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420 Part Three Key System Applications for the Digital Age

Affiliate Revenue Model
In the affiliate revenue model, Web sites (called “affiliate Web sites”) send
visitors to other Web sites in return for a referral fee or percentage of the revenue
from any resulting sales. For example, MyPoints makes money by connecting
companies to potential customers by offering special deals to its members. When
members take advantage of an offer and make a purchase, they earn “points”
they can redeem for free products and services, and MyPoints receives a refer-
ral fee. Community feedback sites such as Epinions and Yelp receive much of
their revenue from steering potential customers to Web sites where they make
a purchase. Amazon uses affiliates who steer business to the Amazon Web site
by placing the Amazon logo on their blogs. Personal blogs often contain display
ads as a part of affiliate programs. Some bloggers are paid directly by manufac-
turers, or receive free products, for speaking highly of products and providing
links to sales channels.

SOCIAL NETWORKING AND THE WISDOM OF CROWDS

One of the fastest growing areas of e-commerce revenues are Web 2.0 online
services, which we described in Chapter 7. The most popular Web 2.0 service is
social networking, online meeting places where people can meet their friends
and their friends’ friends. Every day over 93 million Internet users in the United
States visit a social networking site like Facebook, Google+, Tumblr, MySpace,
LinkedIn, and hundreds of others.
Social networking sites link people through their mutual business or personal
connections, enabling them to mine their friends (and their friends’ friends) for
sales leads, job-hunting tips, or new friends. Google+, MySpace, Facebook, and
Friendster appeal to people who are primarily interested in extending their
friendships, while LinkedIn focuses on job networking for professionals.
At social shopping sites like Pinterest, Kaboodle, ThisNext, and Stylehive,
you can swap shopping ideas with friends. Facebook offers the Like button and
Google the +1 button to let your friends know you admire something, and
in some cases, purchase something online. Online communities are also ideal
venues to employ viral marketing techniques. Online viral marketing is like
traditional word-of-mouth marketing except that the word can spread across an
online community at the speed of light, and go much further geographically
than a small network of friends.

The Wisdom of Crowds
Creating sites where thousands, even millions, of people can interact offers
business firms new ways to market and advertise, to discover who likes (or
hates) their products. In a phenomenon called “the wisdom of crowds,” some
argue that large numbers of people can make better decisions about a wide
range of topics or products than a single person or even a small committee of
experts (Surowiecki, 2004).
Obviously this is not always the case, but it can happen in interesting ways.
In marketing, the wisdom of crowds concept suggests that firms should consult
with thousands of their customers first as a way of establishing a relationship
with them, and second, to better understand how their products and services
are used and appreciated (or rejected). Actively soliciting the comments of your
customers builds trust and sends the message to your customers that you care
what they are thinking, and that you need their advice.
Beyond merely soliciting advice, firms can be actively helped in solving
some business problems using what is called crowdsourcing. For instance,

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