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Report: E-Commerce to Replace Affiliate Marketing

Today's affiliate marketing and e-commerce programs will evolve from one-size-fits-all links to one of three models: syndicated boutiques, e-commerce networks or "elastic retailers," says a new industry report.

The report from Forrester Research Inc. says that retail and media firms will increasingly "share ownership of traffic, revenue, merchandising and content to drive revenue and increase brand awareness."

"Commerce and content companies need each other more than ever," said Jim Nail, senior analyst in New Media Research at Forrester. "Today's popular affiliate program structure will be replaced by what Forrester calls cooperative e-commerce, designed to satisfy increasing consumer demand for self-service, to diversify revenue streams and to offer a shopping experience that will engender loyalty."

Syndicated boutiques will replace simple links at small content sites, featuring pop-up microstores using automated merchandising and store-building tools to offer a small selection of branded products for purchase without leaving the content.

The report says small niche sites will be able to convert customers on the spot through affiliation with brand names and intercept new customers who elude advertising by offering bonuses to first-time buyers.

In commerce networks, media and merchant sites can create new buying opportunities by combining exclusive content with relevant product offers. When an article generates interest, commerce networks can deliver a one-click buying experience from a known and trusted merchant that delivers the product, the report says.

Elastic retailing evolves when merchants that target similar customer bases and offer complementary product lines create affiliations among themselves the way commerce networks link strong content to commerce.

Merchants partner with complementary retailers to meet all their target customers' needs for advice, recommendations and products. In sharing the cost of merchandising, retailers spend less per customer without changing their vertical economies of scale, the report says.

"Retailers need to have a plan in place once cooperative affiliation starts," said Nail. "Merchants must define their audience, identify their dream team list, and turn business development loose to sign deals."

For the "New Affiliate Marketing Models" report, Forrester interviewed 50 retailers with active affiliate programs that have been in place for at least three months. On average, these retailers have more than 10,270 affiliates that currently generate 13 percent of total online revenues.