1. More data on this topic available from:: How to Use Affiliate Marketing to Extend Your Subscription Marketing Reach Online Peter Figueredo CEO NETexponent Tuesday, May 8, 2007

2. More data on this topic available from:: 2 © 2007 MarketingSherpa, Inc. This presentation is not for distribution. Thank you. Outline  About NETexponent  Affiliate Potential  The Basics  Case Studies  Brand Protection – The Financial Times  Harness Loyalty Power – NY Times  Manage Retention – NY Times  Holistic Search and Affiliate - Audible.com  Emerging Trends

3. More data on this topic available from:: 3 © 2007 MarketingSherpa, Inc. This presentation is not for distribution. Thank you. About  Founded January 2001  NYC headquarters  Deep agency roots  Performance Marketing Agency specializing in Affiliate and Search  Practice Areas  Subscription Marketing  Financial Services  Online Retail

4. More data on this topic available from:: 4 © 2007 MarketingSherpa, Inc. This presentation is not for distribution. Thank you. Affiliate Potential

5. More data on this topic available from:: 5 © 2007 MarketingSherpa, Inc. This presentation is not for distribution. Thank you. Affiliate Potential: Valuable Traffic  comScore Networks panel of 1 million affiliate marketing consumers in the US  During the 2 nd Quarter of 2006, affiliate shoppers spent 7% more than the average consumer in internet sales  Affiliate marketing consumers were 43% more likely to convert into a sale than consumers directed by other referrals  Affiliate marketing shoppers were 17% more likely than the average Internet user to have average household income of greater than $75,000  32% of affiliate shoppers were between 45 and 64 years of age, and were 4% more likely to have children

6. More data on this topic available from:: 6 © 2007 MarketingSherpa, Inc. This presentation is not for distribution. Thank you. The Basics  Technology  Staffing  Core Strategies  Report Card / Competitive Analysis  Commission Strategy  Communication Strategy  Recruitment Strategy  Optimization Strategy  Quality Assurance Strategy

7. More data on this topic available from:: 7 © 2007 MarketingSherpa, Inc. This presentation is not for distribution. Thank you. The Basics: Keys For Success  Relationships are the major key to success  Treat them as true partners  Grow your programs as you would grow a sales force  “Kaizen”  Success requires:  Relationships  Compelling consumer offer  Affiliate automation  Motivation  Policing of sites  Frequent contact  Proactive optimization  Flexibility  Speed  Active recruitment  Integrity

8. More data on this topic available from:: 8 © 2007 MarketingSherpa, Inc. This presentation is not for distribution. Thank you. The Basics: 4 Main Affiliates  Coupon  provide consumers with savings  Loyalty  use point systems to motivate consumer action  Search Arbitrage  buy search keywords on behalf of advertisers  Vertical Content  specialize in a particular niche

9. More data on this topic available from:: 9 © 2007 MarketingSherpa, Inc. This presentation is not for distribution. Thank you. The Basics: Meet The Top Affiliates

10. More data on this topic available from:: 1010 © 2007 MarketingSherpa, Inc. This presentation is not for distribution. Thank you. Case Study: Brand Protection  Goal = grow subs without brand risk  Tactics used:  Custom terms and conditions  Affiliate rescreen  Top affiliate monitoring  Daily monitoring (VSD)  Measured recruitment efforts  Strict rules for email and downloads  Allow CJ to weed out inactive affiliates  Dedicated affiliate QA team  Small manageable network  Result = We have successfully grown their affiliate volume and protected their brand for 5 years Affstat 2007 Report

11. More data on this topic available from:: 1 © 2007 MarketingSherpa, Inc. This presentation is not for distribution. Thank you. Case Study: Brand Protection  New publishers must opt into special terms and conditions before joining the FT affiliate program  The terms and conditions state that publishers must:  Have a privacy policy included in their websites  Have no material which is illegal, defamatory or discriminatory  Drive traffic from North America and/or South America  According to the terms and conditions FT has the right to:  Review and approve the use of the FT trademark  Approve / Disapprove any pending payment due to publishers  Review materials for an email campaign  Terminate the agreement without prior notice to the publisher  Modify terms within the contract from time to time

12. More data on this topic available from:: 1212 © 2007 MarketingSherpa, Inc. This presentation is not for distribution. Thank you. Case Study: Brand Protection Source: Quantcast.com

13. More data on this topic available from:: 1313 © 2007 MarketingSherpa, Inc. This presentation is not for distribution. Thank you. Case Study: Harness Loyalty Power  Goal = Increase subscription volume without sacrificing retention rates  Tactics Used:  Scrutinize incentive sites for relevant audience demographics  Assign unique tracking to each incentive site to monitor retention  Use test periods for less established affiliates to gauge performance before full launch  Limit incentive structure provided to consumers based on cost goals  Account for ABC guidelines with incentive traffic

14. More data on this topic available from:: 1414 © 2007 MarketingSherpa, Inc. This presentation is not for distribution. Thank you. Case Study: Manage Retention  Goal = Grow volume of valuable subscribers based on retention rates  Tactics Used:  Incentivize paid subscriptions  Tailor consumer offer to paid subscriptions  Marry front end and back end tracking  Optimize top sites based on retention  Remove/reduce low retention affiliates  Adjust commissions periodically based on retention rates  Evaluate performance based on total costs (media + agency + tech + incentive)  Result = Affiliate program retention rates increased 20% in less than 6 months

15. More data on this topic available from:: 1515 © 2007 MarketingSherpa, Inc. This presentation is not for distribution. Thank you. Case Study: Harness Loyalty Power  Result = Loyalty affiliates helped us achieve our 12 month volume goal in only 5 months and retention rates remained at levels consistent with other online marketing channels Revenue Operational Costs $

16. More data on this topic available from:: 1616 © 2007 MarketingSherpa, Inc. This presentation is not for distribution. Thank you. Case Study: Holistic Search/Affiliate  Goal = Grow affiliate search arbitrage volume without hurting internal PPC search efforts  Tactics Used: Encourage affiliates to bid on generic terms (audio books, audio book download, etc.) Support a controlled group of top affiliates and media partners on trademark terms, Monitor key terms for affiliate violators – Affiliate self policing helps Utilize “transitional affiliate” for long tail build out Managed by seasoned affiliate staff

17. More data on this topic available from:: 1717 © 2007 MarketingSherpa, Inc. This presentation is not for distribution. Thank you. Case Study: Holistic Search/Affiliate Agency PPC listing Affiliate PPC listings Competitors

18. More data on this topic available from:: 1818 © 2007 MarketingSherpa, Inc. This presentation is not for distribution. Thank you. Case Study: Holistic Search/Affiliate Normal seasonality  Result:  12% over goal of new subscribers  35% reduction in cost per new subscriber  58% reduction in cost per sub in search  Able to dominate valuable keywords  Added ~500K keywords to search campaign Holistic Sub Volume

19. More data on this topic available from:: 1919 © 2007 MarketingSherpa, Inc. This presentation is not for distribution. Thank you. Emerging Trends  Google PPA will complement affiliate efforts  CPA Ad Networks become “Affiliate Networks”  Lack of tech advancement leaves door open for affiliate widgets  Long tail concept justifies large affiliate programs  Affiliate tech provider value continues to be challenges  Holistic search and affiliate strategies spread  Advertisers struggle to calc duplication and decide which channel should get credit for sales

20. More data on this topic available from:: 2020 © 2007 MarketingSherpa, Inc. This presentation is not for distribution. Thank you. Credit/Thank You Conference Attendees Receive A Free Affiliate Competitive Analysis Contact Me: Peter Figueredo NETexponent CEO 212-981-2700 ext 200 peter@NETexponent.com