Affiliate Marketing Programs | |
| by eRetail Research | |
| Read the related article: How to develop an affiliate strategy.
| Affiliate programs are booming. It’s a marketing executives dream to be able to pay only for advertising that works. This is essentially what a good affiliate program allows merchants to do. Affiliate programs allow eRetailers to expand their marketing channel across a wide variety of Internet sites. The beauty of affiliate programs is that they generate incremental sales revenue from sites geared to niche markets. The principal is simple; merchants pay commission to sites that generate incremental sales (and sometimes to sites that simply generate increased site traffic or new leads). Affiliate programs are consistently ranked at the top of the effectiveness charts in research conducted with eRetailers. The cost of gaining new customers through affiliate programs is typically lower than any other form of advertising. A high percentage of customers who reach a merchant site through an affiliate link go directly to the merchant on subsequent visits to the web. Some research shows this figure to be as high as 80%. This can have a significant impact on successful affiliates. Programs that are designed to drive traffic back through the affiliate sites attract the most attention from the affiliate community. The ultimate affiliate solution allows an affiliate to build a virtual storefront and take sales on behalf of the merchants they represent. There are affiliate program solutions available today that support this concept. Why Establish An Affiliate Program?The obvious reason is to grow sales, but to manage a successful program you need to look beyond this simple objective. The affiliate program can be used to: • Broaden market awareness What your objective is will determine how you establish the program. PrerequisitesDefine who your affiliates are or should be. It is important to have a clear understanding of who you think can best sell your products. Very few affiliates will sell in volume. In fact the majority of affiliate sales volume will come from less than one percent of a merchant’s affiliated sites. However it’s possible to build an affiliate base of over 100,000 affiliates. Even one sale a year from 99,000 affiliates amounts to 99,000 new customers, so don’t ignore small affiliates with low traffic volume. Once you have a clear picture of your potential affiliates and you have defined the objectives of your program you are ready to consider what technology you want to use to manage your program. First you’ll need to consider how you’ll pay your affiliates: • Per impression You also need to consider how long you need to keep information about customer visits. You might only pay an affiliate if the customer buys on their initial click through visit, or you might reward your affiliates if the same customer buys within several days of their initial click-through visit. Affiliates like programs that pay out even if the customer goes directly to the merchant on the next visit. You also need to consider what the minimum monthly payout should be to your affiliates. You may only want to write a check to an affiliate who accumulates $10 or more of commissions. Affiliates who earn less than this would have their balances carried over until they reach the $10 threshold. How you will advertise your site on your affiliate pages will impact your technology. Not all solutions support rotating banner ads for example. You should have a variety of links to your site including banners, text and product links. Allowing affiliates to build a virtual storefront with product links on their pages works well. This also allows you to feature product promotions on affiliate sites. Selecting TechnologyMany leading Internet retailers have established remarkable growth largely through the success of their affiliate marketing programs. Although early affiliate programs were largely developed in-house, new eRetailers now have a variety of options to help get affiliate programs up and running quickly. Beyond in-house developed programs the choices can be divided into the following categories: • Affiliate management packages Affiliate management packagesPackages typically don’t require additional payments to vendors beyond the initial license fees and have the benefit of keeping control of the affiliate program in-house. The downside of running your own software in house is that you have to do your own affiliate marketing to attract new affiliates. You also have to manage the program and the technology. There are three packages available to manage affiliate programs for under $1,000. AssocTRAC is not installed on the merchant’s server. Instead the merchant buys a license to use the software on AssocTRAC’s managed servers (Similar in principle to Commission Junction below). The difference is that Commission Junction brings a network of affiliates to the merchant. If owning the package and running it on in-house servers is preferable, then The Affiliate Link from Affiliatezone.com or The Affiliate Program from KowaBunga! Technologies, Inc. are worth considering. The Affiliate Program supports NT and Unix servers and comes with an extensive array of features. The Affiliate Program starts at $499 and extends to $1,348 for all the options. KowaBunga! Technologies will be releasing a service version (see below) of its product in January to be called MyAffiliateProgram. Priced at $795, it’s intended to compete with Commission Junction. The Affiliate Link offers low cost of ownership if you don’t require all the sophistication of the larger solutions. Affiliate management servicesServices not only allow the creation of an affiliate program, but they also manage the program on behalf of the merchant. The number of affiliates can be grown very quickly through the service provider’s affiliate network. Affiliate management companies typically take a percentage of each commission or sale paid to an affiliate as their fee as well as an up front charge. Commission Junction www.CJ.com |
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