Affiliates or the one-stop-and-shop super sites known as virtual malls? That’s the question many on-line video retailers are currently grappling with in their pursuit to attract more mainstream family-oriented consumers. Both strategies, analysts say, hold their own benefits.
‘They’re both really marketing agreements. The only difference is that the compensation structure is not completely performance-oriented with malls or network arrangements,’ says Ken Cassar, an e-commerce analyst at Jupiter Communications. Affiliates are Web pages that will, for a fee, carry a link or an ad for an on-line retailer on their page. Generally, affiliates are paid in one of two ways. If a referral from their page leads to a sale, they will receive payment, or they will get an agreed upon compensation rate per CPM (the cost per 1000 times a company’s ad appears on the computer screens of Internet users).
While Reel.com (www.reel.com) is still using an affiliates program, the Mountainview, California-based company announced plans in October to enter into a major network alliance with three other Internet retailers-Cyberian Outpost (computers), eToys (toys, kids products) and CDnow (CDs). Under the terms of the deal, the four companies share a hub page that contains the promos and services that each company is offering for the month. It’s a traffic sharing agreement says Chris Deyo, president of Reel.com, that doesn’t require any of the companies to pay each other referral fees. Whether or not the network can attract the kind of mainstream movie consumer Reel is after, though, is far from being a sure thing.
‘On an overall basis, I think the kinds of people the network will be attracting are likely pretty experienced Internet shoppers. On an individual basis, however, I think it’s difficult to say whether a music person or someone who buys toys from eToys is also interested in buying movies on-line,’ says Deyo.
New York City-based BigStar.com (www.bigstar.com) has taken a stealthier approach with its Internet marketing strategies. In October, it signed agreements making it the exclusive filmed entertainment retailer for Women.com Networks, a women’s Web resource that features a Crayola FamilyPlay section, and Hearst’s HomeArts.com Network, which provides on-line versions of all of Hearst’s women’s pubs, such as Redbook and Cosmopolitan. The agreements, says company president, David Friedensohn, essentially allow BigStar to set up mini shops on the sites that are tailored to the interests of its marketing partners.
‘Our target for selling videos on-line is the same market that buys videos off-line, which is women with children under 17 years of age in the household,’ says David Friedensohn, president of BigStar. Friedensohn remains dubious about the ability of virtual malls to attract that demographic let alone any other specific age group.
‘Being all things to all people is what malls are all about, and we’re kind of the opposite of that. What we want to do is to get the video that you want to you,’ says Friedensohn. ‘With malls, you lose the strength of the Web, which is being able to connect to people one on one.’
Michael Mason, principal and co-founder of VideoServe.com (www.videoserve.com), shares Friedensohn’s skepticism. VideoServe has steered clear of signing on with any virtual malls or networks, Mason says, and instead has inked affiliate deals with thousands of Internet Service Providers (ISPs) to carry its link and its ads.
‘It helps us to attract our target demographic-parents with young children-because, generally, today most of the people who are going online for the first time are parents.’