Affiliate marketing:is it a good way to increase profits? Università degli Studi di Bari Aldo Moro Facoltà di Economia Corso di Laurea in Economia e Commercio Anno Accademico 2011-2012
Introduction• Nowadays almost 30% of the world’s population has Internet access: around 2 billion people• 32 billion hours spent online every month! (Source: Go-Gulf)
Italian Internet users are estimated to be closeto 26 million, with a great growth since 2001(source: Mclink)
Millions of Italian Internet users30252015 Millions of users1050 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
• What happens during those billions of hours spent online every month?• Who earns money?
General infoDefinition: affiliate marketing is a type of performance-basedmarketing in which a business rewards one or more affiliates foreach visitor or customer brought about by the affiliate’s ownmarketing efforts.The players of affiliate marketing are:• the merchant, also called “retailer” or “brand”• the publisher, also known as the affiliate• the customer.
• One of the best ways to earn money online (Robert Kiyosaki)• Many hard-working affiliates made a fortune
How does affiliate marketing work?• A company sets-up an affiliate marketing program• The webmaster signs up to the program as an affiliate• The webmaster publishes banners or links
• A random visitor clicks on a banner/link• The company’s web server is programmed so that the visitor will be sent to the webpage for the product/service promoted.
Short history Referral William Amazon marketing Tobin• Affiliate marketing nowadays
Future growth: mobile market, social medias, social gaming
In-house vs outsourced affiliate programsAffiliate programs are the means through whichaffiliate marketing works
What should a company do before launching an affiliate program?• Competitor analysis• Commercials• Creatives• Communication• Campaign analysis
Affiliate programsIn-house Outsourced Direct Use of a control networkMoney saved on Fast growthcommissions
In-house OutsourcedConnections may be limited and finding new affiliates Experienced managers have already estabilished an might prove to be a challenge extensive network of affiliates Experienced managers know what works and whatIt is risky to hire an unexperienced affiliate manager does not This is not a one person job. It requires networking Estabilished managers will have a team of experts toand people skills, technical expertise, graphic design handle all facets of affiliate program management and newsletter managementOften, program management is a secondary task for The managers focus in on managing an affiliate in-house managers as other responsibilities take program with few distractions priority Many in-house managers have an employee Managers are business owners. Their income ismentality, requiring direction and permission on even based on performance, giving them incentive to do the smallest decisions good work Often the manager acts as one point of contact forAffiliates need to deal with several affiliate managers multiple merchants, making it easier for the affiliate for several different companies to promote several programs at once
Affiliate networks“Affiliate networks act as an intermediary betweenaffiliates and the merchant’s affiliate program”
Benefits:• easy and free to join• all tracking and payments are done by one network• easy way to get deals with big companies• wide offer of banners that can be perfectly added to every website• chance to check every affiliate program’s record before applying
The main affiliate networks• Main ones: Tradedoubler, Zanox, Sprintrade, Netaffiliation , AffiliateWindow, Webgains, Buy.• How they earn their transaction fees
Tradedoubler: 1,900 advertisers and 138,000publishers. Yearly gross revenue: 73 million €Zanox: 4,000 merchants; more than 1 millionpublishers. Yearly gross revenue: 77 million €
How can a publisher drive traffic to his website?• SEM – Search Engine Marketing• DEM – Direct Email Marketing• Social media marketingStatistics Google Analytics
Case studiesCase study #1Client: HyundaiAffiliate network: TradedoublerReward plan: CPLGoal: generate 1,000 sign-ups for a newsletter with achance to win a €20 fuel voucherDuration: 5 weeksResults: 1,156 unique visitors, 1,000 sign-ups
Case study #2Client: BimbomarketAffiliate network: ZanoxReward plan: CPSGoal: increase salesDuration: 2009-ongoingResults: sales increased by 25% during the first weeks;new customers all around Europe
Case study #3Publisher: Paolo MoroAffiliate network: TradedoublerDuration: 2002-2008Revenues: €125,369.48
Case study #4Publisher: John ChowAffiliate networks/programs: severalDuration: 1 yearRevenues: more than $500,000! Currently he earns upto $40,000 each month with affiliate marketing.
Alternatives• Print advertising• Television advertising• Telemarketing
The main problems related to affiliate marketing are:• Email spam• Virus• Spoofing• Affiliate’s incentives