AffiliatesNeeded.Com What's New In Affiliate Marketing

Ten years ago I started my first, full-time job at a tech company. A few months in I had an argument with one of the company’s salesmen. At one point, instead of answering my question, he countered with, “What? Are you going to cry now?” I quickly retorted, “I don’t cry when I get mad, I yell!” Here’s the thing: we both had valid points to make so why resort to using a stupid stereotype? This marked the first time, but not the last, that my interactions with men in the tech field would be peppered with baffling responses based on stereotypes.

I remembered this argument and others like it, when I caught a segment on NPR this week about women asking for raises. The interview focused on the work of Linda Babcock, an economist at Carnegie Mellon University. She found that women hesitate to negotiate for more money, and her research uncovered a very good reason why. Babcock conducted a study that showed viewers a video of men and women asking for raises using matching scripts:

“People found [the woman] to be way too aggressive,” Babcock says. “She was successful in getting the money, but people did not like her. They thought she was too demanding. And this can have real consequences for a woman’s career.”

We Still Need to Talk about Women in Tech

The reality is that we’re comfortable with stereotypes, particularly if they’re used to describe others and not ourselves (i.e., as long as it’s not in my backyard). This attitude explains why we still have to deal with pink infographics that portray talented and successful women as bobble heads.

When Alexia Tsotsis first discussed the infographic produced by an unapologetically wrong-headed Wpromote, critical comments ranged from you’re “taking this way too seriously,” to “I find feminist rants like this really boring.”

To those commentators, allow me to put the argument squarely in your backyard by challenging you with this: would you want the accomplishments of your daughter, your sister, your wife, or your mother belittled by a caricature?

Wpromote joined the conversation with the following saccharin-filled comment:

We at Wpromote are thrilled to have this infographic featured on TC; we’re big fans! We know this was probably a little controversial but all that we were aiming to do was to spotlight some really fantastic women and, at the same time, have a little fun with it! We hope that nobody takes this too seriously. If it makes you crack a smile or look up the accomplishments of one of these women, then we’re happy.

But the big point that Tsotsis unwittingly makes, which seems to be missing from other comments, including Wpromote’s, is how poorly the chart represents what it’s supposedly celebrating: the success of talented women in tech.

The belittling goes almost unquestioned. When I first saw the graphic, I indulged in my own stereotype and thought that it was the brainchild of an all-male team. Imagine my surprise when I saw several women on Wpromote’s management team. The reality is they’re not the only ones that would have given it a pass all in the name of “fun.”

By 2015 women are projected to earn more professional degrees in general than men, but in 2010 there was still a significant gap in the hard sciences with women earning “only 22 percent of degrees in engineering, and only 27 percent of math and computer science doctorates.”

Knowing that women are still a minority in these major tech areas, we’re told condescendingly that if “it makes you crack a smile or look up the accomplishments of one of these women, then [Wpromote is] happy.” How does this approach encourage women to enter challenging, male-dominated fields if upon arrival their skill and success is treated lightly? When we fail to push back against such nonsense and bad taste then we’re abetting the behavior and the attitude that says it’s OK to define a woman by something other than her intelligence and ability.

In many ways the most aggravating aspect of the pink nightmare was the approach to the “non-tech” women.” While I don’t care personally for Sarah Palin, Snooki, or Jenna Jameson, this infographic sets them up as punchlines. Their success, even if it may prove short lived or controversial, is mocked although it is often unmatched by the critics. What level of success do women have to achieve before they’re taken seriously?

Women are Guilty, Too

The boys’ club mentality aside, the role of women in this argument can’t be ignored. Remember the Babcock study? Both men and women were put off by a woman negotiating. But wait, aren’t we all “sisters” and the men are the enemy? Hardly.

Women are just as quick as men to tear down other women. It’s also one explanation for why men think it’s okay to use stereotypes: they see other women doing it so why shouldn’t they? It’s exactly the defense Wpromote used in their response to the Tsotsis article that, “Caroline and Sarah liked it, so we hope that no one takes offense on their behalf.” Such behavior is categorized as having “a little fun” and critics who protest that women deserve better are labeled killjoys and feminazis. Thank you Rush Limbaugh.

The System is Broken So We Shouldn’t Just Play Along

My frustration level rises when I’m advised to, “Just work the system.” And it’s difficult advice to argue with based on Babcock’s opinion after she ran tests with Hannah Riley Bowles from Harvard on how a woman could negotiate without backlash:

The trick, Babcock says, is to conform to a feminine stereotype: appear friendly, warm and concerned for others above yourself. “I gotta say, that was very depressing!” she says with a laugh.

Depressing is one word for it. Another is bullshit.

As a society we view men and women differently. Since we are different, this view isn’t entirely unexpected, and we’ve proven willing to change and adapt our views towards each other over time. What still remains unclear is what it will take for women with talent and experience to be celebrated for their success, minus the bobble heads, without the stereotypical reactions and expectations from within the industry.

Barnes & Noble seized the moment this week when it published an open letter reaching out to spurned Amazon affiliates. “If Amazon doesn’t want you we do!” proclaimed BN.com president, John Foley. The letter was sparked by Amazon’s announcement that it plans to close its Irving, Texas, distribution center in connection with the State of Texas’s claim that Amazon owes $269 million in uncollected sales tax. Texas countered by announcing a new bill, HB 1317, proposing the implementation of a sales tax program targeting affiliates.

Since 2008, state legislators have been in hot pursuit of online retailers who fail to collect sales tax. To achieve their goal, they pass legislation that defines affiliate programs as providing out-of-state companies with nexus. In other words, they now need to collect sales tax. Multiple states are considering similar legislation to close budget shortfalls.

Amazon affiliates felt the brunt of this legislation. Over the last three years, Amazon terminated affiliate agreements in Rhode Island, North Carolina, and Colorado when they passed their own version of an online sales tax. Past history suggests that if the Texas bill passes, Amazon will follow pattern and terminate Texas affiliates, too.

Since Barnes & Noble has physical locations throughout the country, they’ve already extended their sales tax collection to online sales. Barnes & Noble also took a clear shot at Amazon’s actions with its statement that “we will take care of collecting and remitting all sales taxes due on BN.com sales to its customers so you and our customers don’t have to worry about being hassled or prosecuted by state tax auditors.”

Amazon vs. Barnes & Noble

While Barnes & Noble refers to online sales tax bills as “e-fairness legislation,” Amazon’s line in the sales tax sand seems to be growing wider, leaving affiliates to wonder what company deserves their loyalty. It doesn’t help Amazon’s case that it is undeniably using affiliates’ livelihoods as a political bargaining chip in its game of chicken with various states.

Barnes & Noble may win some converts with affiliates who specialize in books or casual affiliate sites (certain blog sites for instance), but they are not going to win any friends with the majority of the industry being hurt by such a tax regardless if they are an Amazon affiliate or not. Additionally, it’s not a slam dunk for Barnes & Noble even with affiliates directly in their niche since public feedback about their affiliate program is mixed. And while Amazon will pay commissions on a wide range of products, Barnes & Noble has a more limited product offering. There’s also some complaints that Barnes & Noble’s program is more complicated than Amazon’s and lacks robust tools like Amazon’s A-Store.

Putting aside which program is “better,” affiliates need to acknowledge an underlying issue. Does relying solely on programs that fail to collect sales tax have the potential to hurt you, and where you live, in the long run? I’m undecided on the answer, as I can see both sides, but it’s a point of view that can’t be dismissed without serious consideration. If you’re curious about what an online sales tax could mean to your state, this interactive map provides a breakdown.

Online Sales Tax Gains Momentum

A cornerstone argument for online retailers against collecting sales tax involves the complexity around differing state laws and regulations. To undermine that particular argument, the National Governors Association (NGA) created the Streamlined Sales Tax Project (SST).

As of July 2010, 44 states and the District of Columbia had approved an interstate agreement that establishes uniform sales tax rules and definitions, and 24 states had taken the next step of passing implementing legislation. Those 24 states are: Arkansas, Georgia, Indiana, Iowa, Kansas, Kentucky, Michigan, Minnesota, Nebraska, Nevada, New Jersey, North Carolina, North Dakota, Ohio, Oklahoma, Rhode Island, South Dakota, Tennessee, Utah, Vermont, Washington, West Virginia, Wisconsin, and Wyoming.

Under the project, states and cities still have flexibility to determine what goods are taxed and their tax rate, but they have to follow a uniform set of rules that apply to all participants.

As Missy Ward noted, “the Affiliate Marketing Industry is not against the booksellers and merchants that are looking for the same advantages online retailers have.” But instead of each state creating individual solutions, they would “love to see a federal solution which actually addresses this crucial issue.” National organizations like the Performance Marketing Association (PMA) don’t believe that the SST represents “a great solution” to the question of creating a nationwide solution.

It will take years to implement, to say the very least, it is unclear how it will change to accommodate the needs of its member states, and there are still constitutional challenges against it.

Other organizations like the Direct Marketing Association (DMA) are fighting the efforts of states like Colorado by filing a lawsuit challenging the constitutionality of the law.

An Opportunity for Other Affiliate Programs

Amazon clearly holds a lot of power in the Affiliate Industry and the eCommerce marketplace. Competitors, like Barnes & Noble, might gain traction if Amazon continues to punish its affiliates over state actions. Skittish Amazon affiliates may be open to other merchants that collect online sales tax since they can argue they’re already in compliance and stable sources of revenue.

Some affiliates make take up Barnes & Noble on their overture, but it doesn’t necessarily mean they can fill Amazon’s shoes completely. Barnes & Noble’s focus on books still leaves an opening for merchants who supply items online that can’t be substituted by local, big-box retailers. Ultimately the success of affiliate programs promoting themselves as an Amazon alternative will depend on how much effort they put into making their programs more attractive, easy to adopt, and financially viable. I’m not sure an open letter is enough.

What happens when two giants go to war? Things get messy for people caught in the middle. The most recent shots traded by Amazon and Texas in their ongoing sales tax battle have put affiliate marketers in the cross hairs. On Tuesday, February 15, the Texas State Legislature introduced a New York-style affiliate bill, HB 1317. A direct challenge to Amazon’s decision to pull distribution centers out of Texas, HB 1317, if passed, goes into effect September 1, 2011.

The First Shot

Last fall, Texas lined up with other states like New York, Rhode Island, North Carolina, Colorado, and Illinois, declaring that Amazon owed back sales taxes to the tune of $269 million. Texas claims this amount represents unpaid taxes plus interest from December 2005 to December 2009. Amazon countered the move by taking a very public stance against the Texas claim in its SEC filing:

We believe that the State of Texas did not provide a sufficient basis for its assessment and that the assessment is without merit. Depending on the amount and the timing, an unfavorable resolution of this matter could materially affect our business, results of operations, financial position, or cash flows. We intend to vigorously defend ourselves in this matter.

Amazon followed up its SEC statement by filing suit against Texas in early 2011, demanding that Texas “produce an audit on which the state bases its demand for $269 million in uncollected sales taxes.” Amazon’s suit, citing the state’s Public Information Act, contends that repeated requests for the audit results to the Texas comptroller’s office in September and October were ignored. Texas, relying on the opinion of its attorney general, countered that the audit results are protected by attorney-client privilege.

So why does Texas believe it has a legitimate claim? Amazon’s distribution center is in Irving, Texas. However, Amazon believes it’s in the clear because the distribution center is owned by a subsidiary technically based in Kentucky, Amazon.com KYDC LLC. From Amazon’s point of view it doesn’t have what is referred to as nexus, or a connection, to the state of Texas.

Strengthening Their Defense

To counter future efforts by Texas to claim sales tax, Amazon announced February 10 that it planned to close the Irving distribution center. This closure also meant the end to expansion plans that would add 1,000 new jobs to the Texas economy. In an emailed statement announcing the decision, Amazon noted that “despite much hard work and the support of other Texas officials, we’ve been unable to come to a resolution with the Texas Comptroller’s office.” The Irving center will close in April 2011.

Getting Even

Still unwilling to admit defeat, Texas introduced HB 1317. Similar in intent to the New York affiliate bill, HB 1317 makes another attempt to establish Amazon as a legal presence in Texas and thus require that it collect and submit state sales tax. At its core, HB 1317 says that sales tax applies when a retailer enters into an agreement with a Texas resident that results in commissions or other considerations related to that resident’s referrals, “including [referrals from] a link on an Internet website,” language aimed at Amazon and other online retailers.

HB 1317 also stipulates that gross sales receipts for referred state residents during the previous four quarters must reach $10,000. With quarterly revenues in the billions, it’s clear that Amazon will need to pay sales tax if the bill passes AND they maintain their Texas affiliate program. However, Amazon may have the Constitution on its side.

In Quill Corp. v. North Dakota, the Supreme Court addressed a similar issue in 1992 regarding what constituted a physical presence in the state and the requirement to collect and pay sales tax. The Supreme Court found, in this instance, that a company must be physically present in a state to require that it pay sales tax. The presence of customers alone in a given state does not constitute a physical presence.

Caught in the Middle

Once again, retail affiliates are caught between the companies they refer to and the states where they reside. Given budget shortages and no more federal dollars to close the gap, Texas believes collecting additional sales tax will make a significant difference. But what happens when the result is lost jobs and decreased personal income? Can state budgets afford to take on more unemployed workers?

Amazon and other retailers with affiliate programs have left states completely when bills like HB 1317 become law, making the bill moot with no sales tax collected as in the case of Rhode Island. It’s worth noting that:

The revenue at stake from uncollected online and mail-order purchases is significant, though not game-changing. In April, researchers at the University of Tennessee estimated Rhode Island’s government would forego a total of $132.7 million in sales tax revenue from 2007 through 2012. The average annual loss is equal to 2.5 percent of the state’s total sales tax collections in 2007.

The main result from this particular battle? No sales tax and lost income to Rhode Island residents.

What Comes Next

Texas isn’t alone in its efforts to cast the sales tax net far and wide. As other states grapple with budget shortfalls and increased demand, online retailers will continue to be targets for sales tax initiatives. In the meantime, if you’re a Texas affiliate marketer, you can join with your peers at Google’s PMA Texas Advertising Group to learn more about what you can do to support efforts to oppose HB 1317.

In the same way we liked to pick on Microsoft in the 90s, Facebook has become a popular punching bag. Defenders point to the positives. Through Facebook we can keep up with friends, share photos, and play games. For many of us, Facebook has become a digital version of the local hangout. But do you remember anyone from management following you after you left that corner booth?

Apparently it’s common knowledge among privacy groups, and it is spelled out in Facebook’s policies, but I was surprised to learn that “Facebook can essentially track you around the Web.” I bet the majority of Facebook users would be surprised as well. As long as you remain logged in to your Facebook account and then browse elsewhere on the web to a site that uses the Facebook “Like” button, Facebook can see where you go and what you do. Even more disturbing is that non-Facebook users can also be tracked.

Now that the number of “likes” a site receives factors into SEO ranking expect to see the distribution of the “Like” button on more and more websites. It’s one of the reasons you see it on the article pages here at ReveNews.

Nuts and Bolts of How “Like” Tracks

For those who are not familiar with the specifics of Facebook’s tracking, Arnold Roosendaal of Tilburg University recently published a rough draft of a paper that highlights three ways Facebook follows you around the web:

• If you’re a Facebook user, when you visit sites that use the Facebook Like button, a cookie is placed on your computer even if you don’t click the Like button (clicking the Like button requires you supply your login information to process the request, thus connecting your “like” to your account). This browsing history is then associated with your user ID the next time you login to your account.
• Non-Facebook users are also tracked by Facebook, but it appears this tracking happens through a site using both the Like button and the Facebook Connect service, which places a cookie on your computer. This cookie comes with a two-year expiration date. Once this cookie exists on your computer, browsing behavior goes back to Facebook’s servers each time you visit a site that includes Facebook content.
• If a non-Facebook user opens a Facebook account there’s the potential for past browsing data to be associated with that user’s ID. When the new account is created, a cookie is issued with the user ID. This cookie then talks behind the scenes to the already existing cookies on your computer from your pre-Facebook days and the browsing data is synchronized with your user ID.

When asked, Facebook replied that it stored users’ web-surfing data via cookie for 90 days.

One suggested solution for consumers is to use AdBlock to keep Facebook from following you. The fact that a relatively simple solution exists helps, but the bigger question remains about what qualifies as legitimate tracking. We know that advertisers are salivating over the potential of Facebook’s user database. Tracking its users’ browsing habits adds another reference point and makes that user database all the more valuable.

More than a Privacy Concern

Like all companies that collect user data, only part of the concern relates to how they plan to use it. The other, and perhaps larger concern, is the security of that data. If Facebook and its fellow data collectors (like Google) want the benefit of the data, they’ll have to bear the closer scrutiny that comes with it.

Facebook has made very public privacy stumbles. The most recent one involves sharing contact information, likes addresses and phone numbers with developers. And yet, we keep going back for more. Over 500 million people around the world actively use Facebook. So where does that leave us?

• Quit Facebook: The most extreme action, advocates of quitting Facebook make a compelling case for people to walk away from the popular site. There are alternatives like the open source Diaspora, but if all your friends are on Facebook, making the switch doesn’t look as appealing.
• Limit how and when you use Facebook: After learning about the off-site tracking, I now make it a point to logout of Facebook and delete its cookies before I do any other browsing. I’m also selective about just how much information I put on Facebook. I take the old advice that I always heard about email: don’t put anything out there you wouldn’t mind seeing on the front page of the newspaper.

Despite Facebook’s assertions to the contrary, its actions continue to indicate that privacy is an ongoing cause for concern.

Bull in the China Shop

If Facebook continues to muck around and make a mess, for both users and businesses, it will become an even more attractive target for government investigation and regulation. I’m not a fan of regulation, but if basic ideas like protecting my data and not abusing access to my data cease to exist between customers and businesses, government involvement starts to look more attractive.

Tracking web browsing and building user databases is not inherently evil. I suspect most of us appreciate not getting slammed with only Viagra ads everywhere we go. There is value to targeted advertising. This point is one that the FTC seems to be missing with its latest push to implement “do not track” across the board.

I suspect that if most people are informed of when and how they’re being tracked that concerns about it would decrease. Paranoia about tracking is generated when we hear the stories about data being shared without consent or when it happens and we don’t expect it (like after leaving Facebook).

We also have to take responsibility for the companies we choose to support. If we’re seriously concerned about privacy and the way Facebook treats our data, how can we expect a real response to our concerns if we aren’t willing to walk away? In some respects, if we’re complacent and choose to continue supporting companies that do things we don’t like, then we bear some of the blame too.

With almost $1 billion in sales, eBooks are here to stay whether book lovers (of the physical kind) like it or not. Google’s announcement Monday that it’s now a viable eBook contender only adds to the overall sense that the channels for eBooks are growing. Of particular interest is the 15 million books secured through Google’s book-scanning project. Of those 15 million, 2.8 million fall in the public domain and will be offered as free downloads via the new Google eBooks. Access to more recent titles and other books out of the public domain are covered under agreements with a wide groups of publishers, including Random House, Simon & Schuster, and Penguin.

A Service, Not a Device

Unlike other eBook heavyweights—Amazon, Barnes & Noble, and Apple—Google enters the arena strictly as a service. While readers can download an Android-based app, and one is planned for the Apple platform, Google made it clear that its goal is to sell books not devices. Google’s position as a service creates the opportunity for it to be device-agnostic, a potential benefit if the device market continues to grow.

For example, Amazon has increased accessibility to its eBooks across multiple operating systems and devices through system-specific apps. However, its proprietary system makes the Kindle incompatible with books purchased from competing vendors with other DRM controls in place. The same holds true in reverse for other device readers who want to buy from Amazon. This closed system potentially limits Amazon’s reach, but since device competition is still limited to a few key vendors, the push to open the system is small.

Owners of the Sony Reader and the Nook from Barnes & Noble, which don’t use a proprietary DRM, will be able to download purchased books to their devices. Google stands to gain traction through a fairly open system that offers functionality not available on other devices, including access to indie bookstores and traditional favorite, Powell’s Books. In this instance, Google has cast a wide net that offers the potential to appeal to readers that would rather not support closed systems.

eBooks: A Growing Market

Last November, Forrester released its five-year projections for the eBook market, and the numbers indicate a digital strategy is no longer optional for publishers, or authors for that matter. In 2010, Forrester believes eBook sales will hit $966 million. That number is expected to triple by 2015 with sales reaching almost $3 billion. Clearly eBooks can no longer be defined as a niche strategy, so what does it mean going forward?

Many of us still get the majority of our books from expected sources like the library and friends without spending a cent. So it probably isn’t a surprise that only 7 percent of book purchases are of the electronic variety. But this 7 percent is a dedicated bunch. By far they buy and read the most books out of potential book buyers. This number is expected to go up as ease-of-access and usability (e.g., the addition of color, more robust searching, etc.) improve.

Sink or Swim: An Industry on the Verge

The publishing industry isn’t the first to have it’s model turned inside out. Music and most recently, television and movies have watched digital platforms match, if not overturn, traditional channels. Publishers have a choice, and if recent behavior is any indication, they’re dragging their feet while trying to wring as much money as possible out of the existing system.

To date, publishers have resisted the argument that eBooks should be significantly less than their print counterparts. The other area that remains a point of contention are the end-user agreements (EULA). Amazon, for instance, has a EULA that grants you a license to the book, not ownership of the book. Even as access to eBooks increases through vendors like Google, many sticky issues remain.

For instance, many DVDs now come with digital copies, but there’s pushback to packaging an eBook with a physical book. Publishers fear doing so will cut down on overall sales as dedicated e-readers tend to buy eBooks for instant gratification then circle back to get the physical book at a later date, resulting in two separate sales. There’s also the question of dedicated e-readers (e.g., Kindle) versus multi-purpose devices (e.g., iPad). Each device type offers pros and cons over the other, but it remains to be seen which option will appeal to the widest audience. Clearly the eBook industry is still in its infancy with many challenges yet to come, but including eBooks in your future content strategy seems like common sense instead of science fiction.