| LED Digest 1831: Inside Affiliate Marketing |
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================================================== The LED Digest Moderated Discussion List "Effective Online Advertising, Since 1997" pair Networks: The LED's Web Host Hosting and Domain Reg. from a Trusted Leader pair.com for Hosting | pairNIC.com for Domains ================================================== List Moderator: Published by: Adam Audette LED Digest adam,led-digest.com http://www.led-digest.com ................................................ July 1, 2004 Issue #1831 ................................................ .....IN THIS DIGEST..... ======= NEW ===================== --== Site Redesign Blues ==-- ~ Chuck Hiatt "...the new designers plugged in a bunch of words at the bottom of the page..." ==== CONTINUING ================= --== Using Affiliate Services ==-- ~ Brian Clark "...the biggest issues...are the rampant mischannelization, affiliate fraud and the general spirit of mistrust..." ~ Ajeet Khurana "I am not pessimistic about the business of affiliates." ~ John Barendrecht "I couldn't disagree with this more..." --== The End of Email as You Know It? ==-- ~ Joe Halbrook "The easier the uninterrupted delivery process occurs for the readers, the better." ==== BILLBOARD =================== --== Email Alternatives to Outlook ==-- ~ Jacob Matthan ======= NEW ===================================== From: Chuck Hiatt Subject: Site Redesign Blues HELP! I am a long-time LED subscriber and I finally have something worth posting. Frankly, I need your help. I recently hired a company to re-design my site [URL below]. The new design looks great but I can't even get the site to show up on Google by typing in the exact web address! When I was using the old site design, each page was optimized and I had great traffic and sales conversion. It also looks like the new designers plugged in a bunch of words at the bottom of the page and made them the same color as the background. All descriptive text has been removed from the index page and keywords are mostly gone from almost all pages. When I complained about the removal of all of my keyword info and descriptive copy, they wanted to charge me US$5000 for SEO services. I told them to !%$#@ off. Now I am in a bind. I would appreciate it if any knowledgeable folks could take a look site and recommend any changes that I could do myself or hire out to be done without it costing me two arms and a leg. Note: I am not a computer professional but can muddle through FrontPage when necessary. Thanks in advance. Chuck Hiatt Promogear.com, Inc. www.promogear.com ===== CONTINUING ================================= From: Brian Clark Subject: Affiliates No offense intended, but as someone who's been covering affiliate marketing among other revenue-sharing deals for a number of years, I think Mr. Gortatowsky provides some very mistaken advice in his LED post from yesterday. > Is the affiliate having to pay a sales tax? In theory > yes, however sales tax is also charged by the POS > direct leading to an illegal scenario of double taxation. In affiliate marketing channels (like CJ, Linkshare, etc.), individual affiliates are not conducting any financial transactions: they are providing an advertising service in exchange for commissions on sales that happen from that advertising. So there's no "double taxation" taking place -- merchant partners might have to start charging a sales tax on more of their sales, but affiliates would not be responsible for that at all. I don't believe an internet tax would even impact the margins available for this kind of marketing (since the tax would be passed through completely to the consumer.) In the case of a reseller / POS / drop ship model, the situation is the reverse: the reseller is responsible for the taxation (being the point of sale) and the supplier's relationship is that of a wholesaler (which is not taxable, as long as that reseller is supplying their taxpayer ID.) > Atop this word has had it that any affiliate past / present is > virtually guaranteed an audit within the next 3-5 years as > considerable issues of accounting on all sides are in question, > exactly how much money is unaccounted for in other words. I'm not a lawyer or an accountant, but as a publisher, a merchant and a consultant the revenue streams from affiliate marketing aren't any different from that involved with other forms of internet advertising or marketing. > eBay now has been pushing eBay Business, the new venue that > phases the old away into history. The businesses using affiliate > programs are working on models now that reward the buyer not > some driving site / entity. Not to dispute that, but eBay just greatly expanded their affiliate program last week. From their own press release: ----------------------- "The affiliate tier brings together the entrepreneurial spirit of our affiliate community with the technical savvy of the eBay developer community, and we expect that it will be a catalyst for the creation of new and highly profitable affiliate businesses." http://snipurl.com/7g9b [ecommerceiq.com] and "eBay's Affiliate Program enables entrepreneurial individuals and organizations to earn money by driving new users and bids to the eBay marketplace, with the top 50 affiliates earning an average of over $1 million per year in commissions. Most of the top 50 affiliates are entrepreneurial teams of three to five developers committed to driving traffic to eBay in technologically-savvy and creative ways." http://snipurl.com/7g9c [home.businesswire.com] ----------------------- > This is the replacement of the current affiliate models. Clearly, that's not the case. Remember, affiliate marketing (at least as it is practiced by most major merchants and service aggregators) is about attracting new customers, in contrast to both the "loyalty marketing" (rewarding customers for their purchases) and the "low-volume reseller market" (wholesaling a product to other small retailers.) Most affiliate marketing managers, in fact, do not want a marketing vehicle that creates a cost per sale for every sale -- they are interested in affiliate marketing as a channel to acquire new customers, which can then be maintained and optimized by the loyalty marketing efforts. Don't get me wrong, I'm not as bullish on the specific model described as "affiliate marketing" as I was in 1999, but the reasons for me are very different than what Mr. Gortatowsky, and some of the trends impacting reseller marketing are not really applicable to affiliate marketing. For me, the biggest issues facing affiliate marketing are the rampant mischannelization (sales being logged as "affiliate created" when in actuality they come from other sources), affiliate fraud (such as "cookie stuffing") and the general spirit of mistrust between affiliate publishers and the very third-party affiliate aggregation services they work with. Best, Brian Clark, Producer ReveNews.com ------- new post - same topic ------- From: Ajeet Khurana Subject: Affiliates Dear Gortakowski, Whoa, such a barrage of interesting points. Though I agree with a lot of your premise and issues, I have to disagree with your conclusions. Tell me, wouldn't things work if: 1) The store were to deduct tax at source (withhold tax). I agree with you that even today tax(es) are payable on affiliate income and I know many people who do pay. But, if there is a serious concern on "tax-dodging," the taxes can be withheld. 2) Instead of killing a concept, there can be some clarity on tax dues from affiliate type earnings. Customer bring customer type programs have been around since the pre-web days. And, I think that they are a smart idea. Except that they are not substitutes to affiliate programs. Both models have their own place in the sun (monitor-glare?). I am not pessimistic about the business of affiliates. I do agree that things might get more formalized and CJ kind of providers might do better than people running their own custom scripts. Thanks Ajeet Khurana http://search-engines.allinfoabout.com ------- new post - same topic ------- From: John Barendrecht Subject: Affiliates > The days of external entities leaching unto sales by being > qualified traffic directors will be dead by the end of 2005. - R. Gortatowsky, LED 1830 I couldn't disagree with this more. I think there are some basic flaws in the arguments provided. I hope I am right, I sell a million dollars worth of merchandise for some of my affiliators (merchants) and make a full time living being an affiliate. The Sales Tax issue -- Most merchants already charge sales tax in the state(s) they have a presence in, and most have a presence in multiple states. As different states have different rates, going to a flat rate would only simplify their sales tax issue. As for affiliates having to charge sales tax? Affiliates don't sell anything, they are basically commissioned sales people. The affiliate doesn't buy the item, store it, ship or sell it. The affiliator sells the merchandise and pays the affiliate a commission. No different than a car salesman on a new or used car lot. (Just more honest, and no price haggling <gr>). As for merchants selling directly to the customer and rewarding them. There are 2 flaws here. How do you get the traffic to your site? I know that I've searched Yahoo for some item and couldn't find it. I finally found the item at a affiliate (of Yahoo) and ordered it there. The affiliate had a much more focused site, making it easier to find items. As for rewarding the customer directly, quite often I may make a purchase at a store and I won't need that store's service again (ever). So any coupon is useless. If you're going to reward me with air miles or something, these are not free and can cost more than affiliate commission. If you're going to give me tens of thousands of dollars in store credits instead of an affiliate check, I won't be driving any traffic to your store. I'll pack up my marbles and go home. I'm an entrepreneur, I'll find a different game. Dropping affiliate programs for small to medium size businesses (under $100 million in sales) will be a death sentence for many of these businesses. What if you drop all affiliates and your sales drop by 20% to 40%, how do you cut costs? Affiliates are paid commission, less sales = less commission. No sales = no commission. With the gaining popularity of outsourcing, affiliate sales only make sense. You outsource some (or most) of your advertising and sales force on a percentage basis. If affiliate sales are dead by the end of 2005, this will be a big blow to Google. They derive 95% of their income from advertising. Drop affiliates out of the picture and I could see their revenues drop 30 to 70%. Short the IPO. Mr. Gortatowsky mentions EBay but it is mainly an auction house not an affiliate program. He also mention the customer will get his friends to buy. I don't know about you, but I don't recommend stores to my friends. I don't recommend my own sites to my friends. But I do drive thousands of paying customers to some sites per month as an affiliate. He further states, the friend will get store credits. Now we are replacing affiliate checks with store credits. Either way the merchant pays someone. If the friend takes a $1,000 item and pays for it with store credits, how much profit did the merchant make on this item? His customer / friend reward scenario sounds a lot like in-house Air Miles loyalty program without the flexibility of being able to cash rewards with different airlines. Also if a friend recommends a store because he'll get a store credit, isn't his recommendation tainted? People / government are pushing search engines for more honesty as to which are organic and which are paid results. Should friends recommendations require a similar disclaimer? Best regards, John Barendrecht ------- new post - new topic ------- From: Joe Halbrook Subject: End of Email > Now is not the time to run away because it is getting > more difficult to market effectively via email. It's time > to acknowledge that BECAUSE of the changes, those > who are innovative "fighter" can move to the front of the pack. - Willie Crawford, LED 1830 I love this! That is exactly where I started last fall. I developed a toolbar to distribute my own email publication. Then, I realized that subscribers would be less likely to install a toolbar for each of their favorite publications -- with browser real estate in short supply these days. So, I developed a toolbar where subscribers could read any and all of their favorite email publication using a single toolbar. I even provided a few extras, such as a search bar that can access multiple search engines right from the toolbar, and a pop-up killer to get rid of those pesky pop-ups. I think this is the natural and obvious direction of email: To minimize the weaknesses of the SMTP protocol, while adding syndication enhancements that take email to the next level -- such as instant notification of new email content. The easier the uninterrupted delivery process occurs for the readers, the better. Joe Halbrook http://www.ez-feeds.com ==== BILLBOARD ==================================== From: Jacob Matthan Subject: Open source email > I am currently mortified by the fact that my e-Mail programs > has been engulfed by Microsoft Word, so that the mails > I send out are of the type I hate to receive! - John Smart, LED 1826 I just found a new email Open Source programme and an associated Open Source browser by the names of Thunderbird and Firefox (donation ware to the Open Source community). Search Google for these names and you will find the version suitable for your operating system. I use a mac which has such a large selection of email and browser programmes, but I have found this to be a really good one which can link to my Simputer, my handheld computer and mp3 player, which runs on the Linux system. They really rock, so you can leave behind Internet Explorer, Outlook Express and Microsoft Word!! Ask all your friends to send you documents in RTF format so you can open with almost any text editor programme. I refuse to open any Word doc attachments. I have no connection whatsoever with the developers - but I use a Mac and any Open Source software as a rule. Regards Jacob Matthan Oulu, Finland ------------------------------------------------------- The LED Digest is sponsored by pair Networks: pair.com for Hosting | pairNIC.com for Domains Copyright 1995-2004 Adam Audette. All Rights Reserved. ----------------------------------------------------------------- "Fiat justitia et pereat mundus. Let justice be done, though the world perish." - Ferdinand I |
