RevenueWire.com: Growing in a Competitive Affiliate Industry
(11 pages of text)
After three years of rapid growth in a relatively young industry, the affiliate and payment-processing company RevenueWire.com found itself operating in a very different environment. Sales growth in the company’s affiliate network service had leveled off, and orders for Q1 2010 looked just like those for Q1 2009. New competitors, low entry barriers, and a plateau in the affiliate market meant few opportunities for growth across the industry. Despite these conditions, the company’s owners had set aggressive revenue targets for 2010 to 2012. The general manager needed to evaluate options for growth, including new markets and new products, to determine how to meet her targets. Because RevenueWire.com’s competitors were privately held, there was little public data on the state of their finances or the size of various markets. The general manager had learned how to use surrogate data to gauge the market and make strategic decisions, and the students must do the same to develop an effective three-year plan that will hit or exceed the owners’ expectations.
The case exposes students to decision making in a global industry dominated by privately held companies. It also exposes students to the affiliate marketing industry from the viewpoint of an entrepreneurial company that serves as an intermediary between merchants and affiliates. It describes many of the challenges facing an intermediary in an industry that includes not only legitimate merchants but a vast array of scam artists and phony products.
The objectives of this case are to:
- Engage students in assessing two significant segments of e-business — affiliate marketing and online shopping carts — from the perspective of an industry competitor, rather than a consumer.
- Improve students’ ability to identify, compare, and choose from among competing strategic opportunities.
- Hone skills in projecting revenues and conducting sensitivity analysis.
- Engage students in identifying and assessing complex secondary factors in implementing an online strategy.
Information, Media & Telecommunications
Canada, Small, 2010
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