VigLink Aims to Turn Links Into Gold—But Will the Golden State Force the Company Out?

6/7/11Follow @wroush

In the spring of 2009, when former Microsoft engineer Oliver Roup was finishing his second year at Harvard Business School, he entered the idea for his future company, VigLink, in the school’s annual business plan competition. During his live presentation to the judging panel, he showed off some code he’d written to help Web publishers make more money from affiliate commissions—essentially, mini-kickbacks from e-retailers for the outgoing links they place on their pages. On his last slide, he included his cell phone number.

As it turned out, Roup’s idea didn’t advance to the finals of the competition. But the “link” he’d included on his slide, in the form of his cell number, actually did bring him some money. One of the people in the audience that day was Rich Miner, a partner at Google Ventures and the co-creator of the Android mobile operating system. “Before I even got to the door, Rich had read my cell number off the slide and texted me,” says Roup. “He said, ‘This is very interesting.’”

By that summer, fast-moving Google Ventures had put some seed money into Roup’s idea, and VigLink’s software went live in February 2010. Now the company is based in San Francisco—though how long it will stay in the state is up in the air, thanks to a political showdown brewing in Sacramento over Internet sales taxes; more on that in a moment. And it’s growing fast, counting 17 employees and a “four-digit number” of customers, according to Roup. Already, pages outfitted with VigLink’s affiliate commissions code are viewed roughly 2.5 billion times per month.

It’s all part of an ongoing technological revolution in what’s called “performance marketing.” If you were under the impression that bloggers, copywriters, and other content creators pepper Web pages with outgoing links like this one purely for your edification, I have some disappointing news: trillions of those links are actually designed to send you off to a page where you’ll buy something. Whenever you do, some money changes hands between the site that profited and the site that sent you. Those are called affiliate commissions, and performance marketing is the science of maximizing both the commissions and the sales they’re designed to incentivize.

Roup says he became convinced that there was room for improvement in the performance marketing business—and for a startup like VigLink—after he wrote an experimental Web crawler to count the number of links pointing to product pages on Amazon. Fewer than half of the links that he found included the extra code needed to activate an affiliate commission from Amazon. For whatever reason—lack of awareness, or perhaps lack of technical skills—Web publishers were leaving tens of millions of dollars in Amazon commissions on the table.

VigLink’s service offers a simple fix: it gives its clients a bit of Javascript code that they can add to their sites’ HTML templates. Once it’s installed, VigLink tracks all of the clicks on links pointing to merchants with affiliate commission programs, and it makes sure that publishers get paid what they’re due. The company profits by keeping a 25 percent slice of each commission.

Here’s a quick VigLink video in which Roup explains the concept; article continues after video.

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Wade Roush is a contributing editor at Xconomy. Follow @wroush

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