My second published article appeared in Issue 8 (October 2009) of FeedFront Magazine.  This magazine will be distributed to attendees of ad:tech New York, Blog World Expo, and PubCon.  You can also view the entire magazine online.  My article is titled “Lessons From North Carolina’s Affiliate Tax Fight” and is on page 26.  It appears in its entirety here:

Over the years many events, technologies, and companies have changed the face of affiliate marketing. The current battle against the Affiliate Tax (Advertising Tax, Amazon Tax) is one of the most important events to happen in our young industry. The Advertising Tax has the power to both reform and injure our entire industry. To date New York, Rhode Island, and North Carolina have all passed the tax. Other states have seen the damage these laws do to small businesses and have shot down similar legislation.

Being headquartered in North Carolina, mgecom took a leading role in the fight against the Advertising Tax. In this fight, we learned many things which could be of great value should you find yourself in a state considering the implementation of the Advertising Tax. My best advice is this:

• Start an online petition and gather as many signatures as possible. The volume of signatures is important, but more from your state equals more relevance to lawmakers.
• Gather short, personal stories from every affiliate you can reach whose business will be negatively impacted. Print and bind these, and hand deliver them to your legislators.
• Use Twitter to get the message out and gain new supporters. Create a hash tag (we used #ncaffiliatetax) and include it in every Twitter update you write.
• Talk to the Performance Marketing Alliance and leverage their experience, data, and reach.
• Utilize the enormous power and community of ABW (ABestWeb.com) and other affiliate marketing forums.
• Organize face to face meetings with anyone in your state who has an interest in seeing the law shot down. Use these meetings to plan your group strategy.
• Don’t wait to start the fight. Make yourself heard as soon as the legislation appears. Even better, be preemptive and start educating your legislators on our industry.
• Visit your legislators in person. Meeting with lawmakers from your county is very important, but talk to anyone who will listen, particularly if they are on your State Finance Committee.
• Call your legislators multiple times. Don’t settle for speaking to an aide.
• Be persistent.

In North Carolina, we were unfortunately fighting against the perception of “fairness” in the eyes of lawmakers. Many were focused on ensuring that Amazon.com and local book retailers were both subject to the same taxes and removing what was seen as an unfair competitive advantage. North Carolina being in a significant budget deficit certainly did not help our chances. To lawmakers, the Affiliate Tax seemed like a way to both close the budget gap and keep local retailers happy.

We found that personal stories from affiliates and getting legislators to see how the Affiliate Tax laws negatively affect small businesses and individuals was much more effective than speaking to them about their misconceptions of fairness and new tax revenue streams. In the end we lost the fight, but we did make headway with key legislators. Now, we will work towards repeal of the Affiliate Tax.

The August 2009 issue of FeedFront Magazine (Issue 7) featured an article I wrote titled “Inside Information on Affiliate Classifying”.  Here is that article, in its entirety:

When my company takes over the management of an existing affiliate program or launches a new one, we do so using the Structured Diversity Method I have developed. Affiliates are categorized into three distinct classifications: Aggregate Volume, High Potential, and Premium Partners.

Each affiliate within any given classification is equally significant and must be treated with a high level of importance. This ensures that your affiliate partners are able to consistently improve their sales volume and helps your program become a significant portion of your overall online revenue.

Aggregate Volume affiliates comprise the foundation of your program. These affiliates are what most would consider rookies to affiliate marketing. They will likely have many questions and may need to be taught the basics of generating traffic and converting visitors. These affiliates typically generate a few orders each, per month.

Your program should be designed so that you have hundreds of converting affiliates at the foundation level who occasionally generate individual sales, but who, as the Aggregate Volume group, contribute a significant amount of monthly revenue.

High Potential affiliates are important both as a group and individually. This group does not typically make their living entirely from affiliate marketing, but they are generating consistent sales each month. Their commission earnings play a role in both their business and personal budgeting. High Potential affiliates are likely to increase their sales rapidly if they are given the right tools.

Premium Partner affiliates are your top performers. They may or may not be considered an industry Super Affiliate, but regardless are generating a significant amount of your monthly sales. These affiliates should be viewed as a method of “sharpening the tip” of your affiliate program. They have the ability to drive significant amounts of revenue, often in a very short period of time. More importantly, their high performance level is often sustainable over time.

You can build a significant revenue generating program through Aggregate Volume and High Potential affiliates alone, but overall growth will be inconsistent and slow. Likewise, a program built with Premium Partners alone may not be sustainable over time as any number of factors beyond your control could temporarily or permanently affect their sales volume. The loss of even a single Premium Partner in a program consisting only of this group will result in a significant decrease in overall revenue.

In utilizing the Structured Diversity Method for your affiliate program design, you will be able to reach profitability from the sales generated by Aggregate Volume and High Potential affiliates alone.
However, you must attract and recruit affiliates of all three classifications in order to realize the sharp growth curves you are looking for. You must manage your program under the assumption that each partner in each classification wants to earn more with your program and is actively working on improving their business. If you provide the tools and assistance needed, you will find a steady flow of affiliates advancing their performance level and generating more sales in your program.

Matt Enders is the CEO and Founder of mgecom, inc., a leading Outsourced Affiliate Program Management firm.

Issue 7 of FeedFront Magazine can be downloaded here.