Affiliate Networking is Reshaping E-commerce

Creating e-commerce for some companies may be as easy as developing a Web site, throwing on a few graphics and order forms, and sitting back to watch the money roll in. That’s one way of doing it. But managers of large sites such as BarnesandNoble.com (New York), and Travelocity.com (Fort Worth, Texas) just aren’t that patient to sit back and wait for hits.

Instead, these companies are turning to affiliate networking, a communications medium that allows a large money-making site to increase the traffic of users visiting its site by allowing smaller sites to add the larger site's link to their sites and make a percentage of the profit derived from any transaction.

For example, a user checks out ESPN.com to find the score to last night’s Yankees game. While the user is viewing the site, he or she may see the BarnesandNoble.com search engine link on the left side of the page and decide to search for books about baseball. If that user makes a purchase, ESPN.com gets a percentage of the profit. When someone visits a site on Hawaii, he or she may find a link to search Travelocity.com for information about upcoming flights.

Affiliate networking has become so large that these and other sites are contracting Be Free Corp. (Pittsburgh, www.befree.com) to handle the operation of affiliate networking. When a user is linked to Travelocity.com from an affiliate site, that user is being linked via Be Free Affiliate Serving Technology (BFAST).

All the information about the consumer -- buying opportunities the customer sees, how often the customer sees opportunities, and what the response rate is -- is logged and stored on Be Free’s database, which contracted companies can access by using an application that is designed by Be Free and will run on a variety of operating systems, including Windows NT. User identity is not recorded.

According to Tom Gerace, president of Be Free, the companies Be Free represents experience rapid growth when the affiliate management process is automated. "BFAST makes everything from new affiliate registration to affiliate site set-up, and from reporting to commission payment, efficient," he claims.

This process is not just creating new opportunities for companies who already had existing Web pages to make money. Some sites are popping up just to become an affiliate site and reap the rewards. For example, a group may create a site on fishing so it can become an affiliate to BarnesandNoble.com, which would pay that affiliate site when it made a sale based on that affiliate link.

Ben Boyd, director of communications for BarnesandNoble.com, reports that his company has more than 16,500 affiliate sites, and his staff pays attention to the data from BFAST every hour. "Understanding points of origin is critical in this business," he says. "[The data] impacts the layout and the design of our site."

The first online site to begin affiliate networking was Amazon.com (Seattle) in July 1996, but so far Amazon.com has kept its operation completely in-house. "This was something that came about as a result of a customer inquiry," says Shawn Hayes, group product manager for Amazon.com. "[The customer] wanted to promote books from their Web site and make money, and we loved that."

Companies that most benefit from affiliate networking, according to Hayes, are those that sell a product that relates to everything, such as books. He says, "Every site can recommend reading sources." More than 100,000 sites are "recommending reading" for Amazon.com.

The recent concerns about secure transactions over the Web haven’t hurt Be Free or its clients, says Be Free’s Gerace. "We deal with blue-chip companies, and nobody’s worried that they’re going to have insecure servers," he comments.

Gerace says that his company helps the enterprise get things done as quickly as possible: "We allow IT managers to outsource the setup and maintenance of their affiliate network, allowing them to do the things that make their network work."