some people online assume all email is spam. But if you target your message and search for sites, you can provide them with the message that is relevant. If someone gets an email that has to do with their interest and is the result of searching, not just stripping email addresses like a spammer, you can get an effective communication going.

If they are happy to receive your message and it relates to them, it is direct email. If it is sent to them without any regard for what they are interested, it is junk emailÉa waste of your time and their time.

Be careful with email though; if your target affiliate site is big, it is unlikely they will even answer their own email! The biggest players are so busy, or get so many emails, that your inquiry may get lost. The bigger the site, the less reliable email becomes.

That is where the phone and fax comes in; it is sometimes good to call them and ask about advertising. Compare that to what you might do with them via an affiliate program. If they don't like the idea of an affiliate program, move onto the next prospect. But if you ask them how often they sell their ad space, and if there is any negotiation or open advertising space, you can then open up to the possibility of affiliate programs.

If they say they have no dead advertising space, don't even bother talking to them. All media has dead advertising space, even radio and television. They want you to pay for it and if they can sell it, great for them. The fact is, below the top 10 visited Web Sites, there is a ton of dead advertising space to be bought, begged, bartered, or borrowed. Use Affiliate networks as a means to open up a long term advertising campaign that brings them continual advertising revenue and brings you sales.

Most sites do not sell their advertising space regularly, so repeat business is not common. Selling advertising online is tough. Make it easy with your affiliate program, and get a thick skin. You will still get many more no's than yes's, but that's part of the test. Target your efforts and you will see your efforts improve.

At the end of this section is a sample email we have used to recruit affiliates; it is also a good overview of how to approach them on the phone as well.

POWER TIP: Invite the owner of major ezine/email lists to endorse you to their list and compensate them per affiliate if possible. A recent test of this approach yielded over 100 affiliates within a week, through just one ezine/email list owner. By extending the trust they have earned and rewarding them for endorsing it to their list, you can quickly set up a vast, efficient network via an endorsement.

3. Register at major associate directories

Many affiliates research programs at the top directories; there are so many popping up on the Internet that it is hard to tell who is who. Most of the Web Sites share their knowledge of affiliate programs, ratings, and have their own subscribers lists and advertising. You can also post for free at most of these sites.

The two most popular Web Site directories are http://www.refer-it.com (Refer-It) and http://www.associateprograms.com (Associate Programs). They review and discuss programs, with many competitors on the horizon. Be sure to get the word out at these directories.

Finally, if you work with a third party service bureau like ClickTrade, they may make their own list of affiliates available to you as an added service. Some of the top affiliate software providers are trying to integrate this into their services. You will pay extra for their services, but they try to streamline the operation for you.

4. Promote it at your own Web Site

This should be the most obvious suggestion, but it is amazing how many times an affiliate network is hidden at a Web Site. Make it a prominent link on your site and invite people into sign up for your program. Add this to every element of your marketing, so that visitors can buy from you, or even affiliate with you.

5. Use some free reward, invitation, report, discount, coupon, or something that delivers immense value and does not sell them anything on first contact.

An excellent way to invite affiliates to join your network is to give them immediate value. When someone contacts you to learn about your program, give them a free report via a Web Page or autoresponder. Put a discount or coupon on what you offer; if they become an affiliate, apply a percentage off their purchase of your product.

Get them to quickly understand the value of what you are offering and more importantly, the value of working with you.

6. Spread the word at mailing lists, newsgroups, discussion boards, and using your SIG file

Some of the best places to invite affiliates are the many places people are meeting to discuss. Just make sure you don't act like it is a blatant ad; share some information and insight and invite them to get your free information, or to your Web Site to learn more about your affiliate network. Start a thread and put your SIG (signature) file in, which acts like a business card at the bottom of your emails.

7. Most of all, follow Mark Twain's advice: "The secret to success is -- find out where the people are going and get there first."

Here's a sample email of a first contact that was used with a recent client. We visited each Web Site and wrote a short description in the first paragraph, and then followed through with the form letter that invited them in. The key is to be honest, and to have visited their Web Site; it will dramatically increase responses and improve their perception of you.

NOTE: This email has short lines, because all email programs read things differently. A good rule is to make sure each email line is just 65 characters long. A great program to do this on Windows is TextPad, http://www.textpad.com, and on the Macintosh, BBEdit will shorten your lines to this length for email (http://www.tucows.com has a free version).

Subject Line is
RE: I've recommended your website

Hello [their name], (if no name use Hi there!)

I just reviewed your website at [their URL]. I really liked [write a couple personable sentences about their site design or content. Have fun with this!] Did you design the site yourself? Excellent work!

I wanted to introduce myself and present you with an offer. The company I am working for is called Habitat. They have high-quality hand drawn artwork, of nature and the outdoors, available on clothing, mugs & stationery. Check it out at:

http://www.habitatonline.com/home.html

We are looking for a few website owners (like you) who love the artwork as much as we do, and would like to make it available to their web visitors. We will pay you for doing so.

The idea is simple. You add a link to your site, we track your visitors and pay you a fairly attractive commission on each sale. We do all the work of processing orders, drop shipping, customer service and handling returns. You receive e-mail notification with each order and a check at the end of each month with a sales recap.

Sound interesting?

Habitat has been in business since 1983, has over 6,000 retail locations handling their merchandise and typically outsells their competition, off the rack, by 1 1/2 times. They offer a 100% guarantee. That's an indication of the quality of the company and their products.

They asked me to select a few great websites and reward the WebMasters with better than average revenue-sharing commissions. That's where you come in! I like your site and recommended it to the Review Committee.

If you are intrigued at this point, I invite you to investigate the site, then fill out the Associate Application at:

http://www.habitatonline.com/associates.html

Our Online Sales Director will call you to discuss the commission arrangements and answer your questions.

P.S. Keep up the good work on your site. It was a great place to visit! I ended up spending quite a bit of time at it and bookmarked it for later...

Declan Dunn
Habitat Review Committee
http://www.habitatonline.com/associates.html

What is the Net Asset Value (NAV) of Your Affiliate?

The power of affiliate network is often undercut by neglect. It is amazing how many companies brag about their affiliate networks; meanwhile, a few high traffic sites generate sales, while the rest of the affiliates become mere numbers.

For example, one affiliate network owner has an easy sign up form. He doesn't care what happens after the sign up; if they complain, he tells them it is up to them to succeed. In one way, he is right; you do not need dead weight in your business.

On the other hand, these are people who are eager to sign up and get started. He leaves them alone and expects them, without motivation or direction, to sell his products. You can see why his affiliates will not succeed, because he has already planned for them to fail.

It is quite simple; your affiliates can bring so much value to your business, but you have to pay attention to them. They need more than a banner ad, they need direction. They are an asset that you can measure your success by if you take the time to track your results and do what you can to improve them.

If you don't build the value of your assets, your affiliates, your network will die of neglect. The good news is, most of your competitors are doing this. They are signing up tons of affiliates and ignoring them. Soon people will understand what you are about to read, that the real goal is to keep them your affiliates by helping them succeed. And by realizing the real value they bring to your business.

The 5 Key Profit Centers Affiliates Can Generate For You

Affiliates are more than just sites that market for you; they generate much more value for your business. In this section read the values they bring and consider the case study of one small site, and how much real value these sites bring to you. Remember these 5 Keys when you set up your network:

Key 1. Leads

Generating leads on the Internet begins by targeting high traffic sites, and niche sites with a loyal following. A Web Site with an ezine mailing list, or considerable daily traffic, is a huge asset. Affiliate programs are an excellent way to generate leads. If you determine your cost per lead, you will find that affiliate networks bring significant savings.

Example: A few years ago Edmunds.com, a Web Site with detailed information on automobiles, generated leads for Auto ByTel. This was an early affiliate, lead generating model (almost like a highly qualified clickthrough). The shopper went to the information site to find out about the car. They filled out a form at the site, a sales application, which is eventually forwarded to the local automobile dealers to start the sales process.

Edmunds used its traffic to generate leads, and charged per inquiry; because these inquiries were qualified, the price for these leads was much more than a clickthrough would get. In fact, given that the lead cost for a car dealer can easily exceed $40 a car, the cost was incredibly cheap. Edmunds not only generated leads, they became a primary builder of Auto ByTel's business.

Questions to Consider:

1. How much do you pay per lead now? If you are strictly an Internet business, count the number of inquiries (via phone, fax, and email) to your total traffic. Count how much it costs you to generate that traffic and divide this by the number of leads. This is your lead cost.

2. How many free leads do you get from your affiliates? Amazon.com generates a visit from your Web Site, but when someone goes back to Amazon.com site alone the second time, the affiliate doesn't get paid. This is a natural occurrence; it is the free lead value of their network.

Key 2. Sales

Sales are the obvious value of an affiliate; how many sales do they generate per month? Many times you may get a certain number of sales from a Web Site, but unless you are selling software, it is difficult to maintain this level. Quite simply, there is just so much traffic that goes to a Web Site. If the site is lightly visited, even having 10-20,000 visitors a month, you can quickly run out of people to sell to.

The first months will often give you your biggest returns; this will decrease over time. Exceptions to this are commodity products that are often purchased on impulse like books, music CD's, and even dating services. Products that are bought repeatedly, like airline tickets or investment related products, can also bring long, steady sales. For the rest, it is the case of a bell curve; it starts small, rises to a peak, and comes back down at the end.

One affiliate interviewed for this book shared an interesting insight; he was selling hundreds of books a month for Amazon.com. Eventually he called the distributor directly and asked if he could sell books. The distributor had no problem. Amazon.com lost a leading affiliate because they couldn't afford to pay him what he was worth. This trend has serious implications for the growth and development of your affiliate network, your sales channel.

If you don't reward your best sales people well, they will find the next best thing. Bank on it.

Questions to Consider:

1. How many sales are your affiliates generating?

2. Can you reward those who generate more with better margins?

3. Do you offer training and support for all your affiliates to give them a chance?

4. The first month an affiliate joins your network is critical. Do you make the effort to keep them active, interested, and thriving? If not, they may never make the effort.

5. Do you track your affiliate's performance monthly and seek ways to improve it, or do you just cut checks and consider it a burden? Your attitude will seep down to your affiliates.

Key 3. Advertising/Marketing: How Affiliate Networks Affect CPM

Advertising and marketing costs are directly affected by affiliate networks. The goal of Internet advertising is to get your product in front of as many consumers as possible. CPM (cost per thousand) is the advertising term for the reach, the amount of customers, your advertising appears in front of.

Affiliate networks should increase the value of advertising space on the Internet. This is not hard, since in reality few sites really sell any advertising (in a recent report, only about 1700 sites actively sought advertising out of the multi-million Web Sites online). To sell advertising month by month is a full time job, and few companies place month by month advertising on any site.

The wealth of dead advertising space makes negotiating advertising pricing a wise choice; it also makes affiliate programs a good, long term solution for both parties. If you can generate continual sales from a Web Site, it only makes sense for the affiliate to keep you on the site.

But if you don't generate sales, they will do nothing for you. Affiliates should only choose those programs that bring them in money. For example, Brian Clark of RankThis, a search engine ranking site, offers a piece of software to improve your positioning, He gets almost $37 CPM for selling that software; if he were to sell the banner ads alone, he would be lucky to get $15 CPM.

Remember this CPM factor in the case study below; if you count the thousands of impressions your affiliate programs generates, even the clickthroughs, you will realize how valuable good affiliates can beÉand we don't just mean the big sites generating traffic, but the thousands of niche sites spreading the word about your business daily.

Questions to Consider:

1. . Are you increasing the CPM of the affiliate's site?

2. Is your CPM in terms of visits generated to your site good in comparison to the costs of actually buying advertising?

3. Would your marketing costs be better served by clickthrough, affiliate networks, or traditional marketing?

4. Can you incorporate any off-line resources into your affiliate program? For example, one Web Site has an ezine list of tens of thousands. But only 10% of them live near one of this chain's many stores, so offers to the list rarely result in visits to the actual stores. Why shouldn't the company makes its heavily trafficked, "real world" stores affiliates by setting up a computer and registering people for Internet offers? The real value is in understanding how to best serve your target customer base; an affiliate in the real world who generates sales and orders via the Web Site is as valuable as an online affiliate.

Key 4. Branding

Branding is difficult to measure, which is why advertising agencies love to sell it. It almost becomes an excuse, an intangible that many people readily accept. Online branding is difficult, but there are a few brands emerging. Amazon.com is a great case study of a brand developed through affiliate networks.

Brand identity demands mass exposure, which is a great reason to sign up many affiliates. Administration costs should be measured against this over time. Amazon.com obviously benefits from administering its huge network of affiliates.

Since it benefits the Web Site owner to sell books, and to get perceived credibility for offering this well known bookstore's offerings, they have signed over 100,000 affiliates up. Results are not as important as convenience and credibility. More importantly, Amazon.com developed a whole brand through this strategy.

Questions to Consider:

1. Will the branding of your business help people remember your company's name? Be sure to use a good logo or memorable text graphic to instill your company's name in their memories.

2. Will the branding of your business enhance the credibility of other Web Sites in your network?

3. Can you insist that affiliates choose your brand over your competitors by competing on profit margins, training, and developing good will? Helping your affiliates is the best way to help your brand through positive, word of mouth advertising.

Key 5. Affiliates as Customers

The final key is one most overlooked by many affiliate networks. If someone signs up to sell your products at their Web Site, it is likely that they approve of what you offerÉor they are just looking to make money. Either way, this salesperson is likely your best customer.

So why do so many affiliate networks fight the natural urge of affiliates to buy through their own network? For example, if you buy a book through your Amazon.com affiliate network, it is literally against their policy and if they catch you, they can revoke your right to sell books.

Perhaps that makes sense, if you look at the affiliate strictly as a salesperson. Life shows us that only 20% of these people will do the selling, and these are the folks most unlikely to engage in this kind of trickery. Making money does give you a form of loyalty.

For the other 80%, this behavior is one of the only ways for them to make it a viable enterprise. By saving money, they benefit from being an affiliate. What is forming is an evolution from seeing affiliates just as salespeople, and realizing they are really fans of your business.

Does that mean Amazon.com should pay them 15% off of qualified books? Perhaps not, but it wouldn't be a bad idea to set up a special buying deal for affiliates so they could get something like 5-10% off qualifying purchases. Why not encourage them not only to sell, but to buy from you?

Questions to Consider:

1. Are you realizing the full value of your affiliate network by simply looking at them as salespeople?

2. Can you encourage them to buy through you, for their friends, for their network?

3. Why fight a natural human behavior to save money, especially online, when you could encourage this buying behavior into repeat business? If they don't sell for you, at least they can save money by buying books from you.

4. Customer loyalty programs will be a natural outgrowth of affiliate networks. Why not start now by allowing your affiliates to save money with you, as well as make money?

Finally, having explored the 5 Keys to affiliate networks, let me share a personal viewpoint from having been an affiliate for Amazon.com for over two years. While not a money maker (and I've actually never bought a book through my affiliation), it has shown me the true value that affiliate networks can bring.

This is the story of a small affiliate, likely a typical affiliate, who has a Web Site that generates good traffic, but has no time to turn it into a thriving business. Affiliate networks are the only opportunity in this situation.

Affiliate Case Study: The Cybrary

The Cybrary is an educational site (http://remember.org) set up since 1995 to educate students from sixth grade to early college. The visitors to this site are mostly teachers and students from throughout the world who come for the free information. The site has a long growth curve, to its current steady traffic of 500,000 visitors a year, with 10-20,000 in slow months and over 100,000 on its two peak months, generating over a million hits.

Yet no one can offer as much information as that which can be found in copyrighted books. A book store was a natural growth for this Web Site. I went to Amazon.com a few years ago and just searched; within a week I had a book store with over 2,000 books, including a featured page with the most important books suggested by the visitors.

Remember the value of this recommendation; it is one of the most brilliant reasons Amazon.com has succeeded. A book that is recommended is more likely to generate interest than a bland listing of thousands of books.

The scenario is familiar; the Web Site is a community that educates. Profit motives are not important here, because it is a site where children come to learn. As the Web Site developer, I barely have time to keep up, much less sell advertising. The fact is, putting advertising in a child's hands is like selling Pepsi in the classroom; it is just not a classy thing to do.

Books, on the other hand, are a natural market for these visitors. Since it only took a week to set up this book store, with no changes in two years, the time factor is limited. Now this book store pays the hosting fees for this site for an entire year, not much but enough to keep it going.

For Amazon.com, this site generates an estimated 18,864 visitors a year, buying somewhere around 1,440 books (about 120 a month, or 30 a week). Let's break this down to see the real value of this little affiliate.

Imagine 10,000 Affiliates Making $12,000 in Sales ($120 million total) a Year
A Sample Weekly Report From Amazon.com For the Cybrary

Click-throughs and sales by individual item

For the week of 22-Nov-1998 through 28-Nov-1998

HITS is total hits generated, DIR is books ordered directly from the site, NDIR is books ordered after the visitors looked around a bit, and my fee, as you see, is small. What is interesting is that even though I recommend books, ALL my books are bought after they look at the initial recommendation this week. This is a common trend at the site.

                                              YOUR          AMAZON'S
              HITS   DIR. NDIR     FEE    TOTAL PAYMENT    TOTAL SALES
 ---------- ------ ----- ----- ------- -----------------------------------
    Totals:   497     0    31               $  9.58          $249.46 
    

Now let's look at the actual visitors we generated this week.

                                   ISBN/ASIN home page    search   other
 --------------------- ----------- --------- --------- --------- ---------
 Number of Visitors on 22-Nov-1998        62         0         0         0
 Number of Visitors on 23-Nov-1998        69         0         0         0
 Number of Visitors on 24-Nov-1998        64         0         0         0
 Number of Visitors on 25-Nov-1998        43         0         0         0
 Number of Visitors on 26-Nov-1998        40         0         0         0
 Number of Visitors on 27-Nov-1998        71         0         0         0
 Number of Visitors on 28-Nov-1998        44         0         0         0
 --------------------- ----------- --------- --------- --------- ---------
 Total Visitors this week                393         0         0         0
 

Let's determine the value of this small affiliate over a year, with these as average. Use this as a general guide, some figures are rounded slightly for convenience. Remember, I do all the marketing, they maintain their network and email me weekly with results, and cut me a check once a month or so.

                             Per Month                    Per Year
Total Hits                     1988                        23,976
Total Visitors                 1572                        18,864
Total Sales                   $1,000.00                   $12,000.00
Total Affiliate Payout        $38.40                      $460.80

Net Profits: $12,000 - $460.80 = $11,539.20 of profit

If Amazon.com could get 10% of its affiliates generating these kinds of sales, it would make $120,000,000 and spend $4,608,000 to do it, a profit of over $115,000,000.

These figures are general, but they give you an idea of why people love to invest in Amazon.com. No matter how skewed they are, the figures are astounding. Let's look at the Asset Value of this Affiliate called the Cybrary by figuring it in our 5 Keys.

Key 1. Leads: 18,864 ($460.80 affiliate payout): $41 Clickthrough cost (let's say $0.10 per clickthrough): $1,886.40

Affiliate Network Savings: $1,886.40-$41 = $1845.40

Key 2. Sales: $12,000-460.80 = $11,539.20

Key 3. Advertising/Marketing: 18,864 impressions ($460.80 affiliate payout): $41 These costs are difficult to determine and can skew the figures, but to Amazon.com it costs them nothing to do the actual advertising. Let's compare it to banner advertising for a rough comparison.

CPM Banner Ad Cost ($15 CPM average): $280
Affiliate Network Savings: $280-$41 = $239
Amazon's CPM Estimate: 18,864 impressions at $239 = $12.92 CPM

Key 4. Branding

It is impossible to determine a branding value for this affiliate. If you could ever figure out how many books a visitor from this site made at Amazon later, it might help. But it isn't like the Cybrary is the only affiliate doing this, which shows that if they keep seeing this brand name pop up, the value is enormous. Combine this with all the repeat business Amazon.com gets from customers who return on their own, and you see that branding is dramatically extended. The Cybrary introduces the customers to this business and rarely gets repeat sales.

Key 5. Affiliate as Customer

I have never bought a book through this affiliate program, but I buy around $200 worth of books from Amazon.com in the past year, inspired at first by this affiliation. Total Sales: $200.00

Net Asset Value of One Sample Affiliate

Key 1: Leads and Key 3. Advertising/Marketing = $1042.20

If we average the Clickthrough and CPM cost, we get around $1083.20 to use as an average Affiliate Network Savings over Banners and Clickthroughs: $1,083.20-$41 = $1042.20

Key 2: Net Sales = $11,539.20

Key 4: Branding = N/A

Key 5: Affiliate as Customer: $200.00

Net Asset Value of this Affliate Per Year: $12,781.40

Even if they bought banner ads or clickthroughs, the profitability of this venture is huge. What is interesting is the fact that this value is for just one affiliate, and not a particularly big one. If even just 1,000 sites generate this kind of Asset Value, you are talking $12,781,400.00

Not bad for letting other Web Sites do the marketing for you!

Tracking Your Success:
How to Measure Your Affiliate Network Return on Investment (ROI)

Setting up an affiliate program should be simple. You plug into the software, sign up tons of affiliates, and wait for the cash to roll in. Or at least that is how it is presented at many Web Sites.

The key to remember is that you are setting up a sales force, and that affiliate programs are tracking mechanisms for your advertising. What is important is to focus on how to empower your affiliates to generate more leads, sales, and spread the word. Affiliates bring numerous values to your business which often go unrecognized; enabling your affiliates to succeed is crucial to your success.

It is also important to minimize your administration of your network. Software is just the first step; the really important challenge is to keep your affiliate network humming with sales by checking into what kind of traffic is being generated, who is making sales, and how to get the most value out of your network.

To better understand how to maximize the value of your affiliate network, this ROI model will outline the Assets and Liabilities to give you an idea of where you should be placing your money. Start up costs are nothing compared to the monthly maintenance and development.

The costs of running an affiliate network should be considered only part of an overall marketing budget. Search engine placements, opt-in email list building, and even banner ads are still important components of any business.

Smaller affiliate programs can be set up and running within a week, with just a few people maintaining them. The real tricks come when the software has to handle many, complex transactions; this is where a third party service bureau like Be Free provides a better solution. Most of the problems happen with the more complicated tracking systems, while smaller businesses can often set up a simple system in a few days and really do little to maintain it. After all, if it is a script that does one thing and is installed properly, a small business can focus on their affiliate support and customer service.

Yet if you can reduce your costs of marketing and advertising through your affiliate network, you can greatly reduce your reliance on other forms of Internet marketing. Again this depends on the type of product or service you are selling, and if you set up a clickthrough, revenue sharing, or straight CPM model, or as many businesses do, a hybrid combination of all the available tools.

The real value of an affiliate network is when you can focus your costs on maintenance, administration, customer service, order fulfillment, tracking, returns, and affiliate development. The reduction in marketing costs should also be reflected in a reduced administrative costs when your company can focus on support instead of marketing.

Start-Up Costs

Setting up an affiliate network depends on your demands and the investment you can make in creating this network. For small businesses, you can get in for as little as $250. Even the higher end packages are not that expensive, although they do not list their pricing.

Still, it is not close to lofty figures Web developers get for complex Web Sites, because basically you are buying tracking software. The more sophisticated the tracking, and the more demanding your needs, the higher the cost. For more complex networks, a third party service bureau like Be Free or ClickTrade incurs more cost in terms of setup and percentage of revenue paid out to the service bureau per transaction, or whatever measurement is used for the affiliate network.

The return on investment is huge because these companies handle the technical headaches and manage the system to insure that it is working well. For smaller businesses, the goal is to buy the software and have it set up and working on your server.

Remember the basic rule; the more complicated your network is, the more ways it can break down. For higher end solutions, these third party services have arisen to keep up with the demand. Small businesses and entry level programs are usually simple and work from first installation.

Consider the following costs:

Software setup and installation

1. Do it yourself; many of the technically minded can handle this well. Just be sure you can spare the time, because what you save in money you pay for in hours. Here's some scripts you can try:

   Matt Wright's Script Archives

2. $500 and less solutions: These are the entry level, where the company installs the scripts for you on your server. These start at $250 and most good packages are around $500, $700 or so with installation.

3. High End Solutions: For those who need the best and can pay a little bit more for start up, and often grant a per transaction fee, there are Affiliate service bureaus and networks like Be Free, ClickTrade, and LinkShare.

4. Server Fees and Transaction Costs: Naturally you have to pay your server fees, possibly fees to where your affiliate software is hosted (if it's on another server), plus various transaction costs for processing credit card orders online, or paying a per transaction fee to a higher end company. Contact the companies to find out what percentage they will charge for you.

5. Ongoing maintenance fees: Your network will need to be taken care of to protect against glitches in code, security threats, fraud, and simply to keep it working efficiently. Make sure you back up your online network and set aside time and money to keep your network running at peak efficiency.

Ongoing Costs

The most important ongoing costs will be maintaining your network, delivering your products and services, customer service, and affiliate support. Remember that your marketing should be leading the effort, emailing and encouraging your affiliates to succeed with the tools they need.

With the multitude of products and services, plus the number of affiliates different networks require, it is impossible to give a standard cost. The following is an overview; these programs can be run by a few people, or manned by a staff. The real key is in how many affiliates you sign up and how many sales you make.

Here's an example of the ongoing maintenance of an affiliate program to consider and budget for in your investment. Whether it is time or money, you will have to cover as much of this as makes sense. Don't expect to do everything, but pay attention to details.

Production of Affiliate Marketing Materials

Your marketing materials are the core of your business; if you leave it up to your affiliates, they will likely not do it as well as you can.

The logic is simple; if you are selling someone else's products, you need their marketing and advertising materials. Think of a retail store; point of purchase displays are central to selling. Control your marketing and content by giving your affiliates all the approved tools to work with.

Here's some of the things you should consider:

1. Ad Copy

   In journalism and direct mail, your headline and sentence are the most important parts of your offer. If you read the ad copy online, you discover why people are failing. They think that fancy graphics, Java, spinning animations, and other gadgets impress people. Give people a simple, direct message that they can understand, outlining exactly what your product or service is important to them, is more important than any trick you have.

   Remember to also check your ad copy, any copy you write, with Word's Grammar Checker (look under the Tools menu; this is the kind of advice your grade school teacher used to give, but there is value). Keep clicking through until you get to the end of your writing; up will pop a box giving the "Flesch" Reading Level. This tells you the grade level you are writing at. If you write at greater than an 8th grade level, simplify your language. Write short sentences, two to three sentence paragraphs, use bullets and numbers, and keep it moving.

   What's amazing is most people think you have to sound over intelligent to impress the well educated audience on the Internet. Nothing could be further from the truth; the more educated they are, the more impressed they will be when you quickly and simply get to the pointÉdon't waste their time.

   Don't believe me? A friend of mine worked with George Lucas -- yes the George Lucas -- and she told me he never read anything, he scanned the bullets and headlines. Power scanning is a rule of our society, and your ad copy should understand this and compel your visitors to work with you. The more educated they are, the more valuable their time. Respect it and pay attention to your ad copy to boost your sales.

2. Banner Ads

   Create a series of banner ads, maybe 4-5, and update them frequently if they are not working. Some banner ads can be used again and again; Cory Rudl's Internet Marketing Center banner ads have rarely changed, because they do work.

   Be cautious with banner ads though. There is a tendency in affiliate programs to just create banner ads and neglect everything else. Banner ads generate a 2% response usually, sometimes greater but they are still unreliable. Don't just create a banner ad and let people post it; invite them to promote your business better.

3. Text ads, endorsements, ezine/email ads, classified ads, and sales letters

   This is one of the best ways to market; write a headline and a few sentences giving a free offer or compelling reason to visit your site. An endorsement from an affiliate with a trusted list is incredibly valuable; the trust this person has generated is extended to your products, so the target customers meet you via a recommendation.

   Ezine/email ads are also a good way to generate leads for your affiliate programs. Be sure to test which lists will trade your ads, and build up your own ezine list to exchange as well. Finally, pay attention to the sales letters that greet your visitors. You should direct people to a specific page in your Web Site with a specific offer. Try not to send them to the home page of a catalog and give them thousands of choices. Give them just a few good choices and keep them focused.

   One final component is your follow up; using systems like Aweber (http://www.aweber.com), you are able to create an automated email follow up to any inquiries. This automation can dramatically decrease your overhead and create a valuable system that will put your email on autopilot. The system simply responds with your messages at time intervals you set. It is a must for any affiliate inquiries, and can also be used to generate email inquiries from other Web Sites by putting a tracking code that is submitted with the inquiry.

4. Free reports

   An excellent way to empower your affiliates is to give them a special Web Page/report to post at their site, or direct their ezine traffic to learn about what you offer. A good free report is better than a banner ad or a simple picture; it can describe a benefit and should lead them to your site. Free reports look almost like a sponsored page at another site, as well as giving the Web Site owner extra content.

   Don't make it just a sales letter, but mix in some content and make it worthwhile. Post these at sites, and allow others to pass your article on. You can also include your banner ads on this page to make the offer compelling.

5. Special search engine pages for your product, each with a link to your site

   This is the most under-utilized tool in the market and one that can yield immediate benefits. Portal pages, or entry pages, to a Web Site are becoming favored by search engines as long as they don't massively repeat words or manipulate the search engines.

   Why not create special search engine pages for your affiliates to post at their Web Site and submit to the search engines? It will help them succeed and will help you generate more traffic, plus it will have links to your site via the affiliate program to possibly improve your ratings in certain search engines. If you do it, you can minimize the risk of your affiliates doing it the wrong way. For many products, this could be an effective tool and put your company near the top of the major search engines.

Ongoing Costs of Your Associate Network

Administration of your network is one of the most demanding chores of an affiliate network. Do not expect to write a Web page and have people never contacting you. Requests will come in, browsers will have different views of your page, and the Internet will provide glitches that may have nothing to do with your efforts.

Administration issues are crucial to your success; many programs have broken down and lost orders, not responded to emails, and some haven't even paid their affiliates. One program failed to pay an affiliate over $1500 for a period of 3 months.

This kind of behavior is not only wrong, it can be illegal depending on the country and/or state you are in. Just be sure to pay your affiliates on time, answer inquiries, and if something goes wrong, fix it and don't make excuses.

Here are some of the administrative costs to count on:

1. Getting Associates Approval and Verification

   Many programs will allow any affiliate to sign up. They just fill in a form and get an automatically generated code. It is still a good practice to visit your affiliate's sites and make sure they are presenting your materials the way you want. You should also make sure that if you don't want certain types of Web Sites offering your products, like Adult Sites, that you visit just to see what they do.

   Some affiliate programs take an application, verify who the site is and that it meets the qualifications, before allowing them to affiliate. This may seem to slow down the process but if your goal is just to sign up hordes of affiliates, then avoid this. If you want to qualify your salespeople and take an extra day or two, include verification. This is best done with an actual visit to a Web Site and contact, making it more time consuming. But you will know who is working with you.

2. Tracking/ reporting sales and Commission Statistics

   Tracking software is often built into your affiliate system. You should have reports on how many visitors were sent and where your sales came from; many packages offer complete statistical reporting for you and for each individual affiliates. Emails are often sent out with each order, and commissions are reported on monthly.

   At the end of each month you must tally the commissions, count your returns (Do you have a policy to cover returns of products and any credit card fraud that might happen? These amounts should be deducted from the payment to an affiliate if they occur, and the affiliate should know how many were incurred) and deduct them from payments, and prepare to issue checks. This may seem simple, but with bigger networks you may run into the problem of writing many, smaller checks. Most affiliate networks set a minimum amount, or threshold, to be reached before issuing a check. Part of your end of the month routines is to tally your commissions, rank the results of your leading affiliates, and here is where you can determine who needs more assistance and who are your best salespeople.

3. Issuing payments

   Writing your checks and issuing payment is the final step, and should be done at a certain time of the month. Give yourself a few days after the beginning of the month to issue checks and let your affiliates now. Be sure that you have agreed to disperse your funds in the currency of your own country; remember that some of your affiliates may live in other countries. If you mail them a check, it may take a long time to arrive. Try to find a good arrangement with them, and notify them by email of what you are sending.

4. Legal issues

   For specific questions affecting your affiliate network in your state or country, consult an attorney. Be sure to get Federal Tax ID numbers for affiliates who generate more than $600 in earnings (or whatever the current Federal Tax Level is) and give them a 1099 form (for those outside the U.S., consult your own tax requirements for paying independent contractors).

   Be certain that your affiliates are considered independent contractors and not employees of your company. Also check into state usage and tax laws; doing business on the Internet can be confusing. Affiliate networks branch your business into many states; most affiliate networks put a disclaimer in their agreement to make sure that the affiliate is responsible for any local tax laws. As always, ask an attorney if you have any questions.

5. Security and Protection

   If you are setting up an affiliate network, be sure to protect your software and reporting mechanisms. Don't let your affiliates information be easily dispersed either; some networks that have failed to protect their scripts have left themselves prone to intense explorations by their competitors to see what sorts of sales their affiliates are actually generating. Security for your ordering systems is a must, as always; if you are processing credit card transactions online, this will bring added cost to your efforts.

6. Sales Tracking and Training, Keeping your sales force fresh

   As you use your reporting statistics, be sure to review them periodically and rank your best salespeople. Phone them up and thank them for working with you; try to give them all the tools they need to succeed. Ongoing training is also a good idea; you could offer Internet marketing books to your network, or even better affiliate training systems. Pay someone to adapt their system to your network and create a natural funnel for added income which empowers your sales force to sell.

   Use the example set by a company called Mining Company (http://www.miningco.com). They have editors of special Web Site sections that comprise their site. Each specialist generates traffic for their specific subject. They get paid for the advertising impressions they generate; the more traffic they generate, the more the editor gets paid.

   Mining Co. makes it a point to contact their editors and gives them training to improve their results. You should apply the same procedure to your affiliate network, and perhaps create an additional revenue stream for yourself with the training materials they need to succeed.

7. Support: Set An Example for Your Affiliates That They Share With Your Customers

   Be prepared to get plenty of emails with questions, confusion, and technical naivetŽ. If you think you will create an instructional page and never hear from them again, think again. Even if you write it down, people want support. Give them access via telephone, email, and fax. Don't make it hard for your affiliates to contact you.

   Set a good impression, style, and quality of service that you provide to your affiliates. Your example will filter down to your customers. A good affiliate network emulates the people running it; teach by example and give them a good example to follow.

Customer Service Costs

The final cost to consider is how much your costs are to take orders and deliver what you offer to your customers. This customer service element is critical, because your affiliates should be the marketing arm that frees you to pay attention to your customers.

A good suggestion is to include a telemarketing component to your customer service. In today's business world, customer service is marketing. Getting repeat business depends on you treating your customers as a privileged asset. Call them and thank them for ordering; process their returns and complaints quickly and courteously.

Here are the costs to consider for your investment:

1. Order Taking

   Let your customers order any way they are comfortable with, and be sure to take credit cards. Give them the option to phone an 800 number, fax, pay by check, by multiple credit cards, and by any other means possible. Be sure that if they do order somewhere other than online that you find a way to get the affiliate that referred them to your Web Site. If you phone them or email after they order quickly, you will find that most people know where they heard about you. Secured online ordering is a must; this is where your best tracking is done and after all, you want to get your customers comfortable with ordering online. That is the most cost effective consumer behavior you can encourage

2. Fulfillment

   How will you get your orders to your customer quickly? Immediate attention and delivery creates a powerful impact. If you have to ship a physical product, make sure you get it out the door as soon as possible. Do not let weeks pass by, like many mail orders companies do. With the Internet, you don't have the excuse of the postal system to cause delays, even if you ship through the postal service.

   Internet visitors want it now and they don't want excuses. Make sure you can upscale your business to handle the influx of orders.

3. Returns and problems

   There is an old saying in business; if you don't get returns and complaints, you are not selling enough. That doesn't mean you sell bad products or services (if you do, huge returns should indicate that you stop selling it!), but that you count a percentage of your business as returns. Create a system to handle returns, complaints, and inquiries so that you can quickly follow up with your customers. The worst thing you can do is ignore the problems, or delay the return. Give them everything as quickly as possible and move on.

   Also remember that if you ship via the Internet or mail, the U.S. has an implicit 30 day guarantee. It protects consumers from getting ripped off; even if you don't know it, you are offering at least a 30 day guarantee. So why not put it on your marketing materials and make sure that you build up reassurance. If you treat one customer poorly, it can spoil your entire business, so treat them with respect and don't play games with returns, complaints, or problems. Your Return on Investment is a measurement of your sales generated, your costs in starting up and maintaining your Web Site, and the development of your long term assets, your affiliate network that generates ongoing sales for your company. Be sure to check out these costs and keep a tab on improving your business.

Interview with Commission Junction

The site, commission-junction.com, is the subject of these questions:

1. How did you first get into this? What inspired you to create your affiliate program?

Name: Lex Sisney
Age: 28
Education: Marketing Management degree from The University of St. Thomas. Minor in Mandarin Chinese.

Work Experience: My background is in designing EDI and Internet Commerce solutions. As the Business Development Manager for Control Data Systems, I spent over three years living and working throughout Asia, including China, Singapore, and Korea. In this role, I designed EDI and Internet Commerce services for Sprint, Sing Tel, Dacom, and Rayes (privately financed China-wide network).

I left Asia in 1996 and returned to my home in Minneapolis to create a new Internet start-up called ProcureLink. ProcureLink was designed to use corporate intranets for contract buying of operating resources (things like office supplies, maintenance and repair, computer hardware, software, etc) . After nine months of serious effort, blood, sweat, and tears, I lost out to better financed competition (see Ariba, IBM, and Trilogy). Despite my loss, I learned a great deal about what it takes to launch a new business from this experience.

Soon after, while a consultant for a small Internet Commerce company called Net-Medical, I launched my first affiliate program. I found this experience to be both rewarding and very frustrating. From a merchant's perspective, our program succeeded in signing-up many new associates. However, there were also significant costs associated with:

• verifying and approving associates;

• tracking and reporting sales and commission statistics;

• fraud management;

• associate support and training;

• establishing and maintaining 'trust' with associates;

• issuing payment.

I also engaged in many other merchant's revenue sharing programs as an affiliate. Dealing with payment threshold's of $50 or $100, monitoring different tracking systems, managing different user id's and password's, and losing out on some poorly run and disreputable programs - all made me feel that there was a better way to run an affiliate network. Commission Junction was designed to solve the inherent problems (for both merchants and affiliates) of a revenue sharing programs, while leveraging its unique advantages.

3. Could you explain the strategy behind your associate program?

In a sentence: Make it easy for affiliates to join, monitor, and earn revenue from our merchant partner programs.

With competing solutions, when affiliates join more than one merchant program, they deal with each merchant separately. Consequently, they must wait until their commission levels reach $50 or $100 before they get paid and they have a management nightmare in monitoring their multiple accounts.

With Commission Junction, we handle everything for the affiliates. Monthly payments are consolidated into a single check, representing total sales from multiple merchants. Affiliates also manage all of their sales and earnings reports with a single ID and password. These features can't be overemphasized. We make it easy for affiliates to join our merchant partner programs; affiliates continue to actively promote these programs because they get a pay-check each month while receiving the convenience and accuracy of a trusted-third-party service.

Merchants enjoy the benefits of reduced administrative costs and increased exposure of their program. Each of our merchant partners has their own "branded" sign-up form. Whatever affiliates they recruit from their site - they keep on their site. We also recruit and sign-up affiliates from the Commission Junction web site and directory.

4. Tell us a little about the results you've achieved in terms of your business. Also, if you have specific associates who have been successful, can you share that also?

We are a new company and are busily working to integrate leading merchant programs into our service. We have a back-log of 15 great programs. Stay tuned for our success stories.

5. What are you most proud of and why?

I have a wealth of determination and a clear vision of how I want to lead my life.

6. What do you think are the key elements that make your program successful?

See above. (Real-time reporting, monthly checks, dual exposure, branded sign-up, easy-to-use site, upfront approach).

7. Can you give us a specific example of one of these elements in action?

Before we created Commission Junction, we took an objective look at associate programs and existing service providers like LinkShare and BeFree. We believe that we created a better mouse trap by integrating all of these features into our service and more.

8. How do you let people know what you will and won't allow in your program? How do you keep tabs on this, or do you?

The service agreement clearly states who and who can't join. I.e. No adult or illegal activity. We monitor all new sign-ups to ensure that they meet this criteria. Our merchant partners can elect to automatically approve or manually approve their associate applications.

9. Anything we haven't covered that you'd like to share?

Commission Junction set-up fees are $245 for a "do-it-yourself" set-up or $545 for assisted set-up. We earn 15% of the commission payout for our services. E.g. if a merchant pays $1 per lead, we earn 15%.

10. How can our readers contact you for more information?

Commission Junction
800/761-1072
info@commission-junction.com
http://www.commission-junction.com

How To Set Up An Associate Program

by Allan Gardyne, AssociatePrograms.com: http://www.associateprograms.com

We want to thank Allan for sharing this important article that shows the options you have when setting up an affiliate program. Be sure to visit Allan's site for more information.

If you want to set up a network of affiliates, you have several options to choose from. You can hire a service such as Safe-Audit or ClickTrade which handle the money - and charge you a healthy percentage (ClickTrade charges 30%) - or LinkShare, which doesn't, but it charges you a few thousand dollars to get established. You can hire Craig Belcher or Paul Galloway to put their software on your server. You can use a shopping cart - or you can write your own script.

Confused already? OK, I'll narrow it down to three good options:

• Budget-priced: Affiliate Link
• Just a little more expensive: Paul Galloway
• Be Free: the "best on the Internet"

1. Budget-priced: AffiliateZone.com

3. Just a little more expensive: Paul Galloway

3. "Best on the Internet": Be Free

Various other options I've found

4. Just pay people for clicks - or leads, or sales

• LinkShare Corporation has created a software solution to track leads that result in immediate or long-term sales. As well, it has established a network to help publishers of sites and online retailers. The software enables merchants and sites to share feedback information and customer analysis. Examples of companies using LinkShare are MyPoints and Cyberian Outpost. Costs several thousand dollars to set up. LinkShare organizes things and does the tracking - it does not handle the money.
  
  
• ClickTrade - ClickTrade allows you to easily reward other Web site owners for linking to your site by setting up your own link partner program. You reward link partners on a pay-per-click, pay-per-lead or pay-per-sale basis. You set the amount you are willing to pay them, and ClickTrade handles all the tracking, reporting, and payments. ClickTrade charges 30%.
  
  Associates using ClickTrade need to monitor the results closely. Some people using the system may try a scam that costs you money. One disadvantage of ClickTrade is the company you keep. ClickTrade allows disreputable companies to offer high payouts and then without warning switch to a low payout - or even have no funds available.
  
  
• SafeAudit gives you the options of paying by clicks, leads or sales. It's a huge operation with about 40,000 members, a small number of whom complained recently that they were unpaid and that e-mails went unanswered. It charges you a percentage.
  
  

5. DoubleClick Direct

6. Jim says Shopcart is simple

7. Site Sponsor

8. ViaMall/Yahoo Stores

9. ShopSite

10. TeknoSurf's Net-Tracker 2000

11. EComWorks

12. MerchandiZer

13. RevShare software

14. justClick! Target Network's CommunityBuilder98

16. Using cookies, Javascript and Perl to track referrals

17. Do it yourself articles

End of Article

The 100% Guaranteed Affiliate Tracking System That Costs $20 a Month

If you have an affiliate program, then your follow up system to email inquiries is crucial. I use a service by Tom Kulzer called Aweber, http://aweber.com. It allows me to follow up on emails automatically and is one of the most effective ways to put your business on autopilot.

You owe it to yourself to check out this site and put this into action for you as soon as possible. Visit http://www.aweber.com for more details.

In a few weeks I'm about to release a new affiliate tracking system that is based on the tradition of direct response marketing.

This system is 100% effective, has absolutely perfect tracking, and requires just two skills:

1. . Writing the messages

2. Managing the database of names

Here's how it works. Most affiliate programs rely solely on banner advertising; I've found that email is one of the most effective marketing tools. The goal of this affiliate program is to create opt-in lists that track the order to the affiliate from first contact.

In order to get the best of both worlds, I'm combining the banner ad and the email form into a single unit that looks just like a banner ad. The top has a graphic, the middle has a place for a name and email, and the bottom is another graphic.

The scenario is simple:

A. The affiliate places this banner ad/form on their site and simply types in their identifying code in one place in the form.

B. The call to action is a free newsletter offer which is prominently placed on the affiliates site.

C. The visitor at the Web Site fills in the form and is immediately sent to the free report Web Page.

D. An autoresponder is sent immediately, with another copy of the report.

E. The visitor is then contacted with a series of opt-in messages; they can opt-out at any time with the click of a mouse.

F. The affiliate's code is sent with the form and downloaded into a leads database. When someone buys, their email and name is compared to the leads database, and a credit given for the sale.

This system requires no cgi, no cookies, and no fancy programming. It does require good writing, attention to detail, ability to work with a database, and the energy to inform affiliates when a sale is made. There will be no online statistics, but monthly reporting will share the number of inquiries and sales made. You will have to manually notify your affiliates, but the value in terms of pure sales will more than compensate for the lighter statistical reporting. Plus it will most likely increase your SellThrough for your affiliates, a good compromise.

The cost of this is just $20 for the online follow-up email system per month. Each email is personalized and in my initial tests, over 400 people opted in with no one asking to be removed.

The messages mix commercial content and a call to action, to visit the Web Site, with Internet marketing strategies. It is all part of my latest training system coming out in December.

You owe it to yourself to check out this site and put this into action for you as soon as possible. Visit http://www.aweber.com for more details.