Affiliate marketing

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  • Imagine getting 10% of the bill for every person you referred to a restaurant.
    Affiliate Marketing = Performance based
    Notes:
    They would be paying you a finder’s fee for new customers. There are a number of businesses that market this way offline. Brokers for insurance products are an example, but these referrals can be hard to track. Online, they are very easy to track. This system of reward where compensation is based on referral is called Affiliate Marketing, and is used to describe this type of marketing in an online environment.
    Affiliate Marketing is used widely to promote websites, and affiliates are rewarded for every visitor, subscriber or customer provided through his efforts. Because of this, affiliates are sometimes viewed as an extended sales force for a website. Affiliates are paid for performance, so affiliate marketing is also referred to as Performance Marketing.
  • Imagine getting 10% of the bill for every person you referred to a restaurant.
    Affiliate Marketing = Performance based
    Notes:
    They would be paying you a finder’s fee for new customers. There are a number of businesses that market this way offline. Brokers for insurance products are an example, but these referrals can be hard to track. Online, they are very easy to track. This system of reward where compensation is based on referral is called Affiliate Marketing, and is used to describe this type of marketing in an online environment.
    Affiliate Marketing is used widely to promote websites, and affiliates are rewarded for every visitor, subscriber or customer provided through his efforts. Because of this, affiliates are sometimes viewed as an extended sales force for a website. Affiliates are paid for performance, so affiliate marketing is also referred to as Performance Marketing.
  • Affiliates can be viewed as part of the sales force of a company - they have incentives to sell, although at optimal cost to themselves.
  • An affiliate refers potential customers to a merchant’s website.
    Some of those customers perform a desired action.
    The merchant rewards the affiliate for each desired action resulting from the affiliate’s referral.
    …We’re going to take a look at the different types of action, discuss keeping track of it all, and lastly take a look at some of the many means that affiliates use to send merchants customers, and of course, to make themselves cash.
  • CPA
    Here the action could be anything from downloading a White Paper or some software to signing up to a newsletter.
    CPL
    Merchants that offer CPL commissions are usually those that need to convert a lead into a sale offline or that the process is quite complicated. It is typically insurance companies and banking institutions that will offer this type of commission. Membership sites which offer a free trial period, such as online DVD rental, will also use this commission structure.
    Some merchants may be wary that the leads will not be of a high enough quality. This is why they will usually have conversion targets that the leads generated need to comply with as a quality control.
  • CPC - used to drive lots of traffic, particularly to new websites
    Sale of information: Publishers collect data on behalf of advertisers looking to for mailing lists etc…this is often done by offering consumers entry into competitions endorsed by the potential marketer who requires there information, or less directly and sold on at a later stage to the highest bidder.
  • Revenue Share
    Revenue Sharing is the ideal commission structure as both the merchant and the affiliate are rewarded for performance – the more sales, the more revenue generated for the merchant, and the more commission for the affiliate. Websites where a sale can be performed instantly are ideal for Revenue Sharing.
    Merchants tend to structure their commission offering so that affiliates who perform better, earn a higher commission. For example, a merchant might offer the following tiers of commission:
    CPC commission is rarely used, and is primarily a way of driving large volumes of traffic, usually to a new site. An affiliate would be awarded commission for every click through to the merchant website. Although this type of commission was prevalent in the very early days of Affiliate Marketing, it has been largely abandoned due to click fraud.
    Super affiliate = special deal because of volume
  • 1. Affiliates send traffic to merchants through links,
    2.Tracking software allows each affiliate to have a unique identifier in the URL.
    3.These links set a cookie on the customer’s computer, which allows the software to track the sale.
    When customer completes required action cookie allows tracking soft ware to record appropriate affiliate commission.
    The following is the kind of information usually recorded.
    the affiliate network – Affiliate Future
    the ID of the affiliate - 214
    the ID of the merchant
  • There are as many kinds of affiliates as there are sources to bring users to a site….
  • There are as many kinds of affiliates as there are sources to bring users to a site….
  • With the likes of Google Adsense, any blogger or amateur website owner with enough traffic in theory begin making money from sending ‘targeted’ traffic to a website , although they get paid by google on a CPC basis and not by a merchant directly, personal blogs and websites do in a sense act as indirect affiliates.
    commonly personal blogs and websites would utilize direct relationships with vendors, leveraging the content of there site for related product referrals.
  • Content and niche sites are websites created specifically around a topic, and any products promoted will carry affiliate tracking. For example, an affiliate might create a site dedicated to digital cameras, with tips and downloads to help you get the most out of your camera. It could review a number of different cameras, and offer links to purchase those cameras online. All of those links will be affiliate links.
    Seasonality is also a key time for content sites i.e Letter to Santa website:
  • Sites offer discounts and instant savings on promoted brands and services.
  • Resellers of email lists and mailing lists incentivise affiliates to gather data of individuals willing to receive commercial communication
  • As affiliates earn a percentage of a sale, some affiliates “split” this with the customer and create cashback or points based shopping sites.
    There are also some that donate a percentage of the commission to a charity.
    Often these sites are gathering data for marketers as potential sales leads.
  • Comparison sites offer valuable consumer tools in order to direct traffic to the site and then funnel it back out to merchants who pay them.
  • For example. iRead allows you to display personal likes. The developer is an affiliate, and earns commission if a purchase is made from a link on the application.
  • Some of the most successful Affiliate Marketers are those who promote various merchants through paid search: PPC advertising on search engines. As these affiliates seek to find the highest Earnings Per Click (EPC) for the lowest Cost Per Click (CPC), this is also referred to as search arbitrage.
    Essentially taking advantage of the price discrepancy between what they pay per click and what they earn per lead/referral
    THESE ARE SOME OF THE BIG GUYS.
  • A comprehensive affiliate programme can also assist indirectly in your search effort.
    Many affiliates are search experts in their own rights , and extend your key word coverage or bolster your efforts - depending on how niche your product is. You are not paying for the affiliate presence in search results but rather their effectiveness… from PPC to CPA .
    This means , affiliates absorb a decent portion of your search costs .
  • •Tracking solutions &Reporting
    •Hosting creative
    •Recruiting merchants and affiliates
    •Quality control of affiliates and brand compatibility
    •One payment solution for merchants /commission handling
    •Tracking the market e.g.search developments, new technology etc.
  • Merchant pays 30% of all commission paid out to affiliates to Affiliate network.
  • Define the goal e.g new biz = awareness and traffic
    2.Decide: run own programme vs............ affiliate network:
    If choosing a network ask yourself:
    Kind of affiliates represented by network
    Where are your competitors represented
    Fees
    Support offered
    Countries covered by network
    3. Competitor analysis including:
    Commission tiers
    Cookie periods
    Creative offering
    Which affiliates they work with and incentives on offer
    4. Test tracking software for possible conflict with existing tracking
    5. Recruit affiliates! And promote via forums or network
  • Pay affiliates as much as possible – its an incentive driven model and there is little to no product loyalty . High conversion mean lower commissions to attract affiliates.
    Niche, long-tail product focus can benefit an affiliate e.g google ‘pumps and ponds’ (http://www.pondsandpumps.co.za/)
    It’s important as an affiliate to keep in mind that affiliate marketing is true web business – meaning if it’s a product that can sell online your market is global.
    More accurate geo targeting will further promote specialised niche traffic and products, ‘thickening’ the long tail.
  • It’s pay for performance marketing, so merchants are only paying for growth.
    The merchant sales force just got bigger, as well as its branding potential.
    There is a very low barrier to entry for both affiliates and merchants.
    £800 to join a network, monthly costs – free to £300 p/m
  • Note: these negatives are more applicable when no network is involved !
    There are seldom contracts in place between affiliates and merchants. (Particularly if little notice is given, affiliates might have spent time and money setting up promotions, only to have the campaign pulled out from underneath. Most infamously, ASOS.com did this a couple of years ago)
    There is still little to no industry regulation
    Some merchants fear a loss of brand control.
    Affiliate programmes are not easily scalable.
  • Affiliate marketing

    1. 1. Affiliate Marketing – Week 05
    2. 2. What is affiliate marketing? If you enjoy a restaurant, and recommend that restaurant to a friend and the friend visits that restaurant, the restaurant benefits from your recommendation.
    3. 3. What is affiliate marketing? What if the restaurant gave you 10% of the bill of every friend you recommended it to? They’d be paying you a finder’s fee. Online, this is affiliate marketing.
    4. 4. Affiliates: an extended sales force
    5. 5. “A performance based online marketer, sending targeted traffic to a specific website”
    6. 6. Who’s who? Affiliate / Publisher • Sends targeted traffic • Publishes adverts • Earns commission Merchant / Advertiser • Wants targeted traffic • Has products to advertise • Pays commission on successful referrals
    7. 7. The 3 step process
    8. 8. Performance based relationships Action and Reward
    9. 9. CPA – Cost per Action CPL – Cost per Lead
    10. 10. CPC – cost per click Sale of information
    11. 11. Revenue Share e.g. 1 – 10 sales: 10% commission 11 – 25 sales: 11% commission 26 – 50 sales: 12% commission 51 or more sales: 15 % commission Super Affiliate!
    12. 12. The Crux : Tracking Why? Allows correct commission to be awarded to correct affiliate
    13. 13. Tracking in URLs http://www.firebox.com/product/1201 http://scripts.affiliatefuture.com/AFClick.asp? affiliateID=238&merchantID=214&programm eID=3897&mediaID=0&tracking=cube_world &url=http://www.firebox.com/index.html? dir=firebox&action=product&pid=1201&usg= AFQjCNGdHpzAasCefzDnyUBPxnagxqzvTA
    14. 14. Types of affiliates
    15. 15. Social networks Podcasts Personal portals Social Social shopping Bookmarks IM Desktop Wikis Product reviews Blogs Meta-search User-generated content Search Micro-blogging
    16. 16. Personal Blogs and Web Sites
    17. 17. Niche content
    18. 18. Coupons and Promo sites
    19. 19. Email newsletters
    20. 20. Loyalty sites
    21. 21. Comparison
    22. 22. Social Applications
    23. 23. Search affiliates
    24. 24. Affiliates and Search • Payment on CPA basis, not CPC • Search marketing spend passed on to affiliates • Greater keyword coverage
    25. 25. Affiliate Networks
    26. 26. “3rd party technical enablers, linking merchants, affiliates and their transactions”
    27. 27. Network benefits • Tracking solutions & reporting • Hosting creative • Recruiting merchants and affiliates • Quality control of affiliates and brand compatibility • One payment solution for merchants / commission handling • Tracking the market e.g. search developments, new technology etc.
    28. 28. Some examples
    29. 29. Costs • Usually no affiliate joining charge • Merchant set up costs – followed by monthly fee (based on level of support) • 30% of commission earned by affiliate
    30. 30. Setting up an Affiliate campaign • Define the goal • Own programme vs. affiliate network • Competitor analysis • Promote via forums or network
    31. 31. Tips in a performance market 1. Pay affiliates as much as possible 2. Focus on conversion optimisation 3. Niche products can benefit 4. Go global (if possible)
    32. 32. Pros • Merchants only pay when goals are achieved. • Sales force and branding potential just got bigger • Low barrier to entry for both affiliates and merchants.
    33. 33. Cons • There are seldom contracts in place (publisher usually has the power) • There is still little to no industry regulation • Loss of brand control. • Affiliate programmes can be time consuming to manage, and often require dedicated staff.

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