Affiliate Marketing

Affiliate Marketing Social

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Kapil Bhatia

Exactly what is affiliate marketing?• What is it?

‘A commission based (CPA) arrangement where referring sites (publishers) receive a commission on sales or leads by retailers or banks’.

• Remember – affiliate sites use other payment models– CPC (Cost Per Click) and CPM (Cost per thousand) or fixed media buys are also possible

VisitorPC

TrackingSoftware/ Network

Merchantsite

Affiliatesite

Click

Sets time-limited cookie e.g. 1 day to 90day checks cookie present on purchase

Creative

Visit Re-direct

• Example Affiliate networks:– www.cj.com (+US), www.tradedoubler.com (+Europe), www.omguk.com

www.dgm-uk.com, www.affilliatewindow.com, www.buy.at,

Commission fee

Affiliate v/s Aggregator• Affiliates (Publishers)

– Small privately owned sites – Carry out their own marketing activity – Through various business models to generate traffic to their site – Build their own customer base. – Affiliates may advertise for other sites, and receive commissions

for sales generated via their website.

• Aggregators, – Sometimes referred to as Comparison sites, – Have a similar payment model to Affiliates – Receive commissions for sales generated via their site, at an agreed

amount prior to activity starting.

Affiliate & Aggregator Marketing operational diagram

Operational Relationships More cost effective to manage the programme through Affiliate Networks.

Examples - Online Media Group (OMG) and Commission Junction (CJ).

• Affiliate Networks: – Act as an intermediary between the merchant/brand and the affiliates. – Manage hundreds of sites. – Set up tracking, manage the payment of individual affiliates, – First point of contact to resolve affiliate issues. – The networks in turn receive an agreed % commission for each sale delivered

• Aggregators – Are generally larger in scale than affiliates, and fewer in number– More established – A single aggregator can deliver significantly larger volumes than a single affiliate. – More cost effective to manage aggregators directly. – Building direct relationships, eliminates network fees and provides an opportunity for negotiating better deals.

Who are these affiliates?

• 83% male• 34% are full time affiliates• Promotion techniques:

– Social Networks– Blogs & Forums– Email Marketing

• Networks used:– Affiliates are typically signed up

with multiple affiliate networks – 15% of affiliates are signed up

with just one network

Source: E-consultancy Affiliate Census 2009http://www.e-consultancy.com/publications/affiliate-census

What can affiliates do?

13% of the affiliate marketer generate > £ 50,000 per month for their business

Source: E-consultancy Affiliate Census 2009http://www.e-consultancy.com/publications/affiliate-census

Affiliate Programme StructureMerchant Affiliate Networks Affiliates/Publishers

1. Agree fixed commission per sale with networks.

2. Agree terms and conditions for the programme

3. Pay monthly sales lump sum

1. Recommends new affiliates wishing to join the programme.

2. Recommends new opportunities for increasing volumes

1. Manages the affiliate set up process once approved for the programme

2. Pay individual affiliates

1. Any new opportunities to drive more volume through their site

2. Resolution of any tracking or payment issues

Affiliate Types• Affiliates vary in their business model type which they employ to generate traffic to their sites. These include:

Business Model Explained Example sites

Paid Search Bids on generic , high-volume keywords

http://www.compare-carinsurance.com

SEO – Natural Search Employing SEO techniques to achieve high rankings in the natural search listings.

http://www.trialpay.com

Email marketing to registered customer base

Send weekly emails with offers and promotions to a registered customer base that have opted in to receive such updates.

www.smartquotes.com

Social Media/Blogs Posting of affiliate links on social networking sites or writing product reviews on their blogs/vlogs

www.facebook.com

Loyalty/Cashback / Incentives

Registered customers receive an incentive, cash back or points (towards some incentive) when they purchase via the affiliate

http://www.xpango.comhttp://www.quidco.com

Product Comparison / Review

Sometimes seen as small aggregators. Encourage customer reviews and have product table comparison across a number of brands

http://moneysupermarket.com

Why Affiliate Marketing

• Increasing the amount of traffic to your site

• Benefit from gaining links from established web sites and online marketers

• Amazon implemented an in house affiliate scheme in 1996

• Your affiliates are your online sales force, but you only pay when they actually make a sale.

• If AdWords aren’t performing – Or your natural listing drop, you have

another source to fall back on

for every interactionthere is an equal and

opposite

reaction

Redefining Newton’s law for the Digital World

2.0web

Affiliate Marketing and Social Media

• People discussing, commenting and recommending the products that matter to them.

• A limitless marketing budget (allowable cost/lead)

• Unbound customers finding new ways to efficiently take your products to market.

• Customers actively seek product reviews – – Blog about it or create groups for discussion

• Caution• May not generate direct Income

• But• They will lead customers to your sites via links submitted

• Create Awareness about your product/services

Affiliate Marketing on Social Networks

Source: Affiliate Marketing Benchmarkshttp://www.affstat.com

More than 50% of the Affiliate Marketers use Social Media to promote products

Usage of Social Media Sites

Source: Affiliate Marketing Benchmarkshttp://www.affstat.com

Twitter exceeding usage of Facebook for Affiliate Marketing

Adoption of Social Media

Facebook Twitter – Information network

Referring Links to Merchant’s Website

For merchants - opens up a new channel to sell products For affiliates –a way to generate revenue by recommending other people's products to Merchants Website

Affiliate Marketers using Youtube to promote Products.

Tips for Affiliate Marketers: -

-Product Reviews on Vidoes

- Add Affiliate URL to the video to redirect the viewer to the Merchant (Bank) site

Note - The Marketer is wearing a

T-Shirt highlighting his website used for Affiliate Marketing.

Event or the URL Link

What Can You Sell Using Affiliate Marketing

Product considerations• Tips on approach

– High online purchase rate• Additionally can pay

commissionon direct phone numbers (managed by affiliates)

– Need competitive rate to achieve volume

• Can make competitive on some criteria only, e.g. 0% on purchase, not balance transfer

• Uncompetitive products can be promoted in other ways to increase EPC, e.g. cookie period, leads for other products not in programme

• Not worth high CPA deal on aggregator unless rate competitive

• The experience:– “Steer clear of high involvement

products with complex fulfilment– Examples of suitable products

• Home and motor insurance• Credit cards

– Examples of less / unsuitable products

• Mortgages• Life insurance

“he clicks me

he clicks me not”

Banners

1. Strong primary message2. Use high contrast3. KISS - Don’t use TOO MANY:

FramesAd elements

4. Clear call-to-action ‘Apply Online Now!’All frames clickable

5. Consider images

Landing Pages

Example creative

Reach/Segmentation consideration

Affiliate relationships consideration• Tips on approach:

• Provide detailed and up-to-date programme information – copy and best features to promote – not just a bullet list.

• Monitor and respond to forums and top affiliate blogs

• Regular email communications- Newsletter- Personalised email

• Phone communication for top affiliates.

• Quick response to queries

The experience:

• “It’s all down to communication”

• Monthly newsletter for all affiliates with updates on key product / rate launches

• Phone chat with top affiliates explaining, changes in CPA if product not converting or being tracked through secure banking.

• Top tier affiliates don’t get blanket emails – only personal ones

Reach / segmentation consideration

• Tips on approach:

• Track new / emerging affiliates each month

• Treat large super affiliates differently.

• But use different involvement tactics for smaller affiliates(e.g. reward fastest growing, those that meet a low-mid volume threshold)

• The experience:

• “Market evolving fast”

• Now 100s of affiliates per product commonplace – adding monthly

• 90 (% sales) : 10 (% of volume) rule still applies

• Need separate strategies for super-affiliates and tail – mid and long

10. How well are you measuring the health of your affiliate programme

Overall programme or network MI• Importance of affiliate channel / network:

– % sales generated by affiliates– Number of sales, value of sales

• Value from channel / network– Return on investment – Long-term lifetime value

• Affiliate recruitment (segment by affiliate types):– Absolute and % active affiliates– New signups

• Aggregate affiliate performance (segment)– Number and % increasing sales– Number and % decreasing

Few Disadvantages

Banner Placement – You are not directly in control of where your ads are shown. However, as you pay on results it won’t cost you too much if they do not work.

Less Choice – You have less choice over which will show your ads and where they will show them. Affiliate adverts are at the request of the publisher.

Direct Affiliate – Time Consuming – As you need to deal with every publisher individually

Network Affiliate – Requires Payment – Joining an affiliate company is not free!

Future Trends

• Affiliate marketing is a low-risk, high-return strategy for online marketers.

• US affiliate marketing spending will reach $4 billion by 2014 and will increase at a compound annual growth rate (CAGR) of 16% from 2009 through 2014

• Payments to affiliate sites direct from marketers will represent the majority of the affiliate marketing spending, or 57%, in 2014.

• Within the next five years financial services firms will be among the top 3 spenders in the affiliate marketing arena.

• Will be most preferred type of marketing in tough times

Source: US Affiliate Marketing Forecast, 2009 To 2014http://www.forrester.com

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