Pay-Per-Click Affiliate Deals Come Under Fire at Symposium

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NEW YORK -- Scott Blum, chairman/CEO of online retailer Buy.com, took a swing at pay-per-click affiliate deals at yesterday's LinkShare Symposium 2004.


Most retailers have to contend with fake clicks from affiliate sites and search engines for driving traffic that may not necessarily result in sales, he told an audience of 900 Internet executives.


"Until the Googles and Yahoos of the world go to a pay-for-performance model, a lot of consumers will have to pay [for those clicks]," Blum said. "This pay-per-click analogy, which is a '95 analogy we use today, makes pricing more expensive for consumers."


Google is not doing pay-per-performance deals, he said, but Yahoo is starting to.


What Blum was railing against was paying for traffic that did not translate into sales.


However, another panelist said it would be unfair to characterize only buyers as ideal traffic as opposed to people visiting Web sites for information.


"Information is probably the most powerful thing the Internet has let us achieve," said Adam Dell, managing general partner of Impact Venture Partners.


Macys.com president Kent Anderson had perhaps the most sober point of view as chief of the online division of the Macy's department store chain.


"Pay per performance ... [has] an equivalent in the real world -- commission sales people, who are your best people in the store," he said.


In a recent test, macys.com appealed to different types of affiliates based on spring and fall messages and not on price.


"We tested on affiliates and found it to be very productive," Anderson said.


That said, e-mail marketing plays a critical role in building awareness and driving online sales for macys.com. That tactic, along with the Web site, also pushes traffic to Macy's stores.


Meanwhile, Dell cautioned Google as it enters the affiliate game. Sharing revenue with affiliates for directing traffic to sites may hurt its reputation.


"If they abuse that position, they may quickly lose the trust that the brand has," he said.


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