Who's Who in Affiliate Marketing?

On December 2nd, internet.com and Refer-it hosted Affiliate Solutions ’99 in New York City, which attracted a veritable Who’s Who in affiliate marketing. Over 400 e-commerce executives came together to explore Affiliate Marketing strategies, including keynote speaker Timothy Choate of Freeshop.com and panelists from Priceline.com, ProFlowers.com, NextCard, and BeFree.

“internet.com now offers a variety of seminars focused on vertical business-to-business topics similarly covered by several of its web sites in the internet.com network. Affiliate Solutions will be produced in 2000 once again in New York City and San Francisco, and will also make inaugural launches in London, Sydney and Hong Kong,” said internet.com chairman and CEO Alan M. Meckler.

Cynthia Aylward, Marketing Manager of Refer-it, kicked off the day with opening remarks, which were punctuated by the recent Forrester Report (New Affiliate Marketing Models). The report stated that affiliates currently deliver 13 percent of online retail sales, and that by 2003, this figure is projected to increase to 21 percent of online sales.

“Throughout the past year, we have seen explosive growth in affiliate marketing as the Refer-it directory has grown by nearly 300 percent with more than 1,400 programs listed to date,” stated Aylward.

Keynote to success: Timothy Choate excited the standing room only crowd as he rattled off the impressive numbers for the successful Freeshop.com affiliate program. After one year in operation, the program has grown to 45,000 affiliates. The Freeshop.com program boasts 35 percent to 40 percent active affiliates, compared to the industry average of 10percent to 20percent, and the company has experienced a 15 percent increase in traffic per month, which he attributed to affiliate links.

Timothy stated that any company not considering an affiliate program is making an active mistake, and that “they have to be a lot more aggressive about it, because there’s massive opportunity, and if people focus their resources and time, they’ll discover the opportunity like we have.”

According to Mr. Choate, some necessary components for building a strong program are automatic approval of affiliates, appropriate staffing, performance-based awards for affiliates, and constant outreach and communication with the affiliates.

Mr. Choate concluded that integrating an affiliate program into your company is a no-brainer, because the programs provide increased revenue, a wider reach in the marketplace, and increased brand awareness. These benefits are compounded by the fact that affiliate programs are an efficient traffic source that offers high conversion and a low operating cost.

Communication is key: One theme was consistent throughout Affiliate Solutions ’99 in New York City. Communication is the cornerstone of a successful affiliate program, and the relationship between an affiliate and merchant should be an interactive partnership.

Tricia Travaline, Vice President of Marketing Communications for Be Free stated, “If you have a good program, your affiliates are going to stay very loyal to you, but you can’t get complacent. You have to build your channel, you have to continually incent your affiliates, and you have to continually work with your affiliates to develop better promotions, to understand what works, and to really establish a selling partnership with them.”

Joe Michaels, co-founder and President of Nexchange, agreed that communication is key. “Communication with affiliates is everything. They are not retailers, so merchants must teach affiliates to think like retailers. Affiliates need help. It’s best to have retail experts on staff to communicate with the affiliates. Nexchange has assembled a team of retail experts to communicate with affiliates and the results have been fantastic,” said Michaels.

How soon is now? What does the future hold for affiliate programs? There are many different models emerging in the industry, and it will be interesting to see how the affiliate space evolves as we cross into the next millennium.

Roman Godzich, Director of Communities for Vstore.com, noted the emergence of storefront affiliate programs and asserted that “people are beginning to discover the difference between a ‘pay-per-action’ affiliate relationship and owning their own store.”

Affiliate Solutions ’99 keynote speaker Tim Choate foresees B-to-B affiliate marketing playing a larger role in the industry, as well as more participation from the affiliates with promotions and merchandising efforts. Timothy also touched on a possible move towards direct deposit commissions for affiliates.

On December 10, Commission Junction announced that they will soon begin paying all U.S. and Canadian affiliates through the Federal Reserve’s Automated Clearing House (ACH) electronic transfer system. Talk about developing in Internet time.

The future promises to be an exciting road with many new and evolving revenue opportunities for merchants and affiliates.

As the seminar drew to a close, James Marciano, founder of Refer-it, offered some perspective on the state of the industry. “This industry has grown exponentially in its brief existence. We have witnessed the creation of a dynamic industry within an industry. As the first software solution provider to go public, Be Free’s IPO has been very well received – a validation that affiliate marketing provides another solid business model,” said Marciano.

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