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1 MIT’s Media Tech Club November 1999. 2 Gordon Hoffstein President & Chief Executive Officer.

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Presentation on theme: "1 MIT’s Media Tech Club November 1999. 2 Gordon Hoffstein President & Chief Executive Officer."— Presentation transcript:

1 1 MIT’s Media Tech Club November 1999

2 2 Gordon Hoffstein President & Chief Executive Officer

3 3 Agenda l What is affiliate marketing? l Be Free history l What is the opportunity? l How are we doing? l The competitive landscape l Leveraging our leadership position

4 4 What is Affiliate Marketing? Affiliate Marketing Affiliate marketing allows online merchants to promote their goods and services within the content of tens of thousands of web sites – paying a commission only when a sale is made.

5 5 Who Is Be Free? We power the infrastructure for the next generation of online marketing: Affiliate Marketing

6 6 How Affiliate Marketing Works Content Sites Partner With Merchants

7 7 Place Promotions in Context How Affiliate Marketing Works

8 8 Earn Commissions Based on What Is Sold New York Yankees righthander David Cone has become the second Yankee in as many years to throw a perfect game, as he blanked the Montreal Expos on Sunday at Yankee Stadium. The Yankees won the game, 6-0, on Yogi Berra Day How Affiliate Marketing Works

9 9 Click-through rate Non-portal traffic The Need for Affiliate Marketing l 80% of online traffic bypasses portals l Traditional online marketing is not effective n 99.5% of banners are ignored 80%0.5%

10 1010 Be Free History l Founded in 1996 by Sam and Tom Gerace l First customer launched in September 1997 l First round of venture funding in September 1998 l Second round of venture funding in March 1999 l IPO -- November 3,1999

11 1 Business to Consumer Online Sales What is the Opportunity? Source: Forrester Research and Jupiter Communications In Billions 69% CAGR

12 1212 What is the Opportunity? Worldwide Online Ad Spending Source: Forrester Research, Inc., August 1999 15A 15% 50% 1999 2003 Performance-based Online Advertising 1999 $3.3 2000200120022003 $6.5 $10.9 $16.7 $24.1 In Billions

13 1313 How Are We Doing? 13 27 53 109 192 76% Growth Our Rapidly Growing Customer Base

14 1414 Our Customers – Category Leaders

15 1515 15

16 1616 Number of Affiliates 1,075,000 1,469,000 400,000 67,000 31,000 Explosive Growth of Our Customers’ Reach

17 1717 Number of Promotions Viewed In Millions Dramatic Growth of Our Customers’ Promotions 221 338 541 825 1,156

18 1818 The Competitive Landscape If you spend $20,000 2,000,000 banner ads assume $10 CPM 10,000 clicks to your site assume 0.50% click-through rate 100 sales assume 1% conversion rate $5,000 in gross sales assume $50 average sale assume $50 average sale Banner Advertising Spend$20,000 Sell $5,000 Affiliate Marketing commission-based model $5,000 in gross sales $500 paid to affiliates assume 10% commission rate $100 Be Free service fees assume 2% service fee Spend $600 Sell$5,000

19 1919 Most Effective Marketing Methods Source: Forrester Research, April 1999 Affiliate Marketing Works! 1Affiliate programs 1E-mail to customers 3Public relations 4Television 5Outdoor advertising 6E-mail to opt-in lists 7Direct mail 7Magazines 7Radio 10Sponsorships 11Buttons 12Banners

20 2020 Competition – In-house Development An Outsourced Infrastructure for Affiliate Marketing Benefits to Merchants l Eliminates development costs l Allows focus on core competencies l Capitalizes on our expertise and knowledge l Shortens time to market l A strategic sales channel that online merchants own and control

21 2121 Our Dominant Leadership Position Number of Customers Among Top 50 Sites Closest Competitor Be Free Source: Media Metrix, July 1999 3 11 1 All Others Affiliate Market Share Source: Be Free Analysis, September 1999 20% 75% 5% Closest Competitor Be Free Customers All Others 21

22 2 Leveraging Our Leadership Position l Expand our customer base l Expand internationally n Launch of (Bertelsmann) in Europe l Provide new products and services n B-INTOUCH SM — E-mail affiliate marketing n Private branded networks — Visa Partners Network, SmartAge n Profiling technology for targeting promotions

23 2323 MIT’s Media Tech Club November 1999

24 2424 Our Affiliate Marketing Infrastructure Affiliate Merchant Promotions Viewed Click- Throughs Sales Click- Throughs Recruitment Management Tracking Decision Support and Analysis

25 2525 Critical Success Factors l Attract, develop and retain the best associates l Create the infrastructure and internal processes that will allow us to provide the highest level of customer satisfaction l Attract customers with the commitment and resources to build highly successful affiliate sales channels l Continue to develop reliable, intuitive and scaleable technology that meets our customers’ evolving needs l Obtain the necessary financial resources to achieve our business objectives l Develop new products and services in a timely and consistent manner

26 2626 Critical Success Factors l Position the company as the leader in affiliate and database marketing through aggressive and ongoing public relations and marketing programs l Create a corporate culture that rewards innovation, creativity and teamwork in order to stay at the forefront of industry trends and changes l Create strategic alliances that will enhance our position in the marketplace l Contribute to our customers’ success by educating them about the industry’s best practices in marketing, affiliate outreach and affiliate management

27 2727 Hosted Services Accessible Through the Internet Be Free’s Solution A Robust Infrastructure for Affiliate Sales Channel

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