Self-regulation, government affairs and new technologies are just some of the initiatives at the top of the ERA board’s priority list.

By Vitisia Paynich (Photo by Ken Reid)

On January 29, 2006, members of the 2005-06 Electronic Retailing Association (ERA) board of directors gathered in a meeting room at the Loews Hotel in Miami for one essential purpose: to set a plan for the upcoming year and put it in motion. For ERA’s six new board members, the Strategic Planning Meeting launched their four-year term of service, which will enable ERA to capitalize on their industry expertise, as well as to create diversity within the group.

So, how do some of the board’s newest members feel about their new role in the association? “I am excited to be a new member of the ERA board, not despite, but because of the challenging and unpredictable times ahead,” says Jon Congdon, president of Product Partners, LLC/Beachbody.com in Beverly Hills, Calif. “I believe the members of this association are among the most innovative members of the business community today, and that makes ours a fun industry to be a part of.”

For another new member, serving on the board is familiar territory. Linda Goldstein, partner at Manatt Phelps & Phillips, LLC, in New York City, was ERA chairman from 2002-03. She notes, “Many people have asked me why I wanted to return to the board, and I think a key reason for me was the continuation of the Electronic Retailing Self-Regulation Program [ERSP] and to make sure that as we continue to refine the program, we stay consistent with the Commission [FTC].”

Maria Kennedy, vice president, direct response/paid programming for Discovery Communications in New York City, contends that being a new board member allows her to represent the cable industry and offer insight into the key issues that would affect everyone across the board.

Ed Garrubbo, CEO of CIRCUMEDIA, LLC, in West Chester, Pa., has been an active participant in the association, serving as a member of the ERA European board of directors. “From the beginning, I’ve been very interested in ERA’s international development, so I think I will continue to be involved in helping ERA formulate its future outside of the United States as well as inside the [U.S.],” he says.

EBAY, MATCH.COM SIGNAL ERA GROWTH
In September 2005, ERA also welcomed new board members from two high-profile companies: Brian Bieron, senior director, federal government affairs at eBay Inc. in Washington, D.C., and Christopher Gassett, senior vice president and general counsel at Match.com in Richardson, Texas. However, Gassett is no stranger to direct response or the association. Prior to joining Match.com, he served as assistant general counsel at HSN.

Gassett believes having another highly regarded online company like eBay is “a reflection of the fact that people are recognizing the continued and growing presence of the direct response industry.”

Rick Petry, ERA chair-elect and chief marketing officer for Downstream in Portland, Ore., points out, “If you look at eBay, for example, five years ago, I would venture to say that no one could have imagined the global impact that company would have today. And, it’s pretty phenomenal.”

Nancy Marcum, founder and CEO of Marcum Media, LLC, in Phoenix, agrees. “I am thrilled to have these companies as board members, because we have fought a long battle since 1984 [when] the infomercial business was [comprised of] a bunch of renegades,” she says. “The very fact that we have credible companies like eBay and Match.com makes consumers and marketers stand up and take notice of an industry that has been successful in cleaning itself up.”

Kennedy says, “Bringing more blue chip companies into the fold not only equals instant credibility, but it also helps [members] get more of a foothold on the industry.”

While many believe having these companies brings integrity to the industry, others contend it’s a reflection of ERA’s desire to support a multi-channel marketing environment. Gassett adds that although television and radio marketers are looking for other marketing methods beyond the traditional television medium, Internet firms are also looking at growth opportunities. “Here is Match that probably suffers from the opposite problem that most of the ERA members [deal with],” he points out. “We started solely as an Internet business and what I know [Match.com] can get out of ERA are opportunities to expand its business into other media like DRTV.”

Toni Erickson Knight, CEO of WorldLink, LLC, in Los Angeles, concurs with that sentiment. She cites Google’s recent acquisition of dMarc Broadcasting Inc., a radio ad firm based in Newport Beach, Calif. “That’s a very interesting situation to note because as we’re all looking at new ways to grow into these new distribution channels-i.e., Internet advertising, podcasting, etc.-you know a lot of [Internet] companies are also looking at traditional ways to advertise. In the case of dMarc, Google obviously realizes that even though it is growing strongly in Internet advertising, the majority of ad dollars are in traditional media,” she says.

HOW FAR HAS ERA COME?
When asked what significant accomplishments the organization has achieved within this past year, many point to the association’s business conduct. “To me, it seems like there’s a much higher level of professionalism in the way that ERA is going about managing its business-from how it sets goals, to how it develops the techniques, to the tactics used to achieve those goals, to how it goes about achieving them,” notes Steve Armstrong, executive vice president and general counsel at HSN in St. Petersburg, Fla.

Garrubbo echoes that statement. “While it [the association] started in a very entrepreneurial fashion, it’s evolved into a truly professionally run organization and that has been the biggest impact,” he says.

On the government affairs side, many members believe the association’s efforts in this area have made an indelible impression on the industry. “There’s no question that our self-regulation program continues to put us in the forefront of industry credibility,” affirms Barbara Tulipane, president and CEO of ERA.

In August 2004, the association-in partnership with the National Advertising Review Council (NARC)-launched the Electronic Retailing Self-Regulation Program (ERSP). This self-policing program pulls off the air shows that make unsubstantiated advertising claims. As of January 2006, ERSP has reviewed 2,400 direct response advertisements, with 90 cases pending or closed. What’s more, of those 90 cases, the program has achieved a 94 percent participation rate. (For more information on ERSP, see article.)

Has the direct response industry been cooperative with ERSP? “I think you’re always going to have a segment of the industry that unfortunately won’t participate,” notes Goldstein, “but I would say today, the vast majority of the industry is embracing the program and participating.”

Thomas Kelly, president and CEO of hawthorne direct inc. in Fairfield, Iowa, contends the implementation of the self-regulation program makes “a fundamental point in that it allows for the public to garner greater trust when they purchase from television.”

Anand (Andy) Khubani, president and CEO of Ideavillage Products Corp. in Fairfield, N.J., believes self-regulation is simply a matter of critical necessity. “The Federal Trade Commision seems to really have this industry under a magnifying glass and anything we can do to have a better image with the FTC will be helpful, and I think ERA is perfectly positioned to do that,” he states.

Another feather in ERA’s cap is the reaction by other industries to its self-regulatory efforts. Tulipane adds, “We certainly have recognition from all of the regulatory agencies for doing the right thing and stepping in. But even beyond that, I know that other CEOs [of] other associations are now sitting up and taking notice-whereas before they may have said, ‘No, I don’t want to get involved with you.’ But now, they recognize our efforts and how we really are turning things around, and they are reaching out to us as well.”

THE LAUNCH OF ORA
As for other association accomplishments to date, Jeffrey Knowles, 2005-06 ERA board chairman and partner at Venable, LLP, in Washington, D.C., says, “I think the single most important initiative that ERA has undertaken this year during my chairmanship is the launch of the Online Retailing Alliance (ORA), which I believe has enormous potential to create a significant increase in ERA’s membership, drawing on companies from the online community.”

Launched in October 2005, ORA was established to address the top legislative issues facing Internet merchants. Knowles adds, “The goal behind the formation of ORA is really two-fold. One, by creating a grassroots membership of e-commerce companies, we would make ORA-and therefore, ERA-more attractive to eBay, Google, Yahoo, InterActiveCorp (IAC), Microsoft and others.”

He further points out that Internet companies-large and small-need greater political support “and in order to be effective legislatively, they need to have a core group of e-commerce companies working with them. Consequently, these companies are looking to ERA and ORA to recruit that grassroots, online membership that will turn [the association] and those major companies into a more powerful lobbying force.”

Some of the core initiatives that ORA has been tackling since its inception include privacy issues, streamlined sales tax and net neutrality.

FORGING NEW TERRITORIES
The formation of ORA is merely the beginning of a new chapter for ERA. In addition to its concentration on e-commerce and online marketing, the association is focused on emerging technologies such as mobile marketing, RSS technology, podcasting and interactive television (iTV).

“We will always be focused on TV in some regard, because TV is the vehicle that draws most consumers,” Tulipane clarifies. “However, one of the best things about our members is they look for all avenues for building business.”

Tonda Mullis, CEO and founder of MarketRights International in Newtown, Conn., says, “Traditional TV marketers have seen their numbers and their success significantly grow through some of these emerging technologies. For example, several years ago, some of the traditional two-minute partners were shocked when they tested web sites versus 800 numbers on the TV spots and found that not only did they get more sales through the web but their overall sales increased.”

According to Stephen Hamlin, vice president of QVC.com in West Chester, Pa., “DRTV needs to embrace some of these technologies. I think they [DRTV companies] were very slow to embrace some of the Internet technologies that they now [employ].” Although he quickly points out that the more advanced DRTV companies embraced the web early on, he says, “because of the convergence of these technologies, it’s important that the DRTV people do not live in a vacuum and are exposed to what’s going on out there. And, I really think that opening up to more technologies will end up benefiting them.”

Knight adds, “The Internet, mobile television and all these other distribution channels are going to become increasingly more important to all of us, because they are great new ways for advertisers to connect with consumers. And, we have to stay at the forefront of these changes so that we can take advantage from an increased sales opportunity.”

LIVE SHOPPING FINDS ITS VOICE
Nathan Fagre, senior vice president and general counsel for ShopNBC in Eden Prairie, Minn., says ERA’s involvement with government affairs was a key factor in deciding to become a member. “With live shopping, since it’s 24 hours a day live, we have separate challenges in terms of making sure that all of our unscripted, on-air statements are always accurate and follow guidelines,” he says. “And through ERA, we’ve set up a separate council called the Live Shopping Council.”

Armstrong, who is also involved with the Live Shopping Council, adds, “With live advertising, you can’t prevent people from just getting on the screen and saying things that you don’t want them to say occasionally. That’s the nature of live broadcasting. And so, it was really with the Live Shopping Council through ERA that we were able to sit down with the FTC and talk to them about this.” As a result of these meetings, the council believes that the FTC now has a much stronger understanding of the challenges the live shopping industry faces, while trying to comply with regulations.

INTERNATIONAL EFFORTS
On the international side, ERA has expanded its global membership, which comprises companies throughout Asia, Europe and Latin America. One of the association’s biggest accomplishments, however, was the establishment of ERA Europe.

According to Gilles Labouyrie, vice president, marketing and merchandising for Home Shopping Service (HSS) in France and chairman of ERA’s European board of directors, says, “The most significant development for ERA Europe has been the Government Affairs Committee, where ERA was heavily involved with the European Commission to help redraft the Television Without Frontiers directive. This directive is the foundation of all the television regulations across Europe.”

He adds that ERA Europe was able to convince the Commission “to participate in the different debates and discussions that happened around this directive, and they have taken [our input] into account.”

Jorge Hane, president and CEO of Premier Solutions in Miami, Fla., has seen firsthand the growth in membership, especially from Latin America. “Internationally, we’re growing,” he says. “We’re finally getting to where we should have been five years ago.” Hane serves as the ERA board liaison to the Latin America Committee.

He continues, “The first thing that we have to address at the board level is how to [effectively] communicate to those [international] members at large that there are many benefits to becoming a member of ERA and staying a member.”

In 2005, the Latin America Committee, under the chairmanship of Luis A. Salaverria, increased the Latin American membership from its initial goal of 17 to 26 new members.

ERA also has set its sights on the Asian market. In April 2006, the association will host its Asia Conference in Hong Kong. Chairman Knowles believes the association should put particular emphasis on restoring its efforts that were started nine years ago in that region. “I think we need to make Asia a high priority. The Asian economies are growing stronger, and I’d really like to see ERA re-establish itself in Asia in a very prominent way. And, I hope our meeting this April will accomplish that.”

While it’s clear that the association is making strides in helping its members expand their businesses on a global scale as well as transforming ERA into a thriving international organization, Richard Stacey, president and CEO of Northern Response (Int’l.), Ltd., in Toronto, warns against handling each region in the same manner. “It’s not a cookie-cutter approach. There are different strategies for Asia, as there are different strategies for Europe and Latin America. So, we need to carefully assess each market going forward.”

WHAT LIES AHEAD?
Tulipane believes in the past year, the association’s other significant accomplishment has been its ability to form strategic partnerships with other industry organizations, including the Interactive Television Alliance (ITA) and the Retail Industry Leaders Association (RILA). “We’ve developed very strong alliances with other groups that have allowed us to share resources,” she says. Thus, while these groups may also host conferences, they may not have the type of political clout that ERA has through its government affairs efforts.

Recently, Tulipane met with the Interactive Advertising Board (IAB). “I’m learning that there seems to be some synergy there,” she points out. “The beauty of ERA is the fact that we’re all electronic retailers. So to bring in the [IAB members] would be a perfect fit for us, because there aren’t competing interests.” She adds that this is an opportunity for ERA to represent these other organizations in the area of government affairs and fill that void for them.

Tackling issues that affect everyone in the electronic retailing industry, such as net neutrality and streamlined sales tax, will be priority one for the association in the coming months. As chairman of ERA’s Ethics Committee, Hane will be addressing another critical problem plaguing the industry worldwide-counterfeiting. “Members are going to have to find a way to come forward and disclose these problems, so we can help them resolve them,” says Hane.

“Being a board member today is a more challenging responsibility than it has been in prior years,” notes Goldstein, “in a sense that’s because the media world and the channels of distribution are so rapidly changing and evolving. The challenge for the board members is to be somewhat visionary and to try to think about how technology will change marketing platforms and marketing activities, and to help ensure that we embark on a strategic road that keeps us relevant.”

Looking ahead, Petry believes the future looks bright for ERA. “The leadership that’s preceded me has begun to lay a [solid] foundation by creating an organization that’s financially stable,” he notes. “ERA and the board are protecting our interests on Capitol Hill, creating a level playing field through self-regulation, and now we really have an opportunity to realize our potential and [as the next chairman], that’s what I look forward to helping the organization do.”

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