rkgblog

RKG At ACCM 2008 in Orlando May 19-22

Larry Becker — Wed, 07 May 2008 18:14:50 +0000

The 25th annual ACCM conference takes place in just a few weeks, May 19 -22, in Orlando Florida.

RKG is looking forward to leading the sessions and workshops listed below, looking for alligators in the atrium (do they enjoy eating marshmallows, like their Louisiana Bayou relatives?) and, especially, to touching base with friends and folks in the space.

If you’ll be at the show, and would like to grab a few minutes to talk paid search or website effectiveness, we’d be glad to meet up — just drop us a line.

Getting The Most Out of Your PPC Program
Ryan Gibson
May 19, 2008
9:45a-10:45a

We’ll review best practices for developing keyword lists, building effective adgroups, and writing compelling copy. We’ll present explicit formulas for rational economic bidding and provide spreadsheet models to determine optimal PPC ad budgets. We’ll also touch on key advanced topics, including advertising on brand names; match-type optimization; mining the long tail; and off-site conversion tracking.

Conversion Is Your Ultimate Secret Weapon: Tracking & Optimizing Search Traffic
Larry Becker
May 19, 2008
12:45p-1:45p

You must measure your paid and organic search conversions to determine where to invest, where to cut, and where to fine-tune. In this session, we’ll review different tracking technologies, including redirectors, cookies, tracking URLs, and on-page JavaScript. We’ll show methods for tracking search-driven sales into the call center and stores. We’ll discuss the limitations of “last touch gets credit” allocation schemes and propose alternatives. We’ll discuss why “conversion is the ultimate secret weapon” and present concrete approaches to increase sales per visitor.

Growth Through Smart Bidding: Wine Enthusiast & RKG Share Strategies
George Michie & Glenn Edelman
May 21, 2008
10:45a- 12:00p

Grow your PPC program through smarter bidding! In this session, you’ll hear the secrets behind portfolio bid management systems and why the industry standard position-based systems guarantee inefficiency. Hear how Wine Enthusiast increased non-brand sales significantly and improved efficiency through smart long-tail management and flexible tools. You will learn:

10 advanced tricks and tips to improve your bottom line

The single most important fact about search marketing

Beyond the talks, we’re also offering 1:1s at the “medical center” and hosting a lunch table.

Lunch with the Experts
May 21, 2008
Noon

Ryan Gibson hosts a table discussing hot topics in paid search marketing.

“Ask the Doctor” Multichannel Merchant Medical Centers
Time TBA

Larry Becker, (who also returns as as a judge in this year’s MCM website awards) will provide one-on-one consulting on usability and website effectiveness.

Ryan Gibson will provide one-on-one consulting on paid search marketing.

If you’d like to meet up in Orlando, give us a call. We hope to see you at the show!

accm, catalog show, dma, george michie, glenn edelman, larry becker, lawrence becker, marketing conference, orlando, PPC, rimm kaufman group, RKG , ryan gibson, website effectiveness

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Webinar: The Keys to PPC for Online Retailers

Ryan Gibson — Wed, 07 May 2008 00:07:47 +0000

Jason, Andrew and the folks over at Elastic Path have kindly invited me to be part of their ongoing series of webinars.

Each month, Elastic Path produces a webinar that covers a topic of interest for online retailers. Recent topics have included web analytics, website personality and online merchandising.

I’ll be presenting some key tactics to managing an effective paid search program; specifically looking at the importance of focusing on the basic “blocking and tackling” of PPC. We’ll be sure to take some questions from attendees, too.

If you have some time on May 15th at Noon Eastern (9a Pacific), check it out.

The Keys to PPC for Online Retailers
Thursday May 15, 2008 at 12p Eastern
Register (or view the event after 5/15)
ElasticPath, SEM, webinar
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Paid Search Share Q1 ‘08: Google Up, Yahoo Down, Microsoft Steady

Matthew Mierzejewski — Mon, 05 May 2008 15:28:41 +0000

Looking at Q1 numbers for our client base, Google continues to gain paid search market share.

From December ‘07 to March ‘08, Google accrued an additional 3 points of overall paid search traffic.

Month	Google	Yahoo	Microsoft
2007-01	73%	22%	5%
2007-02	69%	26%	5%
2007-03	72%	24%	4%
2007-04	76%	20%	4%
2007-05	74%	21%	5%
2007-06	73%	21%	6%
2007-07	76%	19%	5%
2007-08	77%	18%	5%
2007-09	76%	19%	5%
2007-10	79%	16%	5%
2007-11	79%	16%	5%
2007-12	79%	16%	5%
2008-01	79%	16%	5%
2008-02	81%	14%	5%
2008-03	82%	13%	5%
2008-04	81%	14%	5%

Details about how the data is aggregated, and disclaimers aforementioned here

google, microsoft, paid click share, paid search share, PPC, ppc share, ppc trend, SEM, yahoo

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Free Planning Spreadsheet: How Will Do-Not-Mail Impact Your Holiday 2008 Multichannel Results

Alan Rimm-Kaufman — Sat, 03 May 2008 11:56:07 +0000

A few weeks back, I had a conversation with Chuck Teller of Catalog Choice.

If you’ve been following this blog, you can tell I believe the “do-not-mail” movement will soon become a very significant issue for multichannel and catalog marketers.

In one conversation with Chuck, he shared his belief that CatalogChoice and other do-not-mail efforts would help catalogers avoid mailing individuals who didn’t want their books, thus helping catalogers be more profitable.

I wasn’t so sure about that, so I built a small mathematical model to help myself understand the relationship between mailing costs, response rates, never-mails, and the bottom line.

If math isn’t your thing, you rejoin us a few paragraphs down for the analysis. There’s also a helpful spreadsheet which does all the math for you.

Algebra Ahead

Consider your holiday mailings in aggregate as one campaign.

Let n_b and n_p represent the number of buyers and prospects mailed, respectively.

Let r_b and r_p represent your buyer and prospect response rate, and let theta_b and theta_p represent the fraction of buyers and prospects who put themselves on the never-mail-me list.

Let c denote the cost of a catalog, and alpha represent contribution per order, defined as average order less average COGS less average variable order costs (credit card fees, pick-pack costs, etc).

We’ll assume theta_b and theta_p are independent of r_b and r_p. That says the typical buyer never-mail-me optout responds no better or worse than the average buyer, and the typical prospect never-mail-me optout responds no better or worse than the average prospect.

If anything, that assumption is conservative: I’ve had conversations with catalogers indicating that the buyers choosing to opt-out through Catalog Choice are typically far better than average buyers. More on that later.

OK. Without the never-mail effect, you’ll earn

dollars on the mailing.

With the never-mail opt outs, you’ll earn

dollars on the mailing.

So when would never-mail opt-outs increase profits?

Simple: when

Using high-school algebra, we can rearrange terms like this.

Enough math, what does it mean?

For the cataloger concerned with profit, the never-mail-services increase your bottom line (in the short term, more on that later) if they cull more low-responding low-profit prospects relative to their removal of high-responding high-profit buyers.

How much bigger does the prospect optout rate, theta_p, have to be relative to the buyer opt-out rate, theta_b, to make it work out in the mailer’s favor?

The critical ratio depends on several factors

c, the cost of the book. The more expensive your book, the larger your buyer opt-out rate can be and you’ll still be OK.
n_p / n_b , the ratio of prospect to buyer circ. The more you mail prospects, the larger your buyer opt-out rate can be and you’ll still be OK.
r_b alpha - c , the contribution per buyer book. The more money you make from a buyer, the small your buyer-opt out rate has to be.

Here’s a spreadsheet you can use to play with some of these numbers.

In this case, I set the buyer opt-out rate, theta_b, at 2%. Ouch.

I dialed in a cost-per-book of 50c, an average order of $150, COGS at 50%, variable costs at 5%, buyer circ at 1000k with a 2% response, and prospect circ at 1000K at a 0.5% response rate.

With these numbers and a 2% buyer do-not-mail me rate, the prospect opt-out rate has to be at least 3.4%, so that the money saved from losing low-responding prospects covers the income loss from the high-responding buyers who opt-out.

This model only considers a single mailing.

By ignoring life-time value and the need for fresh buyers to keep a house-file healthy, it underestimates the impact of the opt-outs.

Time’s, They Are A’Changing

The catalog world is changing, and changing quickly. The do-not-mail movement is one of the small-but-soon-to-be-seismic shifts hitting the industry.

The question isn’t whether or not you participate in the do-not-mail collectives. You’re going to have to, by consumer sentiment and perhaps even by law in some states.

The question isn’t whether or not you are going to see some of your best buyers raising their hands to never receive your book. You will see this, and their online sales won’t make up what you made when you pushed (far too many, likely) books at them.

The question is: how do catalogers revise their business models in 2008 and 2009 to reach 2010?

Spreadsheet: Catalog opt-out model

Business, catalogchoice, chuck teller, dma, never mail, opt out, SEM

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Shop.org’s Scott Silverman & NRF’s Elizabeth Oesterle Talk About Pending Online Retail Regulation

Alan Rimm-Kaufman — Mon, 28 Apr 2008 11:58:54 +0000

I caught up with Scott Silverman and Elizabeth Oesterle to hear about Shop.org and the NRF’s lobbying work on behalf of online retailers.

Listen to podcast: Scott_Silverman_Interview.mp3

Alan Rimm-Kaufman: It’s a delight to be here with Scott Silverman of Shop.org, Shop.org’s executive director. Hello, Scott. And also Liz Oesterle who’s the VP of Government Relations Councils at the National Retail Federation. Hey, Liz.

There’s some very important legislation pending on the Hill which Shop.org and the National Retail Federation is working on.

Liz, can you tell us what’s going on and what online retailers should know?

Elizabeth: Sure. I think the most interesting piece of legislation that’s actually pending on Capitol Hill relating to the Shop.org membership is probably the legislation that deals with credit card interchange rates.

The processing fees that are associated with credit cards are actually the highest for online retailers, and they can actually come close to four percent per transaction if you’re online. So for instance, if a customer goes on your site, spends $100, you’re gonna give $4 of that back to Visa and MasterCard just in shopping fees.

And NRF and Shop.org and several other retail trade associations have been working to get legislation introduced, which was recently introduced by the chairman of the judiciary committee to go after interchange fees from an antitrust perspective. Right now, Visa and MasterCard with the banks that sit on their board, are able to fix the rates without any negotiations with the retail community at all. So it’s an important issue, and it’s one we’re looking at closely.

And the other most very important issue for Shop.org members is actually not an issue that’s pending on the hill right now, but it’s something that we’re dealing with the Federal Trade Commission, and that is the same day that the FTC approved the Google/Double Click merger , they came out with some proposed best practices or principles with relation to online behavioral advertising . They defined behavioral advertising very broadly. Not just tracking across websites, but actually tracking that an individual retailer could be doing on their own site with their own customers.

So we just submitted comments to the FTC last Friday on that, and we’re hoping that the FTC takes a good hard look at this and doesn’t really try to be too proactive because I don’t think they’ve really gathered enough information on the issue, and we’re looking forward to the opportunity to continue the dialogue with them.

Alan: What does it mean when the FTC offers best-practice guidelines? Do those become binding?

Elizabeth: It’s interesting. They can bring enforcement actions under the FTC Act, and that’s usually for unfair or deceptive trade practices, and what happens sometimes when there are these sort of suggested principles out there, although they’re not regulatory in nature, if people begin sort of regularly skirting them or violating them, the FTC has used these types of principles in the past to go after people.

So although they’re not regulatory in nature, and they would be suggested, they do sort of have a regulatory effect in that people have to be very careful in order not to have any type of action taken against them.

Alan: So let’s continue on this for a moment. You were saying that some of this relates to behavioral targeting on the ad networks. But some of it relates to activities on a retailer’s own site. Can you explain what these best practices might be relating to the own site issues?

Elizabeth: The way that they defined behavioral advertising, it’s really any tracking that goes on a webpage or a website that could be used then to deliver more marketing or advertising to a consumer, so a retailer on their own site could be doing some tracking of their customer’s behavior and use that information to serve up what would be considered marketing or advertising.

I know that Amazon.com is a great example of a site that does that regularly. They are always looking for ways to get merchandise in front of their customers that their customers might be interested. And most retailers do it in that they will send marketing e-mails or things like that to get their customers to come back to their site and shop. So it’s kind of a slippery slope.

I think people, when they think about behavioral advertising, they think of sort of tracking across the web and someone kind of watching you go from one site to another and serving up ads based on the things you’re doing on multiple different sites, but really the FTC’s definition is really much broader than that. It goes towards first-party marketing practices.

Alan: A lot of retailers want to simply make their website relative to users.

Elizabeth: Right.

Alan: And say, “You looked at some of this. Maybe you’d like to see more of this.”

Elizabeth: Exactly.

Alan: And some of those practices would be considered a non-best practice or not appropriate under those guidelines?

Elizabeth: Well, they would have to be associated with a higher degree of notice than consumers are given right now. Most retailers do let their customers know in their privacy policies that this type of stuff is going on their sites, and they also let folks know if they are contracting out with any behavioral networks as well that ads could be served off of the site as well.

But the FTC really wants more, I guess, notice and choice , and it kind of raises the question of what are they looking for. How much more notice and choice do they want? Do they want customers to have to consent to certain behavior every time they come back to a site? Would it be a matter of actively opting out of something? It’s very unclear what they want folks to do. I’m sure we’re gonna hear more about it.

Alan: You have to click a box that says, “Please make this relevant to me.”

Elizabeth: Right.

Alan: And what’s the timeframe on all of this? What’s happening, and what should folks be doing in the retail community?

Elizabeth: It’s unclear. The comment period was extended after there was a fair amount of pushback from the business community, and like I said, the filing deadline was last Friday. And now it’s sort of up to the FTC as to what they want to do. There’s no clear timeline as to what they want to do.

Scott and I attended a meeting with the staff a few weeks ago, and they don’t really seem to know what they want to do next, which sort of left us with the impression is they thought they needed to do something post-Google/Double Click merger to make it look like they were being proactive for consumers, but we’re really just not sure what that something’s going to be.

Alan: Interesting. Well, thank you so much, Liz.

Elizabeth:Sure.

Alan: Scott, can I ask you a couple questions about this issue and how it relates to the Shop.org membership?

Scott: Yes, absolutely.

Alan: Great. How aware would you say the typical online retailer or typical Shop.org member is of this issue pending in the FTC right now?

Scott: Probably less than it should be. I think NRF has to manage this issue all the time, which is there’s always a lot going on in Washington. People are back at headquarters working on their business, and that’s why they have organizations like NRF and Shop.org that can monitor this.

And our job, really, is to put together the right people who can provide input on how this would affect their business and try to make sure that there aren’t any economic harm that will be unintended from some of these proposals or suggestions that regulators or people on Capitol Hill with the best intentions are trying to move forward with, and protect consumers.

Alan: Are there retailers speaking about this and going on record publicly? Or are folks approaching you privately to share their concerns?

Scott: There’s not too many that are speaking publicly about it. I don’t know of any specific retailers submitted their own comments to the FTC. Liz, are you aware of any?

Elizabeth: No, I’m not aware of any that did.

Scott: Right. So mostly they’re talking to us and having us serve as their voice on this particular issue, and that provides a couple of advantages. And certainly the key among them is being able to represent a larger group of people, more employees. That has more weight with folks in Washington.

Alan: So without naming names if folks aren’t on the record yet, do large retailers, household name retailers, is this a concern? Or is this some sort of hypothetical strangeness out of D.C. that will come to nothing?

Scott: No, it’s definitely a concern. Shop.org has a policy advisory group which is around a dozen or so of our members, and they have been participating in conference calls. They’ve been reviewing the guidelines. They’ve been reviewing the drafts and providing input on the comments that we submitted to the FTC.

And in the middle of May, we are bringing a number of them to Washington to have a discussion on this and hopefully meet with some folks from the FTC and potentially some meetings on Capitol Hill that may touch on this as well. So there are definitely some retailers that are tuned into this, and what they learn is very concerning to them.

And we’re doing everything we can to educate a broader group of retailers. We try to use things like our Smart Brief newsletter to educate our members about the issue with newspaper articles, and I’m sure we’ll link this, whatever you do on your blog, Alan, to the Shop.org blog as another way it educate our members.

Elizabeth: I’m going to jump off now. I just want to let you guys know that I’m doing that so no one asks questions that go into thin air.

Alan: No worries, Liz. Thank you for your time. Scott, if folks wanted to read more and learn more, where should they go?

Scott:Well, certainly they can start with going to the FTC’s website and reading the FOIA guidelines and also all of the comments, including Shop.org’s, Google’s, any other group that submitted comments for public consumption. And that should give you a very good perspective of what the FTC is thinking about and how different companies are reacting to this.

Alan: And after reading that, if folks wanted to become more involved, how can retailers make their voice heard or help keep these strange best practices?

Scott: Well, certainly I’d like them to get in touch with Shop.org. They can, for now, get in touch with me. My e-mail is Scott@Shop.org. And if they have a point of view, I’d love to hear what that is and see where we can incorporate their input.

Alan: Good stuff. Well, thank you for the update today. It’s great that the NRF and Shop.org keep an eye on things like predatory interchange rates and FTC guidelines meant to help which might actually hurt. Everyone’s so busy. It’s really great to have a trade association that’s sort of minding the details in Washington.

Scott: Great. Well, that’s what we’re here for.

Listen to podcast: Scott_Silverman_Interview.mp3

Elizabeth Oesterle, FTC, interchange, nrf, privacy, scott silverman, shop.org, visa

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Effective Websites: Forwarding Email As Convenient Means To Enter Data

Alan Rimm-Kaufman — Wed, 23 Apr 2008 15:21:38 +0000

Two in-the-cloud apps I find really useful are HighRise and TripIt.

HighRise is a simple and elegant CRM system from 37signals.

TripIt manages your travel plans.

Tripit creates an integrated itinerary from your air and hotel reservations, along with local sights, weather, and airport check in.

What both apps have in common is how cleverly they use email for input.

With TripIt, you just forward all the emails from the airlines and the hotels to plans@tripit.com. The app does all the data entry drudgery, determining who you are from the sending address, then parsing the email to extract structured travel data from the free text message.

With HiRise, you blind-carbon copy a special drop box, something like dropbox@999999997.rkg.highrisehq.com. Again the app does all the hard work, determining who you are from the dropbox subdomain, parsing the email to determine where to file it it the CRM system, and associating the message with the right people and companies and dates.

Forwarding an email is really simple. Bccing an email is really simple.

If I had to visit the sites to type in my data, I would not use them. But because using them is so easy, I’m now a fan of both.

What initiatives do you have on the table to make your e-commerce site easier to use?

web effectiveness

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Video: Chris Anderson And Michael Arrington On Charlie Rose

Alan Rimm-Kaufman — Tue, 22 Apr 2008 16:46:57 +0000

Two interesting interviews with Chris Anderson and Michael Arrington on Charlie Rose back in March.

Anderson (0:00) talks about his Wired article and upcoming book about Free.

Arrington (22:50) talks about everything web.

Long interviews but worth it.

They work just as well audio-only, as the video doesn’t add much to the spoken conversation.

Business, Charlie Rose, chris anderson, Michael Arrington

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AJAX for Keeping Online Retail SKU Pages Fresh IntraDay

Alan Rimm-Kaufman — Tue, 22 Apr 2008 12:38:53 +0000

A few years back, we watched an IR200 client migrate off an antiquated static home-brew HTML store onto a modern robust e-commerce platform.

The cart was dynamic on the old site, of course, but their huge number of SKU pages weren’t. SKU pages were static HTML, generated by scripts each night.

This meant big headaches for their merchants. Think mid-day price changes (disallowed!) and mid-day stock-outs (site kept selling sold-out SKUs!)

So they switched onto a (then) modern e-comm platform.

The new site solved the mid-day merch change issues, but came with some downsides: ugly SEO unfriendly URLs with sessionids, a much slower site, increased hardware costs, increased platform costs. And they didn’t remap the old URLs properly, so they lost a great deal of SEO-driven revenue. Ouch.

This experience got me thinking about how little on a e-comm site is truly dynamic intra-day.

Prices and quantities, yes. In-stock and out-of-stock, absolutely. Perhaps user reviews and ratings, but those don’t need to be true real-time.

(Completely different from a news or sports site, where everything must be up-to-the-minute fresh.)

So, here’s a crazy idea for a e-comm architecture:

Render the whole site in static HTML each evening, with prices and quantities accurate as of when written. Then use tiny fast AJAX calls throughout the day to update only those few bytes on each page that actually change.

Just a thought.

ajax, code, online retail

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Why Small Businesses Should Support Open Source

Alan Rimm-Kaufman — Mon, 21 Apr 2008 16:54:38 +0000

Many startups and small businesses rely on open source software. Many big businesses rely on open source, too, but that’s a different article.

Open source code is typically high-quality, lets you avoid licensing fees, and most important, you can lift the hood and fix any bits that come loose.

RKG is among the many many companies that owe a large debt of thanks to the open source movement.

But, of the many small businesses using open source, only a small fraction give back to the community.

One way to support open source is donate to the organizations and conferences.

Again this year, RKG is making a donation to help the good folks at YAPC::NA2008, and urge others using perl to do the same.

Another way is to contribute code.

Bug fixes. New features. New applications. What have you.

If your company uses open source, and you improve the code, seriously consider sharing it back.

While we don’t release the proprietary code which provides RKG and our clients with unique technological and/or business advantages, we do share back “housekeeping” code.

For example, for both RKG and for the community, Baron Schwartz developed table archiving nibblers, table synchronization helpers, server monitoring scripts, and other useful mysql tools. He bundled these apps as MaatKit and released them under the GNU General Public License.

What a honor for Baron that last week at the MySql conference he was given a “MySql Community Member Of The Year” award. Kudos, Baron!

It doesn’t matter if your donation is large or small. It doesn’t matter if you give money or code.

What does matter is this: if you’re benefiting from the Open Source Movement, try to give something back.

It makes good business sense. And it is the right thing to do.

code, RKG

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Affiliates: Thieves or Heroes? It Depends on the Source

George Michie — Mon, 21 Apr 2008 14:39:25 +0000

Wikipedia has a long, detailed entry on affiliate marketing with an elaborate taxonomy for different types of affiliates.

To my thinking there are really only three types, with the critical differentiator being how they generate traffic. This is the key question as it helps us think about which sales are incremental, and which cannibalized from other marketing efforts.

User Benefit Sites: Affiliates that take a portion of the revenue share they collect from the retailer and either give it back to the user (like Ebates) or to some worthy cause (like SchoolPop and Upromise).
- Traffic Source: Largely their traffic is their own. Loyal customers start their shopping on the affiliates sites to reap the benefits.
- Traffic Volume: Small but not negligible.
- Incremental orders?: Tough question. Certainly more so than most, but do loyal Acme customers buy from Acme because they participate in these programs, or would they buy Acme anyway without the discount if Acme didn’t participate? A surveys of buyers might be revealing as to what fraction fall into each camp. Beware of “loyalty affiliates” who use downloaded applications to ensure that all future orders from those customers also pay the piper.
Keyword Domain Affiliates: Affiliates who were savvy enough to snarf up great, keyword-rich domain names. Domain names like plasmatvs.com. Search Google for “plasma tvs” and they’re the number 1 organic link. But they don’t sell TVs they sell traffic to retailers. Many of these folks double dip: they take product feeds from the retailers in their network and collect commissions on sales, but also serve either Adwords ads or Adsense ads on their sites and collect revenue from that, too.
- Traffic Source: Competitive natural search. They have a huge advantage algorithmically on the search phrase that matches their domain, so for that one phrase, they’re king.
- Traffic Volume: Varies with industry. If it’s a high volume keyword it can be material. It’s not a wide net, but if your market is heavily weighted to a handful of keywords, and an affiliate or group of affiliates have those domain names they can be big. However, this type of affiliate doesn’t have much impact in a more highly distributed environment.
- Incremental orders?: Absolutely. There is every reason to believe that if your listing and skus aren’t on that affiliate’s “shopping site” the customer will buy from a retailer who is there.
Traffic Thieves: Affiliates who intercept traffic heading for a retailer, place their cookie and a coupon code on the customer’s browser and sell the traffic back to the retailer. There are many mechanisms for engaging in this theft, PPC ads on your trademark are just one class. Natural search on your trademark, or your trademark + “coupons”, or as Ryan Douglas points out: buying domain names that are misspellings and typos of your marks also accomplish the same objectives.
- Traffic Source: Your brand, your other marketing efforts, friend referrals, etc.
- Traffic Volume: Huge. Many folks have been trained to shop for what they want, then do a search for “[retailer name] coupons” to save money. The retailer loses money on the sale AND pays commission for the privilege. This is easy money for the affiliates, with almost no work and huge revenue potential.
- Incremental Orders?: Very few. Arguably there are some folks who wouldn’t buy without the discounts. We all know that offers do improve conversion rates. However, if giving offers to anyone who wants one is good business, why not put a “click here for discount” button on your website? Balance the cost of giving discounts to those who would have bought without a discount, plus the commission paid to the affiliates against the few incremental orders and this component will almost always be in the red, usually deeply in the red.

Two out of three affiliate models provide some value, unfortunately very few affiliates actually fall into the first two categories. The vast majority fall into the “Traffic Thieves” category for the simple reason that for the least amount of work they can make the most amount of money.

In evaluating the profitability of an affiliate program it is NOT enough to simply study the “new customer” numbers. New customers who are looking for you by name aren’t driven by affiliate programs, they’re driven by loyal customer recommendations, other marketing efforts, and the power of your good name. Don’t let anyone sell you that traffic; you’ve paid for it already!

Last week I posted some tips for identifying traffic thieves in your affiliate program.

I hope this simplified taxonomy catches on, feel free to spread it around :-)

George

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