I promised more from CJU, and more I shall deliver!  This was an informative session, mostly featuring a lot of analytic and numbers supplied by Jupiter Research. The speaker was:

• Patti Freeman-Evans, Research Director & Senior Analyst, Jupiter Research.

Kind of dry, but had some good information.

Bullet Point Review!

• Affiliate marketing will have to change and adapt with the general economic conditions.
• Weak dollar, housing value declining, tighter credit markets, rising retail prices, possible inflation.
• It’s a slow process for consumers to come back.
• Online retailing up 15% in 2008 (estimated).
• Online retail has been doing well, but starting to slow from economic down turn.
• Online buyer much more affluent than offline shopper.
• Online still going up because people don’t want to drive.
• 30% of consumers believe that they can get a better deal online.
• 36% of offline sales are influenced by online research.
  • Expected to raise to 50% by 2012.
• 2008 – 6% of total US retail sales made online.
• More people looking for financial services online.
• Online retail sales reached $39 billion for 2007 holidays.
• Many CEO’s of multichannel retailers looking for growth.
  • Expect a lot of free shipping offers, discounts, coupons, etc.
• Increase in number of people looking for free shipping online.
  • Worth looking at ROI, but doesn’t necessarily create incremental sales.
  • Harder to turn that free shipping/discount customer into a full price customer later on.
• Online ad spend is 1/10 of total ad spend.
• Printed ads are lagging in performance and are expensive.
• Merchants are looking for cost-effective alternatives in advertising.
• The pace of display ad growth is faster than, but no bigger than, search.
  • Mostly due to advancements in targeting.
  • Better value for the money.
• Seeing growth in new media experimentation.
• Advertisers prepare for rich media & video, less static banners & text.
• Affiliates are the ones taking the risk on the sale.
• 13% compound annual growth rate – $2.1 billion.
• Affiliate industry is growing at ~9%.
• Publishers need to be relevant!
• Never underestimate the ignorance of the government regarding the internet.
• Other states are looking at the NY Tax issue and to the online area for taxation over the next 18 months.
• By 2012, 51% of online shoppers will be female.
• By 2012, 56% will be over the age of 35.
• By 2012, 41% will have an annual income of $75k+.
• By 2012, 69% will be Caucasian.
• Now – online shoppers are affluent & Caucasian, split evenly between male and female.
• Don’t concern yourself too much about other languages now as most online shopping is done by English speaking individuals.
• Consumers are making fewer decisions before getting online to buy.
• Only 31% known the item they want before hand.
• Search in research process has grown.
• Fundamentally, social media is influencing decisions by way of reviews, but otherwise not having a large effect.
• Consumers are more likely to start the buying process at the retail site they want to purchase from.
• Over time there could be a paradigm shift to social media.
• Online buyers go to three sites on average during the buying process.
• Google increases solidifies it’s dominant position as top traffic source for most retail sites.
• Why do people go to other sites?
  • 71% : To see other prices
  • 41%: Like to shop around
  • 29%: Looking for free shipping
  • 29%: Looking for more product information
  • 23%: To get a sense of what other people said about the product
  • 23%: To check other sites offers
  • 23%: To see expert reviews
  • 21%: To validate product information already found
• Put what the people are searching for on your site so they don’t have to leave (i.e. include reviews, comparison pricing, product info, etc).
• Consumers trust reviews, spend more on those products, and become loyal.
  • 69%: Impulse buyers
  • 60%: Brand advocates
  • 60%: Loyalist
  • 52%: Directed buyers
  • 48%: Overall online users
• Learn from reviews to create communication strategy.
• On average consumers come back to the site 2.5 times.
• About 20% of online retailers include “Recently viewed products” to try to cross sell other things the consumer already looked at (Amazon is the best example).
• Loyalists are not as profitable as customers (they’re just as likely to abandon in favor of a lower price).
• Use direct customer input to set achievable buyer expectations.
• About 60% of online retailers have persistent carts (i.e. when you leave the site & come back, the items are still in your cart or gives you the option to save items for a later purchase).
• The sooner you can give the customer information on incidental feels (shipping, handling, processing, etc) the better.

There was no time for any questions from the audience because it was so JAM PACKED with data and information.  Every slide Patti shared had great graphics, which was kind of hard to concentrate on, but great for any data and analytic nuts that want to see concrete research represented in lovely chart format.  I know this definitely inspired me to learn more about perfecting charts within Excel!  Great stuff overall for affiliate managers and online marketers alike.

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Well, I think many people attending this session were expecting the topic to be heated, but l’m not sure they were expecting some of the venom that seemed to be in the room.  Speaking for myself, I certainly didn’t.  Originally there was only supposed to be one panelist fielding questions, but since 4 out of 5 working group leaders were in attendance, they were also recruited to speak.  So ultimately the panel consisted of:

• Rebecca Madigan, Performance Marketing Alliance
• Sam Harrelson, Publisher, Cost Per News
• Brook Schaaf, Schaaf Consulting
• Brad Waller, VP Business Development, AdJungle.com
• Peter Bordes, CEO, MediaTrust

Guns were slinging!  Unfortunately there’s not many bullet points to be had, but here you go.

Bullet Point Review!

• PMA is in germination phase – not a real entity yet.
• Why start now?
  • Misinformation & lack of representation.
  • Legislation.
  • Lack of transparency.
  • Maturity of industry.
• Formation process still underway.
  • Interviewed over 60 industry leaders, Formation Advisory Board voted in by 100 peers.
  • Working groups of 45 volunteers.
  • Working groups make recommendations on formation.
  • FAB 11 ratifies formation proposals (click here to see members).
• The working group committees are Scope/Objectives (headed by Sam Harrelson), Governance (Brook Schaaf), Fundraising (Peter Bordes), Membership (Durk Price), and Operations (Brad Waller).

Points (or other observations in this case) brought up during the Q&A

• Right off the bat the questions were hostile.  There’s animosity about the PMA using the NY Tax situation as a launching point for formation despite the fact that they can’t do anything to help.
  • Essentially there’s nothing the PMA can do since they’re NOT a fully formed organization, no matter how much they want to help.
• Rebecca acted as moderator and moved the conversation on after almost 20 minutes of hostile banter.
• The PMA blog as been quiet because the people in working groups have had their heads down working on things without much to report at this point.
• The term “Performance” has been used over “affiliate” because it is more inclusive of the larger base of members within the industry.  Inclusive of a lot more relationships than just the affiliate – merchant relation.
• The PMA has a very similar model as a chamber of commerce but the scope is still being set up.  They are looking at the chamber model in forming things.  Mostly they want to improve visibility & credibility.
• Rebecca was questioned as to why she didn’t attend the meetings in Albany that the NY affiliates had since she’s actually the only paid member.  It was decided that there was no reason because it would have been redundant and she can’t represent an organization that isn’t formed and doesn’t officially exist.
• They were asked why they divorced themselves from ABestWeb after the controversy, to which they responded that they didn’t divorce from it BUT once a particular few threads got ugly and became increasingly unprofessional they just stopped participating in those threads.
• There’s no conspiracy regarding Rebecca’s involvement – Anik Singal of Affiliate Classroom generously donated her salary for a year and she’s just being paid to “corral cats” and help form the organization.  Her comment was that if she weren’t paid for this she’d have bailed long ago based on the assumptions about her involvement and what she’s had to deal with.
• An affiliate asked how they can be assured that the PMA won’t be overtaken by large company sponsorhips and forget the little affiliate?  The affiliate industry is it’s own little ecosystem and the heart of it is the average affiliate.  They’ve been very hypersensitive to the issue to ensure that affiliates are included.

It seems that there’s lots of confusion about the organization – or lack thereof – and hopefully the Q&A has taken things in the right direction.  Perhaps Q&A wasn’t the right moniker.  Maybe Suggestion Session or Feedback Forum might have worked better.  It was disappointing to see one of the most vocal critics of the PMA – ABestWeb founder Haiko de Poel Jr – leave the session half way through in apparently disgust.  I hope that future discussions going forward will be a bit more productive than the session in Boston.

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Unfortunately I was a bit late to this session today, but I got a lot of good info in the 40 minutes I did attend. The panel consisted of:

• Adam Riemer, Director of Marketing & Client Relations, Downtown Ecommerce Partners (Moderator)
• Chris Henger, Group Product Manager, Google Affiliate Network
• Kim Rodgers, Affiliate Manager, 4Checks.com
• Melanie Seery, Affiliate, NY Affiliate Voice
• Clarke D. Walton, Internet Lawyer, Walton Law Firm, P.C.

First I do have to comment on the panelists – I had the pleasure of hearing a session at ASW08 where Clarke spoke on internet taxes in relation to affiliates and I have to tell you – this is the kind of lawyer you want in your Rolodex.  He’s extremely internet and tech savvy, which is always good when you’re talking about internet law.  He has experience doing affiliate marketing himself, so he can totally relate to your issues.  And he clearly knows his stuff.

Speaking of really knowing their stuff, Kim Rodgers is the ace affiliate manager who really knows what she’s doing, and has built her program up SO much it’s phenomenal.  I had the pleasure of sitting with her last night at the Affiliate Dinner (more on that later) and she really is a great AM and has the unique experience of being in the position of a company that initially culled their NY affiliates and now, after some changes internally, are able to welcome them back and have to regain their business (not to mention their trust).

So, the bullet point review of the panel:

• Networks can’t really give any advice to affiliates legally, so they’ve pretty much had to stay out of it.
• Early in July, California explored the NY law and determined that affiliates don’t prove nexus, hence pretty much saying the opposite of what NY is.  Hopefully for those of us in California this means that they’ve gotten it out of their heads to try to mimic this.
• Late in July the NY state senate approved a motion to repeal the tax, so while there’s not much news about this yet it’s a step in the right direction in terms of a repeal.
• It’s important for affiliates to be willing to comply and work with their merchants to get through this and maintain a good relationship.
• Affiliates in NY will have to give up a little privacy (like their NY address) in an effort to comply.
• Merchants can simply add a small paragraph into their terms of service that NY based affiliates need to agree to specifically to comply with laws.
• Affiliate managers need to follow up with the NY affiliates to make sure they’ve read the modified TOS and agree.
• Merchants who kicked NY affiliates right away probably have a better chance of wooing them back than merchants who waited until the middle of June and then deactivated the NY affiliates retroactive to May 31st.  Melanie’s opinion?  “They don’t have a prayer.”

Some take-home answers from the open Q&A:

• The law applies to merchants based in Canada as well  (unfortunately I couldn’t hear if they said it applied to international merchants too).
• The law is not clear if nexus is established when a merchant has affiliates who make $10,000 per year aggregate or per affiliate.
• Affiliate managers should not encourage their affiliates to incorporate their businesses in other states.  This is a poor work around (it’s not a solution) since, well, what if that state’s next to adopt a similar law?  You can’t keep reincorporating and it’s basically fraudulent anyway.
• The state of Washington has come close with a similar law affecting internet sales and taxes.  Formerly, the tax rate on an internet sale was calculated based on where the merchant is located.  Now, it’s calculated based on where the order is shipping to.  This only applies within the state – for now.  (As an aside, I know that the California law is already like this and bases tax assessment on the shipping address, being that PsPrint is based in California).
• The federal government is also looking into these laws since we are talking about interstate commerce and may make a move soon, but it’s hard to say in what direction that move will be.

If you caught anything I didn’t (ahem 11|15 Media’s Michael Buechele), please share with the rest of us!

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