Re: Profit Sharing

From: Charlie Martin <CMartin_at_shopexpert.com>
Date: Tue 13 Jun 2000 15:41:18 -0700

AMANDA HENRY <IxpaGrnbrw_at_aol.com> WROTE:
> I'm looking for more information about profit sharing
> deals. If, for example, I placed a banner ad on
> someone's website, and a customer clicked on that
> banner, and directly because of that banner, purchased
> my product, what percent of the profit from that sale
> would the host of the website expect to get?

Amanda .... couple of comments:

Look into LinkShare or BeFree .. both of which provide
tracking technology to allow etailers to offer links,
banners, etc. to affiliate websites to host (smaller
ones typically) for a % of sales driven (not as likely
a % of 'profits' which is subject to all sorts of
nastiness when trying to define clearly).

%s vary ... books and CDs (a la Amazon are lower - like
3-5%). Specialty retailers, such as Sharper Image,
that license the BeFree or LinkShare technology to
allow affiliates to host ads for them, can pay more -
perhaps as much as 20 to 25% reportedly. I've never
heard of 40% as an industry standard (but then again
you were saying 40% of profits and not sales as I'm
discussing here). One caveat ... companies like ETRADE
and Schwab typically have to spend $200 to $300 in
advertising to convert a new customer and I read about
a marketing relationship in the Industry Standard
several months ago that paid a bounty of $100+ per
signed customer; this is a little different than your
question, but perhaps a reference point of interest.

RE the last point - there are hybrid deals; part CPM or
CPC and bounty for conversion. They are mostly
negotiated on a one-off basis depending on how the
respective parties' view the opportunity / risks.
Mostly, though, you are right - if you pay CPM then
whatever you convert in sales / registering a new
customer is your side of the business after buying the
ad.

Charlie Martin, Director of Business Development
ShopExpert.com
Email: charlie.martin_at_shopexpert.com
URL: www.shopexpert.com




Received on Tue Jun 13 2000 - 17:41:18 CDT