What is the Tipping Point?

November 5th, 2007

The Tipping Point: How Little Things Can make a Big Difference

“The Tipping Point” by Malcolm Gladwell

1. What is The Tipping Point about?

It’s a book about change. In particular, it’s a book that presents a new way of understanding why change so often happens as quickly and as unexpectedly as it does. For example, why did crime drop so dramatically in New York City in the mid-1990’s? How does a novel written by an unknown author end up as national bestseller? Why do teens smoke in greater and greater numbers, when every single person in the country knows that cigarettes kill? Why is word-of-mouth so powerful? What makes TV shows like Sesame Street so good at teaching kids how to read? I think the answer to all those questions is the same. It’s that ideas and behavior and messages and products sometimes behave just like outbreaks of infectious disease. They are social epidemics. The Tipping Point is an examination of the social epidemics that surround us.

2. What does it mean to think about life as an epidemic? Why does thinking in terms of epidemics change the way we view the world?

Because epidemics behave in a very unusual and counterintuitive way. Think, for a moment, about an epidemic of measles in a kindergarten class. One child brings in the virus. It spreads to every other child in the class in a matter of days. And then, within a week or so, it completely dies out and none of the children will ever get measles again. That’s typical behavior for epidemics: they can blow up and then die out really quickly, and even the smallest change — like one child with a virus — can get them started. My argument is that it is also the way that change often happens in the rest of the world. Things can happen all at once, and little changes can make a huge difference. That’s a little bit counterintuitive. As human beings, we always expect everyday change to happen slowly and steadily, and for there to be some relationship between cause and effect. And when there isn’t — when crime drops dramatically in New York for no apparent reason, or when a movie made on a shoestring budget ends up making hundreds of millions of dollars — we’re surprised. I’m saying, don’t be surprised. This is the way social epidemics work.

3. Where did you get the idea for the book?

Before I went to work for The New Yorker, I was a reporter for the Washington Post and I covered the AIDS epidemic. And one of the things that struck me as I learned more and more about HIV was how strange epidemics were. If you talk to the people who study epidemics–epidemiologists–you realize that they have a strikingly different way of looking at the world. They don’t share the assumptions the rest of us have about how and why change happens. The word “Tipping Point”, for example, comes from the world of epidemiology. It’s the name given to that moment in an epidemic when a virus reaches critical mass. It’s the boiling point. It’s the moment on the graph when the line starts to shoot straight upwards. AIDS tipped in 1982, when it went from a rare disease affecting a few gay men to a worldwide epidemic. Crime in New York City tipped in the mid 1990’s, when the murder rate suddenly plummeted. When I heard that phrase for the first time I remember thinking–wow. What if everything has a Tipping Point? Wouldn’t it be cool to try and look for Tipping Points in business, or in social policy, or in advertising or in any number of other nonmedical areas?

4. Why do you think the epidemic example is so relevant for other kinds of change? Is it just that it’s an unusual and interesting way to think about the world?

No. I think it’s much more than that, because once you start to understand this pattern you start to see it everywhere. I’m convinced that ideas and behaviors and new products move through a population very much like a disease does. This isn’t just a metaphor, in other words. I’m talking about a very literal analogy. One of the things I explore in the book is that ideas can be contagious in exactly the same way that a virus is. One chapter, for example, deals with the very strange epidemic of teenage suicide in the South Pacific islands of Micronesia. In the 1970’s and 1980’s, Micronesia had teen suicide rates ten times higher than anywhere else in the world. Teenagers were literally being infected with the suicide bug, and one after another they were killing themselves in exactly the same way under exactly the same circumstances. We like to use words like contagiousness and infectiousness just to apply to the medical realm. But I assure you that after you read about what happened in Micronesia you’ll be convinced that behavior can be transmitted from one person to another as easily as the flu or the measles can. In fact, I don’t think you have to go to Micronesia to see this pattern in action. Isn’t this the explanation for the current epidemic of teen smoking in this country? And what about the rash of mass shootings we’re facing at the moment–from Columbine through the Atlanta stockbroker through the neo-Nazi in Los Angeles?

5. Are you talking about the idea of memes, that has become so popular in academic circles recently?

It’s very similar. A meme is a idea that behaves like a virus–that moves through a population, taking hold in each person it infects. I must say, though, that I don’t much like that term. The thing that bothers me about the discussion of memes is that no one ever tries to define exactly what they are, and what makes a meme so contagious. I mean, you can put a virus under a microscope and point to all the genes on its surface that are responsible for making it so dangerous. So what happens when you look at an infectious idea under a microscope? I have a chapter where I try to do that. I use the example of children’s television shows like Sesame Street and the new Nickelodeon program called Blues Clues. Both those are examples of shows that started learning epidemics in preschoolers, that turned kids onto reading and “infected” them with literacy. We sometimes think of Sesame Street as purely the result of the creative genius of people like Jim Henson and Frank Oz. But the truth is that it is carefully and painstaking engineered, down to the smallest details. There’s a wonderful story, in fact, about the particular scientific reason for the creation of Big Bird. It’s very funny. But I won’t spoil it for you.

6. How would you classify The Tipping Point? Is it a science book?

I like to think of it as an intellectual adventure story. It draws from psychology and sociology and epidemiology, and uses examples from the worlds of business and education and fashion and media. If I had to draw an analogy to another book, I’d say it was like Daniel Goleman’s Emotional Intelligence, in the sense that it takes theories and ideas from the social sciences and shows how they can have real relevance to our lives. There’s a whole section of the book devoted to explaining the phenomenon of word of mouth, for example. I think that word of mouth is something created by three very rare and special psychological types, whom I call Connectors, Mavens, and Salesmen. I profile three people who I think embody those types, and then I use the example of Paul Revere and his midnight ride to point out the subtle characteristics of this kind of social epidemic. So just in that chapter there is a little bit of sociology, a little of psychology and a little bit of history, all in aid of explaining a very common but mysterious phenomenon that we deal with every day. I guess what I’m saying is that I’m not sure that this book fits into any one category. That’s why I call it an adventure story. I think it will appeal to anyone who wants to understand the world around them in a different way. I think it can give the reader an advantage–a new set of tools. Of course, I also think they’ll be in for a very fun ride.

7. What do you hope readers will take away from the book?

One of the things I’d like to do is to show people how to start “positive” epidemics of their own. The virtue of an epidemic, after all, is that just a little input is enough to get it started, and it can spread very, very quickly. That makes it something of obvious and enormous interest to everyone from educators trying to reach students, to businesses trying to spread the word about their product, or for that matter to anyone who’s trying to create a change with limited resources. The book has a number of case studies of people who have successfully started epidemics–an advertising agency, for example, and a breast cancer activist. I think they are really fascinating. I also take a pressing social issue, teenage smoking, and break it down and analyze what an epidemic approach to solving that problem would look like. The point is that by the end of the book I think the reader will have a clear idea of what starting an epidemic actually takes. This is not an abstract, academic book. It’s very practical. And it’s very hopeful. It’s brain software.

Beyond that, I think that The Tipping Point is a way of making sense of the world, because I’m not sure that the world always makes as much sense to us as we would hope. I spent a great deal of time in the book talking about the way our minds work–and the peculiar and sometimes problematic ways in which our brains process information. Our intuitions, as humans, aren’t always very good. Changes that happen really suddenly, on the strength of the most minor of input, can be deeply confusing. People who understand The Tipping Point, I think, have a way of decoding the world around them.


Affiliate Marketing

November 4th, 2007

Affiliate marketing is a method of promoting web businesses (merchants/advertisers) in which an affiliate (publisher) is rewarded for every visitor, subscriber, customer, and/or sale provided through his/her efforts.

Affiliate marketing is also the name of the industry where a number of different types of companies and individuals are performing this form of internet marketing, including affiliate networks, affiliate management companies and in-house affiliate managers, specialized 3rd party vendors and various types of affiliates/publishers who utilize a number of different methods to advertise the products and services of their merchant/advertiser partners.

Affiliate marketing overlaps with other internet marketing methods to some degree, because affiliates are using the same methods as most of the merchants themselves do. Those methods include organic search engine optimization, paid search engine marketing, email marketing and to some degree display advertising.

Affiliate marketing – using one site to drive traffic to another – is the stepchild of online marketing. While search engines, e-mail and RSS capture much of the attention of online retailers, affiliate marketing, despite lineage that goes back almost to the beginning of online retailing, carries a much lower profile. Yet affiliates continue to play a fundamental role in e-retailers’ marketing strategies.[1]

History

The beginning

The concept of revenue sharing, paying commission for referred business, predates affiliate marketing and the internet. The translation of the revenue share principles to mainstream electronic commerce on the internet happened almost four years after the World Wide Web was born in November 1994 when CDNow launched its BuyWeb program.

With its BuyWeb program, CDNow was the first to introduce the concept of an affiliate or associate program with its idea of click-through purchasing through independent, online storefronts.

CDNow.com had the idea that music-oriented web sites could review or list albums on their pages that their visitors might be interested in purchasing and offer a link that would take the visitor directly to CDNow to purchase them. The idea for this remote purchasing originally arose because of conversations with a music publisher called Geffen Records in the fall of 1994. The management at Geffen Records wanted to sell its artists’ CDs directly from its site but did not want to do it itself. Geffen Records asked CDNow if it could design a program where CDNow would do the fulfillment.

Geffen Records realized that CDNow could link directly from the artist on its Web site to Geffen’s web site, bypassing the CDNow home page and going directly to an artist’s music page.[2]

Affiliate marketing was used on the internet by the adult industry before CDNow launched their BuyWeb program. The consensus of marketers and adult industry insiders is that Cybererotica was either the first or among the early innovators in affiliate marketing with a cost-per-click program.[3]

Amazon.com launched its associate program in July 1996. Amazon associates would place banner or text links on their site for individual books or link directly to the Amazon’s home page.

When visitors clicked from the associate’s site through to Amazon.com and purchased a book, the associate received a commission. Amazon.com was not the first merchant to offer an affiliate program, but its program was the first to became widely known and served as a model for subsequent programs.[4][5]

In February 2000, Amazon.com announced that it had been granted a patent (6,029,141) on all the essential components of an affiliate program. The patent application was submitted in June 1997, which was before most affiliate programs but not before PC Flowers & Gifts.com (October 1994), AutoWeb.com (October 1995), Kbkids.com/BrainPlay.com (January 1996), EPage(April 1996), and a handful of others.[3]

Historic development

Affiliate marketing has grown quickly since its inception. The e-commerce website, viewed as a marketing toy in the early days of the web, became an integrated part of the overall business plan and in some cases grew to a bigger business than the existing offline business. According to one report, total sales generated through affiliate networks in 2006 was £2.16 billion in the UK alone. The estimates were £1.35 billion in sales in 2005.[6] MarketingSherpa’s research team estimated that, in 2006, affiliates worldwide earned $6.5 billion in bounty and commissions from a variety of sources in retail, personal finance, gaming and gambling, travel, telecom, education, publishing and forms of lead generation other than contextual ad networks such as Google AdSense.[7]

Currently the most active sectors for affiliate marketing are the adult, gambling and retail sectors.[8] The three sectors expected to experience the greatest growth are the mobile phone, finance and travel sectors.[8] Hot on the heels of these are the entertainment (particularly gaming) and internet-related services (particularly broadband) sectors. Also several of the affiliate solution providers expect to see increased interest from B2B marketers and advertisers in using affiliate marketing as part of their mix.[8] Of course, this is constantly subject to change.

Web 2.0

The rise of blogging, interactive online communities and other new technologies, web sites and services based on the concepts that are now called Web 2.0 have impacted the affiliate marketing world as well. The new media allowed merchants to get closer to their affiliates and improved communication between each other.[9][10] New developments have made it harder for unscrupulous affiliates to make money. Emerging black sheep are detected and made known to the affiliate marketing community with much greater speed and efficiency.

Compensation methods

Main article: Compensation methods

Predominant compensation methods

80% of affiliate programs today use revenue sharing or cost per sale (CPS) as compensation method, 19% use cost per action (CPA) and the remaining 1% are other methods, such as cost per click (CPC) or cost per mille (CPM).[11]

Diminished compensation methods

The use of pay per click (PPC/CPC) and pay per impression (CPM/CPT) in traditional affiliate marketing is far less than 1% today and negligible.

Cost per mille (thousand) (CPM/CPT) requires the publisher only to load the advertising on his website and show it to his visitors in order to get paid a commission, while PPC requires one additional step in the conversion process to generate revenue for the publisher. Visitors must not only made aware of the ad, but also pursue them to click on it and visit the advertiser’s website.

Cost per click (CPC/PPC) used to be more common in the early days of affiliate marketing, but diminished over time due to click fraud issues that are very similar to the click fraud issues modern search engines are facing today. Contextual advertising, such as Google AdSense are not considered in this statistic. It is not specified yet, if contextual advertising can be considered affiliate marketing or not.

Compensation methods for other online marketing channels

Pay per click is the predominant compensation model for pay per click search engines and their contextual advertising platforms, while pay per impression is the predominant compensation model for display advertising. CPM is used as a compensation method by Google for their AdSense/AdWords feature “Advertise on this website”, but this is an exception in search engine marketing.

While search engines only recently started experimenting with the compensation structures of traditional affiliate marketing, such as pay per action/CPA,[12] they have used similar models in display advertising, offering CPA as early as 1998.[13] By the end of 2006, the market share of the CPA/performance pricing model (47%) caught up with the CPM pricing model (48%)[14] and will become the dominant pricing model for display advertising, if the trend of the last 9 years continues in 2007.[15]

CPM/CPC versus CPA/CPS (performance marketing)

In the case of CPM or CPC, the publisher does not care if the visitor is the type of audience that the advertiser tries to attract and is able to convert, because the publisher already earned his commission at this point. This leaves the greater, and, in case of CPM, the full risk and loss (if the visitor can not be converted) to the advertiser.

CPA and CPS require that referred visitors do more than visiting the advertiser’s website in order for the affiliate to get paid commission. The advertiser must convert that visitor first. It is in the best interest for the affiliate to send the best targeted traffic to the advertiser as possible to increase the chance of a conversion. The risk and loss is shared between the affiliate and the advertiser.

For this reason affiliate marketing is also called “performance marketing”, in reference to how employees that work in sales are typically being compensated. Employees in sales are usually getting paid sales commission for every sale they close and sometimes a performance incentives for exceeding targeted baselines.[16] Affiliates are not employed by the advertiser whose products or services they promote, but the compensation models applied to affiliate marketing are very similar to the ones used for people in the advertisers’ internal sales department.

The phrase, “Affiliates are an extended sales force for your business”, which is often used to explain affiliate marketing, is not 100% accurate. The main difference between the two is that affiliate marketers cannot, or not much influence a possible prospect in the conversion process, once the prospect was sent away to the advertiser’s website. The sales team of the advertiser on the other hand does have the control and influence, up to the point where the prospect signs the contract or completes the purchase.

Multi tier programs

Some advertisers offer multi-tier programs that distribute commission into a hierarchical referral network of sign-ups and sub-partners. In practical terms: publisher “A” signs up to the program with an advertiser and gets rewarded for the agreed activity conducted by a referred visitor. If publisher “A” attracts other publishers (“B”, “C”, etc.) to sign up for the same program using her sign-up code all future activities by the joining publishers “B” and “C” will result in additional, lower commission for publisher “A”.

Snowballing, this system rewards a chain of hierarchical publishers who may or may not know of each others’ existence, yet generate income for the higher level signup. This sort of structure has been successfully implemented by a company called Quixtar.com, a division of Alticor, the parent company of Amway. Quixtar has implemented a network marketing structure to implement its marketing program for major corporations such as Barnes & Noble, Office Depot, Sony Music and hundreds more.

Two-tier programs exist in the minority of affiliate programs; most are simply one-tier. Referral programs beyond 2-tier are multi-level marketing (MLM) or network marketing.

Even though Quixtar compensation plan is network marketing & wouldn’t be considered ‘affiliate marketing’, the big company partners are considered and call themselves affiliates. Therefore, you may argue that the Quixtar company is the affiliate marketer for its partner corporation.

From the advertiser perspective

Pros and cons

Merchants like affiliate marketing,[17] because in most cases, it is a “pay for performance model”, meaning the merchant does not incur a marketing expense unless results are realized, excluding the initial setup and development of the program. Some businesses owe much of their growth and success to this marketing technique, one example being Amazon.com, especially small and midsize businesses. However, unlike display advertising, affiliate marketing is not easily scalable.

Implementation options

Some merchants run their own affiliate programs (In House) while others use third party services provided by intermediaries to track traffic or sales that are referred from affiliates. (see outsourced program management) Merchants can choose from two different types of affiliate management solutions, standalone software or hosted services typically called affiliate networks.

Affiliate management and program management outsourcing

Main article: Affiliate manager

Successful affiliate programs require a lot of maintenance and work. The number of affiliate programs just a few years back was much smaller than it is today. Having an affiliate program that is successful is not as easy anymore. The days when programs could generate considerable revenue for the merchant even if they were poorly or not at all managed (“auto-drive”) is over.

Those uncontrolled programs were one of the reasons why some of the not so positive examples of affiliates were able to do what they did (spamming,[18] trademark infringement, false advertising, “cookie cutting”, typosquatting[19] etc.)

The increase of number of internet businesses in combination with the increased number of people that trust the current technology enough to do shopping and business online caused and still causes a further maturing of affiliate marketing. The opportunities to generate considerable amount of profit in combination with a much more crowded marketplace filled with about equal quality and sized competitors made it harder for merchants to get noticed, but at the same time the rewards if you get noticed much larger.

Internet advertising industry became much more professional and online media is in some areas closing the gap to offline media, where advertising is highly professional and very competitive for a lot of years already. The requirements to be successful are much higher than they were in the past. Those requirements are becoming often too much of a burden for the merchant to do it successfully in-house. More and more merchants are looking for alternative options which they find in relatively new outsourced (affiliate) program management or OPM companies that were often founded by veteran affiliate managers and network program managers.[20]

The OPM are doing this highly specialized job of affiliate program management for the merchant as a service agency very much like Ad agencies are doing the job to promote a brand or product in the offline world today.

Types of publisher (affiliate) websites

Affiliate sites are often categorized by merchants (advertisers) and affiliate networks. The main categories are:

  • Search affiliates that utilize pay per click search engines to promote the advertisers offers (search arbitrage)
  • Comparison shopping sites and directories
  • Loyalty sites, typically characterized by providing a reward system for purchases via points back, cash back or charitable donations
  • Coupon and rebate sites that focus on sales promotions
  • Content and niche sites, including product review sites
  • Personal websites (these type of sites were the reason for the birth of affiliate marketing, but are today almost reduced to complete irrelevance compared to the other types of affiliate sites)
  • Blogs and RSS feeds
  • Email list affiliates (owners of large opt-in email list(s))
  • Registration path affiliates that include offers from other companies during a registration process on their own website.
  • Shopping directories that list merchants by categories without providing coupons, price comparison and other features based on information that frequently change and require ongoing updates.
  • CPA networks are top tier affiliates that expose offers from advertiser they are affiliated with to their own network of affiliates (not to confuse with 2nd tier)

Finding affiliate partners (advertisers)

Affiliate networks that have already a number of advertisers usually also have a large number of publishers already. This large pool of affiliates could be recruited or they might even apply to the program by themselves.

Relevant sites that attract the same audiences as the advertiser is trying to attract, but are not competing with the advertiser are potential affiliate partners as well. Even vendors or the existing customers could be recruited as affiliate, if it makes sense and is not violating any legal restrictions or regulations.

Finding affiliate programs (publishers)

Affiliate programs directories are one way to find affiliate programs, another method is large affiliate networks that provide the platform for dozens or even hundreds of advertisers. The third option is to check the target website itself for a reference to their affiliate program. Websites, which offer an affiliate program often, have a link titled “affiliate program”, “affiliates”, “referral program” or “webmasters” somewhere on their website, usually in the footer or “About” section of the site.

Past and current issues

In the early days of affiliate marketing, there was very little control over what affiliates were doing, which was abused by a large number of affiliates. Affiliates used false advertisements, forced clicks to get tracking cookies set on users’ computers, and adware, which displays ads on computers. Many affiliate programs were poorly managed.

Email spam

In its early days many internet users held negative opinions of affiliate marketing due to the tendency of affiliates to use spam to promote the programs in which they were enrolled.[21] As affiliate marketing has matured many affiliate merchants have refined their terms and conditions to prohibit affiliates from spamming.

Search engine spam / spamdexing

There used to be much debate around the affiliate practice of spamdexing and many affiliates have converted from sending email spam to creating large volumes of autogenerated webpages, many-a-times, using product data-feeds provided by merchants. Each devoted to different niche keywords as a way of “SEOing” (see search engine optimization) their sites with the search engines. This is sometimes referred to as spamming the search engine results. Spam is the biggest threat to organic search engines whose goal is to provide quality search results for keywords or phrases entered by their users. Google’s algorithm update dubbed “BigDaddy” in February 2006 which was the final stage of Google’s major update dubbed “Jagger” which started mid-summer 2005 specifically targeted this kind of spam with great success and enabled Google to remove a large amount of mostly computer generated duplicate content from its index.

Sites made up mostly of affiliate links are usually badly regarded as they do not offer quality content. In 2005 there were active changes made by Google whereby certain websites were labeled as “thin affiliates”[22] and were either removed from the index, or taken from the first 2 pages of the results and moved deeper within the index. In order to avoid this categorization, webmasters who are affiliate marketers must create real value within their websites that distinguishes their work from the work of spammers or banner farms with nothing but links leading to the merchant sites.

Affiliate links work best in the context of the information contained within the website. For instance, if a website is about “How to publish a website”, within the content an affiliate link leading to a merchant’s ISP site would be appropriate. If a website is about sports, then an affiliate link leading to a sporting goods site might work well within the content of the articles and information about sports. The idea is to publish quality information within the site, and to link “in context” to related merchant’s sites.

Adware

Adware is still an issue today, but affiliate marketers have taken steps to fight it. AdWare is not the same as spyware although both often use the same methods and technologies. Merchants usually had no clue what adware was, what it did and how it was damaging their brand. Affiliate marketers became aware of the issue much more quickly, especially because they noticed that adware often overwrites their tracking cookie and results in a decline of commissions. Affiliates who do not use adware became enraged by adware, which they felt was stealing hard earned commission from them. Adware usually has no valuable purpose or provides any useful content to the often unaware user that has the adware running on his computer. Affiliates discussed the issues in various affiliate forums and started to get organized. It became obvious that the best way to cut off adware was by discouraging merchants from advertising via adware. Merchants that did not care or even supported adware were made public by affiliates, which damaged the merchants’ reputations and also hurt the merchants’ general affiliate marketing efforts. Many affiliates simply “canned” the merchant or switched to a competitor’s affiliate program. Eventually, affiliate networks were also forced by merchants and affiliates to take a stand and ban certain adware publishers from their network.

Resulting from this were the Code of Conduct by Commission Junction/BeFree and Performics,[23] LinkShare‘s Anti-Predatory Advertising Addendum[24] and ShareASale‘s complete ban of software applications as medium for affiliates to promote advertiser offers.[25] Regardless of the progress made is adware still an issue. This is demonstrated by the class action lawsuit against ValueClick and its daughter company Commission Junction filed on April 20, 2007.[26]

Trademark bidding / PPC

Affiliates were among the earliest adopters of pay-per-click advertising when the first PPC search engines like Goto.com (which became later Overture.com, acquired by Yahoo! in 2003) emerged during the end of the nineteen-nineties. Later in 2000 Google launched their PPC service AdWords which is responsible for the wide spread use and acceptance of PPC as an advertising channel. More and more merchants engaged in PPC advertising, either directly or via a search marketing agency and realized that this space was already well occupied by their affiliates. Although this fact alone did create channel conflicts and hot debate between advertisers and affiliates, was the biggest issue the bidding on advertisers names, brands and trademarks by some affiliates. A larger number of advertisers started to adjust their affiliate program terms to prohibit their affiliates from bidding on those type of keywords. Some advertisers however did and still do embrace this behavior of their affiliates and allow them, even encourage them, to bid an any term they like, including the advertisers trademarks.

Lack of self regulation

Affiliate marketing is driven by entrepreneurs who are working at the forefront of internet marketing. Affiliates are the first to take advantage of new emerging trends and technologies where established advertisers do not dare to be active. Affiliates take risks and “trial and error” is probably the best way to describe how affiliate marketers are operating. This is also one of the reasons why most affiliates fail and give up before they “make it” and become “super affiliates” who generate $10,000 and more in commission (not sales) per month. This “frontier” life and the attitude that can be found in such type of communities is probably the main reason, why the affiliate marketing industry is not able to this day to self-regulate itself beyond individual contracts between advertiser and affiliate. The 10+ years history since the beginning of affiliate marketing is full of failed attempts[27] to create an industry organization or association of some kind that could be the initiator of regulations, standards and guidelines for the industry. Some of the failed examples are the Affiliate Union and iAfma.

The only places where the different people from the industry, affiliates/publishers, merchants/advertisers, networks and 3rd party vendors and service providers like outsources program managers come together at one location are either online forums and industry trade shows. The forums are free and even small affiliates can have a big voice at places like that, which is supported by the anonymity that is provided by those platforms. Trade shows are not anonymous, but a large number, in fact the greater number (quantitative) of affiliates is not able to attend those events for financial reasons. Only performing affiliates can afford the often hefty price tags for the event passes or get it sponsored by an advertisers they promote.

Because of the anonymity of forums, the only place where you are to get the majority (quantitative) of people in the industry together, is it almost impossible to create any form of legally binding rule or regulation that must be followed by everybody in the industry. Forums had only very few successes in their role as representant of the majority in the affiliate marketing industry. The last example[28] of such a success was the halt of the “CJ LMI” (“Commission Junction Link Management Initiative”) in June/July 2006, when a single network tried to impose on their publishers/affiliates the use of Javascript tracking code as a replacement for common HTML links.

Lack of industry standards

Training and certification

There are no industry standards for training and certification in affiliate marketing.[29] There are training courses and seminars that result in certifications. Some of them are also widely accepted, which is mostly because of the reputation of the person or company who is issuing the certification. Affiliate marketing is also not a subject taught in universities. Only few college teachers work with internet marketers to introduce the concept of affiliate marketing to students majoring in marketing for example.[30]

Education happens mostly in “real life” by just doing it and learning the details as you go. There are a number of books available, but readers have to watch out, because some of the so-called “how-to” or “silver bullet” books teach how to manipulate holes in the Google algorithm, which can quickly become out of date[30] or that advertisers do not permit anymore some of the strategies endorsed in the books.[31]

OPM companies usually mix formal with informal training, and do a lot of their training through group collaboration and brainstorming. Companies also try to send each marketing employee to the industry conference of their choice.[32]

Other resources used include web forums, blogs, podcasts, video seminars and specialty websites that try to teach individuals to learn affiliate marketing, such as Affiliate Classroom, whose founder Anik Singal won the first place and $15,000 in the Young Alumni Category of the University of Maryland $50K Business Plan Competition in 2006.[33]

Affiliate Summit is the largest conference in the industry, and it is not run by any of the Affiliate networks, many of which run their own annual events.

Code of Conduct

Main article: Code of Conduct (affiliate marketing)

A Code of Conduct was released by the affiliate networks Commission Junction/BeFree and Performics on December 10 2002. It was created to guide practices and adherence to ethical standards for online advertising.

“Threat” to traditional affiliate networks

Affiliate marketers usually avoid this topic as much as possible, but when it is being discussed, then are the debates explosive and heated to say the least.[34][35][36] The discussion is about CPA networks (CPA = Cost per action) and their impact on “classic” affiliate marketing (traditional affiliate networks). Traditional affiliate marketing is resources intensive and requires a lot of maintenance. Most of this includes the management, monitoring and support of affiliates. Affiliate marketing is supposed to be about long-term and mutual beneficial partnerships between advertisers and affiliates. CPA networks on the other hand eliminate the need for the advertiser to build and maintain relationships to affiliates, because that task is performed by the CPA network for the advertiser. The advertiser simply puts an offer out, which is in almost every case a CPA based offer, and the CPA networks take care of the rest by mobilizing their affiliates to promote that offer. CPS or revenue share offers are rarely be found at CPA networks, which is the main compensation model of classic affiliate marketing.

The name “affiliate marketing”

Voices in the industry are getting louder that recommend a renaming of affiliate marketing. The problem with the term affiliate marketing is that it is often confused with network-marketing or multi-level marketing. “Performance marketing” is one of the alternative names that is used the most, but other recommendations were made as well,[38] but who is to decide about the change of a name of a whole industry. Something like that was attempted years ago for the search engine optimization industry, an attempt that obviously failed since it is still called SEO today.[39][40]

moneybob-wikipedia-logo.gifFrom Wikipedia

E-mail Marketing

November 4th, 2007

Email marketing is a form of direct marketing which uses electronic mail as a means of communicating commercial or fundraising messages to an audience. In its broadest sense, every email sent to a potential or current customer could be considered email marketing. However, the term is usually used to refer to:

  • Sending emails with the purpose of enhancing the relationship of a merchant with its current or old customers and to encourage customer loyalty and repeat business.
  • Sending emails with the purpose of acquiring new customers or convincing old customers to buy something immediately.
  • Adding advertisements in emails sent by other companies to their customers.
  • Emails that are being sent on the Internet (Email did and does exist outside the Internet, Network Email, FIDO etc.)

Researchers estimate that US firms alone spent $400 million on email marketing in 2006.[1]

Advantages

Email marketing (on the Internet) is popular with companies because:

  • The advantage of a mailing list is clearly the ability to distribute information to a wide range of specific, potential customers at a relatively low cost.
  • Compared to other media investments such as direct mail or printed newsletters, it is less expensive.
  • An exact Return on investment can be tracked (“track to basket”) and has proven to be high when done properly. Email marketing is often reported as second only to search marketing as the most effective online marketing tactic.[2]
  • It is instant, as opposed to a mailed advertisement, an email arrives in a few seconds or minutes.
  • It lets the advertiser “push” the message to its audience, as opposed to a website that waits for customers to come in.
  • It is easy to track. An advertiser can track users via web bugs, bounce messages, un-subscribes, read-receipts, click-throughs, etc. These can be used to measure open rates, positive or negative responses, correlate sales with marketing.
  • Advertisers can generate repeat business affordably and automatically
  • Advertisers can reach substantial numbers of email subscribers who have opted in (consented) to receive email communications on subjects of interest to them
  • Over half of Internet users check or send email on a typical day.[3]
  • Specific types of interaction with messages can trigger other messages to be automatically delivered.
  • Specific types of interaction with messages can trigger other events such as updating the profile of the recipient to indicate a specific interest category.
  • Green – email marketing is paper-free

Disadvantages

Many companies use email marketing to communicate with existing customers, but many other companies send unsolicited bulk email, also known as spam.

Illicit email marketing antedates legitimate email marketing, since on the early Internet (see Arpanet) it was not permitted to use the medium for commercial purposes. As a result, marketers attempting to establish themselves as legitimate businesses in email marketing have had an uphill battle, hampered also by criminal spam operations billing themselves as legitimate.

It is frequently difficult for observers to distinguish between legitimate and spam email marketing. First off, spammers attempt to represent themselves as legitimate operators, obfuscating the issue. Second, direct-marketing political groups such as the U.S. Direct Marketing Association (DMA) have pressured legislatures to legalize activities which many Internet operators consider to be spamming, such as the sending of “opt-out” unsolicited commercial email. Third, the sheer volume of spam email has led some users to mistake legitimate commercial email (for instance, a mailing list to which the user subscribed) for spam — especially when the two have a similar appearance, as when messages include HTML and flashy graphics.

Due to the volume of spam email on the Internet, spam filters are essential to most users. Some marketers report that legitimate commercial emails frequently get caught by filters, and hidden; however, it is somewhat less common for email users to complain that spam filters block legitimate mail.

Companies considering an email marketing program must make sure that their program does not violate spam laws such as the United StatesCAN-SPAM Act (Controlling the Assault of Non-Solicited Pornography and Marketing Act),[4] the European Privacy & Electronic Communications Regulations 2003 or their Internet provider’s acceptable use policy. Even if a company follows the law, if Internet mail administrators find that it is sending spam it is likely to be listed in blacklists such as SPEWS.

CAN-SPAM compliance

Because the CAN-SPAM Act of 2003 authorizes a USD 11,000 penalty per violation for spamming each individual recipient, many commercial email marketers within the United States utilize a service or special software that helps ensure compliance with the Act. A variety of older systems exist which do not ensure compliance with the Act. To comply with the Act’s regulation of commercial email, services typically: require users to authenticate their return address and include a valid physical address, provide a one-click unsubscribe feature, and prohibit importing lists of purchased addresses which may not have given valid permission.

In addition to satisfying legal requirements, service providers stepped in to help customers to set up and manage their own email marketing campaigns. The services provide email templates, automatically handle subscriptions and removals, and generate statistics on how many messages were received and openned, and whether the recipients clicked on any links within the messages.

Opt-in email advertising

Opt-in email advertising or permission marketing is a method of advertising by electronic mail wherein the recipient of the advertisement has consented to receive it. It is one of several ways developed by marketers to eliminate the disadvantages of email marketing.[5]

Email has become a very popular mode of communication across the world. It has also become extremely popular to advertise through. Some of the many advantages of advertising through email are the direct contact with the consumer and is “inexpensive, flexible, and simple to implement” (Fairhead, 2003). There are also disadvantages attached to email advertising such as, alienating the consumer because of overload to messages or the advertisement getting deleted without getting read.

Permission email marketing may evolve into a technology that uses a handshake protocol between sender and receiver (Fairhaed, 2003). This system is intended to eventually result in a high degree of satisfaction between consumers and marketers. If opt-in email advertising is used, the material that is emailed to consumers will be “anticipated.” It is assumed that the consumer wants to receive it, which makes it unlike unsolicited advertisements sent to the consumer (often referred to as spam). Ideally, opt-in email advertisements will be more personal and relevant to the consumer than untargetted advertisements.

A common example of permission marketing is a newsletter sent to a firm’s customers. Newsletters like this are a way to let customers know about upcoming events or promotions, or new products. In this type of advertising, a company that wants to send a newsletter to their customers may ask them at the point of purchase if they would like to receive this newsletter.

With a foundation of opted-in contact information stored in a database, marketers can automatically send out promotional materials. The marketers can also segment their promotions to specific market segments.[6]

Terms

There are number of terms used in email marketing, marketers in this space have to be familiar with, to name a few: auto-responder, bounce message, click-through rate, double opt-in or opt-in, open rate and spam for example.

moneybob-wikipedia-logo.gif From Wikipedia

Search Engine Marketing

November 4th, 2007

Search Engine Marketing, or SEM, is a form of Internet Marketing that seeks to promote websites by increasing their visibility in the Search Engine result pages (SERPs). According to the Search Engine Marketing Professionals Organization, SEM methods include: Search Engine Optimization (or SEO), paid placement, and paid inclusion.[1] Other sources, including the New York Times, define SEM as the practice of buying paid search listings with the goal of obtaining better free search listings.[2][3]

Market structure

In 2006, North American advertisers spent US$9.4 billion on search engine marketing, a 62% increase over the prior year and a 750% increase over the 2002 year. The largest SEM vendors are Google AdWords, Yahoo! Search Marketing and Microsoft adCenter.[1] As of 2006, SEM was growing much faster than traditional advertising. [2]

History

As the number of sites on the Web increased in the mid-to-late 90s, search engines started appearing to help people find information quickly. Search engines developed business models to finance their services, such as pay per click programs offered by Open Text [4] in 1996 and then Goto.com [5] in 1998. Goto.com later changed its name [6] to Overture in 2001, and was purchased by Yahoo! in 2003, and now offers paid search opportunities for advertisers through Yahoo! Search Marketing. Google also began to offer advertisements on search results pages in 2000 through the Google AdWords program. By 2007 pay-per-click programs proved to be primary money-makers [7] for search engines.

Search Engine Optimization consultants expanded their offerings to help businesses learn about and use the advertising opportunites offered by search engines, and new agencies focusing primarily upon marketing and advertising through search engines emerged. The term “Search Engine Marketing” was proposed by Danny Sullivan in 2001 [8] to cover the spectrum of activities involved in performing SEO, managing paid listings at the search engines, submitting sites to directories, and developing online marketing strategies for businesses, organizations, and individuals. In 2007 Search Engine Marketing is stronger than ever [9] with SEM Budgets up 750% as shown with stats dating back to 2002 vs 2006.

Ethical questions

Paid search advertising hasn’t been without controversy, and issues around how many search engines present advertising on their pages of search result sets have been the target of a series of studies and reports [10] [11] [12] by Consumer Reports WebWatch, from Consumers Union. The FTC also issued a letter [13] in 2002 about the importance of disclosure of paid advertising on search engines, in response to a complaint from Commercial Alert, a consumer advocacy group with ties to Ralph Nader.

moneybob-wikipedia-logo.gif From Wikipedia

Pay Per Click (PPC)

November 4th, 2007

Pay per click (PPC) is an advertising model used on search engines, advertising networks, and content websites/blogs, where advertisers only pay when a user actually clicks on an ad to visit the advertiser’s website. Advertisers bid on keywords they believe their target market would type in the search bar when they are looking for a product or service. When a user types a keyword query matching the advertiser’s keyword list, or views a page with relevant content, the advertiser’s ad may be shown. These ads are called a “Sponsored link” or “sponsored ads” and appear next to, and sometimes, above the natural or organic results on search engine results pages, or anywhere a webmaster/blogger chooses on a content page.

Pay per click ads may also appear on content network websites. In this case, ad networks such as Google Adsense and Yahoo! Publisher Network attempt to provide ads that are relevant to the content of the page where they appear, and no search function is involved.

While many companies exist in this space, Google AdWords, Yahoo! Search Marketing, and Microsoft adCenter are the largest network operators as of 2007. Depending on the search engine, minimum prices per click start at US$0.01 (up to US$0.50). Very popular search terms can cost much more on popular engines. Arguably this advertising model may be open to abuse through click fraud, although Google and other search engines have implemented automated systems to guard against this.

History

In February 1998, Jeffrey Brewer of Goto.com, a 25 employee startup company (later Overture, now part of Yahoo!), presented a PPC search engine proof-of-concept to the TED8 conference in California.[4] This and the events that followed created the PPC advertising system. Credit for the concept of the PPC model is generally given to the Idealab and Goto.com founder, Bill Gross.

Google started search engine advertising in December 1999. It was not until October 2000 before the adwords system was introduced. Allowing advertisers to create text ads for placement on the search engine. However PPC was only introduced in 2002, until then, advertisements were charged at CPM. Yahoo Advertisements have always been PPC, since its introduction in 1998.

See also

moneybob-wikipedia-logo.gifFrom Wikipedia

Internet Marketing

November 4th, 2007

Internet marketing, also referred to as online marketing or Emarketing, is the marketing of products or services over the Internet. The Internet has brought many unique benefits to marketing including low costs in distributing information and media to a global audience. The interactive nature of Internet media, both in terms of instant response, and in eliciting response at all, are both unique qualities of Internet marketing.

Internet marketing ties together creative and technical aspects of the internet, including design, development, advertising and sales. Internet marketing methods include search engine marketing, display advertising, e-mail marketing, affiliate marketing, interactive advertising, blog marketing, and viral marketing.
Internet marketing is the process of growing and promoting an organization using online media. Internet marketing does not simply mean ‘building a website’ or ‘promoting a website’. Somewhere behind that website is a real organization with real goals.

Internet marketing strategy includes all aspects of online advertising products, services, and websites, including market research, email marketing, and direct sales.

See also

moneybob-wikipedia-logo.gifFrom Wikipedia, the free encyclopedia