Open Vulnerability and Assessment Language is an international, information security community baseline standard to check for the presence of vulnerabilities and configuration issues on computer systems. It standardizes the three main steps of the process: characteristics Schema for collecting configuration data from systems for testing; OVAL definitions to test for the presence of specific vulnerabilities, configuration issues, and/or patches; and an OVAL Results Schema for reporting the results from the evaluated systems. Each OVAL vulnerability definition is based primarily on Common Vulnerabilities and Exposures (CVE), a dictionary-type list of standardized names for vulnerabilities and other information related to security exposures. The tests are standardized, machine-readable XML Vulnerability Definitions, Compliance Definitions, and Patch Definitions.

• Oval • Pagejacking • Phishing • BitTorrent • VDSL • ZigBee • Ambush Marketing • Adjustment Letters • Small Scale Services • Robust Design • Black-Scholes Model • Affiliate Marketing

It is the activity of stealing content from a website and copying it into another site in order to drain off some of the original site’s traffic to the copied web pages. The term pagejacking is a combination of the words web page and hijacking, indicating that a Web page has been hijacked. Pagejackers rely on search engines to spider the contents of the illegitimate site and index the results so that the copied site will appear in the search result rankings along with the original site’s rankings. Users can be tricked into thinking the illegitimate site is the one they are searching for, and once they visit the copied site they may be subjected to mousetrapping . When mousetrapped, the user is unable to leave the scammers’ site using his or her browser’s “back” or “forward” or even “close” buttons. To pagejack, scammers make digital copies of certain web pages including meta tags. Meta tags are hidden text in a websites page that inform the Internet’s search engines about the subject matter of a site and permit the search engine to properly


typically a quarter of a megabyte (256 KB) in size. social security. is bogus and set up only to steal the user’s information. the original client application. The protocol is ‘smart’ enough to choose the peer with the best network connections for the fragments that it’s requesting. in other words. because clients generally download the file from each other. Sharing by each peer therefore begins when the first complete segment is downloaded and can begin to be uploaded if another peer requests it. monetary fee attracted as a result of that. With BitTorrent. BitTorrent greatly reduces the load on seeders. To increase the overall efficiency of the swarm (the ad-hoc P2P network temporarily created to distribute a particular file). the fragments that are available on the least number of peers.0. BITTORRENT BitTorrent is both the name of the peer-to-peer (P2P) file distribution protocol and client application for it created by programmer Bram Cohen. some will be tempted into biting. Peers download missing fragments from each other and upload those that they already have to peers that request them. Clients start uploading fragments to their peers before the entire file is downloaded. high demand can actually increase throughput as more bandwidth and additional “seeds” of the file become available to the group. making most fragments available widely across many machines and avoiding bottlenecks. The scammers then insert one change to the copy of the web page by adding a command to “redirect” any user intending to go to legitimate site to be redirected to the aberrant site. BitTorrent can support about a thousand times as many downloads as HTTP . such as passwords and credit card. The website. This scheme is particularly useful for trading large files such as videos and operating systems. also referred to as brand spoofing or carding.categorize the site in the engine. The file fragments are not usually downloaded in sequential order and need to be reassembled by the receiving machine. and the torrent file type. however. Because it is relatively simple to make a website look like a legitimate organization’s site by mimicking the HTML code. has heightened the need for providers to offer more 68 . The name “BitTorrent” refers to the distribution protocol. It is designed to widely distribute large amounts of data without incurring the corresponding consumption in server and bandwidth resources and typically. is a variation on “fishing. PHISHING Phishing is the act of sending an e-mail to a user falsely claiming to be an established legitimate enterprise in an attempt to scam the user into surrendering private information that will be used for identity theft.” the idea being that bait is thrown out with the hopes that while most will ignore the bait. The original seeder only needs to send out one copy of the file for all the clients to receive a copy. For very popular files. the bittorrent clients request from their peers the fragments that are most rare. After the initial pieces transfer from the seed. scams may trick people into thinking they are actually being contacted by a legarahtate site and are subsequently going to the site to update their account or other information. The bittorrent protocol breaks the file(s) down into smaller fragments. coupled with new competitive environment. the pieces are individually transferred from client to client. The original BitTorrent application is written in Python and its source code has been released under the BitTorrent Open Source License as of version 4. VDSL The demand for faster access to the Internet. and bank account numbers that the legitimate organization already has. Phishing. This is contrasted with conventional file serving where high demand can lead to saturation of the host’s resources as the consumption of bandwidth to transfer the file to many requesting downloader surges. The e-mail directs the user to visit a website where they are asked to update personal information.

Delivery of these services requires the downstream channel to have a higher bandwidth than the upstream channel and is thus asymmetric. including digital broadcast TV. By placing a VDSL transceiver in home and a VDSL gateway in the junction box. 69 . video teleconferencing and teleconsulting applications etc. with higher throughput and simpler implementation requirements than ADSL. VDSL has also been designed to provide symmetrical services for small and medium business customers. Like other DSL technologies. It is both symmetric and asymmetric and provides up to 52 Mbps of bandwidth over voice on a single twisted-pair copper loop. It converts the data received from the transceiver into pulses of light that can be transmitted over the fiber-optic system to the central office. The gateway takes care of the analog-digital-analog conversion problem that disables ADSL over fiber-optic lines. Symmetric VDSL can be utilized to provide short-haul T1 replacements at nxT1 rates. When data is sent back to your computer. it may be widely deployed. This architecture will allow VDSL users to access the maximum bandwidth available through normal phone lines. Actual spectral allocation varies based on line rates and whether or not asymmetric or symmetric rates are being used.complete. The use of VDSL for businesses and residences will provide the badly needed increase in bandwidth that the market demands. VDSL must transmit compressed video. VDSL connects to neighborhood Optical Network Units (ONUs). As the final length of cable into the home or office. another DSL technology known as very high bitrate DSL (VDSL) is seen by many as the next step in providing a complete home-communications/ entertainment package. where the data is routed to the appropriate network to reach its final destination. and premises VDSL units may have to implement a physical layer media access control for multiplexing upstream data. the VDSL gateway converts the signal from the fiberoptic cable and sends it to the transceiver. the corporate enterprise. The tradeoff for increased speed is loop length. distance learning. VDSL will have to incorporate Forward Error Correction (FEC) with sufficient interleaving to correct all errors created by impulsive noise events of some specified duration. and telemedicine. Technologies like cable modems and ADSL are not fast enough to support the integration of home services such as digital television and video-on-demand. plus support a host of other business applications. which connect to the central office’s main fiber network backbone. To achieve error rates compatible with compressed video. In fact. Instead of installing fiberoptic cable along each street. By using ATM over VDSL. a real time signal unsuited to error retransmission schemes used in data communications. which means that they will replace all existing copper lines right up to the point where your phone line branches off at your house. The VDSL spectrum is specified to range from 200 kHz to 30 MHz. the systems will be reliable and can provide the required quality of service (QoS) that customers expect. VDSL is a technology suitable for a full service network. the distance limitation is neatly overcome. many phone companies are planning Fiber to the Curb (FTTC). high-speed data applications. VDSL uses the higher-frequency spectrum available over standard copper above the frequencies used for lifeline plain old telephone service (POTS) and integrated services digital network (ISDN) services. video-on-demand (VoD). The key to VDSL is that the telephone companies are replacing many of their main feeds with fiberoptic cable. VDSL has been designed to deliver a host of asymmetric broadband services. This is commonly referred to as dataand video-over-voice technology. VDSL technology will be the solution for providing the market with required bandwidth now and into the future. Once the standards issue is solved. However. VDSL is the next generation of DSL. VDSL is the most promising technology capable of delivering full service. highspeed Internet access. Like ADSL. It is nearly ten times faster than ADSL and is over thirty times faster than HDSL. VDSL must be lower in cost and lower in power. more differentiated services and is accelerating the telecom industry’s development of new technologies. At the least. to name a few. most companies expect to implement Fiber to the Neighborhood (FTTN). FTTN has fiber going to the main junction box for a particular neighborhood.

It supports three different frequency bands.15. passing data from other devices. AMBUSH MARKETING Companies sometimes invest millions of rupees to ensure exclusive sponsorship rights to major sporting event only to see competitors associating 70 . With ZigBee. controls and remote monitoring. ten channels at 902 to 928 MHz and one channel at 868 to 870 MHz. however. Mesh networking can extend the range of the network through routing. It is aimed at applications with low data rates and low power consumption. These frequency bands include sixteen channels at 2. The ZigBee protocols support both beaconing and nonbeaconing networks. The maximum data rates for each band are 250 kbps.4 Low-Rate Wireless Personal Area Network (WPAN) standard.4 GHz. 40 kbps and 20 kbps. medical sensor applications. ZigBee also provides multiple levels of security to ensure reliable and secure networks. this enables heterogeneous networks. wirelessly networked. Mesh and Cluster Tree networks.11 and the Wi-Fi Alliance. The basic mode of channel access specified by IEEE 802. cost-effective. thereby lowering their duty cycle and extending their battery life. Message acknowledgement helps to ensure that the data was delivered to its destination. and toys and games. transmitting only when an external stimulus is detected. It cannot relay data from other devices. so that individual devices might run for a year or two with a single alkaline battery.The relationship between IEEE 802. multiple access” (CSMA/CA). providing customers the flexibility to choose what band best suites their needs. ZigBee uses 16 channels Direct Sequence Spread Spectrum (DSSS) modulation in mixed-Mesh. ZigBee is intended for the hostile RF environments that are common in mainstream commercial and industrial applications.4 and ZigBee is analogous to that existing between IEEE 802. In non-beaconing networks. The protocol is being evolved by members of the ZigBee Alliance whose mission is to bring in “reliable. It might bridge to other networks. There are three different types of ZigBee devices. that is. Third device is Reduced Function Device (RFD). the nodes talk in the same way that people converse. most devices typically have their receivers continuously active.ZIGBEE ZigBee technology is a wireless networking technology based on the newly defined IEEE (Institute of Electrical and Electronics Engineers) 802. is being developed for use in consumer electronics. In beaconing networks.15. which uses the frequencies to send data over distances of upto 20 meters. It is based on the packet radio standard. in which some devices receive continuously while some remain asleep. ZigBee supports Star. which is the most capable device. lowpower. Star and Peer-to-Peer topologies to deliver reliable data service with up to 65000 available network addresses. which transfers data at a few hundred bits per second. The ZigBee standard.15. while self healing increases the reliability of the network by re-routing a message in case of a node failure. smoke and intruder alarms. It is able to store information about the network. Second device is Full Function Device (FFD). they briefly check to see that no one is talking before they start. building automation and home automation PC peripherals. the network nodes transmit beacons to confirm their presence to other network nodes. inexpensive self-organizing mesh network that can be shared by industrial controls. and to allow nodes to sleep between beacons. It can support 255 nodes per network. automation. and forms the root of the network tree. There is exactly one ZigBee coordinator in each network. which can act as an intermediate router. ZigBee’s current focus is to define a generalpurpose. homeowners can set up a wireless network that is designed to use very small amounts of power.4 is “carrier sense. It has the potential to last as long as the shelf life of most batteries. monitoring and control products. First device is ZigBee Coordinator. which is just smart enough to talk to the network. based on an open global standard”. requiring a more robust power supply. Adoption of the ZigBee protocol as a single wireless standard helps original equipment manufacturers (OEMs) realize cost reductions and speed time-to-market versus current proprietary wireless or wired sensor networks.

if you are satisfied. Nowadays. Ambush marketing can be divided into two broad classes of activities i. • Purchasing advertisement time around replays of the competitor’s event. • Sponsoring subcategories within the event and exploiting this investment aggressively. ADJUSTMENT LETTERS Attention and response to customers’ complaints is an important part of customer service. However. Goodwill can be created by prompt and sincere attention to complaints. has been broadly defined as “the unauthorized association of a business or organization with the marketing of a particular event— gaining benefit for the marketing right or licensing fee applicable in order to be associated with an event. make adjustment. providers of goods and services have to ensure customer satisfaction and pay prompt attention to any dissatisfaction or complaint from the customer side. commercial sponsorship is one of the fastest growing businesses. Ambush marketing. Indirect Form of Ambush Marketing Indirect form of ambush marketing is subtle and very much hidden in nature. which damages the entire efforts of the official sponsors.. Direct and Indirect. When a customer complains. Asiad or the world cups of Cricket. Ambush marketing is very complex in nature and has a far-reaching impact on the business practices as well as the promotion of sports events. Following are the more subtle practices of ambush marketing. a term first coined by marketing guru Jerry Welsh. such as a sporting event”. Ambush marketing is very much a part of today’s corporate sponsorship climate and very much a feature of the Olympic landscape. Ambush marketing . But the commercial value of the event is nullified if the rival companies of the official sponsors’ resort to Ambush Marketing. Dissatisfied customers are likely to talk about their dissatisfaction with a product/service and may write to grievance columns of newspapers. There is growing competition. “If you are dissatisfied. which is bad for the reputation of the company.” This is a very good message to convey to customers. In reputed companies 71 . Such sponsorship is to achieve audience awareness and image enhancement. sometimes referred to as parasitic marketing. explain. football or any other game. the indirect form of ambush marketing needs to be properly addressed through effective legal system. It is typically targeted at major sporting events— like the Olympic games. tell others. and legislation to protect consumers. it broadly refers to a situation in which a company or product seeks to ride on the publicity values of a major event without having to finance the event through sponsorship. The success of a business depends on the satisfaction of the customers and it is important for a company to know whether the customers are satisfied with its goods/services or not.e. which are indirect in nature. increased customer awareness. one gets a chance to correct faults. unauthorized use of registered event logo on merchandise or false claims to the official suppliers of particular team. This sponsorship permits marketing communication to talk more directly to particular market segment in a manner that maybe more efficient and less costly than traditional media advertising. and help the customer to use the product properly. b. tell us. Today. • Sponsoring the broadcast of the event. a. one also gets a chance to be in touch with the customers and make sure that they are satisfied with the product/service.their products with the event as well. • Involving in major sponsorship promotions to coincide with the event. Though remedies are available for direct form of ambush marketing. Direct Form of Ambush Marketing Activities traditionally considered as piracies are direct form of ambush marketing. has not really been rigorously defined. For example.

but their might and impact on our lives is immense. the action must be taken by the supplier promptly and in right note. corrective and learning attitude which is reflected in the letter. one has to be helpful and sympathetic. Adjustment letter must express regret for the inconvenience caused. In fact. First of all. the letter must follow certain principles in order to fulfill its function of maintaining good customer relations. both small and large. customers who make a complaint have a fear that they may be at fault. SMALL-SCALE SERVICES From the one-man. If the letter re-assures them about using the product properly and helps them understand how to avoid trouble and get the best service.. the travel agent. and show human consideration while mentioning or describing the cause of the error. thus they are assured that their needs will be looked after. It is therefore important to assure the customer about what action is being taken to reduce the inconvenience. the neighborhood doctor. Increased disposable incomes and growing complexities of personal and professional life necessitates that individuals seek and get support of a number of services. the larger services create opportunity for a large number of small services surrounding them. who have not paid their dues and not explained the delay in payment. The small-scale services sector represents a huge opportunity for contribution to economic growth and potential for employment generation. The letter must reflect the seller’s respect for the customer’s feelings and needs. are asked if they are not satisfied with the goods/services provided. and the dry-cleaner . Customers. Secondly. The customer may be feeling angry and cheated at not getting what he/she had expected from the brand and the reply should restore that lost goodwill. and what is being done. corner photocopying shop to the local telephone booth to the downtown coffee shop. they will appreciate it. the book store. it must take pains to explain why things went wrong. and not accuse either employees. The inconvenience is always suffered by the customer. his/her confidence in company is little shaken. While drafting an Adjustment Letter whether the adjustment is to be granted or not. speedily. one must take an objective attitude to error.. no matter whose fault it was. It is the customer who has a broken-down machine to deal with. or damaged goods occupying space. When a customer finds something wrong with goods or services. and the reply to his/her complaint must restore the confidence. use courteous words.all employees are trained to be alert to customer needs. one must be able to (i) locate the error. it is a useful argument in persuading them to pay or explain. suppliers or the customer. the plumber. the auto-rickshaw driver. to put them right. one must remember that loss of money is different from inconvenience suffered. One must have a proper frame of mind and a positive attitude for writing a good adjustment letter. no matter whose fault it was. Customers who have bought a product or used a service are offered further service and adjustment in case they are not fully satisfied. or some other problem on account of not getting what was needed. Customers who have not placed orders for a long time are asked if they have been dissatisfied with products/ services. the general merchant. (iii) forgive the error. The question of who bears the loss is not to be confused with who takes action to satisfy the customer’s need. associate businessmen. we cannot imagine a day in our lives without the services of these providers. Sometimes. This helps one have a positive. know what steps to take in order to put matters right speedily. 72 . (ii) control the error. find out where it occurred and who was responsible for it. Thirdly. Some firms offer to make adjustments even without having received a complaint. they may be won back by this offer. Offer of adjustment is used as a strategy for sales and for collections. We have got so used to them that they may go unnoticed. and also know how to prevent such mistakes from occurring again.

etc. They account for 52 per cent of the GDP and have . (2) Growth in services that support. a primary or secondary sector. and communication. hotels. therefore. etc. schools. (3) Growth of services that are dependent on local purchasing power that has improved significantly over last few years. personal tutors (education industry). schools. medium. electricity. Another dimension to the issue is that the larger part of the employment will have to be generated for rural and sub-urban populations. Additionally. haircutting . 73 . Central. Small services will be created for the following reasons: • Truncated · Demand for local services (way 3) where larger players will find it difficult because of (i) their lack of knowledge of needs of local segments. state. In next few years. A sector with this combination of high share and high growth rate will obviously provide an enormous boost to overall growth. and pathology laboratories (health care industry). opportunities for those who are under-employed. create and support a competitive and extensive small-scale service sector. Another way of looking at the national economy is the three tiers-large. the need for these services and providers will increase. There is a growing trend of franchised services. Examples here include the laundry service. local transport. More local wealth would be created. meet local demands on one hand. Examples are tour operators and guides (tourism industry). plumbers. health care.While GDP grows at 8-plus percentage. or are an extension of. eating joints. The capacity for self-employment and employment in small services is enormous. education. and lack of economies of scale to serve a disbursed market on the other. The small-scale sector accounts for 92 per cent of employment. and communication. lawyers. freight transportation. The service sector will grow in three ways: (1) Growth in service industry. they would play a vital role in transition from agrarian. therefore. Livelihoods will have to be found to suit people. the virtuous sharegrowth relationship clearly rests on trade. doctors. radiology. Thus. Looking at the components of this sector. especially in agriculture and allied sectors must be created. more services demanded and. etc. and retailers. partly because of growth in ways 1 and 2. maintenance. whose current occupations are dictated by their background and who have trade skills handed down through generations. That would set the development cycle in motion. total exports. housekeeping . insurance. like banking. This component contributes about half of the service sector GDP and grew at almost 12 per cent during the recent years. etc. more employment generated. As the economy gets better day by day. coaching centres. to a service-led economy. transport. like call centres. and B2B selling. and small sectors. Small-scale services can. close to one crore jobs have to be created annually. like tourism. etc. grown at almost 10 per cent during current years. In fact. Services have shown remarkable buoyancy. small-scale services form a large part of the economy and will continue to play that increasingly important role in the growth and development of the economy. (iii) their high overheads on the one hand. and local governments should. and telephone booths and cyber cafes (communication). to industry-led. contributes 59 per cent to the GDP and takes care of almost 50 per cent of the . doctors. (ii) their failure to build and have sustainable relationship with local segments. restaurants (especially in small cities and suburban townships). and communication. the contribution is largely from the service sector. and create livelihoods to locals on the other. · As fringe service providers-independents in various service industries or franchisees of bigger service provider (way 1).

and servicing shops (automobile. software. It was only recently that a new classification of Small-Scale Service Businesses and Enterprise (SSSBEs) was created and accepted by the Union Government. Over the last five years. Examples include canteens. against the emerging global environment. housing. Many companies around the world have saved hundreds of millions of dollars by using the method in diverse industries: automobiles. Technology upgradation. banking. Funding this part is often difficult or costlier. a lot more needs to be done. The challenge of the small service sector. A change in attitude through education and awareness programmes is a prerequisite. Lack of finance (especially credit) facilities There are little or no finance facilities that are available to small-scale service businesses. improve quality. These efforts have had great impact on the cost structure and hence on the bottom line of those companies. and communication. Some of them are: Poor managerial and professional skills It lacks an understanding of markets and has a myopic approach to selling. and component deterioration) and the cost of failure in the field the Robust Design method helps ensure customer satisfaction. warehousing. and professionalism are the major imperatives. Still. transport. etc. storage. Genichi Taguchi. like roads. xerography. telecommunications. greatly improves engineering productivity. ROBUST DESIGN Robust Design method. pioneered by Dr. also called the Taguchi Method. Inadequate human capital There is a dearth of skilled service workers to cater to the needs of these smaller service businesses. thus facilitating flexible designs and concurrent engineering. The small service sector has always been there. is to become competitive. retailers (FMCG products). Many of them have reached the maximum potential of the traditional Six Sigma approach. etc. communication. It often uses the shoot and scoot strategy.· As support service providers to the agriculture and manufacturing sectors (way 2). While little headway is made in some cases. and training institutes. rather than using the sustainable approaches via relationship building with customers and other stakeholders. this sector has suffered several deficiencies. important but least attended to. 74 . and simultaneously reduce development interval. Robust Design method is central to improving engineering productivity. Lack of governmental support The government has failed to prioritize the support of small-scale services. power. The state itself must commit and attract private investment in roads. the method has evolved over the last five decades. but the working capital requirements may be huge. enhanced credit flow. with both technical capabilities and interpersonal skills. it is the most powerful method available to reduce product cost. etc. schools. Pioneered by Dr. equipment). Many of them have little capital expenditures. By consciously considering the noise factors (environmental variation during the product’s usage. a number of state governments are yet to provide and extend the necessary benefits to these. Given this state of affairs. Robust Design focuses on improving the fundamental function of the product or process. manufacturing variation. security services. Genichi Taguchi after the end of the Second World War. Inadequate infrastructure Small services have suffered primarily because of the lack of necessary infrastructure facilities. electronics. Little or no institutional support was available to this sector. Indeed. etc. many leading companies have invested heavily in the Six Sigma approach aimed at reducing waste during manufacturing and operations. power. Adequate facilities for vocational training must be created to cater to the requirements of these small services. There needs to be an investment in creating human pool. call centres.

“design directly influences more than 70% of the product life cycle cost. and the so-called risk free AFFILIATE MARKETING It is an online marketing strategy that involves revenue sharing between online advertisers/ merchants and online publishers/salespeople. N-GARCH. In a very real sense. Options traders often refer to “the greeks”. the classic Black-Scholes model remains dominant with options traders.com really started the affiliate ball rolling.Brenda Reichelderfer of ITT Industries reported on their benchmarking survey of many leading companies. puts various links. markets often move in ways not consistent with the random walk hypothesis. Delta measures how much an option price will move relative to the underlying. banners. and products on ones website. is a tool for pricing equity options. After ARCH came an explosion of different models. Myron Scholes and Robert Merton were awarded the Nobel Prize in Economics. The most significant is that volatility. amazon. companies with high product development effectiveness have earnings three times the average earnings. registrations or a combination of factors When it comes to the web. Vega is the sensitivity of the option price to changes in implied volatility. however. By combining these assumptions with the idea that the cost of an option should provide no immediate gain to either seller or buyer. Prior to its development there was no standard way to price options. The Design for Six Sigma approach is focused on 1 Increasing engineering productivity so that new products can be developed rapidly and at low cost. and 2 Value based management. There are known problems with the BlackScholes model. In everyday practice. These are mathematical characteristics of the Black-Scholes model named after the greek letters used to represent them in equations. rate of return. and volatility is not. they are as likely to move up as they are to move down. Compensation is typically awarded based on performance measures such as sales. The key adjustment is the replacement of constant volatility with stochastic. and companies with high product development effectiveness have revenue growth two times the average revenue growth. Vega. in fact. an implied volatility for a given price can be calculated. etc. all incorporating ever more complex models of volatility.” She also observed. a set of equations can be formulated to calculate the price of any option. a measure of how much a stock can be expected to move in the near-term. BLACK-SCHOLES MODEL The Black-Scholes model. There are several assumptions underlying the Black-Scholes model. and Theta is the expected change in option price due to the passage of time. The model also works in reverse: instead of calculating a price. The Black-Scholes model takes as input current prices. is a constant over time. H-GARCH. “40% of product development costs are wasted!” These and similar observations by other leading companies are compelling them to adopt improved product development processes under the banner Design for Six Sigma. at any given moment. especially Delta. volatility. for which Fischer Black. it launched its “associates” program and now counts over 450. length of time until the option expires worthless. clicks. the Black-Scholes model marks the beginning of the modern era of financial derivatives. EGARCH. an estimate of future volatility known as implied volatility. When 75 . Autoregressive Conditional Heteroskedasticity. was developed to deal with these limitations. GARCH. The basic model works something like this: A small website owner registers with amazon (or any other affiliate program). constant. generally defined as the interest rate of short term US treasury notes. and Theta. In July 1996. or random. The Black-Scholes model also assumes stocks move in a manner referred to as a random walk.000 sites in its network. A Black-Scholes variant known as ARCH.

consider merchants that don’t even have formal affiliate programs: auction buying clubs like Mercata and MobShop. compensation schemes are as varied as the merchants themselves from a 15 percent commission on Amazon books. Several dozen scripts are listed. and responding to webmaster queries. 76 . Running a network of affiliates is not rocket science. but it does require quite a bit of time and commitment.visitors click through on these links and purchase a book or other product. The model is now being flexed to drive behavior beyond mere commerce transactions. it’s in the relationship. For that reason. many merchants are finding that outsourced providers offer a compelling solution. or marketing services like credit cards. While amazon only pays when a sale is made. Instead of earning a commission. an entirely new category has been born: affiliate networks. the goal is for marketers to only spend money when their particular performance objective is met. Thousands of merchants now use affiliate marketing to get business done. has even taken to the web and affiliate marketing with its Quixtar site. In a few short years. the “affiliate” is rewarded with a lower purchase price. In fact. Looking a bit farther afield. the small website owner is paid a commission for generating the sale. These sites work on the premise of variable volume discounts as demand for an item increases. have modified the model paying instead for clicks or qualified leads. Complete do-it-yourselfers should check out the listing of affiliate scripts at the CGI Resource Index. Other programs like Dynamic Trade and Commission Junction offer additional services: cutting checks. In all cases. LendingTree offers up to $14 per qualified application and NextCard offers $20 per enrolled cardholder. one of its oldest practitioners. And yet for all the jargon and hype. Amway. to 1 percent on Dell PCs. affiliate marketing has become a significant force in how commerce on the web occurs. In fact. the value isn’t in the transaction. Both sites encourage buyers to get their friends to buy too. the concept really isn’t new. reporting. sending out end-of-year tax forms. While amazon remains the most visible pioneer. Consumer retailers like FogDog offer a fairly typical 5 percent. On the financial services side. the price goes down. merchants selling big ticket items like cars. As merchants have rushed to build programs. Some vendors like LinkShare provide tracking. and affiliate recruiting. affiliate marketing is about connecting buyers and sellers and rewarding those that facilitate the connections. After all. ranging from freeware and shareware to scripts costing a few hundred dollars.

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