revenue performance magazine, spring 2010 edition

ISSUE 3 | SPRING 2010 | REVENUE.MTHINK.COM

BigBucks, Bad BusinessWho’s Getting Google-Slapped and Why

Does DirectTrack 8.0 Change The Game? Full Review

Geno Prussakov on The Year Ahead in 2010

How To Stay Legal With Negative Option Billing

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ContentsFeature Article

Big Bucks, Bad Business 12Google has been cracking down on some affi liates. Are you at risk of losing your business to a decision that can’t be challenged?BY LISA MORGAN

Product Review

Taming the Affi liate Network Jungle 24DirectTrack 8.0 offers certifi ed tracking, cross-network publication of offers and more. Does it change the game?BY LISA MORGAN

Publisher’s Letter

Are You a Velociraptor? 4BY CHRIS TRAYHORN

Manager’s Minute

2010: The Year Ahead 6BY EVGENII “GENO” PRUSSAKOV

Social Media Watch

What Are you Buying? 10BY IAN ROSENWACH

Legal Web

Putting The Positive on Negative Option Billing 18BY DAVID O. KLEIN & JONATHAN E. TURCO

Affi liate Corner

What New Affi liates and Merchants Need to Know 22BY PARESH VADAVIA

Visions of Performance

Are You A Value Added Affi liate? 32BY GEORGE HANSEN

Publisher’s letter

4 revenuePERFORMANCE – ISSUE 3

PUBLISHER & EDITOR

Chris Trayhorn

ART DIRECTOR

David Witcomb

SENIOR WRITER

Lisa Morgan

PRODUCTION MANAGER

Yvonne Schellerup

CLIENT LIAISON

Jennifer Neaves

CONTRIBUTING WRITERS

George Hansen, David Klein,

Evgenii “Geno” Prussakov,

Ian Rosenwach, Paresh Vadavia.

VICE-PRESIDENT, SALES

Tobias Siegel

ADVERTISING/SALES DIRECTOR

Kelly Joseph Lemos

To advertise, subscribe or obtain reprints, call 415-371-8800, or visit: revenue.mThink.com

Revenue Performance is published by mThink55 New Montgomery, Suite 216

San Francisco, CA 94105

mThink: Intelligent Performance Marketing

CHAIRMAN AND CEO

Chris Trayhorn

VICE PRESIDENT, MARKETING

Yvonne Schellerup

DIRECTOR, WEB DEVELOPMENT

Ron Snow

COMPTROLLER

Julienne Riveong

SUPER-AFFILIATE INSIGHTS FOR ONLINE PUBLISHERS AND ADVERTISERS

While every effort has been made to ensure the accuracy

of the content of this publication, the publisher will accept

no responsibility for any errors or omissions, or for any loss

or damage, consequential or otherwise, suffered as a result

of any material published here. The information published

in Revenue Performance is not intended as a substitute

for legal, accounting, tax or other professional advice. The

publisher assumes no responsibility for statements made

by advertisers in business competition. All editorial submis-

sions, whether solicited or unsolicited, become the property

of mThink. Statements and opinions expressed herein are

not necessarily those of Revenue Performance, mThink, its

affi liates, advertisers or any other agent. The name “Revenue

Performance” and the phrase “Super-Affi liate Insights” are

the intellectual property of mThink. The entire content of

this publication is protected by copyright; full details are

available through the publisher. All rights reserved. These

trademarks or copyright materials may not be used in any

media for any purpose without the express written consent

of mThink.

© 2010 mThink

ISSN: 1549-7615

Cover Image: © Diego Cervo, Sandra Van Der Steen | Dreamstime.com

Disclaimer: Revenue Performance and revenue.mThink.com include editorial and/or advertising that refers to affi liate programs that often

include many different websites. Occasionally those programs may include websites offering education in casino or card games. In such cases

no promotion or endorsement of those sites should be inferred or implied – our editorial coverage and/or advertising relates only to the affi liate

program itself. Revenue Performance magazine and revenue.mThink.com do not accept advertising that promotes online gambling.

Lisa Morgan is an independent journalist who covers technology, business, and marketing issues. She is also a strategic consultant and writer serving technology-driven organizations.

George Hansen is Director of Sales and Business Development at Digital River – oneNetworkDirect.

David O. Klein is a partner with the New York law fi rm of Klein Zelman Rothermel where he practices internet marketing law.

Evgenii “Geno” Prussakov, writes, blogs, speaks and consults about affi liate marketing and program management.

Paresh Vadavia is a veteranaffi liate manager who recently launched his own agency for outsourcing program management.

Ian Rosenwach is a product manager with LinkShare overseeing product planning and execution, as well as social media.

Welcome to 2010. This is the year in which we can look to the horizon once more. A year of rebirth, of gaining the high ground, of winning again. Never before has such a tough year been followed by one of such massive

opportunities.If you’re not excited by 2010, you should be. Just look at what’s coming.Everyone is talking about the impact of social media but we are only at the very

beginning of the changes it is going to make in our lives. Mobile web access is grow-ing faster than any previous technology has ever done and is going to be at least twice as big as desktop web access. Cloud computing will mean that everyone has all their data available to them all the time. New non-governmental currencies and payment systems are being invented. Entertainment is changing as people move from passive TV-watching to interactive games. And then there’s climate change and all the green technologies that are being introduced.

This is a meteorite-load of disruption. The world of commerce is going to heat up dramatically. Established industry dinosaurs will have to try and evolve with the new environment, which will provide lots of opportunity for faster, smarter competitors. Big beasts are going to die off while the smaller and more intelligent thrive.

2010 is going to be the year of the Velociraptor.Take a minute to consider: are you a Velociraptor? Or are you prey?Welcome to 2010 and Revenue Performance. We have lots of plans for this year.

Stay with us and let us be your trusted guide. It’s going to be a great year.

Chris Trayhorn Publisher

Contributors

6

Let’s face it. 2009 is a year that many of us are pleased to put behind us. We want to look to the future. 2010 beckons. New mobile phones and tablet computers are appearing every week. We are seeing crazy-fast take-up of social media like Twitter, YouTube and Facebook. Add those developments to a rebounding economy and it all indicates an infl ection point: one of those moments in history when every-thing comes together to enable massive change and opportunity.

2010 is going to be a big year politically, technologically, globally. We invited Geno Prussakov to take look at what we can all look forward to in the coming year.

It’s that time of the year when half the world is making predictions, while the other half is reading them. The one thing that unites us is the desire to have some solid

information that can be relied upon along with practical ideas on how to turn the knowledge into action. Here are my thoughts on what will work in 2010, together with some of the most important data points on what the trends are in the industry.

Social Media to BlossomI know this will come as no surprise to the majority of

the readers, but it’s worth looking again at some of the more interesting research data. Forrester’s US Interactive Market-ing Forecast, 2009 to 2014 – which projects a substantial growth in online marketing over the next four years (hit-ting nearly $55 billion in 2014) – also estimates that social media will play an increasing role and demand increased at-tention from marketers. More concretely, Forrester forecasts that social media marketing spend will grow faster than any other sector (more than fourfold). Additionally, out of the top seven interactive channels which are expected to increase in marketing effectiveness, two are directly related to social media: what Forrester calls “created social media” (expected to show the greatest increase in effectiveness), and paid social listings.

Transparency is CentralTransparency and trust are going to become ever more

important to online marketing in general and affi liate marketing in particular during 2010. With the recent introduction of new Federal Trade Commission endorse-ments/testimonials rules and the rapid development of social media, online marketers are going to fi nd that suc-cess comes from increased transparency leading to better customer engagement.

6

Manager’s Minute – Evgenii “Geno” Prussakov

revenuePERFORMANCE – ISSUE 3

>>

2010The Year Ahead


Manager’s Minute – Evgenii “Geno” Prussakov

Engagement is no longer something that is solely driven by a marketing decision. Consumers are participating in shaping brands at will, on an hourly basis, and social media in all its variety is enabling and accelerating this process. Publishers and marketers can either monetize this trend by offering the necessary tools and opportunities to help their customers participate. Or they can risk destroying what they have previously built by choosing to use social media carelessly, spamming and abus-ing the trust of their readers and followers.

Affi liates and publishers that make the effort to combine greater transparency with the demand for more social media participation, will fi nd that they can create new value-added tools and services, and by doing so will win big.

Mobile Marketing to Grow…and fast too! Morgan Stanley predicts that mobile

Internet usage will be “at least twice the size of the desktop Internet” within a few years. Smartphones are expected to “out-ship the global notebook + netbook market in 2010 and out-ship the global PC market (in-cluding desktops) by 2012.”

Other sources support this forecast of massive growth. eMarketer, for example, forecasts steady growth in mobile ad spend from $416 million in 2009 to $593 million in 2010, to $1.5 billion in 2013.

The increasing demand for mobile services created by social media combined with the growth of mobile technologies offers any number of interesting market-ing opportunities. This will be big play for many affiliate marketers in 2010.

The Year of CRORand Fishkin, CEO & co-founder of SEOmoz, has chris-

tened 2010 “the year of conversion rate optimization.” He believes that most companies are now at an “infl ection point …[able] to assess their spend and where they derive value.” As a result, he believes that CRO, with its reason-able costs that deliver high ROI, will be the area where most will focus.

Tim Ash of SiteTuners has been stressing the importance of CRO for a long time to affi liate marketers, and increas-ing numbers of affi liates and etailers are now paying atten-tion to landing page optimization. Those that have learned to tweak, split test, improve, test again, and again, will be the ones that beat their competition in 2010.

For merchants or affi liates, there is no better New Year’s resolution than to spend time every day on practicing con-version optimization skills. Nothing will pay off better.

Online Video to BoomIn 2010 video will be increasingly presented as part of gen-

eral search results and both affi liates and etailers should keep this in mind. Some merchants are already providing affi liates with video creative, but expe-rience is already showing that the best converting creative is often that made by the affi liates themselves. And they do not have to be professionally shot. In the present disintermediated world, honesty and objectivity counts for more than glamour.

The Forrester’s report quoted above also forecasts that over 80% of polled marketers believe that the marketing ef-fectiveness of online video will increase in the course of the next three years, which will make this channel second only to created social media in infl uence.

More Legislative FightsWith more and more states facing budget defi cits, more

will turn towards the “affi liate tax” as the panacea. If it hasn’t happened in your state yet, it’s just a matter of time and as an affi liate marketer you need to be prepared to be proactive. These legislative initiatives can be fought, but it needs merchants and affi liates to join the fi ght, writer let-ters and campaign. Be aware and be ready.

Here’s to a fruitful 2010! Stick with your goals, take the most out of the emerging trends, and success will surely follow.

References:• Forrester’s US Interactive Marketing Forecast, 2009 To

2014 –http://www.forrester.com/rb/Research/us_in-teractive_marketing_forecast%2C_2009_to_2014/q/id/47730/t/2

• Morgan Stanley’s The Mobile Internet Report – http://www.morganstanley.com/institutional/techresearch/mo-bile_internet_report122009.html

• eMarketer - Trends to Watch - All of eMarketer’s 2010 Predictions - http://www.emarketer.com/blog/index.php/trends-watch-emarketers-2010-predictions/

• Rand Fiskin - 8 Predictions for SEO in 2010 - http://www.seomoz.org/blog/8-predictions-for-seo-in-2010. |rp

EVGENII “GENO” PRUSSAKOV is an author, blogger, speaker and consul-tant in affi liate marketing and affi liate program management.

You thought the Internet

we’ve seen so far is big?

According to Forrester,

mobile web is going to be

twice as large.

>>

Five million people use Twitter every day. Each month, more Americans visit YouTube than watch the Super Bowl. It’s clear that the Internet is fundamentally

changing. What does this change in online behavior mean for e-commerce?

The Great Attention Stream MigrationBy now we’ve seen that Black Friday and Cyber Mon-

day numbers were stronger than expected. E-commerce continues to be a vibrant force in the economy, even during uncertain times. But at the same time the online shopping landscape is changing. As people spend more time on social networks their online behavior is evolving. Consumers are doing the same activities as before such as shopping, brows-ing, and searching, but on social sites. Increasingly, they are fi nding recommendations on what to buy from their friends or others that they trust. The 00’s saw a migra-tion of the attention stream to social places.

It’s the job of networks, pub-lishers, and advertisers to adapt to the changing online shopping landscape and fi nd ways to use social networks to engage consumers.

Social Media Grows UpAccording to eMarketer’s 2010 Social Media Marketing

Benchmark Report, social media marketing is now reaching maturity, meaning that it’s becoming more measurable. Whether it’s the numbers of followers, fans, or subscribers, advertisers are able to set measurable goals and then track ROI. Until now social media has been used primarily for branding and customer service but more marketers are see-ing the direct response opportunities that lie within social networks. As social media matures as a channel, marketing objectives will focus towards sales growth and lead genera-tion. MarketingSherpa reports that the retail/e-commerce sector is poised to increase social media spend by an average of 79% in 2010. Social media is not an experiment for mar-keters anymore – it’s a must-have.

Smart publishers are using social networks to promote their own brand and drive sales, as well as enabling their customers to share deals within their own social networks.

By allowing consumers to share links on social sites you open up a vast new distribution opportunity, so long as your content and offers are compelling enough to be shared. Every publisher and advertiser should be thinking about how to incorporate social sharing links on their site. BradsDeals.com is a great example of how it should be done, with nice integration of Twitter, Facebook, and email op-tions for every deal on the site.

Networks Plugging InCPA and affi liate marketing are channels well-suited to

helping marketers capture the new attention stream. At a 10,000 foot level, social sites represent distribution opportu-

nities. As more marketers turn to social media as an actionable chan-nel, affi liate programs can assist the distribution of their products on social sites.

Networks, such as ourselves, also need to think about how they can help their customers be aware of and involved with emerging shopping trends. At LinkShare,

what we call our Bento Box is a sandbox for plug-ins where we offer a number of tools like WordPress plug-ins and a Google Gadget that make getting links outside of the LinkShare Dashboard seamless. Tweetshop and the Social LinkGenerator bookmarklet enable publishers to create tracking links to advertiser pages and then share it on their social sites, with a click of a button. As a demonstration, go to Twitter and take a look at all the tweets with the hash tag #tweetshop. You’ll fi nd Twitter users recommending prod-ucts to their followers in real-time. We see social networks as a distribution channel for our customers to not only to drive awareness, but also to drive sales.

As social networks have come to command a greater share of shoppers’ attention so online marketers have adapt-ed. Now it’s time to take it to the next level and treat social media as a mature channel not only suited for branding and customer service but also for sales and leads. |rP

IAN ROSENWACH is a product manager with LinkShare overseeing product planning and execution, as well as social media.

What Are You Buying?

1010

Social Media Watch – Ian Rosenwach


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Google is cracking down. Last month, Google filed a trademark infringement lawsuit against Pacific WebWorks and several others as part of an effort to stop fraudulent “Google Money” schemes. These are scammy offers that use Google’s brand to attract unsuspecting customers and then trap them into hard-to-break continuity programs, often via negative option contracts. In a move that many see as being related, Google has also moved “to remove scammy URLS from our index,” and to, “permanently disable AdWords ac-counts that have a poor or harmful user experience whether or not they use Google’s trademarks illegally.” Unfortu-nately, it’s not just scammers that are getting hit by these new measures.

Are Google-Slaps Arbitrary?Public forums and blogs are rife with complaints from

affiliates whose businesses have been adversely affected by or obliterated by what has come to be known as a Google-slap. A common story is that a business may have existed for some time, with perhaps six or seven figures having been spent on AdWords, when suddenly with little or no warning Google disables the account. Often, there seems to be no way to identify what caused the problem and therefore no way to fix it. Even if the problem could be identified and fixed, the end result would be the same with Google being unresponsive and the account remaining unusable.

The process seems random and has begun to have a chilling effect on affiliates and advertisers. If only Google’s guidelines weren’t so ambiguous, some say, and if there was some recourse, then perhaps honest affiliates could avoid the sanctions intended to deter scammers.

“Google-slaps are just Google trying to correct the market so consumers can have a better user experience,” said Mi-chael Krongel, president of Intermark Media, Inc. “But the process is very arbitrary. People comply and still get slapped or their listing gets poor Quality Scores.”

Although most advertisers adhere to Google’s terms, poli-cies and guidelines, there are nevertheless some aggressive advertisers that try to take advantage of consumers, said a Google spokesperson.

MediaTrust CEO Peter Bordes feels that a lack of industry standards is driving Google’s actions in a situation in which it is trying to protect itself and consumers.

“We’re seeing a contraction of the CPA market which points to this as a root problem,” he said. “My fear is that things are moving so fast and so hard [remedial action] won’t be done in a manner that reflects fair play.”

The word, “fair” is at the heart of the debate. While Google does provides terms, conditions and exhaustive guidelines for advertisers, it is still often accused of not revealing all of the relevant factors.

“Many affiliates feel Google is acting in a way that is unfair by failing to disclose important, relevant information with regard to policies and decisions that affect their liveli-hoods,” said John Lemp, CEO and founder of IntegraClick, LLC. “The frustrating part about this is affiliate marketers have no idea why their account is being terminated. It’s unfortunate that many publishers and advertisers with no ill intentions have had to experience account terminations and worse, blacklisting within the Google network due to heightened security measures. These are Google’s core customers and [they] should be at least treated with some form of dignity.”

Who’s Getting Google-Slapped and Why

Bucks,BADBUSINESS

By Lisa Morgan


Potential PitfallsGoogle’s desire to eliminate “poor or harmful user experi-

ences” makes sense from corporate risk and consumer pro-tection standpoints, but the policy is a point of great debate because it is subjective and not necessarily tied to fraud or intentional misdeeds.

What factors may lead to a user experience being consid-ered poor? Landing page quality, Quality Scores and thin or irrelevant content are the most obvious, but there seem to be several others that are undisclosed.

“If you’re running a PPC campaign your landing page will count toward your Quality Score,” said Jim Lillig, director of Networks at ClickFusion. “The real question is whether your organic Quality Score differs from a paid listing. And the biggest incongruence is you need good information but will you get slapped for a form on a page? Is it ambiguous? Yes, but not to Google.”

A common situation that has perplexed many advertis-ers has been when they have found that their Quality Score has plummeted overnight. What caused it? There is no simple way to know for sure so people have to keep guessing.

According to Google’s spokesperson a number of factors are included in the measurement of a keyword’s relevance to ad text and a user’s search query. Quality Scores are updated frequently and are closely related to the performance of a keyword. Because there are a variety of factors involved in the calculation of a Quality Score, Google says it not possible to give a simple explanation for a Quality Score’s decline.

IntegraClick’s Lemp wonders how any affiliate can be confident about the future when their livelihoods may depend on Google’s subjective judgment on the meaning of landing page quality. Because there are so many differ-ent landing page types and search encompasses hundreds of thousands of different business types, he feels Google has a responsibility to understand the nuances and provide specific feedback.

“The only people that will learn the system if Google continues to do business this way are those that do business the wrong way,” he said. “In the end, Google may end up pushing partners towards using unethical tactics to diver-sify their risks, which is exactly what Google was trying to avoid in the first place.”

Many agree that Google’s approach may actually encour-age the kind of practices it is designed to stop because gaming Google’s rules can provide big increases in traffic volume and ROI, with the result that honest affiliates are either forced to follow suit or become the victims of higher bid prices and lower margins.

Who Decides?Google says it uses both automated and manual processes

to measure site quality and to distinguish scammers from legitimate advertisers. The company disables the accounts of offenders that repeatedly breach its advertising policies and landing page quality guidelines, or that place ads that promote sites considered to be egregiously harmful to users.

Given the ease with which new accounts can be set up and the sheer number of accounts that exist, some sort of automated review is accepted as necessary by everyone. Where it comes in for criticism is when it appears arbitrary and overreaching.

“When you talk about destroying someone’s business, Google needs to do so in a sniper-based fashion,” said IntegraClick’s Lemp. “It’s easy to say ‘some people will be affected for the greater good’, but it’s different once it’s you and your livelihood that is axed.”

Part of the problem is that it seems to many that Google takes no account of a history of good behavior by the affili-ate. Having an account that has existed for years without problems but with great Quality Scores and big ad spends appears to carry little weight with Google. One adver-tiser’s big ad spend may just be regarded as a tiny drop in the Google bucket. It is a sensitive issue for victims of the Google-slap that consider themselves to be some of Google’s best customers.

“A million dollars is not that big a deal to a company Google’s size,” said ClickFusion’s Lillig. “Their strategy is

Who Should Define the Guidelines?

Google’s power over its advertising customers is creating great concern among publishers, adver-tisers, and networks. Some have decided that the industry as a whole needs to take action to self-regulate before the government decides to step in or Google’s rules become even more onerous.

John Lemp, CEO and founder of IntegraClick, LLC says he and the CEOs of some of the largest affiliate networks are talking about creating a not-for-profit entity that protects advertisers, affili-ates, and consumers.

Peter Bordes, CEO of Media Trust hopes that perhaps something might be accomplished through the Performance Marketing Alliance (PMA) although at the present time the group is busy handling Internet tax issues. In the mean-time his network has launched a compliance directory so people can educate themselves about issues like blogging policies.

Jim Lillig, director of networks at ClickFusion is talking with some of his colleagues about po-tentially launching a certification authority. His company is currently working on technology that will monitor the quality of traffic sent by publish-ers to advertisers.

“Affiliates have done a poor job of policing them-selves,” said Lillig. “I’m for anything that will help legitimize affiliate marketing.”

to weed out bad people but even our court system convicts innocent people. The problem is there’s no recourse with Google.”

What Happens If an Account is Disabled?The lack of recourse is a common complaint among those

who have had their accounts disabled.“Think about the guy who has spent his career building a

reputation with Google as far as Quality Scores and bid pric-ing go. All of a sudden he is shut down and has no way to appeal the process,” said IntegraClick’s Lemp. “The legiti-mate affiliate who has worked his whole life in search and has built his reputation the right way faces disaster. I know more and more people every single day that have faced this with Google and it’s a shame.”

According to the Google spokesperson, an escalation process does exist. Advertisers can reply directly to the no-tification email they’ve received to ask further questions or request appeals. Google then conducts a review and makes judgments on a case-by-case basis.

But that doesn’t satisfy most who have been affected and there are increasing calls for a different approach. Lemp and others say Google’s unilateral actions underscore the need for some sort of industry self-regulation or arbitration that has a clear set of checks and balances.

Should You Be Worried?It depends. Opinions differ greatly about who should be

worried and why. Theoretically, if you follow the Google’s guidelines and make a point of conducting business ethi-cally then you should not have to worry about a Google-slap. In practice, results may vary.

Google’s sheer size and market share put the company in a position of defining rules that continually shape and reshape the industry, especially in the absence of a self-regulated industry forum. And even if such an industry body was established and new guidelines published, Google would still have significant influence by sheer force of market presence. That will remain the situation unless and until Google’s market share is eroded at some point in the future.

What to do in the meantime? In addition to adhering to Google’s published guidelines and following sound business practices, the best advice seems to be that the push towards quality of user experience will continue and so publishers and advertisers need to take responsibility for providing that experience and being careful about what they choose to promote.

“Your standard online marketer is trying to figure out what is or isn’t OK,” said ClickFusion’s Lillig. “If you’re just going to follow a get-rich-quick formula and provide no value then expect the worst. Although the guidelines may be vague, content is still king.” |rp

LISA MORGAN is an independent journalist and consultant who covers technology and business issues.

18

With a name like “negative option billing” it should come as no surprise that this practice has re-ceived a lot of negative attention lately from the

Federal Trade Commission (“FTC”), various state attorneys general and other regulatory bodies. Despite this trend, marketers and consumers alike have found this billing method to be a convenient and useful payment option over the years. With proper and prominent disclosures, a reason-able price point, an equitable refund policy and a responsive customer service department (complete with a user-friendly cancellation policy), there’s no reason to think that negative option billing cannot continue to be a respectable business model for years to come.

First, some background for those unfamiliar with this billing method. The phrase “negative option” billing (also referred to as “continuity” or “recurring” billing) refers to a billing method whereby the customer is automatically charged on a periodic and recurring basis for goods or services ordered up until the point that the customer can-cels his or her membership or account. The most frequent model involves a monthly charge, though shorter and longer intervals are sometimes offered.

“Free-to-pay conversion” billing (a close cousin) refers to a billing method whereby the customer is offered a free trial period for a given product or service, and if the custom-er does not cancel before the end of the trial period, the consumer is charged the ap-plicable product or service fee. Frequently, free-to-pay conversion models convert to negative option billing after the applicable trial period expires.

Given the fact that both of these models involve a process whereby the consumer is billed at a later time without obtaining subsequent consent or pay-ment information from the consumer after

the initial interaction, there is a heightened level of scrutiny surrounding the suitability and comprehensiveness of the disclosures required during the initial consumer/business operator sign-up event.

Common Complaints and Regulatory ActionLast May, the U.S. Senate Committee on Commerce,

Science, and Transportation launched an investigation into various companies, including Webloyalty, Vertrue and Affi nion, in response to an avalanche of complaints alleg-ing that consumers were being enrolled in negative option billing programs without obtaining informed consumer consent. The common feature of these complaints was that consumers were being enrolled in the applicable programs without consumers providing their credit card information directly to the program providers. The process worked as follows: after fi rst completing an Internet-based transac-tion using a credit card, a pop-up window would appear on the consumer’s computer screen featuring a different

product offered by a separate company, as well as an incentive to sign-up. After the consumer

entered his or her e-mail address only (not credit card information) in

response to this second offer, the consumer’s credit card

would be billed for the underlying product

offering because, unbeknownst to the consumer, his or her credit card information was provided by the fi rst company to the second company. Ear-lier this month, the Commerce Committee ex-tended its probe

to include Visa, MasterCard and

American Express, seeking answers as

to how these programs were tolerated by credit

card companies that are normally vigilant about pre-

venting such abuses.This past November, a settlement in

excess of $1 million was reached between

18

Legal Web – David O. Klein and Jonathan E. Turco

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Legal Web – David O. Klein and Jonathan E. Turco

the FTC and online business operator Commerce Planet, Inc. in connection with a negative option billing program that was packaged with a “free” offering. The FTC alleged that consumers were not made aware that they were enroll-ing in the negative option program when obtaining the free offering, and that the Commerce Planet refund policy and practices were excessively diffi cult and onerous for ag-grieved consumers to successfully navigate.

These are just two recent examples of regulatory action in this space, though they are by no means isolated instances. The level of scrutiny that these practices are receiving looks like it is only going to increase as regulators attempt to weed out the industry’s few bad actors. Should you engage in these bill-ing methods, it would be prudent to ensure that you conform to the requirements of law, as well as industry best practices. Below is a rough guide to help you do just that.

Best Practices GuideFirst and foremost: disclosure,

disclosure, disclosure. And, just to be certain, some more disclo-sure. It is absolutely vital that the price point of your product or service, the applicable bill-ing schedule, the cancellation method (complete with an 800 number for customer service) and the description of how the charges will appear on the con-sumer’s credit card statement are all clearly and conspicu-ously displayed directly above the “call to action” (usually the order “submit” button). Do not hide this information in the fi ne print at the bottom of the sign-up page.

Further, a link to the applicable Terms of Service and Pri-vacy Policy must appear above your order “submit” button so that the consumer is made aware of the material terms prior to consummating the transaction. To reiterate, do not relegate these links to the fi ne print at the bottom of the sign-up page.

While it is important to ensure that the consumer is made aware of the price prior to purchase, that is not the only price-related issue that you should be concerned with. Reg-ulators have also increasingly shown an interest in products and/or services that are marketed via negative option and/or free-to-pay conversion methods where the applicable price of the product and/or service bears little rational relation to the value of the actual product and/or service provided. For

example, if you are charging $60 a month on a recurring basis for access to a database of government auctions that is made available for free by the government, you are asking for trouble.

Do Not Underestimate Customer ServiceLast, but not certainly not least, it pays to ensure that

your customer service department is easy to access, respon-sive and that a process is in place to facilitate cancellations with as little hardship for the consumer as possible. It doesn’t hurt to have a liberal refund policy either. The more responsive and accommodating you are, the more likely it is

that the consumer will feel respected and made whole. Healthy customer relations remains the cornerstone of any successful business, whether or not you employ negative option billing mechanisms as part of your business.

When done right, recurring billing methods provide a convenience for both businesses and their custom-ers by doing away with the need to revisit the purchase/payment process each month for a product or service that the consumer plans to use for an extended period of time. Likewise, if the details of the offer are communi-cated adequately to customers, free-to-pay conversion programs provide consumers with the valuable oppor-tunity to try out a product in advance before committing to a purchase. On

their own, neither of these billing methods is suspect or unethical. Marketers that use these vehicles need to make sure that the consumer is well informed as to the material terms of the offer, that the fee correlates to the value of the product or service and that the means to cancel is easy and hassle free. If properly implemented, negative option billing can provide value to both sides of the transaction.

Please note that this is only a brief overview of some of the legal issues surrounding negative option billing pro-grams. Remember to obtain guidance from a licensed and experienced legal professional prior to offering such billing options as part of your marketing campaigns. |rp

DAVID O. KLEIN is a partner, and Jonathan E. Turco is an associate, with the fi rm of Klein Zelman Rothermel LLP in New York, New York, where they practice Internet marketing law. David O. Klein can be reached at (212) 935-6020 or via email at [email protected].

When done right,

recurring billing methods

provide a convenience for

both businesses and their

customers by doing away

with the need to revisit the

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each month for a product or

service that the consumer

plans to use for an extended

period of time.

Affi liate marketing is a much-coveted career path in the business of online moneymaking. After all, it’s convenient, it looks easy enough and everybody’s do-

ing it. But make no mistake: it’s a virtual jungle out there. Many affi liate newbies believe it is the cash cow of their

dreams that will make them rich overnight: an unfortunate misconception, really, given the overwhelming number of well-established competitors who stand in the way of any newcomer’s success. And for those new retailers, merchants and advertisers who think an affi liate program will inargu-ably bring in the big bucks, it is a rude awakening when they discover they are swimming against a heavy current in the company of much bigger fi sh.

So how does the new guy thrive against such odds?

Tips for the Affi liate NoviceTip #1: Study your competition. Create a dummy email

account and sign up to as many relevant publishers’ newslet-ters as you can to see what kind of deals they are offering their subscribers. Then explore their websites to see what promotional tips and trends you can pick up. You should be offering something similar or better.

Tip #2: Level your playing fi eld. Chances are, because you are new and have virtually no credibility, advertisers will give you lower commissions than what they are giving better-known and more successful players. Sway them into increasing your cut by promising them a hot spot on your homepage and proposing a three-month trial at a higher commission. Then work hard at maintain-ing that privilege.

Tip #3: Make your merchants shine. Don’t just plop logos, links and coupon codes on a page and hope for the best; sell each brand. Create a merchant page that showcas-es images and logos, a proper look and feel, copy about the company and reasons why their product is worth buying. This takes time, but it also makes your affi liation seem legit in the eyes of wary consumers, and consequently optimizes your chances for click-through and sales.

Tip #4: Create a sense of partnership. Rather than pro-moting random coupon codes, ask your advertisers for vanity codes that include your affi liate site’s name, like OPM25 rather than 54321. And propose co-branded landing pages that ensure continuity and consistency in the messaging between your site and theirs. For instance, your logo, a customized welcome mes-sage and the offer you are promoting should appear in a greet-ing on the advertiser’s page. Again, this ups your credibility and makes you trustworthy to cautious customers.

Tip #5: Keep an eye out for new advertisers. More often than not, the bigger and better affi liates are too busy with long-lasting partnerships to bother fostering new ones. Jump on every opportunity to partner up with new retailers and advertisers that show potential and have an innovative

product, because one of them might just be the pot of gold you’ve been hoping for. Remember: the earlier you build a relationship with the smaller retailer, the more you will get out of it when they fi nally succeed.

Tips for the New Merchant Tip #1: Compare yourself to competitors. Set up a

publisher’s account for yourself in the affi liate space in order to see what competitors are doing. What kinds of promo-tions are out there? How long are offers extended? How big are the discounts and how great the commissions? Who has the hottest creative? Compile what you fi nd and assess it. Then turn yourself into a worthy opponent.

Tip #2: Give the little guy a try. Your fi rst instinct might be to push for reputable affi liates to promote your product, but you’d be surprised at how much you can get out of a collaboration with a promising newbie affi liate. The green ones are so eager to succeed, they will give you bet-ter exposure and will work twice as hard to promote your brand. Keep in mind that every big guy started out small…

Tip #3: Give out the goods. Customize coupon codes and landing page greetings for the more devoted affi liates. Provide them with a list of top-performing keywords so they hit better rankings. And give them any marketing material they might need to properly promote your brand: copy about your com-pany, logos in various sizes and any other relevant creative.

Tip #4: Begin with a bang. In order to get noticed in the affi liate space, you’ll want to kick start your program with aggressive offers and bonus incentives for your partners. This may cost you in the beginning, but it is a worthwhile expense in the long run. Think long term ROI: this isn’t sup-posed to be an overnight delight.

Tip #5: If you have it, spend it well. If you have the fi nancial means to hire an experienced affi liate manager who has longstanding relationships with key publishers, do it. Whether it is someone in-house or from an outside agency, this is a sure way of growing your program much more quickly and ensuring faster returns.

Affi liate Conferences: Key to SuccessLastly, but most importantly, whether you are an adver-

tiser or an affi liate that is new to the space, be sure to invest time and money in attending conferences. It is the best forum to meet the right people, build partnerships, seek opportunities and learn a fundamental lesson about the business: relationships go a very, very long way.

So go on: spread your wings and fl y. (And network your way to the sky.) |rP

PARESH VADAVIA recently launched the OPMpros agency, short for Out-sourced Program Management. OPMpros.com.

What New Affi liates and MerchantsNeed to Know.

2222

Affi liate Corner – Paresh Vadavia


24

Networks Go WildIf there is one recent development that has changed per-

formance marketing it is the explosion in new advertising and affiliate networks. Nobody seems to know for sure how many there are now but a guess of over 500 active networks, and several thousand in total, is probably correct. It is easier than ever for someone – anyone – to set up a network and start brokering offers. It’s almost become a standard career path for successful affiliates to start their own CPA network.

All of this frantic growth has been driven by the easy availability of network platform software. It is no longer the case that a new network has to build their own software. Longtime providers such as DirectTrack, LinkTrust and HitPath have been joined by newcomers such as HasOffers, creating increased competition, the rapid introduction of new features and more aggressive pricing.

The granddaddy of affiliate network platforms is Direct-Track. It’s sufficiently well-established that 19 out of the top 50 performance marketing networks use it with the result that most experienced affiliates are familiar with the inter-face and have learned to trust the tracking and reporting. We decided to take a closer look at the latest version, Direct-Track 8.0, to see if it’s still holding its own as the leader of the pack.


Taming the

Affiliate NetworkJungle By Lisa Morgan


What’s New?DirectTrack is provided by Direct Response Technologies,

a business unit of Digital River. It’s a hosted affiliate man-agement platform which is designed to be used by small, startup networks and scale all the way up to multi-national operations with hundreds of thousands of publishers. It’s flexible enough to cope with merchants needing to run their own affiliate programs and even ad agencies who wish to syndicate offers from their clients of record.

Approximately 600 companies in 45 countries are cur-rently using DirectTrack, some of which are using the platform to build global affiliate networks. To support these kinds of efforts the software can be customized in any language and is already being used in twelve different languages including Chinese and Hebrew. International currency support is also included so users can run truly global campaigns that include offers tailored to specific lo-cal markets.

Tracking And ReportingHere at Revenue Performance we support and promote

best practices in the affiliate marketing community. One of the reasons we decided to review DirectTrack at this time is that with version 8.0 they have taken the unique step – at least unique to our knowledge – of having their affiliate tracking systems independently audited and certified. At a time when the industry is preoccupied with fraud preven-tion and issues of trust and legality, we feel this is an initia-tive that is to be applauded.

The Internet Advertising Bureau (IAB) certification pro-gram was carried out by Interactive Media Services Group, Inc. (ImServices), which provides online media auditing and forensic investigation services. The certification was designed to assure merchants, affiliates and network opera-tors that DirectTrack’s tracking is accurate and glitch-free, and that it reports clicks, impres-sions, sales, leads and other network transactions reliably.

We spoke with ImServices’ CEO Richard Bennett who told us that the audit and certification process checked the integrity of the tracking architecture that is the foundation of the DirectTrack platform (and thus applies to all networks using it) but it didn’t extend to third party add-ons. Bennett also said the IAB certification process is sufficiently rigorous that companies often have to modify and improve their product in order to achieve compliance with the standard.

“Our clients include Yahoo, AOL, Microsoft, and eBay – companies that have the facilities in place to ensure they qualify,” he said. “It’s a big step for a smaller company.”

DirectTrack’s commitment to proving out the reliability and accuracy of its solution is intended to help it appeal to new networks who need to manage their risks effectively. Unreliable network software, or tracking that can not be trusted is a startup killer in this business so we may see more platform providers seeking IAB certification as time goes on. For now, DirectTrack is the only one that’s taken the initiative.

Network APIDirectTrack 8.0 has clearly been designed to provide

everything one needs. It consists of a solid framework and open architecture, rich features, straightforward admin-istrator and affiliate interfaces, and flexible, open source application programming interfaces (APIs). The APIs allow customers to build networks and user interfaces on top of DirectTrack. They can also export data from DirectTrack to third party applications or proprietary tools.

“The API suite is great because it provides a method of getting information in and out of DirectTrack,” said Frank Ioppolo, Jr., COO and general counsel at MarketLeverage. MarketLeverage’s affiliate network uses the platform to track millions of sales and leads.

In addition to providing an expanded portfolio of APIs, DirectTrack 8.0 also allows users to build private-label inter-faces to reflect their own brand identity. Agencies running several affiliate networks for different entities or brands can establish and own multiple private domains without having to worry about third party code appearing on the page.

Fraud Prevention For a long time one of the biggest factors holding back the

growth of the performance marketing industry has been the difficulty of identifying high-risk or fraudulent affili-ates before they can cause problems. We’ve heard stories of

Fraud prevention features include a central database of potentially high-risk affiliates that is shared across all DirectTrack networks.


networks having to reject up to 50% of their applicants – it’s a massive time-waster and one bad apple slipping through can cost a network a lot of money very quickly.

DirectTrack 8.0 addresses this issue via the creation of a central database of affiliates that have been red-flagged as fraudulent or high-risk by any network using the platform. This shared repository means that such affiliates can be instantly identified as soon as they apply. The affiliates are rated based on internal data from DirectTrack and also from TARGUSInfo so networks can make informed deci-sions about which affiliates they accept. Although affiliate acceptance or denial can be implemented manually, the process can also be automated. Red-flagged affiliates cannot simply avoid the taint of past substandard behavior simply by re-registering because their identities are tied to several different parameters.

“When an affiliate signs up, they go through a validation process that involves our re-pository and a 40-point checklist from TARGUSInfo,” said George Bordo, group vice president and general manager of Direct Response. “Our network clients love it because you can quickly identify and manage higher-risk affiliates.”

ForgeBusiness CEO Jonathan Miller finds the fraud manage-ment capabilities are invaluable because the OfferForge network has tens of thousands of affili-ates.

“We sign up about 200 affili-ates a week. About 50 to 100 of them will try to do something fraudulent,” he said. “Direct-Track is helping to clean up the industry.”

Campaign ManagementThose who create and manage

cross-platform marketing cam-paigns will find the integrated delivery capabilities particularly appealing. Using DirectTrack it is easy to track the effectiveness of search, email, advertising, video, and now mobile cam-paigns. It is also easy to create new campaigns, rotate ads, and target or retarget ads based on time of day, demographics, and geographic location.

DirectTrack also provides cookie-based, cookieless, and hybrid tracking options which are important for organizations

running international campaigns that are subject to region-al restrictions. Some parts of Europe, for example, regard cookies as spyware. Without cookies, it can be difficult to track transactions and properly credit affiliates. To solve the issue, DirectTrack provides cookieless tracking using a combination of attributes including IP address, proxy ID, session IDs, and more.

“About three percent of Internet users block cookies so affiliates may not be credited the way they should,” said Direct Response’s Bordo. “With our hybrid tracking, which combines cookie and cookieless technologies, both affiliates and networks receive the optimal credit.”

Internet marketers, merchants, and agencies concerned with brand consistency will appreciate the fact they can upload creative to DirectTrack which affiliates can then grab with a simple mouse click. What’s more, DirectTrack automatically generates and embeds the affiliate’s code in

the creative, which saves previ-ous time and eliminates manual coding errors.

“[With some other networks], you have to create new creative for each affiliate which is nearly impossible when dealing with agencies,” said ForgeBusiness’ Miller. “With DirectTrack 1,000 people can instantly generate customized tags that are all tracked in one place.”

Mobile CampaignsDirectTrack 8.0 also includes

new features that help publish-ers leverage emerging channels such as SMS.

“More affiliates are demand-ing mobile functionality,” said Direct Response’s Bordo. “With the rise of smart phones, campaigns can be delivered to handsets and optimized according to the preference of recipients.”

In addition to SMS campaign delivery, DirectTrack 8.0 also provides mobile reporting and client portals which enable pub-lishers to be updated anytime, anywhere.

“There are 14 million mobile users in South America,” said ForgeBusiness’ Miller. “Being able to send and track SMS messages is a killer app for us. We plan to expand our focus on mobile because our clients are extending their reach.”

Improved mobile integration allows campaign reporting on affiliates’ mobile phones.

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Inter-Network Ad Marketplace

One innovation that we feel deserves praise is what Direct Response calls “cross publication”. This refers to a sharing and distribution ad marketplace in which Direct-Track networks can cross-publish offers, entire campaigns, or links to other networks. In turn, they can also pick up offers from other networks and push them out to their own publishers.

“With cross publication you can have an offer up and run-ning on another network in about five mouse clicks,” said Direct Response’s Bordo.

This is going to be really useful in helping networks im-prove the distribution of their offers and expand the scope

of the campaigns offered to their own publishers. To take one example, an agency will now be able to set up their own network and immediately find distribution for their clients without having to leave the familiarity of the DirectTrack environment.

“No one else is offering cross publication,” said Forge-Business’ Miller. “We can pull offers from other networks without having to worry about [software] integration or manipulation. It allows competitors to collaborate.”

DirectTrack 8.0 further provides improve lead manage-ment capabilities that allow networks to capture data from leads and broker the information to advertisers.

“Network clients who use lead management software can buy and sell leads based on quality score,” said Direct Response’s Bordo. “Advertisers get the highest quality leads for the price paid and agencies can ensure they’re paying the right price for the leads.”

One of the strengths of previous editions of DirectTrack has been the straightforward affiliate interface and this

has been continued with version 8.0. Comparatively, the new interfaces are a little better organized and are easier to customize than previous versions. But the simplicity of the updated UIs conceals a lot of functionality.

ForgeBusiness’ Miller said anyone planning to adopt Di-rectTrack should be ready to commit to it because the depth of its capabilities means that it takes time to learn, and as you learn you will realize that there’s a lot more that can be done with it.

“You can’t go into it lightly because your business model will evolve with DirectTrack,” he said. “If you really want to make the most of the platform you should take time to study the training materials available from DirectTrack. The demo is simple but you really need to get the training

to understand [the complete depth of functionality].”

ConclusionThere is no doubt that Direct-

Track has been listening to its customers and working hard to maintain its position as the off-the-shelf network platform of choice. The cross publication of offers across networks is a killer feature. And as affiliates have more and more networks from which to choose, the ability to offer a familiar interface and tracking that has been inde-pendently certified is a big plus for any new network seeking to grow.

There are other options out there of course. Price competi-tion in this sector is intense and “free” is always attractive. But if you are thinking of set-

ting up a network of your own, it’s worth remembering that it’s hard to move from one platform to another. As a result, our recommendation has always been to choose a platform that provides an upgrade path so that as you grow you can add new capabilities without having to change your whole network. We’re told that DirectTrack is willing to scale their pricing according to the features a customer needs, which means you can start with a very cost-effective, lean-and-mean set-up that’s still highly usable and then add function-ality along the way.

All in all, networks, agencies, affiliates and online mar-keters will find DirectTrack 8.0 a robust and reliable option for streamlining campaign creation and management, lead management, affiliate management, and a lot more. Highly recommended. |rp

LISA MORGAN is an independent journalist and consultant who covers technology and business issues.

DirectTrack’s inter-network ad marketplace allows networks to trade offers with other DirectTrack networks simply and easily.

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Counsel to the Online Marketing Industry

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Merchants often ask me about the true ‘value’ of affi liates: what they really add to the value of the merchant’s products or sales campaign. Now

most merchants have a pretty good understanding of the general value of affi liates – they drive traffi c, generate revenue, and in some cases are strategic partners. But beyond that, they sometimes lose sight of just how much value affi liates can add.

So I ask the question: do merchants really understand what it takes to be a value added affi liate? Do you?

In technology sales they use the concept of Value Added Resellers (VARs). VARs are businesses that buy products, add extra value to it and then resell the product for a higher price. Most often VARs add value by bundling services into the package to provide a complete customer solu-tion. They sell solutions rather than products.

In affi liate marketing and with the direct to consumer model that is so prevalent on the web - there are no resellers. There are only affi li-ates. But would it add understanding if we used the term Value Added Affi liate? Actu-ally, I think it fi ts our industry perfectly and represents the essence of what affi liates do ev-ery day. Consider the dif-ferent business models that affi liates commonly use and think about the value they add to the merchants’ sales channel:• Experts in search add value through

their intimate knowledge of Google and other search engine platforms, and of key technologies required to succeed as a PPC affi liate such as ad groups, quality scores, display and destination URLs, CTRs and optimization. Google’s recent Caffeine update shows how important these value added areas of expertise are. I don’t always agree with Google, but if you want to see which affi liates are truly adding value (in Google’s eyes anyway), just look at who is left standing and you can get a pretty good idea.

• Coupon affi liates are aware of the many nuances that go into using discounts to generate sales. The knowledge of when to deploy standard, premium, and exclusive offers; when to use coupon codes vs. direct to cart discounts; and

which merchants and platforms have exclusive discount-ing capabilities adds huge value for merchants. Data feeds, XML, RSS, data dedupe & parsing are all elements that coupon affi liates must master in order to effectively merchandise what may be hundreds of merchants and thousands of offers. Using coupon updates to rank well organically is another ‘trick’ that coupon sites employ to drive additional traffi c to their sites. Every one of these value added elements must be mastered by affi liates to drive sales in the coupon vertical.

• Review affi liates use unique and expert content to trans-form information gathering shoppers into decision making

buyers. Solo reviews, head to head comparison charts, expert reviews - all add value and help cus-

tomers make informed buying decisions. How to compile this information,

transform it into a sales focused website, while also balancing

editorial integrity and manag-ing new FCC regulations are

elements review affi liates struggle with everyday. • Email affi liates, a segment that has prob-ably been around the longest, are always testing new methods to monetize their lists. CAN-SPAM, double opt-in and list scrubbing

are all critical elements to successfully market-

ing offers via email. List segmentation, A/B testing,

dynamic personalization: all these processes add value and

assist the conversion of email lists into customers.

The fact is that affi liate marketing is a fairly simple business model, but requires affi liates to balance a complex set of techniques. For merchants serious about optimizing their online sales channel, the skills of a value added affi liate are inherently valuable.

So if you are a merchant, take some time to consider just how much value your affi liates add to your business. And if you are an affi liate, think about how adding value can benefi t your business – and that of the merchants you work with. |rP

GEORGE HANSEN is Director of Sales and Business Development at Digital River – oneNetworkDirect.

Are You A Value Added Affi liate?

3232

Visions of Performance – George Hansen


revenue performance magazine, spring 2010 edition

Documents

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