With over half a billion users, if Facebook was a country, it would be the 3rd largest country in the world. But it would also be, by far, the poorest. New revenue projections for 2010 would place Facebook’s GDP per capita in 2010 at just over $2, less than 1.3 percent of the world’s lowest GDP.
Of course, Facebook is not a country, it’s a business — it produces revenue, not GDP. And its revenues are expected to more than double in 2010. But even at that rate (and partly because of it), the numbers still leave some room to doubt the company’s business model and future.
Between the company’s ad revenue and virtual currency trade, Facebook is expected to more than double its revenue in 2010. As AdAge reports:
A new estimate from eMarketer says the company will book $1.285 billion in global advertising alone this year, almost double the estimated $665 million the company took in last year. That figure doesn’t include Facebook’s so-called virtual currency trade, which would nonetheless account for a fraction of the company’s overall business.
With more than 500 million active users, this places the average value of a Facebook user around $2.57. Not surprisingly, however, the average US user is worth a lot more.
As TechCrunch reports, “ US ad spending on Facebook is estimated to be $835 million this year, up from $500 million in 2009.” With the US accounting for about 30% of active Facebook users, that puts that average worth of an American Facebook user around $55.

Even though the average US Facebook user is worth about 22 time more than the average, that still places the value of Facebook’s “richest citizens” at about only one-third of world’s poorest – Burundi (see link above).
Of course, any economist of mathematician would scoff at my calculations. First, calculating GDP per capita is a bit more complicated than this.
Secondly, not all US ad spend is being driven by US users. For example, just as many US advertisers target users abroad, many non-US advertisers are targeting US users.
Nonetheless, the analogy, while purposefully absurd, does bring to light some interesting challenges still faced by the social networking giant.
There are three important ways we should look at these number before jumping to any conclusions.
First, revenue is not profit. Facebook is a private company, and we have no idea what its overhead is. Essentially, we don’t know how much of that projected $1.285 billion will be tied up in salaries, infrastructure, and debt.
Second, the rate of growth itself is not sustainable. Many savvy investors would be wary of such growth trends. After all, growth rates can’t continue forever at this rate. So some hard questions loom:
Finally, what is a profitable user value for Facebook? Many affiliate programs will pay more than $2.50 for a lead or new user. So we have to wonder at what point does Facebook break into the black with their average user value.
As with all things digital, all this speculation is worth bupkis. Just as Facebook could find some way to revolutionize ecommerce, it can also end up being the next MySpace.
For now, there are only two things of which we can be sure: (1) with advertisers spending that much on Facebook, it’s an advertising opportunity we can’t afford not to at least explore; and (2) given how ads are targeted through Facebook, the social network will most certainly change advertiser expectations across the board.
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Facebook Is The Poorest Country In The World
We know there’s lots of advantages to being an affiliate, but sometimes we find ourselves gravitating towards one program or genre over another. Here are just a handful of reasons why we think it’s pretty awesome to be a fashion retail affiliate:
If you want to get in on the fashion retail fun, Share Results has a ton of great programs you can promote. Here are just a few examples:
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In a letter to Jean-Baptiste Leroy, Benjamin Franklin famously said, “In this world, nothing can be said to be certain, except death and taxes.” Even though you might not always be assured of conversions that lead to be commissions, what you can be sure of is that any money you earn as an affiliate is taxable income. If you don’t declare this income, it’s entirely possible that, someday, somebody’s going to come knocking on your door wondering why you haven’t given the government its cut.
We’re not tax experts here at Share Results, but many of us have been involved in some kind of entrepreneurial enterprise in one form or another, and have had to deal with the resulting taxes. Here are a few points that have been assembled from members of our team to give affiliates a little bit of advice on how to handle taxes.
Remember that affiliate marketing is a business
Any time a person makes money through a business venture of any kind, it is incredibly important to declare that income at tax time. Even if it’s not enough to put you into another tax bracket, the best thing we can suggest is to always be honest with your government’s revenue agency.
The reason being is that affiliates often start out slow before they become successful. Once you start to earn enough money for the government to want its cut, it’s best to make sure that you have been honest all along, so that there are no discrepancies in your earnings.
Be prepared
Recognize that any income that you receive will be taxed. To avoid having to pay a lot of taxes all at once, it is a good practice to put some money aside as it comes in, so that you will be ready at tax time. Some people like to put these funds in a high-interest account, so that they’re earning a little bit of interest while waiting to use the money to pay for taxes.
Not doing so could result in you not being able to meet your tax obligations in a timely fashion, which could result in monetary penalties. Nobody wants to pay interest on tax money, so be sure to be prepared for the inevitable.
To know how much money you have earned from the Share Results program, simply log in to your affiliate account and navigate to the payment history section. You can produce a report here that will show you your income over a specific period of time, which will allow you to find out how much you earned over a specific calendar year. For more information, contact your affiliate manager, and they will be happy to go over everything that you need to know.
Read the Terms and Conditions
Every program or network handles taxes in a different way. In some states, there is an obligation for networks to deduct taxes from affiliate earnings, while in most others affiliates are payed directly and it is up to them to declare the income. It’s extremely important to read the Terms and Conditions of any program you belong to and make sure that you are aware of the tax laws in your state or province.
Reducing the obligation
Once your business starts to grow, you should look into ways that you can reduce your tax payout. Like any business, you can write off expenses, so be sure to save receipts that can be used to lessen your tax obligation. There are also other techniques that can be put it into effect, depending upon the size of your business. To find out what methods you might be able to employ, it’s best to refer your questions to someone who makes their living dealing with tax issues.
Talk to a tax professional
In order to be absolutely certain that you are handling your tax obligations correctly, the very best thing to do is to talk to a tax professional. A Chartered Personal Accountant (CPA) should have all of the answers that you are looking for, and can often advise you on the best ways to handle your business taxes. If possible, find out from other affiliates in your area if there is a CPA that they can recommend.
You may also be able to find out some information from your affiliate manager. If you are in a different country from a program that you belong to that is generating your income, you’ll want to find out what that is going to mean for your business. The best way to find out is to refer your questions to a professional.
Once again, we are not tax professionals, but we do think that it is important that affiliates know that there is a responsibility to pay taxes on earnings, and to be prepared for that eventuality. With help from a professional accountant, or other tax professional, you’ll be able to find out the best way to ensure that you are paying your taxes properly, and keeping as much of that money as you can.
If you have any information on how you manage your taxes that you want to share with other affiliates, be sure to leave us a comment below. If you have links to places where affiliates can find out more information, feel free to leave those as well.
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Affiliates Business Tips | As Certain as Death and Taxes
In Part 1, we talked about women’s abilities to relate to one another, and how that could help them to get ahead in affiliate marketing. In Part 2, we outlined a couple of steps and helpful hints about how to pick out an affiliate niche. If you’ve been looking to get started, then hopefully you’ve already had a great brainstorm session and came up with your own niche’s. If you haven’t quite gotten around to that, don’t worry –there’s a ton of selection in great programs in Share Results. Here are just a few creative ideas we have for how you can bring an affiliate program into your online world:
You are: A recently hot-to-trot single that can’t wait to smooch a few new frogs before finding your prince (or princess) charming.
Your online world revolves around: Blogging about your extravagant and exciting dating escapades.
Your Perfect SR Program: Mate1 Affiliate program. Why not earn $2.50 for every new sign-up you refer? With a generous cookie duration of 120 days, there’s lots of opportunities to help you earn commissions from referred signups (which may come in handy in case your date “conveniently” forgets their wallet. AGAIN).
You are: The wife of an up-and-coming hip-hop artist
Your online world revolves around: Sending email newsletters documenting your husband’s tour to friends, family and fans.
Your Perfect SR Program: UnderGroundHipHop affiliate program. Earn 10% commission on all referred sales –seeing as you’re already plugging albums, you may as well make a profit off of your efforts!
You are: A new parent that is absolutely ecstatic over their new bundle of joy.
Your online World revolves Around: Posting pics of Beautiful Baby (when you have time, that is) for the whole extended family to enjoy.
Your Perfect SR Program: The Cute Kid affiliate program. While no parent ever gets over how adorable their little pumpkin is, smart parents earn $12.00 for every referred contest entry and $1.25 for every registration to The Cute Kid site.
You are: Determined to never grow up and live vicariously through your inner Peter Pan (or at least create a fun environment for your kids).
Your Online World revolves around: A dedicated space for your creative outlets, projects and stories.
Your Perfect SR Program: Imaginary Greetings affiliate program. Helping your child to believe in Santa? Awesome! Earning 25% commission from referred sales while allowing parents to do the same for their kids? Even better!
Haven’t quite found what you’re looking for? We’ve got a ton of other great options in numerous categories. Just check out our increasing list of Affiliate Programs. Or, get in touch with us to see what might be right for you!
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Currently, I am managing a couple of B2B merchants that have some fairly strict guidelines regarding promotional efforts. Our first step towards educating new affiliates is by outlining any restrictions regarding promotional methods, PPC methods, in the program terms. However, I am still shocked by the number of affiliates that either email me with questions clearly addressed in a specific affiliate program’s Terms and Conditions or their blatant disregard for these terms and conditions. This leads me to wonder, do affiliates actually read the Terms and Conditions when signing up for an affiliate program?
I know that for myself, when updating my iTunes account, for example, I rarely read the Terms and Conditions, instead I just scroll to the bottom and click “Accept”. However, I assumed in affiliate marketing that this would not be the case and people would take the time to read these guidelines.
Recently I had the pleasure of talking with Mike Allen of Shopping-Bargains, who was awarded the 2009 Affiliate of the Year by Affiliate Summit. I asked him a few questions regarding a merchant’s Terms and Conditions in order to gauge whether successful affiliates actually read the document and what they would like to see included. Our discussion follows:
Do you read all of the affiliate terms and conditions for each affiliate program you apply to?
Mike’s response:
“After reviewing thousands of different affiliate programs I generally now just scan the affiliate terms and conditions statements. In many cases I know the affiliate agreement is the standard one for that particular network and so I can essentially auto-approve. Thankfully some networks list the main points or those that differentiate one program from another — like coupon usage, paid search terms, and types of sites they will accept — so that speeds up my scans. Generally, though, my promotional efforts are far from controversial so I know I have nothing to worry about. If in doubt, I simply contact the affiliate manager.”
I found this to be very insightful and encouraging that some people do take the time to read these terms and conditions. It left me wondering, is there something more I need to do to call out any special restrictions regarding promotional methods? One of my practices is to include any special PPC restrictions in the program terms as well as this is another way to educate affiliates of any pertinent information they need to consider prior to promoting a merchant.
What information are you looking for when reviewing affiliate terms and conditions?
Mike’s response:
“Specifically I want to know the commission rate, the return days, and if the merchant will work with coupon affiliates. I want to find out who is managing the program and if management is via a dedicated affiliate manager, an OPM, the affiliate network, or essentially nobody. I also like to know if incentivized traffic is allowed and if the search policy is open. I find that these two issues often point to a low conversion rate.”
While I wasn’t necessarily surprised by his initial response, wanting to know the commission rate, return days and if the merchant is open to working with coupon affiliates, I was interested by what he said regarding incentive sites and an open search policy. We rarely manage programs with an open search policy or that allow incentivized traffic, however I didn’t realize from the affiliates’ perspective that these two things point to a program with a low conversion rate.
What is the best format for terms and conditions? Lengthy or short (bulleted list) to the point?
Mike’s response:
“I like it when merchants follow the networks’ standard affiliate terms and conditions and then provide a short and/or bulleted list of anything that differs from that network standard. I don’t like a bunch of legalese but want plain English do’s and don’ts.”
This was also helpful information and I must admit relief at the mention of not wanting a bunch of “legalese” as that is definitely not one of my strengths. His responses confirmed that we are on the right track in terms of how we present Terms and Conditions to affiliates.
If any affiliates have any further feedback on the questions above or if there is another way to present this information that you’d prefer, I would welcome your feedback.
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SEO for Squidoo Lenses
In terms of active participants in the affiliate marketing industry, Shawn Collins is no doubt somewhere near the top of the list. He’s the co-founder of the Affiliate Summit conference and the publisher of quarterly magazine FeedFront. And somewhere between writing for his Affiliate Tip blog and producing YouTube videos, he and his partner Missy Ward put together a regular AffStat Report, which I had the pleasure to speak to Shawn about just recently.
The AffStat Report has been published for the past eight years, and gathers insight from over 1,150 affiliates who are surveyed on their strategies in affiliate marketing. The goal of the report is to provide benchmarks that are central to the development of any affiliate marketing program, and really, if you haven’t had the opportunity to check out his free guide, it’s definitely worth a read.
Our team at Share Results had a chance to read Shawn’s AffStat Report back in April, and there were a number of stats that really got our attention.
I thought I would have a chat with Shawn to get his feedback on the most recent AffStat Report, and his thoughts on what this means for the industry.
Janice Scrim: What one thing about the AffStat Report surprised you more than anything else?
Shawn Collins: I am surprised more people don’t cloak their links. Based on our polling, less than 40% are doing it.
JS: According to your report, most affiliates only promote 2-5 affiliate programs. Why do think this is? Is fewer better?
SC: I’d guess it’s because most affiliates haven’t figured out how to scale their business to run many sites.
JS: Over 67% of affiliates said they used social networking sites to market. How does this compare to last year? What do you predict going forward?
SC: That question was new this year. You can see the 2009 study here. I would imagine the percentage will increase next year.
JS: One of the things I was most surprised about in your AffStat Report is that 15.8% of affiliates don’t know their gross monthly income. What’s your feeling on why this is?
SC: A great many affiliates are part-time and perpetual newbies. They haven’t tasted success, and that has limited their time investment.
JS: Your report indicates that most affiliates are fairly new to the industry, most having started in 2009. Do you think this speaks to the fact that affiliates are starting in the biz, and not following through?
SC: I’d say it’s a testament to the ever growing tent of folks who consider themselves affiliates. Just a few years ago, there was little intersection with those in SEO, social media, blogging, etc, but that has been steadily changing, as evidenced by the growing, varied attendance at Affiliate Summit.
JS: If there were one message that affiliate managers should take away from this AffStat Report, what would it be? What about merchants?
SC: I’d urge affiliate managers and merchants to read the second part of the report where affiliates sound off on various issues. Also, I think they should take note of the changing landscape of affiliates, and adjust their paradigm to recruit affiliates in all of the places the can be found these days, including bloggers, podcasters, video makers, social networkers, etc.
JS: Do you predict any changes in the stats you reported on the kind of industry/merchant types that affiliates like to promote? I was surprised that areas like Green/Eco weren’t more popular… what surprised you most?
SC: I think it speaks to the varied nature of the business that there are so many areas being equally promoted. I was not surprised by the related small interest in green. But I would have expected education and dating to be more popular.
JS: Most affiliates don’t use video in their marketing plan. Why do you think this is? Do you predict this will change in the near future?
SC: I think a lot of affiliates are intimidated by video, and also consumers aren’t really accustomed to clicking video. I think video will increase over time, as consumers interact more, rather than being passive with it. That said, it provides a good opportunity to focus on video to help dominate a niche.
JS: You are a great role model for many affiliates. Who do you look up to?
SC: I admire affiliates that have persevered and built successful affiliate-based companies through hard work and patience, such as Connie Berg, Scott Jangro, and Tim Storm.
Our team will be at the Affiliate Summit East conference coming up this August in New York City—so we’re hoping to have the chance to meet up with Connie, Scott and Tim—and hopefully Shawn too. It’s a pretty incredible three-day conference, with lots of opportunities to network, meet representatives from leading merchants, vendors and networks—plus, there are educational sessions galore.
What’s your take on Shawn and Missy’s most recent AffStat Report? Let us know your thoughts in the comments section below.
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Why Podcast – profit with your voice
You probably haven’t heard about my state’s referendum on the Advertising Tax. It’s not a ballot proposition. It’s the gubernatorial election.
Politics are complex. Many readers will bristle at my boiling down California’s election between Democrat Jerry Brown and Republican Meg Whitman to a single issue.
[To set aside all other issues I'll just say that politics in the United States today (and California for sure) are not working they way they should. Personally, I don't want to see the State Legislature and the governor's mansion controlled by a single party. Neither has shown the responsibility in governing to deserve it.]
The Advertising Tax began in California as AB178 a couple of years ago. It was co-sponsored by Assm. Charles Calderon, a Sacramento veteran who has many years of fighting for good causes and effecting change, and new-comer Assm. Nancy Skinner. Unfortunately, they were sold a bad bill by a lobbyist for many of the trade unions. What do the trade unions know about online sales? Just the false promise of increased sales tax revenue.
No one bothered to evaluate the negative effect the legislation would have on California’s small businesses such as mine. AB178 couldn’t make it out of the Revenue and Tax sub-committee and was snuck into the State’s budget in a trailer bill at the eleventh hour. Governor Schwarzenegger vetoed it and made a strong statement about it after Overstock terminated 100% of its California affiliates. We were reinstated into the program the next day.
The State Legislature is consider both New York and Colorado versions of the bill. There is a coalition of large and small businesses fighting these bills. We’ll see what happens with it.
I haven’t seen any statements from either candidate about the Advertising Tax so you might be wondering why I boil the election down to this one issue. Simply put, if Jerry Brown wins, I predict that the Legislature will pass the most encompassing version of this bill in the first 90 days of its session and Governor Brown will sign it. It will be hailed as significant legislation to generate revenue and level the playing field for brick-and-mortar and online stores. The next day California’s affiliates will see significant portions of their revenues disappear as stores that do not have nexus in California terminate their California affiliates (Amazon and Overstock probably will do so prior to the legislation taking effect).
Other stores might decide to go the route of Drs. Foster and Smith and simply close down their affiliate programs in total.
In the end, there will be few stores that start to collect sales tax from California residents and the State will see its income tax revenue decline as affiliate move out of state, sell to out-of-state companies, go bankrupt or simply just have their revenues decrease. I don’t see this as a good solution for California… and I think that Meg Whitman will veto every version of the bill, not to help eBay which is opposed to the legislation but because she understands the harm the bill will do to California’s tech industry and that it won’t help the State or brick-and-mortar stores.
I’m voting against the Advertising Tax!
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In part two of our Affiliate Guide to Standing out at a Conference, we explore setting a personal itinerary and scheduling appointments with people that will help you build your business. But first, let’s talk about personal branding.
Remember in part one of our guide we mentioned the importance of affiliates carrying business cards? Branding is everything and a conference is the first place to get started promoting yourself. Business cards are a must, but what about that initial in-person introduction? Besides smelling and looking good, people are going to pay attention to how you define who you are and/or the industries in which you specialize.
Here’s a scenario of what not to do:
My name is Frank. You know, I don’t really know what my niche is. I’m just kind of seeing how this all works for the first time.
The problem with the aforementioned statement is that it’s too vague and there’s nothing about you that stands out.
Instead, why not try the following:
My name is Frank and I’m a budding SEO affiliate with plans to launch two new domains by the end of September 2010. I specialize in virtual malls for Christmas holiday shoppers, and hot travel deals. In fact, I’m building a blog for reviews on the best resorts to stay during the winter…
Okay, so maybe you don’t need to say everything about yourself in the first five minutes, but the point is to tell people how your objectives/activities differ from others.
On another note, all conference organizers list their daily itinerary for the duration they are holding their event, so it’s important to take an advanced look at which seminars, courses, speeches, etc. will benefit you the most. Evaluate who the speakers or panelists are. Do some research beforehand to determine if they will be speaking on anything worthwhile. You may discover that they are a published author and have a wealth of knowledge on web analytics. Or, perhaps they have more than a decade of experience as a COO with a top online loyalty rewards network. Furthermore, some conferences have seminars that teach affiliates of all levels how to do something better. Perhaps it’s earning more commissions from affiliate programs, or finding innovative ways to use SEO to generate more traffic. If these events interest you, mark them down as high-priority events to attend.
On a personal level, if you don’t possess the most refined conversation skills, create a series of questions in advance to figure out what it is that you want and need to know from the professionals you meet. This is especially helpful in the case of meeting an affiliate manager or merchant for the first time. In fact, you should be making it a point to meet one-on-one with your affiliate managers at their booth, and other people of importance that can help your chances of earning more. Personal time with a professional can be vital and afford you more visibility. Take advantage of programs at conferences that offer mentorship opportunities. This is one the best types of training.
If you’re at a loss as to how to make initial contact with people and set up appointments in advance of a conference, you can always contact them directly via email or by phone one or two weeks before the big event. The beauty about obtaining a free pass to an Affiliate Summit conference is that you get to join their social network where you can set up a profile page to explain everything that you’re about, and make personal contact with people to introduce yourself and set up appointments in advance. Participating in forums like 5Star, AffSpot and ABestWeb are also great sources to see which industry members are going to the same event that you are. You can always send a private message if you’re interested in meeting someone personally.
Not every event at a conference is all about business, and requires a suit and tie. If you like to let loose, or find yourself bonding with other affiliates and want to hang out after regular conference exhibit hours, it’s a good idea to check out the different gatherings and parties taking place on and off the premises. If you’re a morning person, perhaps you prefer to attend an informal breakfast event. What if you’re an affiliate who functions better in the evening and night time? It may not be such a bad idea to attend an affiliate meet up scheduled at a hotel bar, or join other attendees at a party located at a downtown club. The point of attending these types of informal events is to increase your chances of meeting people: the more familiar you become to others, the better. You might also make friends with other affiliates who need support just like you.
In the final part or our guide, we look at what to do after attending a conference. For example, what do you do with all those business cards and contact details you’ve gathered?
Do you have any other tips about what to do at or how to survive a conference? Let us know by leaving a comment. We’d love to hear how you get the most out of attending affiliate marketing events.
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Affiliate Guide to Standing out at a Conference: Part 2
Now that warmer months are upon us, it’s no wonder that we’d rather be playing outside and soaking up the sun rather than stuck at our desks on the computer all day. Especially when there are so many memorable events coming up: graduations, weddings and Father’s Day all beg for a stroll outside. So when we read this great article from Internet Retailer about how an increasing amount of shoppers will be turning to the web in order to buy graduation presents this summer, we thought affiliates would need to hear about it in order to get that extra little motivation to work on their campaigns this summer (I promise, you’ll be at the pool only a few minutes late).
With summer vacations, national holidays and warm weathers in abundance this time of year, it’s little wonder that the malls become slightly deserted. And while online shopping in the summer isn’t always the most convenient method (c’mon, how many ice-cream trucks do you know that carry wi-fi?), it’s becoming the more popular method for gift purchases.
From the same article, there are quite a few encouraging statistics regarding online shoppers and their gift giving habits:
Among the online consumers who plan to buy graduation gifts:
With the increasing demand and usage of coupons and promotions, we think it’s never been a better time to become an affiliate than now.
Ask yourself, which of your programs do you anticipate to peak this season? If you’re a little unsure of your answer, it may be worthwhile to add a new program to your rotation that can help you boost those sales during those lazy dog days of summer. We’ve already mentioned that Graduation, Weddings and Father’s Day are excellent gift giving opportunities to bank on, so how about some programs that can help to capitalize on those gift-giving and party-throwing opportunities?
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Trend Alert: Consumers To Buy More Graduation Gifts Online in Summer 2010
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