Affiliate Marketing's Big Reach Is Big Opportunity, Panel Says

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NEW YORK -- Affiliate marketing specialists say the potentially massive reach of affiliate marketing programs offers both opportunities and challenges for merchants.


While search marketing has gotten the lion's share of attention, affiliate marketing mainly has flown under the radar. Participants at yesterday's iBreakfast panel discussion devoted to affiliate marketing said that should change as businesses see the vast reach affiliate networks bring.


"Distribution is the name of the game," said Stephen Messer, chairman/CEO of LinkShare, which manages affiliate programs for about 600 merchants including American Express, AT&T and Office Depot.


He cited the success of Google's AdSense paid listings program as an example. Google has created a quasi-affiliate program by distributing paid listings to Web pages on thousands of Web sites.


Messer said LinkShare lets businesses tap its network of 11 million affiliates to achieve similar massive sales reach. Merchants pay only for an actionable event, often a sale.


Amazon has built a large part of its business around the affiliate program it began in 1996. Though the company does not release how much of its sales its affiliates generate, it has the distributed power of 900,000 "Amazon Associates" promoting its goods.


Such scale affords opportunities and challenges. Managing thousands of affiliates is difficult, said Rob Key, CEO of Converseon, a direct response agency. Merchants are wise to treat their affiliate network like a sales force, he said.


"You really have to focus on who you bring in and how you motivate them," he said.


Key said some affiliate networks offer automated approval for Web sites to join programs. This can lead to fraudulent activities, he warned.


"There's a lot of people trying to game the system," he said.


David Schwartz, vice president of marketing at online jeweler Goldspeed.com, said he treats Goldspeed's affiliates "like an Amway team," with motivation and education.


"I really have to teach them how to market," he said.


Schwartz said the merchant-affiliate network can be murky, particularly in search marketing, where a merchant and its affiliates often find themselves competing. For example, in a search for "jewelry," the non-paid results are filled with affiliates and push down Goldspeed's results.


The company has affiliates agree to conditions on their bidding for paid search listings tied to the "Goldspeed" keyword, in most cases agreeing not to get the No. 1 slot and to keep their bidding below a certain level.


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