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You may have read on Revenews that Overstock was considering terminating its California affiliates and that it likely wouldn’t unless AB1625 passed (that is the bill that changes the definition of nexus, or presence in the State, to include any out-of-state store with online affiliates who are based in California).

Last year, Overstock terminated its relationship with all of us after the Governor vetoed the legislation. The Governor’s office called Overstock’s CEO and issued a statement that he would not let this bill pass. He is still governor. [Note that I think that the bill will become law if Jerry Brown wins the gubernatorial election in November but not if Meg Whitman wins.]

It happened. We just received an e-mail from Commission Junction, Overstock’s affiliate network, informing us that we have been terminated from its affiliate program (see below). Note that CJ’s policies require a one-week notice so I assume that Overstock is sending a message to state legislators that this is what will happen should they enact AB1625 into law. [Note: I cannot find any information that would show that AB1625 was passed by either house of the California Legislature.]

Dear Cashbaq,

We regret to inform you that the Commission Junction advertiser BizFilings has chosen to expire its affiliation with you effective 7-Sep-2010.

If you would like to locate another advertiser in the network to partner with, login to your Account Manager (http://www.cj.com/login.jsp) and visit the Get Links tab.

Best Regards,

Client Services
Commission Junction

It looks like Overstock is playing chicken with the California Senate:

If you are an affiliate manager, please wait until after the bill passes, the Governor vetoes it and the Legislature doesn’t have the votes to override the bill to terminate us. We’d really appreciate it.

Read more:
New Flash: Overstock Terminates Its California Affiliates

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Yesterday Overstock announced its intention to terminate California affiliates should AB 1625 pass. In a  letter to all of its affiliates, Overstock urge opposition to AB 1625 stating that:

There is a measure under consideration in California, likely to be voted on tomorrow, which, if it passes, will likely result in the termination of our business connection.

The letter goes on to urge California affiliates to oppose the passage of the legislation and specifically calls out Section 1 as being the point of contention.

In reading AB 1625 (PDF) the measure is essentially a motion by the Budget Committee to allow changes to the Budget Act of 2010. The section Overstock identifies as being problematic, Section 1, reads:

SECTION 1.  It is the intent of the Legislature to enact statutory
changes relating to the Budget Act of 2010.

In the bill itself there are no definitive statements as to the Legislature’s intentions. The only clues to what changes might be enacted are based on the political climate within California. AB 178 was only stopped by a veto from Governor Schwarzenegger. Odds are that proponents of that bill will use AB 1625 to enact measures supported in AB 178 including California’s version of the so-called Amazon Tax.

We queried Overstock as to its specific concerns over AB 1625 and received the following response from their PR department:

It is the end of the California legislative session and the budget isn’t done. We continue to learn that those who seek to impose this tax measure have some new strategy. Yesterday, we learned more new information (in regards to AB 1625) on which we acted. We don’t want to be forced to terminate our affiliates, and we are glad those most affected are responding and their voices are being heard by senators who need to understand the strong counterpoint to this unwise tax legislation.

So it would appear that Overstock is leveraging their affiliates to act as a counterpoint to a bill they see as threatening, even if the actual purpose of the bill is nebulous. Rebecca Madigan, Executive Director of the Performance Marketing Association,  posted an excellent synopsis of the politics of the situation.

Although we don’t necessarily agree with Overstock’s tactics we do feel that any enactment by California of an Affiliate Nexus Tax is a terrible decision. There is still time for California affiliates to contact their representatives. The PMA has a great resource that provides a painless guide on how to find your representative including suggested email templates for you to use.

View original here:
News Brief: Statement from Overstock Regarding California Bill AB 1625

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Now that I have your attention, Overstock may terminate its California affiliates tomorrow. The State Legislature is once again considering a bill that would make the Affiliate Nexus Tax law in California. If you are not familiar with this legislation, it defines affiliates as salespeople in order to establish nexus (the legal word for presence in the state) to out of state retailers (namely Amazon and Overstock).

We’ve been through this before. It started out as AB178 a couple of years ago. Kerri Pollard and I went to Sacramento to testify before the Budget and Finance sub-committee. As my cab pulled up at the State Capitol, I received an e-mail that the bill was pulled by its sponsor. It turns out that there weren’t enough votes to get it out of even the sub-committee.

Now its here… again. Last year it was passed under the cover of darkness and the Governor vetoed it. Overstock terminated us last year as part of the process. Only after the Governor vetoed the bill and issued a statement that he would not allow the Affiliate Nexus Tax to become law did Overstock reinstate all of us. Fortunately, CJ’s policies give us all a week before the termination takes effect so we would have time for the Governor to use his veto stamp (can’t you just picture it in slow motion… the stamp dropping onto parchment on the Governator’s desk…. cigar in his mouth (yes, it would be in the tent outside the Capitol)).

If you are a California publisher in the Overstock program, contact your state senator… NOW. Forward Overstock’s letter and explain how AB1625 (the current form of the Affiliate Nexus Tax) will hurt small businesses in your senator’s district. If you need more information or drafts of similar letters, take a look at the Performance Marketing Association’s website.

Also, there was a good op-ed piece by Loren Bendele in today’s LA Business Journal.

If you didn’t get Overstock’s letter, here it is. Remember not to beat up Overstock for this. This is a bad law that will hurt California’s small businesses and will not generate any revenue.

OVERSTOCK.COM, INC.
6350 SOUTH 3000 EAST
SALT LAKE CITY, UT 84121
PHONE: (801) 947-3100
FACSIMILE: (801) 947-3144

August 30, 2010

Dear Cashbaq:

Overstock.com values your advertising efforts, and hopes to be in a position to continue our business connection for years to come. However, as we notified you in February, there is a measure under consideration in California, likely to be voted on tomorrow, which, if it passes, will likely result in the termination of our business connection. We are urging you to contact your Senator in the California Legislature immediately to oppose the affiliate nexus tax.

By tomorrow the California Senate will have to consider the new tax, which appeared in the Assembly’s final budget proposal as AB 1625 (Section 1), or it will die for this year. In order to pass, AB 1625 needs a 2/3 majority vote. Its chances of passage are unclear; consequently, your efforts in opposition will be highly effective.

Last year the Governor vetoed a similar measure, and we are told that the Governor has not altered his position on this new tax; however, despite this, we are concerned about last minute political compromises.

You will find information on how to contact your State Senator at this location on the Performance Marketing Association’s website.

Please waste no time in contacting your Senator today to oppose the affiliate nexus tax.

Respectfully,

Jonathan E. Johnson III
President Overstock.com, Inc.

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Overstock to Terminate California Affiliates Again Tomorrow

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When it comes to revenue, some statements are not only worth thinking about, but are worth re-reading several times. The first quote came a few days ago from Eric Schmidt, CEO of Google, who said,

“Trust me that revenue is large enough to pay for all of the Android activities and a whole bunch more.”

That “whole bunch more” should lead readers to take a closer look at the mobile ad market. Of the four largest smart phone OS providers: RIM (Blackberry), Google, Apple, and Nokia, Blackberry appears to be the only one without a clear profit plan in mobile advertising. It’s no surprise then that Blackberry is looking to buy their way in, as reported in the Wall Street Journal here.

It’s old news that Google paid $750 million to acquire AdMob and that Apple scooped up Quattro Wireless Mobile for $275M. But few know that Nokia launched its own mobile network back in 2008. Although Nokia may be in the game it has not had the same smartphone success in the United States, the hottest mobile advertising market.

AdMob, acquired by Google, is currently the largest mobile ad network, estimated by International Data Corporation (IDC) to control 21 percent of the market, with Millennial Media, the apparent target of Blackberry mobile ad growth plans at 12 percent. Yahoo and Microsoft are in the game, but trail at 10 percent and 8 percent respectively.  AOL, which bought former market leader Third Screen Media in 2007, is no longer a factor.

If there is any trend, it’s that mobile advertising is less of a web portal game, and more of a mobile OS game.

One key reason that mobile OS providers are more relevant in this market is that they can change the economics of the carrier phone relationships. What if, instead of carriers paying a subsidy for phones on their networks, the carriers were paid, not once, but over and over again for the life of that phone on their network? Wouldn’t that be more attractive? That’s exactly how Google has changed the game - by sharing revenue with carriers.

This could be lucrative for carriers and could easily influence device selection and promotion. Who has the most to lose, is Nokia and RIM as they dominate smart phone unit sales, but Nokia already owns an ad network, they just have to execute. Blackberry, then, better get its act together, and soon. Not only do they risk missing out in revenue, but their distribution channel with the carriers could be negatively impacted.

To put the opportunity into perspective, I’ll close with the second quote made on CNBC’s Mad Money, where in 2008 Google CEO Eric Schmidt said that,

“Mobile computing alone will bring in more money than the company’s desktop business.”

If he meant what he was saying, Schmidt sees mobile advertising as larger than the approximately $6 billion a quarter that Google currently earns from web-based advertising. Now that’s a quote worth thinking about.

Excerpted from:
Mobile Ads: Fad Or The Next Big Revenue Opportunity?

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In this session, web developer Justin Sainton set out to cover three areas: (1) WordPress 3.0, (2) Ecommerce Trends, and (3) the WP e-Commerce plugin. Justin has 3 years of experience developing with WordPress. Everything that follows this italicized paragraph is based on Justin’s presentation, and not my own ideas.

WordPress 3.0

Justin started out with an overview of WordPress 3.0, and what advantages and opportunities it offers publishers. Essentially, there are many new features and functions that can help publishers integrate ecommerce into their WordPress site.

For starters, the default username after you install it is no longer “admin”. Rather, you can select your default admin username. This gives it added security because it’s harder for hackers to guess your admin username.

Another benefit is that the default theme, 2010, is a very strong parent theme — meaning that publishers can build better “child themes” off of WordPress 3.0 right out of the box. WordPress 3.0 also offers a lot of custom post types and taxonomies that give publishers more flexibility in creating custom front-end user-experiences.

Ecommerce Trends & Improving Conversion Rates

This part of Justin’s explored ecommerce data, analysis, statistics and making money with WordPress sites.  Specifically, he focused on conversion rates, and addressed how, on average, 80 percent of traffic on most sites are new users, and new users are the hardest to convert.

One of the things that improves conversion rates is if users can easily return products. So a return policy is something that any ecommerce site should have.

Another conversion improvement method is product search. Forty percent of users coming to ecommerce sites are looking to search. So ecommerce sites should offer an easily accessible product search.

Product recommendations or cross selling are another way to improve conversions. Amazon does a great job of this — e.g. XX percent of people who bought this also bought that.

Most online consumers also like to see some kind of security logo. So such a logo should be prominent through the shopping and check-out process.

And don’t forget SEO. 20-25 percent of Google searches are new search queries. So don’t assume that the market is too competitive or too saturated. Chances are you’ll be able to attract targeted new users on a variety of long-tail search terms.

Also, a toll free number helps increase conversions. It reassures users that they can reach someone for assistance if they need it.

Finally, requiring pre-registration will deter 40 percent of user from completing the check-out process. So allow the user to fill out a shopping cart and proceed to check-out without having to set-up a profile with you.

Similarly, almost half of users will abandon the check-out process if the page takes more than 2 seconds to load. To address load times, Justin recommends using either the W3 Cache and WP Super Cache plugin.

Essentially, there are 3 keys to improving conversions, and they come down to testing:

• Analyze: Dive into your analytics, and determine where the bottlenecks are.
• Modify: Once you identify your bottlenecks, try changing stuff. For instance, if you’re losing most users at the check-out page, try adding a security logo, reducing the check-out steps, or even adding bigger product pictures (might reassure users that they’re getting what they’re paying for).
• Evaluate: Now, once you’ve made some changes, keep monitoring the funnel. Conduct A/B testing and determine what kinds of changes are driving conversions and which ones are not.

WordPress Ecommerce Plugin

Justin recommends use the WP e-Commerce Plugin. Although the plugin has had some issues in the past, version 3.8 (not yet released) is said to address many of these bugs. In the meantime, the latest branches of 3.7 are said to be very stable.

For starters, the admin and user-interface are completely new. The tax system is also more customizable so that merchants can manage different kinds of tax rates in different regions.

Version 3.8 will also offers advanced control over search, cross-sales, and social media sharing. And on the data side, it will offer analytics on conversion funnel trends, such as shopping cart and profile abandonment rates.

Read more here:
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Brands and marketers are always looking for the magic bullet that turns a normal campaign into an overnight success. So it’s no surprise that $11 million in revenue from a single merchandise promotion generates a lot of interest in a company. It’s the kind of success story that gets marketers talking.

That success story belongs to Groupon whose national promotion for Gap last week resulted in income of $11 million from sales of a $25 coupon worth $50 of store merchandise to over 440,000 shoppers, according to AdAge. While Gap has yet to see how many coupons are actually redeemed, Rob Solomon, Groupon’s president said,

“I’m pretty sure if they ran a national TV campaign, they wouldn’t have gotten nearly 500,000 paying buyers in the store.”

Less than two years old Groupon began as a locally-oriented service offering a “deal a day” to subscribers in particular cities who give Groupon their email addresses. The twist is that an offer is only redeemable if enough people express interest in it. With redemption rates exceeding 80 percent on average, Groupon’s growth is easy to understand since it often splits the value of the offer as part of its revenue. It is the local focus that got Groupon to where it is today. The company is obviously unafraid to think beyond localization. “There’s a lot of room to remain hyper-local,” Solomon tells Reuters, “but to introduce super-specials, like for the Gap. Gap is a testament to demand for the big guys.”

Such success is necessary for Groupon to show its model cannot only attract large brands, but that it can retain its position of dominance within its own model now that a slew of copycats have followed on the heels of its success.

Groupon has already spawned several look-alikes – LivingSocial and ScoutMob are competitors. Yelp just launched a similar service, as did Travelzoo. But as with Facebook in social networking and Foursquare in location-based services, Groupon has first-mover status – something it will clearly take advantage of as it grows.

In the last five months, according to AdAge, Groupon has grown from 3 million to more than 15 million subscribers, has gone from 300 to more than 1,500 employees, and has expanded from the U.S. to 28 other countries. The week following the Gap promotion, an additional 750,000 subscribers signed on. Solomon says Groupon expects to have over 20 million subscribers by the end of this year and generate some $400 million in gross sales. The company is well funded by venture capital and shares in the revenue it generates for retailers.

Groupon currently makes localized offers in 29 countries in Europe, Japan, Latin America, North America, and Russia. According to Reuters, Groupon expects to expand from 85 markets to 200 in North America by the end of 2011.

There is no question that Groupon’s model can generate a successful crowd effect driving a glut of conversions based on a coupon. However even though the model is obviously a hit among advertisers, there is legitimate concern among brands that are worried about “training” consumers to only wait for, or buy with, an offer. Not all case studies of the model have had positive results.

1. Advertisers have experienced product shortages that have created customer service nightmares.
2. When examining the buyers often it was discovered that Groupon did not generate new-to-file customers.
3. Poor customer service from Groupon itself.

As Augustine Fou, the chief digital officer at Omnicom’s Healthcare Consultancy Group, is quoted by Mashable in saying that stores like The Gap are exactly the type of advertiser who shouldn’t be using Groupon. He estimates that their loss on such a campaign $7.5 million revenue which is a hefty expense for publicity.

Groupon is, of course, all about driving traffic – and what it did in terms of traffic generation for Gap is now generating a lot of interest among retailers. Advertisers seem enamored with Groupon and many will be lining up to try the service this holiday season. The experience with Gap has proven that Groupon can sustain its business model with a national as well as a local audience. Solomon tells AdAge that he expects Groupon to hold another national promotion “pretty soon,” and that there will be more to come in the last quarter of this year.

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It would be easy to dismiss Places as Facebook’s attempt to simply keep up with the Foursquares and Gowallas of the world. But the recent announcement that Places will incorporate a directory of 14 million businesses proves Facebook has other ideas, and they’re all about business.

Localeze, the largest business listings identity management company for local search, announced that its 14 million record “Enhanced Business Registry” will be featured on Facebook Places. Facebook will use Localeze’s premium business content, including nearly 600,000 business-verified and managed listings, which have been enhanced directly by local businesses, to offer accurate data for people to easily share where they are with friends on Facebook, find friends who are nearby, and discover new places from a mobile device.

Earlier this month, Localeze signed an agreement with TomTom to provide the same local information to TomTom GPS users starting in 2011. According to PC Magazine, “the combination will undoubtedly help TomTom compete against companies like Google, which already has a database of local POIs [Points Of Interest] and a free Google Maps Navigation app for smartphones, to boot.”

Indeed, if you read into it, the same competitive positioning could be true of Facebook, who more and more seems to be gearing up for head-to-head combat with Google.

Jeff Beard, president of Localeze, said that by using its listings,

“Facebook will provide an unsurpassed user experience, limiting the possibility of people entering an incorrect or incomplete business name, address of phone number when checking in.”

Beard adds that he views Facebook as “an important piece of a local business’ footprint giving them more visibility for current and potential customers.”

Already, social networking experts are recognizing the business applications of Facebook Places. For example, David All, writing in The Huffington Post, says a business can “claim its Place” on Facebook Places now “so that you can manage how it’s being read by those who are checking-in or are curious because they’re seeing their friends check-in at your Place.” He advises businesses to “keep tabs on the way your competition is using Places and be ready to make counter-offers via advertising.”  All recommends being proactive by asking visitors and staff to participate by checking in, and asking clients or top customers to “give a review of your place.”

The Facebook Places and Localeze connection is yet another piece of solid evidence that Facebook is aligning itself with the interests and needs of local businesses. Facebook is creating a valuable business-oriented utility that goes far beyond the original casual friend-to-friend connections. The bottom line is Facebook Places isn’t just for fun; it’s very much about driving people to local businesses, and for Facebook that’s big business.

Read more here:
Facebook Places Means Business

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As city and state governments scramble to make up for growing budget shortfalls we’ve seen the passing of some fairly ludicrous legislation. From the Amazon Tax passed by New York, Rhode Island, and North Carolina to Colorado Governor Bill Ritter’s “Dirty Dozen” which included a tax on bull semen, we’ve seen a lot of ridiculous legislation in 2010.

Enter the city of Philadelphia whose government seems to think that blogging is the next big untapped treasure trove of tax revenue. Philadelphia has imposed a privilege license on all bloggers who reside in the city limits. Cost of the tax, $300.

According to tax attorney Michael Mandale as long as a blog is engaged in an “activity for profit” for example taking any advertisement including Google AdSense, the city of Philadelphia’s “blogging tax” applies to them. By such a definition blogs or sites on communities like Squidoo, Livejournal and platforms like WordPress and TypePad would be subject to such a tax.

The thing is a lot of people who blog do so as a hobby or a form of self expression. They may put up an occasional link to Amazon or to Fandango because of a book or movie they have seen but most are not making a living off of blogging. In fact both local bloggers interviewed by the Philadelphia City Paper made less than $50 over two years. But as Michael Mandale points out the law applies whether or not the blogger “earned a profit during the preceding year.”

Interestingly the way the law is written it would exempt most corporate blogs from being taxed separately because most corporations do not display advertising on their blog.

Now, I don’t fault the Philadelphia city government for searching for new tax revenue resources especially when faced with the crisis of a budget shortfall. In fact, I would classify myself as generally pro tax. But this law is just misguided for many reasons.

1. Jurisdiction: The law is targeting the blogger who hopes to earn a profit through advertising. Fine. But what if a blogger living in Philly blogs on a third party site, say they setup a Squidoo Lens, but chooses not to run their own advertising. Let’s say the third part site then decides to run advertising triggered by the blogger’s content. Seems wrong that the small blogger would be taxed but the larger business (the site) would be allowed to make a profit untouched.  Philadelphia having no jurisdiction over matters outside of its city limits could never impose the tax on a site outside of its city limits. Yet, in the scenario above it could not tax the site for the very same content and potential profits that it is trying to tax the blogger for.
2. Enforcement:By the city’s own admission they do not keep track of how many bloggers reside in their city limits. In fact it might be an impossible task at least from a resource standpoint, not just for Philly but for any city, to actively enforce such a law. So the only people this law taxes (punishes) are those honest enough to come forward and pay it.
3. What Content is Taxable?: The supposition here is that the blogger is seeking out advertisers and the revenue from ads should be taxed. But I’m sure that the city officials are thinking about traditional display style ads. What about in-text ads or outright advertorial? Are those taxable? If so, how will the city enforce? What about, as mentioned earlier, blog content from a large business or corporate entity? Such a blog isn’t likely to have advertising but essentially does serve a marketing/advertising purpose for the company that created it. Is that taxable? Will companies then be required to pay two taxes: one for their business license and one for the privilege of having a blog?
4. Small Business Growth: In a city that is trying to encourage small business growth, as Philadelphia claims to, aren’t such tax measures a great way to hamper such growth? Bloggers who become successful enough through their writing will naturally evolve into businesses that bring in new tax revenue. Government should be cultivating business growth not burying it before it has a chance to flourish.

In Philadelphia there is already an effort to reform the current business privilege tax put forward by local City Council members Bill Green and Maria Quiñones-Sánchez so that the law wouldn’t apply to business that had not generated over $100,000 in revenue. While I applaud that effort, government tends to be a bit of “monkey see, monkey do.”

Among the repercussions of New York’s passing of the Amazon Tax, was that various states lined up to follow New York’s lead without really looking at the impact of the legislation. Don’t be surprised if a city near you follows in Philly’s footsteps.

Here is the original:
Blogging Tax Coming To A City Near You

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So they’ve finally gone all in: Facebook has launched Places, they’re internal location-based-service (LBS) marketplace, and when the third largest (yet poorest) country in the world does something new, the world watches.

For the moment, Facebook Places is only in the US, and still doesn’t have a writing API, but that will all change quickly. As that changes, it will have some serious implications for the Internet. Here are 3 ways in which Facebook Places is going to change the digital landscape:

1. The web just got a bit more closed

Earlier this week, Chris Anderson and Michael Wolff of Wired proclaimed that the web is dead. Their reasoning was that as we use apps more and more to consume content and interact with others, the internet becomes “less about the searching and more about the getting“.

Well, with Facebook Places, your run-of-the-mill Facebook app will start doing what you once needed a Foursquare, Gowalla, and Yelp app to do. This means Facebook has secured much more of a stake in how the net’s evolving.

More importantly, though, it means Facebook users have that much less of a reason to go beyond the walls of Facebook. And that is precisely the behavior Google should be worried about.

2. LBS is going mainstream

The advent of Facebook Places may be the big push we need to take LBS mainstream. And the way LBS will reach that level of adoption is through its Facebook smartphone apps.

Social media apps and consumer engagement with them is the reason that smartphones will push LBS mainstream. Those little apps are gold and consumers are infatuated with them. Such apps will let the marketing industry take LBS advertising beyond mere SMS spam.

Now, sites such as Foursquare and Gowalla already offer apps and user-experiences that make LBS advertising possible, but they don’t quite yet have the user-base. As Michael Lazerow of AdAge points out:

Foursquare and Gowalla combined have just a few million users. Facebook has north of half a billion. When Facebook gets into a market, they bring everyone. Literally, everyone.

So while Foursquare and Gowalla have had potential LBS technology all along, they lacked the audience. Facebook, on the other hand, has had both the audience and the advertiser base all along. Now that they’re rolling out the technology, LBS advertising (via Facebook apps, of course) shouldn’t be too far behind.

3. Foursquare & Gowalla condemned to mediocrity

In a nutshell, Facebook Places won’t kill off these services completely. But it’ll hinder their growth potential and dash any acquisition hopes they might have had (that is, at least any hopes of Facebook acquiring them).

On one hand, many users will simply choose not to integrate their current LBS network (e.g. Foursquare) with their Facebook network. We’ve already seen this in how many users use Twitter very differently than they do their Facebook status updates. So these pre-existing LBS networks will probably retain an entrenched user base.

On the other hand, these incumbent LBS networks will probably have trouble growing their existing user base. Given Facebook’s scale and reach, for example, many users will discover Facebook Places before they discover Foursquare or Gowalla. These users, then, will probably be less likely to see the value in joining a separate LBS-only network.

You see, just like Twitter, Foursquare and Gowalla are more of individual features than stand alone social networks. This much is evident in how Facebook Places is usurping their entirely functionality as a mere feature.

So these networks will continue to be relevant, but only marginally so and for what will be a stagnant if loyal user base.

Taming the wild wild web

The Internet is in its 20s. It’s starting to grow up and past the awkward, experimental years of its teens. It’s time for the Internet to get down to business.  Companies can no longer launch just to say they did so, but they will launch to have an answer to their investors’ questions of, “How will you make money?”.  Part of that maturity will lead to an increased competition between close competitors and there will be attrition.

So while Google and Apple try to fence us in at the OS level, Facebook seems to be moving to middle-man them (and might be working on their own OS). After all, if users only use your OS to run someone else’s apps, who really controls those users? Facebook clearly intends to address that weakness.

Read more here:
3 Ways Facebook Local Will Change the Internet

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So they’ve finally gone all in: Facebook has launched Places, their internal location-based-service (LBS) marketplace, and when the third largest (yet poorest) country in the world does something new, the world watches.

For the moment, Facebook Places is only in the US, and still doesn’t have a writing API, but that will all change quickly. As that changes, it will have some serious implications for the Internet. Here are 3 ways in which Facebook Places is going to change the digital landscape:

1. The web just got a bit more closed

Earlier this week, Chris Anderson and Michael Wolff of Wired proclaimed that the web is dead. Their reasoning was that as we use apps more and more to consume content and interact with others, the internet becomes “less about the searching and more about the getting“.

Well, with Facebook Places, your run-of-the-mill Facebook app will start doing what you once needed a Foursquare, Gowalla, and Yelp app to do. This means Facebook has secured much more of a stake in how the net’s evolving.

More importantly, though, it means Facebook users have that much less of a reason to go beyond the walls of Facebook. And that is precisely the behavior Google should be worried about.

2. LBS is going mainstream

The advent of Facebook Places may be the big push we need to take LBS mainstream. And the way LBS will reach that level of adoption is through its Facebook smartphone apps.

Social media apps and consumer engagement with them is the reason that smartphones will push LBS mainstream. Those little apps are gold and consumers are infatuated with them. Such apps will let the marketing industry take LBS advertising beyond mere SMS spam.

Now, sites such as Foursquare and Gowalla already offer apps and user-experiences that make LBS advertising possible, but they don’t quite yet have the user-base. As Michael Lazerow of AdAge points out:

Foursquare and Gowalla combined have just a few million users. Facebook has north of half a billion. When Facebook gets into a market, they bring everyone. Literally, everyone.

So while Foursquare and Gowalla have had potential LBS technology all along, they lacked the audience. Facebook, on the other hand, has had both the audience and the advertiser base all along. Now that they’re rolling out the technology, LBS advertising (via Facebook apps, of course) shouldn’t be too far behind.

3. Foursquare & Gowalla condemned to mediocrity

In a nutshell, Facebook Places won’t kill off these services completely. But it’ll hinder their growth potential and dash any acquisition hopes they might have had (that is, at least any hopes of Facebook acquiring them).

On one hand, many users will simply choose not to integrate their current LBS network (e.g. Foursquare) with their Facebook network. We’ve already seen this in how many users use Twitter very differently than they do their Facebook status updates. So these pre-existing LBS networks will probably retain an entrenched user base.

On the other hand, these incumbent LBS networks will probably have trouble growing their existing user base. Given Facebook’s scale and reach, for example, many users will discover Facebook Places before they discover Foursquare or Gowalla. These users, then, will probably be less likely to see the value in joining a separate LBS-only network.

You see, just like Twitter, Foursquare and Gowalla are more of individual features than stand alone social networks. This much is evident in how Facebook Places is usurping their entirely functionality as a mere feature.

So these networks will continue to be relevant, but only marginally so and for what will be a stagnant if loyal user base.

Taming the wild wild web

The Internet is in its 20s. It’s starting to grow up and past the awkward, experimental years of its teens. It’s time for the Internet to get down to business.  Companies can no longer launch just to say they did so, but they will launch to have an answer to their investors’ questions of, “How will you make money?”.  Part of that maturity will lead to an increased competition between close competitors and there will be attrition.

So while Google and Apple try to fence us in at the OS level, Facebook seems to be moving to middle-man them (and might be working on their own OS). After all, if users only use your OS to run someone else’s apps, who really controls those users? Facebook clearly intends to address that weakness.

Read the original:
3 Ways Facebook Places Will Change the Internet

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Affiliate networks have all be jumping on the Pay-Per-Call bandwagon using RingRevenue’s pay-per-call tracking platform.  Currently I have seen programs for Commission Junction, Google Affiliate Network, LinkShare and ShareASale.

What are the advantages of pay-per-call?

1. The ability for companies to compensate partners for sales calls.
2. The ability for consultative or high ticket purchase companies to get into performance marketing
3. The ability for websites to compensate partners for both online sales and sales that turn into calls from the website (typically lost to performance partners and a primary reason performance partners as to have phone numbers removed from landing pages).

These all sound great, but like any other new technology the devil is in the details and the implementation.  Here are some of the struggles I have run into so far:

1. Phone# Replacement Code Implementation – The vast majority of the companies offering pay-per-call have not implemented the code to actually replace the performance partner’s unique number into their landing page.  This seems like an obvious 1st step to implementation, but alas having your number show on the page is currently more of an exception than a norm.
2. Listed Call Times – Since we are dealing with phone calls, and not all companies can afford to staff their call centers 24/7, each program lists the call times for which they are willing to pay for calls.  That makes perfect sense, but for one of the companies I was testing, I placed a test call during listed hours, and got a message that the company was taking a day off to go sailing!  If you are not going to be around, you need to communicate this to your partners so they aren’t wasting their money on campaigns.
3. Call Leakage – Performance marketers have talked about website leakage for a long time, leakage is paths that consumers can take that end up being uncompensated for the performance partner.  In fact pay-per-call promises to solve the phone number leakage problem.  One company I placed a test call to directed customers to visit their website (a non-compensated url) and then proceeded to place the customer on hold and then every 10 seconds on hold offered the customer the option to enter a call back number and not lose their place in line.  While that might be very convenient for a customer, it encourages the customer to drop off the call before hitting the pay-out time threshold.
4. Ghost Calls – If you are focusing your marketing efforts on mobile marketing, you may find that there are a lot of “Ghost Calls”, calls that appear as clicks/calls to the marketing network you are working with but never actually generate a call.  This can happen if a customer clicks on the “call” option and then doesn’t click ok when their phone asks them if they want to place the call.   This seems to happen a lot in the mobile display advertising space.
5. Standard Landing Pages – While having the standard landing pages and replacing the phone number is a great first step, it would be great to also offer mobile marketing links with mobile landing pages that are made to look good on the various types of mobile phones.

My suggestion is that this is a very new technology with a lot of hurdles.  It’s worth testing the waters right now, but tread lightly and make sure to test out the customer experience on the click and the call before proceeding.

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Pay-Per-Call Programs from the Trenches

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Over the last two days, the dust from Affiliate Summit East 2010 has settled and most of us have recovered from the jet lag and three consecutive days of late nights and early mornings (for some there may have been some drinking involved).  And now that we’re starting to settle back into an everyday pace, a lot of us are assessing just what we took home from the conference. Well, here are the top 5 things I took away from ASE 2010.

1. AdWords faces some tough competition

From Facebook Ads to Plenty of Fish, advertisers seem to be turning to user-driven-networks spread their message. And it’s no surprise why.

While AdWords only lets you target by location and intent, user-driven networks let advertisers reach users by both location (great for localized offers) and demographics while at the same time fostering a network affect of like-minded shoppers. So while Adwords only helps you reach users that are already aware of the kinds of services/products you offer, user-driven networks allow you to reach a completely untapped customer base through their social interests.

2. Facebook Ads are the new big thing

Despite the fact that Facebook Ads are bupkis advertisers are drinking the Kool-Aid. No matter if it was a session or a one-on-one interview, everyone seemed to be talking about Facebook Ads. Those who’d figured out the platform heralded positive results, and those who hadn’t figured it out weren’t ready to give up on it just yet and wanted to know more about how to leverage it.

In a nutshell, Facebook Ads let advertisers target users by demographics and personal network; and that affords them a bit more trust currency. And as we know, belief is essential to selling. For instance, your ad might tell a user that one of their friends “liked” your product/service, and that seems to help with conversions more than a run-of-the-mill banner ad or sponsored result. Of course, the flip-side of that is that your product/service can’t completely suck.

3. Email remains a vital component

Believe it or not, email is not just still important, it’s more important than ever. And the reason is that email notifications are an integral part of the social networking experience. Just think about it: whenever a contact takes any action on your profile or content on a social network, you get an email notification.

As Declan Dunn pointed out in his session, marketers should pay attention to users’ email experience for two reasons. First, email is obviously integral to keeping users engaged in whatever community you’ve built-up through social media.

Secondly, and more importantly, depending on the platform you use to manage that community, either you can’t advertise directly to them or it’s inappropriate/inadvisable to do so because it infringes on their community experience. So email notifications become one of your best opportunities to promote any product or service.

4. A picture is worth a thousand clicks

During his awesome session on Facebook Ads, Jeremy “Shoemoney” Schoemaker broke down the most important elements of a Facebook Ad. And the most important piece of the puzzle was, you guessed it, the image.

Essentially there are three elements to a Facebook Ad: the title,  the ad copy, and the image. From his own personal experience with Facebook Ads, Jeremy has found that the image impacts an ad’s performance much more so than the body or the title. So much so, in fact, that between the three elements, Jeremy focuses 70 percent on the image, and only 20 percent on the body and a mere 10 percent on the title.

5. Sex still sells

Credit: Adrants

Of course, this isn’t exactly a revelation. But sometimes, it helps to be reminded of  age old truths — if only to not lose sight of them.

For starters, there were no shortage of pretty face representing the CPA networks and merchants. One network even had a pair of bikini babes prowling the conference floor.

But sex seems to work even on a performance-basis (no pun intended). In fact, one of the examples Shoemoney offered during his session (linked above) was an experiment where he sent US traffic to ad pages where some of the ads featured a cleavage pic and some foreign text. The cleavage/foreign language pics got more clicks than the non-cleavage ads that had English copy.

So it seems that sometimes, it doesn’t matter what your call-to-action or value propositions. Users seem to judge books by their cover, and have their minds in the gutter.

The sum of it all

Overall, Affiliate Summit East 2010 is the best conference I’ve been to this year, and maybe one of the best ever. Unlike a lot of other industry conferences, everything was extremely well organized (from sessions to parties), and the networking opportunities abounded in both quantity and quality.

More importantly, all the intelligence to be gained through sessions came directly from the front lines. After all, these are affiliate marketers. They live and die by their performance, so there’s no margin for error. They’re very focused on results, and very quick to figure out what works and what doesn’t.

In a nutshell, everything I learned was about what is working, not what was fun or cool to do with someone else’s money. I’m looking forward to doing it all again in Las Vegas in January.

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Top 5 Takeaways from Affiliate Summit East 2010

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The title of this post is the name of a classic book by Dr. Seuss, but it also refers to the introduction by Facebook of its newest service, Places.

Places is Facebook’s long-awaited entry into the location-based services marketplace. As I’ve discussed previously, this area is an outgrowth of the social networking/smartphone connection and it’s quickly becoming the next major growth sector. Facebook’s Places is an attempt to counter the momentum of such services as Foursquare and Gowalla, if not crush it altogether, as well as capitalize on user activity in local over the long term.

As with Foursquare and Gowalla, Places enables users to “check in” at places and tell their friends where they are. The difference, of course, is Places users can seamlessly alert their friends on Facebook. Attempting to distinguish Places from competitors, Michael Sharon, the Places product manager, tells The New York Times:

“This is not a service to broadcast your location at all times, but rather one to share where you are, who you are with, when you want to. It lets you find friends that are nearby and help you discover nearby places.”

Not surprisingly, Foursquare and Gowalla told The Times that they see Places “as a complement to their own services and as an opportunity to gain additional distribution.” Foursquare actually was present at Facebook’s headquarters for the news conference announcing Places – so at least for the present time, the two companies are playing nice.

Facebook’s move comes at a time when it is increasingly positioning itself against Google in what could be the mother of all Internet battles. With its 500-million user base, anything new Facebook offers could have widespread adoption. “Facebook’s long-term goal with Places appears to be to capture the largely untapped advertising opportunity that local and small businesses offer,” says The Times, although Facebook says it currently has no advertising products for Places. Google, of course, generates most of its income from ads; in fact, AdWords is responsible for over 90 percent of Google’s revenues.

Walter Mossberg, the renowned technology reviewer for The Wall Street Journal, said his test of Places showed that it was “easy to use and reliable, with mostly logical privacy controls, an issue on which Facebook has been bruised in the past.” He does mention, however, that Places is “more stripped down and leaves out some attractive features others [like Foursquare and Gowalla] include.”

But it isn’t really the features that matter, as much as the fact that Facebook is now squarely in the location-based game. That could be good or bad for services like Foursquare. However, Places is definitely one more piece of evidence that Facebook intends to face off with Google head on. Google is making the inevitable move towards social networking features and trying to attract small businesses through location-based initiatives. Places is clearly focused on the small business market as well, because it is expected to help drive consumers to local businesses and will likely take advantage of developing options like pushing coupons or offers to users as they check in.

At the moment, Places is in early stage availability in the U.S. and available only on the iPhone. That will surely change as Places rolls out. And Places will just as surely add fuel to the fire in the Facebook-Google battle.

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Editor’s Note: The following post is an excerpt from material Jim Kukral, former Managing Editor of ReveNews and author of Attention! This Book Will Make You Money, used during his keynote at Affiliate Summit East 2010. It is published here with Jim’s permission. Rumor has it the Affiliate Super Friends appeared during the keynote, that indeed is all Jim’s fault. Enjoy.

Did you know that 4.6 million bottles of 5 Hour Energy Drink are sold each week in the USA alone? According to The New York Times, Bill Pecoriello, chief executive of Consumer Edge Research, estimated that energy shot sales could reach $700 million this year, nearly double last year’s $370 million. Today, 5-Hour Energy accounts for about 80 percent of the rapidly expanding market.

The question is how did a relatively new product gain such traction with the US consumer? Here are five valuable lessons you can take away from this product and their marketing.

#1 Reason – “Energy” Is In The Product Name

I’m a huge fan of saying what you do. If you are a plumber and your name is Angel, your business name should be Angel’s Plumbing. If you are the world’s best expert at databases, then you should be calling yourself The Database Diva, not “Aviva, LLC” which was her original name. If you are an amazing resource of tax information for small businesses owners, you should be calling yourself TaxMama, not Eva Rosenberg Tax Services.

Lesson: Say What You Do

#2 Reason – It Helps You Get Energy

You’re tired,  you’re down. You need energy. You can go and drink coffee all day long, but then your breath smells and you have to pee every five minutes. In other words, it solves problems which is what every successful product does.

Lesson: Solve Problems For Your Customer

#3 Reason – It Helps You For Five Hours

Not one hour, not 12 hours, not a half hour. Five hours. When you think about it that number is of significant importance to their marketing because people find it believable. A product with a claim that sounds outrageous, no matter how true, won’t sell. Consumers have to believe it to buy it. If it was 12 hours, nobody would buy it, they’d think it was fake or like a speed pill. If it was one hour, again, people wouldn’t buy it, they’d say “Who needs one hour of energy only?”

Five hours is exactly what you need, and want, and they know it. Need a pick me up after lunch to get you through the rest of the day? Drink 5 Hour Energy Drink. Need to hit the clubs at Midnight in Vegas and dance the night away? Drink 5 Hour Energy Drink.

Lesson: Think About What Your Customers Really Need

#4 Reason – It’s Very Portable

You can drink it in seconds. Not like a giant Monster energy drink that you have to chug-a-lug around with you all day. Not like a big coffee mug you have to carry around. You don’t feel bloated after drinking it. While all their competitors went big, five hour energy was smart enough to go small.

Lesson: Be The Alternative

#5 Reason – It’s Convenient

You can stick it in your gym bag or your work backpack. You can leave it in your glove compartment or put it in your coat pocket. Since it’s small, it’s convenient.

Lesson: Make It Easy

Whether you are a business or a brand, or you sell a product or a service, you can learn quite a bit from 5 Hour Energy. People look for new things all the time. Are you creating them for them? Not everyone loves coffee you know.

Now is your chance to take these important lessons and work them into your own strategy. Pretty soon you might just find yourself owning the majority share of customers in your industry.

Source:
Five Marketing Lessons You Can Learn From 5 Hour Energy Drink

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2.2 billion dollars in revenue and 11 percent growth seem like strong earnings. That is, unless your eBay. The strength of eBay’s Q2 earnings, driven mostly by PayPal, were undermined as eBay cut its fiscal forecast by $250 million. Such earnings adjustments are enough to make $20 million in fraudulent affiliate commissions seem like a small matter.

Due to Amazon’s growing strength and marketplace shifts, eBay’s market relevancy has slipped over the years. They just seem to be out of mind. As consumers adopt social media, eBay has become less exciting.

So how do you bring the excitement back? eBay hopes money will help.

Resorting to bribes, eBay has launched eBay Bucks a loyalty program that will offer consumers 2 percent back on items purchased on the site through PayPal. Once the Bucks are rewarded, consumers can use them towards additional eBay purchases. The program excludes all purchases from Business & Industrial Capital Equipment, Real Estate, and eBay Motors categories.

Loyalty programs are historically healthy models with companies as large of Discover using them to great success. Although the model is proven, success is often dependent on how well consumers click with the company itself. Microsoft Bing’s shuttering of their cashback program is a clear example of what happens when a program doesn’t click.

Interestingly, one of the primary methods people did use Bing’s Cashback was on eBay. How this bodes for eBay’s program remains to be seen.

As a side note, eBay implementing such a loyalty program may have an impact on affiliate relationships especially those in the loyalty space. Will consumers get to double-dip on awards from eBay and its affiliates? Will eBay count sales referred by an affiliate if the consumer was previously enrolled in eBay Bucks? It will interesting to whether eBay will play fair with its own affiliates.

More:
eBay Hopes Shoppers Will Cash In On eBay Bucks

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