Affiliate Marketing in a Digital World

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Affiliate marketers face challenges making money on lower priced items such as MP3’s and eBooks. We’ll present best practices and some tips and tricks that work.

Experience level: Beginner, Intermediate
Target audience: Affiliates/Publishers
Niche/vertical: Digital

Brian Chapman, Manager, Affiliate Channel, Amazon.com

Published in: Business
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  • Furthermore, the compounded annual growth rate (CAGR) of retail sales from 2007 to 2012 is expected to be just 2.6%, while the CAGR of online sales is expected to be 14% for the same time period “ Online retail continues to outpace store growth. The reality is that there is a channel shift happening, and consumers are in fact spending dollars online that had previously been spent in stores. While the breadth of selection and 24x7 accessibility of the Web have certainly contributed to some incrementality in overall consumer spend, a portion of overall spend is the dreaded “C” word — cannibalization of store sales. Furthermore, the compounded annual growth rate (CAGR) of retail sales from 2007 to 2012 is expected to be just 2.6%, while the CAGR of online sales is expected to be 14% for the same time period.”
  • At Amazon, the vast majority of albums are now available in both Audio CD and MP3 formats. Wider selection is an important criteria for digital consumers.
  • 60% of Netflix users now use streaming video content
  • http://www.guardian.co.uk/books/2010/jul/20/amazon-ebook-digital-sales-hardbacks-us Amazon.com is now selling more Kindle books than hardcover books. Over the past three months, for every 100 hardcover books Amazon.com has sold, the Company has sold 143 Kindle books. Over the past month, for every 100 hardcover books Amazon.com has sold, the Company has sold 180 Kindle books. This is across Amazon.com's entire U.S. book business and includes sales of hardcover books where there is no Kindle edition. Free Kindle books are excluded and if included would make the number even higher. Amazon sold more than 3x as many Kindle books in the first half of 2010 as in the first half of 2009. The Association of American Publishers' latest data reports that e-book sales grew 163 percent in the month of May and 207 percent year-to-date through May. Kindle book sales in May and year-to-date through May exceeded those growth rates. On July 6, Hachette announced that James Patterson had sold 1.14 million e-books to date. Of those, 867,881 were Kindle books. Five authors--Charlaine Harris, Stieg Larsson, Stephenie Meyer, James Patterson, and Nora Roberts--have each sold more than 500,000 Kindle books.
  • When customers download free music, we see a 10% lift in subsequent sales and a significant lift in repeat customers.
  • Sales of music on Amazon bears this out: customers in the CD store drive a double digit percentage of
  • Sales of music on Amazon bears this out: CD store drives a double digit percentage of sales in the MP3 store as customers cross-shop across formats
  • In a recent survey, customers valued ‘Price’ and ‘Ease of Use’ as the top two factors when deciding where to purchase their digital music When we examined customers shopping on the MP3 store over a 30day period, users that entered the store through an album deal where much more likely to return as repeat customers than a control group that did not see a deal initially.
  • Relationships matter Listen, understand, respond Own your readers and their minds Reach out to share news and updates Word of mouth works and Social Media is best channel to do that http://www.slideshare.net/nzl/viral-marketing-with-widgets
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  • Affiliate Marketing in a Digital World

    1. 1. Affiliate Summit West 2011 Affiliate marketing in the digital era Trends and challenges in selling digital content Brian Chapman (bchapma@amazon.com) Affiliate Program Channel Manager, Amazon.com
    2. 2. Don’t forget: You can copy-paste this slide into other presentations, and move or resize the poll.
    3. 3. Amazon Associates overview
    4. 4. E-Commerce growth forecast “ US eCommerce Forecast: 2008 To 2012”, Forrester 2008
    5. 5. All categories are growing “ US eCommerce Forecast: 2008 To 2012”, Forrester 2008
    6. 6. Digital products <ul><li>Music (MP3) </li></ul><ul><li>Video (Streaming, Download) </li></ul><ul><li>eBooks </li></ul><ul><li>Software </li></ul><ul><li>Digital Video Games </li></ul><ul><li>Virtual Turtles? </li></ul>
    7. 7. Digital music sales growing Half of all music sold in the US will be digital in 2011 and sales of digitally downloaded music will surpass physical CD sales in 2012 , according to a new report by Forrester Research, Inc. (Nasdaq: FORR). Digital music sales will grow at a compound annual growth rate of 23 percent over the next five years, reaching $4.8 billion in revenue by 2012, “ The End Of The Music Industry As We Know It”, Forrester 2008
    8. 8. Digital video sales growing
    9. 9. PC Games Digital Downloads NPD Group claimed Wednesday that full-game PC digital download purchases reached 21.3 million in the U.S. during 2009, nearly even with 23.5 million physical unit buys, signifying an important shift in purchasing habits . Gamasutra, http://www.gamasutra.com/view...
    10. 10. Amazon's eBook milestone Digital sales outstrip hardbacks for first time in US. 143 eBooks for every 100 hardbacks .
    11. 11. Digital retailers
    12. 12. Digital affiliate programs
    13. 13. Challenges advertising digital products <ul><li>Low average selling price for digital goods </li></ul><ul><li>Trying to alter consumer behavior (from physical to digital) </li></ul><ul><li>DRM vs. Open </li></ul><ul><li>Require special device to consume digital content </li></ul><ul><li>Internet Bandwidth constraints </li></ul>So how do you make money advertising digital products?
    14. 14. Low average selling price for digital goods Hardback: $18.48 Kindle: $9.99
    15. 15. Low average selling price for digital goods CD: $11.99 MP3 album: $8.99 each track for $0.99
    16. 16. Low average selling price for digital goods DVD: $17.49 Video on Demand Rental : $2.99 Purchase: $11.99
    17. 17. Low average selling price for digital goods <ul><li>Up sell </li></ul><ul><ul><li>Drive traffic to MP3 album instead of MP3 track; Video buying instead of renting </li></ul></ul><ul><li>Cross Sell </li></ul><ul><ul><li>Bundling: Show related books in book series, Link to related movies </li></ul></ul><ul><ul><li>Cross sell higher ASP products like media readers, electronics or even Kitchen/Sports goods </li></ul></ul>
    18. 18. Low average selling price for digital goods <ul><li>Cross Sell </li></ul><ul><ul><li>Sell related physical ASIN. E.g. Link to CD and MP3 album  Lots of people like to purchase both physical/digital media3 </li></ul></ul><ul><li>Advertise on Price and Convenience = Lots of repeat customers </li></ul>
    19. 19. Trying to alter consumer behavior Tangible feel of a physical product Vs.
    20. 20. Trying to alter consumer behavior Ownership Vs.
    21. 21. Value Sell – Educate your reader Trying to alter consumer behavior Availability – Over 2 million free books available Accessibility – Alter text size; text-to-speech Portability & Storage- Store 1000s of books in the space of a single physical book Long term cost – Save money in the long term since eBooks are cheaper Security – Don’t ever lose your book since it’s stored in the ‘cloud’ Good for the environment - Printed books use 3 times more raw materials and 78 times more water to produce
    22. 22. <ul><li>Let users sample the product </li></ul>Trying to alter consumer behavior
    23. 23. Variety of widgets let you add digital samples to your page Trying to alter consumer behavior Random House Book Widget Amazon MP3 Clips Widget Hulu Video widget
    24. 24. Market free items and free trials where possible Trying to alter consumer behavior
    25. 25. Market digital product whenever physical equivalent is displayed Trying to alter consumer behavior
    26. 26. Market digital product whenever physical equivalent is displayed Trying to alter consumer behavior
    27. 27. Does it work? A/B testing digital links Trying to alter consumer behavior Vs. <ul><li>Increased overall CTR by 46.1% while decreasing Conversion by 16.5% (CTR * Conversion) factor increased by 22% </li></ul><ul><li>Decreased CTR on Physical links by 6.5% while increasing conversion by 25% (CTR * Conversion) factor increased by 12.2% </li></ul>
    28. 28. Trying to alter consumer behavior
    29. 29. Read digital sample whenever physical book is advertised Trying to alter consumer behavior ‘ Kindle for PC’ with sample chapter
    30. 30. Showcase Deals Trying to alter consumer behavior
    31. 31. Showcase Deals Trying to alter consumer behavior
    32. 32. How to influence the conversion funnel Consideration Purchase Loyalty Awareness <ul><li>Awareness </li></ul><ul><li>Social media as ‘Word of Mouth’ </li></ul><ul><li>Engagement </li></ul><ul><ul><li>SoundUnwound.com </li></ul></ul><ul><ul><li>Polyvore.com </li></ul></ul>
    33. 33. How to influence the conversion funnel Social media – Share on Twitter
    34. 34. How to influence the conversion funnel Engagement – SoundUnwound quiz
    35. 35. How to influence the conversion funnel Consideration Purchase Loyalty Awareness <ul><li>Consideration </li></ul><ul><li>Previews/Free samples </li></ul><ul><li>Product Reviews </li></ul>
    36. 36. How to influence the conversion funnel Free sample – HarperCollins Browse Inside http://www.idpf.org/events/presentations/digitalbook08/lHulse08.pdf
    37. 37. How to influence the conversion funnel Consideration Conversion Loyalty Awareness <ul><li>Conversion </li></ul><ul><li>Try Free samples for first time digital customers </li></ul><ul><li>Landing page optimization - Album page versus Track page </li></ul>
    38. 38. How to influence the conversion funnel Consideration Conversion Loyalty Awareness <ul><li>Loyalty </li></ul><ul><li>Build communities </li></ul><ul><ul><li>Message boards </li></ul></ul><ul><ul><li>Newsletter </li></ul></ul><ul><li>To attract repeat customers , highlight Price & Convenience </li></ul>
    39. 39. Questions? Follow us on Twitter @AmazonAssociate And find us on Facebook
    40. 40. Don’t forget: You can copy-paste this slide into other presentations, and move or resize the poll.

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