Affiliate Marketing 1.01

A copy of the presentation I did today for the Dovetail User Group over at the Institute of Directors (click to load the presentation in google docs). It’s called ‘Affiliates 1.01’ because the brief was for something very basic as an introduction for people who haven’t yet used affiliate marketing. ‘Very basic’ is obviously one of my core competencies; anyone who use affiliates already should just pass this blog post by (although there are some useful links at the foot of the page).

So, (basically) affiliates are another source of traffic, leads or orders for ecommerce sites. The affiliate gets people to come to your website and buy something, and you pay them for that customer. Those sites might be content based websites or blogs, comparison or shopping sites, cashback, incentive or voucher sites. The affiliate might be getting traffic to their site through great content, strong SEO, their own PPC activity, emails or because they run forums or other high-traffic services.

If you operate in a very niche market with a small number of relevant content sites in the same space, you could try and set up your own network, offering links or ads to the external sites and tracking sales from them. Beyond the very small though, you will need either to buy affiliate software or sign up with one of the affiliate networks.

The network will list your sales program (what you’re going to pay for a sale and your ts & cs) and the affiliates signed up to that network are then able to join the program. This means that they are given links to your site that pass through the network’s server; when a customer clicks on that link on the affiliate’s site a cookie is dropped. A piece of code in your site’s basket looks for this cookie and if it finds it, chalks up the sale to the affiliate. You pay the network and the network pays the affiliates.

The advantages to you as the merchant are that you have access to thousands of potential affiliates through the network (including big players who wouldn’t want the hassle of coming direct to every merchant), you don’t have to worry about accounting for sales for each individual affiliate, the network gives you detailed traffic, sales and conversion data, and you have one point of contact for communications and customer (i.e. affiliate) service.

On the downside, it ain’t cheap. You’ll pay a setup fee, a monthly charge and commission on the commission paid to the affiliates. Prices vary, but Affiliate Window, the biggest UK network might charge £2500 set up, £500 a month management and 30% override on the commissions you give out. Obviously, if you’re not doing a lot of business through affiliates then your CPA is going to be extremely high.

You should not underestimate the amount of work that it is likely to take to manage the network and your main affiliates (you will have hundreds of affiliates sign up for your program, of these only a few will generate any traffic and only a handful a decent level of sales). You need to make sure that offers and creatives are kept up to date, the commissions you pay are working, that you nurture your core affiliates so that they keep producing good sales volumes for you, and that you communicate with the affiliates in the program when you’re looking to give sales a boost. You’ll also need to monitor fraud or activity that you deem is unsuitable – removing sites from the program if you object to their content, monitoring which affiliates are using PPC and whether they’re bidding on your brand terms for example. You will probably also need to continue to try to recruit new affiliates directly.

In summary, affiliate marketing can provide extra levels of traffic and customers, but it isn’t cheap and it takes effort. If you can invest time and money, and your product range is attractive enough, you could see it become a useful additional channel for your marketing efforts.

Further reading

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