Feeling the Pain: Top Ten Frustrations for Advertisers in Affiliate Marketing

December 16th, 2009

By Adam Ward

Even for veteran online merchants (the advertisers), marketing products in the affiliate space (also referred to as performance-based marketing) is no walk in the park. Here are the top ten headaches nearly all online advertisers deal with.

Running ad campaigns (or programs) on multiple ad networks (also called affiliate networks)

Online merchants expose their products to more consumers by running ad campaigns on other websites. Ostensibly, the more publisher websites the ads run on, the more traffic they push to the merchant’s site, which increases sales. Since ad networks provide an easy way for merchants to find publishers, it makes sense that a merchant would want to join as many ad networks as possible.

However, running on multiple networks creates new problems. First, there is the extra cost of getting set up and funding an account balance on each network. Second, the merchant needs to have a way of determining which network to attribute the sale to, if traffic came from multiple networks. Third, the chance of fraud increases dramatically, especially if the merchant isn’t actively managing the campaign.

Having to use different tracking software for each network on which they run ads

Every network has its own software for tracking ad campaigns. The networks expect merchants and publishers to use the tracking numbers from its own software to determine who should receive commissions on sales. So even if a merchant has its own tracking software, it still has to log into a tracking system for every network it belongs to and pull campaign statistics from it.

Having to develop proprietary tracking software (or buy third-party software) to manage in-house campaigns

Although a merchant can use the tracking software of whatever network it joins, that only works if the merchant doesn’t run ad campaigns in-house or on multiple networks. For example, if the merchant has the same campaign running on two networks, it is possible for a single publisher to grab that ad from both networks. If the publisher refers a consumer who ends up buying on the merchant’s site, each network will attribute that single publisher with a sale. So if the merchant doesn’t have its own tracking software to police that situation, it will end up paying a double commission for a single referral.

Also, because merchants contract directly with publishers (off network) to run a campaign, those merchants will need to have their own software to track the campaign results.

Dealing with publisher and network disputes over tracking numbers

Because everyone uses the tracking statistics to know what commissions to pay, this inevitably leads to squabbling over “which” statistics to use. Publishers would prefer to use their own tracking numbers. Networks would prefer to use their own tracking numbers. And advertisers would prefer to use their own tracking numbers. Since all these numbers are rarely the same, you get a lot of back-and-forth between advertisers and publishers over how much the advertiser really owes.

Recruiting new publishers and maintaining relationships with current publishers

Having an ad campaign does an advertiser no good if the ad isn’t running anywhere. So advertisers need to constantly prospect for publishers. And just like any other sales environment, taking care of your existing business relationships is far cheaper and more productive than prospecting new relationships. So advertisers need to stay in touch with publishers that are running the ad campaigns. However, knowing that this needs to be done is not as easy as actually doing it. With all the other demands on an advertiser’s time, prospecting and relationship management often take a back seat, especially if the advertiser doesn’t have tools, such as customer relationship management (CRM) software, in place to help focus those efforts.

Dealing with parasiteware and unethical networks and publishers

Parasiteware is too complicated to delve into here (but you can go to this forum to learn all about it). Basically, there are some networks and publishers out there that use various technologies to divert search traffic that would have come directly to an advertiser’s site (so the networks and publishers get commissions they didn’t earn), that would prevent other publishers from receiving their legitimate commissions (which can create tension with the advertiser and those publishers), that would overwrite the tracking code, or would inflate tracking numbers so advertisers end up paying more than they should.

Not knowing how effective a campaign will be before it starts, and then not knowing the optimum time to discontinue a campaign that is no longer effective

Although advertisers can get a good sense of what campaigns work, they don’t have crystal balls. Since the look and content of an ad’s creative play a big role in attracting customers, a poor campaign can really hurt an advertiser. Advertisers can use analytics and persuasion consultants to help them optimize their campaigns, but that adds an extra cost to a campaign.

Having publishers refuse to join a particular ad network, or refuse to run an in-house campaign directly

Ideally, an advertiser should be able to work with any publisher it wants. Unfortunately, some publishers refuse to work with advertisers that don’t run campaigns on a specific network. If an advertiser wants to work with that publisher, but decides the benefits don’t outweigh the extra headaches of joining another network, it will have to not work with that publisher.

Having to continuously, actively manage an ad campaign

Running an ad campaign is not as simple as writing copy for the ad, designing the creative, giving it to a publisher to run, then forgetting about it. A campaign needs to be actively managed. Campaign managers need to monitor statistics to make sure the commissions they pay out are for valid leads. They need to monitor the effectiveness of the ad. They need to make changes to the campaign or creative if they aren’t getting the results they’d like.

Having to manage an ad campaign in-house as well as on affiliate networks

As a continuation of the previous point, an advertiser needs to multiply the effort of managing each campaign by the number of networks on which they run the campaigns.

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Google Sues Utah Company over Alleged Online Scams

December 9th, 2009

By Adam Ward

I’ve often wondered why nobody seems to do anything about online offers that are clearly scams. I picked apart one such scam in this post. But except for questioning the publishers’ decision to run such ads, I didn’t make a call to action. It looks like Google has taken action in a big way.

The Salt Lake Tribune today reported on Google suing Pacific Webworks of Salt Lake City for using Google’s name to sell fake products. I’m sure you’ve seen similar offers: “Download our toolkit for free to make tons of money from home using the Internet.”

I don’t know anything about Pacific Webworks, so I can’t comment on them specifically. But I can comment on these types of offers because they are, unfortunately, so prevalent online. The kicker for these types of offers is, often, 1) they don’t have a legitimate product, 2) unsuspecting consumers who download the product don’t realize it isn’t legitimate until after they’ve downloaded it, and 3) even though it was free to download, it comes with an ongoing monthly charge that hits the consumer’s credit card unless the consumer cancels it.

Google got involved in this one because it felt its name was being used to market products that it had no control over. Google has a right to protect its brand regardless. But when it comes to protecting its brand for products that are fraudulent, which carries a greater chance of tarnishing Google’s name, it makes sense that Google would aggressively target companies it feels are running such fraudulent offers.

I hope that this has a chilling effect on other bogus offers online, much the way CAN-SPAM Act of 2003 stemmed so much of the pernicious tide of email spam.

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Effectively Tying Your Ad Campaigns Together Across Multiple Media

November 20th, 2009

By Adam Ward

In today’s converged environment, simply diversifying your marketing campaigns across multiple platforms may not be enough. Beyond maintaining consistent branding across all media (which is always important), you need to tie the actual campaigns together. In other words, you need to use one medium to spur consumers to jump to another medium as quickly as possible. I call this cross-pollination. Here are some examples of how you can do that.

You’ve probably been in a retail store and seen a product display showing “as seen on TV.” That’s a simple way of tying a campaign together across two media. However, it is not a proactive tie. These campaigns could be a little more proactive if the television ad or infomercial mentioned the stores in which you could expect to see their products. But they don’t because it is easier for them to get a consumer to pick up the phone and order the product than it is for the customer to rush right out to the store.

One effective way of cross-pollinating is to use outdoor media to generate online traffic. Ad Hustler discovered this to be an effective, cheap way of getting people to his site. Although he couldn’t track directly which sales originated by people seeing his bus ads, he knew the number of people that would see his ad in a given month (billboard companies have this information for each location), he calculated that the cost per thousand (CPM) eyeballs was lower than what he could be paying to advertise online, and he noticed an uptick in his site impressions and sales during that month. So he had a pretty good idea of his ROI on running those billboards.

Billboards can be a wonderful way to promote your website. Depending on your niche, your website could be competing with thousands of similar sites. If you use only online sources for promoting your website, you will need to spend quite a bit of money for keyword searches, search engine optimization (SEO), or affiliate marketing. Even with that, you may still have difficulty standing out among the crowd. With billboards, however, you can stand out. Billboards get noticed, they have the advantage of repetition (people who pass them every day remember them), and because not every billboard is promoting a website, those that do are even more memorable.

Billboards are also good fits because, by the very nature of billboards, their messages need to be short and memorable. Drivers zipping by at 70 miles an hour have just seconds to see what your product is, understand it, be enticed to visit your site, and remember how to get there. If you can do that in seven large words or less, you’ve got a winner.

Unless a driver immediately types in your website URL on a handheld device after passing your billboard (which is unlikely, not to mention dangerous), you’ll notice that although billboards can cross-pollinate websites, the effect isn’t exactly immediate, and not perfectly trackable.

For more immediacy and trackability, let’s look at some cross-pollination of print advertising and mobile. Mozes [http://www.mozes.com] is one company that, among other things, allows newspaper or magazine readers to get offers sent to their mobile phones.  A restaurant, for example, would sign up for a “mob” account at Mozes. The restaurant then runs a print ad in a newspaper. The ad contains a keyword for readers to text. When the readers text the keyword, they join the restaurant’s mob (essentially joining the restaurant’s mobile mailing list), and in return will get a discount or other special offers from the restaurant.

It is kind of like taking coupons to the next level. Only instead of having to tear out the coupon, carry it around, remember to use it and feel a bit sheepish when you do, you just show the restaurant your “coupon” on your phone. And since you are now on the restaurant’s mailing list, the restaurant can continue to send you additional offers, so your lead is much more valuable to the restaurant than a single purchase from a coupon would have been.

Another cross-pollination technique I’ve seen popping up is the use of mobile tags, such as Microsoft tags. Mobile tags are like bar codes in that they contain unique information about a product, only better. They can take readers (taggers?) to a website that gives whatever information the owner of that tag chooses to give.

For example, suppose you are a music company and know that a music critic is going to be reviewing one of your new albums. You can pay the critic’s publisher to include a mobile tag next to the review on the page. If readers want to listen to a song from that album, all they need to do is “scan” the tag with their mobile phone. They will need to have a free tag reader downloaded first. When they do that, their phones’ cameras will recognize the tag and take them directly to a website where they can listen to songs from the new album, see cover art, learn more, download the album, etc. So this gives your consumers the ability to read a review, listen to the music and buy from you, all within seconds of each other.

Because advertisers can easily create their own mobile tags, you can create a tag specific to one print campaign. That way you can track your “click-through” ratio and sales. This gives you a way of tracking the effectiveness of your print campaigns in a way you’ve never been able to do before.

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What Online Marketers Know About You

November 10th, 2009

By Adam Ward

We live in a world where privacy is becoming an increasingly foreign concept. The Internet, which on one hand still perpetuates a sense of anonymity, has actually been the biggest catalyst for loss of privacy. I don’t mean to embark on a Big Brother rant, but I do want to point out what online marketers know about you as a consumer, so you can be better informed. Because knowledge is power, right?

First, let’s talk about your digital footprint. Every website on the Internet runs on a Web server somewhere. Whether that server resides in a fancy data center halfway across the world or in some guy’s basement down the street, the Web server is essentially just an application running on a computer that is connected to the Internet. The server has a unique IP address, which is associated with a domain name. Whether you browse to that domain name or enter its URL directly, your computer makes a connection with that server.

As soon as you make the connection, you see the Web pages that reside on that server, and the server starts recording information about your computer. It records the IP address of your computer, the date and time of when you “landed,” where you came from (either the URL of the site you just left, or that you came in directly from typing the URL in the address bar), and what type of a search string you typed if you came from a search engine. It also records your computer’s operating system and the Web browser you are using.

Once you are at a site, the server will keep track of your movements within that site as you click from page to page. Once you leave the site, it will record the time you left, the last page you visited on the site, and the URL of the website you jumped to. It also records what country you are in, which it knows by your IP address, as well as whether you came in from an educational, non-profit or business environment, based on the domain extension on your network.

Although it won’t know your exact location, it gets fairly close geographically based on your IP address. Unless you own your own IP address, which most home consumers don’t, you’ve been assigned an IP address by your Internet Service Provider (ISP). If your ISP is in the next city to you, you’ll probably see some ads giving you offers in that city.

Many websites also drop a cookie on your computer when you visit their sites. Where the previous information about your computer got stored on the Web server (which you have no access to and therefore can’t control), cookies stay on your computer only for a specific amount of time, and you can delete them just like you can delete any file on your computer. Each website decides whether to drop a cookie, as well as the duration of that cookie.

Now that we’ve covered what Web servers know about you, let’s talk about what they don’t know about you. Web servers have no way of knowing what other Web sites you have visited other than the site you were on right before coming to their site, and the site you landed on right after leaving their site. Your computer will record every site you’ve visited, but like with cookies, you can at least control your history if you so choose. Web servers also don’t know your name, age, address, height, social security number, interests, etc., or any other files (like documents) on your computer. Although the Web servers don’t collect that information, that doesn’t mean the databases that integrate with those Web servers don’t.

Any time a website asks you to log in, fill out a form, fill out a profile, etc., the data you provide will populate a database owned by that site owner or a third party working with that site owner. Once you submit that information, you may never be able to completely control that information because you don’t have direct access to the server hosting that database.

When you combine the information Web servers keep on your movements and the information you freely enter into databases on websites, you end up with a lot of information that marketers can use to give you offers. The better the online marketers know you, the more customized offers they can give you.

If you enjoy classical music, for example, you may have noticed an ad for your local orchestra popping up when you log into your Facebook account. Or if you are typing a message about tennis from your gmail account, you may have noticed an ad for tennis rackets showing up. How do they do that? Easy, actually. You were the one that typed Classical Music as an interest in your Facebook profile. And since gmail owns the email servers where your emails reside, its powerful search engines match the text in your emails with the advertising offers Google’s clients pay to place.

That isn’t to say an employee of Google or Facebook is reading your emails or posts. With millions of users, they don’t have time to do that, nor do they need to. They use their technology to do the matching. So when your local symphony agrees to run ad campaigns on Facebook, they can specify that their ads show up only on the accounts of users within their targeted geographic area who have expressed an interest in certain keywords.

The Google and Facebook examples illustrate the cases where they know a lot about you because of information you’ve specifically given them. In those situations, you may actually welcome those ads because you’d rather have ads that apply to you than ones in which you have no interest.

Even where you don’t specifically offer information about you, the aggregated information collected by Web servers and cookies can still build a profile on you. Most major search engines keep a record of your IP address and everything you have searched for using that address. (Ixquick.com is an exception to that rule.) Although a search engine may not know your sex and age, it can make a pretty good guess that you are a woman of child-bearing years if a preponderance of searches from your IP are for baby-related items and information. And if you come back to a website that formerly dropped a cookie on your computer, the website will know you are a returning visitor. If you visit often, it might treat you differently than a visitor it assumes is there for the first time.

Merchants that sell products online use cookies and IP addresses for compensating Web publishers for sending them traffic. For example, say you are reading a skiing blog and you see a banner ad for backcountry.com. If you hover over the ad, your browser should show you the destination of that link before you even click it. Chances are it will not link directly to backcountry.com. Instead, it will link to the tracking server that backcountry.com uses to manage its campaigns. It will include a bunch of code that essentially references the campaign, the image of the ad, and where the link should redirect it. If you click the link, you’ll get redirected to backcountry.com, but not before it places a cookie on your computer and records the impression and click on the tracking system. If you buy something from the backcountry.com site, the tracking system knows the skiing site you originally came from and will credit the owner of that site with the sale. The site owner will get paid whatever commission was originally agreed upon. Even if you don’t buy right then, but go back later (up to 120 days, in some cases) and buy, the skiing site still gets credit for that sale. How? Because of the cookie that is still on your computer. When you make the purchase, a small, invisible pixel in the thank-you page’s code tells the tracking system that the sale has been completed, knows you came from the skiing site because of the cookie on your computer, and will credit the skiing site accordingly. If you ended up deleting your cookie between when it was first placed and when you bought the item, it would not be able to credit the sale to the skiing site, unless the tracking system also tracks IP addresses (which most don’t).

Online marketers also use email to track campaign effectiveness. Just about any time you sign up for something online with your email address, you’re going to end up on someone’s mailing list. Marketers use email management systems that allow them to send a single email out to thousands of their subscribers. The CAN-SPAM legislation requires that these emails have an opt-out link at the bottom of the email. If you don’t like receiving the offers, you can opt out. But until you do, the marketers can track whether you got the email messages, read them, clicked through to a website from them, and actually bought something as a result. Even after you’ve opted out, you remain in their databases with a flag that you’ve opted out.

You can see that your movements don’t go unnoticed on the Internet. Online merchants, networks and other marketers are trying to understand you as best they can to cater their ads and offers to you. As technology continues to improve, and as major players like Google continue to run a disproportionate amount of Web traffic on their networks (and acquire companies that you have existing relationships with), online marketers will know even more about you than they do now. Whether this results in a better consumer environment by producing hyper-targeted ads, or consumer frustration through further privacy erosion, remains to be seen.

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Many Advertising Paths to Seller Heaven

November 6th, 2009

By Adam Ward

If you sell a good or service from a bricks-and-mortar store, you probably already realize there are seemingly endless vehicles with which you can advertise in the physical world. Adding the online world to that mix can create so many advertising opportunities that you might be overwhelmed to the point of not utilizing any of them. But since everyone with a product or service needs to do some form of marketing, I’m hoping this post will help.

Which advertising vehicle you use could be a calculated result of a sophisticated marketing strategy you’ve put together, or it may be as loose as caving to whatever sales person pushed hardest for your business. Whether you are a new advertiser or a veteran, you need to be informed of your options. I’ll try to cover the basics of some options in both the physical and online worlds.

Offline Advertising

Newspapers, radio, television and outdoor are probably the first types of offline advertising that come to mind. Even if you aren’t familiar with their rates and terminology, you at least recognize their media. Because I’ve written about these media here, I’ll leave it at that.

However, there are a lot more offline advertising sources than those. Here are a few.

Yellow pages: Yes, it seems strange to think of phone books in the digital age, but they are still around. In fact, I probably get phone books from four different companies delivered to my door each year. When I was a kid, I remember just a single phone book. The crazy thing is I keep each one until I replace it the following year. Even though yellow pages still get printed, they also have an online presence. It’s just as easy for them to put the information they have online as in print. And when you think about how important accurate data is, the phone books have a built-in reputation that is stronger than a listing site on the Internet that nobody has heard of.

Yellow pages are more akin to search engines than banner ads. Chances are consumers will run across your ad only if they are searching for something you provide. You won’t get any impulse buyers.

Mailers: With the price of postage these days, direct mail is not cheap. But there is some comfort knowing that a consumer will at least look at your mailer and decide whether to toss it or keep it. And if you do it with consistency, consumers know to look for it. For example, I know that if I want anything from Bed, Bath and Beyond, I just need to wait a few weeks for a 20-percent-off coupon in the mail.

You can do mailers a few ways. You can send a stand-alone piece that you’ve produced (like the Bed, Bath and Beyond coupons). Or you can mix your ad with other advertisers, like inside a ValuePak envelope, the equivalent of mailed newspaper inserts, or coupon magazines. If you decide to go the ValuPak-type route, you’ll be working with a sales rep from whatever advertising company produces those coupons, inserts or magazines. You pay them, and they’ll handle the mailing costs, and probably do your creative work for you as well.

Other: There are also quite a few non-traditional offline ways to advertise. If your community has a bike-share program, you may be able to sponsor the program by having your company or product show up on all the bikes. You can advertise in playbills for orchestras, plays, dance concerts, etc. You can be a supporter of public radio or television. Your local dry cleaner may let you put your ad on the coat hangers they give out to all their customers. And remember that outdoor media includes sides of buses and bus-stop benches.

Online Advertising

Just like broadcast and newspaper ads come to mind with offline advertising, banner ads are probably the first that come to mind with online advertising. These ads often run through online ad networks, which I’ve written about here.

But online advertising doesn’t stop with banner ads.

Search: If you anticipate people looking for your company or product by going to an Internet search engine, think about the search terms they would most likely enter. Now search for those terms yourself and see what results you get. If you or your product don’t show up anywhere, you may want to pay for those search terms. You can actually buy your way to the top of sponsored search results on Google, Yahoo, etc.

Contextual: If you want your text or banner ad to show up in or around online stories, you can pay for contextual advertising. You can do this through online ad networks or Google. So if you sell snowmobiles and want to advertise on newspaper websites, but only if the story has something to do with outdoor activities, snowmobiling or winter sports, you can pay for those contextual ads.

Directories: Online directories are kind of like yellow pages. It is possible that you are already listed in some online directories, just like you’re listed in phone books, without your having paid to be there. The directory company adds as many businesses as they can for free, because the more accurate content they have, the more people will trust their listings. But if you want to show up more prominently, you’ll have to pay extra. That’s what the yellow pages and online directories hope for.

Although being listed in online directories may be good for you, they may actually be a hindrance. It is much easier for an entrepreneurial person to create a directory online. Once online, that person may then be using search engine optimization (SEO) or paying for keywords that would drive some customers who might have otherwise found your site to their own. For example, if you own a coffee shop, search for “coffee shop” and the name of your city. Chances are you’ll see a number of directories where you and your competitors may or may not be listed. If so, chances are you’ll be getting calls from the owners of those sites asking you to advertise in their directories.

If you just want people to know your address and phone number, showing up on multiple directories might be OK. But if you actually need people to come to your site, realize that you are now not only competing with other coffee shops in your area, but also competing with these online directories that will probably have their own interests above yours.

Social: By now you know you can advertise on Facebook and other social-media sites. Paying Facebook for clicks may or may not be the best use of your money. There are other ways that you can utilize social sites. Although technically you can do them for “free,” there will still be some cost in terms of hiring someone to do it for you, or for spending the time to do it yourself.

Social sites include blogs and forums. If you or someone you hire participate in forums, leave comments on blogs, or leave product reviews on sites that showcase your products, you are in essence engaging in viral marketing. If you have your own blog, potential customers will view you as an expert in your area, develop a level of trust with you, and feel better buying from you.

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Newspaper Ad-Tracking Systems vs. Online Ad-Tracking Systems

November 3rd, 2009

By Adam Ward

Thanks to the Internet, differentiation between media companies is blurring. Newspaper photographers now shoot video for their websites. Broadcast companies offer classified ads on their sites. Bloggers report local news, and news reporters blog.

However, when it comes to advertising on these different media, the available technologies still cater specifically to a single medium. Newspaper software differs from television software which differs from radio software which differs from online software. Because I’m most familiar with newspaper software and online software, I’m going to focus on the difference between those two.

Newspaper business systems (e.g. AdPro, MediaSpan, SCS) refer to themselves as ad-tracking software. Although they are correct insofar as they keep track of the booking, pricing, sizing and billing of ads, they don’t track the effectiveness of the ads. That’s a major difference from online ad-tracking systems. Another major distinction is print publishers are the ones paying for and managing the newspaper software, whereas online publishers piggyback on someone else’s software, usually at no cost to them.

Although business software is the most complex software used by newspapers, here’s a simple example of how it works. Once a newspaper gets a system up and running (which takes a lot of customization, training and money, by the way), the system knows the rates and ad sizes for all publications offered by that newspaper. Someone at the newspaper then enters an insertion order into the system. For example, let’s assume the ad is a 4X5 ad (four columns by five inches tall) that costs $20 a column inch. The ad-entry person finds the advertiser in their system, enters a new 4X5 ad for them, the system prices it at $400 ($20 X 20 inches), and saves it. Unlike online ad-tracking systems used by publishers through affiliate networks, newspapers control what they charge for ads running through their system.

Because the business system contains an accounts-receivable system, it will either place the ad on hold if the advertiser doesn’t have enough credit, or approve it. The ad-entry person can also enter a payment for that advertiser and apply it to the ad. The system allows newspapers to send out a monthly bill to the advertiser showing all the ads that ran and the total due. Once the advertiser remits payment, an accounting person will enter that payment into the system and apply it to the appropriate ads or invoices.

Some business systems also have modules for managing the actual creatives (the ads themselves), as well as keeping track of the orders for online ads. But they usually don’t manage the uploading of those ads, or tracking the customer responses to those ads. That’s where online ad-tracking systems come in.

Online publishers who want to place ads on their sites often use affiliate networks to manage the ad tracking for them. Networks can either be open networks or exchanges (e.g. Commission Junction or ShareASale), where the publishers are responsible for choosing which advertising campaigns they want to run, or they can be closed networks (e.g. AvantLink or Affiliate Traction) where the networks manage the campaigns for the advertisers.

Whichever type of network the publishers join, they will use that network’s ad-tracking software. Each network uses either an ad-tracking system they built in-house, or a commercial tracking system (e.g. DirectTrack or LinkTrust). The networks allow publishers to log into their tracking system. If a publisher joins multiple networks, the publisher will have access to all the systems used by those networks.

Once logged in, publishers grab the HTML code for whatever ad campaigns they decide to run. When they paste that code into their websites, the code refers back to the tracking software to pull in the creative for the ad, direct users to the advertiser’s landing page when clicked, and track the impression, click and ultimate lead or sale.

The publishers are also able to see the stats from the campaigns they run so they can see the number of impressions, clicks, sales and—most important—the commission they expect to receive as a result of running that campaign. Unlike newspaper software where only the newspaper has access to the system, both publishers and advertisers have access to online tracking systems so they both know how successful the campaigns are. Online tracking systems also differ from newspaper systems in that the advertisers are the ones that dictate what the cost of the campaign will be, and the actual payout isn’t known until after the campaign has been running. With newspaper ads, an advertiser knows exactly what the ad will cost before the ad runs. With online tracking systems, although the advertiser and publisher have an idea of what the cost for each lead or sale might be, the total cost is dependent on how the ad actually performs. That’s why affiliate marketing is also referred to as performance marketing.

Online tracking systems do a pretty good job of tracking ad performance (unfortunately there are still ways to defraud the systems, but that’s another topic), and they can tell you what the payout should be. But that’s where they stop. Unlike newspaper business systems that have robust accounts-receivable features, online systems don’t handle billing, receivables, etc. They expect you to export that data (or enter it manually) into Quickbooks.

Maybe someday newspaper business systems will track effectiveness like online systems, and online systems will handle receivables as well as newspaper systems. But the more systemic differences between the systems, particularly which entities have access to the system and which entities dictate the costs of ads, suggest we won’t see the blurring of tracking systems like we’ve seen with the blurring of the media themselves.

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Ways Online Publishers Can Steal Your Organic Traffic

November 2nd, 2009

By Adam Ward

You’ve got a product and a website. You’d like to drive more traffic to your site, so you sign up with an online ad network (called an affiliate network). As long as the publishers on that network send you traffic that turn into sales, you’re happy to pay commissions to those publishers, right? Well, yes, unless you end up paying commissions on traffic that would have come your way organically.

The point of advertising on a publisher’s site is to have consumers already on the publisher’s site see your ad, be interested enough to click through to your site, then buy something. Although they may already have known about your products, the key was they didn’t come to your publisher’s site specifically looking for your product or company.

When consumers are looking for your site or product, they will either type in your site’s URL directly or come in through a search engine. If your site is listed high enough on search pages, you may not be buying search words through the search engines. Or, you may be buying search terms so your site will show up higher in the sponsored-search section of the results page. Either way, you are responsible for managing the results of those searches.

What you may not realize, though, is your publishers may be engaging in affiliate arbitrage. This is where they buy search terms applicable to your site or product, hoping they’ll make money on the spread between the commission you’ll pay them and the click costs they have to pay the search company.

In a general sense, you probably won’t mind publishers paying to generate traffic that eventually turns into a sale for you. And since making money through affiliate arbitrage is quite tricky, chances are you may not encounter this.

But if a publisher is unscrupulous enough to buy search terms that are clearly competing with your traffic, you can’t afford to be in a relationship with that publisher. For example, if your company is called Widget House and you are the only makers of the Super Widget product, you would expect people searching the Internet for Widget House or Super Widget to click through the organic search results, or sponsored results that you pay for, directly to your site. Now let’s suppose you’ve got a publisher that you’re paying commissions to through an affiliate network. If that publisher wants to bid on the search words “Super Widget” and “Widget House” through Google’s AdWords, Google will not prohibit them from doing so. If a consumer then searches for “Super Widget” and sees your publisher’s link at the very top of the page, the consumer may click through that link rather than clicking your own link. Although the consumer may then click the ad on your publisher’s page and ultimately buy from you, you’re on the hook for paying a commission that you never should have paid. You’ve just paid an unethical publisher a commission for stealing your traffic and rerouting it to you.

To avoid this pitfall, make sure your attitude toward affiliate arbitrage is spelled out in your terms and conditions with the network and publisher. Also, periodically search for your business and products to see whether any of your publishers show up in the paid searches.

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Running Your Ads on Multiple Networks: Some Gotchas

October 30th, 2009

By Adam Ward

There are hundreds of affiliate networks (which are like ad agencies or exchanges for online ads) on which you can run your ads. Because the barriers to entry are so low for online publishers (often referred to as “affiliates”), it makes sense for publishers to sign up on many networks. After all, they usually don’t have to pay to sign up, the more networks they sign up for, the more advertisers (at least in theory) they’ll be exposed to, and financially, they aren’t out anything for being on multiple networks.

For advertisers, though, it is a different story. Running the same ads on multiple networks can actually be counterproductive, and costly, because if you’re not careful you could end up paying double, triple or more for each sale or lead.

The problem isn’t from overexposure. Rather, it’s just a downside inherent to what makes online advertising so desirable in the first place: the ability to track leads and sales. With traditional advertising you can benefit from overexposure. By placing your ad on TV, the radio, billboards, etc. you get your message out to a wide target. You hope to drive traffic from those ads, but you are essentially branding your product or company. With online ads, your approach is more one-on-one targeting. A single customer sees your ad, clicks through it, buys the product, and only then do you pay for that ad. The plus side of this is you don’t pay for the exposure you might be getting if people don’t buy. The downside is you either penalize publishers who can’t claim sole responsibility for sending you the lead, or you end up paying multiple publishers as though they were the only ones sending you the lead.

Here’s how it works. Let’s say you run a single ad (the same one) on three different networks. Each network places the ad on one of their publishers. The networks also have tracking software to keep track of who clicks through the ads on their publisher sites, and whether it resulted in a sale or lead. If while your customer is researching products he or she clicks through your ad on all three publisher sites, then ultimately buys your product (either right after clicking through the ads, or comes back directly to your site a month or two later), all three of those networks log the sale. Their publishers expect to get paid the full commission for referring that customer. And they have the tracking numbers to back it up. But for you, that means you have to pay full commission to three separate publishers, while you get the revenue from just one sale. You can see the dilemma.

This is why consultants (called outsourced program managers, or OPMs) try to convince their advertising clients to choose a single network and stay on it. Although that reduces your payout risk, it could also limit the publishers you might be exposed to. And to a certain extent, limiting your ads to publishers on a single network might be like running ads just on TV and ignoring print and outdoor.

Besides, from a branding standpoint, it might be a good thing to get your message on as many sites as possible. And if multiple publishers helped to get you a sale, shouldn’t they be compensated for that? The kicker is, how much should they get compensated, and how do you track that? Right now there isn’t good technology for sorting this issue out. Advertisers who join multiple networks usually have to manage this manually to a certain extent. They have to clearly spell out in their terms and conditions, what they will pay, and how. They also have to negotiate that the tracking statistics they’ll go off will be their own (which means they have to create some scripts on their own servers that can track where the leads came from, and when). Networks are hesitant to do that because they have their own tracking software and they like to be the one holding the cards when advertisers and publishers dispute tracking numbers.

One advertiser, CSN Stores, has come up with a tiered way of paying for sales generated by two different networks. They have a way of distinguishing the publisher who referred the lead first (and rewarding them at a higher payout) and the publisher who referred the lead last (and rewarding them at a lower payout). You can see that they have to actively manage this approach to work, and do a lot of manual work. But they recognized that there were publishers on one network that would not sign up with their preferred network.

Maybe someday there will be tracking software sophisticated enough to account for multiple referrers, make sure the referrals were legitimate, and spread the payout from a single sale to those multiple referrers. That seems to be the equitable way to do it.

Editor’s Note: Since I originally wrote this post, I’ve discovered TagMan, which purports to do exactly what I mentioned in the last paragraph. I haven’t seen it in action or talked to anyone using it, but I thought I should mention it here.

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An Advertiser’s Guide to Placing Ads in Traditional and Online Media

October 28th, 2009

By Adam Ward

If you’ve never advertised your product, service or business before, you might find the world of advertising to be daunting. You have a variety of media to choose from, each with their own advertising products, prices and lingo that aren’t necessarily intuitive.

You’ll find some basic information here that will help you wade through these waters.

Television and Radio

Broadcast media have a finite space (i.e. just 24 hours a day). That space is divvied up among programming content, public service announcements and ads. The ads you’d be buying are called “spots” and you pay for a fixed amount of time (e.g. 30 seconds). Although you could buy a single spot, it is much cheaper for you (on a per-spot basis) to buy a bulk of spots. Especially with TV, where the cost of producing an ad is so expensive, it wouldn’t make sense for you to run the commercial just once.

The cost of a 30-second spot will vary greatly among stations (based on the number of listeners), and among the time of day. Drive time for radio and prime time for TV will cost you a premium over ads in the middle of the night, for instance. So when you buy a package of spots, you’ll probably get your ads spread out over the course of a day, with a spot or two during more desirable times (or programs), with the majority of your spots being at less-desirable times. Be aware that even though you think you’ve purchased spots for a specific time, if another advertiser comes in and is willing to pay more for those spots, they can bump your ad out of that time slot. Because of the finite space for ads in broadcast media, the law of supply and demand are in full swing.

Outdoor Advertising

Like broadcast media, outdoor advertising has limited real estate. They can’t easily add a new billboard if they are running at 100-percent capacity. However, with billboards you can lock in the duration of your ad, so you don’t have to worry about another advertiser with deeper pockets bumping you off halfway through the month.

Billboard rates are determined by the number of eyeballs they deliver. So a billboard on a busy freeway will cost a premium over a billboard on a less-busy street. You usually buy billboard space a month at a time, and you can also get discounts for committing to run longer.

Print Advertising

Magazine ads are pretty straight-forward. They typically have just a handful of sizes that you can choose from. So a full-page ad might cost $X, a half-page ad would cost a little more than half of $X, and a quarter-page ad would cost a little more than a quarter of $X. Magazine ads usually include color in their prices because color ads visually enhance the overall look of their magazine.

Newspaper advertising is probably the trickiest to understand because there are so many options. The ads you typically see scattered throughout news pages are called display ads, also known as run-of-press (ROP) ads. Newspapers typically charge per column inch for those ads. A column inch is one column wide by one inch tall. So an ad that spans six columns and is ten inches tall is called a 60-inch ad. If the newspaper charges $X per column inch, you’d be looking at paying $60X for that ad to run once. If you want the ad to be in color, you will probably have to pay extra, either as a flat color cost, or an extra color cost per column inch. You can get discounts if you agree to run a certain number of inches over a specific period, or if you agree to run an ad a certain number of times.

In addition to running display ads in newspapers, you can run classified line ads (paying per word, per line, etc.) or classified display ads, which price more like display ads but run in the classified section. You can also pay for advertorials that are written to look like news content (the front page of a real estate insert, for example) but are written by advertising people, not the editorial folks.

You can also put pre-printed inserts into the paper. Newspapers will charge you a fee per thousand inserts. So if you decide to have the newspaper put in 10,000 of your inserts, and the cost is $X per thousand, you will pay $10X. You will also have to pay to have the inserts created and delivered to the newspaper.

Online Ads in Traditional Media

As you know, newspapers and broadcast stations also have websites.  They run the same types of ads as other online publishers (e.g. banner ads and text ads), but they don’t always price the ads the same. Since traditional media companies are used to telling their advertisers what to pay for ads, they’ve adopted the same approach for ads on their websites. They usually charge one of two ways: per a fixed period of time (e.g. a month) or per impressions served.

The nice thing about these pricing structures is you’ll know about how long your ad will be online. If you pay for a month, you’ll be up for a month. If you pay per impression, the media company should be able to tell you what their average impressions per day are. Chances are you’ll also be able to deal with the same sales person for online ads as for the other ads you purchase with them.

The downside to this is you aren’t paying based on the effectiveness of the ad. Like running a radio spot or a print ad, you expect the ad to ultimately generate sales for you, and with online ads you have a better ability to track that your website visitors clicked through a particular ad, but if your ad doesn’t get enough people to your site to buy your product, you may pay for a lot of eyeballs that don’t do anything for you.

Online Ads in the Performance Marketing Space

Before traditional media companies even had their own websites, Internet publishers were hosting advertising banners placed through affiliate networks. The publishers (anyone with a website that wants to advertise someone’s product on their site would be considered a publisher), to a certain extent, were happy to take whatever money the advertisers were willing to push their way. And the advertisers, thanks to the electronic nature of the Web’s marketplace, wanted to pay for actions, not just eyeballs.

Today there are hundreds of these affiliate networks that help pair online advertisers with online publishers. To advertise on these networks, you need to simply join the network. Most networks are free to join and you’ll have a network manager assigned to you. Others are more like exchanges where you pay to join, then post your campaigns on the exchange hoping to get picked up by the many online publishers in that network. You will have direct access to the publishers in an exchange, but probably not have any access to publishers in a managed network.

Affiliate networks are using the term “performance marketing” to highlight the fact that you’ll pay for actions, not just eyeballs. What you pay depends on what you are selling and the type of campaign you run.

If you are a bricks-and-mortar retailer, you will probably run a cost-per-sale (CPS) campaign. This simply means you pay a publisher only if a visitor on the publisher’s site clicks through your ad, lands on your site, and buys your product. When you start the campaign, you’ll tell the publisher what the percentage of each sale you will pay. So if you figure you can afford to pay 10-percent commission on all sales coming from a publisher’s site and still be profitable, your campaign will have a 10-percent payout. Publishers decide whether to run your ads based on 1) the payout and 2) how well the advertised product fits with the publisher’s site content.

If you aren’t selling a physical product, you may want to do a cost-per-lead (CPL) campaign. For example, if you are just trying to build up your email list, you might want to put an ad on a publisher’s site that entices a user to fill out a form with their email address. Once the form gets submitted, that lead gets tracked in a tracking system, you get the email address you’re looking for, and you then pay the publisher whatever amount you previously decided for that lead.

If you run performance campaigns through networks, you actually won’t pay the publishers directly. You will actually pay the network, which will then pay the publishers. The network will also have the tracking software that tracks your sales and leads. The network will provide you with a login to their tracking software so you can monitor your campaign’s activity and results.

As you can see, there is a lot to learn for advertisers in the traditional and online arenas. I hope this information has given you a good starting point for learning more.

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Don’t Cheapen Your Site with Questionable Ads

October 23rd, 2009

Adam Ward

Although I have been advocating for traditional media organizations to adopt performance marketing into their online ad space, I’d like to add this caveat: know what ads are running on your sites, and steer clear of ads that don’t belong there. Ad managers use discretion when placing ads on TV, radio and in print. So why do they give carte blanche to affiliate managers to run questionable ads on their websites?

Case in point: What’s with USA Today, MSNBC and even my local daily, the Salt Lake Tribune, doing running blatantly bogus ads touting people in my area working from home and making lots of money? I expect to see offers like that scrawled on poster paper and stapled to telephone poles, but on legitimate news sites? Do those news organizations realize how much that cheapens their content?

Check out the landing page of one of the banner ads from these sites, which was placed by the Pulse 360 network. The banner ad itself is dubious, but the landing page is downright sleazy.

Notice how the whole website is set up like it is a legitimate news organization. They’ve copied the format that newspapers use in reporting stories. They try to make the content look local by entering the name of city where your IP address originates from (in my case, Roy, Utah). Your page might look different, but mine says that Mike Richardson from Roy, Utah, went from his lost job as a “boring account rep for a manufacturing company” to making “$5,000 a month at home” in four weeks. Unlike real news stories that mention a person’s full name the first time, then subsequently refer to the person by just the last name, this “story” refers to Mike by his full name in each reference. That’s another sign that some non-human is populating elements into this story.

This site tries to look like other news sites by having icons you can click if you like it, dislike it, or want to share it on reddit, digg, facebook, etc. Only they are just for show. You can’t actually click any of them. And all those favorable comments by readers at the bottom of the “story” that rave how similar their experiences were making loads of money doing nothing? All bogus. Yes, it looks like you can add a comment, but of course you can’t.

Two other things I thought were frustratingly brilliant in their deception was that 1) in the “story” it discounts get-rich-quick schemes (inferring that we all know those don’t work, so this must somehow not be one of those) and 2) how it has advertising links along the side. The ads seem to lend credibility to the “story,” all while linking to other bogus offers.

If you actually read the disclaimer (yes, the small print nobody reads) at the bottom of the page, you’ll learn what those warning bells in your head were telling you: that Mike Richardson is not a real person, and you’re more likely to end up in the hole instead of making money.

One can argue that if people are dumb enough to fall for these types of gimmicks, that’s their fault, not the fault of the website that drove those people there. But when I see those types of ads next to real news content of legitimate news organizations, I can’t help but question the integrity of the story.

There are plenty of legitimate networks pushing legitimate offers to web publishers. So my advice to traditional news organizations is this: steer clear of the bottom feeders and make sure your affiliate ads don’t drag you into the muck. Your readers will appreciate you for it.

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