The Best Is Yet to Come

Last week’s article focused on the future of affiliate marketing. If you had any doubts, Shawn made it abundantly clear that while a few dot-coms are closing up shop, affiliate marketing’s best days are still to come. Another way to look at the health of affiliate marketing is to measure the activity at the top. Specifically, this week, we’ll look at how the web’s top sites are leveraging affiliate networks to drive growth — and even profitability.

How the Stats Were Compiled

As background, all of the data contained in this article was compiled from several sources. First, we obtained the list of October’s Top 100 sites from PC Data. Next, merchant lists were obtained from the web sites of Commission Junction on November 27, 2000, Be Free on November 22, 2000, LinkShare on November 22, 2000, and Dynamic Trade on November 28, 2000. Additionally, the password-protected account management areas of Be Free and LinkShare were inspected to make sure no programs were overlooked.

These lists of merchants were compared with PC Data’s Top 100 list. Any remaining Top 100 sites not listed as operating an affiliate program with the four networks were manually visited. Then, each of the Top 100 sites was assigned a category based on the better judgment of yours truly. As a final note, one of the sites on the PC Data list — YIMG.COM — was unable to be accessed. According to PC Data, it is a “marketing site,” a moniker it applied to everything from PostMasterDirect.com to ContentMail.com to FlowGo.com.

Drum Roll, Please

First, some overall numbers. Of the Top 100 web sites, 55 operate an affiliate program. Commerce-related categories, such as retail and shopping (e.g., Amazon.com) and email, games, and sweepstakes (e.g., Grab.com) are most likely to have affiliate programs. Least likely to offer affiliate programs are sites in the news and community (e.g., MTV), web hosting services (e.g., Yahoo GeoCities), and services (e.g., Napster) categories.

Some of the categorization gets a bit tricky. For example, two of the sites in the adult category actually provide hosting services for other would-be pornographers. Perhaps these two sites could have been classified under web hosting services — or not. News and community started as a number of smaller categories that ended up being consolidated. It features everything from Monster.com and ESPN to CNET and MSNBC. The retail and shopping category started with obvious sites such as Amazon.com and barnesandnoble.com, but it eventually ended up with sites such as eBay, Travelocity.com, and NextCard. There were a few other tossups. For example, is About.com a portal or community? For the purposes of this column, About.com was classified as a community site.

Affiliate Marketing Adoption by Category
Category
N
Y
Totals
Adult
2
2
4
Retail and Shopping
2
10
12
Services
6
4
10
Web Hosting Services
8
0
8
Email, Games and Sweepstakes
10
18
28
News and Community
12
7
19
Portals, Directories and ISPs
5
14
19
Grand Total
45
55
100
) 2000 Joel Gehman

From a competitive standpoint, Be Free is clearly the leader among PC Data’s Top 100 list with a total of 26 sites utilizing its technology. In addition to shear numbers, Be Free has top name brands such as NBCi, Excite, and Ask Jeeves. In fact, Be Free is the only affiliate network to operate an affiliate program for a Top 10 site (America Online and Lycos). Overall, 12 of Be Free’s merchants are from the portal category and another 8 are from either the news or retail categories.

A few Be Free caveats: AOL Anywhere, AOL Proprietary, and Netscape all make the Top 100 list and count as 3 of Be Free’s 26 merchants. Likewise, Preferences.com (a.k.a. FreeFastFun.com) is an Excite property, Excite is on the Top 100 list, and both are Be Free merchants. The situation is the same for Be Free merchants Lycos and Gamesville (a Lycos property). So, depending on how you do the math, Be Free has either 26 sites or 22 unique customers among the Top 100. Regardless, for those Top 100 sites that operate affiliate networks, Be Free has nearly 50 percent market share.

Merchant Marketshare by Provider and Category
Category
Be Free
CJ
In-House
LinkShare
Totals
Adult
0
0
2
0
2
Retail and Shopping
3
3
3
1
10
Services
2
0
1
1
4
Email, Games and Sweepstakes
4
3
6
5
18
News and Community
5
0
1
1
7
Portals, Directories and ISPs
12
0
0
2
14
Grand Total
26
6
13
10
55
) 2000 Joel Gehman

The next largest contingent of merchants has actually opted to build its own affiliate network. Some such as Amazon.com and CDnow have been doing affiliate marketing long before today’s affiliate networks came of age. Others opting for in-house solutions are adult sites, which have long been pioneers on the web. Finally, another group of sites are almost affiliate networks in their own right — Focalex, MailBits.Com, PostMasterDirect.com, and so forth.

Web Sites With In-House Affiliate Networks

    Amazon.com
    CDnow
    Cybererotica
    Focalex
    GroupLotto
    Kara’s Adult Playground
    LifeMinders
    MailBits.Com
    PostMasterDirect.com
    Uproar Inc.
    The Weather Channel
    Webshots
    x.com (e.g., PayPal)
    ) 2000 Joel Gehman

LinkShare’s 10 merchants include sites such as JobsOnline.com, MyPoints.com, and Freelotto. In fact, 5 out of LinkShare’s 10 merchants are from the sweepstakes category. LinkShare also counts GO.com and AT&T as clients.

Perhaps those most recent developments among the Top 100 sites belong to Commission Junction. Its three merchants in the retail category are Half.com (an eBay company) and credit card issuers NextCard and Capital One. Others include lotto site Jackpot.com and opt-in emailer Z Media.

Overall, affiliate marketing looks to be well established among the Top 100 web sites. Over half of the web’s top properties operate affiliate programs; some, such as Amazon.com, CDnow, and even Cybererotica, were themselves early pioneers. Other sites, such as Jackpot.com and iwin.com, are relatively new but have wasted no time in benefiting from the power of affiliate marketing. Finally, veteran direct marketers such as Capital One and LifeMinders are leveraging affiliate networks to build Top 100 sites while staying true to their core ROI ideals. If the web’s top properties are any indication, affiliate marketing indeed has a bright future.

Note: To report any corrections or request a Microsoft Excel workbook containing the underlying data, please email joel@echofactor.com.

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