Affiliate marketing

Affiliate marketing is a method of promoting web businesses (merchants/advertisers) in which an affiliate (publisher) is rewarded for every visitor, subscriber, customer, and/or sale provided through his/her efforts.

Affiliate marketing is also the name of the industry where a number of different types of companies and individuals are performing this form of internet marketing, including affiliate networks, affiliate management companies and in-house affiliate managers, specialized 3rd party vendors and various types of affiliates/publishers who utilize a number of different methods to advertise the products and services of their merchant/advertiser partners.

Affiliate marketing overlaps with other internet marketing methods to some degree, because affiliates are using the same methods as most of the merchants themselves do. Those methods include organic search engine optimization, paid search engine marketing, email marketing and to some degree display advertising.

Affiliate marketing - using one site to drive traffic to another - is the stepchild of online marketing. While search engines, e-mail and RSS capture much of the attention of online retailers, affiliate marketing, despite lineage that goes back almost to the beginning of online retailing, carries a much lower profile. Yet affiliates continue to play a fundamental role in e-retailers' marketing strategies.[1]

Compensation methods

Predominant compensation methods
80% of affiliate programs today use revenue sharing or cost per sale (CPS) as compensation method, 19% use cost per action (CPA) and the remaining 1% are other methods, such as cost per click (CPC) or cost per mille (CPM).[2]

Diminished compensation methods
The use of pay per click (PPC/CPC) and pay per impression (CPM/CPT) in traditional affiliate marketing is far less than 1% today and negligible.

Cost per mille (thousand) (CPM/CPT) requires the publisher only to load the advertising on his website and show it to his visitors in order to get paid a commission, while PPC requires one additional step in the conversion process to generate revenue for the publisher. Visitors must not only made aware of the ad, but also pursue them to click on it and visit the advertiser's website.

Cost per click (CPC/PPC) used to be more common in the early days of affiliate marketing, but diminished over time due to click fraud issues that are very similar to the click fraud issues modern search engines are facing today. Contextual advertising, such as Google AdSense are not considered in this statistic. It is not specified yet, if contextual advertising can be considered affiliate marketing or not.

Compensation methods for other online marketing channels
Pay per click is the predominant compensation model for pay per click search engines and their contextual advertising platforms, while pay per impression is the predominant compensation model for display advertising. CPM is used as a compensation method by Google for their AdSense/AdWords feature "Advertise on this website", but this is an exception in search engine marketing.

While search engines only recently started experimenting with the compensation structures of traditional affiliate marketing, such as pay per action/CPA,[3] they have used similar models in display advertising, offering CPA as early as 1998.[4] By the end of 2006, the market share of the CPA/performance pricing model (47%) caught up with the CPM pricing model (48%)[5] and will become the dominant pricing model for display advertising, if the trend of the last 9 years continues in 2007.[6]

CPM/CPC versus CPA/CPS (performance marketing)
In the case of CPM or CPC, the publisher does not care if the visitor is the type of audience that the advertiser tries to attract and is able to convert, because the publisher already earned his commission at this point. This leaves the greater, and, in case of CPM, the full risk and loss (if the visitor can not be converted) to the advertiser.

CPA and CPS require that referred visitors do more than visiting the advertiser's website in order for the affiliate to get paid commission. The advertiser must convert that visitor first. It is in the best interest for the affiliate to send the best targeted traffic to the advertiser as possible to increase the chance of a conversion. The risk and loss is shared between the affiliate and the advertiser.

For this reason affiliate marketing is also called "performance marketing", in reference to how employees that work in sales are typically being compensated. Employees in sales are usually getting paid sales commission for every sale they close and sometimes a performance incentives for exceeding targeted baselines.[7] Affiliates are not employed by the advertiser whose products or services they promote, but the compensation models applied to affiliate marketing are very similar to the ones used for people in the advertisers' internal sales department.

The phrase, "Affiliates are an extended sales force for your business", which is often used to explain affiliate marketing, is not 100% accurate. The main difference between the two is that affiliate marketers cannot, or not much influence a possible prospect in the conversion process, once the prospect was sent away to the advertiser's website. The sales team of the advertiser on the other hand does have the control and influence, up to the point where the prospect signs the contract or completes the purchase.

Multi tier programs
Some advertisers offer multi-tier programs that distribute commission into a hierarchical referral network of sign-ups and sub-partners. In practical terms: publisher "A" signs up to the program with an advertiser and gets rewarded for the agreed activity conducted by a referred visitor. If publisher "A" attracts other publishers ("B", "C", etc.) to sign up for the same program using her sign-up code all future activities by the joining publishers "B" and "C" will result in additional, lower commission for publisher "A".

Snowballing, this system rewards a chain of hierarchical publishers who may or may not know of each others' existence, yet generate income for the higher level signup. This sort of structure has been successfully implemented by a company called Quixtar.com, a division of Alticor, the parent company of Amway. Quixtar has implemented a network marketing structure to implement its marketing program for major corporations such as Barnes & Noble, Office Depot, Sony Music and hundreds more.

Two-tier programs exist in the minority of affiliate programs; most are simply one-tier. Referral programs beyond 2-tier are multi-level marketing (MLM) or network marketing.

Even though Quixtar compensation plan is network marketing & wouldn't be considered 'affiliate marketing', the big company partners are considered and call themselves affiliates. Therefore, you may argue that the Quixtar company is the affiliate marketer for its partner corporation.

History

The beginning
The concept of revenue sharing, paying commission for referred business, predates affiliate marketing and the internet. The translation of the revenue share principles to mainstream electronic commerce on the internet happened almost four years after the World Wide Web was born in November 1994 when CDNow launched its BuyWeb program.

With its BuyWeb program, CDNow was the first to introduce the concept of an affiliate or associate program with its idea of click-through purchasing through independent, online storefronts.

CDNow.com had the idea that music-oriented web sites could review or list albums on their pages that their visitors might be interested in purchasing and offer a link that would take the visitor directly to CDNow to purchase them. The idea for this remote purchasing originally arose because of conversations with a music publisher called Geffen Records in the fall of 1994. The management at Geffen Records wanted to sell its artists’ CDs directly from its site but did not want to do it itself. Geffen Records asked CDNow if it could design a program where CDNow would do the fulfillment.

Geffen Records realized that CDNow could link directly from the artist on its Web site to Geffen’s web site, bypassing the CDNow home page and going directly to an artist’s music page.[8]

Affiliate marketing was used on the internet by the adult industry before CDNow launched their BuyWeb program. The consensus of marketers and adult industry insiders is that Cybererotica was either the first or among the early innovators in affiliate marketing with a cost-per-click program.[9]

Amazon.com launched its associate program in July 1996. Amazon associates would place banner or text links on their site for individual books or link directly to the Amazon’s home page.

When visitors clicked from the associate’s site through to Amazon.com and purchased a book, the associate received a commission. Amazon.com was not the first merchant to offer an affiliate program, but its program was the first to became widely known and served as a model for subsequent programs.[10][11]

In February 2000, Amazon.com announced that it had been granted a patent (6,029,141) on all the essential components of an affiliate program. The patent application was submitted in June 1997, which was before most affiliate programs but not before PC Flowers & Gifts.com (October 1994), AutoWeb.com (October 1995), Kbkids.com/BrainPlay.com (January 1996), EPage(April 1996), and a handful of others.[9]

Historic development
Affiliate marketing has grown quickly since its inception. The e-commerce website, viewed as a marketing toy in the early days of the web, became an integrated part of the overall business plan and in some cases grew to a bigger business than the existing offline business. According to one report, total sales generated through affiliate networks in 2006 was £2.16 billion in the UK alone. The estimates were £1.35 billion in sales in 2005.[12] MarketingSherpa's research team estimated that, in 2006, affiliates worldwide earned $6.5 billion in bounty and commissions from a variety of sources in retail, personal finance, gaming and gambling, travel, telecom, education, publishing and forms of lead generation other than contextual ad networks such as Google AdSense.[13]

Currently the most active sectors for affiliate marketing are the adult, gambling and retail sectors.[14] The three sectors expected to experience the greatest growth are the mobile phone, finance and travel sectors.[14] Hot on the heels of these are the entertainment (particularly gaming) and internet-related services (particularly broadband) sectors. Also several of the affiliate solution providers expect to see increased interest from B2B marketers and advertisers in using affiliate marketing as part of their mix.[14] Of course, this is constantly subject to change.

From the advertiser perspective

Pros and cons
Merchants like affiliate marketing,[15] because in most cases, it is a "pay for performance model", meaning the merchant does not incur a marketing expense unless results are realized, excluding the initial setup and development of the program. Some businesses owe much of their growth and success to this marketing technique, one example being Amazon.com, especially small and midsize businesses. However, unlike display advertising, affiliate marketing is not easily scalable.

Implementation options
Some merchants run their own affiliate programs (In House) while others use third party services provided by intermediaries to track traffic or sales that are referred from affiliates. (see outsourced program management) Merchants can choose from two different types of affiliate management solutions, standalone software or hosted services typically called affiliate networks.

Affiliate management and program management outsourcing
Successful affiliate programs require a lot of maintenance and work. The number of affiliate programs just a few years back was much smaller than it is today. Having an affiliate program that is successful is not as easy anymore. The days when programs could generate considerable revenue for the merchant even if they were poorly or not at all managed ("auto-drive") is over.

Those uncontrolled programs were one of the reasons why some of the not so positive examples of affiliates were able to do what they did (spamming,[16] trademark infringement, false advertising, "cookie cutting", typosquatting[17] etc.)

The increase of number of internet businesses in combination with the increased number of people that trust the current technology enough to do shopping and business online caused and still causes a further maturing of affiliate marketing. The opportunities to generate considerable amount of profit in combination with a much more crowded marketplace filled with about equal quality and sized competitors made it harder for merchants to get noticed, but at the same time the rewards if you get noticed much larger.

Internet advertising industry became much more professional and online media is in some areas closing the gap to offline media, where advertising is highly professional and very competitive for a lot of years already. The requirements to be successful are much higher than they were in the past. Those requirements are becoming often too much of a burden for the merchant to do it successfully in-house. More and more merchants are looking for alternative options which they find in relatively new outsourced (affiliate) program management or OPM companies that were often founded by veteran affiliate managers and network program managers.[18]

The OPM are doing this highly specialized job of affiliate program management for the merchant as a service agency very much like Ad agencies are doing the job to promote a brand or product in the offline world today.

Types of publisher (affiliate) websites
Affiliate sites are often categorized by merchants (advertisers) and affiliate networks. The main categories are:

* Search affiliates that utilize pay per click search engines to promote the advertisers offers (search arbitrage)
* Comparison shopping sites and directories
* Loyalty sites, typically characterized by providing a reward system for purchases via points back, cash back or charitable donations
* Coupon and rebate sites that focus on sales promotions
* Content and niche sites, including product review sites
* Personal websites (these type of sites were the reason for the birth of affiliate marketing, but are today almost reduced to complete irrelevance compared to the other types of affiliate sites)
* Blogs and RSS feeds
* Email list affiliates (owners of large opt-in email list(s))
* Registration path affiliates that include offers from other companies during a registration process on their own website.
* Shopping directories that list merchants by categories without providing coupons, price comparison and other features based on information that frequently change and require ongoing updates.
* CPA networks are top tier affiliates that expose offers from advertiser they are affiliated with to their own network of affiliates (not to confuse with 2nd tier)

Finding affiliate partners (advertisers)
Affiliate networks that have already a number of advertisers usually also have a large number of publishers already. This large pool of affiliates could be recruited or they might even apply to the program by themselves.

Relevant sites that attract the same audiences as the advertiser is trying to attract, but are not competing with the advertiser are potential affiliate partners as well. Even vendors or the existing customers could be recruited as affiliate, if it makes sense and is not violating any legal restrictions or regulations.

Finding affiliate programs (publishers)
Affiliate programs directories are one way to find affiliate programs, another method is large affiliate networks that provide the platform for dozens or even hundreds of advertisers. The third option is to check the target website itself for a reference to their affiliate program. Websites, which offer an affiliate program often, have a link titled "affiliate program", "affiliates", "referral program" or "webmasters" somewhere on their website, usually in the footer or "About" section of the site.

Past and current issues
In the early days of affiliate marketing, there was very little control over what affiliates were doing, which was abused by a large number of affiliates. Affiliates used false advertisements, forced clicks to get tracking cookies set on users' computers, and adware, which displays ads on computers. Many affiliate programs were poorly managed.

Email spam
In its early days many internet users held negative opinions of affiliate marketing due to the tendency of affiliates to use spam to promote the programs in which they were enrolled.[19] As affiliate marketing has matured many affiliate merchants have refined their terms and conditions to prohibit affiliates from spamming.

Search engine spam / spamdexing
There used to be much debate around the affiliate practice of spamdexing and many affiliates have converted from sending email spam to creating large volumes of autogenerated webpages, many-a-times, using product data-feeds provided by merchants. Each devoted to different niche keywords as a way of "SEOing" (see search engine optimization) their sites with the search engines. This is sometimes referred to as spamming the search engine results. Spam is the biggest threat to organic search engines whose goal is to provide quality search results for keywords or phrases entered by their users. Google's algorithm update dubbed "BigDaddy" in February 2006 which was the final stage of Google's major update dubbed "Jagger" which started mid-summer 2005 specifically targeted this kind of spam with great success and enabled Google to remove a large amount of mostly computer generated duplicate content from its index.

Sites made up mostly of affiliate links are usually badly regarded as they do not offer quality content. In 2005 there were active changes made by Google whereby certain websites were labeled as "thin affiliates"[20] and were either removed from the index, or taken from the first 2 pages of the results and moved deeper within the index. In order to avoid this categorization, webmasters who are affiliate marketers must create real value within their websites that distinguishes their work from the work of spammers or banner farms with nothing but links leading to the merchant sites.

Affiliate links work best in the context of the information contained within the website. For instance, if a website is about "How to publish a website", within the content an affiliate link leading to a merchant's ISP site would be appropriate. If a website is about sports, then an affiliate link leading to a sporting goods site might work well within the content of the articles and information about sports. The idea is to publish quality information within the site, and to link "in context" to related merchant's sites.

Adware
Adware is still an issue today, but affiliate marketers have taken steps to fight it. AdWare is not the same as spyware although both often use the same methods and technologies. Merchants usually had no clue what adware was, what it did and how it was damaging their brand. Affiliate marketers became aware of the issue much more quickly, especially because they noticed that adware often overwrites their tracking cookie and results in a decline of commissions. Affiliates who do not use adware became enraged by adware, which they felt was stealing hard earned commission from them. Adware usually has no valuable purpose or provides any useful content to the often unaware user that has the adware running on his computer. Affiliates discussed the issues in various affiliate forums and started to get organized. It became obvious that the best way to cut off adware was by discouraging merchants from advertising via adware. Merchants that did not care or even supported adware were made public by affiliates, which damaged the merchants' reputations and also hurt the merchants' general affiliate marketing efforts. Many affiliates simply "canned" the merchant or switched to a competitor's affiliate program. Eventually, affiliate networks were also forced by merchants and affiliates to take a stand and ban certain adware publishers from their network.

Resulting from this were the Code of Conduct by Commission Junction/BeFree and Performics,[21] LinkShare's Anti-Predatory Advertising Addendum[22] and ShareASale's complete ban of software applications as medium for affiliates to promote advertiser offers.[23] Regardless of the progress made is adware still an issue. This is demonstrated by the class action lawsuit against ValueClick and its daughter company Commission Junction filed on April 20, 2007.[24]

Trademark bidding / PPC
Affiliates were among the earliest adopters of pay-per-click advertising when the first PPC search engines like Goto.com (which became later Overture.com, acquired by Yahoo! in 2003) emerged during the end of the nineteen-nineties. Later in 2000 Google launched their PPC service AdWords which is responsible for the wide spread use and acceptance of PPC as an advertising channel. More and more merchants engaged in PPC advertising, either directly or via a search marketing agency and realized that this space was already well occupied by their affiliates. Although this fact alone did create channel conflicts and hot debate between advertisers and affiliates, was the biggest issue the bidding on advertisers names, brands and trademarks by some affiliates. A larger number of advertisers started to adjust their affiliate program terms to prohibit their affiliates from bidding on those type of keywords. Some advertisers however did and still do embrace this behavior of their affiliates and allow them, even encourage them, to bid an any term they like, including the advertisers trademarks.

Lack of self regulation
Affiliate marketing is driven by entrepreneurs who are working at the forefront of internet marketing. Affiliates are the first to take advantage of new emerging trends and technologies where established advertisers do not dare to be active. Affiliates take risks and "trial and error" is probably the best way to describe how affiliate marketers are operating. This is also one of the reasons why most affiliates fail and give up before they "make it" and become "super affiliates" who generate $10,000 and more in commission (not sales) per month. This "frontier" life and the attitude that can be found in such type of communities is probably the main reason, why the affiliate marketing industry is not able to this day to self-regulate itself beyond individual contracts between advertiser and affiliate. The 10+ years history since the beginning of affiliate marketing is full of failed attempts[25] to create an industry organization or association of some kind that could be the initiator of regulations, standards and guidelines for the industry. Some of the failed examples are the Affiliate Union and iAfma.

The only places where the different people from the industry, affiliates/publishers, merchants/advertisers, networks and 3rd party vendors and service providers like outsources program managers come together at one location are either online forums and industry trade shows. The forums are free and even small affiliates can have a big voice at places like that, which is supported by the anonymity that is provided by those platforms. Trade shows are not anonymous, but a large number, in fact the greater number (quantitative) of affiliates is not able to attend those events for financial reasons. Only performing affiliates can afford the often hefty price tags for the event passes or get it sponsored by an advertisers they promote.

Because of the anonymity of forums, the only place where you are to get the majority (quantitative) of people in the industry together, is it almost impossible to create any form of legally binding rule or regulation that must be followed by everybody in the industry. Forums had only very few successes in their role as representant of the majority in the affiliate marketing industry. The last example[26] of such a success was the halt of the "CJ LMI" ("Commission Junction Link Management Initiative") in June/July 2006, when a single network tried to impose on their publishers/affiliates the use of Javascript tracking code as a replacement for common HTML links.

Lack of industry standards

Training and certification
There are no industry standards for training and certification in affiliate marketing.[27] There are training courses and seminars that result in certifications. Some of them are also widely accepted, which is mostly because of the reputation of the person or company who is issuing the certification. Affiliate marketing is also not a subject taught in universities. Only few college teachers work with internet marketers to introduce the concept of affiliate marketing to students majoring in marketing for example.[28]

Education happens mostly in "real life" by just doing it and learning the details as you go. There are a number of books available, but readers have to watch out, because some of the so-called "how-to" or "silver bullet" books teach how to manipulate holes in the Google algorithm, which can quickly become out of date[28] or that advertisers do not permit anymore some of the strategies endorsed in the books.[29]

OPM companies usually mix formal with informal training, and do a lot of their training through group collaboration and brainstorming. Companies also try to send each marketing employee to the industry conference of their choice.[30]

Other resources used include web forums, blogs, podcasts, video seminars and specialty websites that try to teach individuals to learn affiliate marketing, such as Affiliate Classroom, whose founder Anik Singal won the first place and $15,000 in the Young Alumni Category of the University of Maryland $50K Business Plan Competition in 2006.[31]

Affiliate Summit is the largest conference in the industry, and it is not run by any of the Affiliate networks, many of which run their own annual events.

Code of Conduct
A Code of Conduct was released by the affiliate networks Commission Junction/BeFree and Performics on December 10 2002. It was created to guide practices and adherence to ethical standards for online advertising.

"Threat" to traditional affiliate networks
Affiliate marketers usually avoid this topic as much as possible, but when it is being discussed, then are the debates explosive and heated to say the least.[32][33][34] The discussion is about CPA networks (CPA = Cost per action) and their impact on "classic" affiliate marketing (traditional affiliate networks). Traditional affiliate marketing is resources intensive and requires a lot of maintenance. Most of this includes the management, monitoring and support of affiliates. Affiliate marketing is supposed to be about long-term and mutual beneficial partnerships between advertisers and affiliates. CPA networks on the other hand eliminate the need for the advertiser to build and maintain relationships to affiliates, because that task is performed by the CPA network for the advertiser. The advertiser simply puts an offer out, which is in almost every case a CPA based offer, and the CPA networks take care of the rest by mobilizing their affiliates to promote that offer. CPS or revenue share offers are rarely be found at CPA networks, which is the main compensation model of classic affiliate marketing.

The name "affiliate marketing"
Voices in the industry are getting louder[35] that recommend a renaming of affiliate marketing. The problem with the word affiliate marketing is that it is often confused with network-marketing or multi-level marketing what it is absolutely not. "Performance marketing" is one of the alternative names that is used the most, but other recommendations were made as well,[36] but who is to decide about the change of a name of a whole industry. Something like that was attempted years ago for the search engine optimization industry, an attempt that obviously failed since it is still called SEO today.[37][38]

Web 2.0
The rise of blogging, interactive online communities and other new technologies, web sites and services based on the concepts that are now called Web 2.0 have impacted the affiliate marketing world as well. The new media allowed merchants to get closer to their affiliates and improved communication between each other.[39][40] New developments have made it harder for unscrupulous affiliates to make money. Emerging black sheep are detected and made known to the affiliate marketing community with much greater speed and efficiency.

References
1. ^ Guide to E-Commerce Technology 2007-08 Edition by Internet Retailer
2. ^ AffStat Report 2007. Based on survey responses from almost 200 affiliate managers from a cross-section of the industry
3. ^ March 3, 2007, Pay-per-action beta test introduction, Google's Inside AdWords Blog, retrieved June 25, 2007
4. ^ May 3, 1999, Internet Advertising Revenue more than double in 1998, IAB - Interactive Advertising Bureau, retrieved June 25, 2007
5. ^ September 25, 2006, IAB/PwC Release First Half 2006 Internet Ad Revenue Figures, IAB - Interactive Advertising Bureau, retrieved June 25, 2007
6. ^ IAB/PwC Ad Revenue Reports, industry stats and figures since 1996, IAB - Interactive Advertising Bureau, retrieved June 25, 2007
7. ^ CellarStone Inc. (2006), Sales Commission, QCommission.com, retrieved June 25, 2007
8. ^ Jason Olim, Matthew Olim and Peter Kent, "The Cdnow Story: Rags to Riches on the Internet", Top Floor Publishing, January 1999 ISBN 0-9661-0326-2
9. ^ a b Shawn Collins (November 10, 2000), History of Affiliate Marketing, ClickZ Network, retrieved October 15, 2007
10. ^ Frank Fiore and Shawn Collins, "Successful Affiliate Marketing for Merchants" , from pages 12,13 and 14. QUE Publishing, April 2001 ISBN 0-7897-2525-8
11. ^ Daniel Gray, "The Complete Guide to Associate and Affiliate Programs on the Net", McGraw-Hill Trade, November 30, 1999 ISBN 0-0713-5310-0
12. ^ October 2006, Affiliate Marketing Networks Buyer's Guide (2006), Page 6, e-Consultancy.com, retrieved June 25, 2007
13. ^ Anne Holland, publisher (January 11 2006), Affiliate Summit 2006 Wrap-Up Report -- Commissions to Reach $6.5 Billion in 2006, MarketingSherpa, retrieved on May 17 2007
14. ^ a b c February 2007, Internet Statistics Compendium 2007, Pages 149-150, e-Consultancy, retrieved June 25, 2007
15. ^ Tom Taulli (09.November,2005), Creating A Virtual Sales Force, Forbes.com Business,Retrieved May 14, 2007
16. ^ Danny Sullivan (June 27 2006), The Daily SearchCast News from June 27 2006, WebmasterRadio.fm, retrieved May 17 2007
17. ^ Wayne Porter (September 06 2006), NEW FIRST: LinkShare- Lands' End Versus The Affiliate on Typosquatting, ReveNews.com, retrieved on May 17 2007
18. ^ Jennifer D. Meacham (July/August 2006),Going Out Is In, Revenue Magazine, published by Montgomery Research Inc, Issue 12., Page 36
19. ^ Ryan Singel (October 02 2005), Shady Web of Affiliate Marketing, Wired.com, retrieved May 17 2007
20. ^ Spam Recognition Guide for Raters (Word document) supposedly leaked out from Google in 2005. The authenticity of the document was neither acknowledged nor challenged by Google.
21. ^ December 10, 2002, Online Marketing Service Providers Announce Web Publisher Code of Conduct (contains original CoC text), CJ.com, retrieved June 26, 2007
22. ^ December 12, 2002, LinkShare's Anti-Predatory Advertising Addendum, LinkShare.com, retrieved June 26, 2007
23. ^ ShareASale Affiliate Service Agreement, ShareASale.com, retrieved June 26, 2007
24. ^ April 20, 2007, AdWare Class Action Lawsuit against - ValueClick, Commission Junction and BeFree, Law Firms of Nassiri & Jung LLP and Hagens Berman, retrieved from CJClassAction.com on June 26, 2007
25. ^ Carsten Cumbrowski (November 04 2006),Affiliate Marketing Organization Initiative Vol.2 - We are back to Step 0, Reve News, retrieved May 17 2007
26. ^ May 2006, New Javascript Links? main discussion thread to CJ's LMI, ABestWeb, retrieved on May 17 2007
27. ^ Affiliate Manager Training Courses, Affiliate Bootcamps and Self Learning, Cumbrowski.com, retrieved June 26, 2007
28. ^ a b Alexandra Wharton (March/April 2007), Learning Outside the Box, Revenue Magazine, Issue: March/April 2007, Page 58, link to online version retrieved June 26, 2007
29. ^ Shawn Collins (June 9, 2007), Affiliate Millions - Book Report, AffiliateTip Blog, retrieved June 26, 2007
30. ^ March/April 2007, How Do Companies Train Affiliate Managers? (Web Extra), RevenueToday.com, retrieved June 26, 2007
31. ^ April 10, 2006, UM Announces $50K Business Plan Competition Winners, University of Maryland
32. ^ Jeff Molander (November 15, 2006), Are CJ and Linkshare Worth Their Salt?, CostPerNews.com, retrieved May 17 2007
33. ^ November 17 2006, Affiliate Networks vs CPA Networks- Official statements to CostPerNews.com post from 11/15/2006 and comments, CostPerNews.com, retrieved May 17 2007
34. ^ January 2006, There Must Be a Better Way - Thread at ABestWeb affiliate marketing forums, ABestWeb, retrieved May 17 2007
35. ^ Vinny Lingham (11.October, 2005), Profit Sharing - The Performance Marketing Model of the Future,Vinny Lingham's Blog, retrieved on 14.May, 2007
36. ^ Jim Kukral (18.November, 2006), Affiliate Marketing Lacks A Brand - Needs A New Name, Reve News, retrieved on 14.May, 2007
37. ^ Danny Sullivan (5.November, 2001), Congratulations! You're A Search Engine Marketer!, Search Engine Watch, retrieved on 14.May, 2007
38. ^ Danny Sullivan (3.December, 2001), Search Engine Marketing: You Like It, You Really Like It, Search Engine Watch, retrieved on 14.May, 2007
39. ^ Dion Hinchcliff (15.July, 2006),Web 2.0's Real Secret Sauce: Network Effects,SOA Web Services Journal, retrieved on 14.May, 2007
40. ^ Dion Hinchcliff (29.January, 2007), Social Media Goes Mainstream, SOA Web Services Journal, retrieved on 14.May, 2007

Internet presence management

This is the concept of utilizing measurable online tactics to cultivate multiple Internet-based channels to extend beyond a simple Web page or site, but also allow technology to reach into the organization to create operational efficiency.

A Web presence encompasses a user's or company's listing in search engines, message boards, Web sites, mini-sites, word of mouth marketing (WOMM), directories, email, MySpace, YouTube and other Web-based vehicles or destinations. The concept encompasses advanced internet marketing where an advertiser fully communicates its' brand in a synergistic fashion through all areas of online marketing, being it paid or unpaid. It also factors in technology such as sales force management system, enterprise resource planning, Web analytics, business analytics and other resources to streamline a business operationaly in order to do less with more.

Internet presence management is a great concept for organizations that are attempting to embrace the online medium as an effective way to connect with their target audiences as well as reduce customer acquisition and customer service costs.

Marketing 2.0

Marketing 2.0 is a natural outgrowth of Web 2.0 as it refers to the transformation of marketing resulting from the network effect of the Internet. Marketing 2.0 represents a dramatic shift in marketing to account for customers researching and buying goods and services independent of advertising and marketing campaigns and messages. With broadband as the new utility in the household and at work, customers now make decisions on their own terms, relying - in seconds - on friends, family, colleagues, and other trusted networks to form opinions.

Where traditional advertising and marketing is based on key messages and support points in an attempt to force a purchase decisions, Marketing 2.0 is based on authentic, real content used to fuel conversations and purchase decisions in a manner that allows the customer to draw their own conclusions. Traditional media may be used in Marketing 2.0 - online and offline - but media is used to talk about content, not brand or product positioning. "Creative concepts" are left behind in favor of "content concepts."

This shift has dramatic implications for how marketing gets created. For marketing agencies - the communications consultants to their clients - it means relying on a different process, skills, and set of deliverables in order to brand, engage, and sell to customers. The process puts content front and center as the means to engage the market. Required skills now include editorial, documentary, gaming, and other content-related capabilities rather than copywriting, art direction, and creative direction. Deliverables now include content and the ability to promote content rather than brand and product creative concepts. Promoting the content may also include participating in social networks in a fully disclosed, credible fashion.

For marketing organizations, it means aliging with communications agencies that put content at the center of what they do or driving similar process, skill set, and deliverable changes with an in-house service.

With Marketing 2.0, messages don't matter. It's about fueling purchase decisions rather than forcing them. And the future belongs to crowds.

Examples of Marketing 2.0
Marketing 2.0 is about turning transactions into interactions and interruptions into integrations. Here are some examples of what that translates into:

Marketing 1.0	Marketing 2.0
commercials	product placements
press releases	blog posts
direct mail	email
push content	pull content (RSS)
collateral	videos
seminars	webinars/podcasts
business generated content	user generated content
building websites	building communities

New Media Marketing

New Media Marketing is a relatively new concept utilized by businesses in developing an online community, which allows satisfied customers to congregate and extol the virtues of a particular brand. In most cases, the online community includes mechanisms such as blogs, podcasts, message boards, and product reviews, all of which contribute to a transparent forum to post praises, criticisms, questions, and suggestions.

One of the primary arguments to promote New Media Marketing is the premise that traditional advertising is losing its influence on consumers. Backed by statistical evidence demonstrating a growing trend of consumers making purchasing decisions off Internet research and referrals. These advocates strongly adhere to the notion that consumers are more inclined to believe feedback from like-minded peers than corporate marketing verbiage dispersed through traditional television, radio, direct mail, or newspaper advertising.

Although businesses would be exposing certain weaknesses to the marketplace by allowing individuals, or even competitors, to post critical comments, responding with an honest and transparent answer designed around solving the issue at hand may mitigate potential risks.

New Media Marketing is most effectively marketed by Internet-driven technology such as blogs, RSS, Web video productions, and podcasts.

Search engine marketing

Search Engine Marketing, or SEM, is a form of Internet Marketing that seeks to promote websites by increasing their visibility in the Search Engine result pages (SERPs). According to the Search Engine Marketing Professionals Organization, SEM methods include: Search Engine Optimization (or SEO), paid placement, and paid inclusion.[1] Other sources, including the New York Times, define SEM as the practice of buying paid search listings with the goal of obtaining better free search listings.[2][3]

Market structure
In 2006, North American advertisers spent US$9.4 billion on search engine marketing, a 62% increase over the prior year and a 750% increase over the 2002 year. The largest SEM vendors are Google AdWords, Yahoo! Search Marketing and Microsoft adCenter.[1] As of 2006, SEM was growing much faster than traditional advertising. [2]

History
As the number of sites on the Web increased in the mid-to-late 90s, search engines started appearing to help people find information quickly. Search engines developed business models to finance their services, such as pay per click programs offered by Open Text [4] in 1996 and then Goto.com [5] in 1998. Goto.com later changed its name [6] to Overture in 2001, and was purchased by Yahoo! in 2003, and now offers paid search opportunities for advertisers through Yahoo! Search Marketing. Google also began to offer advertisements on search results pages in 2000 through the Google AdWords program. By 2007 pay-per-click programs proved to be primary money-makers [7] for search engines.

Search Engine Optimization consultants expanded their offerings to help businesses learn about and use the advertising opportunites offered by search engines, and new agencies focusing primarily upon marketing and advertising through search engines emerged. The term "Search Engine Marketing" was proposed by Danny Sullivan in 2001 [8] to cover the spectrum of activities involved in performing SEO, managing paid listings at the search engines, submitting sites to directories, and developing online marketing strategies for businesses, organizations, and individuals. In 2007 Search Engine Marketing is stronger than ever [9] with SEM Budgets up 750% as shown with stats dating back to 2002 vs 2006.

Ethical questions
Paid search advertising hasn't been without controversy, and issues around how many search engines present advertising on their pages of search result sets have been the target of a series of studies and reports [10] [11] [12] by Consumer Reports WebWatch, from Consumers Union. The FTC also issued a letter [13] in 2002 about the importance of disclosure of paid advertising on search engines, in response to a complaint from Commercial Alert, a consumer advocacy group with ties to Ralph Nader.

See also

Organizations
* SEMPO, the Search Engine Marketing Professional Organization, is a non-profit professional association for search engine marketers.

Search engines with SEM programs
* Google - global
* Yahoo! - global
* Microsoft Live - global
* Ask.com - global
* Baidu - China
* Yandex - Russia
* Rambler - Russia

References
1. ^ a b The State of Search Engine Marketing 2006. Search Engine Land (February 8, 2007). Retrieved on 2007-06-07.
2. ^ a b More Agencies Investing in Marketing With a Click. New York Times (March 14, 2006). Retrieved on 2007-06-07.
3. ^ SEO Isn’t SEM. dmnews.com (December 5, 2005). Retrieved on 2007-06-07.
4. ^ Engine sells results, draws fire. news.com.com (June 21, 1996). Retrieved on 2007-06-09.
5. ^ GoTo Sells Positions. searchenginewatch.com (March 3, 1998). Retrieved on 2007-06-09.
6. ^ GoTo gambles with new name. news.com.com (September 10, 2001). Retrieved on 2007-06-09.
7. ^ Jansen, B. J. (May 2007). The Comparative Effectiveness of Sponsored and Nonsponsored Links for Web E-commerce Queries. ACM Transactions on the Web,. Retrieved on 2007-06-09.
8. ^ Congratulations! You're A Search Engine Marketer!. searchenginewatch.com (November 5, 2001). Retrieved on 2007-06-09.
9. ^ Is Search Engine Marketing Dying?. darin.cc (June 20, 2007). Retrieved on 2007-06-20.
10. ^ False Oracles: Consumer Reaction to Learning the Truth About How Search Engines Work (Abstract). consumerwebwatch.org (June 30, 2003). Retrieved on 2007-06-09.
11. ^ Searching for Disclosure: How Search Engines Alert Consumers to the Presence of Advertising in Search Results. consumerwebwatch.org (November 8, 2004). Retrieved on 2007-06-09.
12. ^ Still in Search of Disclosure: Re-evaluating How Search Engines Explain the Presence of Advertising in Search Results. consumerwebwatch.org (June 9, 2005). Retrieved on 2007-06-09.
13. ^ Re: Complaint Requesting Investigation of Various Internet Search Engine Companies for Paid Placement and Paid Inclusion Programs. ftc.gov (June 22, 2002). Retrieved on 2007-06-09.

Web 2.0

Web 2.0 refers to a perceived second generation of web-based communities and hosted services — such as social-networking sites, wikis and folksonomies — which aim to facilitate collaboration and sharing between users. The term became popular following the first O'Reilly Media Web 2.0 conference in 2004.[1][2] Although the term suggests a new version of the World Wide Web, it does not refer to an update to any technical specifications, but to changes in the ways software developers and end-users use the internet. According to Tim O'Reilly, "Web 2.0 is the business revolution in the computer industry caused by the move to the internet as platform, and an attempt to understand the rules for success on that new platform."[3]

Technology expert Tim Berners-Lee has questioned whether one can use the term in a meaningful way, since many of the technology components of "Web 2.0" have existed since the early days of the Web.[4][5]

Defining Web 2.0
In alluding to the version-numbers that commonly designate software upgrades, the phrase "Web 2.0" hints at an improved form of the World Wide Web. Technologies such as weblogs (blogs), social bookmarking, wikis, podcasts, RSS feeds (and other forms of many-to-many publishing), social software, web application programming interfaces (APIs), and online web services such as eBay and Gmail provide a significant enhancement over read-only websites. Stephen Fry (actor, author, and broadcaster) describes Web 2.0 as "an idea in people’s heads rather than a reality. It’s actually an idea that the reciprocity between the user and the provider is what’s emphasized. In other words, genuine interactivity if you like, simply because people can upload as well as download".[6] The phrase "Web 2.0" can also refer to the transition of websites from isolated information silos to interlinked computing platforms that act like software to the user. Web 2.0 also includes a social element where users generate and distribute content, often with freedom to share and re-use. One perceived result is a rise in the economic value of the Web as users can do more online.

Earlier users of the phrase "Web 2.0" employed it as a synonym for "Semantic Web". The combination of social-networking systems such as FOAF and XFN with the development of tag-based folksonomies, delivered through blogs and wikis, sets up a basis for a semantic web environment.

O'Reilly regards Web 2.0 as business embracing the web as a platform and utilising its strengths (global audiences, for example). O'Reilly considers that Eric Schmidt's abridged slogan, don't fight the Internet, encompasses the essence of Web 2.0 — building applications and services around the unique features of the Internet, as opposed to building applications and expecting the Internet to suit as a platform (effectively "fighting the Internet").

In the opening talk of the first Web 2.0 conference, O'Reilly and John Battelle summarized what they saw as key principles of Web 2.0 applications:

* The web as a platform
* Data as the driving force
* Network effects created by an architecture of participation
* Innovation in assembly of systems and sites composed by pulling together features from distributed, independent developers (a kind of "open source" development)
* Lightweight business models enabled by content and service syndication
* The end of the software-adoption cycle (the so-called perpetual beta)
* Software above the level of a single device, leveraging the power of the "Long Tail"
* Ease of picking-up by early adopters

O'Reilly provided examples of companies or products that embody these principles in his description of his four levels in the hierarchy of Web 2.0-ness:

* Level 3 applications, the most "Web 2.0"-oriented, which could only exist on the Internet, deriving their power from the human connections and network effects that Web 2.0 makes possible, and growing in effectiveness the more people use them. O'Reilly gave as examples eBay, craigslist, Wikipedia, del.icio.us, Skype, dodgeball and Adsense.
* Level 2 applications, which can operate offline but which gain advantages from going online. O'Reilly cited Flickr, which benefits from its shared photo-database and from its community-generated tag database.
* Level 1 applications, also available offline but which gain features online. O'Reilly pointed to Writely (now part of Google Docs & Spreadsheets) and iTunes (because of its music-store portion).
* Level 0 applications, which would work as well offline. O'Reilly gave the examples of MapQuest, Yahoo! Local and Google Maps. Mapping-applications using contributions from users to advantage can rank as "level 2". Non-web applications like email, instant-messaging clients and the telephone.[8]

Characteristics of Web 2.0
While interested parties continue to debate the definition of a Web 2.0 application, a Web 2.0 website may exhibit some basic common characteristics. These might include:

* "Network as platform" — delivering (and allowing users to use) applications entirely through a browser.[9] See also Web operating system.
* Users owning the data on a site and exercising control over that data.[10][9]
* An architecture of participation that encourages users to add value to the application as they use it.[9][1] This stands in sharp contrast to hierarchical access-control in applications, in which systems categorize users into roles with varying degrees of functionality.
* A rich, interactive, user-friendly interface based on Ajax[9][1], Flex or similar frameworks.
* Some social-networking aspects.[10][9]
* The concept of Web-as-participation-platform captures many of these characteristics. Bart Decrem, a founder and former CEO of Flock, calls Web 2.0 the "participatory Web"[11] and regards the Web-as-information-source as Web 1.0.

Technology overview
The complex and evolving technology infrastructure of Web 2.0 includes server-software, content-syndication, messaging-protocols, standards-based browsers with plugins and extensions, and various client-applications. These differing, yet complementary approaches provide Web 2.0 with information-storage, creation, and dissemination capabilities that go beyond what the public formerly expected in Web 1.0.

Web 2.0 websites typically include some of these features:

* Rich Internet application techniques, often Ajax-based
* Semantically valid XHTML and HTML markup
* Microformats enriching pages with additional semantics
* Folksonomies (in the form of tags or tagclouds, for example)
* Cascading Style Sheets to separate presentation from content
* REST and/or XML- and/or JSON-based APIs
* Syndication, aggregation and notification of data in RSS or Atom feeds
* Mashups, merging content from different sources, client- and server-side
* Weblog publishing tools
* Wiki or forum software, etc., to support user generated content
* OpenID for transferrable user identity
* Use of Open source software, such as the LAMP stack Ph of Oxford University Almat

Innovations associated with Web 2.0

Web-based applications and desktops
The richer user-experience afforded by Ajax has prompted the development of websites that mimic personal computer applications, such as word processing, the spreadsheet, and slide-show presentation. WYSIWYG wiki sites replicate many features of PC authoring applications. Still other sites perform collaboration and project management functions. In 2006 Google, Inc. acquired one of the best-known sites of this broad class, Writely.

Several browser-based "operating systems" have also appeared. They essentially function as application platforms, not as operating systems per se. These services mimic the user experience of desktop operating-systems, offering features and applications similar to a PC environment. They have as their distinguishing characteristic the ability to run within any modern browser.

Numerous web-based application services appeared during the dot-com bubble of 1997–2001 and then vanished, having failed to gain a critical mass of customers. In 2005, WebEx acquired one of the better-known of these, Intranets.com, for slightly more than the total it had raised in venture capital after six years of trading.

Rich Internet applications
Recently, many rich-Internet application techniques such as Ajax, Adobe Flash, Flex, Nexaweb, OpenLaszlo and Silverlight have evolved that can improve the user-experience in browser-based applications. These technologies allow a web-page to request an update for some part of its content, and to alter that part in the browser, without needing to refresh the whole page at the same time.

Server-side software
Functionally, Web 2.0 applications build on the existing Web server architecture, but rely much more heavily on back-end software. Syndication differs only nominally from the methods of publishing using dynamic content management, but web services typically require much more robust database and workflow support, and become very similar to the traditional intranet functionality of an application server. Vendor approaches to date fall either under a universal server approach (which bundles most of the necessary functionality in a single server platform) or under a web-server plugin approach (which uses standard publishing tools enhanced with API interfaces and other tools).

Client-side software
The extra functionality provided by Web 2.0 depends on the ability of users to work with the data stored on servers. This can come about through forms in an HTML page, through a scripting language such as Javascript, or through Flash, Silverlight or Java. These methods all make use of the client computer to reduce server workloads and to increase the responsiveness of the application.

XML and RSS
Advocates of Web 2.0 may regard syndication of site content as a Web 2.0 feature, involving as it does standardized protocols, which permit end-users to make use of a site's data in another context (such as another website, a browser plugin, or a separate desktop application). Protocols which permit syndication include RSS (Really Simple Syndication — also known as "web syndication"), RDF (as in RSS 1.1), and Atom, all of them XML-based formats. Observers have started to refer to these technologies as "Web feed" as the usability of Web 2.0 evolves and the more user-friendly Feeds icon supplants the RSS icon.

Specialized protocols
Specialized protocols such as FOAF and XFN (both for social networking) extend the functionality of sites or permit end-users to interact without centralized websites.

Web APIs
Machine-based interaction is a common feature of Web 2.0 sites, beyond simple Web Feeds. There are two main approaches to Web APIs, which allow web-based access to data and functions: REST and SOAP.

* REST (Representational State Transfer) Web APIs use HTTP alone to interact, with XML or JSON payloads;
* SOAP involves POSTing more elaborate XML messages and requests to a server that may contain quite complex, but pre-defined, instructions for the server to follow.

Often servers use proprietary APIs, but standard APIs (for example, for posting to a blog or notifying a blog update) have also come into wide use. Most communications through APIs involve XML (eXtensible Markup Language) or JSON payloads.

See also Web Services Description Language (WSDL) (the standard way of publishing a SOAP API) and this list of Web Service specifications.

Web 2.0 and language-learning technologies
In second-language learning, some[citation needed] see Web 2.0 technologies as new and emerging technologies. Technologies such as on-demand video, file-sharing, blogs, wikis, and podcasting have become very popular with language-educators and students.[citation needed] Users of these technologies have emphasised their collaborative and community-building aspects, and suggested they form a natural ally for a constructivist learning methodology.[citation needed] A number of events sponsored by the International Association of Teachers of English as a Foreign Language (IATEFL) Learning Technologies SIG in the UK, Japan and India have focused on the use of Web 2.0 technologies to enhance language-learning environments.[citation needed]

The Economy of Web 2.0
Before being purchased by Google, YouTube declared that its business model was advertisement-based, making 15 million dollars per month. Advertisements were launched on the site beginning in March 2006. In April, YouTube started using Google AdSense[citation needed]. YouTube subsequently stopped using AdSense but has resumed in local regions.

The analysis of the economic implications of Web 2.0 applications such as wikis, blogs, social networking, open source, open content, file sharing, peer-production, etc. has also gained scientific attention. The goal of this realm of research is to show which implications Web 2.0 has for the economy and on which principles the economy of Web 2.0 is based.

Don Tapscott and Anthony D. Williams argue in their book Wikinomics that the economy of Web 2.0 ("the new web") is based on mass collaboration that makes use of the Internet. Tapscott and Williams say that it is important for new media companies to find ways of how to make profit with the help of Web 2.0. The new Internet economy that they term Wikinomics would be based on the principles of openness, peering, sharing, and acting globally. They identify seven Web 2.0 business models (peer pioneers, ideagoras, prosumers, new Alexandrians, platforms for participation, global plantfloor, wiki workplace).

Companies could make use of these principles and models in order to gain profit with the help of Web 2.0 applications: “Companies can design and assemble products with their customers, and in some cases customers can do the majority of the value creation” [12]. “In each instance the traditionally passive buyers of editorial and advertising take active, participatory roles in value creation“ [13]. The suggest business strategies would be “models where masses of consumers, employees, suppliers, business partners, and even competitors cocreate value in the absence of direct managerial control“ [14].

Tapscott and Williams argue that the outcome will be an economic democracy.
There are other views in the scientific debate that agree with Tapscott and Williams that value creation is increasingly based on harnessing open source/content, networking, sharing, and peering, but that in opposition to Tapscott and Williams argue that the result is not an economic democracy, but a subtle form and deepening of exploitation, in which labour costs are reduced by Internet-based global outsourcing. The economic implications of Web 2.0 would be that on the one hand new business models based on global outsourcing emerge, whereas on the other hand non-commercial online platforms could undermine profit-making and anticipate a co-operative economy. E.g. Tiziana Terranova speaks of "free labor" (performed without payment) in the case where prosumers produce surplus value in the circulation sphere of the cultural industries [15]

In the context of such approaches, Dallas Smythe's notion of the audience commodity can be discussed. Smythe suggests that in the case of media advertisement models, the audience is sold as a commodity. “Because audience power is produced, sold, purchased and consumed, it commands a price and is a commodity. (...) Your audience members contribute your unpaid work time and in exchange you receive the program material and the explicit advertisements“ [16] (Smythe 1981/2006, 233, 238). Audiences would work, although unpaid, the consumption of the mass media would be work because it would result in a commodity, hence it would produce that commodity.

Criticism
Given the lack of set standards as to what "Web 2.0" actually means, implies, or requires, the term can mean radically different things to different people.

Many of the ideas of Web 2.0 had already featured in implementations on networked systems well before the term "Web 2.0" emerged. Amazon.com, for instance, has allowed users to write reviews and consumer guides since its launch in 1995, in a form of self-publishing. Amazon also opened its API to outside developers in 2002.[17] Previous developments also came from research in computer-supported collaborative learning and computer-supported cooperative work and from established products like Lotus Notes and Lotus Domino.

Conversely, when someone proclaims a website "Web 2.0" for the use of some trivial feature (such as blogs or gradient-boxes) observers may generally consider it more an attempt at promotion than an actual endorsement of the ideas behind Web 2.0. "Web 2.0" in such circumstances has sometimes sunk simply to the status of a marketing buzzword, like "synergy", which can mean whatever a salesperson wants it to mean, with little connection to most of the worthy but (currently) unrelated ideas originally brought together under the "Web 2.0" banner.

The argument also exists that "Web 2.0" does not represent a new version of World Wide Web at all, but merely continues to use "Web 1.0" technologies and concepts. Note that techniques such as Ajax do not replace underlying protocols like HTTP, but add an additional layer of abstraction on top of them.

Other criticism has included the term "a second bubble," (referring to the Dot-com bubble of circa 1995–2001), suggesting that too many Web 2.0 companies attempt to develop the same product with a lack of business models. The Economist has written of "Bubble 2.0."[18]

Venture capitalist Josh Kopelman noted that Web 2.0 excited only 53,651 people (the number of subscribers to TechCrunch, a Weblog covering Web 2.0 matters), too few users to make them an economically-viable target for consumer applications.[19]

Web 2.0 usually pursues both a content project and a user community. In this search for the "wisdom of crowds", these two goals are sometimes in tension and one's individual experience might suggest that Web 2.0 is a new kind of library while others view it as a some new kind of saloon. One title in this vein is "UDL and Web 2.0: Confronting the Drunk Librarian".[20] See also The Cathedral and the Bazaar.

Trademark
In November 2004, CMP Media applied to the USPTO for a service mark on the use of the term "WEB 2.0" for live events.[21] On the basis of this application, CMP Media sent a cease-and-desist demand to the Irish non-profit organization IT@Cork on May 24, 2006,[22] but retracted it two days later.[23] The "WEB 2.0" service mark registration passed final PTO Examining Attorney review on May 10, 2006, but as of June 12, 2006 the PTO had not published the mark for opposition. The European Union application (application number 004972212, which would confer unambiguous status in Ireland) remains currently pending after its filing on March 23, 2006.

References
1. ^ a b c Paul Graham (November 2005). Web 2.0. Retrieved on 2006-08-02. “"I first heard the phrase 'Web 2.0' in the name of the Web 2.0 conference in 2004."”
2. ^ Tim O'Reilly (2005-09-30). What Is Web 2.0. O'Reilly Network. Retrieved on 2006-08-06.
3. ^ Tim O'Reilly (2006-12-10). Web 2.0 Compact Definition: Trying Again. Retrieved on 2007-01-20.
4. ^ developerWorks Interviews: Tim Berners-Lee (7-28-2006). Retrieved on 2007-02-07.
5. ^ Nate Anderson (2006-09-01). Tim Berners-Lee on Web 2.0: "nobody even knows what it means". arstechnica.com. Retrieved on 2006-09-05.
6. ^ Stephen Fry: Web 2.0 (Video interview (Adobe Flash)). Retrieved on 2007-07-26.
7. ^ Markus Angermeier : Web 2.0 Mindmap Translated versions
8. ^ Tim O'Reilly (2006-07-17). Levels of the Game: The Hierarchy of Web 2.0 Applications. O'Reilly radar. Retrieved on 2006-08-08.
9. ^ a b c d e Tim O'Reilly (2005-09-30). What Is Web 2.0. O'Reilly Network. Retrieved on 2006-08-06.
10. ^ a b Dion Hinchcliffe (2006-04-02). The State of Web 2.0. Web Services Journal. Retrieved on 2006-08-06.
11. ^ Bart Decrem (2006-06-13). Introducing Flock Beta 1. Flock official blog. Retrieved on 2007-01-13.
12. ^ Tapscott, Don and Anthony D. Williams. 2007. Wikinomics: How Mass Collaboration Changes Everything. New York: Penguin. pp. 289sq.
13. ^ Tapscott, Don and Anthony D. Williams. 2007. Wikinomics: How Mass Collaboration Changes Everything. New York: Penguin. p. 14.
14. ^ Tapscott, Don and Anthony D. Williams. 2007. Wikinomics: How Mass Collaboration Changes Everything. New York: Penguin. p. 55.
15. ^ Terranova, Tiziana. 2000. Free Labor: Producing Culture for the Digital Economy. Social Text 18(2): 33-57.
16. ^ Smythe, Dallas W. 1981/2006. On the Audience Commodity and its Work. In Media and Cultural Studies KeyWorks, edited by Meenakshi Gigi Durham and Douglas M. Kellner. Malden, MA: Blackwell. pp. 233, 238.
17. ^ Tim O'Reilly (2002-06-18). Amazon Web Services API. O'Reilly Network. Retrieved on 2006-05-27.
18. ^ Bubble 2.0. The Economist (2005-12-22). Retrieved on 2006-12-20.
19. ^ Josh Kopelman (2006-05-11). 53,651. Redeye VC. Retrieved on [[2006-12-21>]].
20. ^ UDL and Web 2.0: Confronting the Drunk Librarian
21. ^ USPTO serial number 78322306
22. ^ O'Reilly and CMP Exercise Trademark on 'Web 2.0'. Slashdot (2006-05-26). Retrieved on 2006-05-27.
23. ^ Nathan Torkington (2006-05-26). O'Reilly's coverage of Web 2.0 as a service mark. O'Reilly Radar. Retrieved on 2006-06-01.

Criticism of marketing

Some aspects of marketing, especially promotion, are the subject of criticism. It is especially problematic in classical economic theory, which is based on the assumption that supply and demand are independent. However, product promotion is an attempt coming from the supply side to influence demand. In this way producer market power is attained as measured by profits that would not be realized under a free market. Then the argument follows that non-free markets are imperfect and lead to production and consumption of suboptimal amounts of the product.

Critics acknowledge that marketing has legitimate uses in connecting goods and services to the consumers who want them. Critics also point out that marketing techniques have been used to achieve morally dubious ends by businesses, governments and criminals. Critics see a systemic social evil inherent in marketing (see No Logo, Bill Hicks, Marxism or Commercial Alert). Marketing is accused of creating ruthless exploitation of both consumers and workers by treating people as commodities whose purpose is to consume. (see Fashion victim)

Most marketers believe that marketing techniques themselves are amoral. While it is ethically neutral, it can be used for negative purposes, such as selling unhealthy food to obese people or selling SUVs in a time of global warming, but it can also have a positive influence on consumer welfare

The Observer’s survey among 1,206 UK adult consumers in 2001 highlighted some of the stark changes our society has gone through in the last two decades. This raises a question on the effectiveness of the CIM’s definition of marketing (anticipating, identifying and satisfying customer needs profitably), mainly in consumer marketing. There are similar concerns in industrial markets, also known as business-to-business or B2B. Industrial market segmentation attempts to provide some answers.

Core marketing elements such as segmentation, targeting and positioning are still relevant in the modern (or post-modern) world. However, they are complex topics that need a high level of effort, intelligent thinking as well as resources to be implemented successfully. A definitive statement cannot be made whether the conventional marketing concept is applicable in today’s environment. Its relevance is very much situational and depends on many factors such as the product, the segment, time, location, political and economic conditions and the inner workings of a company.

However, some scholars such as Stephen Brown challenge the marketing concept in an extreme language. Their statements, sometimes unfair, are relevant, which is why Post-Modern Marketing 2 was chosen as a key reference point for this chapter

On the one hand Brown makes positive statements about marketing, e.g. “marketing is endowed with considerable personal charm and has enjoyed more than its fair share of conquests” (Brown, 1998:16); and “indeed, the increasing academic attention that is being devoted to marketing and consumption-related phenomena by non-business disciplines such as sociology, anthropology and history; far from being the second-hand rose of the scholarship, marketing is now something of a fashion leader” (p 17)

On the other hand, he condemns marketing by saying “marketing has to decide whether to expose its intellectual nakedness or press itself against the searing heat of postmodernism” (p 17); and using quotes such as “mid-life crisis” (p 23); “in decline; failing; anachronistic; being abandoned; no longer appropriate; in an unprecedented state of crisis; delivered nothing of value; failure; confusion; misunderstanding; occasional inexplicable hitting of the jackpot” (p. 21).

This apparent love-hate relationship is proof in itself that even a skeptics find it difficult to deny the contribution that marketing has made and can make to customer satisfaction and economic value. It has contributed to both customers’ and suppliers’ quality of life by selecting profitable customer satisfaction as its sole objective. The marketing concept, together with other business disciplines, helped the UK to make the transition from a 19th-century manufacturing economy to a modern model of success in the service industry, creating an economic growth period never seen before in the United Kingdom.

Marketing has helped create value through customized products, no-questions-asked refund policies, comfortable cars, environmental attention, shopkeepers’ smile, and guaranteed delivery dates. Even some government departments address the public not as ‘the Queen’s subjects’ or ‘the applicants’ any more but as ‘customers.' Of course all of the above is done for economic or political gain, for better or worse. Despite all this achievement, to dismiss marketing as a failure is unfair.

Marketing also helps companies avoid unnecessary R&D, operational and sales costs by helping to develop products because customers want them, not for the sake of innovation. Another success is the now commonly implemented value-pricing principle, whereby a product or service is sold for the price the customer is willing to pay, not on a cost-plus basis. This way, both suppliers and customers get a fair deal.

In the context of segmentation, Brown suggests that “the traditional, linear, step-by-step marketing model of analysis, planning, implementation and control no longer seems applicable, appropriate or even pertinent to what is actually happening on the ground” (p. 23-24). If Mr. Brown had studied “the ground” before making his statement, he would have realised that companies are successful the world over precisely because they implement this model.

They segment their markets, relate their products and services to them, define their value proposition and serve their customers accordingly. Examples are General Electric, HSBC, PriceWaterhouseCoopers, Smiths Aerospace, BAE Systems, BOC Edwards, Weir Group and the BT Group to name but a few. A brief visit to their websites can make this point clear.

Stephen Brown also has a constructive suggestion: “I reckon we need more passion in marketing, not less; it is time we banished banishing passion from works of marketing scholarship” (p. 256). This refers mainly to promotion, which is only one element within the marketing concept. The truth is that marketing today leads the way in segmentation, innovation, pricing, product management, distribution, and last but not least, promotion.

After all the contribution as well as further potential, to deny its successes and try to reduce it to only promotion is a great injustice to the marketing profession as well as to academic insight. Contrary to Brown’s suggestion in his final paragraph (p. 257), we need objectivity, rigour, quantification, models, relationships, paradigm shifts and (some application of) science.

Customer focus

Many companies today have a customer focus (or customer orientation). This implies that the company focuses its activities and products on consumer demands. Generally there are three ways of doing this: the customer-driven approach, the sense of identifying market changes and the product innovation approach.

In the consumer-driven approach, consumer wants are the drivers of all strategic marketing decisions. No strategy is pursued until it passes the test of consumer research. Every aspect of a market offering, including the nature of the product itself, is driven by the needs of potential consumers. The starting point is always the consumer. The rationale for this approach is that there is no point spending R&D funds developing products that people will not buy. History attests to many products that were commercial failures in spite of being technological breakthroughs.[3]

A formal approach to this customer-focused marketing is known as SIVA[4] (Solution, Information, Value, Access). This system is basically the four Ps renamed and reworded to provide a customer focus.

The SIVA Model provides a demand/customer centric version alternative to the well-known 4Ps supply side model (product, price, place, promotion) of marketing management.

Product -> Solution
Promotion -> Information
Price -> Value
Place ->Access

The four elements of the SIVA model are:

1. Solution: How appropriate is the solution to the customers problem/need?
2. Information: Does the customer know about the solution, and if so how, who from, do they know enough to let them make a buying decision?
3. Value: Does the customer know the value of the transaction, what it will cost, what are the benefits, what might they have to sacrifice, what will be their reward?
4. Access: Where can the customer find the solution? How easily/locally/remotely can they buy it and take delivery?

This model was proposed by Chekitan Dev and Don Schultz in the Marketing Management Journal of the American Marketing Association, and presented by them in Market Leader - the journal of the Marketing Society in the UK.

The model focuses heavily on the customer and how they view the transaction.

Distribution

Channels

* Manufacturer to consumer (most direct)
* Manufacturer to wholesaler to retailer to consumer (traditional)
* Manufacturer to agent to wholesaler to retailer to consumer

Manufacturers

Reasons for direct selling methods

* Manufacturer wants to demonstrate goods.
* Wholesalers, retailers and agents not actively selling.
* Manufacturer unable to convince wholesalers or retailers to stock product.
* High profit margin added to goods by wholesalers and retailers.
* Middlemen unable to transport.

Reasons for indirect selling methods

* Manufacturer does not have the financial resources to distribute goods.
* Distribution channels already established.
* Manufacturer has no knowledge of efficient distribution.
* Manufacturer wishes to use capital for further production.
* Too many consumers in a large area; difficult to reach.
* Manufacturer does not have a wide assortment of goods to enable efficient marketing.

Wholesalers

Reasons for using wholesalers

* Bear risk of selling goods to retailer or consumer
* Storage space
* Decrease transport costs
* Grant credit to retailers
* Able to sell for the manufacturers
* Give advice to manufacturers
* Break down products into smaller quantities

Reasons for bypassing wholesalers

* Limited storage facilities
* Retailers' preferences
* Wholesaler cannot promote products successfully
* Development of wholesalers' own brands
* Desire for closer market contact
* Position of power
* Cost of wholesalers' services
* Price stabilisation
* Need for rapid distribution

Ways of bypassing wholesalers

* Sales offices or branches
* Mail orders
* Direct sales to retailers
* Travelling agents
* Direct Orders

Agents

* Commission agents work for anyone who needs their services. They do not acquire ownership of goods but receive del credere commission.
* Selling agents act on an extended contractual basis, selling all of the products of the manufacturer. They have full authority regarding price and terms of sale.
* Buying agents buy goods on behalf of producers and retailers. They have an expert knowledge of the purchasing function.
* Brokers specialize in the sale of one specific product. They receive a brokerage.
* Factory representatives represent more than one manufacturer. They operate within a specific area and sell related lines of goods but have limited authority regarding price and sales terms.

Marketing communications

Marketing communications breaks down the strategies involved with marketing messages into categories based on the goals of each message. There are distinct stages in converting strangers to customers that govern the communication medium that should be used.

Advertising

* Paid form of public presentation and expressive promotion of ideas
* Aimed at masses
* Manufacturer may determine what goes into advertisement
* Pervasive and impersonal medium

Functions and advantages of successful advertising

* Task of the salesman made easier
* Forces manufacturer to live up to conveyed image
* Protects and warns customers against false claims and inferior products
* Enables manufacturer to mass-produce product
* Continuous reminder
* Uninterrupted production a possibility
* Increases goodwill
* Raises standards of living (or perceptions thereof)
* Prices decrease with increased popularity
* Educates manufacturer and wholesaler about competitors' offerings as well as shortcomings in their own.

Objectives

* Maintain demand for well-known goods
* Introduce new and unknown goods
* Increase demand for well-known goods

Requirements of a good advertisement

* Attract attention
* Stimulate interest
* Create a desire
* Bring about action

Seven steps in an advertising campaign

* Market research
* Setting out aims
* Budgeting
* Choice of media
* Design and wording
* Coordination
* Test results

Personal sales

Oral presentation given by a salesman who approaches individuals or a group of potential customers:

* Live, interactive relationship
* Personal interest
* Attention and response

Sales promotion

Short-term incentives to encourage buying of products:

* Instant appeal
* Anxiety to sell

Publicity

* Stimulation of demand through press release giving a favourable report to a product
* Higher degree of credibility
* Effectively news
* Boosts enterprise's image

Packaging and trademarks

Requirements of good packaging

* Appropriately designed for target market
* Eye-catching
* Suitable to product
* Compliant with retailers' requirements
* Promotes image of enterprise
* Distinguishable from competitors' products
* Strong, convenient, well-designed
* Point of difference in service and supply of product.

Forms of packaging

* Specialty packaging — emphasizes the elegant character of the product
* Packaging for double-use
* Combination packaging two or more products packaged in the same container
* Kaleidoscopic packaging — packaging changes continually to reflect a series or particular theme
* Packaging for immediate consumption — to be thrown away after use
* Packaging for resale — packed, into appropriate quantities, for the retailer or wholesaler

Significance of a trademark

* Distinguishes one company's goods from those of another
* Serves as advertisement for quality
* Protects both consumers and manufacturers
* Used in displays and advertising campaigns
* Used to market new products

Requirements of a good trademark

* Reflects products' advantages
* Good, simple language
* Easily pronounced and remembered
* D