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Google Launches Affiliate Network

Google is now in the affiliate-marketing business, having launched the Google Affiliate Network, a rebranding of the network run by DoubleClick's Performics business.

In the typical affiliate program, publishers place links on their Web site to online retailers or other e-commerce sites and receive a commission for each referral they pass along.

The relaunched network will put Google (NASDAQ: GOOG) in competition with large affiliate networks such as ValueClick's Commission Junction and LinkShare, a division of the Japanese concern Rakuten.

The rollout comes as Google has been talking up new ad-driven business lines and integrating the recently acquired online ad powerhouse DoubleClick. Google, which built much of its empire on pairing ads with people's search queries, is looking to expand its display-ad network through its new DoubleClick assets, and accelerate its video advertising both on YouTube and through the new AdSense for video product.

Many online retailers derive business through affiliate programs, either in-house or through an outside network. Amazon.com (NASDAQ: AMZN) runs its own program. eBay (NASDAQ: EBAY) recently followed suit, dropping its long-standing partner Commission Junction and taking its network in-house.

Among the larger retailers participating in the Google's network are Barnes & Noble (NYSE: BKS), Circuit City (NYSE: CC) and Target (NYSE: TGT).

Advertisers pay through a cost-per-action (CPA) model, in which they are charged only for the placement when a customer makes a purchase or takes another action that qualifies as a conversion.

Publishers will receive their commissions twice a month. Google said that it will put each application through a quality review, admitting publishers into the network at its own discretion.

Once they have been added to the network, publishers will be able to apply to advertisers, who can decide on a case-by-case basis which sites are a good match for their links.

It's a nervous time in the affiliate-marketing space. A controversial law took effect in New York last month that requires merchants who run affiliate programs to collect sales taxes on purchases made in that state, even if they don't have any employees or operations there.

Amazon and Overstock.com are fighting the law in court, but many fear that if it holds up, other states will follow suit, and affiliate marketers will become responsible for keeping track of overwhelmingly complex state and local tax codes.

Prior to the law, individual consumers were responsible for reporting out-of-state purchases on their income tax returns, but most people either didn't know about that law or ignored it.

Performics launched as an independent network in 1998. In 2004, it was acquired by DoubleClick, which was in turn bought by Google in a $3.1 billion deal that closed in March.

In addition to its affiliate-marketing business, Performics also carries a search-marketing division, which Google is in the process of selling.

ConnectCommerce.com will continue to host the affiliate network, but it will eventually be converted to a Google.com URL, Google said.