Affiliate Marketing: An Offline Marketing Revolution

by Per Pettersen, Thursday, Jul 19, 2007 3:30 PM ET

THE ONLINE EXCHANGE, A POPULAR concept of late, brings buyers and sellers of any product together in the most efficient way possible -- both get what they're looking for, at a price that's acceptable to each, and the middleman is no longer in the equation. While many have explored the benefits this model brings to advertisers and publishers, a beneficiary not yet discussed is the affiliate marketer. Affiliate marketers have long discussed the possibilities that could be opened up by being able to access offline ad budgets. Using a lead generation exchange, affiliate marketers can use any number of techniques to capture leads from any medium -- print, radio, TV or online -- and sell those leads to the highest bidder. Some exchanges even give the affiliate marketers the tools to make this happen. Marketers can now drive consumers to an optimized online lead capture Web site hosted and optimized by the exchange but owned by the marketer, or drive the consumer to call an 800 number. These are the tools needed to drive profitable arbitrage in any direct response media. To give you a example of how this works, let's take a look at a radio ad for debt consolidation (which happens to be one of the most successful categories for direct response radio ads). Let's say a single advertiser spends $5,000 on a radio ad that generates 100 phone calls. That means he's paying $50 per lead, no matter the quality of the lead. The calls will be sent to his sales reps, who will then work to close each lead. It's likely that many of those calls were for information, or from consumers that just don't qualify for his loans. If his success rate were 25 percent, he'd really be paying $200 per good solid lead. Using the same example, the affiliate marketer could purchase a radio ad using a generic or his own business name and a phone number that connects directly with a customer service rep to get the loan application process started. Now that he's captured the intent of the caller and has a good idea of the level of quality (how big is the loan request, what is the consumer's credit like, etc.), he can sell those leads to the highest bidding lender and make a profit on his initial expenditure. The higher quality leads will sell for the most, while the lower quality leads will generate lower prices. Although he's likely to have generated a mix of leads, his potential customer base spans the entire industry of debt consolidators. Some will pay $300 for a high quality lead, and some will pay $25 for a lower quality lead. Either way, the affiliate has maximized his revenues by opening up the bidding for those leads to the entire marketplace. Radio is only one avenue. At the same time the affiliate marketer can be capturing online leads through his blog or Web site, through rented billboard space offline, or by running a print ad in a newspaper or magazine. He can manage all of these incoming leads, tracking which generate the most revenue by selling them to the highest bidder through a lead generation exchange. While other companies are buying up ad space in the hopes of generating a lead, the affiliate marketer can serve up just what that advertiser is looking for, often at a better cost for the advertiser but at a price that ensures the marketer earns a profit, too. Similar to what happened online ten years ago when affiliate marketers jumped into the game, marketers no longer need any call center back-end or direct relationships to participate in the sector. This opens up a whole new world of possibilities for affiliate marketers. The offline direct response opportunity is now open to anybody who wants to try to market in a category, and is poised to create thousands of small businesses that specialize in creating customers out of offline inventory and marketing opportunities. Per Pettersen is CTO of lead generation exchange LeadPoint and CEO of Estalea, an entrepreneurial company that focuses on creating a network of new Internet businesses. Prior to his work at LeadPoint, Pettersen served as senior vice president and CTO of Commission Junction.