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Running Your Own Network
Even today some firms are touting that building the biggest quantity and best technology affiliate network is the way to go, and that then all merchants would join them because they have the best technology and best affiliates. More...

The evolution of the Online Media Broker
The evolution of the broker from a facilitator of deals to the online marketing expert who shares long term relationships with specific advertisers has been a remarkable part of the online marketing industry's development. More...

Digital Thoughts: Profits. Security. Stability.
Three terms whose relationship to email (and online) marketing some people are questioning after the past few months (especially last week). After repeated articles, memos and assorted declarations, it is apparent that self-regulation is favored and needed by the online marketing community. More...

A return to the good old days ?
A few years ago we were spending on most of our niche eMagazines about 35% on marketing. Thus, if our eCPM was $10, we would spend $3.50 to acquire subscribers. This is a typical advertising supported circulation model at work. More...

 

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Running Your Own Network
Jason Wolfe ( jason@directresponse.com)

Even today some firms are touting that building the biggest quantity and best technology affiliate network is the way to go, and that then all merchants would join them because they have the best technology and best affiliates. In this scenario, merchants are supposed to be happy because they have tons of great affiliates and great technology access, networks are happy because they have more and more merchants and affiliates so they get their cut of a larger and larger pie, and affiliates were supposed to be happy because they get really great payouts from a trusted 3rd party. It reminds me of the late 90's when the 3 'big' affiliate networks claimed that they could give the merchant access to 1,000,000 affiliates. Once these merchants paid they waited for the 1,000,000 affiliates to come running to their program. It never happened.

In 1997, Amazon was awarded patent #6,029,141 which seemed to cover affiliate tracking as we know it, but they never enforced their ownership of this intellectual property. Since then many new affiliate and ad networks came onto the scene. Linkshare (also awarded patent #5,991,740), BeFree, CJ, and a host of other Ad Networks like Web Clients, Value Click, FlyCast, Double Click, Advertising.com (Technosurf), and even one of my properties participated in the space. The technology of how to track was not overly complex and it was not very difficult field to enter.

It was not a technology or patent rights issue to pitch to the merchant. It became a 'how big is your network' game. The larger networks claimed that if the merchant joined them, (see above) they would have access millions of affiliates. Well, there might have been millions of affiliates, but 80% were either bogus entries, linkfarms, or too small to matter; 5% or more were scamming you; 5% were incentivizing their users to click your CPC campaign (if you were unfortunate to been running CPC's on a non regulated network), and the few remaining 10% were the ones to focus on. In reality, there where only a few thousand real "super affiliates." In around 2002, I started to hear 'join our network and we will get you the Super Affiliates.'

There is no such thing as the affiliate network with 1 million active members. The technology is widely used and not enforced by patent, nor is it proprietary to one firm. The success is garnered from 'Super Affiliates' and the ability of the firm/person running the network to pay on time, pay fast, guarantee payment, be available at all times, and make the highest payouts.

Therefore there is an opportunity for firms/people to run their own networks and be successful. There are many niches and there are many Super Affiliates in those niches. The more focused a network can be to a certain niche or a certain group of Super Affiliates, the better the relationship will be for all involved, including the network, the affiliate, and the merchant.

Technology is technology. We think we have the best tools built into our technology, but tracking a click, lead, sale is standard amongst almost every network. And there are plenty of advertisers online. Today at least 150,000 merchants are bidding for keywords on Overture, Google, FindWhat, and other portals and search engines. In the Ad Networks and Affiliate networks, there are probably a maximum of 10,000 advertisers. There is plenty of room to grow, and this is not a zero sum game, so there is room for you to grow and be successful.

Here is what I would suggest to a firm/person that has a Niche and wants to run their own network

  1. Decide if you want to be a marketing company or a technology company. DON'T try to be both, trust me something will suffer.
     
  2. License a Network Version of software that enables you to run your own Ad/Affiliate network. This will save you many thousands of dollars per month. Consider this: DirectTrack (our product) took years to build and evolve to where it is today with all its features and functionality. DT powers many other networks, and thus we have a significant interest to keep it working fine, and our clients happy. It has millions of dollars worth of web servers, database servers, storage devices, backup, etc. DT has dedicated staff of 40 employees behind it. If you chose to build your own, it might take a long time, and then you would have to staff it, support it, and have the redundancy to power it with up time of 100%. Our estimations show that you will save considerable amounts of money using a solution that is powered by another firm, whether ours or someone else, and remember point 1.
     
  3. Focus on a specific niche or vertical.
     
  4. Select and promote exclusive offers or only deals that test out well internally before putting them out to your network.
     
  5. Focus on a few hundred very good affiliates that drive significant traffic. Be picky about who you approve, do not approve everyone that applies.
     
  6. Payout as much as you can while still making a profit. Do not payout more than you make. This makes no business sense.
     
  7. Pay Fast! In 15 days or 30 days maximum.
     
  8. Guarantee Payment
     
  9. Share your knowledge and help someone else grow too!

Some last thoughts.. it's all about relationships now, not 1,000,000 affiliates. Who you do business with can cost you your business, so you need to be absolutely certain of who you are working with. You cannot have a massive network with fraud running rampant, advertisers whom you do not know, and problems that can cause you your livelihood.

Have a happy holiday!
Jason

About the Author: Jason Wolfe is the President/CEO of Direct Response Technologies, Inc.

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The evolution of the Online Media Broker
By Paul Fellinger

When first asked by Digital Moses to contribute to The Confidential, I was a bit apprehensive but at the same time very flattered. I thought to myself, what industry insight or knowledge could I share with my fellow colleagues? I didn't want to write about all the same online marketing issues and topics that we all read and hear about daily such as the sizzle of search, the crumbling of email marketing, or the death of pops. I chose to write about something that I am experiencing first hand, the beginning of the demise of the online media broker. The evolution of the broker from a facilitator of deals to the online marketing expert who shares long term relationships with specific advertisers has been a remarkable part of the online marketing industry's development.

I started out in this business as a senior account executive for a web-based storage company claiming 15 million active users. My role was to monetize the 15 million users through online advertising. An online media buying company looking to buy thousands of clicks for a Fortune 500 company inquired about my company's inventory capabilities. Fortunately, the company that I was working for did not have the inventory on the shelf. I found the inventory outside my company and successfully delivered the desired clicks for the advertiser, and that's how Felly Media was born. I immediately decided that this was the business for me. I loved the fact that I was not restricted in selling inventory from only one source or website. I did not have to push my website's inventory on an advertiser. If it did not make sense for them I could find inventory that did. I could buy from any site, network, or list owner. I was truly looking out for the best interest of my client, something that I have and always will believe in.

As I continued brokering more and more deals I was finding that the advertiser's best interest was being compromised. With so many "hands in the cookie jar," the best rates were not being negotiated for the client. The optimization of campaigns was not happening in a timely fashion. Many times reps would over promise and under deliver. Ultimately, all parties involved ended up loosing in the long run.

I began focusing more on the needs of the advertiser. I found that when an advertiser/direct marketer is trying to hit a specific CPA/CPL goal, a media broker is not what they need. They are not looking for someone to just facilitate a deal. Their job as a direct marketer is to get the best ROI possible. And in order to achieve their marketing objectives they need to constantly test a variety of online media programs. The person who understands these goals and provides test programs and/or media options becomes their online marketing consultant or expert, not just their broker. Today companies are looking for online media experts to guide them and become more entrenched in knowing how their businesses run and operate. We need to know what worked in the past, and what did not. The online media expert becomes a business partner to the advertiser/direct marketer. And if we are successful at guiding or helping the company achieve their objectives and goals, this will ultimately lead to a long term relationship that is always beneficial to both parties involved.

Now I don't think I am telling most of you anything that you don't already know or haven't figured out for yourselves. However, if we are going to evolve as an industry and continue to compete for a larger portion of ad budgets, then we as the experts must take a more vested interest in the advertiser's core business. Removing the middleman is what's best for the advertiser. We must improve the overall integrity of the industry and continue being the most accountable form of media available to advertisers.

It is clearly evident that online media is becoming a larger part of every company's marketing mix. Everyday, more and more traditional companies are dipping their big toes into the sea of online advertising. The Internet is growing and where there are eyeballs, you can be certain there will be advertisers. These advertisers will not need media brokers to facilitate deals for them. They will need online marketing experts. As brokers continue to change roles into online media experts, their value will increase and their place in the online advertising world will become more entrenched. This change will not be overnight, but just as more consumers come online, more brokers will realize their potential as online experts. And as Frank Sinatra so nicely put it, "the best is yet to come."

Have a happy and safe holiday season and a fantastic 2004!

All the best,
Paul Fellinger

About the Author: Paul Fellinger is the President of Felly Media, Inc. he can be contacted at paul@fellymedia.com

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Digital Thoughts:Profits. Security. Stability.
By Sam Harrelson

Profits. Security. Stability. Three terms whose relationship to email (and online) marketing some people are questioning after the past few months (especially last week). After repeated articles, memos and assorted declarations, it is apparent that self-regulation is favored and needed by the online marketing community. However, no viable solution has yet to come forward. Money can still be made in email and co-registrations, but the way we gather and use this data has to be changed. We have do this before the Federal Government or Eliot Spitzer does it for us. In a market where a single opt-in by a consumer generates 150-200 emails, how can we expect our cpm's to stay in the double digits? How can we expect to be taken seriously by advertisers and consumers when a sign-up submission leads to so much mail that the deluge keeps cpm's artificially low. Email is a valid form of marketing, and we need to have an internal shift to recognize that by flooding the inbox of consumers we are stifling ourselves and our profits.

Along with this, legitimate email marketers now face the responsibility of self-policing their partners. Even if contractual agreements or IO's have been signed, it is clear by the actions of NY Attorney General Eliot Spitzer, it is not enough to simply trust marketing partners. Recent articles from various publications have traced the shady web of "marketing partners" which start at common hubs in the online marketing sphere but then web out to include distant third party partners who might not be following best practices guidelines. In effect, legitimate marketers are forced to hold not only direct partners accountable for their links and brand name, but also these distant third party marketers who might not follow the same mailing guidelines as the original advertiser would permit.

The interesting thing about the network that we have cooperated in creating is that this ‘web' does not have a spider to construct, maintain and pattern the web. Physicist Albert-Laszlo Barabasi's fascinating work, The New Science of Networks, covers this point in the last chapter. "No central node sits in the middle of the spider web, controlling and monitoring every link and node. There is no single node whose removal could break the web. A scale-free network is a web without a spider" (p. 221). Unlike some people in this industry privately hope, there is no central spider sitting at the center of everything and controlling our web of networks and IO's. The DMA, AIM or the other acronymic organizations which offer policy suggestions certainly aren't sitting in the center of our webbed community.

That is good for the democratic nature of our industry, allowing relationships to flourish at will. However, it means that there is no one to dictate best practices, and there is no one to work with the ISP's and no one to assure security within the relationships of advertisers and publishers. Barabasi makes the point that:

"In the absence of a spider, there is no meticulous design behind these networks. Real networks are self-organized. They offer a vivid example of how the independent actions of millions of nodes [members] and links lead to spectacular emergent behavior" (p. 221).

The spectacular emergent behavior that Barabsi refers to is both good and bad in our webbed network. The good part is that relationships are easily formed by knowing a shared contact. The bad part is that stability and security are not as optimalized as they could be within the system. With no agreed upon best practices or guidelines, it is a matter of faith as to who business is done with. With shady third party partners flooding the inboxes of consumers and keeping cpm's artificially low, it is a matter of lost hope that cpm's will ever rise again. We are at a cross-roads in the online marketing world, and need to face the challenge.

For that reason, it is imperative that a solution be introduced into our spider less web. Responsible Marketer Seal (RMS) lays out the practices that the entire community can look to for guidance and security. We need to articulate which standards we want to be held up to. This not only protects each individual member of our network from legal action it will serve to separate the shady from the not and hence increase confidence in our industry and promote prosperity

In order for this to work we the community of responsible marketers need to contribute opinions as to the do's and don'ts. Over the coming weeks, we will roll out the view points that will hopefully lead to a consensus . The view points will cover marketing activates like: lead generation, data sale, e mail deployment, co registrations and desktop apps. To voice your opinion pleases write to sam@digitalmoses.com

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Banners of all sizes, mini-sites, pops, splash pages, email newsletters, animated interactive banners. Very quick turn-around.

Contact Michael at mm@maridium.com AOL IM: maridium


 

A return to the good old days ?
By Stuart Hochwert

A few years ago we were spending on most of our niche eMagazines about 35% on marketing. Thus, if our eCPM was $10, we would spend $3.50 to acquire subscribers. This is a typical advertising supported circulation model at work.

As Spam, data buys and other forms of e-mail marketing evolved, it made it difficult for us to continue to acquire legitimate double opt-in subscribers at $3.50 when our "competitors" were selling ad space at $.50.

With the new government focus through laws and enforcement on the horizon or in action, we predict that e-mail marketing will continue to grow and evolve in some positive steps. For the past several years the environment has been counter productive to growing an e-mail business focused on best practices.

As a veteran direct mail professional, it has also been frustrating to see well established brands use questionable marketing methods due to lack of knowledge and also to pay very little. As an example, we used to work with a very large credit card company. They can afford to pay $100 per new card accepted off-line. On the Internet, due to oversupply, they were only paying $30. Further, as they began to work with questionable e-mail marketing firms, our own eCPM's decreased significantly.

What we should see, and we have already seen in other Internet marketing programs is the following:

1. Increased payouts – direct marketing companies typically spend 30 – 40% to acquire a first time customer. Low bounties will be increased, as legitimate Internet marketing professionals demand fair compensation and many current vendors accepting low bounties leave the market. This could increase eCPM's significantly.

2. Increased eCPM's – less e-mail based on laws, legal enforcement and best practices will increase eCPM's slightly.

Prepared by Stuart Hochwert, President & Founder, Ampere Media LLC. Ampere Media publishes 45 titles that deliver targeted content through e-mail, e-magazines and Web sites. The interactive lead generation division has created proprietary technology that is deployed on Ampere Media Web sites and more than 3,000 partner Web sites. The Direct Marketing Association's Marketing Technology & Internet Council awarded its first MTIC Award of Excellence to Stuart Hochwert on December 3, 2003 during the National Center For Database Marketing (NCDM) Conference & Exhibition at the Disney Dolphin in Orlando, FL.

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