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Microsoft continues to wrestle with the e-commerce side of its search engine, Bing, in an effort to more effectively compete with Google’s dominance.

The company discontinued Bing Cashback as of July 30. Bing Cashback was a novel way for shoppers to save money by earning a percentage of the price paid for an online product as “cashback” – in essence, an instant rebate. The cashback was paid out of proceeds from search advertising fees from participating stores. Consumers received cashback payments through PayPal, direct deposit, or mailed checks.

George Michie, CEO & Co-Founder of The Rimm-Kaufman Group, a search engine marketing firm, tells Internet Retailer, “Cashback was a big win for merchants and users, but I don’t know how big a win it was for Bing in terms of buying market share.” According to Microsoft, while Bing Cashback attracted over a thousand merchant partners, it “did not see the broad adoption that we had hoped for.”

Bing is trying to remove the sting from killing Cashback with the launch of Bing Shopping, which appears as a navigational link on the Bing home page. Bing Shopping is following Google’s lead in offering online retailers free clicks from the Bing Shopping page. Microsoft confirmed that a product feed service for merchants was being offered without charge, so product listings and images show up in search results as essentially free placements. Eventually, Microsoft is expected to add paid advertising to the mix.

Bing Shopping is a nicely organized shopping portal, with featured products, featured stores, and “products people are talking about.” It will offer some new search marketing features; for example, “shopping slide shows” allow consumers to click through product photos and purchase a product of interest, directly through the portal. Bottom line, however: Bing Shopping is basically similar to Google Product Search, with some added functionality.

Bing Shopping will also be similar to Google Product Search in ranking products. Rick Backus, co-founder of CPC Strategy, an online data firm, tells Internet Retailer, “Bing’s data on search clicks will be part of its overall algorithm that ranks product search results, giving popular retailers an advantage.”

But the big question about Bing Shopping is whether the search engine can drive enough traffic to build the numbers merchants want, especially in terms of sales conversions. Bing Cashback presented a pretty compelling reason to shop because of attractive rebate offers. Bing Shopping has no such built-in incentive.

Bing Shopping needs to do two things quickly: get as many merchants as possible to participate, and get as many shoppers as possible to visit. Launched last summer, Bing has seen increases in traffic, but its U.S. market share is under 10 percent, while Google’s is over 71 percent. Microsoft has also been losing money in its Online Services division.

If Bing Shopping can’t make the cash registers ring for online retailers, dumping Bing Cashback may come back to haunt Microsoft.


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Will Shoppers Click with Bing Shopping?

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Between the potential of Facebook Ads and the launch of Apple’s iAds, many are wondering what’s next for Google. Despite the rumors around Google Me and the potential of Google Android, it looks like the company’s very next move might not be into social or mobile advertising. Rather, the company might be looking at additional ways to middle-man more of the ad-purchases across the net.

Some recent moves by Google and its properties indicate that the company is moving to address the concerns from investors that it has limited short-term growth potentials. Specifically, the company seems to be pursuing three distinct sets of short-term strategies for monetizing more of the third-party content on the web.

Three Short-Term Revenue Solutions

Although Google posted a 25 percent gain in Q2 2010 over the same quarter the previous year, Google stock has dipped 21 percent since January, suggesting that investors are beginning to lose faith in the company’s ability to move beyond click revenue. Google seems to be reacting to these trends by aggressively pursuing three additional ways of capturing online ad dollars and monetizing third-party content:

  1. New ad sales partnerships for Adwords
  2. New ad software acquisitions
  3. Added ad product development

On the sales partnership side, Google has struck a deal with Omnicon to bolster its display ad business. As the WSJ reported, Google will get guaranteed sales from Omnicon, and Omnicon will receive added technology and analytics support:

Under the deal, Omnicom [...] is expected to spend hundreds of millions of dollars to buy display ads for its clients through Google over the next two years [...] In return, Google will work with Omnicom to build a global “trading desk” that allows the company to buy display ads more easily on Google’s ad exchange, an auction-like system that matches ad buyers and sellers to advertising space across large groups of websites.

Omnicom says it was already buying ads on Google’s exchange using its own technology system.

As part of the deal, Google [...] will provide analytics services to Omnicom to help it understand how its display ads are performing [...]

As for new software acquisitions, it looks like a recent acquisition by Google may be integral to providing Omnicon with the aforementioned “trading desk.” Specifically, Google recently acquired technology that would allow them to middle-man ad buys on content and ad network beyond their own. As Adage reported:

Google recently acquired Invite Media, a company that specializes in software allowing advertisers to buy across multiple advertising networks, or what is known as a “demand-side platform.” Though he did not mention that acquisition, (President of Global Sales Operations for Google Nikesh Arora) suggested a trading desk-type system would be required to streamline the process for advertisers, which accurately describes how Invite Media’s software operates. “It allows very effective buying across the network,” he said of Google’s latest display efforts, “and every player in that ecosystem can get their fair share.”

Finally, some added product development seems to be coming to Google Ventures-backed Pixazza. The start-up has been on the campaign trail again, recently raising an addition $12 million for their crowdsourced “Adsense for images” platform. This new round of funding brings it closer to leaving private-beta, meaning that Google can soon be generating commissions from the third-party images that generate third-party sales. As TechCrunch reported:

Pixazza’s tagging technology is [...] compelling; the startup crowdsources workers to list products and tag them with the appropriate link to a retailer. Additionally, Pixazza shares advertising and affiliate revenues with publishers.
[...]
The company has also announced that it reaches more than 25 million unique visitors per month through its 75-plus publishers, which include US Weekly and Access Hollywood. Of these visitors, more than 70% are based in the U.S. Additionally, Pixazza says that the startup delivers commerce-enabled photos at a rate of 8 billion image views per year, a 60% increase in the last three months.

Pixazza plans to use its new fund fuel product growth and expand to international markets.

Although this last pursuit is admittedly longer-term than the previous two, it still rests on a product that has an established market presence, revenue model, and client/partner base (unlike Google Me or any potential Android ad platform). Of course, the service will have to come out of private-beta before any final call could be made.

Short-Term Survival

It seems that Google has no shortage of options for bolstering its short-term revenue growth. Two of the three options, moreover, rest on expanding the potential of the already proven Adwords platform. These two should be sufficient to sustain investor confidence until the next big product roll-out.

That being said, the looming question is what that next big product roll-out will be. Facebook has such a lead on “social graph” data that it might be reckless of Google to invest too heavily competing with Facebook Ads. However, iAds also has the advantage of tapping into the data of 150 million iTunes users, 4-5 million iPhone users, and 225,000 iPhone apps.

So, yes, while Google has to still expand its revenue sources in the very immediate short-term, its market predominance will still depend on the development of some new longer-term product. In addition to developing the potential of existing products to their full potential, the company must still seek to innovate new technologies if it hopes to retain its prestige and dominance.


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Despite the continuing growth of Web advertising, the dirty little secret of the industry is that the manner in which Web results are measured is far from standardized. In fact, it varies widely from one source to another. Since numbers between two analytics systems will rarely, if ever, produce an exact match, industry professionals are often times forced into a bit of guesswork  looking for trends in the data and ignoring anomalies that are not statistically relevant.

Dave Morgan, founder of media marketing company Simulmedia, tells Mediaweek, “When you see a different number on the ad server and a different number on a log-based server, you don’t have confidence…” Chris Hiland, president of media networks at IPG-owned Geomentum, adds, “The limitations and the confusion are very disruptive to our conversation with the client.”

Morgan and Hiland are referring to the fact that Web measurement criteria aren’t reported by websites in a consistent way. “The lack of standardization has undermined advertisers’ confidence in the Web, discouraged them from spending more online and depressed ad rates,” writes Lucia Moses of Mediaweek.

That’s why, Moses says, the IAB (Interactive Advertising Bureau) is looking to make its largest impact yet on the measurement world – by working towards a “gold standard” for Web measurement. Moses reports that while the IAB will first deal with online media, it has a broader mission – to attempt to standardize the way advertising is measured across all media platforms. Good luck.

IAB has already worked towards standardization by issuing voluntary guidelines two years ago. Those guidelines were meant to get Website owners to agree to definitions like “unique users” and establish acceptable standards for audience measurement. Apparently, however, voluntary means just that – and that’s why a lack of standards still exists.

One of the challenges is simply the fact that there are numerous measurement companies that analyze online data. These companies “have their own proprietary ways of doing things, and there will be some levels of resistance,” says Dave Morgan. Nonetheless, some of the companies are supportive of the IAB’s effort. John Burbank, CEO of Nielsen Online, one of the leading measurement firms, tells Mediaweek he supports standardization because it is essential “if brand advertisers are to move more dollars online.”

There is some urgency to the IAB’s desire for standardization. As I’ve mentioned in a previous post, online privacy concerns are being raised both in the United States and Europe. While standardization isn’t a solution to the larger privacy issue, it is one way to help head off government regulation, because it demonstrates that the industry as a whole is moving in the right direction.

The IAB has a big job ahead of it. Standardization of Web measurement has been a long time coming, and it’s important that it happens sooner rather than later. If advertisers are to have a sense of confidence that they are getting what they are paying for – and the results are being measured using commonly accepted metrics – then everyone will benefit.


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Will There Finally Be A Web Measurement Standard?

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If there were a godfather of social media, he or she might be rolling in their virtual resting place. What everyone knows about social media is that creating and connecting to a community is much easier, compared to five years ago. On the other hand, technology makes it too easy to do social media badly; especially when it’s seen as something the “interns should do” and the basics of communication, upon which social media is based, are forgotten. Even large corporations among the Fortune 500, with dedicated social media teams, are guilty of just broadcasting at their audience instead of interacting with their audience.

A decade ago when I was speaking to directors from management consultancy Accenture, one of the roadmaps they laid out for user engagement for a website. There’s no arcane or cryptic explanations behind the levels of engagement listed. The are rather self evident:

Levels of the website engagement matrix

Level 1: information publishing/bulletin board. Information publishing refers to the one-way transmission of information – think of an email or newsletter sent to you without a valid reply-to email address.

Level 2: interaction. Interaction is where an individual or organization uses technology to communicate (two-way interaction) with it’s leads, prospects, customers, partners and other stakeholders.

Level 3: transaction. Transaction is like interaction, with added commerce elements that have a direct implications for the businesses’ bottomline.

While this sounds simple on paper and there’s mutual agreement that to the majority, if not all, businesses want to operate at level 2 or possibly level 3; the reality is that most business will settle for level 1.

Where have things gone wrong? Let’s look at an example.

Facebook Fervor

The rage at the moment is for a business to set up a Facebook fan page. In fact you could call it a requirement in the corporate playbook. The reasons behind why they’re doing this or what they are hoping to achieve are frequently not entirely clear. Often it comes down to a matter of everyone else is doing it, and is done with the sole objective to get “as many fans as possible”.

So you’ll see fan pages gathering up 10,000 fans and in some cases 50,000 or more fans within a single week, especially if the business has brought in social media hired-guns to fan the social media flames and create buzz.

Based on a casual survey of big brand fan pages on Facebook, the next step is where as many as 80 percent of well-intentioned fan pages fail.

If you’re just publishing product discount codes and press releases on your fan page, I think you’re one of the leading contenders for a “Social Media epic fail” award. You’ll get bonus points if some fans who “like” your fan page who post feedback about a bad experience and you don’t response to it…ever.

We’re all aware that online marketing spend can be as low as 10 percent or less than it’s offline TV, newspaper or magazine equivalent, But folks, that shouldn’t mean you just put in 10 percent of the effort to get it working, does it?

In this age of Twitter retweets and Facebook wall postings, having bad PR circulated about your brand virally through the Internet is just a button press away.

Facebook Mayhem

What’s the worst that can happen with a badly-managed Facebook Fan Page campaign?

Mistake #1

Not understanding the democratic nature of Facebook, probably the largest online community, is probably a mistake. Once your campaign is live, you don’t have control over the conversation, you can attempt to steer it, but attempts to delete, censor, moderate conversations can be as useful as plugging a thumb into a dam that’s ready to explode.

Mistake #2

Failing to move beyond just publishing discount codes and press releases thus simply broadcasting at your audience. Looking at successful fan pages and adapting best practices will help. Here’s the obstacle too – I was looking for a couple of successful fan pages to cite as examples here. Instead, I found a fan page for a popular musician and questions like “When do you next perform in LA?” go answered even though it was posted 2 months ago. So even record labels and musicians can get it wrong. You might have to trawl through 100 fan pages to find a great one to emulate. On the plus side, you’ll stand out once you have your house in order.

Mistake #3

Timeliness and fast response times. While some Facebook users expect a response time within minutes, I don’t think it’s a realistic expectation, unless you spend your entire day logged onto Facebook. But if you’re a social media manager and every comment or response requires approval from the CEO or board before it goes online, you’re looking at a tough road ahead. Businesses should empower their social media team to respond to comments and feedback without having to get every response rubber-stamped.

Elements of a Smart Facebook Fanpage Campaign

A well thought-out Facebook fanpage campaign should encompass the following:

1) What are the objectives of the FB campaign? Is it merely a branding exercise? Is there a performance component?

2) How are you measuring engagement or creating interaction? Is reaching level 2 of the website engagement matrix important? (I hope it is.) Is there a dedicated employee or consultant monitoring the channel? Is there a response time by which comments are responded too? Will anyone lose their head if a customer has an urgent question that is unanswered for more than 24 hours?

3) How is the success of a social media campaign being measured? Are social media stats packages in place, even if as simple as clickthroughs being measured through a redirect link, or Google Analytics being embedded in an external website?

Some organizations will go overboard and gun for transactions (level 3) without first establishing and building a relationship, but these tend to be solitary eBook marketers, rather than the corporates we’re referring to.

If there was a proverbial double-edged sword, social media would probably be it. Being able to go beyond just the “everyone else is doing it” coolness of Facebook and Twitter and instead focus on the fundamentals of communication will bring your campaign to the next level.


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Cooking Up A Batch Of Facebook Fan Page Mayhem

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So, once you decide which social media channel is right for you business, you have to find a way to measure the success of whatever it is you did with all those social media.

Well, just as social media can be used in all kinds of different ways, there are different tools out there to help you evaluate your social media efforts from different perspectives. Here’s an overview of the four most promising tools that I’ve used or demo’d in recent months.

Radian6 for Social Media Monitoring

Of all these tools, Radian6 offers the most extensive social media reporting, but that’s because this is all the tool does. The data can also be tailored for a variety of settings, including customer service, marketing, sales, and management.

With Radian6, users set-up monitoring campaigns according to branded or general keywords. This creates a “river of news” that includes every Tweet, blog post, or other social mention of those keywords. Users can then use a variety of parameters to package that data and export it around their needs.

Radian6 pricing varies according to the number of campaigns you’re monitoring and the volume of activity on those keywords. However, users can also set up any campaign for free for seven days to determine if its worth monitoring and how much it would cost to monitor it.

PostRank for Social Engagement

PostRank offers several services. The company is best known for its alternative to Google’s PageRank. Essentially, PostRank helps publishers and PR folks measure the social impact of their content.

The way it works is that the PostRank algorithm assigns different values to different actions on the social web, such as Tweets, blogs or social bookmarks. The more effort that an action takes, the more it is worth in the eyes of the PostRank algorithm.

The PostRank of any piece of content helps publishers determine what kind of content to focus on (i.e. the most engaging), and PR agencies evaluate whether a piece of content actually resonated with the target audience.

Knowem for Reputation Management

KnowEm helps brands secure their name in the social media sphere. The platform also provides reporting on social media activity around branded usernames.

Depending on the package you choose, KnowEm will let you register your username on up to 300 social networks. Networks are also categories. Users can prioritize the kinds of communities that are most relevant to them.

The reporting function is like Google Alerts on steroids. In addition to tracking brand mentions, the software also trends those mentions in a way that helps users determine where in the world and on the web users are talking about their brand.

SocialTALK for Social Content Management

The SocialTALK suite of tools is geared for brands that produce and syndicate content across several different channels. SocialTALK also offers reporting on how that content performed in the social sphere.

SocialTALK provides an interface where content creators upload content for moderation. Once a moderator approves the content it can be syndicated to any number of outlets, such as company blogs, Facebook profiles and fan pages, and Twitter accounts.

After the content is syndicated, users can get reports on the comments, responses, likes, and shares that the content received. This helps publishers determine what kind of content worked best with what channel.

Do You Really Need Any of This?

If the goal of your social media activity is just to drive traffic, then Google Analytics can probably fill most of your reporting needs. But the real potential of the social web is that it exists in the cloud, away from your own site.

So if social media is a substantial part of your marketing, PR, or customer service strategies, you should probably consider some additional tools. Using something tailored to your needs and activity you can better determine what’s effective and how to invest your resources.

After all, the allure of social media for most business is its cost-effectiveness. Unlike media buys, so long as you have a competent in-house team, it doesn’t require any additional investment.

If your brand is actually investing employee time into social media you want to measure what’s working and what’s not so that your team isn’t wasting their time (and your money).


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4 Social Media Tools for the Enterprise Level

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Join Marc Purtell and Stuart Smith of the SEM/SEO team of TenGoldenRules.com as they present, “Ten Steps for Analyzing Website Traffic with Analytics.”

This presentation will explain the following topics:

• Setting up a Google Analytics account
• Setting up Google Analytics tracking on your website
• Understanding critical metrics such as Exit Rate, Bounce Rate and Traffic Source
• How to use analytics to improve website performance and identify trends
• Advance tools such as Actions and detailed reporting

This free webinar will take place on Wednesday, April 21, 2010 12:30pmEST – 1:30pmEST. To register and for more information please visit: Ten Steps for Analyzing Website Traffic with Analytics

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InternetMarketingClub.org Presents Ten Steps for Analyzing Website Traffic with Analytics

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Yesterday I laid out the rather unsettling truth — how affiliate marketing has evolved from something sexy that every brand “must have” into a  “necessary evil” strategy.  Everyone from state politicians to marketers themselves have piled on to create problems for the performance marketing industry.  With this in mind I ask…

How can marketers work to grow affiliate-related revenue, new customers and better quality leads in a world that’s already decided “fewer affiliates are better?”

Today, I’ll report on how some brands are boldly going where few have gone before with affiliates, to ring the cash register and create better leads.  Now I know there are more stories out there so let’s hear more stories in comments… yes?

Clashing Strategies
Direct marketers (in particular) are becoming increasingly proficient in Web strategies like search.  And this means they increasingly find themselves butting heads with their own affiliates — many of whom already have staked out valuable digital turf.

So is it worth playing nice with affiliates?  If so, how can marketers maintain healthy doses of affiliate-generated sales while maximizing incremental revenue and avoiding cannibalization of existing search campaigns?

These questions have no easy answers.  The competitive search environment is leading many marketers to prefer Web affiliates that send incremental visitors — those resulting in sales or leads that otherwise may not occur as a result of marketers’ own efforts.

Armed with affordable, easy-to-use Web marketing analytics packages, marketers are having an easier time gaining the vital understanding needed to produce such cravings for efficiency.  In the end, marketers are hoping affiliates can bring them customers or leads that they, themselves, cannot access.

Marketing Channel Attribution
As if there weren’t enough issues there’s now another:  channel attribution or “scoring” for what marketing strategy caused the eventual sale and to what degree.

Marketers (retailers in particular) increasingly realize that shoppers click around and touch multiple marketing campaigns before purchasing. A customer initially may be referred to a site by a paid search ad.   He/she may then return to the site via a comparison shopping engine and then again through a CPA affiliate, at which point he uses a promo code from a direct mail piece — generating four distinct (often unconnected) points of marketing cost.

Affiliate programs are sometimes targeted — with some marketers reconciling affiliate program performance with the influence of various other marketing channels customers come in contact with (as part of the path to purchase).  This has caused quite a ruckus as well.  Some marketers have been practicing “zeroing out”/negating affiliate commissions — sometimes transparently and sometimes not.

But marketers say the only thing they’re zeroing is zeroing-in on cost efficiency — moving beyond a singular goal of increasing sales or leads.  It’s rather ironic if you think about it considering that the channel works on pure performance (unlike others).  It’s also most often the channel that delivers the “last touch” (last click) before the customer transacts.

But this “last click” is often precisely why affiliates get dinged.  Brands tend to see the associated cost as somehow “extra” or inflationary.  As an example, an instance where a coupon gets redeemed in addition to the affiliate commission… occurring within 12 hours of an email to the marketer’s list.  What actually prompted the sale and to what degree?

More and more brands are wanting to know what works, why and how they can “turn the dials” to create more buying behavior.  Not to mention achieve a smaller cost to return each online sale.  This is a marked change from the more “hands-off” practice of years past where efficiency was all but blindly assumed.

But is such an analytical approach necessary or beneficial and to what degree?  Doesn’t it fight a more holistic approach to Web marketing?

Experiment, Share and Manage Risk
What’s the secret sauce for affiliate marketing success in these trying times?  In a few words:  investment and risk. Breaking away from the pack is a factor of how much risk brands are (or are not) taking in forming deeper partnerships with affiliates.  Higher risk tends to yield higher payoffs:  more new customers and incremental leads.

As an example, affiliate management company AMWSO used an award-winning video approach to drive sales for conscious goods marketer Gaiam.  The focus was balanced across large and small affiliates.  Similarly, Paul Moss, of Moss Affiliate Marketing’s approach at Insurance.com involved selectively underwriting affiliate search optimization efforts.

I say again underwriting affiliate SEO efforts.  Truly bold and gutsy.

Both AMWSO and Moss’s firm are using a highly measured approach to ensure ROI — one that involves data-sharing with affiliates.  This isn’t un-measured or renegade.  And it’s not an affiliate versus marketer situation.  This is true teamwork where marketers actively outsource to affiliates in areas that they don’t want to hold expertise in, yet gain value from associating with a affiliates that do.

“Optimization of campaigns cannot occur in a vacuum — it’s a team effort,” says Chris Sanderson of AMWSO, who agrees with Moss that marketers who take a cautious, yet trusting, view of affiliates see better results.

Use New Tools
Marketers and affiliates have begun to use tools to leverage online social media — video, images, blogs and various, easy-to-use publishing platforms.  New tools like PopShops.com — hailed as the largest searchable collection of affiliate products — are building blocks for innovation, offering opportunity to affiliates and advertisers.

According to ValueClick Vice President of Corporate Strategy John Ardis, most marketers hold back on providing affiliates with the simplest of tools.  In a recent conversation with me he cited giving affiliates the ability to “deep link” (bring visitors directly to product pages) on e-commerce sites.

“A great many marketers are not fully realizing what’s available to them today,” Ardis says.

Make Change: Traditional and Experimental
How can marketers work to grow affiliate programs in safe ways that make sense?

“Set affiliates up as an extension of your company — so they’re complementary.  Yes, some cannibalism will exist, but it’s foolish to think you can overpower the Internet and don’t need affiliates to achieve comprehensive coverage,” says Moss.

Growth and expansion go hand in hand with expansion into social media.  But we cannot forget bread-and-butter strategies: search marketers, landing page optimization affiliates, the tried-and-true stuff.   Some brands are diversifying their affiliate bases in traditional ways that involve rolling up sleeves and interacting with larger numbers of smaller affiliates.

Based on my research to pull together this story, it’s important to note that there’s no silver bullet here.  This involves work — contacting potential affiliate partners using e-mail, instant messaging, Facebook, telephone, etc.  Some marketers are focusing on a larger group of smaller affiliates.  The goal is to grow the affiliate base and take advantage of emerging social networks.  These are the brands to watch.

Even with limited tools and staff, some marketers are quietly investing in grassroots approaches that involve rolling up sleeves, “dialing and e-mailing for dollars.”  It’s good, old-fashioned work with less reliance on large affiliate networks for new partners.

Looking forward, social media’s role remains unclear, although we’re seeing early participants.

Ultimately,  some suggest we’re on the cusp of a customer recommendation-based model that looks like affiliate multilevel marketing — turning everyone into an affiliate.  Witness Amway’s Fanista, ToldYa.com and RadicalBuy.com as early signs of scalable recommendation-based affiliation.

Buzzillions.com hails itself as a Web site of “product reviews from people like you.”  This affiliate collects and displays customer reviews — from individuals verified as actual buyers of the products — provided by participating advertisers, like Staples and Zappos.com.  Buzzillions.com’s goal is to help consumers make educated purchasing decisions.

“We’re in the business of putting an end to buyer’s remorse,” the Web site claims.

And let’s not forget Alvenda and their pilot client, 1800Flowers over on Facebook.

According to experts I’ve spoken to lately, given new Web 2.0 technologies, more people than ever are publishing their opinions online.  As this trend continues, we won’t see a few affiliates rise to the top but, rather, a large base of new affiliates continually emerging.

This, they say, is reality.  And ignoring the ‘long tail’ of affiliates is becoming a thing of the past.  What do you think?


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Affiliate marketing: Redeveloping An Underdeveloped Channel Part II

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Online affiliate marketing has evolved from something every brand “must have” into a “love it or hate it” strategy.  The whole affiliate marketing concept is leaving many marketers torn — from Amazon to Zappos and everyone in between.  And now many state legislatures are ganging up on performance marketing as they struggle to find ways to dig themselves out of debt.  This only adds to marketers confusion.

So how can marketers work to grow affiliate-related revenue, new customers and better quality leads in a world that’s already decided “fewer affiliates are better”?  A few bold voices are suggesting that we’re on the cusp of a resurgence in this tried-and-true strategy.  And they’re sharing their secrets on how to get the job done.  Let’s hear more ideas in comments, folks!

Two Distinct Camps
Like many direct marketers, Amazon.com has continually announced changes to its affiliate program — once even disallowing search-based affiliate to link to its site.  But Amazon is constantly investing creatively and aggressively in smaller affiliates to create results.  They’re not running scared.  They’ve worked diligently to curate affiliate relationships.  Something ReveNews Editor, Angel Djambazov has always preached.

“But in the end, marketers are tending to fall into two camps,” says Dr. Amanda Watlington, owner of the Charlestown, Mass.-based search consultancy Searching for Profit.

“Those who all but abandon Web affiliates as a reliable means to acquire incremental sales or new customers, and those who make attempts to work with them with an eye toward the bottom line.  Working with affiliates requires both knowledge and discipline.”

Auditing your own affiliate and search programs to identify inefficiencies is a popular place to start, says Watlington, who also recommends giving more consideration to customer path to purchase.

Time for a new approach?
Ultimately, increasing performance-based transactions or leads requires more distribution partners.  Yet most marketers grab low-hanging fruit — the obvious affiliate partners — and ignore the rest.  The results are stagnant, sometimes shrinking affiliate programs housing a few dozen (or less) performers.

“While fewer affiliates might be more easily managed, you are certainly leaving dollars on the table with this approach,” says Paul Moss , formerly of Insurance.com and the founder/CEO of Las Vegas-based Moss Affiliate Marketing.

Moss believes that the more marketers move toward this “less is more” mentality, the farther they get from the original promise of context-based affiliate marketing pioneered by Amazon.com.

New Customers v. Loyalty
Moss is among a few veterans who believe the predominant approach used by most direct marketers — where the focus is exclusively on top affiliates — is dangerously flawed.  Many who use this strategy suffer symptoms such as flat revenue and flat customer file growth.  Traditional, powerhouse affiliates like Ebates, Upromise and Cashbaq (oh, and FatWallet too!) often act more like retention-focused partners — not affiliates delivering new customers.

This, of course, has been the issue du jour for ShareASale’s Brian Littleton who has worked diligently to find a solution to the issue.

As he told Lisa Picarille:

“It’s our view that the loyalty channel, which is essentially what most of the download applications are, does not belong in the affiliate channel.  The affiliate channel should be focused on bringing in new customers, new businesses.  Affiliates are able to extend beyond the brand and seek out different demographics.  The purpose of a loyalty marketer is to drive consumer loyalty; it’s a different goal.”

Many believe that focusing on top-producing affiliates is good advice.  Yet they also admit it’s problematic when it’s the only focus — when there’s a lopsided investment in a relatively small number of ponds to fish in.  Plenty of fish swim in these ponds, but this is not a growth strategy on the customer acquisition side.

“While there are few affiliates who are ‘sure things,’ you never know how someone will perform until you try them,” says Moss.

Next up I’ll take a look at how marketers have, often times, chosen to do battle with affiliates… and how this continues today at the cost of growth.  We’ll also look at how marketers thirst to understand “what works” and trim costs has stymied growth.  This is known as the “channel attribution” issue.

And we’ll learn how some bold brands are boldly going where few have gone before with affiliates to ring the cash register and create better leads.


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Affiliate marketing: Redeveloping An Underdeveloped Channel

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Suppose a prospective customer of yours searches on the web for a category that your product or service is in. Or, maybe the person does a search on one of your direct competitors. Wouldn’t it be nice to know that – and to place an ad for your product right then?

That possibility is now a reality. As the Internet progresses towards becoming the most popular ad medium, big players like Google (DoubleClick Ad Exchange), Microsoft (AdECN exchange) and Yahoo! (Right Media Exchange) are enabling advertisers to place instant ads through a technology called “real-time bidding.” Advertisers can “examine site visitors one by one and bid to serve them ads almost instantly,” according to a recent report in The New York Times.

Google’s DoubleClick Ad Exchange, for example, is a marketplace that creates a pool of global advertising inventory and brings buyers and sellers of online display advertising together. Buyers can create ad programs with precise targeting, defined bids and budgets, and frequency caps on purchases. With the addition of real-time bidding, an advertiser can basically “make on-the-fly decisions about what ads to show based on what people [are] doing on the Web.”

Neal Mohan, Google’s VP of product development, tells The New York Times that before real-time bidding arrived, “the technology hasn’t really been there to deliver on the promise of precise optimization, delivering the right message to the right audience at the right time.” Mohan sees the advance of real-time bidding as “not just a big opportunity for Google, but more importantly, we think that the overall display advertising pie, as it exists online today, can be substantially larger.” Google, of course, would win on both ends of the spectrum, since it is also involved in search advertising as well.

Apparently, advertisers who like the sound of “instant” ads are willing to pay more for the ability to target them precisely to prospective customers. A Google study indicates that “publishers received prices on average that were 130 percent higher on ads sold through the DoubleClick exchange,” which suggests that advertisers will pay more for ads that are targeted. United Online, which owns sites including Classmates.com, confirmed that it is selling real time ad space for “50 percent higher prices on those spaces.”

AppNexus, mentioned in the Times report, just introduced an ad platform for real-time advertising. The platform, which has been used by eBay for the past year, now allows an advertiser to use advanced analytics to go through thousands of ad transactions per second. The platform “lets companies funnel what they know about a Web user into the ads they show that person.” Matt Ackley, eBay’s VP for Internet marketing and advertising, says the company has seen “triple-digit increases in return on investment” using the ad platform.

Real-time bidding may inject some new life into online advertising, which has lost ground to search advertising in recent years, but questions about its widespread adoption loom. For one thing, only big advertisers who use ad networks currently have access to it. For another, real-time bidding raises the issue of privacy – long a bane of online ad targeting. Jeffrey Chester, founder and executive director for the Center for Digital Democracy, told The New York Times, “The fact that you can be auctioned off in 12 milliseconds or less just illustrates how privacy in this country has rapidly eroded.”

On the positive side, though, real-time bidding could lead to the day every online marketer dreams about: being able to show the ideal prospect an extremely relevant ad message – at precisely the time it could lead to an inquiry or sale.


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Are Real Time Ads A Game Changer?

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A world in which customers walk through the door of a business and get a coupon especially crafted for them is much closer, thanks to Foursquare.

The application, which has become the dominant player in the world of mobile, geo-specific check-ins, has unveiled a set of analytics for businesses which will put a name and a face to loyal customers.

The dashboard, which is still in alpha, is debuting for 30 select customers before a bigger roll-out. The dashboard gives businesses a look at who is checking in, breaks them down by when they come in, gender, and number of visits. Businesses will also be able to see which platform customers are using to share their status.  If your visitors are heavy into Twitter or Facebook, you can follow them there. Other types of information tracked includes: total check-ins, unique visitors, male-to-female ratio, and top visitors.

Writes Zachary Wilson of Fast Company,

“With priceless data like this, it’s easy to imagine a blow-up in participating venues coming soon. More businesses means more users, more users means more businesses, and suddenly Foursquare is the Facebook of check-ins.”

Foursquare plans to add additional real-time information for business users, including weather updates. Potentially, this dashboard could be used by large chain businesses (like a Wal-Mart or Starbucks) from a central location with a view of all of their outlets in real time.

“We’ve been talking with quite a few [large corporations] who are excited about the potential for this,” said Tristan Walker, Business Development at Foursquare, in an interview with Mashable. “Once we can add purchase information on top of check-ins things can get pretty interesting.”

This valuable information helps Foursquare give itself even more distance ahead of competitors like Gowalla, and the addition of a newly designed iPhone app will give FourSquare an additional bump in users.

As the dashboard and analytics are tweaked, based on the alpha tests, plans are to introduce the service to the 1,000 or so registered businesses currently running specials on Foursquare.


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Foursquare Offers Up User Data with Check-in Analytics

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Unless they are prefaced by dollar signs, numbers are not sexy, which is why social media experts have spent years avoiding them. Like the cool kids, they often seem more interested in being invited to the party than delving into what the party is for. The argument is often that numbers and metrics only serve as distractions to engagement and dialogue.

As a model matures in order for it to maintain a business role, make no mistake social media is about business, its impact needs to be quantifiable. Forrester Research estimates that social media will make up 3% of overall interactive marketing spend in the US in 2010 with the highest delta of growth in any channel over the next four years. As social media’s channel grows so will the pressure to quantify.

Interactive_Marketing_Spend_Data_Forrester_SM2

Brian Solis, author and principal of the FurtureWorks agency, recently posted a well written piece about the Maturation of Social Media ROI on Mashable. In it he tackles the main crux behind the issue that many CMOs are spending against social media without being able to quantify a return on those efforts. Brian believes this is:

“A direct result of not tying activity to an end game, the ability to know what it is we want to measure before we engage. Doing so, allows us to define a strategy and a tactical plan to support activity that helps us reach our goals and objectives.”

Warm and Fuzzy Metrics

It used to be that simply being invited to or crashing the social media party was enough. Companies hired interns to catalog content and rushed to create Facebook Fan Pages and Twitter accounts, often because everyone else was doing it.

Then came what I like to call “warm and fuzzy metrics”. Words like engagement, participation, and involvement became key terms for defining online interactions with consumers. Similar to views in CPM, these terms are measured in volume of followers or retweets. Influencers sprouted from this tactic as a way to amplify that volume; after all you wanted to have the best DJ at your party.

Then came terms like trust and affinity; these were less fuzzy in nature and involved a brand’s core group of followers.

Of the warm and fuzzy metrics of social media ROI, only customer service is tangible. Both in terms of the increased ability for people to rate and review products, as well as the opportunity for customer service teams to engage and provide proactive response.

If your company is just participating in social media than maybe the fuzzy metrics are enough. If your company is running social media campaigns and considers social media a marketing channel than fuzzy metrics are a great way to get your budget slashed. It is no coincidence that, according to MarketingSherpa, inability to measure ROI, lack of budget funding, and management resistance are barriers to companies implementing social media campaigns:

Marketing_Sherpa_Report_Challenges_To_Implementing_Social_Media

For those who insist that “marketing is not sales”, I invite you to use that exact statement with your CMO and see how quickly your budget is diverted elsewhere. As David Vellante, co-founder of ITCentrix, Barometrix, and The Wikibon Project, cautions:

“I’ve seen multimillion-dollar print and television advertising initiatives get the green light because CMOs understood the media — and I’ve seen $10,000 social-media efforts scratched because execs didn’t get it.”

The Key is Return on Ad Spend

ROAS (Return on Ad Spend) is what many CMOs will look at when considering budget allocation against a marketing channel. By definition it has a tighter set of parameters than ROI because it doesn’t consider less fuzzy elements like branding or engagement. This metric for success is specifically looking for a direct dollar value generated as compared to the actual budget being spent.

If, as a study by Bazaarvoice indicates, 80% of CMOs expect upwards of 5% of their revenue to come through the social media channel then the spend against generating revenue better be tracked.

According to Fast Company, Dell made over $3 million in revenue through the Dell Outlet account on Twitter.  But, considering much of what happens in Dell’s Twitter account is coupon or offer driven, what was the true ROAS of hitting that $3 million? Never mind the additional cost of coordinating social media tactics and messaging within a company as big as Dell which, as Lionel Menchaca, Chief Blogger for Dell Inc says is challenging, “Executing against all those [social media] strategies will take a lot more effort and collaboration between many departments within the company.”

More telling is a recent report by Omniture on the impact of a social media campaign for National Geographic. While the campaign was seen as a success, in the report the Omniture analyst states that traffic from social media is 20x less likely to purchase than average visitor.

Laying the Foundation

What rings true for Dell is true for both large and small business interested in participating in social media.  Collaboration between all stakeholders is necessary in order for a campaign to reach its potential.  Here are the steps you need to take to lay a proper foundation for launch.

  1. Know Your End Game: As Brian Solis said defining your end game is necessary in order to be able to quantify results.  Know what are you trying to accomplish and how you want to try keep track of it all.
  2. Define Your Metrics: What metrics do you need to track to quantify results: Leads, Registration, Sales?
  3. Check Your Tracking: I can’t tell you how often a new client doesn’t have the right pixel/cookie set on the right confirmation page. If your success metric is sales make sure you’re not just tracking leads. This requires testing.
  4. Set Expectations: Benchmarking is great way for you and your CMO to have realistic expectations from a campaign. Fireclick and Coremetrics are two tools that can provide benchmarks based on industry averages related to conversion rates, cart abandonment, and other valuable data. They also allow you to pull data from a specific vertical.

Intelligence Gathering

This is where you gather the numbers that will let you know how your campaign is doing and where the dollars are. There are a lot of tools out there that will provide pretty dashboards but few that provide useful data. Here are some of the tools I recommend:

  1. Google Analytics: Google Analytics is the defacto analytics system in most companies. You can track visits, page views, bounce rates, etc. Be sure, if sales are a key metric, that the ecommerce portion is activated.
  2. Hitwise: Owned by Experian, Hitwise relies on ISP data of approximately 10 million users in the United States alone. Although an expensive solution, their Clickstream data provides some of the best intelligence on upstream and downstream traffic to your website.
  3. Coremetrics: Along with their benchmarking services Coremetrics offers an analytics suite whose main differentiator rests in what they call their LIVE (Lifetime Individual Visitor Experience) Profiles. This is essentially an analytics expansion on the concept of customer types.
  4. Fireclick: Owned by Digital River, is a streamlined version of many of the tools available for free through Google Analytics but in an easier to customize interface. The main advantage here is their Advanced Marketing Suite which ties you into other vendors and components in the Digital River portfolio.
  5. Radian6: Radian6 is a buzz monitoring software that allows you to monitor certain keyword sets and capture data round them. The data includes such things sentiment, engagement, reach, and inbound links. It also allows you to port that data to your CRM.
  6. HubSpot: In some ways HubSpot is more of a site optimization tool than an analytics tool. It does compile interesting sets of data around competitors and around reach as well as lead identification tools.
  7. Omniture: I have a love/hate relationship with Omniture. Used correctly, with sufficient internal technical resources as well as buy-off from the marketing team on consistent use of campaign hierarchy, SiteCatalyst along with the other Omniture, is an amazing if overly complicated resource. It is however a very expensive one and there is a reason that Omniture holds yearly conferences on how to use their product.  They have a great Facebook app measuring toolset.

Making Sense of it All

Having the tools to capture the data you need is great but numbers are of little value if they are not actionable.  Here are some guidelines to avoid drowning in the data:

  1. What to Do When the Numbers Don’t Match: First of all get the notion of the numbers matching out of your head. The numbers between two analytics systems will rarely, if ever, produce an exact match. The objective is to look for trends in the data and ignore anomalies that are not statistically relevant. If the data matches within 10% or less variable then consider the data to be inline. If the variant is 11%-49% then it might be worth doing some due diligence. For instance are all the pages that should be tagged, tagged correctly? If the variant is greater than 50% then something is wrong with the setup itself or with one of the systems you are using.Dilbert.com
  2. Spotting Trends is Vital: One of the most common mistakes I see is when business get excited about high sales numbers while completely ignoring the fact they overspent to get those numbers. Sales matter little if ROAS is in the negative. Trends are a great way to spot deltas which often provide indicators of the health of campaign. Sample key trends are:
    1. number of new to file customers
    2. number of transactions
    3. changes in repeat customers
    4. number of customer referrals
    5. uplift in other marketing channels
  3. 3) Looks for Wildcards and Outliers: Sometimes you are so focused on the campaign data that you become blind to important clues. My favorite personal example of this was during the measurement of a campaign that Jones Soda ran with I Can Has Cheezburger in 2008. If you looked just at the number of sales that directly came from the I Can Has Cheezburger website the campaign numbers barely broke even.  However, when we looked closer at the analytics data we saw 12,000 additional posts created because of the campaign. When attributable sales from those posts were factored in sales showed 172% month-over-month growth and 42% year-over-year growth!With the amount of distribution sources available in social media always take time to see if elements of your campaign have been distributed beyond the initial sites you targeted. It will allow you to spot new opportunities to expand your campaigns.
  4. Cross-channel Cannibalization and the Last Cookie in Debate: Most advertisers use cookies to know which ad network to pay and which marketing channel to credit for sales. Shannon Paul, community manager for PEAK6 Online and OptionsNewsNetwork, had a great post on this debate here. Cross-channel cannibalization is when the marketing costs/efforts of one marketing channel are not considered because a different marketing channel is being given credit for them. This impacts both budget allocation and proper allocation of costs. Since social media buzz often serves to uplift other marketing efforts they are most impacted by improper allocation.For example, a social media click originating from a Twitter focused campaign refers a customer to the site but a coupon affiliate closes the sale by providing a coupon to the customer. In a “last cookie in” system only the affiliate in this example would get credit for the sale. In an ideal world both the first and last referrer of a customer would be cookied so that you would know which channel is referring new customers and which is closing them, thus properly giving credit to both channels and minimizing cannibalization. Awareness of the complexities of tracking multi-channel efforts is key in order to properly coordinate award of credit to all involved channels.

Final Thoughts

If you are managing a social media campaign or are a business eager to launch into social media, remember to embrace the numbers. Numbers are sexy -they help spot costs and inefficiencies you could avoid; help identify opportunities you could be missing; and often determine which budgets will be renewed.   The dollar signs are there, you just have to know where to look.


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Sexy Numbers: Measuring ROI in Social Media Campaigns

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I’ve learned to take IT consulting firms’ predictions with a grain of salt. Sometimes these firms come up with provocative stuff for the purpose of selling their consulting services and research reports. They may not always have a real understanding of where things are going.

One firm that’s consistently accurate and level-headed, however, is Forrester Research. Forrester has been around for over 25 years and they’re well-respected. That’s why I found their latest blog about the coming of a new computing age of particular interest.

Forrester’s Josh Bernoff uses the recent launch of Apple’s iPad as motivation to discuss the growing problem of incompatibility between the current rash of devices (Android, iPad, iPhone, Kindle, etc.) and web connectivity. “Your site may not work right on these devices,” says Bernoff, “especially if it includes Flash or assumes mouse-based navigation. Apps that work on the iPhone don’t work on the Android. Widgets for FiOS TV don’t work anywhere else.”

Bernoff says this phenomenon is just part of the problem. In addition to device incompatibility, there seems to be more closed than open systems on the Web, no doubt for competitive reasons. Facebook’s applications, for example, only work on Facebook.

“Web marketing has grown since 1995,” says Bernoff, “based on the idea that everything is connected. Click-throughs, ad networks, analytics, search-engine optimization – it all works because the Web is standardized. Google works because the Web is standardized. Not any more. Each new device has its own ad networks, format, and technology. Each new social site has its login and many hide content from search engines.”

The result is something Forrester Research labels the “Splinternet.” The firm believes the end of the cross-platform compatibility web era is near.

Forrester offers as proof of the Splinternet’s existence the fact that technology standards once controlled by open standards bodies such as the World Wide Web Consortium (W3C) will now be controlled by platform vendors like Apple and Facebook. On the Internet, advertising and user experience side, they suggest that cookie-based customization is being replaced by profile-based customization, and that standard ad formats will now have to be customized for sites and networks that are acceptable to the new devices.

How interesting – here we thought in our multi-option digital world that we were moving towards enhanced inter-connectivity and compatibility. It turns out the opposite may be true.

But Bernoff cautions Internet marketers not to jump off a cliff just yet. Instead, he says, “choose your devices carefully – investments in one cannot be transferred easily to others if you make a mistake. Rethink analytics, links, and measurement – — they’re just becoming available in the new environments.”

Still, I can see a lot of online marketers getting palpitations and sweaty palms right now.


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Google is thinking small as it continues to grow. The search giant is focusing on mobile in 2010, according to CEO Eric Schmidt, who spoke during a conference call (full audio transcript) on the announcement of Google’s Q4 earnings.

Before he got into the nitty-gritty of this year’s outlook, Google announced that revenue was up 17 percent in Q4 2009 ($6.7 billion) and up $23.65 billion for all of 2009 (for a net income of $6.5 billion).

Where does Google go from here? Right in our pockets, it appears. The release of the Nexus Phone made a splash, but Google is concentrating on the red meat of advertising and search to really make its mark in 2010, especially on mobile devices.

In 2009, Google saw mobile search increase 5 fold. The advertising that goes along with mobile search is even more specialized for customers. According to Senior Vice President of Project Management for Google, Jonathan Rosenberg:

“The new formats, the targeting tools and the reporting we are giving to advertisers (are) making a difference. Click to call, letting advertisers target specific high-end devices or carriers (we are) seeing improved monetization across mobile.”

This goes along with the trend Google has shown in strengthening its geo-specific local search results and the goal of getting answers to search result question to the user quicker. The feature is especially appealing to marketers as more consumers are using their phones to research the pricing on a possible item before buying.

Beyond mobile, Google is banking on a boom in its revenue from display advertising, which goes beyond the AdWords/AdSense model to more enriched advertising content.

Said Schmidt: “We have said is that our next huge business is display. If I were to talk about absolute numbers that would be No. 1. But smaller ones (revenue growth opportunities are) growing faster. No. 1 there is mobile. We have a lot of evidence that people are moving towards data-friendly mobile devices quite quickly. 2010 will be a year of significant mobile revenue growth.”

Display advertising is growing market for Google as the integration of DoubleClick, which was acquired in 2007, has finally been completed. Coupled with DoubleClick’s vast inventory the type of  reporting Google Analytics is able to provide is very appealing to marketers. Especially when combined with interactive, call-to-action display ads (ie, click here to do this, go to our web site or become a part of our social network), there is a lot of area for expansion for Google. Google has already rolled out more ad templates to make it easier for small businesses to get into the game and is eager to have video powered display ads as well through YouTube which is the de facto leader in the space.

So it looks like the new ecosystem Google is building for 2010 and beyond will focus on display ads powering the revenue picture in a what that AdWords has done since Google’s beginning, along with a more local-oriented, geo-savvy search on mobile, with faster and better answers and targeted advertising that gets as specific as the device being used as the search.

It’s a plan that can fit in the palm of your hand, but one that Google is banking on for this year and the years ahead.


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Google Q4 Earnings Point To Changes in its Marketing Focus

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Successful marketing is built around accurate forecasting and benchmarking. In an industry like the affiliate industry which is not known for transparency, getting numbers to help you set accurate benchmarks is difficult. There are however resources that can help including: the ecommerce focused reports compiled by MarketingSherpa, eConsultancy’s affiliate marketing reports, and AffStat run by Shawn Collins co-founder of Affiliate Summit .

Recently NETexponent’s research division, AffiliateBenchmarks, has made available to the public our second annual survey of affiliates. You can see my post on last year’s survey here, when we had around 500 responses. This year, with help from our affiliate network partners, we got over 3500 affiliates responses, making it the largest affiliate survey to date.

Although I make it a point to not use the ReveNews forum for self-promotional content, I do believe that the interests, practices and expectations of the surveyed affiliates provide insights valuable to all affiliates wishing to learn successful practices, advertisers looking to forge lucrative relationships, networks, consultants and any other readers with an interest in online marketing practices and techniques.

The report is based on date provided by affiliates. It breaks down results based on the annual income of the participants. This allows us to outline the tactics and practices that highly successful affiliates are employing to get ahead in this increasingly competitive marketplace.

For example, those who are buying PPC keywords, utilizing flash and video widgets are seeing a much higher return from their affiliate programs than those who aren’t.  These insights are extremely valuable to all affiliates seeking new ways to improve their businesses.

Of the respondents 49% indicated they were new to the industry in the last two years.  This points to significant growth in the affiliate channel. However, it is apparent from the results that many of these newer affiliates are not yet taking advantage of the technologies and strategies that are helping more established affiliate succeed.

Among the other under-utilized opportunities beyond PPC search and the use of flash ads/widgets: new affiliates missed opportunities to gather up to date information from industry blogs in order to spot trends and failed to collect data on site visitors in order to promote the more relevant, higher-converting merchant programs.

For a limited time we’re offering all ReveNews readers a 30% discount off the price of the report! To get your copy of the AffiliateBenchmarks report click here and enter code RN30.


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Affiliate Marketing Research Provides Benchmarks for 2009

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As a blogger and an ex-newspaper reporter I have an axe to grind with many of my peers. Please avoid the temptation to distort reality by quoting statistics and data out of context, no matter how linkbait worthy the intended headline or story angle might be.

What raised my hackles? I read this eWeek article and choked when I saw this line:

“Twitter boasted astronomical growth, up 1,170 percent from its negligible .15 percent market share from September 2008″.

I decided to check out the source, Experian Hitwise’s press release on social network traffic, and examine their report using my own calculations:

Twitter September 2009 social network market share of a whopping 1.84% is 12.26 times (or 1,226%) of it’s 0.15% September 2008 figure. This is derived by taking 1.84 divided by 0.15 (1.84/0.15).

Taking a leaf out of a grade school math book, the increase in traffic can be calculated by the following formula:

Percentage Increase = [(new figure - old figure) / old figure] * 100% which should be [(1.84-0.15)/0.15]*100% = 1,127% or an increase of 11.27 times over the previous figure.

So where did the 1,170% figure mentioned in Hitwise’s release come from? Beats me. Maybe someone was a little lax in checking their own stats.

Should we be concerned when a web measurement firm whose bread and butter comes from reporting data, reports it inaccurately? If the reported data is incorrect, how about the validity of the web data contained the report? What happens when a respected media outlet like eWeek publishes data verbatim, without running their own checks to verify accuracy provided by a newsmaker?

Quality control of data is obviously an issue.

Even more interesting is the 1,127% or 1,170% year-on-year growth figure attributed to Twitter’s growth. Everyone loves to see impressive numbers, especially if it’s in multiples of 100%.

Mark Twain popularized the phrase “There are three kinds of lies: lies, damned lies, and statistics.”

Statistics are powerful because they are viewed as logic based.  In school math was the only subject you could get a perfect score in, and that thinking has carried over into adult life. People like seeing statistics, no matter how skewed, because it makes them feel secure in the information they have been given. When delivered by a smart PR firm, marketing team, or in the media the data is often accepted without question. 

This is because most individuals (internet marketers included) are inherently bad at math and numbers in general. Whether by choice or circumstances, they just aren’t equipped to deal with data critically or intelligently.

I’ve seen more than a few isolated instances where writers cite 500% growth or 1,270% increase in profit, but does this mean anything?

Context is key if you want to make sense of data. A sales increase from $1 to $5 is an increase of 400%, and publishing an article announcing a 400% increase will get you more than your fair share of eyeballs. However, if you consider that $5 would barely pay for lunch, it’s a case where statistics, without appropriate context, can be manipulated to distort reality. What’s important when dealing with data is to look at information against the appropriate backdrop.

If your company is growing at 90%, while comparable peers in the same industry are growing at 300%, you’re lagging behind the industry. By “comparable peers” I’m referring to partners or competitors that are equivalent in size or can be mathematically adjusted to provide a meaningful basis of comparison.

Context and relevance and looking at data in a meaningful way means seeing a $1 billion revenue figure and a net profit margin of 0.5%. Or a 500% monthly sales growth figure from a baseline of $27 in sales. Do these figures mean anything? Only when they’re seen from the perspective of the big picture.

If you want to see the forest and not just the trees, don’t simply swallow the “lies, damned lies, and statistics” they are trying to spoonfeed you.


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Are Reporters and Bloggers Guilty Of Using Weapons of Statistical Destruction?

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