No Borders

May/June 2007 Issue: Page 36

Print | Email | Digg This

Performance marketing isn't restricted to a specific geographic location and going global is good for business.

In 1492, Christopher Columbus proved that the world was round. In 2006, Thomas Friedman reversed that thinking by writing in his book, The World Is Flat, that the Internet, technology and diminishing trade barriers have created a global marketplace. We can now work and trade with people all over the world with an ease that would have been unimaginable even one ago.

Performance marketers are taking advantage of this more open and leveled playing field to grow their business across borders and oceans by using the skills honed in their home countries. Publishers and networks no longer must confine their opportunities to the 50 states, but through partnerships can reach out to the world.

However, just as American networks and publishers envision growing profits by going abroad, marketers in other regions are now aiming to do battle in the United States. Everyone should prepare for heightened competition.

The United States may have had the early lead in Internet adoption and e-commerce, but the world is catching up quickly. The EU, which has a population two-thirds larger than the United States, now has approximately the same number of Internet users according to research firm eMarketer. China is expected to have the largest community of Internet users by the end of the decade, and Australia and Japan have a higher percentage of citizens with Internet access today than the U.S. As more people go online, global competitors sensing the opportunity are developing operations on par with the U.S.

Europe Grows Up

Just a few years ago Europe was between 18 to 24 months behind the U.S. in affiliate sophistication, but those days are over. During the past few years TradeDoubler, Zanox and Commission Junction have expanded their networks throughout much of Europe and rival the U.S. in their ability to establish relationships and attract an audience. Publishers are expected to help online commerce in Europe to grow from $94 billion in 2006 to more than $200 billion by 2009, according to Forrester Research.

From a network-services, marketing-savvy and technology standpoint, affiliate marketing in Europe is now equal to the United States, according to Carl White, vice president of ValueClick Europe. (ValueClick is the parent company of network Commission Junction.) For example, network software now automatically adjusts the content for nation-specific language, currency and taxes, says White, adding that ValueClick's European and U.S. networks use the same software. With an understanding of local markets and a bit of training, publishers can get a passport to market internationally.

ValueClick Europe has offices in four countries and saw revenue grow by 30 percent in 2006, according to White. He says that while standardizing on the euro for currency has helped to unite the region, familiarity with the business practices and legal differences of each nation are critical for affiliates to succeed. For example, skill gaming is allowed in much of Europe, while in some regions software downloads as promotional vehicles are less tolerated, White says. "Each market has its own nuances."

William Cooper, chief executive officer of TradeDoubler, says his company learned that hiring local personnel who live in the country and have an intrinsic understanding of the cultural values and language is critical to growing an affiliate program. TradeDoubler, which started in Sweden and now has offices in 15 of the 18 EU countries in which it operates, grew revenue last year by 61 percent to $256 million.

Rather than trying to conquer Europe simultaneously, the company added one or two countries per year, according to Cooper. "I wouldn't say for a second that it has been easy," he says. While most of Europe has adopted the euro (with the exception of the U.K., Poland and Sweden), the unique tax regulations and business laws require time-consuming research before a network can set up shop in a country.

Cooper says that European networks have a more handson style than their American counterparts. "It is more of a consultative approach as we work on a daily basis with our publishers," Cooper says. Focusing on account management rather than technology enabled TradeDoubler to spread across Europe, he says.

TradeDoubler's publishers have asked the company about expanding its network into the U.S. and Asia, but for now the focus remains on Europe, according to Cooper. Earlier this year AOL attempted to acquire TradeDoubler, but shareholders rejected the offer.

The European market may become even more crowded should Performics enter the fray. Chris Henger, vice president of affiliate marketing at Performics, says the company is still debating expanding outside of the United States. "We have other priorities than an international distribution effort." However, Henger says 2007 will be a year for international "investment and investigation" for the company. "We can decide based on demand whether or not to go international," He says. His rival Link- Share is already in France and the U.K.

Steve Denton, president of LinkShare, says the focus in the U.K. is not about the merchants, which often have two or three different affiliate programs, but with the publishers.

He notes that because interactive agencies have a much bigger influence on advertisers' affiliate programs in the U.K., its harder to have exclusive merchant deals with networks. Instead, that means that networks must work hard to woo publishers who often have to decide between offers from the same merchant who may have programs on several networks at the same time.

"As a network you need to look at the needs of publishers," says Denton. "It's about how they choose and why."

Consumers-Border Conscious

While most of the trade and technology barriers to market across borders in Europe are crumbling, publishers may find difficulty in converting visitors because of consumer resistance to shopping internationally. According to a 2006 European Commission survey, while 27 percent of citizens have purchased something online, only 6 percent had made an online cross-border purchase.

European consumers say the biggest concerns about buying internationally include the security of transactions, potential problems in resolving complaints, differences in national laws regulating consumer transactions and higher delivery costs, according to the survey. Partially because of these perceptions, just 29 percent of EU retailers offer their products outside of the country, which limits the number of merchants available to publishers.

ValueClick's White says the software and practices used in affiliate marketing and e-commerce has evolved to the point where the physical location of the publisher or network no longer restricts entering a new market. Continued on Page 2...

Pages: 1 2

Print | Email | Digg This