January 1999 Links to Sales Journal: Declan Dunn's Report from Beyond the Banner

The Birth of the ActiveMarketplace: Affiliates Are The Keys to Success

Dear Friend,

The recent Beyond the Banner conference, held January 1999 in San Francisco, revealed an industry in its infancy.

I find conferences like this inspiring, because in all the questions and answers comes the need for certain tools. We have focused our energies on creating three important marketing systems for affiliate networks to help you improve your results:

1. Winning the Affiliate Game: The Ten Step Master Plan to Maximizing Your Profits

   Visit http://www.activemarketplace.com/win/ and take a sneak preview of the first affiliate sales training system. Created specifically to help your network sell more, this program will be offered to affiliates to help them succeed. The lack of attention and sales training paid to affiliates demands a solution; this training system completes the first step of having them know how to position your products and services for optimal results.

2. The Proprietary, ActiveAffiliate Spider

   Affiliate research is often slow, cumbersome, and untargeted. ADNet has created the first proprietary spider that quickly reveals the Web Sites, numbers, and strategy of affiliate networks. If it is important for you to know your competitor's affiliate approach, who they are contacting, and how you can expand your reach into your market, then this ActiveAffiliate Spider will be critical to your success. Discover how quickly you can gain the unfair advantage by reading this article.

3. The Affiliate Marketing Development Plan

   The final missing piece of the affiliate puzzle is the marketing plan. It was amazing to discover how few had a tangible, feasible marketing plan in place. We have created a tested, proven system to roll out and/or improve your affiliate network without breaking the bank. Click here for more details.

Announcing the Proprietary, ActiveAffiliate Spider

Discover Exactly What Your Competition's Affiliate Strategy Is, Who They Are Linked to, And How You Can Quickly and Easily Roll Out Your Affiliate Network To Gain the Unfair Advantage

Contact Patrick Anderson of ADNet International, http://www.activemarketplace.com, at 770-936-8308 or email patrick@adnetintl.com for complete details.

Do you know what your affiliate network competition is doing? Do you know who their affiliates are?

At the recent Beyond the Banner conference, it became clear that the market needs a way to target and organize an affiliate network. Through a combination of marketing techniques, linking strategies, and technical savvy, we have created the only, Proprietary ActiveAffiliate spider, which will allow you to quickly evaluate your market.

In as little as 5 minutes, the ActiveAffiliate Spider can scope the Internet and pinpoint the existing affiliate networks, as well as thousands of prospective affiliates.

If you want to set up an affiliate network, then this Proprietary ActiveAffiliate Spider will be crucial to your success. Here's why:

• The competition for affiliate networks is ramping up. Not knowing who your competitor's affiliates are could be hazardous to the health of your business.

• Your competitor's strategy can lead you to openings in the market you would never have seen, even though it can be given to you, right before your eyes.

• The ability to make a pre-emptive strike involves more than just posting your program at the various affiliate directories. You must take the next step to understand the complete Internetworking of your specific product or service.

• The whole procedure can be completed in less than a week. You can gain the contact information and strategies that would take you months to do on your own.

• The time to act is now; the demand for this service is so tremendous that we cannot guarantee to keep offering it to the public forever.

The power of this Spider is not in the technology, but in the marketing design. Growing from years of tested, proven lead generation strategies, the Proprietary ActiveAffiliate Spider combines the ability to research the Internet with the Internetworking strategies of ADNet International.

You may have read how ADNet generated millions of hits within weeks for clients like the Country Music Awards. Now this strategy has been incorporated into a technology so targeted, so specific, that it boggles the mind. Your affiliate network's survival will depend on knowing what your competition is doing. After all, there are only so many "thousands" of affiliates available.

Contact Patrick Anderson of ADNet International, http://www.activemarketplace.com, at 770-936-8308 or email patrick@adnetintl.com for complete details.

The Affiliate Marketing Development Plan

Exclusive, In-Depth Research from Declan Dunn, ADNet International, and the ActiveMarketplace

. Contact Patrick Anderson of ADNet International, http://www.activemarketplace.com, at 770-936-8308 or email patrick@adnetintl.com for complete details.

As the old saying goes, most people don't plan to fail...they fail to plan.

Nothing could be truer about affiliate networks. Good companies go out with a limited vision of what their network could be, and do little to empower their affiliates to sell more.

The quiet revolution of affiliate networks is gaining momentum. Right now, your competition is out on the Internet, trying to sign up the same affiliates you are. Do you have your affiliate marketing plan ready to put into action now?

In response to the overwhelming demand for quick, guerrilla affiliate marketing, we are offering the first comprehensive affiliate marketing plans via the ActiveMarketplace, http://www.activemarketplace.com.

We Build "Areas of Influence" Of Interested Consumers and the Affiliate Sites They Are Meeting At To Quickly Generate Revenues

The Internet is the pivotal economic opportunity of the 20th, and 21st, century. What is amazing is how many businesses squander their efforts on dead advertising, poorly planned online strategies, and techniques that simply do not work. The challenges are clear:

1. Most Internet advertising space is dead and under utilized. We turn this dead space into value, and long term market share.

2. The real challenge of the Internet is to develop reach into the vast audience, penetrate your niche market, and frequently interact and sell to them. Building your area of influence and turning first time customers into a long term customer base is our goal.

3. Beyond the top ten Web Sites, there is a wealth of customers, transactional content, and sites where customers flock for information.

4. We transform these into profit centers by merging selected products with the target audience that visits these sites. . 5. Most Internet marketing efforts, from large portal sites like Yahoo to niche markets with a few hundred thousand visitors a month, waste money in one shot, affiliate advertising. The results are wasteful efforts that most often return a 1-2% sales ratio.

5. The ActiveMarketplace instills a tested, proven marketing strategy that can improve that ratio to 20-30%, developing a business that can survive in the long run.

What We Can Do For You
The ActiveMarketplace Is a Tested, Proven System We Apply for Your Clients To Help Them Profit

ADNet has invented the ActiveMarketplace approach to:

1. Build market share for small and large companies, integrating the Internet with their efforts quickly and cost-effectively.

2. Target online consumers by quickly positioning and testing marketing efforts.

3. Create a customer base that looks to a specific, trusted resource for the products and services they want to buy.

4. Implementing sales training and marketing strategies to increase revenues.

5. Deriving residual revenue based on a results-driven system that dramatically increases the revenue for ADNet and its clients.

What we can bring to the table is far more than just one consultant. This marketing plan is a collaborative filtering of your competition, their methods of affiliate advertising, and outlines your best opportunities for success with recommendations.

ADNet's model is more than consulting; we plug you into an integrated process, rolling out affiliate networks and creating ways to empower this sales force to succeed, at minimal cost.

Affiliate Marketing Plan Deliverables

Goal: We will create a 40-50 white paper report for you, with a specific action plan to approach your affiliate network. We will also send your staff complimentary copies of The Complete, Insider's Guide to Associate Programs ($97 value). Each white paper shall cover:

A. Market research into your industry, including who the players are, how to approach your market, and what has worked best.

B. How to select your affiliates and contact them, building your Area of Influence online.

C. How to get the most value out of every affiliate in your network

D. How to measure your ROI on your affiliate network

E. How to empower your affiliates to sell more: ad copy, banner ads, and search engine positioning tools to increase response

F. The Ten Keys to your Affiliate Channel and how to put them to use

G. How to create Target 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 their affiliate program towards. We use our Proprietary Affiliate Spider to give you the inside information.

H. How to find lists of newsgroups, e-zines and targeted mailing lists which can be used to promote your business.

I. Instructions for developing Opt-in lists and automated follow-up procedures which will improve sell-through beyond the initial purchase.

J. Identification of possible co-promotion and joint venture opportunities for their affiliate program.

K. Online ad copy examples and recommendations for their use.

L. An ADNet representative will provide a personal phone consultation to assist in implementing these efforts.

If we were to offer this with full support of our entire staff, our costs begin at $25,000. At that price it would be a bargain. Since we have turned this process into a tested, proven system, we are able to reduce this price dramatically to help give you a quick start. The affiliate marketing development plan should be an essential tool in your network.

The Affiliate Marketing Development Plans start at $2,500. Contact Patrick Anderson of ADNet International, http://www.activemarketplace.com, at 770-936-8308 or email patrick@adnetintl.com for complete details.

Declan Dunn's Report from Beyond the Banner

The Birth of the ActiveMarketplace: Affiliates Are The Keys to Success

The Beyond the Banner Conference, held in San Francisco from December 9-10, was one of the first meeting places of a new industry. The jockeying for position in this industry is incredible; competition heated in a field where no one really knows what is going to happen.

In rooms filled with experts, people with thousands of affiliates, one thing become amazingly clear;

No one really knew what to do with all this abundance.

That is, except for one person; a man who had to use affiliate programs to start his business. We'll get to him later (see Affiliate Acquisition, Retention, and Development).

Let's get back to the abundance. In the old days of business, it was all about scarcity. About finding the market where few people could do what you do, and to dominate that market.

That mentality still prevails over the entire industry of affiliate networks. It is a hard one to overcome. Many companies here literally expect to control their industry.

It became clear that no one will "control" this industry, except for the affiliates. No one represented the affiliates. No one spoke for them.

It became sort of a running joke; how many affiliates do you have? I have thousands and thousands. How much do they sell? I'm not really sure.

The challenge to the affiliate industry right now is the abundance. Instead of honing those affiliates into a tight sales network, measuring the results, we dance with thousands in our press releases, in our promotional materials, but we never quite explain what those thousands do.

It's like the early days of the Internet, when hits was what everyone bragged about...until it became apparent that hits were a giant exaggeration. We moved onto banner ads, and measured success in the number of times a picture appeared in front of someone's eyeballs.

Quantity has never been the driving force of the Internet; quality is the key. I would rather have two great affiliates than a thousand people sitting around, never doing anything.

Then again, if I did have only two out of a thousand doing anything, shouldn't I do my best to turn the rest into long term customers, to reward them for their interest?

It's not only the long term value of the customer, but the long term value of the affiliate that matters.

Logic is lacking in our industry; not unusual for something in its infancy. I realized it is all our jobs to move this industry from infancy to adolescence and adulthood...it's time to grow. The opportunity is wide, wide open.

Abundance is everywhere, and companies want to control it. I knew from this meeting that the time had come to empower the industry by focusing not on the merchants, but on the affiliates, on the people, the Web Sites, the non-profits, who could form this into a great sales channel.

Welcome to the ActiveMarketplace; competition is a thing of the past. You can never control the Internet. Your competitors are partners. Your partners are competitors.

Hope you enjoy this inside issue from the first Beyond the Banner conference created by IQPC and hosted by LinkShare. Everyone in attendance agreed on one thing.

We have only just begun.

Peace,
Declan

Patrick Anderson's Report from BEYOND THE BANNER

Patrick Anderson heads ADNet International, a leading provider to the affiliate network industry.

We just attended the first-of-its-kind conference,

"Beyond The Banner"
Maximizing revenue with strategic Internet partnerships, affiliate marketing programs, and co-branding on the Internet.

This is the first ever affiliate program conference. It was held in San Francisco December 8th through 11th. Presented by International Quality and Productivity Center (IQPC) and co-sponsored by LinkShare. One of the most fascinating conferences we have attended recently. The most interesting thing was the number of merchants who had implemented revenue share and affiliate programs, and actually were discussing what they had learned, how they had set up their programs, and sharing in detail their actual results. There was a refreshing amount of that, where they were actually revealing what worked, what didn't work. One thing was very clear: that the cost of developing these re-seller channels was money that everyone felt was extremely well spent.

Some of the surprising facts that we learned is that these high-profile companies that we've heard about like Cyberian Outpost, Electronic Newsstand, AutoWeb, Artuframe, Virtual Vineyards, Travelocity, that have affiliate programs, have a real small staff managing these. They had, typically, one to two people whose job, in addition to several other duties, was primarily that of acquiring new affiliates and providing the customer service for those affiliates. The company that had the largest number of staff devoted to it, still only had four people. So one to four people are all that's running these programs for these major Internet companies. They are all getting about 20% for the amount of revenue that's being generated to the company, just from the affiliate programs. In addition, there is sometimes up to another 50% of the revenues coming in, not directly from the affiliates. In other words, they are not paying them the commissions, but having heard of the company through the branding from the affiliates, then they start ordering direct. So, by just adding this program, people are seeing immediate returns of 10 to 20% that they are paying commissions on, and an additional 40 to 50% revenues from the additional exposure that this works out for them.

Another surprising fact was the large percentage of affiliates that would sign up for a program, but then would not actually go to the next step of adding a link to their page. The numbers we heard were between 10 and 45% of the people who sign up then do nothing. And, the 10% figures were with a company that was highly focused on customer service where, in many cases, they would actually call the affiliates and then go look to see if the links were placed on there, but then people who didn't have much follow-up in place, could see almost half of the folks signing up would do absolutely nothing at all. This is pretty consistent with our experience as well.

Over and over we heard that the setting up of the software was fairly painless and getting their system together was easily accomplished. But after that, the biggest concerns were how to acquire the good-quality affiliates and how to keep them as part of the program - to keep them selling. So, the acquisition and retention was critical to the success of the program. Also, they were finding then that this was the most time-consuming part of their job, so everyone was looking for a way to do both of those more effectively and a little more automatically.

The successfulness of these programs was mentioned over and over. That every company who had started one of these was very happy that they had started it. What they were saying was a couple of things -

Number one, a lot of people sign up and then a lot of people actually start bringing sales into the company. But the first thing that happened, before sales came in, is that a lot of traffic was being developed, and most merchants were pretty aware of the fact that their products and services weren't impulse-buying items. So affiliates were bringing traffic over to them, but it didn't convert, necessarily, directly into sales.

There was a big concern about this issue - that people don't buy on their first exposure. In fact, with the way many systems were set up, they were ending up where about, we heard numbers like 50% of the sales, being made from a company they were paying no commissions on, because they were not coming directly from the link of the affiliate.

The understanding of the merchants was that sometimes this is the second, third, fourth time contact, then people decide to buy. Maybe they see it in e-mail, maybe they've gone to a couple of sites and seen the banner, and then they finally come and bookmark and go directly to the company when they make their final purchase. They end up by-passing the whole affiliate network when the sale is made. For the merchants this is a good and bad thing. The good thing is, they pay no commissions at all on these sales, so they have no cost of advertising and no cost of sales for the sales commissions. But at the same time, they know that they want to reward their affiliates for the efforts they are making, so they will continue to want to do the advertising and refer business to them.

We were real encouraged to hear that every merchant was really concerned about their affiliates and looking at ways to have them earn more money by coming up with some very innovative, new revenue-split kinds of programs. Some things that emerged were a combination of paying a click-through with the sales commission. Some people were talking about tiered commission payments, where you would get a certain percentage on your own direct sales and then an override type of percentage when other affiliates came up and signed up through your site, then you can get an override on their sales as well.

Trying to match the reward to the action was the effort here. Where if somebody is bringing you eyeballs and exposure, that was worth something. If those eyeballs actually did something, like sign up for your newsletter, that was worth something more. If those eyeballs then moved to the point of purchasing one item, and actually moving through the sales process, that was one more reward. And then we heard a lot of discussions on the lifetime value of a customer, the on-going repeat sales business potential, and how some companies had been thinking through how they could get those on-going sales profits back to their affiliates as well. Really great discussions! I think what became really clear is that the industry is new and emerging and not only are the terms being defined but the revenue models are being defined, even as we speak.

The conference was well-attended, well-run, there were lots of great questions, all of the presentations were by merchants or people who provided the software solutions. All with a been-there, here's who we've done that type of focus. The exhibitors were kept to a minimum, so there were four exhibitors, three of them were providers of software solutions, Be Free, Link Share and Commission Junction, and the fourth exhibitor was ADNet and Declan Dunn, author of "The Complete Insider's Guide to Associate and Affiliate Programs." The software companies all had customers there and they were well represented and it was really fun for us to get to meet everybody.

One thing we noticed from Link Share is that their people are completely passionate and really involved in seeing the affiliate-type of programs mature. The Commission Junction people were kind of newer on the scene and just had a whole determined attitude of really setting up a lot of folks. The Be Free people were almost like a corporate machine - not to be ignored. All three of them provided great software, but from our viewpoint, none of them are really competitors and will all emerge as industry giants. The reason is, all of them have extreme focus on customer service, which we appreciated seeing.

ADNet was also an exhibitor and an announcement was made that a merger had happened between Declan Dunn's company, Web Success, and ADNet. ADNet added the strength of a promotion company combined with research, along with Declan's writing and guide. Also, copies of his book were given away and the sequel to the Insider's Guide was announced, which focuses on ways affiliates can maximize their success. This is part of a large-scale training effort on behalf of both companies. ADNet is positioned to be the support services company for all of the merchants and their affiliates. Some talks have been started.

This book is combined with ADNet's training system that has been put into place by some major ISPs, which gives the on-going motivation, education and training, and access to advertising services. Please visit the ActiveMarketplace for more information.

Rumor has it that IQPC (http://www.iqpc.com) is holding the second Beyond the Banner conference in May in the Chicago area. It should be interesting.

How to Get Your Affiliates Going

One of the most amazing percentages raised in this conference was the absolute lack of affiliates taking any sort of action after signing up. One prominent affiliate network admitted that 45% of its affiliates never did anything after signing up!

The real challenge to your affiliate network is to get people going in the right direction, to give them more than just a banner ad. Motivation is as critical as positioning the right ad. There's an old rule in sales: If you don't believe in what you are selling, neither will your clients.

At first glance, it may seem simple to blame this on the affiliates. After all, you gave them a banner ad. They should place it on their Web site. Instead of blaming anyone, why not take a scientific approach to your affiliate network with the following:

1. Set up advertising approaches the encourage participation; don't fall for the old banner ad shtick. Banner ads are a low percentage game and will make your affiliates disappointed.

2. Motivate your affiliates; set up an email follow up system that contacts them immediately, 3, 7, 14, and 21 days after they sign up. You can automate this. Give them suggestions and a path to follow.

3. You have 2-4 weeks to keep someone interested in your program; the first two weeks are crucial. It is human nature to immediately think a decision is a poor one. Counter this with encouragement, an email, a phone call, something to eliminate that feeling of being all alone with this challenge to make money as an affiliate. If you motivate them early, you will have better chances at increasing the lifetime value this affiliate brings to your network.

4. Have someone on your staff monitor the success of each affiliate. It will be easy to determine the few who are succeeding. Encourage them to participate more, and to develop repeat traffic at their Web Site to create repeat business through your affiliate program.

5. For those who do not generate traffic or sales, move them into a customer loyalty program. Give them a discount to buy continually from you. Mail them a small check in the first month to simply encourage them to succeed.

6. Keep it fun; have affiliate contests and give away prizes. Motivate your affiliate coaches in your business to profit when the affiliates profit. If your affiliates perceive this as a job, they will eventually get lazy and think of ways to do nothing, like any employee. Keep them driven as much as possible and reward the people in your business who must do this.

7. Use email for continual contact, and pick up the phone to make it personal.

8. Give them reasons to continue generating leads, and buying, from you. If only 20% of them will succeed, no matter what you do, why not encourage the rest to become customers?

9. Evaluate the numbers from your affiliate network and see how you can improve.

10. Most of all, watch your profit margins. Amazon.com is learning that it cannot increase profitability by losing money on every customer. Music and videos are low profit items; try to incorporate some high profit margin items as well.

The Four Best Ways to Market Your Affiliate Program

If you look around the Internet, you would think the only way to promote an affiliate program is via banner ads. Everyone creates banner ads and invites people to place these at their site.

You are posting advertising at someone else's site; it needs to be prominent, inviting, exciting, and much more than just a graphic.

I've seen great examples of banner ads that work, creating a clickthrough response and branding the company in the minds of its audience. Cory Rudl's Internet Marketing Center banners haven't changed in ages, and they don't need to. Anyone who knows Cory knows that he wouldn't keep them if they weren't working very well.

Yet for many affiliate programs, the banner ad is simply a poor form of advertising. It encourages a limited response, is stuck like a bad picture on the top or bottom of the screen, and does little if anything for the affiliate, or your network.

If you are going to use banner ads, be sure to drive them to one product page, or even better, to a sign up form where you can email them. These are the best methods to put banner ads into action.

Okay, so what works better than banner ads for affiliate network? Here's what I discovered at the conference:

1. Email/ezine promotions to a qualified list: Only a handful of affiliate networks understand the real power of the Internet. One of the funniest, common realizations at the conference was that customers do not buy until the third or fourth visit to a Web Site. Direct response marketing has been built on this fact for years, following up initial contacts with repeated messages inviting people to visit. Email is the best means to conduct this and to keep up with the volumes of email that come with a new affiliate program. For example, Weather.com talked of receiving 5,000 emails a week for their affiliate program. They could not keep up with the volume. If they installed an automated follow up system like Aweber, they could improve their results, automate sign-ups, and follow up.

   Yet the real power of email comes in the endorsed mailing. When an ezine or list has been developed, with a trust between the writer and the audience, the endorsement is gold. It moves people from being strangers to being introduced to you personally. The unfamiliar is replaced by a recommendation from someone they trust. Response rates to email offerings are much greater; a recent article about the December Internet retail push claimed a 300% increase in sales via email than via other methods. This is the hottest, unknown affiliate promotion available.

2. Text Links/Endorsement With Banner: Kimberly Lyons of PC World shared an excellent tip for increasing the response to her affiliate programs. PC World has an audience who buys online; she claimed over 90% of their audience have bought online. They are extremely selective with who they make their affiliate partners, for a good reason; they are good at selling advertising space, so little of this space is dead.

   When they do use affiliate networks, she favors a small banner ad that can site in a side bar of the page, or at least not dominate the page. To the right of the small banner "button" is text that describes the benefits behind clicking on that banner ad. The text is a link, the banner is a link, and by combining the visual with a short text description, they are able to group affiliate programs on a single Web Page. It is an extremely effective method of offering more than one product on a page, without overwhelming the visitor. Once again, words do the explaining that pictures can't, and a picture tells a thousand words. Together, they are a potent affiliate advertising tool.

3. Featured Product: An excellent method to increase affiliate leads is to offer a Web Page that acts as a featured product at the affiliate's Web Site. This can be a stand alone Web Page or one that merges in with Web Page content at the affiliate's site. The key is to focus on the product being sold, a one product offer that stands out from the rest of the page. This can be integrated into a site almost as a sponsorship, without the cost. For example, if a high traffic area of an affiliate's Web Site is available, encourage them to feature your product in that section alone. It is more effective for the affiliate to test response rates, and for the affiliate network it will result in more qualified leads.

   This approach basically eliminates the grouping of affiliate programs and encourages people to click on this important product, because it appears to be featured. The featured product enables you to gain exposure at the affiliate's site in a way that is perceived favorably by visitors.

4. Storefront: The best affiliate responses can come from a storefront integrated into another Web Site. This can be as simple as putting a logo graphic on top of the page with a return link to the affiliate's Web Site, so that the storefront appears to be an important part of the Web Site as a whole.

   Storefronts increase credibility by offering a selection of products in a single setting. The storefront should not be one of many at an affiliate's Web Site, but an integral part of their efforts. While this requires more work on the part of the affiliate network, the returns can be much greater. Popular portal sites use this strategy often, but by extending it to highly trafficked sites, you can increase branding and perceived value of what you offer.

   A good idea is to mix the text/banner ad approach in number 2 to a storefront, so you can offer multiple products. A good rule of thumb is not to offer more than 3-5 products at another Web Site; too many choices confuse the visitor.

   The four best ways to market your affiliate network are certainly not the only choices. Banner ads can still be an important part of what you do. Just make sure that your affiliate network does not fall into the assumption that banner ads are the only way to go.

5. Finally, the most glaring lack of focus in most affiliate networks is ad copy. Words are what motivate people to read, act, and buy. Without a good headline, testimonial, and ad copy, all your efforts will be hindered. Be sure that you look at the words you use in any of the four methods and find the ones that work best for you, and your affiliates. Adapt your words until you find the ones that pull the best.

As I like to say, there are two types of businesses online; those who test, and those who lose money. If you are not testing, counting, and quantifying your affiliate network efforts, you are missing most of the value...guaranteed.

Affiliate Acquisition, Retention, and Development

The most valuable lesson I learned at this conference came from Bill Lederer of Art.com (formerly known as Artuframe.com). He is the only one I met who actually set up a sales process that looked at the affiliate as a valuable asset in need of development.

Bill began this site a little over a year ago and his budget pointed him solely to using an affiliate network approach. He hired Mark Welch as a consultant to help him set up this site, an excellent choice for him to discover the best way to build this powerful network.

Working with Be Free as his affiliate software solution, Art.com focused on creating an integral network of affiliates. Acquisition of affiliates was the focus, but not solely in terms of bragging rights. It seems Bill used an ingenious approach to meeting places online, research, and creating a motivated affiliate support team to make his network flow.

His affiliates sign up for the program after being contacted and are checked to make sure that they have put the affiliate advertising at their site. Art.com gives them a choice of programs to install and support to overcome the initial confusion.

Most of all, the unique affiliate support team that Art.com employs benefit when the affiliate makes a sale. Each support member is given a certain number of affiliates to keep track of; they must make sure that the advertising is posted and check to see the results.

If there is little or no response to their efforts, the Art.com support member contacts the site to give them some ideas on generating more traffic, or better positioning the Art.com affiliate network at their site. In some cases, if all this seems fruitless, Art.com will suggest that the affiliate remove the program from their site.

The logic is quite simple; if it is not selling, why offer it? It can only create animosity and disappointment on the part of the affiliate, and is not generating sales. The key here is to remember that the Art.com support team earns more when their affiliates generate more sales. Bill Lederer put in incentives for both affiliates and his support team to make more sales.

Like any good sales force, this simple approach to affiliate acquisition, retention, and development is a critical component. The surprising thing to me is that Art.com is one of the only programs to actively promote and check up on its affiliates. They know who is selling, what is selling, and why.

It also doesn't take a huge staff to manage this; only a handful of people manage this network of over 1,000 affiliates. The use of email, telephone, and automated reporting make this network hum.

Small wonder why Art.com is one of the best players in the affiliate industry. It all comes down to your sales force and paying attention to them.

Long Term Value of the Affiliate and Customer Acquisition

Many affiliate networks accumulate great numbers of sites without helping them do anything to sell. In the early days, it seems to be a game of numbers that is quickly passing onto a new way of looking at the entire industry.

One question came up during a discussion about the long term value of a customer. It is still too early for most affiliate networks to really define what this value is. The long term value of a customer is the amount of purchases they make for the lifetime of buying from you.

This may seem to be an obvious question, but it becomes tricky when you don't know how the visitor gets back to your site, if they buy from a different affiliate site, or basically if you even track the record of your customer's buying behavior. Buying behavior is the key; most affiliate networks still focus on the first sale and ignore the residual sale, likely undermining the value of what they are offering.

Still the numbers coming up at this conference indicate that repeat business comes from the visitor coming to the actual Web Site instead of through the affiliate. While the determination of the long term value of a customer may be tricky to evaluate, what about the long term value of the affiliate?

How many sales do your affiliates generate in a year? How much per month? How many visitors do they send to your site in a year? In a month?

The long term value of an affiliate is a mixture of leads and sales generated. This value you can quantify, and if you find an affiliate who generates repeat business for you, it might be advantageous to encourage them to participate a bit more.

Most affiliate networks don't seem to mind the fact that most of their affiliates simply send them customers once, and the customer comes back to their Web Site the second time. Still the question of loyalty and of having a certain number of affiliates generate repeat business is important.

The long term value of an affiliate is part of your customer acquisition; in fact, if they do not generate sales (as likely 80% or more of your affiliates will not), why can't you turn them into customers as well, instead of ignoring them?

The numbers claimed by many affiliate networks are huge compared to the actual responses and sales they generate. Part of that is good for an affiliate network, a cheap form of advertising. Long term, however, we need to look at this issue and how it impacts the effectiveness of your sales force.

Be careful of looking at the short term benefit and ignoring the lack of interest people may give to your network in the future. It's all about making money, and in many cases saving money. If your affiliates fail to make sales for you, can they at least save money buying from you?

A simple question, and one not often considered; some might suggest that this would be abusing the affiliate process. But no matter what you do, the 80/20 rule applies; if you leave the 80 percent who don't sell alone, you are missing out on a possible customer. After all, they should sign up for your program because of some interest in what you sell.

Public Commission Statements, Ongoing Payment to Affiliates, and the Customer's Knowledge of Pricing
Are We Telling Them Too Much?

Visit discussion lists and affiliate sites online and you will find the question of repeat payments to affiliates coming up again and again. Some claim that affiliate networks are rip offs because they only pay you once for customers. Others say that the affiliate must do more than just generate a lead and wait for the cash to keep rolling in; after all, their effort ends with the first contact. If they do nothing to continue to market the program, why should they get paid?

The question of paying affiliates on an ongoing basis is an interesting challenge. Some markets bear this burden better, like cars. CarPrices.com pays its affiliates for up to a year by tracking a cookie. Yet cars offer more frequent sales than most commodities; if you buy a car, you need insurance. You need warranty help. You need repairs, information, and advice. It is an industry with a tremendous back end.

This kind of natural back end ties into the long term value of a customer. Automobile affiliate networks can naturally determine the long term value of a customer and can reward the affiliate on an ongoing basis. The first payment may be small, but overall the reward can be quite lucrative.

Compare that to a video being sold; the profit margin is absolutely small and paying an affiliate for repeat purchases would simply not fly. It would be too costly for the company to do that with a low profit margin item.

The question of whether or not to pay affiliates on an ongoing basis ties into a basic principle of sales; without motivation, you have a bunch of affiliates looking to do little work and get paid forever. It's like a job where you send one customer over, do nothing, and hope to keep getting paid. If the affiliate makes an effort to generate repeat business and promote your network, they should be rewarded.

But if you have set up a basic lead generating system and/or have a low profit margin item, it just doesn't make sense.

Which brings up the final challenge affiliate networks are really bringing to all of us; the customer is starting to know what they should really pay for a product. This has implications outside the Internet as well. Public commission systems inform the consumer of what they are really paying. Look at Amazon.com's inability to make money; it loses money on each transaction.

Only time will tell if the Internet's ability to educate consumers about pricing will really impact pricing significantly. Affiliate networks are providing a significant challenge to both online and offline retailers, certainly in the book market.

Are we all telling the consumer too much?