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Affiliate Tax Propaganda - Affiliates Continue to be the Human Shields

Well this tax issues continues to made news and most of the time it is misinformation and/or partial truths. 

Sadly this issue has continued to be branded as the Amazon Tax and as such has been positioned as a David and Goliath issue:  The Big Bad Online Only Retailer v. Mom and Pop America 

The problem is, this has nothing to do with Mom and Pop.   

In a recent issue of The Directors Letter, the following was written:

Goose and Gander  We recently wrote about Amazon's aggressive battle with various states to avoid collecting and paying sales tax. Amazon's technique is to eliminate relationships with local affiliates so that it can declare no presence in a specific state. In the latest development, competitors including Wal-Mart, Target and other large retailers have joined up to form the Alliance for Main Street Fairness. The Alliance is lobbying for legislative changes that would require Amazon to pay state sales tax.

Let’s analyze this a bit….

First this part:  “Amazon's technique is to eliminate relationships with local affiliates so that it can declare no presence in a specific state”

This isn’t just Amazon’s tactic.  Several online retailers have chosen this path.  What needs to be nailed down is that this isn’t just a tactic……doing this total absolves then from having to collect the sales tax that was the intent of these Bills.    

Here is how it works everywhere it has passed (except NY solely because of pending legislation)

1) Bill Passes

2) Nexus is created for Online Merchant

3) Affiliates Get Fired --- In many cases #3 actually precedes #1!

4) Online Retailer no longer has Nexus since it no longer has affiliates 

5) Online Retailer Collects $0 sales tax - no Nexus, no Sales Tax

6) Affiliate Loses Revenue

7) State collects less income tax from small business that have been financially hurt or put out business by passage of the Bill

This is pretty black and white….

Use Affilates to Create Nexus, Affilaites Fired, No Nexus created, Bill is useless............please tell me what I’m missing????

Second: “In the latest development, competitors including Wal-Mart, Target and other large retailers have joined up to form the Alliance for Main Street Fairness.”

So let me get this straight….The Big Box retailers that KILLED the Mom and Pop stores all across the country in the first place have now joined forces to create the Alliance for Main Street Fairness?   There is nothing Main Street about this fight.  A look at their website, which I will not link to, or course says nothing about Big Box Stores….it trots out a bunch of local business that have supposedly been hurt by the online retailers. 

For the record, I understand that sales tax issue.  It won’t be easy to solve, hopefully legislators will see it for what it is. 

It’s clear what this is.  It’s a fight between behemoths….Online Only versus The Click and Mortar.......

In the meantime,  it’s a shame that Affiliates continue to be the Human Shields in the war between Online Only Retailers and Big Box Retailers.

Affiliate Tax / Amazon Tax / Nexus Tax.... Be Proactive.

Today I met with my representative to the Pennsylvania State Legislature.  The purpose of the meeting?  To discuss the Amazon Tax and its implication to Imwave’s business.

Pennsylvania is not currently discussing this (at least not that we are aware of), but in light of recent events in Illinois it has become clear that these issues can rise up and catch us off guard very quickly.

I know what many of you are thinking….I’m not going to bring it up….I don’t want to give them any ideas.

Well believe me….THEY ALREADY KNOW!  You are not going to give them an idea they don’t have already.  

With state budget deficits what they are, Legislatures are all looking at way to fill the budget gap.  They are looking at other states and they know that they are losing sales tax revenue to online sellers.    

The questions are: 

Are you going to educate them on the impact to your business before the legislation hits the Floor of the Chamber? 

Are you going to tell them that depending on the way they redefine nexus they:

• will probably NOT gain not new sales tax? 
• could kill your business? 
• will reduce your revenue and in turn the amount you pay to them in income tax?

Why not present your case in advance?  Why not give them the ammunition to have the conversation early in the fight?

Don’t be worried if you’ve never met your Representative!

Don’t be worried if you’ve never talked to a Representative before. 

I’ve done neither before today!!

My Representative was very gracious when we met.  He gave me an hour of his time.  We talked, we built up some report.  I asked him if he was aware of the nexus issue.

He was!  He was fully in FAVOR of increasing the nexus to capture lost sales tax revenue.

I LISTENED!!!  I did not talk. I did not plead my case (at first).  I needed to understand what his thinking was; what his position was. 

When he was finished I explained New York, North Carolina, Rhode Island, and Illinois.  I didn’t lecture, I educated.  I informed him about the loophole that would allow merchants to remove affiliates as means to get around nexus and what that would mean for Imwave.  I also, with the help of the PMA, was able to let him know that there were thousands of affiliates in PA that would be affected…not just Imwave.

He listened, he took notes. 

Now, he understands the loophole of removing us from the program and what that would do to both our business and the sales tax.  He can educate his colleagues in advance.

I asked him to keep his ear to the ground and let us know if this issue heats up. 

Which he said he was more than happy to do. 

We now have front line warning and an ally.

Also, he asked for me to gather some data on how this law has failed in other states...more ammunition should this issue heat up.  I will be engaging the PMA to help with this and will send him whatever I can. 

I plan to be his resource for info on this matter, his expert….oh and by the way, one of his constituents as well.

Bottom line, we need to get out in front of these issues, we need to educate and inform.  We need Legislatures to understand the unintended consequences of these bills and how they can kill small business.

Get out in front now, before there is too much momentum.

What’s Holding the Affiliate/Performance Marketing Industry Back?

The PMA (Performcance Marketing Association) has a great section on their website called "Ask the Expert."

Recently Rebecca Madigan asked me what I thougth was holding our industry back from greatness.   I thought about this for a while and sent her the following answer which they posted under the Ask the Expert section. 

What are your thoughts?

 

What’s Holding the Industry Back?

That question was posed last week.  A hundred answers ran through my mind when I read this.  But the more I thought about it, the more I realized that there are many symptoms, but only few root causes.

1)     Lack of Understanding

2)     Continual Focus on the Negative

3)     No unified industry voice

First, let’s talk about the Lack of Understanding.  For whatever reason, all things Internet related often seem to be relegated to the world of “technology.”  This has been going on since the beginning and seems to be getting better, but still exists.  The online channel is usually not the largest sales channel an organization has.  Couple that with its inherent black sheep aspect of being online and many companies just do not give it the focus it deserves.

Imagine walking into a CFO’s office and explaining Affiliate Marketing, not in Internet terms, not in Marketing Terms, but in the language of the CFO…..NUMBERS.  I imagine the CFO’s answer goes something like this:

“So, let me get this straight….you are selling our product (or service) on our behalf, but I only have to PAY you IF and WHEN we actually sell something….AND I only pay you at a predetermined percentage of the sale that I get to set at the beginning of the relationship.

Isn’t that really a no-brainer?  Imagine elevating the conversation above the internal politics and looking at the real numbers.

Second, is the continual focus on the Negative side of our industry.  I’ve never seen an industry that was so vocal about its own negatives that the noise actually drowns out the good things that we can do.  How many blog posts do we need about affiliate fraud, TM bidding, etc?  Between the Work At Home, Get Rich Quick messages and the fractured message of a vocal minority who insist on shinning a light on the few unscrupulous people in the industry, it creates a “Guilty until Proven Innocent” mentality, which we have to overcome on an almost daily basis.  The message of the hard working and ethical affiliate is lost.   You can’t have the conversation necessary to solve the issue in number 1 above until we can change the message of our industry.

Third, there is no Unifying Voice.  This is a direct effort to address Number 2.  There are a lot of people talking, but what they are saying is so chaotic that there is no message.  As marketers, we should be able to create a powerful marketing effort that educates companies on the value that the industry brings to the table.    Many industry groups have tried to form and I salute the PMA for getting farther than any of the others.  Let’s try to get out of the hamster wheel of fighting about “cookie stuffing” and start talking about all of the good things that we as an industry can bring to the table.

We have an industry filled with great people and great companies.  We just need to tell the world!

 

 

RIP - Yahoo Search Marketing / Panama / Overture

We just got word today, that the transition from Yahoo Search Marketing to Bing is complete.  Now you can manage all your ads across Yahoo and Bing from your Microsoft AdCenter account.

This combination of a single ad serving platform gives advertisers access to 163 million unique searches and 33.8% of the US search queries on Yahoo! Search, Bing, and Partner sites all from your single AdCenter account.

Starting on Thursday 10/28/2010, Yahoo Search marketing accounts will switch to "read-only state for the next 6 months so that you can view and download your historical data.  Historical data will be available for the past 13 months only.

Yahoo is reporting that no further click charges will accrue, but have not detailed time lines for returning any pre-paid funds.  I suggest you contact your rep and request any leftover pre-paid advertising as soon as possible.

For those of us who have been advertising on the platform since the Overture days, it is with mix feelings we mark the passing of the platform that originated the pay-per-click sponsored listings in search engines.

A moment of silence please...

Now back to your normal marketing activities.  Bing...

KaChing - Turning your Passion into Profits - Joel Comm does it Again!

I have been a big fan of Joel Comm for a long time.  For me, it started with his AdSense Secrets Book. He showed me how ANYONE could make extra money with your websites using the power of Google's AdSense program.  I had known about AdSense, and had even toyed with it on some of my sites, but it wasn't until I read his first eBook that I started to really understand how to optimize the placement of the ads and really generate good money from these contextual ads.

Since his first eBooks, Joel Comm has gone on to become a New York Times Best-Selling author.

Joel and I have become friends, since then.  We often see each other at the Affiliate Summit conference in Vegas and enjoy getting lunch and catching up.

So I was intrigued at Christmas time when I got this box with a Green "Easy Button" that goes KaChing every time I press it.  (It also goes KaChing every time my kids go by my desk).  Perfect for me as for some time the "KaChing" sound was my AIM tone.  What better sound for an Internet Marketer?

The Kaching Button was just a teaser.  The other day I received his latest Book, "KaChing: How to Run an Online Business that Pays and Pays"

What I like about KaChing, is that it brings me back to when I first started IMWave.  For me it wasn't about making millions of dollars online, it was about taking this $1,000 debit card my employer had given me and seeing if I could turn it into $2,000.  Once I had done that it became about seeing if I could earn enough each month to cover my car payment, then my mortgage, then replace my Salary.  These incremental goals lead me to building IMWave into the Inc 5000 company that it is today.

Joel's book will walk you though what it takes to build a website that brings in an extra $500-$1000 per month. With the skills he provides, you can then determine how you want to apply them.  Think about it, What does an extra $500 - $1000 per month mean to your lifestyle?

When you couple the great book with all the extra bonuses that Joel has been able to "squeeze" out of his internet marketing colleagues, it turns buying his book into a no-brainer.  Once you have purchased, visit his site and fill out the form to claim the extra rewards and gain access to his member area!

Take a look at his video and learn more!

Thanks for the $0 Check Yahoo!

It seems like there was a time where all the Internet marketers were taking pictures of themselves holding up their largest checks, and saying look how much I made!  Probably the most famous of these is Shoemoney's 132k check from Google Adsense (see pic).

At Imwave, we never felt the need, or maybe we never had a check worthy enough for this public display, until today!

Thanks to Yahoo, for sending us this $0 check with no explanation as to what it is for.  My guess is that this is part of the process of closing down the Yahoo Publisher Network that we signed up for but never implemented.  I wonder how many others got $0 checks from Yahoo, I am sure there must be billions of people out there that Yahoo could give Zero dollars to!

I guess the question is, do we cash it or frame it?

We promise not to spend it all in one place <grin>

CPA Network Survival

Chris Trayhorn wrote an interesting CPA Survivor article for mThink, in which he looks at the landscape of CPA networks and the number of failing networks and those that are "refinancing, merging or crouching in a defensive posture" and questions which ones will survive.

Chris believes that BRAND is the key to survival in the CPA network space.  While I think having a good brand is important for standing out from the crowd, I believe that in this space brand is but one small piece of the puzzle and won't be the key to survival and it's hard to create a real brand without differentiation!

For too long the CPA networks that have been popping up have been focusing on "offers" and pushing the same offers that can be found in almost all of the other networks.  In fact a lot of the platforms are specifically setup to be able to share these offers from one network to the other.  This has lead to the commoditization of the networks.

Traditional affiliate networks have always stood out by 3 main factors:

1. The Quality of the Companies (Advertisers) on their Network.  
2. The Quality & Quantity of Affiliates (Publishers) on their Network.
3. The Confidence in their Tracking and Payment Technologies.

Of course there are other factors, but these are the 3 key points. 

So how does a CPA network make the transition and secure their place along the sides of Commission Junction, Linkshare and the likes?

Here is what I would do to change the game:

Exclusive Distribution Partners

For a long time networks have focused on bringing in the top advertisers, and affiliates have come to those networks in order to be able to promote them.  Now that the industry has matured, these top Advertisers are finding that 5% of their affiliate partners are driving 95% of their sales.  The network that controls these 5% of top affiliates writes the rules going forward.  The market is fragmented, and many of these top affiliates are ripe for acquisition.  A strong network with good cash flow could acquire these top affiliates and would find it a lot easier to win the exclusive relationships needed to differentiate themselves from the pack.

Former Linkshare President to Head GSI Media, Inc.

GSI Commerce has appointed Stephen Denton, former President of Linskshare, to head up their new GSI Media Division with the vision of combining leading media networks under one roof.  Here is the press release:

KING OF PRUSSIA, Pa., Apr 20, 2010 (BUSINESS WIRE) -- GSI Commerce Inc, (NASDAQ: GSIC) the leading provider of e-commerce and multichannel solutions, today announced that Stephen Denton has joined the company as president of GSI Media, Inc., where he will oversee the operations and strategic direction of the company. The Pepperjam affiliate network, acquired by GSI last year, will operate under the GSI Media brand. GSI Media is a separate business unit of TrueAction(TM), GSI's digital design and marketing agency, reporting to Nick Pahade, president of TrueAction and CEO of GSI Media.

"GSI Media, Inc. was created during the acquisition of the Pepperjam affiliate network with the goal of combining leading media networks under one roof to drive optimal value for clients," said Pahade. "Steve is one of the most respected and experienced leaders in the affiliate marketing and ad network industry. The affiliate network can drive significant traffic for our clients and hiring Steve is proof positive of our seriousness and vision to grow the network over time, financially and geographically. We feel very fortunate to have Steve join our team."

As president of GSI Media, Denton will lead and manage the company's affiliate network, Pepperjam, as well as shape and drive the direction of the overall GSI Media business unit. In 2009, GSI Commerce acquired the Pepperjam affiliate marketing network to expand the breadth and depth of TrueAction's marketing services capabilities. Since the acquisition, several of GSI clients, including Modell's and Shop.NHL.com, have successfully transitioned over to the Pepperjam affiliate network.

"Leveraging top tier marketing services is critical to online success, and GSI Media will represent the opportunity to coordinate GSI's current network, Pepperjam, with other media networks in the future," said Denton. "GSI offers clients a unique end-to-end e-commerce solution, and I'm excited for the opportunity to provide clients with a performance-based media network that is aligned with their brand and e-commerce goals."

Denton has over 11 years of digital media experience and 20 years of successfully leading sales and marketing teams. Prior to joining GSI Media, Denton helped clients manage and monetize cross media marketing solutions as senior vice president of Cross Commerce Media. Prior to Cross Commerce Media, Denton was president at Linkshare Corporation, a leading performance marketing network provider, where he was responsible for all client facing operations including sales, merchant services, affiliate development, search, and marketing. Denton also served in key leadership roles at FedEx Corporate Services, The Times-Mirror Company, and PepsiCo.

As part of the transition, Pepperjam founder, Kristopher B. Jones, will be leaving the organization to pursue other opportunities but has agreed to continue to act as an advisor to the company for a period of time. "Kris has made great contributions to the affiliate industry and to the success of Pepperjam. We wish him the best of luck in his future endeavors," said Pahade.

About GSI Commerce

GSI Commerce(R) is a leading provider of services that enable e-commerce, multichannel retailing and interactive marketing for large, business-to-consumer (b2c) enterprises in the U.S. and internationally. We deliver customized solutions through an e-commerce platform, which is comprised of technology, fulfillment and customer care and is available on a modular basis or as part of an integrated, end-to-end solution. We offer a full suite of interactive marketing services through two divisions, TrueAction(TM) and e-Dialog. Additionally, we provide brands and retailers a platform for online private sales through RueLaLa.com, and an online, off-price marketplace, SmartBargains.com.

About TrueAction

TrueAction(TM) (http://www.TrueAction.com) is a full-service digital agency focused on creating experiences that drive consumer actions. More than 50 of the world's leading brands and retailers rely on TrueAction to deliver effective digital solutions through a deep understanding of strategy, usability, design, media, and photography. TrueAction, with offices in New York; San Jose, Calif.; and King of Prussia, Pa., is a GSI Commerce company.

Forward-Looking Statements

This news release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements made in this release, other than statements of historical fact, are forward-looking statements. The words "anticipate," "believe," "estimate," "expect," "intend," "may," "plan," "will," "would," "should," "guidance," "potential," "opportunity," "continue," "project," "forecast," "confident," "prospects," "schedule" and similar expressions typically are used to identify forward-looking statements. Forward-looking statements are based on the then-current expectations, beliefs, assumptions, estimates and forecasts about the business of GSI Commerce. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions which are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or implied by these forward-looking statements. Factors which may affect GSI Commerce's business, financial condition and operating results include the effects of changes in the economy, consumer spending, the financial markets and the industries in which GSI Commerce and its clients operate, changes affecting the Internet and e-commerce, the ability of GSI Commerce to develop and maintain relationships with strategic partners and suppliers and the timing of its establishment, extension or termination of its relationships with clients, the ability of GSI Commerce to timely and successfully develop, maintain and protect its technology, confidential and proprietary information, and product and service offerings and execute operationally, the ability of GSI Commerce to attract and retain qualified personnel, and the ability of GSI Commerce to successfully integrate its acquisitions of other businesses and the performance of acquired businesses. More information about potential factors that could affect GSI Commerce can be found in its most recent Form 10-K, Form 10-Q and other reports and statements filed by GSI Commerce with the SEC. GSI Commerce expressly disclaims any intent or obligation to update these forward-looking statements.

SOURCE: GSI Commerce Inc.

Happy St. Patrck's Day - Got Cabbage?

Well I'm not Irish, but that's never stopped me (along with countless others) from celebrating St. Patrick's Day. 

I'm all for the green beer, but I never really got the whole Corned Beef and Cabbage part. 

Well, Anyway......This year the folks over at ShareASale put a new spin on the party with, what I guess they are calling the "Got Cabbage?" contest.  The winner gets....you guessed it....

Corned Beef and Cabbage!

Yesterday I got a call from Jason saying we were one of the winners!  My prize arrived this morning and I just had to share it with you.  Just as advertised, there was a head of cabbage and a corned beef brisket!

 

I have no idea how to cook corned beef, but that's what search engines are for.  Although the package wasn't packed with cold packs and the brisket says to keep refrigerated...I'm a little skeptical....I guess it still safe to eat?

Happy St. Patrick's Day to all!

Thinking of going to Search Engine Strategies 2010 - New York

There seem to be more and more conferences that are focused on the Affiliate Industry.  Maybe too many.  Well at least too many for me.....

If you are like me there are just way to many to be able to go to them all.  We are, of course, in the business of Performance Marketing, not "Conference Attending."  Don't get me wrong, these conferences can be invaluable to your business.  It's a balance of attending the right ones. 

There are a few of these that I keep hearing good things about and yet have never attended.  I keep hearing great things about Search Engine Strategies.  So, I've been thinking lately that I need to go to SES and check it out for myself.

I know, the New York show is only weeks away and I probably should have made up my mind by now, but honestly it's a short drive for me and so I guess I can afford the procrastination on this one.

Anyway, I've been looking over the agenda for SES New York to see what looked interesting.   On Day 1 there are a number of sessions that looked interesting:

Achieving Success with Improved Ads Quality - By Google

10 Things To Supercharge Your SEM Campaigns in 2010

But what really caught my eye, this year, was Day 3.  There is an "Affiliate Track" that seems to be new this year.  This track will be led by Kris Jones of PepperJam Network.

From looking at the agenda, it appears that there are some good Round Table type discussions setup for Day 3.  

The link to the Affiliate Track is here: Affiliate Marketing Forum - Conference Day 3

 Also on Day 3 are some other very interesting looking items like:

PPC or SEO? The Ultimate Search Marketing Battle

Ads in a Quality Score World

There really seems to be some good opportunities here.  Based on that, I will probably end up going...if I do, I'll be sure to report back.