Tap The Power
by Katie Haegele
The Internet is no longer new media. You know you've got to use it to its fullest potential.
Online initiatives, such as affiliate marketing and breeding loyalty through dynamic and compelling content, represent some of the best ways to capture and keep the attention of Internet users.
Friends in High Places
Researchers at Forrester believe that by 2003 the affiliate market will be worth $12 billion. Also called "pay-for-performance" advertising, affiliate marketing is eclipsing banner advertising as the new way to exploit the Web's inherent tracking capabilities.
There's safety in numbers. Forming smart partnerships could well be the wave of online marketing's future. With a glut of players in nearly every space on the Web, it pays to link with a company whose customer base resembles your own.
"We're seeing a shift in the marketplace," says Tom Gerace, executive vice president of BeFree Inc., an affiliate marketing firm that places promotions for clients on appropriate sites. "The market is becoming more rational. Affiliate space is beginning to dominate. In the end, it's a far better way to acquire customers, drive repeat sales and broaden reach, while controlling marketing expenses."
BeFree's first and largest client, BarnesandNoble.com (bn.com), couldn't agree more. Carl Rosendorf, executive vice president of e-commerce at bn.com, says the online bookseller signs up about 1,000 affiliate partners a day. In fact, bn.com now has more than 500,000 affiliate partners, including major players such as CNN, Lycos and Yahoo!, as well as links from individual users' home pages.
The choice to give affiliate marketing a chance wasn't always as obvious as it is now. Gerace says that four years ago, before bn.com came on board, it was tough for BeFree to get venture capital funding for such an innovative idea. How did Rosendorf know he was making the smartest decision for bn.com?
The concept of creating virtual storefronts on hundreds of thousands of sites was compelling, says Rosendorf. "We recognized that as people surfed the Web, they used sites as a resource for information. And books are ubiquitous. If we could merchandise books across so many sites, it would be a significant sales opportunity," he notes.
Such partnerships have changed the face of e-commerce, bringing it back to the community level. "Many Web sites developed a new ad-revenue stream this way, which we now know as an affiliate e-commerce stream. And the user benefits because of the site's relevance. It's a win-win situation," Rosendorf says.
Gerace defines affiliate marketing as a much smarter version of pay-for-space advertising. "With a billion pages of content, retailers must be more broadly positioned. You can't get such broad positioning by paying for space on every Web page," he says.
But Rosendorf doesn't consider online ads a fair comparison to his affiliate partnerships. "It's a different customer experience. Banners are an external presence on a site, from the customer's perspective. It's not an endorsement or a recommendation," he explains. "Generally our links have a relevance to the consumer—they're part of the internal fiber of the site."
He says another benefit to forming partnerships is the value inherent in the ongoing relationship. "Beyond that, online advertising historically has been CPM-based. The affiliate marketing model is pay-for-performance, so it tends to be more affordable."
Another type of affiliate marketing that could be a viable option for a newcomer or a smaller company is a multi-merchant network. Although his company doesn't offer it, Gerace says such a network can recruit thousands of collectives. The company centralizes a huge group of affiliates for you.
The problem is that costs always are going up, and when you're out-bid, you can lose all of your new partners in one fell swoop.
He says small stores that don't have an established brand can benefit from collective networks. "But for those who are serious about target marketing, you must own your channel," Gerace says.
Content Breeds Loyalty
Web customers are fickle. You have to do something outside of the old price/product/placement paradigm to be memorable.
There are many effective ways to maintain customer relationships, some of which include a digital version of the old stand-bys—discounts to special customers, coupons, etc. By now, though, most company officials understand that getting customers to visit a Web site time and again takes more than bribery.
The first step is figuring out what content is worth revisiting. As head of New York-based direct marketing firm Mason & Geller, Lois Geller makes it her business to notice which Web sites and direct e-mail communications show good marketing sense. Here's a look at two of her current favorites.
• eBags.com is an online resource for travel accessories (e.g., luggage ) and travel information.
The site recently was voted "Best E-mail Marketer on the Internet" in the first annual ClickZ/Message Media Email Excellence Award. Peter Cobb, senior vice president of marketing for eBags, says his company spreads the word through a very active e-mail marketing campaign powered by Netcentives.
Customers can choose from several monthly newsletters on topics of interest, including quick tips, travel updates and sales alerts in various product categories. Users can even send postcards to friends made from other users' photos—thus using viral marketing.
"Half of our customers are 'search-and-destroy' shoppers who know what they want and want it now. We make the shopping experience easy and efficient for them," says Cobb. "On the other hand, some shoppers like to take their time and enjoy our content. There's something for everyone."
Geller says this site is clearly doing all the right things. "It's got a gift finder, gift certificates, outlet offers, gift ideas and offers that change often. I come at least once a week. This is the kind of site on which I've become dependent."
Calling itself the "world's largest online retailer of bags and accessories for all lifestyles," eBags offers more than a retail experience. The clever and informative copy (produced by two full-time writers) ensures that those who surf past will want to return. Geller says she's come to rely on the site's frequently updated travel warnings, which came in handy when she was planning a recent trip to see a client in Bahrain.
"The site is organized well, so I can find what I need," she says. A currency conversion calculator even earned eBags "bookmark" status.
In addition to the travel warnings, the site features more than 200,000 members who chat online about travel, giving the e-commerce site an online community feel. Since going live in March of 1999, eBags has added more than 100,000 members to its Travel Community. Users can get a personal travel page on which they upload right to the eBags server photos and accompanying text describing their vacations. Other users then rate the pages, creating an ongoing dialogue.
"The copy and overall approach is not just description: It tells customers the benefits of each eBags product. A lot of sites don't do this, but it's an important part of direct marketing," Geller says, comparing the trust-inspiring sales copy to that of a helpful department store salesperson who's not just trying to push the most expensive item.
The site also offers a customer rating chart, so you can discover which bags users like the most and least. A comparison chart broken down by the functionality features of each bag makes the buying process a lot easier, Geller continues. Customers also can shop by brand names by looking through separate sections.
The customer-service feature with which she is most impressed is the follow-up e-mail she gets from eBags after her order has arrived—just to make sure she's pleased with the purchase.
Says eBags' Cobb, "The Internet is direct marketing on steroids. We can do a lot with technology now, and we should make use of it. It's like selling via a catalog, but taking it much, much further than that."
• AmericanGirl.com is the official site of the popular dolls for girls ages 6 to 10. AmericanGirl.com brings its unique customer loyalty plan up to date with interactive games and stories.
In addition, users can create personalized e-cards on the site and send them to friends—a value-added feature that also spreads the word though viral marketing, Geller points out.
As with eBags, the most important aspect of the content to Geller is its dynamic nature. AmericanGirl.com contains daily trivia tidbits; puzzles; online paper dolls; and games girls can play live together.
The site keeps its customers loyal by creating an environment and a community beyond the store. The experience is carried through to purchases made with a phone rep, says Geller: "The people on the phone are lovely to talk to."
An interesting aspect of the site's "meaningful-content" approach is that the editorial is separate from the selling copy, but customers can move between them easily. Geller says a colleague of hers bookmarked the site because of the games, contests and stories—but she told her little girl to keep out of the site's store. "The wish list for grandparents and parents that you can print is like a bridal registry for children," Geller warns.
"American Girl dolls are anti-Barbie dolls," Geller jokes. "The online stories show girls facing trying circumstances. It's become a sort of cult classic for girls, and the site reflects that."
In short, establishing affiliate marketing programs and offering dynamite content are a few ways that marketers are making the most of the Internet.