ISSUE 2 | FALL 2009 | REVENUE.MTHINK.

COM

Seasonal
Sunshine
Warm up chilly holiday sales!
Give online shoppers what
they really want: VALUE
CLAY SHIRKY TELLS WHY
IT’S GOOD TO BE BORING
HOW 400-PLUS NETWORKS
DIVIDE AND CONQUER
FLOGS, FARTICLES AND
YOUR LEGAL LIABILITIES

PLUS!
US! With this issue, the N
New
ew
Online Advertising Blue Book
Issue 2 – Fall 2009

Contents
Cover Story
Seasonal Sunshine 22
Warm up those chilly holiday sales by giving
consumers what they want and need: VALUE.
BY SUSAN KUCHINSKAS

The Interview:
Clay Shirky 32
Everybody’s favorite media professor
says we’re getting bored with new media.
And that’s a good thing for advertisers.
BY TOM MURPHY

The Right Niche 38

With over 400 ad networks, segmentation
has become a big part of successful
performance marketing campaigns.
BY SUSAN KUCHINSKAS

Editor’s Letter:
The Sun Shines Through 7

Newsworthy BY SOFIA D. MARIN

– Events 10
– Perform 12

2 revenuePERFORMANCE – ISSUE 2
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&217(176

Columnists

Clicking Through 9
The Great Divide
JAY WEINTRAUB

Manager’s Minute 17
Affiliate Program Multiplicity
EVGENII “GENO” PRUSSAKOV

Affiliate Corner 18
Pushing for Luxury
PARESH VADAVIA

Toolbox 21
First Class eMail
MIKE EVANS

By Design 29
Designing in a Recession
PEDRO SOSTRE

Affiliate Inbox 30
A Survival Guide for Networks
JIM LILLIG

Taxing Times 45
You Need a Friend
REBECCA MADIGAN

Legal Web 52
Flogs and Farticles
DAVID O. KLEIN AND
JONATHAN E. TURCO

4 revenuePERFORMANCE – ISSUE 2
(GLWRU·V/HWWHU
The Sun Shines Through
H
ave you driven down Main Street
lately? If your town is anything like
mine, you’re seeing a lot of empty
storefronts with “For Lease” signs in the
window. My favorite bagel shop is gone af-
ter more than 20 years in one location. A hot
new restaurant closed before I could even
try it. Even a thrift store shut down after de-
cades of service to a local charity. How bad is
it when people can’t afford second-hand stuff
at bargain prices?
It’s a tough time for small business people,
where cash flow gets tricky when vendors
pay late and customers push back on pricing.
Merchants slash prices to attract customers,
but that narrows their profit margins, effec-
tively adding to the economic pressure. And
despite recent upticks in economic indica-
tors, it looks like this holiday season will be
another downer for consumer spending.
All this means, of course, it’s a perfect op-
portunity for smart online marketers.
Online sales are rising as shoppers save
gas and shoe leather by seeking out the best
values on the Web. Performance marketing
tools and techniques get better every single
day. There are now more than 400 ad net-
works, ranging from tiny mom-and-pop op-
erations to companies listed in the Inc 500.
And performance marketing veterans seem
more committed than ever to stomping out
the ethical lapses that hurt their industry.
Now it’s up to you. Whether you’re an affil-
iate, network, agency or merchant, this sea-
son will test your ingenuity, business savvy,
ethics, design skills and guts. If you fail to rise
to the challenge, you’ll probably have an aw-
ful season. If you make the right moves, you’ll
seize the opportunity and charge ahead.
Revenue Performance is here to help, with a
holiday sampler for stories and columns that
can help anyone on almost any level of the
performance marketing industry.
First, please take note of our pull-out sup-
plement, the Online Advertising Blue Book.
The Blue Book is designed to help smart affili-
ates connect with the right networks. Eric
Reyes, who has written many of our best
feature stories in the past, edited the first is-
sue of this new magazine for our publisher,
mThink.
We’re very pleased to welcome back Se-
nior Writer Susan Kuchinskas, who was
the founding managing editor of Revenue five
years ago. She’s contributed two superb sto-
ries for this issue, including our cover story,
Seasonal Sunshine, which offers specific strat-
egies for boosting clickthroughs and conver-
sions in the current environment. Kuchinskas
has also analyzed the increasingly segmented
world of ad networks in her second feature
for this issue, providing a much-needed map
through an ever-thicker maze.
In our feature interview, media guru Clay
Shirky talks about the evolution of new me-
dia, including performance advertising, from
being quirky and cool to “boring” and fully
integrated into our lives. You may be sur-
prised to learn why boring is good.
Our columnists have
still more ideas. Design-
er Pedro Sostre goes
against the grain by talking
about how product features
must outweigh aesthetic
consideration when design-
ing in a recession. Affiliate
manager Paresh Vadavia
tells how to sell luxury goods
when consumers are pinch-
ing pennies. Jim Lillig ex-
plains which networks will be
best-positioned to avoid the
inevitable shakeout. Rebecca
Madigan updates what the Performance
Marketing Alliance is doing to stop taxation
of affiliates.
New to this issue are columnists Mike
Evans, who reviews some popular mailing
programs, Jay Weintraub, who opines about
ethics in continuity programs, attorney Da-
vid Klein, who discusses proposed regula-
tions affecting fake blogs and articles, and
Geno Prussakov, who outlines the risks
when affiliates sign up for multiple networks.
We can’t do much about the economy. But
we hope this issue brings a little sunshine
into your holiday season. Now, if I could only
figure out where to get a good bagel.
Cheers!
© Rastudio | Dreamstime.com
Tom Murphy,
Editor
revenue.mThink.com 7
 &2175,%87256
SUPER-AFFILIATE INSIGHTS FOR
ONLINE PUBLISHERS AND ADVERTISERS
Susan Kuchinskas helped Another new face at RP,
start Revenue magazine Geno Prussakov writes, EDITOR
more than five years ago blogs, speaks and consults Tom Murphy

as the managing editor. about affiliate marketing ART DIRECTOR

She’s written extensively and program management. David Witcomb
about technology and
NEWS EDITOR
online marketing since Sofia Marin
then for OMMA and other David O. Klein is a partner,
SENIOR WRITER
publishers. In this issue, she and Jonathan E. Turco is an Susan Kuchinskas
wrote our cover story about associate, with the New York
how to increase sales in law firm of Klein Zelman CONTRIBUTING WRITERS
Mike Evans, David O. Klein, Jim Lillig,
tough economic times and Rothermel where they Rebecca Madigan, Evgenii “Geno” Prussakov,
a second story on the rapid practice Internet marketing Pedro Sostre, Jonathan E. Turco,
Paresh Vadavia, Jay Weintraub
segmentation of online law. This is their debut at
audiences by ad networks. Revenue Performance. PROOFREADER
Marianne Rogoff

To advertise, subscribe or obtain reprints, call 415-371-8800,

or visit: revenue.mThink.com
News Editor Sofia Marin, Rebecca Madigan started
who also edits our Events the Performance Marketing Revenue Performance is published quarterly by mThink
55 New Montgomery, Suite 216
page, worked for The Alliance to help raise the San Francisco, CA 94105

Philadelphia Tribune, visibility and credibility of

Feminist Review and other performance marketers. Knowledge With Passion: mThink publishes
publications before joining thought leadership focused on the convergence
of technology and business.
Revenue Performance.
Pedro Sostre is pioneering CHAIRMAN AND CEO
a concept of “conversion Chris Trayhorn

Jay Weintraub is one of design” through his role as ADVERTISING/SALES DIRECTOR

online marketing’s best- president of the design firm Tobias Siegel
known and best-informed Sostre & Associates.
ACCOUNT MANAGER
bloggers. In his spare Kelly Joseph Lemos
time, he organizes the
BLUE BOOK EDITOR
LeadsCon conferences on Mike Evans manages the Eric Reyes
lead generation. This is his 20,000-member affiliate
first column for Revenue program at the adult site MARKETING DIRECTOR
Yvonne Schellerup
Performance. WebCams.com. He’s worked
in sales for two decades. IT MANAGER
Sterling Phillips
This is his first column for
Paresh Vadavia , a veteran Revenue Performance. COMPTROLLER
affiliate manager, has just Julienne Riveong
launched his own agency
for outsourcing program Jim Lillig has been in While every effort has been made to ensure the accuracy of the
content of this publication, the publisher will accept no responsibility
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or otherwise, suffered as a result of any material published here. The
century, including 12 years information published in Revenue Performance is not intended as a
substitute for legal, accounting, tax or other professional advice. The
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The name “Revenue Performance” and the phrase “Super-Affiliate
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In such cases no promotion or endorsement of those sites should be inferred or implied – our editorial coverage and/or advertising
relates only to the affiliate program itself. Revenue Performance magazine and revenue.mThink.com do not accept advertising that ISSN 1549-7615
promotes online gambling.

8 revenuePERFORMANCE – ISSUE 2
&OLFNLQJ7KURXJK– Jay Weintraub
The Great Divide
O
ver the last five years, almost all
of the topics I’ve written about
focus on some aspect of perfor-
mance-based advertising. My fascina-
tion with the subject stems from a desire
to understand the role performance-
based ads play in the broader ecosystem
for advertisers, merchants and affiliates.
What I’ve come to believe is that the
performance marketing world has two
very different sides. I’m reminded of a
well-loved song from the musical Av-
enue Q, “The Internet Is for Porn.” We
could talk about the divide between
mainstream advertising and adult ads,
but it’s the divide taking place inside
of mainstream advertising that has me
thinking “the Internet is for fraud.”
From an advertiser’s perspective, the
idea of paying only when an acquisi-
tion occurs almost sells itself, especially
when that advertiser has a product or
service to which they can attach a spe-
cific metric. If you are or have ever been
an advertiser who has tried the perfor-
mance-based marketing channel, you
have probably run into one of the chief
problems – getting sales. It is one thing
to find a company or platform that will
charge you only on a cost-per-acqui-
sition model, but it is quite another to
find one that can actually deliver traffic.
And, this is what has lead to the divide in
performance-based advertising.
I’ll give a silly but real example involv-
ing a company that produces a sugar-free
gum without any artificial sweeteners.
Selling gum online isn’t easy because
you can’t make much money selling
packs for $1.50. You can’t scale that busi-
ness and you certainly can’t afford to ad-
vertise widely. Traditional gum makers
can afford broadcast media because of
their retail presence, but a mostly online
seller can’t. So, what are their options,
especially if they want to engage in a
performance-based approach?
They can set up a percentage-of-sale
program, and there will be some sites
with appropriate traffic, but is that re-
ally going to drive volume in scale? They
could do an eBay style approach, paying
a flat fee for a new customer, but that
approach requires an incredibly sophis-
ticated understanding of a user’s lifetime
value. And, it has taken eBay years to
come up with their current system. That
leaves us with one other model, and it is
the Pandora’s box of performance-based
online advertising – continuity.
Many associate continuity programs
with things we don’t want, i.e., services
we sign up for and forget to cancel. Yet
continuity programs also may include
any number of services we use actively,
from offline entities such as gyms to on-
line services like Netflix to GoToMyPC.
Yes, there exists a multibillion-dollar eco-
system of continuity that threatens all of
performance-based advertising, but the
economics of continuity programs make
it possible for companies that couldn’t
scale otherwise to gain a large number
of customers. Like search engine market-
ing, it contains fraud. However, the fraud
here is much more nefarious and much
more difficult to extinguish.
Two Types of Fraud
Online performance-based marketing
fraud falls into two distinct types: mar-
keting and consumer fraud. Marketing
fraud involves an ad running in an un-
approved and more importantly decep-
tive fashion. Consumer fraud involves
people buying things they didn’t want.
To understand these types of fraud
better, we must also understand how
those with traffic make money online
today. There are also two types of pub-
lishers: the smaller affiliate with a site
they own who makes money by linking
to merchants, and the larger affiliate
who also makes a fair share of money
by integrating performance-based ads.
Combined, they include a large but
not all-encompassing sample of perfor-
mance-based marketers.
The problems arise with those who
don’t look towards performance-based
advertisers as a way to monetize their
site. They look towards performance-
based ads as a means to monetize traffic
that others own. This group, known as
arbitrageurs, looks at traffic first and at
ads as a means for buying traffic profit-
ably. The classic example is one who
buys traffic on a click basis but makes
money on a per-action basis. The major-
ity of this bunch (those making the mon-
ey) don’t really care about the products
they promote. Whereas an affiliate who
owns their own property might worry
whether a certain advertiser is not right
for their audience, the arbitrageur only
worries about converting the customer
to cover the media costs.
The Wayward Path
Arbitrage online, like continuity, isn’t
inherently bad. The pursuit of money,
though, can and does lead people astray,
as they put the desire for profit above
any awareness of the advertiser or user.
For anyone familiar with the lawsuits by
Oprah, Dr. Oz, and the State of Illinois,
nothing illustrates this better than the
marketing fraud via fake blogs that trig-
gered the suit. How fake blogs lead to
conversions would be genius were it not
so insidious.
The same goes for those perpetrating
consumer fraud by profiting from cash-
back sites. This isn’t the rogue individ-
ual but highly technical and organized
groups that have specialized in fleecing
the second-tier sites that share the cost
per acquisition with the user. The prob-
lem with both types of fraud is that they
don’t garner the type of attention that
click fraud does. Most advertisers don’t
really understand the magnitude of the
fraud problem – hundreds of millions of
dollars per year with multiples more in
potential brand damage. They also don’t
know how to properly guard against it.
Unfortunately, the amount of fraud
is only increasing, making it harder
and harder for new entrants to succeed
online. The divide in performance ad-
vertising will widen until we reach a
point where new dollars from the out-
side dwindle. Operating in this world is
more and more like swimming with the
sharks. It’s possible, but it means having
an understanding of the risks as opposed
to just focusing on the upside. No one
has your best interest in mind like you
do. |rP
JAY WEINTRAUB is an online ad strategist
who writes two popular industry blogs. He also
runs LeadsCon, the largest conference in the
lead generation industry area.
revenue.mThink.com 9
(YHQWV
If you find yourself itching to travel, here’s a list of events that might pique
your interest and hone your skills:
XOMMA – New York, Park City
On Nov. 2, OMMA Performance will dive into performance and on-
line lead generation tools and strategies for marketers, advertisers,
publishers and third-party vendors. The next day, join interactive
media and vertical ad networks at the OMMA Adnets conference in
New York to discuss where ad targeting is heading and if vertical ad
networks will survive. Brand marketers and agency decision makers
will convene in Utah on Dec. 2 for the Search Insider Summit to share
cutting-edge information through general sessions, keynotes, re-
search presentations, case studies and more.
XPPC Summit – Chicago
Learn how to better manage your PPC campaigns at the Chicago
PPC Summit Nov. 4-5. Designed as a “How To” workshop, this year’s
summit aims to teach advertisers how to spend less money more ef-
fectively and with better results. Find out how experts manage their
campaigns and learn what you need to know to maximize your pay-
per-click opportunities, out-perform your competitors and build your
business.
Xad:tech – New York, Beijing
Learn about the tools and techniques you need to succeed in a
changing digital world at ad:tech. On Nov. 4-6, ad:tech New York will
feature keynote speakers Sir Martin Sorrell, Chief Executive of WPP
and Wikipedia founder Jimmy Wales. The interactive advertising and
technology conference will head to Beijing Nov. 17-18. The show will
present panel discussions, hands-on workshops and a comprehensive
exhibit hall.
XPubCon West 2009 – Las Vegas
PubCon travels west to Las Vegas Nov. 10-13. The six-track educational
conference is designed for experienced Web professionals and website
owners and will cover topics including SEO/SEM, Web 2.0, network
marketing, affiliates and domain management. The keynote speech
will feature vBulletin parent company CEO Bob Brisco.
XeMetrics Summit Mexico – Mexico City
Find out what it takes to improve your website through marketing
optimization and Web analytics – in Mexico! Get tips from industry
leaders on how to optimize your marketing campaigns, communica-
tions, content and user experience. On Nov. 11, eMetrics Marketing
Optimization Summit will offer workshops, educational sessions,
case studies, an expo and networking opportunities.
10 revenuePERFORMANCE – ISSUE 2
XStreaming Media West – San Jose
Covering both the business of online video and the technology of
streaming, downloading, mobile video and more, Streaming Media
West will take place in San Jose Nov. 17-19. Over 100 speakers from the
online video industry will discuss corporate and consumer business,
technology, content issues in the enterprise and advertising at this
one-of-a-kind show.
XOnline Marketing Masterclass – London
Learn the best practices in online marketing across the customer
acquisition, conversion and retention cycle. Expert practitioners
will reveal what works best and teach how to measure and optimize
performance. The one-day class will take place Nov. 18 at the London
Congress Centre.
XAffilicon Far East – Beijing
Looking to extend your global reach? Affilicon is an affiliate market-
ing conference that opens a window into the Chinese and South East
Asian markets. Network with highly successful international affiliates,
meet potential business partners and learn the latest trends in global
affiliate marketing on Nov. 19-20.
XSearch Engine Strategies – Chicago
Your customers are online, but can they find your website? Now in its
11th year, the Midwest’s chief search marketing conference and expo
will be jam-packed with over 60 sessions covering PPC management,
Search Engine Optimization, social media, link building, duplicate
content, keyword research and more. The conference will take place
Dec. 7-10 at the Hilton Chicago.
XAffiliate Summit West – Las Vegas
Start the year off by joining industry professionals Jan. 17-19 in Las Ve-
gas for the best-known affiliate marketing conference. Affiliate Sum-
mit West offers a three-day conference featuring an exhibit hall with
affiliate merchants, vendors and networks, as well as multiple tracks
of educational sessions covering the latest trends and information
from affiliate marketing experts. Keynote speakers include Dr. Robert
Cialdini, expert on the psychology of influence, and Internet publish-
ing and marketing veteran Brian Clark.
XLinkShare Symposium West – San Francisco
Take advantage of this opportunity to network with advertisers and
publishers, attract new business partners, and strengthen your com-
petitive position. Learn from industry thought leaders and make deals
at the 2010 LinkShare Symposium West Jan. 28 in San Francisco.
© Viorel_dud... | Dreamstime.com
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 3HUIRUP– Sofia D. Marin
Protecting Consumer Privacy
Legislators, online marketers and consumer privacy groups
still struggle over the creation of mutually acceptable on-
line privacy laws – although all see the need for some level
of protection. A coalition of 10 consumer advocates and
privacy groups called on Congress to limit companies’ abil-
ity to track Web users and serve them targeted ads. Two
key proposals under debate are to establish a Do-Not-Track
registry similar to the Do-Not-Call registry, and imposing a
24-hour limit to holding consumer data. While the propos-
als are likely to draw protests from online marketers, the
fact that privacy groups are allowing behavioral targeting
for any period of time – even just 24 hours – represents a
departure from the staunch standpoint that tracking and
targeting always requires opt-in consent. The coalition’s
proposals also aim to protect American consumers in on-
line and mobile channels by bringing consumer data collec-
tion under the authority of the Federal Trade Commission.
Rick Boucher (D-Va.) is expected to introduce new privacy
legislation late this year.
Microsoft Adds Ad Preview
Microsoft’s adCenter has added a new tool that lets you
preview your ads while avoiding accidental clicks and
unnecessary impressions. The Ad Preview Tool helps ad-
Center advertisers confirm that their search ad is appear-
ing. While managing campaigns, users can access the Ad
Preview Tool directly in adCenter and preview their ads
as they would appear on Bing.com.
Opting Out on Ads
AOL has agreed to notify all subscribers about how to
opt out of email footer advertisements. The change in
course comes after the filing of two class-action lawsuits,
one of which alleged the ads in email messages violated
a federal privacy law. AOL began inserting ads in email
footers more than three years ago. However, in April
2008, the company quietly allowed paying subscribers
to opt out of the ads. Now, after settling the
lawsuits with a $110,000 donation to charity,
AOL has agreed to proactively inform
users on how to opt out of the
ads. Tricia Primrose, AOL’s
executive vice president
for corporate communica-
tions, said the decision
to allow all users to avoid
the ads reflects the new
management team’s com-
mitment to offering users a
good experience.
© Head-off | Dreamstime.com
12 revenuePERFORMANCE – ISSUE 2
No-Keyword
Search
Imagine paid search without keywords. Nick Fox,
Google’s business product management director for
AdWords, speculated during a keynote address at the
San Jose Search Engine Strategies show that no-keyword
search could become a reality within the next five to 10
years. Increased user sophistication in searches, longer
query length and unique search terms are just a few
reasons why keywords may no longer be essential. Ac-
cording to Google, 20 to 25 percent of search queries
in the last six months were new queries. Additionally, a
Hitwise study reveals that the number of five-plus word
search queries increased by 10 percent in the past year,
while two-word search queries decreased by 5 percent.
The changing landscape has many advertisers asking
whether their skills should be measured based on pains-
taking attention to long query keyword detail. However,
a no-keyword search could spell out advantages for ad-
vertisers. Advertisers would have an opportunity to bet-
ter connect with searchers on natural language queries,
and could better connect with consumers to capitalize
on all relevant advertising opportunities. PPC advertis-
ing campaigns could also be much more efficient without
a keyword research component. We’ll see how Google
tries to make it work.
© Marekulias... | Dreamstime.com
Face Time on Facebook
Social networking sites now account for one out of every
five ads people view online, according to a recent com-
Score study. MySpace and Facebook were the top online
display ad publishers, delivering more than 80 percent
of ads among sites in the social networking category. It’s
no wonder. The rise in popularity of social networking
sites means Internet users are spending a large portion
of their time on these sites. Meanwhile, affiliates are still
figuring out the best ways to use low-cost ads to optimize
access to highly targeted audiences. “As social networking
sites innovate on their existing ad offerings, the category
should continue to grow in ad volume, while CPMs could
also increase if the sites can demonstrate a high campaign
ROI,” said comScore senior vice president Jeff Hackett.
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3HUIRUP
Tighter Tracking Restrictions
Online businesses may have to be even more careful
about tracking and consumer privacy. In a case closely
observed by privacy advocates and behavioral target-
ing executives, the Federal Trade Commission gave
final approval to a settlement with Sears Holdings Man-
agement Corp. about tracking software. The settlement
requires Sears destroy all data it collected from online
users who downloaded tracking software it distributed
between April 2007 and January 2008. While Sears
didn’t admit to wrongdoing or agree to pay any mon-
etary damages, it promised to “clearly and prominently”
notify Web users about any tracking applications in the
future. In the company’s market research program, us-
ers were paid $10 to download tracking software that
would monitor their Web activity. While many in the
marketing community insist the opt-in email solicita-
tion is commonplace and legally valid, the FTC cen-
sured Sears, alleging it did not adequately convey that
the program would “monitor nearly all of the Internet
behavior that occurs on consumers’ computers.” The
FTC crackdown on potential online privacy violations
will keep behavioral targeters on their toes and could
set a new disclosure standard.
m-Commerce
With an estimated 71 percent of teens now owning
mobile phones and using browsing functions more
than adults, it’s no surprise that teen retailers like
American Eagle Outfitters are scurrying to create
mobile commerce divisions. While still in its nascent
stages, m-commerce should give a significant boost
to companies who build a mobile strategy that ef-
fectively interacts with their customer base. However,
it may be too soon to tell. According to Forrester Re-
search, while about 52 percent of Web
buyers (consumers who’ve
made purchases online)
have cell phones with
Web-enabled fea-
tures, only about 14
percent have ever
used their phones
to make a purchase
without speaking
to anyone. Most of
those purchases are for
online content for the
phone, such as games or
ringtones. Only 5 percent
purchased clothing.
© Valuavital... | Dreamstime.com
14 revenuePERFORMANCE – ISSUE 2
Media Consumption on the Rise
Americans are consuming more media than ever with
huge jumps seen in mobile and online video viewing,
according to data from The Nielsen Company’s “Three
Screen Report.” Mobile video viewing increased by 70
percent over last year with over 15 million Americans
saying they watched mobile video in the second quar-
ter of 2009. Online video consumption also continues
to rise with a 46 percent increase in viewership com-
pared to last year. At 83 percent, short-form video
(like YouTube clips) still makes up the biggest share of
online video viewing. Name-brand TV network con-
tent comprises the majority of mobile video viewing.
Adults 18 to 24 lead the pack, watching more than 5
hours of online video each month. But the surge in
online and mobile media consumption hasn’t been
at the cost of TV viewership. Nielson data shows 57
percent of consumers with Internet access at home
watch TV and go online simultaneously at least once
a month. Given the convergence taking place, those
who look at content holisti-
cally and disseminate their
brand message across the
three screens will have
the greatest advantage.
That will require high-
quality content that
can traverse
online, mo-
bile and TV
© Gpalmer | Dreamstime.com
screens.
Impulse Buys
Smartphone users are open to receiving targeted
advertising on their mobile devices, with certain
types of ads working better than others. According
to Compete’s quarterly “Smartphone Intelligence”
survey, nearly one-third of all smartphone owners are
comfortable or very comfortable receiving targeted
marketing on their device. Of these, nearly half are re-
ceptive to location-based ad offers at restaurants and
45 percent of respondents said they would use mobile
grocery coupons. If cell phone users find your ads use-
ful, you will have an opportunity to target consumers
the moment they are making purchasing decisions.
Conversely, if your ads are not helpful they could be
quickly tuned out as a nuisance.
 DGSHULR
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$SDUWQHUVKLSZKHUHDVLQJOHKDQGVKDNHVHQGV\RXUDGYHUWLVLQJ
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0HPROLQN,QFDQG&3$6WRUPDUHQRZ$GSHULR
 3HUIRUP
Google on Display
So, Google has joined the display ad game. In a bid to
duplicate its search-advertising success in the display
ad market, Google launched its much-anticipated au-
tomated ad exchange in September. Google’s Double-
Click Ad Exchange works much like a stock market. It
offers a real-time, automated auction system where
ad networks and publishers can post their ad inven-
tory to auction while other networks and publishers
can bid on and buy specific kinds of inventory.
Ad Exchange is a rebuild of DoubleClick’s old
exchange using Google technology. According to
Google executives, the new system will greatly sim-
plify the process of buying and selling display ad-
vertising space, allowing many more publishers and
advertisers to enter the display ad market. “The ob-
jective from the outset is to grow the display adver-
tising pie for everybody,” said Neal Mohan, Google’s
vice president for product management. In fact, the
new system will automatically allow hundreds of
thousands of advertisers and publishers who now use
Google’s AdWords and AdSense systems to run their
ads and ad space through the exchange.
But Google’s entrance into the business could
shake up the market. Up to now, Yahoo’s Right Media
has led the online display-ad world; Google’s Ad Ex-
change could come to dominate the market over time.
Some industry executives assert that the DoubleClick
exchange will give advertisers more flexibility than
Yahoo’s, helping marketers to more precisely target
the audience their ads are shown to and monitor the
results. While Google says ad inventory available in
the system will reach 76 percent of U.S. audiences
and 73 percent of international audiences, time will
tell how effective Google’s display ads will be.
New CEO in SEO
Search engine marketing firm and SEO 2.0 pioneer Rele-
vant Searches picked Maury Domengeaux for the CEO’s
chair. In addition to his career in search marketing,
Domengeaux has more than 20 years of experience in
venture capital, executive management, high-technolo-
gy development and marketing. Domengeaux has held
executive management positions in both private and
public companies that include Rivio, Hewlett-Packard,
Iomega Corporation and Quantum.
16 revenuePERFORMANCE – ISSUE 2
Germany Joins the Google War
First, Google Books came under fire from three U.S.-
based companies. They warned Google’s plan to digi-
tize millions of books and post them online could give
the company an exclusive license to profit from millions
of texts. Now, Germany has taken up the fight. In a U.S.
court filing, the German government said Google’s plan
would violate the country’s copyright law while having
an international impact on user privacy protections and
the rights of German authors. While some believe the
digitization of books would offer more content to an in-
creasing number of consumers, others argue Google is
going too far. For its part, Google says it will allow rivals
to sell access to the digi-books, but that’s done little to
appease critics. Critics fear the deal would give Google
the unchecked ability to set prices for libraries once
books are scanned and online. Time will tell whether
Germany’s ongoing efforts will thwart a Google book
deal with the European Union.
Solar Marketing Power
With all the talk about going so-
lar, there’s not much to show
for it. While solar technol-
ogy is expected to play a
major role in the U.S. re-
newable energy program,
investment and installa-
tions are proceeding at a
snail’s pace. According to
a study by Clean Energy
Group, improved marketing
initiatives will be fundamental
to expanding consumer interest
in solar energy. Educational web-
sites, partnerships with local builders
and working with celebrities are some
of the marketing tactics solar companies
intend to employ. The group is encourag-
ing solar marketers to connect with con-
sumers by using marketing messages that
emphasize the value and financial benefits
of the alternative technology. Nearly half of
consumers cite initial out-of-pock-
et costs as the main barrier
to installing solar energy
© Galleria | Dreamstime.com
systems in their homes.
The findings have fueled
solar energy companies to
transform their marketing
campaigns.
0DQDJHU·V0LQXWH– Evgenii “Geno” Prussakov
Affiliate Program Multiplicity
O
n various stages of their involve-
ment with the affiliate market-
ing channel, merchants look in
the direction of launching affiliate pro-
grams for the same products on multiple
networks. The most common reasoning
for this being that by so doing they will
expand their affiliate reach, significantly
improving chances of recruiting power-
ful affiliates across different networks.
Such an approach is fueled by two
main misconceptions. First, they believe
affiliate networks play a significant role
in affiliate recruitment. Second, they
think there are different superaffiliates
on different networks.
As a rule, affiliate networks don’t pro-
vide merchants with affiliate recruit-
ment services – at least, not by default.
While many networks do offer their
advertisers opportunities and tools to
recruit the network-based affiliates, they
don’t handle the recruitment campaigns
for merchants.
Therefore, in the majority of cases,
joining an affiliate network doesn’t
equate to tapping into the network’s re-
sources for affiliate recruitment.
And it’s important to underscore that
serious affiliates would normally have
active accounts with several major af-
filiate networks. When they don’t, it’s
not problematic for any affiliate to join
a new network. If and when the mer-
chant’s proposition is truly attractive
and fits into an individual affiliate’s
sphere of interests, the latter will likely
consider joining a new affiliate network.
Finally, I must warn merchants from
presupposing that once they have started
a program on an affiliate network, loaded
their TOS, email templates, creatives and
product feed, they can just sit back, relax
and watch the program self-develop.
There is no such thing as auto-piloted
marketing. In fact, by running an af-
filiate program in such a manner, mer-
chants open the program up to affiliates
that can hurt the development of the
program, hindering the sign-up of new
affiliates by their very presence in the
program. I call this a phenomenon of
merchant naïveté.
Ecological naïveté is a tendency of
animal species living on isolated islands
to lose both wariness of potential preda-
tors, and defensive behaviors to stand
against the threats they may impose. By
analogy, I use the term merchant naïveté
to characterize advertisers that start/run
their affiliate programs first, without
any clearly outlined terms of service (na-
ïvely entrusting the promotion of their
brand to whomever decides to join their
program) and second, without any affili-
ate program manager to actually manage
the program (naïvely presupposing that
it is the affiliate network’s responsibility
to manage it).
Both of these facts can (and often do)
lead to disaster. The affiliate program
then becomes vulnerable to an array of
affiliates who specifically hunt for such
merchants, and I will illustrate this in a
bit more detail in the following.
Bad Affiliates
Now that we have discussed the ques-
tion of affiliate recruitment/manage-
ment and the affiliate networks’ (mini-
mal) role in it, it’s important to look into
something that I believe to be the single
most problematic thing about running
an affiliate program on multiple net-
works.
While the potential conflicts in the
mechanisms of tracking and reporting
are resolvable, there’s another factor
that can only be dealt with if an affiliate
program is being run by a dedicated and
knowledgeable affiliate program man-
ager. I am referring back to the problem
of unethical affiliate behavior.
The more widely spread forms of it
are: affiliate parasitism through adware,
toolbars, and other similar download-
able software; forced clicks / cookie
stuffing; stealing coupons exclusive to
individual affiliates; and violating the
merchant’s paid search restrictions (or
when the merchant has not listed any,
bidding exclusively on the merchant’s
trademarks, domain name(s), and ev-
ery possible misspelling and variation
of them).
Let’s look at an example. When a
merchant runs a program on affiliate
networks A and B, and Network B al-
lows for any type of unethical affiliate
behavior, both Network A and Network
B affiliates suffer. The reason for this is
the “last cookie wins” rule, which is still
the prevailing method of attributing af-
filiate commissions. In dual network
scenarios this essentially means that af-
filiates are competing with each other
not only within one network, but across
all networks on which the merchant has
chosen to run their affiliate program. If,
on either of the two networks, there are
affiliates who are employing unethical
methods, they negatively affect affiliates
on both networks.
Rotten Apple
Additionally, regardless of Network
A’s ethical stance, there is practically
nothing that the network can do to pre-
vent the unethical affiliate behavior of
a Network B affiliate, which affects the
revenue of Network A’s affiliates as well.
Unless the merchant/affiliate program
manager of the program that is run on
both networks is ethical, collaborative
and willing to police and weed out the
unethical affiliates from Network B, the
problematic affiliate will hurt all.
The sad reality is that in many in-
stances both affiliate program managers
and affiliate networks – being financial-
ly stimulated by the quick results that
some of the unethical affiliate practices
can yield – choose to keep the unethical
affiliates in the program, thereby hurt-
ing the overall development of the larger
affiliate campaign.
The bottom line is that there is noth-
ing inherently wrong in running an af-
filiate campaign on two or more affiliate
networks. It is, nevertheless, imperative
for the advertisers to clearly understand
the risks and threats potentially involved
in running such campaigns.
In the majority of cases I advocate a sin-
gle affiliate platform approach. If, how-
ever, a merchant decides to explore the
opportunities beyond one network, it’s
important to be cognizant of the threats
and practice a proactive and preventive
affiliate program management. |rP
EVGENII “GENO” PRUSSAKOV is an author,
blogger, speaker and consultant in affiliate
marketing and affiliate program management.
revenue.mThink.com 17
 $IILOLDWH&RUQHU– Paresh Vadavia
Pushing for Luxury
J
udging by the way our economy has
plummeted in the last year, it seems
the 2009 holiday season does not
bode well for retailers – online or off.
Tens of thousands of people are still get-
ting laid off every week, the job market
simply won’t do us the kindness of open-
ing up, and consumers are squeezing pen-
nies so hard that Lincoln feels their pain.
Given this collective reluctance to
spend money on anything but essentials,
where does that leave online luxury re-
tailers? Better yet, where does that leave
their affiliates?
I recently launched my own affiliate
management agency to help such online
retailers increase their affiliate sales. I
have gained valuable knowledge and expe-
rience in the industry over the years, nota-
bly during the time I spent managing the
affiliate program for two online fine jew-
elry retailers: Ice.com and Diamond.com.
Deals and Steals
While I was at Commission Junctions’
CJU conference in Santa Barbara re-
cently, I spoke to several publishers who
were all singing the same song: there is
a clear decline in sales for luxury goods.
But the fact of the matter is, even in
this economy, no consumer wants to
give up their plush lifestyle; they just
want to pay less for it. To put it simply:
today’s consumer is out for a deal like a
shark is out for blood – and the holiday
season will be no exception.
Luxury retailers have every reason to
push discounts and special sales in these
precarious circumstances. So make the
best of this environment to mold your
affiliate promotions into something
from which you can benefit.
© Frenta | Dreamstime.com
18
Think Outside the Box
My rule of thumb: you never know
until you ask. Contact your affiliate
managers and seek out ways of adjust-
ing the rules of the game. For instance,
propose to reduce your commission on
a given product in exchange for an in-
crease on the item’s discount.
During key seasons at Ice.com like
Christmas, Valentine’s Day and Mother’s
Day, I would bring down certain pub-
lishers’ commissions from 15 percent
to 5 percent on select jewelry items
and then grant them a reduction in the
item’s sale price, making sure it still had
a reasonable margin. This gave advertis-
ers an exclusive discount on select prod-
ucts, allowing them to shine in the face
of their competitors.
And while their commissions weren’t
as strong, the higher discounts generat-
ed more sales than if the items had been
at their regular price.
Keep in mind that this may be a hard
sell for your affiliate managers, who will
most likely have to cater to your request
by creating a new commission term for
that one item, customizing a link for it
and producing a unique coupon to ac-
commodate the special offer.
You must convince them that they will
gain from this out-of-the-box thinking
(and added complications). My sugges-
tion would be to introduce a “Deal of the
Day” kind of offer on your homepage that
will create a recurring sense of urgency
for potential customers visiting the site,
and consequently drive more sales.
Again, for every item that appears as a
deal of the day, you take a hit on your
commission in return for the low-
est possible price. Re-
member: more sales at a lower profit are
better than no sales at all.
Read ’em and Reap
Affiliate newsletters are excellent
tools that you have at your disposal,
so use them. I realize certain affiliate
network providers like LinkShare have
designated pages where retailers can in-
form publishers about the goings-on of
their company; but not all of them do.
So it’s imperative that you read what
affiliate managers have to say about
their upcoming promotions in the news-
letters they fire your way: they give you
the guidance you need on what’s hot and
what is bound to sell despite the state of
the economy. Trust them.
In the newsletters I sent out, in addi-
tion to the discounts we were proposing
for the season, I would point out that
I had a list of our top-selling items for
anyone who was interested. While this
was a valuable opportunity that many
could have grabbed a hold of, only a
small few would reply.
I did my best to subsequently com-
municate these offers to partners per-
sonally, but not all affiliate managers
have time to contact their hundreds
of publishers to inform them of their
hottest deals. So pay attention or you’ll
miss out!
So if you’re wondering how best to
promote luxury goods in light of this un-
forgiving economy, always keep in mind
that consumers are hungrier than ever
for good deals. Open the lines of com-
munication with your affiliate manag-
ers and propose new ways of promoting
their products, even if it means a lower
commission. And use the tools that are
available to you – like affiliate newslet-
ters – to stay on top of things.
You’ll generate sales, reap the ben-
efits, keep your customers coming back
and establish long-term relationships
with your affiliate managers. It’s a win-
win situation, regardless of how badly
the economy is behaving. |rP
PARESH VADAVIA recently launched the
OPMpros agency, short for Outsourced
Program Management. It can be found at
OPMpros.com.
7RROER[– Mike Evans
First Class eMail
A
s performance marketers, our
lives and livelihoods are based on
information – the latest and great-
est. I’ve been in a few different businesses,
but this is the first one where even close
friends will often tell you nothing that will
give you an edge.
As it was told to me by one of my men-
tors, “Telling somebody these things is
the same as giving away money.” True
enough. So, to get that money, I had to
learn the hard way. Lots of money spent
on learning.
One of the most important things
I learned was the importance of do-
ing email marketing correctly from the
start. People actually go to jail for send-
ing emails the wrong way – illegal spam
that is. So here’s a little free advice.
To do email marketing well, and le-
gally, you need an email service provider
(ESP). Using a script or program from
your own computer or server to send
emails is not recommended by any expe-
rienced affiliate marketer. The reasons
you want to go with an ESP are many,
but some of the most important are de-
liverability, tracking and scalability.
According to Alexa, some of the most
widely used ESPs are Aweber, I-Contact,
Constant Contact, Lyris, Get Response
and Net Atlantic.
Each of these ESPs offer a very differ-
ent level of cost, service and tracking.
The highest-end companies, like Lyris
and Net Atlantic offer granular email
Web analytics, activity-based segmenta-
tion, geo-targeting, broadcast-split-test-
ing and more.
The more basic services in the group
– I-Contact, Get Response and Con-
stant Contact – offer fundamental
services that allow you to upload and
send email messages to your prospects
and clients quickly and easily. Which
one you go with depends on where you
are in your email marketing experi-
ence.
“I started out using Constant Contact
which was fine for a while,” said Liam
Bowers, an affiliate marketer in New
York. “But when my list got up over
200,000 names I switched to Net Atlan-
tic. They have a lot of features, and a lot
of power, but they’re definitely not for
beginners,” he said.
The purpose of email in the aggregate
is to build relationships. To build rela-
tionships with your prospects until they
become customers, and then grow those
customers into lifetime clients.
Aweber is by far the top choice of
many large performance marketers.
Aweber works as a complete solution
for anyone wishing to increase his or
her email marketing efforts. Aweber has
a simple, powerful interface that allows
you to get up and running quickly, and
offers lots of tracking features that allow
you to measure and test which emails
are getting opened, and which links are
getting clicked on once an email is in
front of your prospect.
The reason emails sent by an ESP
gets past the spam filters is because
they have relationships with different
Internet service providers. The ESPs
work to make sure that your message
gets through, but in return they have
policies about what you have to do to
get an email sent by them.
Most providers have what is known
as a “double opt-in” system. This means
that after someone submits an email to
your site, the user must then log into his
or her email account and verify that they
have actually requested to be on your
email list.
This protects the ESP and all of the oth-
er of the ESP’s customers as well as you,
because it helps keep spammers at bay and
makes sure you are in compliance with the
strict CAN-SPAM act that makes sending
unsolicited email a crime.
Lyris, for example, claims a 99.34
percent delivery rate. That means that
practically all of your emails will get
into your intended recipients inbox.
Whether or not they open them or click
on them is up to you and your creative
talents.
Most services offer scheduling and se-
quencing that make it easy to organize
and launch strategically timed cam-
paigns. You can send a message on a spe-
cific day, or send one out after a speci-
fied number of days, weeks or months.
Again, this is a function of the service;
the more functionality you get, the more
you have to pay for it.
The average price for using an ESP to
send emails to a list of 10,000 to 25,000
names is about $150 per month. Some
services allow an unlimited number of
emails to your list during the month
and others charge by the amount of
bandwidth you use. If you are going to
be sending lots of graphic files in your
emails be sure to choose a provider that
does not charge by bandwidth.
Many ESPs offer a free trial. I suggest
trying out a couple and see which one
works best for you.
Ryan Pamplin of Ryactive, a super
affiliate based in San Francisco, likes
Aweber the best, “Most all of the email
companies work well,” he told me. “The
difference is in deliverability. Aweber
has all kinds of white lists that they are
on and they’re the best at getting mail to
the inbox, from my experience. Email
is a big part of my business. If the mail
doesn’t get through, what good is it? It’s
all about deliverability.”
“I’d never donated to a political cam-
paign in my life,” Pamplin told me. “But
the Obama campaign emails kept getting
past my spam filters and into my in box.
I thought if this guy is this good, then I’ll
send him some money, and I did. I think
it was because of Obama’s great email ser-
vice that he actually won the election.”
It turns out Blue State Digital based in
Washington, D.C., handled the Obama
presidential email campaign. So there
you have it, get a great email service
provider and you too may soon become
President of the United States.
Just remember that there are a lot
of options to choose from when doing
email marketing. The important thing is
to just do it. Make sure to include email
as a part of your overall Internet market-
ing strategy from the beginning. Start
out small and simple, find what works
and ramp it up, that is the performance
marketer’s mantra.
Switch to larger and more powerful
email service providers as your business
grows. Doing this will always keep your
email in the inbox – and keep you out
of jail. |rP
MIKE EVANS manages the 20,000-member
affiliate program at the site WebCams.com.
He has been an affiliate marketer for three
years and a professional salesman for 20.
He is available at: Dirk@WebCams.com.
revenue.mThink.com 21
22 revenuePERFORMANCE – ISSUE 2
 By Susan Kuchinskas
Despite the gloom hanging over the holiday
shopping season, affiliates can boost sales
by giving consumers what they crave: value.

L
ast year, Kim Berry gave her husband Dennis a miter saw and
a massage chair pad. He gave her a high-end juicer, a DNA test
for their mixed-breed dog and jewelry. There were also plenty of
smaller gifts under the tree, and they spent $1,200 on gifts for their
parents, a grandmother, brothers, sisters, nieces and nephews.
This year, Kim, a corporate writer, moved to a different
company and took a 20 percent pay cut. Her husband’s IT
job was outsourced overseas.

revenue.mThink.com 23
 “Where we once had two professional
incomes, we are now living on 80 percent
of my income,” she says.
This year, she and her husband will
exchange gifts worth less than $100, and
Kim’s sisters and their families will get
nice greeting cards. For his large family,
they’ve agreed to keep the budget below
$250.
“We’re not sure how we’re going to di-
vide that yet. We may not be able to buy
things for the nieces and nephews this
year,” Kim says.
Welcome to the holiday shopping sea-
son, 2009 edition. Expect a replay of last
year, when consumers kept their wallets
zipped until the last possible moment and
spent less when they finally spent. De-
spite recent assurances from Ben Bernan-
ke and other economists that the worst is
over, there’s plenty of gloom among con-
sumers, who are facing the highest unem-
ployment rate in a quarter century.
“SHOPPING LOST ITS FUN LAST YEAR.
IT USED TO BE, ‘ONE FOR YOU, ONE
FOR ME.’ LAST YEAR, PURCHASING
WAS MORE FOCUSED.”
- KEVIN JOHNSON, EBATES
Research firm eMarketer forecasts that
online retail spending will stabilize by the
end of the year, that is, growth in sales
will be zero year-over-year. But that’s no
growth from a memorably bad quarter in
2008. “Last year was very disappointing,
there was a real contraction. It’s going to
continue to be tough for the rest of this
year,” says Jeffrey Grau, eMarketer’s se-
nior retail analyst.
And that’s the good news. According
to the U.S. Department of Commerce, e-
commerce sales in the second quarter of
this year fell 4.5 percent year-over-year.
Optimists called that a slight improve-
ment from the 5.8 percent year-over-year
decline in the first quarter.
Indications from the back-to-school
season are another indicator of a chal-
lenging gifting season. According to the
24 revenuePERFORMANCE – ISSUE 2
National Retail Federation, spending on
kids’ clothing and school supplies was
down 7.7 percent from the previous year,
which was also bad. Consumers seemed
to have trouble letting go of their hard-
earned dollars. Less than half of families
with students in K–12 or college com-
pleted their shopping by early September.
“Back to school happened late this
year, and we expect to see the same with
the holidays as we have the same short
shopping season as we did last year once
again,” says Mark Kirschner, LinkShare’s
CMO.
At the same time, coupon-clipping and
bargain hunting intensified. Ebates, one
of the top 2 percent of affiliates in terms
of sales and merchant revenues, benefited
from this. Spending at its back-to-school
stores was up 133 percent. This example
shows how affiliates who respond to the
public’s deal-seeking mood can grow their
market share.
“Shopping lost its fun last year. It used
to be, ‘One for you, one for me.’ Last year,
purchasing was more focused,” says Kevin
Johnson, CEO of Ebates.
According to LinkShare, the price-con-
scious mentality may not be a temporary
response to a slip in the economy, but a
lasting cultural shift. A study by the per-
formance marketing network and gsi in-
teractiveSM found a new kind of online
shopper: the value hunter. Certainly, the
ability to find the best price has always
been a feature of e-commerce, but, ac-
cording to the survey, price now beats
brand – and it may even change what
people buy.
Okay, kill the gloom. Most folks will
still buy gifts, and slightly more of them
will buy online than last year. Says eMar-
keter’s Grau, “There are consumers out
 9GCTGRNGCUGFVQCPPQWPEGQWTPGYCHHKNKCVGRTQITCO
2GTHQTOCPEGKPEGPVKXGU+'ZVGPUKXGTGRQTVKPI+&GFKECVGFUWRRQTV
6QLQKPIQVQJVVRUCHHKNKCVGUKRUQUEQOCHHKNKCVGAUKIPWRJVON
 there that are unhappy with traditional
stores. They’re up for grabs.”
Here are some tips that will help af-
filiates maximize the effects of holiday
promotions – as well as their revenue.
Add Value
According to the LinkShare survey, 63
percent of value hunters will buy some-
thing online they normally wouldn’t have
purchased because of a special offer. This
is an opportunity for affiliates to step up
and differentiate themselves through
value-based products and promotions.
While you can’t control product pricing
or selection, think about what you can
add to make a purchase feel worthwhile.
Today’s consumer can’t afford to make
mistakes. “They’re looking for confirma-
tion that they bought smart,” Kirschner
says.
Good content is a cost-effective way
for an affiliate to add value, according to
industry consultant Lisa Riolo, formerly
of Commission Junction. One of the ben-
efits of shopping online is that consum-
“REVIEWING
IS THE NEW
ADVERTISING.”
REINIER EVERS,
TRENDWATCHING.COM
ers have access to a broader selection
of merchandise and better information
about not only price, but customer ser-
vice among merchants.
“One opportunity an affiliate has is to
provide true comparisons that are rel-
evant to the consumer. Instead of show-
ing the alternatives, provide content,
comparing and contrasting the different
brands, styles and merchants they’re buy-
ing from,” Riolo says. The more informa-
tion you include to help fire the purchase
decision, the better. For example, one
merchant may price an item higher but
offer free shipping.
Building a site that’s rich in media can
be another powerful tool. “Rich media has
been a tool that can drive results, as have
26 revenuePERFORMANCE – ISSUE 2
video and interactive widgets, as long as
they are designed to drive a sale, and not
just to be interactive for the sake of being
interactive,” according to Kirschner.
Cozy Up to Merchants
One of the most important things you
can do is to make sure you stand out to
the affiliate managers, whether they’re
at a large network or working for one of
the brands you sell. Although they don’t
like to talk about it, there are special deals
available for super affiliates and rising
stars.
The best way to stand out is to be pro-
active, says Matt Enders, founder of mge-
com, a company that manages affiliate
programs: “If you really want to capital-
ize on the fourth quarter, make sure not
to wait for affiliate managers to contact
you. Don’t be afraid to contact a manager
and pitch them,” Enders says. Instead of
looking at yourself as an extension of the
brand’s business, he advises, remember
that you are running a business yourself.
You can see how this works for
Vistaprint affiliates. This year, as always,
the online printing shop will feature
holiday cards and calendars for the new
year, along with discounts and, as it gets
closer to the final shopping countdown,
free shipping offers.
The most successful Vistaprint affiliates
add a truly personal touch to these offers,
according to Donald Schamber, manager
of affiliate marketing. Many build custom
holiday pages, many of them specific to
Vistaprint. They might also do some blog-
ging, or send out emails and newsletters.
During the planning period for the hol-
idays, Schamber does quite a bit of direct
email communication with the compa-
ny’s top-tier affiliates, letting them know
about the top offers and making sure they
understand new ones. Vistaprint will
even adapt an offer to work better for a
valuable affiliate.
It also offers holiday-themed,
co-branded landing pages on the
Vistaprint site. These pages, although
hosted by Vistaprint, carry-through the
look and feel of the affiliate site that re-
ferred the shopper. Schamber says testing
has shown improvements in the conver-
 www.TrendRevenue.com
©Trend Revenue, LLC Santa Monica, California (888) 614-5556
 sion rate and an increase in the size of the
average order when the affiliate’s brand
carries through to the actual transaction.
“For some affiliates, this is 60 to 80
percent of their business. It’s such a short
window of opportunity that we try to be
really responsive to them during that
time,” Schamber says.
Tricia Meyer, founder of Sunshine Re-
wards, uses photos and videos to provide
a personal touch that appeals to her mem-
bers and to affiliate managers. For exam-
ple, last year, she posted a video of her
and her mother in front of a Christmas
tree, bickering over a box of Ghirardelli
chocolates. She also featured her daugh-
ter singing, “All I Want for Christmas Is
My Two Front Teeth.” Says Meyer, “The
“WORD-OF-MOUTH HAS NEVER BEEN
MORE POWERFUL OR UBIQUITOUS.”
- REINIER EVERS, TRENDWATHING.COM
program managers we work with treat us
really well. Even if we don’t send a ton of
traffic to them, they know we’ll go the ex-
tra mile.”
Watch for Trends
It’s great to be offering some of the
hottest holiday gifts. It’s stupendous to
be among the first to have hopped onto
a meteoric trend. Marketers who stand
out from the year-end madness have well-
developed campaigns ready and waiting
when a product hits big. Trend-spotting,
formerly the purview of large, rich re-
search companies, has become acces-
sible to everyone, thanks to the search
companies.
Keeping an eye on Google Trends, Bing
xRank, Yahoo Buzz Index (buzz.yahoo.
com) and Alexa’s What’s Hot will show
you the current most popular searches.
You can also put in your keywords – or
any term – and see a graph of its popular-
ity over months. These services can help
you find the moment when the popular-
ity needle begins to quiver. To keep up
with the blogosphere, monitor Technora-
ti. For truly immediate insight into what
we’re all talking about right now, Twitter
28 revenuePERFORMANCE – ISSUE 2
provides a list of trending topics on its
homepage.
As you look at trends, Riolo advises that
you keep in mind how the economy may
influence them. She says, “For example,
entertainment products remain hot this
holiday season, but consumers are inter-
ested in things they can enjoy at home
with the family, instead of spending mon-
ey going out.”
Customer Evangelists
Word-of-mouth has never been more
powerful or ubiquitous, thanks to Inter-
net sites that let you rate everything from
your toothpaste to strangers’ tuchuses.
“Reviewing is the new advertising,” says
Reinier Evers, CEO of trendwatching.com.
His consulting firm recommends offering
customers the ability to post product re-
views on your site. You should also make it
easy for them to post reviews of your prod-
ucts and your site to third-party sites.
There are a couple of advantages to en-
abling reviews on your site. First, Evers
explains, it’s the best way to keep track
of what customers are saying – and to
quickly and visibly respond if a review is
less than stellar.
“Engaging in conversations from an
early stage on will often help defuse a
potentially damaging, angry thread with
others jumping in,” he says.
To help your site visitors understand
just who is doing the reviewing and why
they should listen to them, Evers advises
that you provide context for reviews by
letting people set up profiles and then
adding the profile information to their
ratings.
“Consumers are not as accepting of
advertising any more. They are more con-
scientious about researching products,”
says eMarketer’s Grau. “They’ll buy from
the retailer with more information in the
form of user ratings and reviews, and per-
sonalized recommendations.”
Continued… p44
%\'HVLJQ– Pedro Sostre
Designing in a Recession
W
hether the worst is behind us
or yet to come, we know for a
fact that people’s spending hab-
its have changed and won’t be changing
back for some time. Everyone is watching
their wallet and pinching pennies – mak-
ing every dollar count. So what does that
mean for us as marketers?
We still have products and services
that people want and need, we just need
to make sure our website visitors under-
stand why they still want what we’re of-
fering – tight pockets or not.
This is where effective website design
becomes essential. A successful design
will highlight the relevant benefits of
your products in a way that creates an
immediate (and sometimes subcon-
scious) understanding that this product
is something you need.
I was presented with the following
question this week: “What qualities
should I look for in a designer?”
As many of you know, I come from a
graphic design background. I went to art
school. I’ve designed websites for years.
One could argue that the artistic ability
of the designer would be the most im-
portant quality.
But I would say that in today’s difficult
economic times, the designer’s under-
standing of marketing should outweigh
his knowledge of traditional artistic ele-
ments. Especially on the web, and espe-
cially during this time, your site’s design
must lead to conversions.
Whether you define a conversion as a
sale, a lead, or simply getting the user to
make a return visit, if you’re in business
on the web, your website design must be
focused on accomplishing your business
goal. In order to be a good designer, you
need to understand what it takes to get
users to engage.
When designing in a recession, the
big design questions should not be what
colors to use or what layouts to select.
Instead, designers need to ask what
products to feature and what benefits to
highlight.
Take Target, for example. Over the
years they have created a reputation
for having great design, both in their
marketing and on their products. In
a typical market, they promote their
designer products with names like Mi-
chael Graves, Anna Sui, Alexander Mc-
Queen, and Rachel Ashwell. What did I
see on the cover of this week’s circular?
A crock pot, blender, and toaster oven
for $15 each, none of them looking par-
ticularly chic. And no designer name
dropping.
Why the change? People today aren’t
spending the money on designer prod-
ucts. Even though Target strives to offer
great designs that everyone can afford,
there is still a perceived price premium
with designer products, so shoppers
tend to assume that they are not get-
ting the best price. Their design had to
change or their advertising would no
longer be relevant to their shoppers.
Simple Steps
In this economy there are three fac-
tors that shoppers are asking them-
selves: Is the product or service a good
value? Is it something I need or will use
on a regular basis? Is it relevant to me?
A good design will inherently answer all
those questions. When considering your
next design project, make sure you hit
the following three points.
Focus on Value. Even if your prices
aren’t the lowest, or if you only sell high-
ticket items, focus on the value that cus-
tomers get when purchasing from you.
Value doesn’t mean inexpensive or cheap,
but it does mean that the money they
spend will be worth it. Maybe the prod-
uct will save them money in other ways.
Take the new LED televisions. Be-
cause they are relatively new technol-
ogy, you pay a premium on the price. To
offset that, retailers are touting all the
energy savings you will experience over
the life of the television.
Is your product or service more reli-
able? Longer lasting? Does it have mul-
tiple uses? Find the reasons why a user
will get every penny out of their pur-
chase and push those reasons in your
design.
Emphasize the Everyday. The average
consumer today is trending away from
“luxury items” but even expensive items
can be positioned in a way that empha-
sizes how they can be valuable essentials.
Even a $200 dress shirt can become an
essential to someone who frequently at-
tends high-end business meetings. Find
the feature that makes your product a
necessity.
If you sell lots of products, you may
want to update the design of your site
to feature those everyday products
more prominently than you would in
a strong market. While they don’t al-
ways have the highest mark-up, these
essential items are more likely to be
purchased in a slow economy, and you
can work on upselling when users are
at your cart.
Target to a Niche. Even for items that
may not traditionally be niche products,
finding a way to target them to a niche
may help overcome objections within
that demographic. When visitors feel
like your product or service is made es-
pecially for them, they are more likely to
purchase your product over another that
doesn’t speak to them directly.
At the end of the day, your product
marketing should dictate the design.
This is the prime reason why pre-made
template-based websites typically per-
form poorly when it comes to conver-
sion rates. While these template-based
sites may look nice, your product has to
be pushed into a pre-created design.
In these times, the art of design is
more about merchandising and messag-
ing than colors and layouts. As long as
your designs are built with that in mind,
you’ll see strong conversions even in
these tough economic times.
Design Makeover
Would you like your website to be the
topic of a future edition of a By Design
makeover? Send your name, company,
contact information (phone, email,
etc.), a brief description of your business
and its goals, and, of course, your URL to
bydesign@sostreassoc.com. Please put
“Revenue’s By Design Makeover” in the
subject line. |rP
PEDRO SOSTRE is pioneering “conversion
design” as CEO of Sostre & Associates, an
Internet consulting, design, and development
firm found at SostreAssoc.com. He is the co-
author of Web Analytics for Dummies.
revenue.mThink.com 29
 $IILOLDWH,QER[– Jim Lillig
A Survival Guide for Networks
As the bubble of CPA networks grows, here’s a plan to help publishers
survive the inevitable shakeout.
C
ost-per-action networks are all the
rage today. But what will it take
for a network to win with 400-plus
competitors? And how does a network
keep ahead of the curve (and the FTC)
while building its publisher and adver-
tiser base and fending off tracking and
fraud issues?
These are the tough questions
that CPA networks face.
It might just be me, but I’ve always felt
that CPA performance marketing (or as
the Madison Ave. types refer to it, the
pay-for-performance model) is one of
the best ways the Internet can connect
and engage the target customer for less
than other channels – a lot less. Further,
it can convert them into buyers, or at the
very least, generate some measureable
brand awareness.
But this promise comes with a need
for tracking solutions that allow adver-
tisers to assess on a micro level the qual-
ity of the traffic sources on which their
campaigns were placed.
I spoke with my old friend and indus-
try veteran Todd Crawford recently, and
he made the same observation: “The
CPA space needs to legitimize itself in
order to see larger advertisers and their
larger budgets shift to the per-
formance model.”
For the last
12 years,
I have
30 revenuePERFORMANCE – ISSUE©2Cammerayda... | Dreamstime.com
watched the online advertising com-
munity mature, and have always been
involved in affiliate marketing. But the
current players in the CPA network
distribution channel need to ask them-
selves where they see the industry in
two, five or even 10 years.
There’s no doubt there will be a shake-
up, or more aptly put, a shakeout, in the
CPA sector of Internet marketing with-
in two years. With 400-plus networks
(thanks to DirectTrack and other plat-
forms that have allowed almost anyone
to start their own network) all compet-
ing for their fair share of online publish-
ers, what will it take for networks to dis-
tinguish themselves and stay standing
after the dust settles?
Here are a few guideposts on which
nearly all the players seem to agree.
1. Address Fraud Issues
Fraudulent transactions constitute
the No. 1 complaint among networks.
While some platforms do an OK job of
trying to identify fraud, it is ultimately
the network that needs to be proactive
in spotting trends early and monitoring
their advertiser’s channel sales. There
will soon be a suite of products and
services that will begin to set new stan-
dards, and the networks that embrace
them will experience greater loyalty
from both publishers and advertisers.
Lead-generation fraud is another
area that will seriously decrease the
move to online performance market-
ing by bigger advertisers. Lead gen is
the logical starting point for most big
brands as they experiment with social
media and other outlets where they
can establish a one-to-one relation-
ship with their brand-loyal consumer.
But fraudulent leads gone unchecked
will destroy the ROI or branding goals
of the campaign. Networks offering
lead-verification services will be bet-
ter off with larger brand advertisers
and their agencies.
Publisher application fraud is the
final puzzle piece in fraud and also
one of the most costly in terms of net-
works’ time. Most large CPA networks
get hundreds of publisher applica-
tions daily. Screening out fraudulent
applications is tedious and necessary.
Because publishers themselves will
more than likely never band together
as a whole to screen themselves, addi-
tional network standards and negative
databases (like those used for SPAM)
applied across all networks would be
at least a first step.
However, as with anything, most so-
lutions that include blacklists or certi-
fications can be gamed or hacked. The
message here, if you are a publisher,
clean up your act and make sure net-
works can verify your identity and your
traffic. Network screening procedures
will tighten up. Those networks that
admit anyone and everyone will be the
earliest to exit in the shakeout.
2. Exclusive Advertisers
Networks whose existence relies
only on cross-published campaigns
or “brokers” to bring them campaigns
will find themselves being left behind.
Agency-of-record advertisers for a
network are their lifeline to healthier
margins and increased budgets for
campaigns.
CPA Networks have the potential to
be the online advertising agency mod-
el for the future. The best networks
add value to both their publishers
and advertisers by understanding the
space and how to best enable all par-
ties to capitalize on unique capabili-
ties and returns. In essence, that’s the
same benefit most Madison Avenue.
shops were supposed to follow with
traditional media companies.
CPA networks are the new agen-
cies for online advertising, because
they have in many cases cut out the
“media companies” and are better
able to connect brands, products and
services directly with the target audi-
ence through their publishers’ traffic.
Networks that realize and capitalize
on this opportunity also will be targets
for acquisition.
Continued… p45
32 revenuePERFORMANCE – ISSUE 2
THE INTERVIEW: CLAY SHIRKY
FEAT
OF CLAY
By Tom Murphy
Everybody’s favorite media professor says we’re getting
bored with new media. And that’s a good thing, especially
if you want consumers to click on your ad.
I
t’s been about 15 years since the browser Mosaic
unlocked the World Wide Web for millions of peo-
ple. But most of them – most of us – still stumble
around cyberspace wide-eyed, knowing we’re in
the middle of something very cool, but not quite sure
what it is or how to make the most of it.
This has happened before with new media, ever since
the Chinese invented mass media in the 13th century. It
took about a quarter century for “the wireless” to work
its way into everyday life. TV was invented in 1926, but
didn’t reach its “golden age” until the ’50s. The tele-
phone took more than a generation to grow common-
place. In the 1980s, the first cell phones were bulky sta-
tus symbols; now, almost every kid has got one.
But this time, there’s something different: interactiv-
ity. We thought we understood the Web in 1999. Then
we really understood it in 2002. But seven years later,
we’re still tripping over killer apps that “change every-
thing.” In fact, there’ve been so many game-changing
developments, that they’re starting to melt into the My-
FaceTwitter continuum, with the next big things arriv-
ing faster, and – as media whiz Clay Shirky likes to say
– getting “boring” faster, too.
And that’s the good news. The sooner the Web grows
mundane, the sooner we’ll settle down into some pre-
dictable patterns that will lead to sustainable business
models, and interactive advertising figures to be a big
part of that. As Shirky points out in his aptly named
book Here Comes Everybody, that day is drawing nigh.
Since 1993, Shirky has worked as a producer, pro-
grammer, professor, designer and consultant. He cur-
rently teaches at NYU’s graduate school. But he’s per-
haps best known as a real-time chronicler of the Net’s
evolution, helping to put today into perspective by look-
ing at what it says about tomorrow.
Let’s start by talking about how new media is
different from traditional media. In my book,
Web Rules, I described the Web as the first
mass medium controlled by the end user. You
come at it a slightly different way, right?
What I’m saying is it’s the first medium that supports
group communications natively. It’s also the first me-
dium that fuses the patterns of the printing press and
the phone. The printing press because you can reach
large groups; the phone because you can have two-way
revenue.mThink.com 33
 conversations. Those two things taken together – the fact with it, which in my view is the critical feature needed
that you have a medium that natively addresses groups for social change. People are actually so familiar with the
and, as you said, every participant has full access to the in- technology that they find it boring.
frastructure – create a very different shape for the media Google made the Web useable, so by 2002 or 2003, peo-
landscape than what we’ve just come out of. ple started to take the Web for granted. Social networking
is starting to be taken for granted.
One of the things I’ve It happens at different places with
noticed is, it takes about “THE BASICS OF different media, but it does seem
25 years for any new
medium to work its way EMAIL WERE BAKED to me to be happening faster, in
part because people have gotten
into society so that people
can discover that they like
IN BY THE LATE ’90s. used to this idea that the Inter-
net’s generative capability for new
it, and how they can use PEOPLE WERE EVEN kinds of media is part of what the
it. That happened with the
GETTING BORED
Internet is good at.
telephone and telegraph So, where it took email from
and TV. Is that happening
with the Internet?
WITH IT, WHICH the mid-1970s to the mid-1990s
to move into any kind of public
Sure, sure. The interesting
thing about the Internet is that
IN MY VIEW IS THE consciousness, it happened for
Twitter in the space of two and
because the core technology – CRITICAL FEATURE a half years. We still don’t know
the basic infrastructure of mov-
ing bits from point A to point B NEEDED FOR SOCIAL what Twitter will look like as a
mature medium. It may peak and
– is media agnostic, the Internet
is really a medium for creating
CHANGE.” then trough, it may get folded into
something else, who knows? It
media. So you’ve got email, then you’ve got the Web, then still takes people time to get use to the media, but I think
you’ve got Web blogs, then you’ve got Twitter and Face- people’s willingness to try new stuff seems to be increas-
book and Flickr and yada, yada. The basics of email were ing because they’ve had enough positive experiences in
baked in by the late ’90s. People were even getting bored the past. That seems to be new.

34 revenuePERFORMANCE – ISSUE 2
 Rather than it being “the telephone” and then a long
time later “the radio” and then a long time later “television,”
now we’re in a landscape where there are new things for us
to try every week if we’re early adopters, and new things get
out into the public consciousness
about every 24 months, which is
an incredible rate for new capa- “IT TOOK ME A WHILE
bilities to be offered to a media-
participating public. TO REALIZE THAT
really what you’d want to say is it becomes invisible in the
way the telephone is invisible. We just take it for granted.
I think of it being fully integrated into our
daily lives.
Right. It’s really that moment
– not the original use of the tool,
but the full integration – when
the social change really gets

You’ve talked about

TECHNOLOGY IS AN weird.

technologies like email ENABLER, BUT THE Let me shift to the

getting “boring.” I suspect area of marketing
that’s an intentional MOTIVATIONS OF THE and advertisement.
slight overstatement
on your part. It’s not
USERS ARE REALLY Advertising has supported
mainstream media for a
actually boring, but it’s so
fundamental that it’s an
THE CHARACTERISTICS really long time. With the
fragmentation of media,
everyday part of our lives, THAT MAKE IT it’s getting much harder
right?
Of course. I say boring to IMPORTANT.” for a lot of these sites
to get along. But I think
make a point. In part, I’m talk- we’re starting to see some
ing to myself. I spent most of my inroads in performance
time in the ’90s, writing about “the technology,” and it marketing and interactive ads. How long do
took me a while to realize that technology is an enabler, you think it will take interactive advertising to
but the motivations of the users are really the characteris- become fully integrated into the consciousness
tics that make it important. So, instead of “boring,” I think of the public?

36 revenuePERFORMANCE – ISSUE 2
 That’s an interesting question. I think it’s going to
be at different rates for different media. There was an
interesting example that happened in Google’s email,
where Gmail was going to run ads alongside your mail.
First, people freaked out about the privacy intrusion and
the general skeeviness of ‘look how much they know
about me.’ Then they got sort of comfortable with the
algorithmic function. And then people started to find it
useful. And so, in a way, the great predictor of it enter-
ing the public consciousness is either when they find it
entertaining enough that they care about it as media, or
when they find it useful enough to be glad to know about
the opportunity.
There is some class of advertising that will simply nev-
er enter the public consciousness in a normal or happy
way because the public will never like the ads. And then
there’s other stuff, like Google Adwords or like Valve, a
game software company that puts up these trailers on
YouTube, with each trailer devoted to one character in
the game. It is plainly and nakedly an advertisement for
Valve software and Team Fortress, too, and at the same
time, it’s quite entertaining content.
The idea of a blanket advertising environment in the
interactive world that matches the blanket advertisement
we had with TV ads or newspaper ads, I don’t think that’s
going to happen. It’s really about figuring out which ads
will be welcomed by the public.
You’ve used the example of Johnson & Johnson
as a company that put up a website that
wouldn’t accept comments on their products
or the company, as opposed to Coca-Cola
which has 3 million fans on Facebook. What
do you think Coca-Cola is getting right in that
equation?
The thing Coca-Cola is getting right is the thing that
they’ve always gotten right since the 1970s. Whenever
it became apparent that the goodwill of the Coca-Cola
brand was the primary asset, they’ve understood the en-
gagement of their customers was not something to be
handled at arms-length, but something to be embraced
within the core of the company. I think what Coke is get-
ting right is, “If people like us, we have to walk into this
new medium inviting those people to engage with us in
ways that are more than just sending them a series of
press releases.”
You talk about motivation as an important
concept in terms of designing a site, or thinking
about a site, or thinking about what you’re
putting on the Web. That’s an interesting
element when you get into advertising. What
motivates a person to click on an ad?
What motivates a person to click on an ad is really not
a separate question from what motivates a person to click
Continued… p46
revenue.mThink.com 37
38
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revenuePERFORMANCE – ISSUE 2
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.
atrina Toft loves sushi. So it’s only
natural that the designer, a recent
college graduate, started a blog
about the Seattle sushi restaurants she
haunts. Already, she’s making enough
from BestSeattleSushi.com to feed
her fish habit. Now, she’s working on
a site for gamers.
The explosion of ad networks – we
count more than 400, and rising –
makes it easier for people like Toft to
make money from some very niche
content for very small groups of read-
ers. Vertical ad networks that segment
according to their incomes, interests
or ethnicity, help marketers hone in
on these spot markets.
There are all sorts of ways to seg-
ment American consumers. Forbes
Ad Network goes after high-earning
executives, while BlogHer addresses
women with wide-ranging interests,
and Complex Media focuses on cool
young guys. But one of the best oppor-
revenue.mThink.com 39
 tunities lies in ethnic marketing, for two reasons: First,
the spending power of Hispanics, Asian-Americans and
African-Americans is growing faster than that of U.S. con-
sumers as a whole. Second, because advertisers tend to
lump them into mass-market ad campaigns, those who
address them directly have an opportunity to grab new,
loyal customers.
For example, even during the recession, the purchasing
power – and spending – of Hispanics has grown. Accord-
ing to Ethnic Technologies, a research firm focused on
global multicultural marketing, because Hispanic-Amer-
icans tend to abhor debt, they weren’t over-leveraged like
so many other American consumers. The Conference
Board’s Research Center forecast the purchasing power
of Hispanics less than 44 years old will grow from $295
billion in 2008 to $397 billion by 2010 – that’s about a
third in two otherwise sluggish years.
According to the Selig Center for Economic Growth
at the University of Georgia’s Terry College of Business,
African-American buying power is projected to top $1.1
trillion by 2012 – a 34 percent increase over a five-year
period, while the purchasing power of Asian-Americans,
the third-largest minority group, is forecast to grow 45.9
percent in the same time, reaching $670 billion in spend-
ing by 2012.
But tapping into this market via horizontal networks
may miss many of them, according to Alicia Morga, CEO
of Consorte Media, a vertical network focused on the His-
panic markets in the United States and Latin America.
In order to reach Hispanics, Best Buy worked with Con-
sorte on a banner and paid search campaign in English
and Spanish to bring new customers to Espa-
nol.BestBuy.com. Dealix, a
7$5*(7('1(7:25.
40 revenuePERFORMANCE – ISSUE 2
company that provides leads to auto dealers in the United
States, ran a lead generation campaign with Consorte to
find the Hispanics it knew it was missing with its generic
campaigns.
$UH<RX%HLQJ6HUYHG"
The Hispanic market is well-served by a variety of per-
formance- and CPM-based ad networks, including Batan-
ga Network, Hola Networks and ImpreMedia. In addi-
tion, Yahoo, MSN and AOL operate Spanish-language
portals to reach U.S. Latinos.
There’s a dearth of ad networks focused specifically on
other ethnic groups. AdGroups.com and the Nubian Ad
Network target African-Americans, while BET ad net-
work focuses on music, entertainment and lifestyle sites.
For reaching Asian Americans, there’s the Asian Ameri-
can Ad Network.
However, networks for non-ethnic demographic and
interest verticals are popping up like mushrooms after a
monsoon. According to comScore, vertical ad networks
as a whole doubled their reach from 2008 to 2009. More
important, comScore found that content-targeted ver-
ticals were significantly more engaging to consumers.
People reached by vertical ad networks spent at least 60
percent more time in those site categories than the aver-
age category visitor.
The marketplace may get still more crowded, thanks to
Adify and DevHub, two services designed to let publish-
ers easily build and manage their own ad networks. Adify
also operates a larger ad network spanning all the proper-
ties on the platform.
:LGHRU'HHS
Of course, advertisers also can reach Hispanics – or
whomever – via the large portals: AOL, Yahoo, MSN and
Google. These mass, horizontal ad networks segment
via behavioral targeting, a technique that uses a unique
cookie to track consumer behavior both within the major
property, as well as over its network of third-party sites,
in order to build a richer profile of each individual. The
profile includes interactions with both content and ads,
and the aim is to gather insight that can be used to show
ads that are more relevant to each person. For
example, a woman who reads pregnancy-
related content may be a desirable target
for an automaker with a vehicle that ap-
peals to new families.
Horizontal networks can help
large advertisers reach more
consumers in a vertical than
some targeted net-
works can.
“Performance
advertisers may
need to reach a
certain audience,
but at the end of the day, they’ll be judging the
success of the campaign based on perfor-
mance. Simple things need to be there:
They need the reach, and they need the
data and optimization tools to drive
the performance,” says David Zin-
man, general manager of the
Yahoo! Network.
Michael Sprouse, CMO of
Epic Advertising, a perfor-
mance marketing compa-
ny that operates the AZN
ad network focused on
big brands and super-af-
filiates, says that because
his network is so large,
advertisers can reach a
niche as well as a vertical
– at a cheaper price. “We
don’t change our pricing
considerably based on how
specific you want to get. We
take the model that is used to
appeal to large constituencies
and hone that to reach some-
thing very specific,” Sprouse says.
Buys on horizontal networks
also tend to be cheaper. As a replace-
ment for contextual targeting, BT could
let that automaker reach the pregnant lady
with ads placed on lower-cost media. According
to Amy Manus, director of media for interactive mar-
keting agency Nurun, 70 percent of horizontal networks
and portals either already offer this kind of targeting or ests and what they respond to. “They are people who un-
plan to. derstand their market deeply and select the sites that speak
“The latest trend is for advertisers and brands to uti- to the passion of the audience. They also maintain a long-
lize networks to determine who they should be targeting term relationship with their publisher that helps them
through audience analytics like Blue Kai, Quantcast or understand what the community cares about,” says Joelle
Personifi. These allow you to find untapped target audi- Gropper Kaufman, SVP of worldwide marketing for Adify.
ences. It has really become more about psychographics They can use this expertise to help marketers fine-tune
than demographics,” Manus says. their messaging. Colors used in ads, key phrases and pho-
tography all can increase performance of ads, according to
%RXWLTXH$SSURDFK Candace Kennedy, sales and marketing director for Ethnic
“The Hispanic market is easier to understand in terms Technologies, a market research firm. “It’s more warming
of language preference. One third is Spanish-dominant, to the individual, so there’s higher chance they’ll read it and
one third is English-dominant, and one third is bilingual. do business with your company,” Kennedy says.
So, an advertiser might be missing a portion of that pie For example, an auto maker ran its mass-market cam-
they want to reach,” she says. For example, if you adver- paign on AdGroups.com, a vertical network of 300+ in-
tise on Yahoo en Español, you’d miss English-dominant dependent publishers focused on the African-American
and bilingual Hispanics, while advertising to Hispanics market, with not-so-great results. After consulting with
who visit English-language sites would miss the Spanish- AdGroups, the advertiser included images of African-
speakers. Americans in the ads for the network and saw response
Vertical ad networks sell their deep knowledge of their triple.
customer segment and their publishers’ passion for it. Roary Wilder, CEO of AdGroups, says that, in general,
Says Genia Stevens, publisher of the Women’s Blog Ad these tactics increase the response by about 300 percent.
Network and the Lesbian Blog Ad Network, “The advan- “The relevancy of what you’re able to do in a niche network
tage of using a targeted network like ours is that bloggers is always going to be more powerful,” he says.
tend to have that trust relationship with their readers. Vertical content networks also claim that their ads
Blogs tend to be more engaging and speak more to their reach consumers when they’re more receptive. For ex-
readers, so ads can feed the conversation.” ample, a stockbroker might be interested in a call from
In addition, the vertical networks consult with advertis- a mutual fund while she’s at the office, and incensed to
ers to share what they know about their audience’s inter- receive the call at night, when she’s home with her family.

revenue.mThink.com 41
 “It’s the right target but the wrong environment and
the wrong frame of mind. We’ve got the same people as
the horizontal networks. The difference is the ability to
reach somebody in the right frame of mind,” says Robert
Pietsch, Forbes co-president and chief advertising officer.
Adds Brian Silver, CEO of the Travel Ad Network,
“What makes my network special is that, because we are
trying to monetize the travel audience at all times, we
have the ability to understand where someone is in the
purchasing lifecycle and target the appropriate ad.”
3UHPLXP3ODFHPHQWV
All these factors position verticals as premium net-
works, able to charge more and insist on terms – at least
in theory. Other factors that go into making a network
“premium” include curating the sites in the network and
using the CPM ad model.
On the Adify network of vertical blogs, “We focus on
great brand engagement. Your advertising will perform
better in the right context, but the right context is often
expensive,” says Kaufman.
Content- or interest-targeted vertical networks tend to
carefully select publishers and keep networks to a man-
ageable number.
“We have our bloggers all sign the editorial guidelines,
and we have humans who are reviewing every blog all
the time, making sure they are blogging regularly about
their vertical, that there are no paid endorsements or paid
posts, and no unacceptable content,” says Elisa Camahort
Page, co-founder and COO of BlogHer.
Tactics like these assure advertisers that the quality of
traffic on the sites is as good as the content. In addition,
most networks provide statistics on what percent of In-
ternet users they reach, as well as how many times they
can reach an individual, on average. They often do user
studies to help advertisers understand their readers. In-
formation on the demographics of visitors to media prop-
erties is also available through third-party media analysis
and tracking services, including comScore and Nielsen
@plan, paid services used by large networks, and Quant-
cast, a free audience measurement service.
3UHPLXP&3$V
In today’s tight-fisted economy, even brand advertis-
ers are looking at CPAs – even if they’re paying based on
CPMs. The difference is, when they advertise on CPM
networks, they do some reverse-math to analyze how the
42 revenuePERFORMANCE – ISSUE 2
CPM translates to whichever action metric they choose.
“In display, there’s always a back-end metric. For exam-
ple, an advertiser may have a $7 CPA target on the back
end. We may charge $10 CPM, and if the campaign gar-
ners a $12 CPA, we can see the lowest-performing sites,
eliminate them and we’ve reduced the CPA to $6,” says
the Travel Ad Network’s Silver.
Large advertisers and agencies, such as those that ad-
vertise on Forbes Audience Network, often have their
own, very sophisticated analytics platforms used to track
conversions; they may also use their own optimization
services. Others make use of built-in analytics and dash-
boards provided by the ad networks.
7KH%LJ'HDO
When it comes to the publisher’s revenue share, some,
like the Gay Ad Network, let publishers set their own
CPMs and fill unused inventory via other networks, a
process known as backfilling or tethering.
“They can use us as the primary sales channel, but if
we’re unable to sell their inventory at their minimum
CPM, we’ll relinquish it and send it over to Google or
whatever backup they choose. If a publisher knows what
their effective CPM is, if we don’t hit it, they’re no worse
off, because we’ll redirect back to what they’re using to-
day. It’s like a no-risk trial,” says Gay Ad Network CEO
Mark Elderkin.
Other networks demand exclusivity, but say they make
up for it with the quality and quantity of advertisers they
can provide.
“Our brand lends credibility and an access to adver-
tisers that most networks don’t have,” Pietsch says. For
example, a major financial advertiser on Forbes.com,
the publisher’s original content site, wanted to reach
small business owners. It targeted them via IP address on
Forbes.com, and then also ran ads targeted by content on
the Business and Financial Blog Network.
Some networks have a reverse sliding scale, rewarding
high-performing super-affiliates with better splits or cus-
tom models.
DevHub gradually raises publishers’ percentages as
they build up their sites. Says Mark Michael, co-founder
and SVP of strategic marketing for Evo Media Group,
which operates the service, “Out of the box, you get our
standard rev share. As you’re building that site, one piece
of content today, another tomorrow, slowly your rev share
would go up.”
Continued… p50
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 …Continued from p28
With some additional work, there’s
another potential bonus for installing
reviews: awesome SEO. In May, Google
introduced Rich Snippets, a search fea-
ture that Evers calls revolutionary, and
here’s why: Rich Snippets could get your
site reviews into the top organic search
results.
First, you need to add some new
markup to your review pages; the
search giant provides information on
how to do this in its Webmaster Cen-
tral Blog. Then, if Google’s search al-
gorithms deem your reviews to be rel-
evant to someone’s search, a link to the
review on your site will show up in the
results. Your Rich Snippet link will in-
clude the overall product rating, review
count, and a snippet of actual review
text, making it eye-catching and highly
attractive to searchers.
Conversion, Not Price
Once you get into the mindset of to-
day’s consumer, you realize that it’s not
all about getting the rock-bottom price.
Riolo advices you try to segment both
your advertising and your offers to appeal
to veteran online shoppers and newbies,
as well.
For example, if you normally mer-
chandise “Gifts under $100,” try “Gifts
under $50” to appeal to bargain hunters.
Appeal to time-starved, convenience-
oriented shoppers by emphasizing quick
shipping.
“Discounting is a vicious game. To lead
with a discount can kill you,” says Grau.
“Instead, give them a reason to come to
your site, and then sweeten the deal. To
ensure they make a purchase on your site,
you offer them an incentive.”
A coupon offered at point of purchase
is an excellent deal-sweetener. Riolo notes
that many affiliates find consumers aban-
doning shopping carts to go in search of
coupons. Then, they convert on the cou-
pon site instead of where they made the
purchase decision. Even if you don’t nor-
mally work with coupons, you should. She
says, “If a coupon is available, every type
of advertisers needs to do that, not just the
coupon sites.”
44 revenuePERFORMANCE – ISSUE 2
Avoid the Google Rush
Keyword prices skyrocket in the run-up
to the holidays, as major marketers throw
their weight into search marketing.
“They dominate the market and drive
cost-per-click so high that affiliates can’t
compete anymore, even for what you
thought was an obscure keyword. They
have teams of people looking for those
same obscure keywords,” says Shane Don-
nelly, an account manager for eZanga.
com, a meta-search engine.
EZanga.com claims that keyword
prices on its search service average half
the price of the big four. Donnelly adds
that, while eZanga.com’s network of sec-
ond- and third-tier search engines handle
around 12 billion searches a month, com-
pared to Google’s 70 to 80 billion, it offers
plenty of scale for most affiliates.
“During the holidays, when you can’t
afford the cost-per-click on Yahoo, Google
or MSN, second-tier search engines are
the place to go,” Donnelly says.
The Tried and True
In 2007, holiday sales through Sun-
shine Rewards shot up, thanks to a Dis-
ney cruise contest. Members got an entry
for every purchase they made through the
cash-back and coupon site. Even if they
didn’t win, people who booked the cruise
on their own could earn Disney gift cards
to use on the voyage.
In 2008, Sunshine Rewards founder Tri-
cia Meyer wanted to make her holiday pro-
motion even better. For starters, instead of
one big contest, she hoped that a series of
smaller ones might give her site a steady
stream of publicity. It also seemed like a
good idea to branch out from the Disney
theme, in order to reach a new audience.
Both ideas backfired. Bloggers weren’t
excited about the smaller contests, and
Meyer found out just how many of her
more than 13,000 members were Disney
fans.
“Now, we realize those Disney fans are
our bread and butter,” Meyer says. “In this
economy, we’re better off playing to our
strengths.”
In this economy, that goes for all
of us. |rP
 7D[LQJ7LPHV– Rebecca Madigan
You Need a Friend
A
s you may know by now, the Per-
formance Marketing Alliance filed
an “amicus” motion in September
to help challenge New York’s nexus tax
law as a friend of the court. Our intent is
to support Amazon’s and Overstock’s law-
suits which seek to strike down a tax law
passed last year that discriminates against
affiliate marketers and has had a devastat-
ing effect on the livelihoods of thousands
of Americans.
The issue at stake is a law that claims
that affiliates establish physical pres-
ence for out-of-state merchants – what
is called “nexus.” Merchants with nexus
in the state are required to collect sales
taxes from their New York consumers.
The unfortunate result is that over 200
merchants terminated their relationships
with New York affiliates to avoid the cost-
ly burden of collecting sales tax.
Amazon’s claim is that this law – N.Y.
Tax Law § 1101 – is unconstitutional
under the Commerce Clause of the U.S.
Constitution. The PMA filed its brief
to provide argu-
ments from the
perspective of
affiliate mar-
keters. Our
© Picstudio | Dreamstime.com
$IILOLDWH,QER[
…Continued from p30
3. Niche Yourself
Networks that niche themselves
around a vertical have better loyalty
than the everything-and-the-kitchen-
sink networks. Networks that have
established themselves in a vertical
will tend to polarize the larger pub-
lishers in that niche. This in turn will
attract advertisers that want to reach
those visitors.
hope is that our perspective will provide
additional evidence that this law is seri-
ously flawed.
Our argument has four main positions:
Issue No. 1 – The law is un-
constitutional.
We support Amazon’s contention that
the law is unconstitutional because affili-
ates can’t fairly be classified as a “physi-
cal presence” in the state.
Affiliates provide a form of Internet-
based advertising akin to traditional
print ads distributed by catalog retailers.
Posting an ad for a merchant does not
qualify the affiliate’s locale as a physical
presence for that merchant.
Affiliates sell no products, collect no
payments from buyers and make no de-
liveries. They have no further involve-
ment in the sales and marketing process
beyond a posted advertisement.
Issue No. 2 – The law threatens the
livelihood of business owners.
The statute has decimated the income
of thousands of affiliates in New York as
retailers such as Overstock.com have ter-
minated all affiliate agreements to avoid
imposition of use tax collection responsi-
bilities. We believe over
200 merchants termi-
nated their affiliate pro-
grams as well.
Issue No. 3 – The law
could stifle inter-
state e-commerce.
Retailers often have
thousands of affiliates
spread across the coun-
CPA network publishers are merce-
naries by the nature of the game, but
as this model matures and the fraud
and tracking issues are sorted out,
publishers will exhibit greater loyalty
to those niched networks where they
know they can get the highest payout
because the network deals with the
advertiser exclusively.
I am sure there are many other fac-
tors that will contribute to the survival
of a CPA network in the coming years.
This is a relatively young business model
try. The New York statute has the poten-
tial to strangle interstate e-commerce
with complex and varied regulation. The
reality is that the residence of the af-
filiate or the merchant has no relevance
whatsoever to the consumer experience
or the effectiveness of the advertising.
Issue No. 4 – The law has the
potential to curb the availability of
free information on the Internet.
Revenue generated from performance
marketing has allowed thousands of
small businesses and individuals to
build and grow Web sites that facili-
tate the more rapid diffusion of free
information to the public. Thousands
of affiliate websites provide valuable
content for thousands of visitors every
day. Lacking performance marketing
revenue, many will fail.
What’s next?
The state of New York required oral
arguments to be heard before the end of
October. The PMA hopes these appeals,
along with our amicus brief and its logi-
cal arguments, will provide a reasonable
case to the court to determine this law
is indeed unconstitutional and should
be reversed.
For more information on this complex
issue, as well as other states that are con-
sidering similar legislation, visit Perfor-
manceMarketingAlliance.com. |rP
REBECCA MADIGAN is the founder of
the Performance Marketing Alliance, a
group seeking to raise the visibility and
credibility of performance marketers.
that is evolving constantly with new ho-
rizons such as mobile, social networks
and online video.
The networks that continue to add val-
ue to both sides of the equation will win,
because they will no longer be the mid-
dleman, but a vital and necessary part of
the process of making money online. |rP
JIM LILLIG is a 25-year marketing veteran who
has been involved in online advertising since
1997. You can read more about him JimLillig.
com or can reach him at jim@jimlillig.com
revenue.mThink.com 45
 …Continued from p37

on anything, which is they think they’ll be happier after

the click than before. A link is an option, and every page
that offers links essentially offers a collection of options.
You have to cross three thresholds. You have to be
better than what’s currently on the page – although tab
browsing makes that a little easier. You have to be better
than the other alternatives on that page. And you have to
be better than turning off the computer and going to do
something else.

“WHAT MOTIVATES
A PERSON TO CLICK
ON AN AD IS REALLY
NOT A SEPARATE
QUESTION FROM
WHAT MOTIVATES A
PERSON TO CLICK ON
ANYTHING, WHICH IS
THEY THINK THEY’LL
BE HAPPIER AFTER
THE CLICK THAN
BEFORE.”
So if I’m searching for a new computer and I
have a list of reviews, and I see an ad next to it
for a computer that sounds like it’s going to be
better or at least comparable to the ones I’m
looking at – because the price is better or the
features are better – that might be something
that will attract my attention.
Right. The general case is that clicking the link is a bet-
ter way to pursue what I’m doing, a better option for my
time, than the other link I have sitting there side-by-side.
But there’s a really interesting study – I think that Josh
Porter up at Bokardo’s great social media blog pointed me
to this – that says the single best use of social media for on-
line retail isn’t Facebook or Twitter or MySpace or Friend-
feeder or any of the rest of them, it’s having user reviews
on your own site.
So I was just shopping for a netbook. I got one from
HP. And one of the things I got from HP was that one of
the highest-ranking search results was people discussing
the pros and cons of the HP. Now, for the marketing peo-
ple, there are no cons. There are no cons to any product
from HP. But in fact, there are, of course, cons. What you
say to yourself is, I’m not going to buy a netbook unless
I know the cons and I know that they’re an acceptable
tradeoff. When I saw the users’ own discussion of the HP
mini was that highly rated, I bought it from HP. In that
model, you’re telling me what I need to know and you’re
trusting people who don’t work for your company to pro-
duce the information about that thing. That’s, I think, a
big change.

46 revenuePERFORMANCE – ISSUE 2
 We just met a woman from Brazil who works
for a media company that, she said, was having
a hard time understanding interactivity on
the Web. And I think that’s true for a lot of
mainstream media companies. I’m seeing a lot
of alliances now between old media and new
companies like Facebook – CNN just did a big
collaboration with Facebook (see Facing Up
to Facebook, Revenue Performance, summer
issue). Is that a good way for mainstream
media to learn and adapt? I’m reminded of the
merger of Time Warner and AOL, in a way.
I don’t think we’ll ever see anything as catastrophic as that
again. That was as much market folly as learning new things
about the Internet. What I will say about the CNN-Facebook
kinds of linkups is that the logic has changed quite dramati-
cally, and it’s changed because of MySpace and later Face-
book, and it’s changed just in the last four or five years. In the
’90s, we all built sites and then we said, “Oh my God, how do
I get traffic to come to my site?” Now the logic has shifted to
“How do I go to where the people already are?”
And I think the CNN-Facebook kind of match-ups don’t
have the stink of death on them the way the AOL-Time
Warner deal did – in part because it’s just a business rela-
tionship, not an acquisition – but it’s a deal for the respec-
tive strengths of each of the partners if they do it right.
Because going where the audience already is is now the
low-cost way of getting an audience. That is such a head
shift for mainstream media. The fact that they’re doing
it at all suggests they have a better idea of what the land-
scape’s like than they did even a couple of years ago.
Most of the mainstream media isn’t doing
that. They’re trying to do it themselves. The
New York Times is, I think, a good example
of that. And they’re doing it pretty well for
a mainstream medium, but I don’t see them
reaching out to leading interactive companies
for a lot of help.
They’ve always been worried about that. Their model
has been to buy those companies, as they did in buying
48 revenuePERFORMANCE – ISSUE 2
About.com, because they’re not comfortable not owning
what they think of as strategic assets. But in a way, once
you own it, it becomes single source, and it actually drains
some of the value from taking About.com as a full mem-
ber of the ecosystem to saying “This is a New York Times
property.” Ironically, the integration of that into corporate
culture can actually damage some of what you thought you
were paying for when you bought the company.
Looking down the road, we’ve seen things
come and go. There was a time we thought
Yahoo was unassailable, and then Google
overtook it. What about Twitter? How long do
you think Twitter will be in the limelight? How
long will it be before it gets boring?
Twitter will not be in the limelight much longer be-
cause people have integrated it very, very fast. I remem-
ber turning on a TV in a hotel room the other day, flip-
ping through the channels, and there was Michelle Wie,
the golfer, and they were talking to her about Twitter. I
thought, all right, this is the moment of ubiquity. The
far side of this, people will talk about Twitter and tweets
in articles, but it won’t go in the headline any more. So
I think that’s probably 2010. But that, in a way, is good
news for Twitter. It’s a little like when AOL had all the
busy signals. People said that was terrible for AOL, but
it was a sign of demand. It will be good news for Twit-
ter, I think, because it will go into people taking it for
granted.
Then they have three strategic options. They can go
for enough revenue to be a stand-alone company. They
can go for enough revenue to raise their acquisition
price. Or they can go for enough revenue to offset their
hardware costs. Those last two options are basically
waiting for acquisition. The pattern of Twitter is that it
works well enough that it could just stay part of the en-
vironment for a long time. But I would not be surprised
to see them be acquired next year simply because they’re
of such critical importance right now. It offers an alter-
native to the walled-garden model of Facebook that is
going to be attractive for companies. |rP
&/$66,),('6

Counsel to the
Online Marketing Industry
CONTRACTS,
PRIVACY POLICIES,
Sweepstakes Rules,
LITIGATION, ETC.
Contact David O. Klein today at:
(212) 935-6020 x 244 | dklein@legal.org
485 Madison Avenue, New York, NY 10022

revenue.mThink.com 49
 …Continued from p42
3RZHULQ1XPEHUV
Large publishers and superaffiliates on the Casale net-
work – those with more than 250,000 unique visitors a
month – may be able to negotiate a guaranteed CPM or
exclusive representation.
“Everybody starts with us in a revenue-share scenario,
so we can have the opportunity to evaluate the property
and audience, as well as advertiser demand for the inven-
tory. From there, we set a benchmark, work with publish-
ers to improve how their traffic is performing, and recom-
mend where we could take the relationship potentially,”
says CEO Julia Casale-Amorim.
CPMs and rev-shares are all over the map. Casale Me-
dia pays 70 percent of ad revenue to the publisher, while
BlogHer shares 45 percent and Forbes offers 40 percent.
Some networks we spoke with didn’t disclose their rev-
enue shares.
Ultimately, though, what’s more important than the CPM
or the rev-share is the publisher’s net revenue. Says Gay Ad
Network’s Elderkin, “Whether it’s 90 percent of a five-cent
CPM or 50 percent of a $10 CPM, the percentage almost
doesn’t matter. Sites that perform well get a larger percent
of campaign dollars and a higher percentage fill-rate, while
sites that don’t, get optimized out of the campaign.”
Another key factor is the audience growth a vertical
network can provide by operating a portal or central hub
that features all the sites in the network.
Says BlogHer’s Camahort Page, “We do a lot to try to
cross-promote our sites, and foster the amplification ef-
fect across our community.” For example, every blogger,
regardless of the size of her audience, sees her headlines
run in rotation in a “what they’re saying” box on all the
other blogs in her group. Selected headlines are also dis-
tributed to iVillage.com.
That audience growth translates into more revenue
for publishers. Says Richard Antoniello, CEO and pub-
lisher of ComplexMedia, which publishes a print maga-
zine and original content on Complex.com, “Say Nike
or Brand Jordan comes to us. We run the campaign on
Complex.com, but of course they also want to run on
NiceKicks.com (one of the independent sites in the net-
work). We usually end up running a little more on the
individual sneaker site, but Complex.com is successful as
well, because we get a smaller slice of lots of ads.”
50 revenuePERFORMANCE – ISSUE 2
7KH,QWDQJLEOH)DFWRUV
And then, there are the intangibles: better branding,
a sense of community and the availability of technology
and services to improve a site may all be important.
If affiliate marketing and blogging are solitary business-
es, the right ad network can ease the loneliness. BlogHer
hosts annual conferences, as well as conference calls
where network members can ask questions and share
knowledge. Even some large networks like Epic try to
leave the door open to help publishers improve site per-
formance and traffic.
Networks may also provide technology beyond what
most indies can easily acquire. “Publishers are as loyal
as the biggest check, which doesn’t always come from
the CPA that runs across my banners. If you’re site
1,000 in the long tail of 10,000 travel sites, you’re go-
ing to look to see who’s going to drive higher CPM,
but also, what products and services do they have that
I can add? When you come to us, you can extend your
pages through microsites, or add widgets, and make
more money from those,” says Silver of the Travel Ad
Network.
Evo Media also promises an expandable platform for
publishers. Says Michael, “No one should ever outgrow
the platform – even if you get ridiculously popular. If you
want to add a forum or chat layer, it should be right there
for you in your publishing dashboard.”
$7LG\0DUNHWSODFH
Clearly, the CPM model removes the risk of many types
of fraud facing super-affiliates. But there are different got-
chas publishers should watch out for.
First, they should read the fine print to determine what
a network’s fill rate is, says AdGroups’ Wilder. “That’s
where the sneaky language starts coming in from net-
works with lower fill rates. They can fill a certain amount
of inventory at a certain CPM, but it’s only 20 percent
– and the rest is filled in with CPMs at less than a dime.
That’s the language some inexperienced publishers will
miss.”
Don’t forget to ask about when and how you’ll get paid,
warns Casale-Amorim. Some networks don’t pay publish-
ers until they get paid by advertisers. “Net 30 would be
the ideal,” she says. |rP
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/HJDO:HE– David O. Klein and Jonathan E. Turco
Flogs and Farticles
N
ew media such as blogs and so-
cial networks have opened vast
territory for information dissem-
ination, networking and connectivity.
Due to their low costs, every “netizen”
with an opinion can set up a Web-based
soapbox from which to broadcast to the
world. As a result, like-minded com-
munities of writers and followers have
sprung up around any number of topics
large and small: from politics to film,
video games to parenting tips.
The word-of-mouth, informal style
that prevails on blogs and social net-
working sites, and the interactive ex-
changes that regularly occur between
author and readers, create a certain level
of trust within that community. That
familiarity and trust is bolstered by the
fact that most contributors are unpaid
for their efforts, and are instead motivat-
ed entirely by an interest in the subject
matter at hand.
This level of comfort is particularly
valuable in the context of product re-
views. Readers looking to make pur-
chases have come to expect and appreci-
ate honest appraisals from impartial and
informed reviewers who are not, them-
selves, looking to sell anything.
Advertisers have begun to take notice
of the enormous potential that blogs
and social networking sites have as ve-
hicles to promote products and services.
Riding this trend, some advertisers are
providing free samples to review sites.
Others are creating corporate sites to
provide real-time updates on product re-
leases and foster interaction with their
consumer base.
More Than Just a Blog
Affiliate marketers and other publish-
ers have discovered the advantages in-
herent in this environment. Many now
incorporate product promotion within
various blogs and Web pages. Some
have even begun creating fake blogs and
profiles masquerading as review sites,
known as “flogs” in industry jargon.
Going even farther, some aggressive
marketers have penned fake articles (or
“farticles”) and include fake or paid tes-
timonials extolling the virtues of a given
52 revenuePERFORMANCE – ISSUE 2
product that they promote on their blog
or other Web venues.
While potentially lucrative, this con-
flation of marketing and social media
carries significant risk and potential
liability. Because of the nature of the
medium as a place for amateurs and
average citizens to voice their opinions,
there is an expectation on the part of the
consumer that the author is not a paid
spokesman or salesman. But when a
publisher is engaged in marketing prod-
ucts and services for a fee, or when that
person is an employee of a company
selling the products discussed, there is
an inherent conflict of interest. Under
those circumstances, flogs, farticles and
dubious testimonials amount to a form
of deceptive marketing, and the Federal
Trade Commission (FTC), various state
attorneys general and other regulatory
bodies are cracking down.
For example, in June 2009, as part
of the increasing attention that govern-
mental regulators have directed toward
these practices, Lifestyle Lift, a cosmetic
surgery franchise, paid $300,000 in pen-
alties to the New York Attorney General
to settle allegations that it had posted
fake customer reviews of its services on
Lifestyle Lift’s blog and other websites.
A Code Is Born
In turn, the FTC recently issued a
draft of proposed revisions to its Guides
Concerning the Use of Endorsements
and Testimonials in Advertising de-
signed to address marketing efforts now
proliferating in new media. The essence
of the proposed guideline revisions is
that online marketing forums must fully
inform the unsuspecting reader of any
and all financial interests that the sub-
ject bloggers or writers have in connec-
tion with blog posts, social networking
site pages, articles or testimonials.
Pursuant to the draft guidelines, if
writers would receive a commission
for the sale of a given product or are
employed by the company making the
product, they must disclose this fact
prominently. Even where the author
has received the product for free for
review purposes, the reader must be
made aware through an appropriate
disclosure.
Similarly, the author of a fake article
(perhaps the riskiest form of market-
ing) must disclose prominently and ex-
plicitly at the top of the piece (or other
suitable location) that the article is not
from a real news organization, that it is
not a real article but, rather, that it is a
marketing device and what, if anything,
the author stands to gain by virtue of the
products or services promoted therein.
The draft guidelines also contain pro-
visions that are applicable to the use of
testimonials. First and foremost, fake
or fictitious testimonials are strictly pro-
hibited. Second, when using a testimo-
nial, the blogger or writer must not edit
or change it from the original in any ma-
terial way (outside of correcting gram-
matical or spelling errors, and cutting
down the size when doing so does not
distort the testimonial itself). Lastly,
where the provider of the testimonial is
paid or stands to gain by providing the
testimonial, this fact must be disclosed
to the reader in close proximity to the
testimonial itself.
When properly utilized, the sense
of community, group interaction and
citizen input facilitated by blogs, social
networking sites and other new me-
dia can greatly enhance your business,
whether you are an advertiser, marketer
or both. However, in order to steer clear
of regulatory scrutiny, you must take
steps to ensure that you aren’t deceiv-
ing consumers by pretending to be an
average Joe with an opinion when you’re
really just utilizing a different medium
through which to make your sales pitch.
Please note that this is only a brief
overview of some of the legal issues sur-
rounding new media advertising on the
Internet. Remember to obtain guidance
from a licensed legal professional prior
to engaging in such advertising. |rP
DAVID O. KLEIN is a partner at the law firm
Klein Zelman Rothermel with a focus in
Internet marketing.
JONATHAN E. TURCO is an associate.