Multi Level Marketing

Multi Level Marketing (MLM) is the dirty little secret of Internet Marketing. It is advertising gone bad and gone off to meet the rough kids behind the bike sheds for a smoke. It would be fair to say, though, that a good MLM is an accomplished selling strategy that provides definite returns. It is a fairly simple model that has existed for years: a parent multi-level marketing company will sell market their products/services directly to consumers by means of relationship referral and direct selling.

It is also fair to say that MLM is not dissimilar to a pyramid scheme in the same way stealing is not dissimilar to theft.

In MLM schemes independent nonsalaried sales representatives of the parent company are rewarded a commission relative to the volume of product sold through each of their independent businesses or organisations. These sales reps will ideally develop their organization by building an active customer base who will buy direct from the parent company. This builds direct relationships and is a positive side to MLM. The other option is for the Sales reps to create a waterfall of independent subsidiaries who also build a customer base, expanding the overall organisation, which, in turn, can employ independent subsidiaries who also build a customer base, expanding the overall organisation, which, in turn, can employ independent subsidiaries… In the perfect MLM/pyramid, everybody will be selling everybody else the same product and getting rich because of it. This is by far the easiest way of getting an economy like Albania’s.

These quasi franchises will return profits both to the initial product/service supplier but also to every rung on the ladder back to the original company. In this situations there can be enormous loss of profit towards the bottom of the chain; it rolls down hill is the adage here. In these circumstances, it is not unknown for sales tactics to push the boundaries of the law. In fact, the boundaries are often ripped up into little pieces and posted back to the authorities such is the disregard for law or morality.

The fact that these MLMs are in existence is because it is very hard to distinguish between the legitimate and the illegitimate. Defenders of the MLM format will say that it is illegal pyramid selling schemes portraying themselves as MLMs that are the problem, and to a certain extent they are right. In the most legitimate MLM companies, commissions are earned only on sales of the company’s products or services. If participants are paid primarily from money received from new recruits, or if they are required to buy more products than they are likely to sell, then the company is a pyramid. But, what is the difference between an ambitious seller who thinks he can sell £30,000 worth of double-glazing (say) and a useless sales rep who buys £30,000 of prospective sales with no hope of hitting the target? Herein lies the question – or more specifically a big fat payday for the lawyers.

As a basic rule of thumb, any MLM that offers more money for recruiting than for actually selling the product will be of dubious origins. There is also an association with near fanatical levels of training and corporate banter. Viewers of BBC’s Rogue trader will be familiar with the training tactics designed to fleece unsuspecting elderly people out of thousands of pounds. Indeed many critics have compared these training and sales regimes as akin to cults – many MLM programs feature intense motivational programs, which can be hard to distinguish from cult propaganda.

By and large, if someone comes round to your house and says that it will collapse unless you have your walls covered in “Flake-No-More” paint which he just happens to sell at £10000 per treatment you have encountered a pyramid MLM. In which case you phone up the BBC or just kneecap the bugger.

PIPE Funding Through Direct Public Offering is the “New” Venture Capital

What is PIPE funding?
Let’s begin with the definition of “PIPE funding” and how it differs from venture capital, private equity and other investment vehicles. PIPE stands for “Private Investment In Public Equity”. It is essentially the process resulting in hedge fund, venture and/or private capital investment into a registered public company in exchange for equity ownership, normally at a discounted price.

What is the relevant history of PIPE funding?

In the fourth quarter of 2007 there was a dramatic increase in the amount of funding provided to public companies due to the credit crunch extraordinary strains now inherent in the sub-prime marketplace. According to Robert F. Kyle, Executive Vice President of Sagient Research the PIPE market hit historic levels in 2007 with over $45 Billion raised in the fourth quarter alone. That one-quarter total exceeded any annual total over the past twelve years.

Why is PIPE funding growing so quickly?
Mark Twain once said “I am more interested in the return of my investment, rather than a return on my investment.” This statement echoes the primary advantage to an investor found in PIPE funding with regard to exit strategy. When an investor makes an investment into a company, a major concern is exit strategy. With PIPE funding the company is public therefore the investor has control over his or her ownership and can buy more, or sell at any time. Private companies normally cannot provide investor liquidity until an exit strategy is identified and executed which normally comes at great risk and over an extended period of time. This is the reason PIPE funding has increased over the last 12 years. Another benefit of investing in public vs. private entities is disclosure. A public company is required to disclose financial information and is regulated by the SEC. Investors all over the world, including hedge and venture fund managers, institutional bankers and individual investors, view this information. Another main advantage for a public company is the ability of management to retain control. Venture capital and angel investors normally demand board seats and majority voting rights. In our experience, companies that take their company public and attain PIPE funding maintain majority ownership, allowing them to execute or modify their strategy to achieve the company’s growth objectives as they see fit.

Does your company qualify to go public?
Not every company is positioned to be a public company and we advise that companies always seek counsel from an industry expert specializing in PIPE financing and the DPO process.

- Would your friends and family invest in your company? If not, there is little chance anyone else would. This might sound simplistic, however in our experience this is perhaps the most powerful litmus test of all.

- Does your company have the potential to reach a national or even global market? For example, a local flower shop with 10 locations would not be in a good position to go public. However a flower shop with national growth aspirations such as may well be a viable candidate due to its national market plans and growth strategy.

- Does your company have a strong and experienced management team? A strong management team is the backbone of any company. Over the years we’ve seen a sharp increase in the number of start-up and early stage companies going public to raise capital. However, to attract investors these companies must demonstrate consistent revenue growth and/or a history of success within a related industry. We often use the example of a local banker who wanted to commercialize a golf ball he developed and patented to distribute nationally. With no history in that field, his chances of being successful in the public offering process were diminished. However, if that same inventor had a proven history with similar development projects, his chances of going public and obtaining funding, even without existing revenue, would be greatly improved.

- Do you know how much capital your company needs? If your company is looking for less than $1 million, then the process of going public would be to costly. The typical funding opportunity for a new public company is between $1 million and $10 million. However, established companies with revenues in excess of $3 million, routinely obtain greater sums once public.

- Can the company generate cash or create value? All public companies must perform in order that their stock price continues to trend in the right direction. If a company is unable to demonstrate the ability to generate cash or to create value in the minds of investors as a private company, chances are it won’t as a public company. Half the battle for a public entity is creating interest, a “buzz”, about the company’s potential or its product or service. This is critical not only to attract investors initially, but also to help sustain the health and growth of the company ongoing. If a company has a good story to tell and a product or service that meets a need on a regional, national or global scale, then the PIPE funding process is an excellent funding solution to consider.

How much does the going public process cost?
The IPO process, which involves an underwriter such as Goldman Sacks or Merrill Lynch can cost a company as much as $10 million. Direct Public Offerings (DPO) for small to mid-sized companies where no underwriter is required because of the stock exchanges and sources we use cost around $100,000. The other major difference with the DPO process is the exchanges. Most Direct Public Offering shares are held on the OTC Bulletin Board, often referred to as Pink Sheets.

In Conclusion
PIPE funding has been increasing at steady pace over the last 12 years due to the increasing amounts of capital allocated to hedge funds and private equity groups that invest primarily in public entities. The opportunities for emerging companies, as well as investors, are tremendous.

The advantages for private companies to go public through DPO include:
- Low cost compared to IPO
- Access to a wider variety of investors
- Access to greater business growth investment funds
- Maintain operating control by the company’s management
- Higher market valuation

The advantages for the investor in public entities include:
- Access to company data and financials resulting in risk reduction
- Integrated exit strategy

Although investors in public entities may not hold board seats or maintain voting rights, leveraged ownership speaks volumes to company leaders and can be a very powerful motivation to continue to move the company in the right direction. So, “exit strategy” certainly entails greater benefits than just the opportunity to liquidate an investment.

Squeezepage 101 – Lessons for the Internet Marketer Wannabe

By definition, squeeze page is a landing page that is made to solicit e-mail addresses from among potential subscribers who would want to opt-in. In the world of direct marketing, having a list of subscribers is a very important tool that any marketer must not do without. On the world of digital technology, having e-mail lists pretty much serves the same purpose.

There is a down side to e-mails since, nowadays, there are much more spam when compared to the real bulk of messages. Most consumers are now wary when it comes to receiving e-mail messages from unknown sources. Squeeze pages were created to allay these fears of being ‘spammed’ or, worse, being sent a virus that would eat up the user’s system.

Experts on online businesses have come up with the idea of squeeze pages that explain the business’ privacy standards and also what the recipient will be getting. It has been observed that online businesses that have squeeze pages have experienced reasonable increases on their visitor-turned-to-subscriber rates. This is the exact reason why more and more online businesses are resorting to squeeze pages.

The general rule to squeeze pages is to keep information and contents concise. The page’s goal is to get e-mail addresses from visitors (any other unrelated or irrelevant information would often drive the visitor away). This is why most squeeze pages do not have hyperlinks or even navigation bars. It’s just one or the other-register or click away.

As an internet marketer, it your duty to convince a casual visitor to opt-in by, primarily, providing their e-mail addresses. Once this is done, an internet marketer has all the opportunities in the world to send marketing messages, establish a relationship with the client, eventually sell something, then maybe even cross sell other products or get some referrals.

Squeeze pages work well with Autoresponders. An autoresponder works by sending out standard response e-mails to all who have sent messages (this buys the person enough time to respond when he is already available). When these two work hand in hand, they can be utilized to present direct download links to obtain some information. Take note that there is a higher opt-in rate to those internet marketers who promise information once the visitor provides an e-mail address. Another good way to spice up squeeze pages is to incorporate some music or videos on them.

To become a successful internet marketer, you must fully utilize squeeze pages. To come up with a convincing squeeze page, just follow these simple guidelines:

1. Keep squeeze pages concise and direct.

2. Make it clear that they can opt-in and also ‘opt-out’.

3. If you could stick to just a single page, do so.

4. Create an opt-in box that would immediately catch the visitor’s attention.

5. Come out straight-tell them that you have no intention of sending any spam messages.

6. Make an offer that people would find hard to refuse.

7. Number all the benefits that they could get by opting-in.

8. Create a headline that ‘tells it all’ and ‘shouts to the world’.

9. Try posting some relevant videos on YouTube that would link to your eye-catching squeeze page.

10. If you are not into technical stuff, you could opt to have squeeze page templates online. Just fill in with all the information that the templates require and your squeeze page is good to go.

There are so many advantages for an internet marketer when he chooses to use a squeeze page. The results may not automatically show but down the road, the income could suddenly start pouring that you would even wonder why it took so long. The list of your visitors would just continue to grow (for as long as they don’t opt-out) and you might eventually convince them on one of those e-mail messages that you constantly send.

It is also important for all internet marketers to keep track of the number of visitors and squeeze pages can lead you back to the visitors’ contact information and you could confirm how much visitors have become clients. As a newbie on Internet marketing, it is necessary to build your reputation. Being professional-looking (even without having a site of your own) could be achieved by having squeeze pages.