Payment Trends and Strategies in Affiliate Marketing - William Lorenz/EntroPay, Jason Kilby/Zanox, Raphael Arnlold/NetRefer
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  • © 2005 Parson Consulting All rights reserved


  • 1. Payment Trends and Strategies in Affiliate Marketing 15 th October 2008 Jason Kilby, Key Account Director, Zanox Raphael Arnold, CEO, NetRefer William Lorenz, COO, EntroPay
  • 2. Agenda
    • Zanox: Industry overview, affiliates and how affiliate networks can help
    • NetRefer: Payment methods, needs of affiliates and transparency and flexibility
    • EntroPay: Making payments, issues impacting payments and how to make cost-effective payments
    • Q&A
  • 3. Industry overview
    • Affiliate marketing sector estimated to be worth over £2bn in sales in 2006 and £3bn in 2007
    • Market has suffered in past 12 months
      • Marketing budgets designated to affiliate marketing has dropped from 18% to 14% from 2007 to 2008
      • Proportion of sales ascribed by merchants to affiliate activity decreased from 16% to 12%
    • Merchants still see the channel as very cost effective
    • Sources:
    • IAB’s Affiliate Marketing Guide, 2007
    • eConsultancy’s Affiliate Marketing Network Buyers Guide, 2008
    • eConsultancy Report
  • 4. The affiliates
    • Most valuable affiliates, according to merchants:
      • SEO/Content publishers
      • Paid search
      • Loyalty/cashback
      • Price comparison
      • Email
      • Affinity
    • Merchants admit their relationships with affiliates have not improved in the past year
    • Affiliates need to be paid swiftly
    • Payments should be made as easily as possible, as often as possible and in as many currencies as possible
    • Source:
    • Affiliate Marketing Survey Report 2008, eConsultancy
  • 5. How affiliate networks can help
    • Affiliate networks act as an aggregator for affiliates
    • One network, multiple programmes
    • Service
    • One stop shop for payments
    • Project Olympia
  • 6. Payment methods in affiliate marketing
    • The two most common online payment methods are:
      • E Wallets
      • Bank wire transfers
    • Findings indicate that payment methods can have a direct and indirect effect on key issues:
      • Commitment, trust and corporate reputation
    • In a recent qualitative research study, more than 62% of the respondents cited payment reliability as the key factor affecting affiliate satisfaction with the merchant
    • Sources:
    • , 2007
    • Pensa 2005
  • 7. The stated needs of affiliates
    • Research findings indicate that payment methods do not only have a direct effect on satisfaction but are also a cause for major concern and a determining factor when an affiliate is considering which merchant to partner with
    • In a recent research study, affiliates cited the following six factors as being critical aspects of the affiliate merchant relationship
      • Transparency
      • Resource availability – Time money material
      • Reliability
      • Flexibility
      • Communication
      • Trust
    • Source:
    • Caruana 2006
  • 8. Transparency and flexibility
    • 34.7% of affiliates want to be in full control of their activity and commission record
    • 76% emphasized the importance of transparency at the beginning of the relationship when trust had not yet been established
    • Communication
      • Affiliates have an implicit need for good communication channels, communication between themselves and affiliate managers is essential in terms of payments
    • Trust
      • Trust is undoubtedly essential in this partnership – and this can only be established by the merchants ensuring that they are reliable in terms of getting paid the right amount on the right day at a minimal cost
    • Source:
    • Polidano 2007
  • 9. Resources
    • Time, money and skills are all of essence to the affiliate to ensure revenue generation and higher commission pay outs
    • Liquid cash
      • The benefits of these are significant for both parties, where having liquid cash the affiliate has more opportunity to invest in campaigns and site improvements
    • Time
      • Spending less time hassling over payment issues, the affiliates have more time on their hands to:
        • Educate themselves further on issues like SEO/SEM customer behaviours
        • Build relationships and further understand their customer base
  • 10. The “payment to affiliates” problem has yet to be solved
    • A typical affiliate network can spend, on average, £5000 per month on making payments, not including accounting overheads...
    • ...whilst a key observation from the last UK affiliate census was that 68% see payments role of affiliate networks as crucial to them
  • 11. Both networks and affiliates face a range of problems arising from payment options currently available Networks have limited options to pay their affiliates around the world
    • Cheques get lost, are expensive to cancel and administratively costly
    • SWIFT is too expensive for even medium-sized amounts
    • Some online payment systems do not offer any flexibility on presentation of the payment to the recipient
    Recipients dislike many of the available options
    • Overseas bank transfers & cheques take too long to arrive and clear, and are too expensive for small amounts
    • Payment in shopping vouchers is unsatisfactory
    • Some online payment systems only offer restricted ways of spending / accessing funds
  • 12. New payment options can solve many of the problems of both networks and affiliates Via recipient’s bank account access Varies – typically 1 – 5 working days >£1000 £2 – £10 dependent on country & currency
    • With payment options such as the above, we calculate that networks can save up to 50% of their banking costs and significantly streamline their accounting operations
    Virtual cards Typical payment values? Plastic cards Bank Transfer (in-country) Speed of access to funds? Rough cost (to both parties) Can be spent? Anywhere VISA / MasterCard accepted online Instant £1 - £100 £0.50 – £2 Anywhere VISA / MasterCard accepted - inc. ATM Instant - after plastic delivered first time £50 - £1000 £0.50 – £2 plus plastic (£5)
  • 13. Q&A
    • William Lorenz Jason Kilby
      • COO Key Account Director
      • T: +44 (0) 20 870 3666 960 T: +44 (0) 20 7851 5827
      • M: +44 (0) 7939 543 766 M: +44 (0) 7944 560 516
      • Email: [email_address] Email: [email_address]
    • Raphael Arnold
      • CEO
      • T: +356 2767 3337
      • M: +356 9906 7009
      • Email: [email_address]