I ghost wrote this piece in 2006 and it is still totally relevant today. I am still astonished that so many people still don’t know about affiliate marketing or use it, especially small business owners. A model where you only pay when a sale has been made! Perfect!
Which online marketing channel is older than search engine marketing? It delivers millions of consumers monthly to household brand names in Australia, costs money only when you have sold a product and has been one of the driving forces behind eBay and Amazon? Affiliate marketing.
Affiliate marketing is one of the most cost-effective online advertising models, as well as one of the best ways for targeted websites to make money. The model is simple: the advertisers promote their company on affiliated sites and pay based on the results of an action.
This action could be a qualified lead, an application, or a final sale of a product or service. It is effectively paying a sales commission against the value of introducing customers to the advertiser. It is attractive because the company does not have to pay until it gets results.
It is also attractive to media owners because they can attract new advertisers and generate money from unsold advertising inventory, or simply get new advertising clients without having to go through a lengthy pitch. They can prove their website’s ability to deliver sales and generate an income from the activity.
The direct sales results are impressive and on top of this, there is also the benefit of increased brand exposure. Below are some tips for getting the affiliate marketing model working.
Work out what your customer is worth as a new acquisition and as a returning customer. This allows you to set the commission you are willing to pay.
There are a number of payment models you can adopt in your campaign, and you may want to consider offering your affiliates a range of commission options and rates against the value of various actions. Examples include pay per lead (PPL), cost per action/acquisition (CPA) and cost per lead (CPL). These mean that you pay for every referred visitor to the advertiser’s website who performs an action, such as completing a registration, signing up for an email newsletter or completing an account registration.
The other popular payment models are pay per sale (PPS) and cost per sale (CPS). With these, you pay a percentage of the sale to the affiliate against the product purchase.
You can use a hybrid of these models to work closely with your affiliates and help them to work out your value to them as an advertiser, and assess what their earnings per click (EPC) are likely to be from your campaigns.
Set your criteria
Be clear about the type of affiliates you want, and qualify the type of sites you are happy to have your advertising appear on. An affiliate network will help you pre-approve the sites you will work with.
Nurture affiliate partners
Your affiliates are your virtual sales team, so help them to help you. Provide them with plenty of creative and promotions to help them drive traffic and sales to your website. Communicate regularly with them through a newsletter and share the latest news from your company. This way they feel part of your organisation and will work harder for you. An affiliate network has tools to help you promote to the affiliates, so use them.
Research and learn
Look to more mature markets and research what other companies in your market sector are doing. Find out what is successful and emulate it.
Continually test and learn from your own campaigns and listen to what your affiliates say is working.
Ensure you do your research when choosing an affiliate network partner. Key things to look at are their long-term and possible international experience, technology capability, quality of affiliates and advertisers in the network, and the support and account management they will offer you. Choose and focus on one network rather than signing up to multiple networks, spreading yourself too thinly and duplicating your efforts.
Pay attention to your other marketing
Affiliate marketing is a win-win situation, but it’s not a wonder solution that you can just sign up to and then ignore. Integrate it into your overall marketing mix and treat it with the same attention and respect as other marketing channels.
Seek to work with reputable brands that enhance your site. Look for advertisers with a broad product range and creative that links deep into their sites, directly to a product sale page. This creates a higher conversion to sale as the customer has to perform fewer clicks to find the product they want.
Assess the quality of the networks you sign up to by the quality of advertisers in their network; their tracking and transparency of reporting; and their communication program to keep you informed of updates and offers.
Look at advertiser programs that give you the best earnings per click (EPC).
Ensure your network has sales validation and a reputation for paying commissions regularly. Ask other affiliates what their experience is.
Only work on a “validated” action
Minimise the risk of paying for any action which does not deliver you an ROI by only paying partners for an action you have validated.
Support your advertisers
Integrate your site with your advertiser’s creative. Place them prominently on your site. Ensure you place them where your content matches their product and you are more likely to generate a sale.
Test and learn
Any affiliate network or system which is worthwhile will allow you to track the results of your advertising by each placement, so use this to make sure you’re getting the best ROI from your ad space as a media owner.
Affiliate marketing relies on affiliate websites who know how to make the most of their web space and advertisers who manage effective affiliate relationships, improving their earnings per click and expecting to pay for sales volume.
The model is low risk and delivers high returns. Rather than nominating a budget via standard media planning, then buying and waiting to see the results, affiliate marketing allows advertisers to control acquisition costs, setting the price they are willing to pay for leads, registrations, sales, and so on. The affiliates decide the placement and timing to deliver the audience and get their return.
Affiliate marketing is a true ROI advertising model. The benefits are tangible; it drives revenue through customer acquisition and generating sales and actions. It reduces costs and provides absolute ROI transparency. It boosts conversion rates and provides viable business intelligence into which advertising campaigns work best.
Fi Bendall is the managing director of digital and interactive consultancy company Bendalls Group. With over 20 years’ experience, Bendall has worked with global brands including BBC and Virgin, and is an expert in how businesses can approach strategy in the digital world. You can follow her on Twitter at @FiBendall, and can contact her through Bendalls Group.