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Affinia Joins the Pay-for-Performance Parade

Affinia Inc., a company best known for building cyberstores on small Web sites, is moving to take its share of the burgeoning “pay-for-performance” market.

Last week, the Mountain View, CA-based company began accepting applications from sites interested in joining what it calls the “Product Placement Network,” a service similar to a regular online ad network. One difference is in the format of the ads themselves. Rather than a skinny rectangular banner running top and center on a Web page, the ads are vertical and always bear a product picture.

“One of the limitations of a banner ad today, rich media or not, is it still ends up being too small of a footprint to get a good product image unless you’re selling ball- point pens or something similar,” said Affinia founder/CEO Kris Hagerman.

Like a growing number of companies, including Flycast Communications Corp. and DoubleClick Inc., that are venturing toward the “cost-per-click” model, Affinia will charge advertisers based on an ad’s performance rather than the number of impressions the company serves.

But it plans to take it a step further than cost-per-click. Affinia will charge merchants on a per-click basis, but will guarantee not to exceed a ceiling cost for acquiring each buyer. In effect, cyberstores will be guaranteed purchasers at a certain cost or less. Affinia will negotiate that cost from merchant to merchant.

The company can track consumers back to the purchase, thanks to technology it developed over the last year with online affiliate network companies Be Free Inc. and LinkShare Corp.

Affinia epitomized an e-retailing buzz-phrase last year when, as a startup, it began “taking the store to the traffic” by building shopping areas on small sites across the Web. Publishers register at www.affinia.com, and Affinia in turn suggests mechants and products for a virtual store that the publishers put on their sites. Those merchants are Affinia’s clients.

Hagerman said the company has a database of 3 million products from hundreds of retailers that it can plug into its forthcoming ad service. The executive said he expects to serve 50 to 100 different product ads to each site in the program. A snowboard site, for example, could run ads for everything from gloves and poles to skiing books. Sites that join the program will be paid $2 to $10 for every thousand impressions.

As it embraces the “performance” trend among marketers, Affinia rejects the philosophy of banners as “branding tools.” Affinia said its product ads aren’t about branding, and the company doesn’t expect to compete with traditional banner companies.

“We have no interest in taking over the banner real estate now or ever. That’s not what we’re good at,” Hagerman said.

Time will tell whether Affinia’s new venture works out. Affinia is privately held but has accumulated $15 million from technology investors, including the venture capital arm of database giant Oracle Corp. Still, the technological challenge of serving millions of ads every month can be staggering.

“Certainly, we’ll walk before we’ll run,” Hagerman said. “By the end of this year, we’d be really cooking if we were serving 200 or even 300 million impressions a month.” It’s a number that’s dwarfed by the total ads put out every month by DoubleClick Inc. or Flycast Communications Corp.

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