Managing Success In A Downturn

Managing Success in a Downturn: Analysing & Motivating Channels within Affiliate Marketing David Harding-Customer Acquisition Manager, Argos Daniel Powel- Head of Account Management, Commission Junction

Agenda Argos/CJ Overview • Argos • Commission Junction Market conditions • Recessionary trends • UK retail in recession • Discounting trends • Argos in the downturn The Argos affiliate campaign: Overview • Stats • Key drivers • Levers for growth • Case study Engage and reward • Communication strategy • Supporting performance • Retention and rewards • Summary

Who is Argos? Home Retail Group is the UK’s leading home and general merchandise retailer with sales of over £5.8 billion in the last financial year, resulting in a 10% market share.  Multi-channel retailer selling  The UK’s No. 1 home over 24,000 products across the enhancement retailer  Sales in 08/09 financial year offline and online business  17m households in the UK have reached £1.5bn  Sell over 30,000 products an Argos catalogue  Sales in 80/09 financial year across the home enhancement reached £4.3bn a market  Argos.co.uk is the most visited  Over 330 stores and 4m ‘spend online retailer with a high street & save’ loyalty card holders presence

Who is Argos? Catalogue in over 17m households Delivery & Check & 40m produced twice yearly Reserve Over 18,000 Products

About: Commission Junction Europe Areas of influence: Ireland, Netherlands 285 active programs Hubs 14,000 active publisher accounts Countries managed from neighbouring hubs Countries with active advertisers and publishers Areas of influence: Austria, Poland, Switzerland 145 active programs 7,000 active publisher accounts Areas of influence: Belgium, Italy 115 active programs 5,000 active publisher accounts Areas of influence: Norway, Finland, Iceland, Denmark 60 active programs 2,000 active publisher accounts (Launched July 2008) Areas of influence: Portugal 16 active programs 2,000 active publisher accounts

The Argos Affiliate Program The Argos affiliate programme is our most established online marketing channel which continues to grow and perform year on year: • Argos has been working exclusively with CJ on the affiliate program since 2003 • Affiliate sales growth in 2008/09 was significant • Argos works with over 4000 affiliates on the program and has a very active base • Argos works with a large mix of affiliates across a variety of business models • Affiliate sales now contribute over 5% of total online sales a growth of 18% YOY

Agenda Argos/CJ Overview • Argos • Commission Junction • Recessionary trends Market conditions • UK retail in recession • Discounting trends • Argos in the downturn The Argos affiliate campaign: Overview • Stats • Key drivers • Levers for growth • Case study Engage and reward • Communication strategy • Supporting performance • Retention and rewards • Summary

Market Overview • Ad spend 2% of GDP since 1919 • “Blurring of above the line” and “below the line advertising” – Above declines in recessions – Below grows... Discounts, vouchers, search= CPA and COS...all below the line. • Email is on the way back, still largely driven by large CPA, but that is changing eMarketer UK Online Ad Spending “...that we do not end up trading analogue dollars for digital pennies”-Jeff Zucker NBC

Retail in the UK: Times are tough Like-for-like retail sales have been negative for 9 of the last 10 months Big Brands are suffering Low Consumer Confidence Consumer Spending is still slow Declining Exchange Rate

Retail in the UK: Managing in a downturn

Argos in the economic downturn CATALOGUE OFFLINE/IN-STORE ONLINE TV

Argos.co.uk: Bucking the downturn trend What was the total sales of Argos.co.uk in 2008/09 financial year? £1.1bn

Argos.co.uk: Bucking the downturn trend Online share Delivery 6% up YOY Proposition Consumer Over 30% Behaviour YOY Sales Growth Marketing C&R Sales up channels over 30% YOY Growth EVIDENCE ENABLERS 27% of Sales Online are online Choice Over £1.1bn Convenient Sales Multi-Channel Over 274m offering Ongoing visits to Promotions Argos.co.uk

Argos Affiliate Campaign What proportion of the Argos affiliate program is active? 42%

New Ways to Achieve Reach 42% of internet users said they look for discounts • Email-steady growth, but not just CPAs anymore • first – More growth expected in 2009 as shoppers • New ways to give and earn become more savvy and price conscious

Affiliates are customers • Do affiliates know what we offer? • What are the key levers on their site? • How can we increase AOV and conversion? Source: Channel Advisor

Argos Affiliate Campaign: Key Focuses ‘Affiliates are our customers’ therefore we should have an affiliate centric strategy that addresses following areas: Supporting Performance Insight & Acquisition Understanding Argos Affiliates Analysis to Developments & support growth new technology Retention, Communication & Reward & Engagement Activation

Argos Affiliate Campaign: Analyse for Growth Strategic Top New Partnerships Affiliates Software Comparison Affiliates Affiliates Argos Top Top PPC Content Affiliates Growers Fallers Affiliates Affiliates Voucher Incentive Affiliates Affiliates New Affiliate Active Recruitment Affiliates

Argos Affiliate Campaign: Analyse for Growth SEGMENT ANALYSE FOCUS GROW

Case Study: C&R Affiliate Campaign To target highly trafficked affiliate sites and encourage new and existing customers to use check and reserve in the final two weeks of peak when we have a competitive advantage over other multi-channel retailers. Objective: • Promote the C&R proposition • Acquire new customers and convert existing customers to C&R users • Maximise traffic and C&R sales EMAIL ACTIVITY BESPOKE SITE CONTENT BANNER ACTIVITY Campaign Results: • 25k reservations – over £1m of reserved product • 13k customers – 17% of customers were new to Argos and 20% new to C&R

Argos Affiliate Campaign What was the conversion rate of the Argos affiliate program in 2008/09? 12.6%

The Unknown Does Not Stick Affiliates are your first voice, give them something to say Source Channel Advisor

Getting the word out •• The store still isn’t the The store still isn’t the first stop for shoppers first stop for shoppers •• Different affiliates need Different affiliates need different content different content •• Make the affiliate site Make the affiliate site stickier stickier Entice Engage Activate Source Channel Advisor

Affiliate Communication & Engagement All affiliates have different requirements according to their business model and their level of engagement with the Argos brand Targeted Promoting Communication Planning Mets Partners New/Inactive Lapsed Affiliates Segmented Business Models All Joined Affiliates Non-Joined Affiliates Untargeted Solus Base Email Communication

Case Study: Christmas iPod Touch What was it? • Save £120 on the iPod touch – Now Only £149.99 Objective: • Widespread Exposure of the deal through the affiliate market • Early communication for maximum exposure • Maximise iPod sales Campaign Results:  Maximum reach and exposure through affiliates  The hottest deal ever on Hot UK Deals  Sold over 3500 units – More than 23% of the overall business sales through affiliates

Supporting Affiliates to Deliver Performance Cross-channel Consistent & Voucher Codes Ongoing Promotions Cross-Channel Integration Supporting Affiliates to Deliver Performance New Product Analysis to optimise Offerings Ongoing Conversion Rates Communication & Transparency Choice, Value & Argos Product Convenience Feed

Supporting Affiliates to Deliver Performance IMPROVED CONVERIONS, SALES & NEW CREATIVE & TECHNOLOGY Content Plug Dynamic Widgets Ins Banners MANAGEABILITY AFFILIATE CREATIVE Flash Product Feed APIs Banners Development

Case Study: Argos Home Event Objective: • Build launch awareness • Shifting brand perceptions about the furniture range • Maximising home event and furniture sales BESPOKE ACTIVITY ON-SITE/OFFLINE COMMUNICATION BANNERS Campaign Results:  Wide reach and exposure across the base  Selected partners helped to build and alter brand perceptions of the Argos furniture range  Individual competition with an affiliate helped generate over 8000 entries  Total Sales through affiliates reached over 7% of total online sales

Affiliate Retention & Rewards Focusing on retaining and rewarding high performing affiliates will put your brand front of mind and ultimately lead to greater loyalty engagement and sales. 1. Web Developments to maximise conversion 2. Promotions to maximise sales 3. Relevant Information & Brand Transparency 4. Understand key issues (affiliate survey) & encourage feedback 5. Tactical Activity and Incentives 6. Programme of competitions for new and growing affiliates 7. Argos Affiliate Service

Affiliate Insight & Understanding Analysis of each affiliate channel to provide insight into the value of all business models within the affiliate marketing mix. This should in turn help you to minimise costs but maximise incremental sales • Argos.co.uk order data • Customer journey on-site • Website Browsing data Analysing Online Activity • Channel Centric Metrics • New customer acquisition data • Customer Journey data • Customer purchase frequency • De-duping data by channel Understanding Analysing the • Customer retention & LTV data • Store collection data the Customer Customer Journey Database

Past and Present Then... The Future.... • Before 2007: Search • Content, bigger better feeds • 2008: • Cashback, rewards Content, comparison • Mid 2008 onwards: • Email Category Specific Sale Count Cashback, reward • Blogging Other 0% Software 2% 1% Search 8% Content Voucher/Discount 17% 29% Cashback Comparison 11% 22% Incentive 10%

Summary-Affiliates • Segment & analyse your affiliate base • Communicate and engage with your affiliates at all levels • Support affiliates to deliver performance • Focus on retaining and rewarding your affiliates • Gain insight and understand the value of your affiliates

Managing the Internal Challenge • Argos is a traditional retailer • Internal PR – Sales Growth – ROI – Case Studies • Budget Challenge – Uncapped – Work on a COS (not just media buy) – Fast Payment

Argos Affiliate Campaign What was the total sales growth of Argos.co.uk affiliate programme in 2008/09? 46%

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Managing Success In A Downturn

by a4uexpo Conference on May 01, 2009

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Managing Success In A Downturn — Presentation Transcript