The average age of Spice Girls fans is maybe 12, but Debbie Newman is counting on them to help boost her businessinto the big leagues. Newman, vice-president of marketing for New York City-based N2K Inc., is using affinitymarketing to reach Spice Girls fans--and others. N2K's Music Boulevard Network sells CDs, videos, T-shirts, andother merchandise on the Web at musicblvd.com.
Through an "affiliate" program, N2K, a public company with $11 million in revenues last year, lets more than 11,000small music Web sites link to musicblvd.com. "The experience of the affiliate is generally, 'Hi, I'm a Spice Girls fanand I have a Spice Girls fan page and I'd like to sell Spice Girls records on that page," says Newman. For that fan,N2K would set up a Web link so that anyone who visits that Spice Girls fan page can, with one click of the mouse, go tomusicblvd.com and buy Spice Girls records.
Affinity marketing began largely with credit-card companies, but recently a variety of industries have noticed therevenue potential and are investigating the concept. Nowhere is the trend more prevalent than on the Internet, wherecompanies believe that savvy affinity marketing will steer more consumers toward E-commerce. A Web site devoted toaffinity programs--refer-it.com--lists more than 300 businesses that are testing this model.
Newman and her colleagues believe that having thousands of small affinity-marketing relationships is as effective aspartnering with a few huge entities. "We have several big, strategic business-development deals," says Newman,referring to N2K's partnerships with the likes of Netscape and Excite. "But in aggregate, these little fan sites in theaffiliate program are the number two source of referral in terms of revenue."
When someone goes to musicblvd.com from an affiliate's site, 7% to 15% of each dollar they spend is returned to anaccount for the site's producer. That money is either paid by check or used as credit toward buying merchandise atmusicblvd.com.
Musicblvd.com's affiliates help N2K reach balkanized music fans that the company might not find otherwise. Among theregistered affiliates: a medieval song club, a pack of Celtic music buffs, and several contemporary Christian musicsites. Newman says these clients are ideal for E-commerce because they're less likely to find their favorite music at thelocal store.
Of course, not every plan succeeds as well as Newman's. Engle Saez had a harder time making an affinity scheme payoff for him. A veteran Timberland executive, Saez founded the AtlanticRancher Co. in 1996, in Marblehead, Mass. The$5.5-million company published a catalog of clothes for outdoorsy, boater types. To form relationships withconservation groups, AtlanticRancher published catalogs endorsed by organizations like the Federation of FlyFishermen and Quail Unlimited. The catalogs, directed specifically to a group's membership, featured a letter from thegroup's president and its logo.
Here's the rub: while fly fishermen and others were attracted to AtlanticRancher's merchandise, Saez soon learned thatthey were much less likely to buy from a catalog. "We needed to concentrate on proven mail-order buyers," says Saez."I thought I could speak directly to people who had an affinity for my concept. But we didn't get the response we werelooking for."
Saez hopes further research into affinity groups' buying habits will help him develop a better program. "I haven't cooledon the idea yet," he says.