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To: KeepItSimple who wrote (76395)	9/3/1999 2:14:00 AM
From: H James Morris	Respond to of 164684

Kis, one more last thing. Thank God for Forrester Research (forr)!! >> San Francisco, Sept. 2 (Bloomberg) -- Cnet Inc. couldn't be happier that technology news from its Web site and prices for the electronic wares it sells online are posted on thousands of personal Web pages, even if it costs 2 cents a mouse click. Cnet has signed up individuals and small companies as ''affiliates'' to post a link on their Web sites that sends visitors directly to Cnet's price information on computers, electronic organizers and pagers. It then pays the affiliate 2 cents for every visitor referred through that link. ''This made the most sense in terms of getting our products on thousands of related technology Web sites,'' said Sam Lawrence, Cnet's associate vice president of consumer marketing. Internet search directories and content providers are following the lead of No. 1 online bookseller Amazon.com Inc., which returns a percentage of sales to Web site operators that refer customers. Cnet, Lycos Inc. and Goto.com Inc. pay cash to sites that direct traffic their way. The Ask Jeeves Inc. search service is looking at how a referral program would benefit it. ''It's a Tupperware party on steroids,'' said Forrester Research analyst Chris Charron. ''The reason it's valuable is that affiliate networks take advantage of the diffuse nature of the Internet. According to our research, it's the best way to drive traffic to a site.'' For companies that use affiliates, about 15 percent of their total revenue can be traced to such programs on average, said Forrester analyst Jim Nail. He surveyed 50 Internet companies for a report that will be issued in October. Nail expects affiliate networks to generate about 20 percent of total revenue for the Internet companies in three years. Affiliate programs are also called performance-based advertising because payment only occurs after certain advertising goals are met. Forrester forecasts that 53 percent of U.S. online spending by 2004 will be based on performance Amazon.com is credited with the first ''affiliate'' program. The company offers a free link that anyone can place on his or her own Web site. If a visitor goes to the affiliate's site, clicks on the Amazon.com link and then buys books, Amazon.com gives the owner of the Web site from 5 percent to 15 percent of the sale. Amazon.com has more than 320,000 sites in its program. The company declined to give the program's specific revenue figures. Credibility Amazon.com Chief Executive Jeff Bezos said its program bolsters credibility by letting experts on various topics make recommendations with links to its products. ''We realized when we invented it several years ago that on these narrow niche topics we couldn't tell people, for example, 'This is the bible of Labrador retrievers.' But there would be some authority out there with a Web site, and they could say, 'This is the bible of Labrador retrievers,' and say that with authority,'' Bezos said. Hundreds of other online retailers have copied Amazon.com's program, and now sites that offer other types of information are starting to shell out for referrals. Lycos, the No. 3 Internet search site, is trying to increase the number of people who visit its sites so it can gain more revenue from advertisers and compete better with rival Yahoo! Inc. Half of Traffic Goto.com, a Web search site that sells listings, now gains about half of its traffic from its referral program, said Chief Executive Jeff Brewer. Since starting its affiliate program about seven months ago, Goto.com has signed up 100,000 sites, he said. ''The affiliate program is the thing that's really going to take off,'' he said. ''Everybody has sites out there.'' The economics of paying for referrals is actually more favorable than it might appear, analysts said. ''It's a pure arbitrage,'' said Abhishek Gami, an analyst at William Blair who rates Lycos a ''strong buy.'' Companies like Lycos are paid by advertisers according to how many visitors see their ads, so if Lycos pays two or three pennies for each visitor, it more than recoups that cost through ad revenue it gets, analysts said. Lycos and other sites also make money when visitors, from whatever origin, buy items through their own electronic-commerce areas and links. ''It's free exposure at zero cost, and the site will get paid based on advertising,'' Gami said. ''It's more than increasing traffic; it's increasing image and branding.'' That's valuable to Internet sites that typically spend millions on advertising on other Web sites. Small boxes with a Goto.com or Lycos logo will adorn thousands of Web sites. Paying to lure consumers may be seen as a form of bribery to increase traffic, analysts said. ''It will be perceived as a desperate act but (Lycos) has in mind to put a lot of effort into their e-commerce service,'' Charron said. ''They are making a bet they'll convert a portion into buyers.'' Sep/02/1999 12:37 <<