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NONE: Re: ONLINE-ADS>>Sales commission vs. ad revenue
Re: ONLINE-ADS>>Sales commission vs. ad revenue
Cheryl C. Ho (cheryl_at_linkcorp.net)
Tue, 23 Sep 1997 00:23:43 -0400
> > My company is interested in exploring the "pay per sale" model. In
> > other words, a web site places ads, copy, emails its subscribers --
> > whatever -- to acquire customers for my services and I track signups and
> > pay out a commission on each sale.
>
My company, LinkShare Corporation takes the view that links are
undervalued assets on the Web and as such, we offer a software that
allows merchants to set up associates type programs. We, however, take
the pay-per-sale method a step further. We are offering a network where
sites can view postings from merchants interested in rewarding referrals
that lead to sales. Our concept is to introduce merchants, who know
their product best, to site owners, who are most familiar with their
audience, and provide them with a trusted third party to do the tracking
and the billing (LinkShare). What results is a win-win-win situation.
We think this model does more than advertise (for which their still is a
need) but fundamentally sets up a means to create and builld an online
sales channel.
>
> How do other people feel about this?
>
> > And what happens to
> > the gal who visits you today, direct from my site -- thinks about the
> > purchase and/or comparison shops -- and comes back to you directly
> > tomorrow because she bookmarked your page? If I'm the website that
> > originally referred her, I may feel (with reason) that I deserve the
> > commission-- afterall, this is how analog-commission sales work.
>
Totally agreed. LinkShare's patent-pending RTP technology has a special
feature which can track a lead from a site indefinitely. LinkShare is
able to identify this visitor even if he returns several days later and
subsequently makes a purchase. Commissions are then calculated based on
whether the return date was within the period of time specified by the
merchant. The only remaining issue is whether the merchant is willing
to offer commission payments for return buyers.
> >Theoretically, then, I'd be willing to pay between $50 and $150 all day
> >long to sites that would generate a sell-through on their own -- by using
> >whatever means possible. * * *
> >Would I find takers for this kind of model? I'm thinking high-traffic
> >sites with loads of unsold inventory would be my best bet. Any other great
> >ideas?
>
Because LinkShare has set up a network of online merchants and site
owners, all members are enthusiastic about this model. The Network
facilitates the building of such business relationships online by
offering a central location where members can meet and locate each
other.
>
> > 6. If you are marketing a product or service and wish to pursue this
> > type of arrangement, you should be prepared to give up a *good*
> > portion of the revenue generated. We've worked with anywhere from 20-
> > 50%.
>
Not necessarily true. Though our Network has just been established,
most offers posted by merchants range between 5 and 10 percent.
Percentages tend to be much lower online given that content sites (ie.
sites not fulfilling order but carrying links to the merchant) do not
bear the offline overhead costs associated with fulfillment, returns,
inventory, etc. In essence, they are compensated purely for their
referral and marketing efforts.
>
> > In reality, however, it would be like my posting an
> > ad in USAToday and telling them on the phone that
> > I would only be willing to pay for the ad if my product
> > sold from their ad. They'd laugh at me because in most
> > instances that's not how it works at all.
>
I would tend to disagree. The problem with all of these revenue models
is that they have basically been copied from traditional media such as
magazines and newspapers. But the Internet is a totally different
animal! It is essentially impossible to track leads and sales from
print or television ads (although some classified services permit people
to run ads indefinitely until a good is sold).
Unlike broadcast and print media, the Internet is essentially a
distributed network. People rely on referrals to make most of their
decisions based on referrals either from people in their communities or
from sites with content they have sought out. Besides, no matter what, a
person is going to leave a site (no site has enough content to keep a
user occupied indefinitely) so why not reward people for understanding
the purchasing preferences of their audience. At least you are giving
site owners a way to charge for their content in a manner that won't
offend their viewers and still respects their control over their site.
This is not to say that other revenue streams such as banner ads and
subscriptions are not viable. Our model respects the core strengths of
the Internet providing merchants with an additional way to get their
product
in front of consumers and another opportunity for site owners to
earn a return on their investment in content.
Cheryl Ho
Vice President, Marketing
LinkShare Corporation
http://www.linkshare.net
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