Click-through customers. (Feature).

Banks are experimetting with an innovative online technique for acquiring new customers. Under this affiliate Web marketing approach, banks make agreements with unaffiliated websites to advertise the bank's services. For every browser who clicks through the ad and becomes a bank customer, the financial institution pays a referral fee to the outside website.

Some online bankers are paying outside websites a fee or every mouse-click that sends a customer their way--a concept known as Web affiliate or pay-for-performance marketing.

"Affiliate programs can do wonders for a business, if run properly," says Peter Kent, author of "Poor Richard's Internet Marketing and Promotions." Agrees Barry Silverstein, author of "Business-to-Business Internet Marketing," "The affiliate concept is so uncomplicated and easy for both parties that it is possible for everybody to be a winner. There is little risk on the part of either the affiliate program sponsor or the affiliate."

Bankers can benefit from affiliate programs it two ways:

They can start an affiliate program of their own, and pay other websites a commission to steer traffic their way.

They can join any number of the thousands of affiliate programs already established on the Web, and get paid for every Net cruiser they steer to the website of the affiliate program sponsor.

Like so many e-commerce things, one of the pioneers of affiliate marketing was bookseller Amazon.com. Under Amazon's model, websites can sign on as "associates," and offer links to Amazon's site from their own. Every time a website visitor clicks on the link and buys something from the bookseller, the Amazon associate gets a small commission.

Currently, Amazon's affiliate program is one of the most commonly used affiliate models on the Web. Commissions typically range between 1 and 15 percent. And derivatives of the model sometimes offer a two-tier commission structure-paying higher-trafficked websites higher commissions for referrals, says Susan Sweeney, author of "101 Ways To Promote Your Web Site."

So far, most financial services institutions are following the Amazon model. Citibank in New York uses affiliate marketing to promote its person-to-person online payment system called C2it. (See sidebar.) Citibank pays $5 to the website for each referred person who registers for C2it. U.S. Bank, Minneapolis, pays $5 for every checking account application and $5 for every current customer who signs up for online banking (www.usbankcom).

Other examples in the financial services industry: A credit-card company, First United Group in Arkansas (www.firstunitedfg.com/cgi-bin/ufgpages.pl?) pays referral sites $10 for every new credit card customer they send its way. A mortgage company, Mortgage IT, in New York state (www.mortgageit.com) pays referral sites $100 for every completed loan application with paid application fee. A commercial bank on the Caribbean island of Domica, Griffon Bank (www.griffonbank.com), pays $10 for every business lead.

A second genre of affiliate programs pays a flat referral fee. Essentially, such affiliate-program creators pay a website a fixed amount for every visitor that ducks through to the program creator's home page and engages in predefined actions, says Sweeney. The required action is quite often making a purchase, downloading a free demo, ordering a catalog, requesting a price quote, or the like, she adds.

The third major genre of affiliate programs reward referring sites that agree to run a banner ad of the sponsoring company on their site. Every time a visitor clicks on the banner ad, the participating website gets a flat fee.

Affiliate programs currently number in the hundreds--if not thousands. Bankers considering joining the affiliate marketing programs of other businesses--gifts, office supplies and the like--should evaluate those programs carefully.

"Don't assume that an affiliate program or its sponsor is legitimate, just because you find it in a directory," Silverstein says. As with any other business venture, unknown entities need to be investigated. Find out how long the program principals have been in business and how many affiliates are involved. Ask for references.

"Typically, your affiliate program will be more successful if the sponsor's products or services are complementary to your own," Silverstein says. "You should think about drawing a relationship between the sponsor's offerings and your site."

Daniel Gray, author of "The Complete Guide to Associate and Affiliate Programs on the Net," agrees "At its best, affiliate marketing has the weight of a personal recommendation. This viral, word-of-mouth-meets-e-mail approach has accelerated the success of any array of Web-based merchants."

Once you've decided to sign up with one or more affiliate programs, diligent and ongoing review of your website's participation in the program is essential. "Evaluate the sponsor's service and make sure your visitors are satisfied," Silverstein says. Affiliate programs should enhance a site-not take away from it--he adds. "If you fill your site with too many affiliate programs, your visitors may perceive that you are more interested in making money than servicing their needs."

Gray concurs: Choosing only the most relevant programs can take discipline. A merchant with a higher relevancy and a lower commission schedule is a better bet than merchant with low relevancy and higher commissions."

Good places to start evaluating the spectrum of affiliate programs available on the Web include Iboost (www.iboost.com) and Refer-It (www.refer-it.com), and GeoCities (www.geocities.com), Silverstein says.

"The GeoCities super-affiliate program allows GeoCities 3.5 million members--each of whom has a Web page--to sell products from 16 Web merchandisers--including BarnesandNoble.com, Egghead.com, Net2Phone.com and Staples.com," Silverstein says. "While members can include multiple merchant affiliate links on their pages, they can also gain access to a consolidated report of all activity from GeoCities."

Not surprisingly, businesses that catch the affiliate program bug often decide to create their own program. For such pioneers, Kent has some simple advice. "The good news is that affiliate programs really do work. The bad news is that they can be difficult to set up and a lot of work to run."

Those not easily daunted can check out services that will aid entrepreneurs in setting up an affiliate program. Such services include the Affiliate Shop (www.affiliateshop.com), Affiliate Zone (www.affiliatezone.com), Your own Associate Program (www palis.com/new/yoap7), Commission Junction (jwww.commission-junction.com) and LinkShare (http://linkshare.com) Kent says.

RELATED ARTICLE: Sidebar

How Citibank Acquires Weh-Sawy Customers for its C2it Service

Citibank, New York, has been using Web affiliate marketing for its C2it product, which allows consumers to send cash online around the globe using a U.S. bank, credit card or money market account (www.C2it.com). Citibank uses Commission Junction's network for the program.

In the past, C2it was used mainly by customers of online auction markets such as eBay. Citibank decided to try Web affiliate marketing to broaden the appeal of the service. "We chose this marketing technique to attract Web-savvy users," says James Rose, chief marketing officer for C2it. "We wanted to build a nucleus of customers (for C2it) and Web affiliate marketing is an efficient way to reach early adopters (of new technology and products) compared to conventional advertising methods."

Web affiliate marketing also allows Citibank to launch a smaller scale marketing campaign and to roll out the product gradually, says Rose. For a new financial services product such as C2it, banners ads that simply display a logo or image on websites aren't as effective because people may not recognize or understand what C2it is, Rose says. Banner ads work well for widely recognized products and services such as credit cards, airlines and booksellers, for example. A new product that needs to be explained benefits more from a text ad on the referring website.

Citibank has used Web affiliate marketing for several months, and Rose says they are already pleased with the results. Ads for C2it are currently on several hundred websites, and Citibank is evaluating several hundred more. One ad suggests sending cash to a son or daughter who is away at college; another recommends e-mailing the gift of cash.

Since Citibank is offering a financial service, Rose says there are distinct privacy and security issues to consider. To ensure that customers are not compromised, no customer information is ever shared with any referring website (commonly called a "publisher"). That fact disappoints some publishers that like to offer rewards to their website visitors for clicking through to other sites. Citibank is unwilling to budge on this point. Also, Rose has a staff dedicated to visiting and examining each website that applies to be a publisher to ensure that the Citibank logo is used only on the best and most appropriate websites. Rose says this is more time consuming than he had anticipated when he launched the program, but quality control is a priority for the bank.

Publishers have access to nearly 30 advertisements in Citibank's inventory, and they have the option of selecting animated or still advertisements, Publishers can decide how often to refresh the ads to keep the look new and interesting.

Rose says that Web affiliate marketing is appealing because the bank pays only for qualified leads. In other words, the bank pays only for leads that become new customers, not for the broadcast of a message that may or may not reach interested consumers. Publishers are attracted to Web affiliate marketing because it is a relatively easy way to add to their bottom line.

When a third-party network provider such as Commission Junction pairs publishers and businesses like Citibank (referred to as the "advertiser"), much of the daily paperwork and tracking is handled by the network. The network calculates and pays commissions to the publisher and compiles and sends sales data commission totals to the advertiser. Both the bank and the referring website (publisher) see the results of the partnership quickly and can make decisions about whether the website is working for that product promotion or whether the advertisement itself may need to be changed. The length of the partnership/agreements between advertisers and networks, and publishers and networks can be negotiated.

Choosing a network is much like choosing an advertising agency, experts say. Seek out evidence of quality work and reputation, longevity and adaptability. And much like choosing an advertising agency, tell the network what you would like to achieve--not how they should go about it. Technology is changing so rapidly that there may be programs or systems the network can put in place for you that you would not know about--until you ask.

Tanja Nan Sablosky

Joe Dysart is an Internet business consultant based in Thousand Oaks, Calif. Telephone: [phone]. E-mail: [e-mail] Web: www.digitalubiquity.com.

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