Money for Nothing, Clicks for Free - An Exploration into Affiliate Marketing

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Affiliate Marketing Overview by Adam Boettiger adam@adamboettiger.com. http://www.adamboettiger.com/. @AdamBoettiger

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Money for Nothing, Clicks for Free - An Exploration into Affiliate Marketing

  1. 1. Adam Boettiger<br />Money for nothing<br />Clicks for FREE<br />(With deepest apologies to Mark Knopfler and Dire Straits)<br />
  2. 2. today<br /><ul><li>Affiliate Marketing 101 – The Basics
  3. 3. Myths & Misperceptions
  4. 4. Building Blocks
  5. 5. Roadblocks & Landmines
  6. 6. Real-Life Examples
  7. 7. Q&A</li></li></ul><li>Affiliate marketing 101 – the basics<br />WHAT is Affiliate Marketing?<br />
  8. 8. What is affiliate marketing?<br />“Affiliate Marketing is an Internet-based marketing practice in which a business rewards one or more affiliates for each visitor or customer brought about by the affiliate&apos;s marketing efforts.”<br />“Affiliate marketing is the equivalent of having an online sales force working 24/7 to sell your product or service and being compensated only if and when actions occur.”<br />
  9. 9. What is affiliate marketing?<br />“Affiliate Marketing is paying for advertising based solely on the end result generated.”<br />
  10. 10. What is affiliate marketing?<br />1800Flowers.com<br />ForgetfulHusbands.com<br />
  11. 11. Commonly used terms<br /><ul><li>Pay-Per-Sale
  12. 12. Pay-Per-Lead
  13. 13. Pay-Per-Click
  14. 14. Pay-Per-Action
  15. 15. Bounty – Affiliate Payment
  16. 16. “Your offer is not converting for us.”</li></li></ul><li>Early roots of affiliate marketing<br />
  17. 17. Cdnow circa 1994<br />
  18. 18. Amazon.com circa 1999<br />
  19. 19. Who uses affiliate marketing?<br /><ul><li>Adult
  20. 20. Retail
  21. 21. Personal Finance
  22. 22. Gaming and gambling
  23. 23. Travel
  24. 24. Telecom & Mobile Phone
  25. 25. Education
  26. 26. Publishing</li></li></ul><li>Why affiliate marketing?<br /><ul><li>Low Risk
  27. 27. Incredible Reach
  28. 28. Establish a larger footprint in search engines
  29. 29. Quantified ROI
  30. 30. Scalable (under the right conditions)</li></li></ul><li>Is affiliate marketing right for my business?<br />It depends…<br /><ul><li>Yes, everyone wants to pay only for results
  31. 31. Yes, most brands online can benefit from one
  32. 32. No, not everyone has what it takes</li></li></ul><li>Building blocks<br />Core Program Components<br /><ul><li>Merchant, Retailer or Brand
  33. 33. Network
  34. 34. Publisher or Affiliate
  35. 35. Customer</li></li></ul><li>Core program components<br />Internal<br /><ul><li>Program Manager
  36. 36. Creative / Development
  37. 37. Technology
  38. 38. Billing & Payments</li></ul>External<br /><ul><li>Affiliates
  39. 39. Affiliate Networks
  40. 40. Brokers</li></li></ul><li>roles<br /><ul><li>Merchant
  41. 41. Empower affiliates to succeed
  42. 42. Provide the tools they need to do so
  43. 43. Affiliate
  44. 44. Create volume (leads, sales or actions)
  45. 45. Make money
  46. 46. Affiliate Network
  47. 47. Create volume by aggregating reach
  48. 48. Make money</li></li></ul><li>Measuring success<br />Merchant<br /><ul><li>Cost Per Transaction
  49. 49. Total Transactions / Total Revenue</li></ul>Affiliate<br /><ul><li>eCPM / eCPC
  50. 50. Total Revenue
  51. 51. Affiliate Network
  52. 52. Volume of Transactions / Total Revenue</li></li></ul><li>compensation<br /><ul><li>Merchant – Incremental sales
  53. 53. Affiliate - % sale or bounty per action
  54. 54. Affiliate Network - % aggregate sales/actions
  55. 55. Agency
  56. 56. Retainer (T&M)
  57. 57. Hybrid (T&M + % bounty)
  58. 58. Performance (% bounty only)
  59. 59. Creative / Dev </li></li></ul><li>Types of affiliates<br /><ul><li>Search affiliates
  60. 60. Comparison shopping websites and directories
  61. 61. Loyalty websites
  62. 62. CRM sites that offer charitable donations
  63. 63. Coupon and rebate websites that focus on sales promotions
  64. 64. Content and niche market websites, including product review sites
  65. 65. Personal websites
  66. 66. Weblogs and website syndication feeds
  67. 67. E-mail list affiliates
  68. 68. Registration path or co-registration affiliates
  69. 69. Shopping directories
  70. 70. Cost per action networks
  71. 71. Websites using adbars</li></li></ul><li>The right mindset<br />Media Buying<br />We’re the client/agency<br />We have the gold<br />We make the rules<br />If you don’t like it, tough<br />Don’t call us, we’ll call you<br />Publishers sell us<br />We eat rate cards for breakfast<br />Adversarial (almost)<br />Affiliate Marketing<br />Fundamental differences<br />Inverse of power<br />Publishers & networks hold the gold<br />Far more collaborative<br />True partnership<br />Publishers assume 100% of risk<br />Publishers can (and will) fire agencies & clients<br />
  72. 72. Myths & misperceptions<br /><ul><li>“We can build an affiliate program with little or no budget or resources.”
  73. 73. “We can turn an affiliate program on and off.”
  74. 74. “Publishers will compete for our ad budget.”
  75. 75. “If we build a program, they will come.”
  76. 76. “We’re Brand X. Everyone wants to do business with us.”
  77. 77. “Affiliate marketing is a waste of advertising dollars.”
  78. 78. “An affiliate program will run by itself, just like cruise control on a car.”</li></li></ul><li>Newsflash: it’s all about the benjamins<br /><ul><li>Does your site convert well?
  79. 79. How does your offer compare to others?
  80. 80. Do you have killer creative?
  81. 81. Are you using a known tracking system?
  82. 82. How does your offer back out?
  83. 83. Is your program capped or uncapped?
  84. 84. Is there a real opportunity for your partners?
  85. 85. Are you imposing too many restrictions?</li></li></ul><li>Where do we begin?<br />Four Phases:<br /><ul><li>Pre-Program Evaluation
  86. 86. Strategic Planning
  87. 87. Pilot Program
  88. 88. Rollout / Growth</li></li></ul><li>Pre-program evaluation<br />Is your client or company a good fit for an affiliate program? <br />How would you know?<br /><ul><li>Do you have the right resources?
  89. 89. If no, can you secure them?
  90. 90. Do you have the authority to effect change if needed?
  91. 91. Is your company willing to change if needed?
  92. 92. Do you have the right mindset?</li></li></ul><li>Strategic planning phase<br /><ul><li>Outline a short-term pilot program and long-term plan
  93. 93. Identify key internal/external resources & decision-makers
  94. 94. Secure a budget and program manager
  95. 95. Deploy & test a tracking/reporting system
  96. 96. Outline how billing and AP will be handled
  97. 97. Involve core affiliate partners in your strategy
  98. 98. Establish KPIs & define success
  99. 99. Develop ad creative and landing pages
  100. 100. Consider A/B & split testing options
  101. 101. Set policy</li></li></ul><li>Key performance indicators<br /><ul><li>Volume - Actions per day, week or month
  102. 102. Gross revenue generated (CLV x actions)
  103. 103. ROAS
  104. 104. Cost Per Action
  105. 105. Cost Per Visitor
  106. 106. Value of branding/awareness as a side benefit
  107. 107. How do these compare to our other channel costs?</li></li></ul><li>Pilot program<br /><ul><li>Goals
  108. 108. To prove efficacy
  109. 109. To identify speed bumps and road blocks
  110. 110. To measure & benchmark KPIs
  111. 111. Allow a minimum of 120 days
  112. 112. Test a variety of ad creative and landing pages
  113. 113. Engage with a handful of affiliates / networks
  114. 114. Build a solid foundation that can be scaled
  115. 115. Report successes visually to executive team
  116. 116. Plan for a rollout</li></li></ul><li>Rollout / growth phase<br /><ul><li>Capped or Uncapped?
  117. 117. Involve affiliate partners in growth planning
  118. 118. Partially automate the recruitment process
  119. 119. Consider additional creative development
  120. 120. Review how your offer and bounty compares to competitors
  121. 121. Solicit input from affiliate partners
  122. 122. Roll up your sleeves and grow your garden
  123. 123. Continually quantify success to executive teams</li></li></ul><li>Challenges, land mines & roadblocks<br /><ul><li>Tier 2 & 3, not so much Tier 1
  124. 124. Ongoing management & optimization
  125. 125. Commission 20-30% of sale
  126. 126. Signal-to-Noise Ratio of Affiliates
  127. 127. Client (individual) or Brand not a good fit
  128. 128. Program not a priority to brand
  129. 129. Minimal allocation of resources
  130. 130. Often difficult to secure corporate buy-in</li></li></ul><li>considerations<br /><ul><li>Long-term investment
  131. 131. No brand loyalty
  132. 132. Requires careful nurturing
  133. 133. Can’t be switched on and off
  134. 134. Control works against you
  135. 135. 80/20 rule applies
  136. 136. Terms & Conditions</li></li></ul><li>Real life<br />
  137. 137. Jenny craig<br />
  138. 138. Jenny craig<br />
  139. 139. results<br /><ul><li>250% ROI on pilot program
  140. 140. Lowest Cost Per Click, Cost Per Lead and Cost Per New Customer of all media channels, online and offline
  141. 141. Growth Phase began July 2009
  142. 142. High six figure revenue generated in 2009
  143. 143. 425% ROAS
  144. 144. Growth continues
  145. 145. On target to generate seven figure revenue in2010</li></li></ul><li>Resources<br />www.abestweb.com<br />
  146. 146. Resources<br />www.affiliatesummit.com<br />
  147. 147. QUESTIONS?<br />Adam Boettiger<br />Digital Strategist<br />The New Group<br />Adam.Boettiger@thenewgroup.com<br />503.989.2668<br /> @AdamBoettiger<br />

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