online marketing |

Advertising is tax deductible, so we all pay for the privilege of being manipulated and controlled.: Noam Chomsky
US activist & linguist (1928 – )

Before I rant, let me just say 3 things:

1. Other than email marketing from an owned list, a well run affiliate marketing program is the best ROI marketing tool on the web when it comes to sales.

2. When it comes to customer aquisition, a well run affiliate marketing program provides the cheapest way to bring new customers or returning lapsed customers back to your business.

3. In the new world of social media and the fragmented web, we are finally at the point of peer-to-peer distributed marketing at it’s purest online form.

Now if you don’t believe these statements as fact, you (and your dog) can stop reading right here and talk to my hand.

Yesterday the State of Colorado passed a bill that caused Amazon, the so-called father of Affiliate Online Marketing to shut out its’ community of affiliate marketers on the Web. Some say that Amazon could have fought the State and others say that Amazon was sticking by it’s principles, but I say this is all a silly excuse by Amazon like many other greedy companies to cut their costs. They weren’t afraid that this might prevent them from having to do this in other states, but what I do fear is that this action will cause the many corporate lemmings of affiliate marketing to say, “we should follow Amazon’s lead” and drop our Colorado affiliates too.

A little over a decade ago, the lead venture capital firm , CMG Ventures, for my start-up specifically came to us and I was given money to “build an affiliate marketing program just like Amazon’s”. Back then, a deal with AOL was worth something, eyeballs were worth something, and building a strong affiliate marketing program was worth something. They were right. a $10MM investment turned int0 a $100MM business just 2 months later. I remember our acquirer marveling at how I had amassed 25K new points of distribution that drove 8% of our business.

While some might debate the validity of the analysis during those years, affiliate programs still were the unsung heroes of driving traffic for online companies which had no real name for themselves. The new online “dot-coms” and their online affiliate partners dominated and created formidable foes for their larger “brick and mortar” foes. The hope was to build a large enough network that would help fend off the bigger brands once they entered the online world. Other than email, the best marketing ROIs came from affiliate programs where contextual selling becme the key buzzwords along with collaborative filtering”. Back then and today though, companies really struggled to figure out whether these programs were “brand builders” or “traffic drivers”. I’ll address this in another post.

Now today you hear about Amazon dropping their affiliate marketing program in certain states because of taxes. Are they turning their back on the girl that brought them to the prom? Are they putting man’s best friend out on the street? Let’s get something straight. There are alternatives. They can charge taxes in those states and let those politicians see the inequities. People understand. How many times have you purchased something online where it said something like, “those in CA, VA, TX, and NY must pay 4% additional”? Happens all the time. Don’t tell me that Amazon couldn’t have imposed that strategy. Not to mention at a time when affiliate marketing is now showing some oats with the power of social media marketing coming in to play, there is no doubt that affiliate marketing is beginning to feel it’s traction again. This can’t happen in every state or else all affiliates will be living in another country or New Jersey (take your pick).

I’ve even had people in my company (you know the people who know little about your business but always like to send you links just because the follow Guy Kawasaki and Alltop which makes them a genius) send me the Colorado announcement and say “oops, looks like your Colorado affiliates are all going away.” It just shows the lack of clarity as my current business doesn’t fall under those same laws. The rush to judgment like lemmings would easily spell the ending of affiliate marketing as we know it. “Why would they do something like that then?”, I’ve been asked.

If you haven’t worked inside a large company, the phrases “customer ownership”, “brand dilution” and “incremental sales” are terms I’ve heard mentioned at almost every large company I’ve worked with. There is no doubt that now that Amazon is a large firm and not just some online start-up that they might just feel they don’t need as much help from the online community helping to build brand equity and that they already own the customer because just about everyone online knows who Amazon is by now, is in their database, and is no longer an incremental customer (somebody who hasn’t purchased from them before). They no doubt have done some analysis and figured what percentatge of those links from Colorado were already customers or could have come from links from somewhere else instead. As much as Google is the big Brother of the Web, Amazon knows more about Web consumption behavior than anyone.

So you see, they have spent the last 10 years gaining ownership over your traffic that you sent them. Your Uncle Charlie who clicked through your link in your blog and bout Sarah Palin’s book? Yep, Amazon now has his email on file. And likely knows his birthday and the last 8 items he looked at online. That next purchase? Yep, they don’t need your Colorado taxes and can pocket that 4% affiliate commission they aren’t going to pay out anymore.

Yep, Amazon is smart and they know points 1 & 2 stated above. What they argue though is statement #3 and where politicians look like the greediest (and dumbest) of all. Politicians are also to blame here. So this is a new advertising tax, eh? So now when I tell my friend via Facebook or Twitter about a cool book and add an affiliate link, that I should be taxed for opening my mouth? Dear Mr. Colorado Governor, since when is giving advice taxable? Are you going to tax every conversation on the Web? Books have always been sold because someone told them it was good or because the NY Times put it on their Bestseller list (Oh so now we might want to get all those last taxes for those NY Times Best Seller referrals)! Let’s have some common sense.

This just won’t happen. People will lose jobs. Measurable consumption will disappear. Good, quality advertising techniques and methodologies will be left behind in the dust.

As we post this entry, the Senator from Colorado has said he will listen to those who will want to complain. Let’s hope this is more action than just a political move.

“No matter how much pressure you feel at work, if you could find ways to relax for at least five minutes every hour, you’d be more productive.”
– Dr. Joyce Brothers

When my mother asked where I was heading this week, I told her I was going to the Affiliate Summit. “What’s that?” , she said? When I told her it was an advertising/ marketing conference, she looked at me oddly. Not unusual for my mother.

“But I thought you sold tickets”, was her reply.

Telling parents what you do in this day and age is always difficult to explain if you are not a lawyer or a doctor and especially worse if you are involved in technology. My mother once asked me when I was an investment banker on Wall St. if I knew the teller at her local bank on the other side of the country. So you can see my mother’s confusion, or at least the difficulty that I have in trying to explain what I do. In fact, it has taught me patience as well as an understanding of the need to break it down more simply.

When I told her it was like being an Avon lady except you could promote whatever you wanted online, you didn’t need to buy the product on consignment, and it was done strictly online, she pulled out her laptop and made me show her (I first sat her down with the video above). So after a 30 minute explaination of what affiliate marketing is, she was hooked and then started grilling me. Despite my mother’s “flightiness” she is pretty tech savvy for a 70 year old grandmother. In fact I would have to say she tends to be an earlier adopter of of retail than I am (as long as it is her idea). Not your typical geriatric mother, but she is one of the most productive people I know. So much so that she has started telling her friends about affiliate marketing and unfortunately they are now telling me daily about all the things they’ve helped to sell online for Amazon, etc. I am amused though as these women are all widowed friends of my mother who have Facebook accounts and blogs about their health which they started via an elderly technology class taught at the University of San Francisco’s Fromm Institute. They used to share information with each other during their Scrabble nights and now talk about how much product they sold on the Web. I must caveat all of this again and say my mother is a bit unusual. She was the first to put alfalfa sprouts in our sandwiches as kids, she wears a wooden fish around her neck (just so you know she is a Pisces), and has had many successful business ventures (before they were called ventures) in the gifts, confections and tourism industries. My mother is always selling something whether it was personal alarms, water purification systems , or vitamins, I think I heard all of her selling tactics. Afterwards, my mom hit me because I have been doing this for over 10 years and had never put her onto this. Truth be told I did, but my mom never listens to me (but that is another story).

So why am I telling you this about my mother? Well recently I’ve been looking at the attendance levels at the Affiliate Summit (ASE09) and saw how it has risen. As a mentor to first time attendees I was also assigned to 2 mentees this year which indicates that there are many people getting into the industry or learning more about it. As someone used to say, “it is the economy, stupid”. My feeling is that if my 70 year old mom can do it, so can you.

And why do you need to do this? Right now everyone is trying to make up for lost income due to the recession and the biggest beneficiaries are MOMMIES. I hear about moms offering massage therapy, holding clothing sales in their homes or helping as a doula. Some moms are strictly going back to work and restarting their careers. My sister has restarted her speech pathology consulting again. Women from single income families are earning income in as many ways as they can. An interesting side note, many of these women right now would be still considered unemployed and not reflect against the rising unemployment rate. Mommy blogs and moms (check twitter) who have started businesses online are extremely successful. MyBargainBuddy.com and SunshineRewards are two companies started by moms who are very big in the affiliate marketing game, work from their homes and make a very comfortable living while mainintaining household. One mom, Tricia Meyer, of Sunshine Rewards, even has her young daughter video tape some of the video for her blog.

So now many people might thing that this industry might be mature and that they have missed the boat. Au contraire. The affiliate marketing world is ripe for you. Many large companies are looking for the lowest cost for acquiring sales during this down time as their marketing budgets are getting trimmed left and right. Affiliate marketing has long been the cheapest way of advertising online.
Secondly, social marketing in the affiliate world has not yet been fully tapped and my guess is that it won’t be for a while. This is because the power is in you,the individual. It is your ability, just like my moms, to influence people just like you do in the real world. While there may be people who think they can help you tap into people like my mom and help sell women’s shoes for example, they might have no idea how poor of a seller of shoes my mother might be. In fact my mother might be the best at recommending chocolates and movies, but if you’ve seen my mother’s attire, she is not the one who should be giving advice (sorry mom, just my opinion).

So if you are new to the game, and are looking for some way to make a little money, think about what it is that makes you an expert about something. Figure out how you can use that knowledge and help your friends and their friends fins what they need and earn you some income based upon referrals. For example, I spent quite a few years in the travel industry visiting the most luxurious hotels in the world both in the US and abroad. I have many people ask me where to stay and where to go and if I wanted, I could send them to my website and link them straight to those hotels , cruise lines, etc and make a profit, just like a travel agent. Travel and music (the industry I’m in) are two industries that people seek personal advice from people based upon individual opinions. Some other good ones are health and financial.

For more information, I suggest checking out some of my affiliate marketing links on the right. I would also do some reasearch and possibly attend Affiliate Summit in Las Vegas in January 2010.

Tag Archives: online marketing

Business Lemmings and Lack of Marketing Fundamentals

Affiliate Marketing – Why Now? Why Me?