May 31, 1999
Affiliate marketing: the future of e-commerce or another hard sell?
Does this sound familiar? "Have I got a deal for you: Here at Volga.com, we carry the finest books, CDs, hair-care products, floor waxes, and dessert toppings. And when you become a Volga.com distributor, you too can sell these quality products from the comfort of your own home page.
"All you need to do is place this small bit of HTML code on your site, and you'll become an authorized Volga affiliate. We'll give you a 15 percent commission for every Volga product you sell through your site.
"Yes, you too can be your own boss and cash in on the Internet-commerce boom -- and you don't have to worry about business plans, venture capitalists, inventory management, or intellectual property lawsuits."
No, it's not cyber-Amway -- this is online affiliate marketing, made famous by Amazon.com. The pioneering retailer of books, CDs, videos, and gifts now boasts more than 260,000 affiliates (one of which is InfoWorld Electric; we sell the books we review through Amazon.com).
The affiliate marketing strategy is increasingly being used by such high-profile e-commerce retailers as Barnesandnoble.com, Travelocity, Reel.com, and a host of others. Its principle is simple: A retailer signs up "affiliates," which sell the retailer's products on their own sites in return for a commission, usually between 8 and 15 percent of sales.
Affiliates that have highly focused Web sites tend to do well under this model. Because they know their audiences extremely well, they can select subsets of the retailer's products targeted directly at their audiences. In this way, the retailer not only increases its distribution, it also gains a host of effective niche marketers.
Some companies have even built businesses around helping retailers set up and maintain affiliate marketing programs. These companies, such as BeFree (www.befree.com) and Microsoft's LinkExchange (www.linkexchange.com), also serve as central clearinghouses for small site operators who want to join an array of affiliate programs at once.
This is not exactly multilevel marketing, because most of these programs don't pay their affiliates for recruiting other affiliates into the programs. But the programs do have some of the same characteristics, such as a tendency to include lots of dollar signs and exclamation points in their marketing materials: "Make $$$ from your Web site!!!!"
At any rate, it's only a matter of time before the retailers running affiliate programs realize that providing incentives for their affiliates to recruit still more affiliates is one of the cheapest ways to expand the network. When that happens, affiliate programs really will start looking like Amway online.
That is, if Amway doesn't get there first. Quixtar, which is under the same ownership as Amway, is conducting a "teaser" campaign for a new Web venture to be launched Sept. 1, 1999. It currently operates two sites, at www.quixtar.com and www.countdown9199.com, which present little more than content-free hype. But it's being closely watched by Amway distributors, many of whom undoubtedly hope to join this new wave of online network marketing.
And that means it may not be too long before a friend invites you over to dinner, and between the main course and dessert, pitches you about the advantages of running your own affiliate marketing business on the Web.
Is Amway the future of e-commerce, or is affiliate marketing a horse of a different color? Write to me at firstname.lastname@example.org.
Dylan Tweney is the content development manager for InfoWorld Electric. He has been writing about the Internet since 1993.
Previous columns by Dylan Tweney
Push: The rumors of its demise have been greatly exaggerated
May 24, 1999
Distance learning is no substitute for real-world education
May 17, 1999
Internetworkers need `synchronets' to help them work and travel
May 10, 1999
How to succeed in I-commerce without breaking the bank
May 3, 1999
Every column since August, 1997