Affiliate Marketing
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Affiliate Marketing

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This presentation is part of an ongoing course at McGill University on Electronic Market places and Social Media....

This presentation is part of an ongoing course at McGill University on Electronic Market places and Social Media.

The session tackles affiliate marketing

More in: Technology , Design
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  • Imagine getting 10% of the bill for every person you referred to a restaurant.
    Affiliate Marketing = Performance based
    Notes:
    They would be paying you a finder’s fee for new customers. There are a number of businesses that market this way offline. Brokers for insurance products are an example, but these referrals can be hard to track. Online, they are very easy to track. This system of reward where compensation is based on referral is called Affiliate Marketing, and is used to describe this type of marketing in an online environment.
    Affiliate Marketing is used widely to promote websites, and affiliates are rewarded for every visitor, subscriber or customer provided through his efforts. Because of this, affiliates are sometimes viewed as an extended sales force for a website. Affiliates are paid for performance, so affiliate marketing is also referred to as Performance Marketing.
  • Imagine getting 10% of the bill for every person you referred to a restaurant.
    Affiliate Marketing = Performance based
    Notes:
    They would be paying you a finder’s fee for new customers. There are a number of businesses that market this way offline. Brokers for insurance products are an example, but these referrals can be hard to track. Online, they are very easy to track. This system of reward where compensation is based on referral is called Affiliate Marketing, and is used to describe this type of marketing in an online environment.
    Affiliate Marketing is used widely to promote websites, and affiliates are rewarded for every visitor, subscriber or customer provided through his efforts. Because of this, affiliates are sometimes viewed as an extended sales force for a website. Affiliates are paid for performance, so affiliate marketing is also referred to as Performance Marketing.
  • Affiliates can be viewed as part of the sales force of a company - they have incentives to sell, although at optimal cost to themselves.
  • Like many eMarketing innovations, the beginnings of Affiliate Marketing are to be found in the Adult industry. Cybererotica was probably the first to run an affiliate campaign with its CPC programme, where it would reward referrers for each click through to its website.

    But the story that is most well known, and that ensured that Affiliate Marketing hit mainstream press articles, is that of the Amazon.com Associates Program.
    Referrers are rewarded for successful sales that occur as a result of their marketing efforts. The growth experienced by Amazon.com as a result of their affiliate programme is well documented, and probably accounts for about 40% of their revenue (according to information in Amazon.com discussion forums).
  • According to eConsultancy’s Affiliate Marketing Networks Buyer's Guide (2006), total sales generated through affiliate networks in 2006 was £2.16 billion in the UK alone. And MarketingSherpa’s research estimates that in 2006, affiliates worldwide earned $6.5 billion in bounty and commissions!
  • An affiliate refers potential customers to a merchant’s website.
    Some of those customers perform a desired action.
    The merchant rewards the affiliate for each desired action resulting from the affiliate’s referral.

    …We’re going to take a look at the different types of action, discuss keeping track of it all, and lastly take a look at some of the many means that affiliates use to send merchants customers, and of course, to make themselves cash.
  • CPA
    Here the action could be anything from downloading a White Paper or some software to signing up to a newsletter.

    CPL
    Merchants that offer CPL commissions are usually those that need to convert a lead into a sale offline or that the process is quite complicated. It is typically insurance companies and banking institutions that will offer this type of commission. Membership sites which offer a free trial period, such as online DVD rental, will also use this commission structure.
    Some merchants may be wary that the leads will not be of a high enough quality. This is why they will usually have conversion targets that the leads generated need to comply with as a quality control.
  • CPC - used to drive lots of traffic, particularly to new websites

    Sale of information: Publishers collect data on behalf of advertisers looking to for mailing lists etc…this is often done by offering consumers entry into competitions endorsed by the potential marketer who requires there information, or less directly and sold on at a later stage to the highest bidder.
  • Revenue Share
    Revenue Sharing is the ideal commission structure as both the merchant and the affiliate are rewarded for performance – the more sales, the more revenue generated for the merchant, and the more commission for the affiliate. Websites where a sale can be performed instantly are ideal for Revenue Sharing.
    Merchants tend to structure their commission offering so that affiliates who perform better, earn a higher commission. For example, a merchant might offer the following tiers of commission:


    CPC commission is rarely used, and is primarily a way of driving large volumes of traffic, usually to a new site. An affiliate would be awarded commission for every click through to the merchant website. Although this type of commission was prevalent in the very early days of Affiliate Marketing, it has been largely abandoned due to click fraud.

    Super affiliate = special deal because of volume
  • 1. Affiliates send traffic to merchants through links,
    2.Tracking software allows each affiliate to have a unique identifier in the URL.
    3.These links set a cookie on the customer’s computer, which allows the software to track the sale.
    When customer completes required action cookie allows tracking soft ware to record appropriate affiliate commission.

    The following is the kind of information usually recorded.
    the affiliate network – Affiliate Future
    the ID of the affiliate - 214
    the ID of the merchant
  • The affiliate is only awarded commission should the desired action take place within the cookie period.

    Some merchants make the cookie last for the session only (i.e. if the user only purchases the following day, no commission is rewarded), whereas the standard cookie period for Affiliate Marketing is 30 to 60 days. Some merchants offer 999 day cookies, or even lifetime cookies.
    Affiliates tend to prefer a longer cookie period: it increases the likelihood of being awarded commission. Cookie periods can be NB in commission structuring and attracting affiliates.
    #need concrete example here.

    It has become standard practice that the most recent referral is awarded the commission, though there are some merchants who also offer compensation to other affiliates involved in sale process. In the example above, the affiliate who placed the PPC advert would get the commission for this sale.
    For example: A user sees a banner on a website that he visits promoting a weekend in Paris, booked with Eurostar. The user clicks on that banner and checks out the deals on the Eurostar website. A cookie is set, as the first website is an affiliate of Eurostar.
    With so many affiliates, it is not uncommon for a potential customer to visit a merchant’s website through the links of many different affiliates before finally making a purchase
  • There are as many kinds of affiliates as there are sources to bring users to a site….
  • There are as many kinds of affiliates as there are sources to bring users to a site….
  • There are as many kinds of affiliates as there are sources to bring users to a site….
  • There are as many kinds of affiliates as there are sources to bring users to a site….
  • There are as many kinds of affiliates as there are sources to bring users to a site….
  • There are as many kinds of affiliates as there are sources to bring users to a site….
  • There are as many kinds of affiliates as there are sources to bring users to a site….
  • There are as many kinds of affiliates as there are sources to bring users to a site….
  • There are as many kinds of affiliates as there are sources to bring users to a site….
  • There are as many kinds of affiliates as there are sources to bring users to a site….
  • There are as many kinds of affiliates as there are sources to bring users to a site….
  • There are as many kinds of affiliates as there are sources to bring users to a site….
  • There are as many kinds of affiliates as there are sources to bring users to a site….
  • There are as many kinds of affiliates as there are sources to bring users to a site….
  • There are as many kinds of affiliates as there are sources to bring users to a site….
  • With the likes of Google Adsense, any blogger or amateur website owner with enough traffic in theory begin making money from sending ‘targeted’ traffic to a website , although they get paid by google on a CPC basis and not by a merchant directly, personal blogs and websites do in a sense act as indirect affiliates.

    commonly personal blogs and websites would utilize direct relationships with vendors, leveraging the content of there site for related product referrals.
  • Content and niche sites are websites created specifically around a topic, and any products promoted will carry affiliate tracking. For example, an affiliate might create a site dedicated to digital cameras, with tips and downloads to help you get the most out of your camera. It could review a number of different cameras, and offer links to purchase those cameras online. All of those links will be affiliate links.
    Seasonality is also a key time for content sites i.e Letter to Santa website:
  • Sites offer discounts and instant savings on promoted brands and services.
  • Resellers of email lists and mailing lists incentivise affiliates to gather data of individuals willing to receive commercial communication
  • As affiliates earn a percentage of a sale, some affiliates “split” this with the customer and create cashback or points based shopping sites.
    There are also some that donate a percentage of the commission to a charity.
    Often these sites are gathering data for marketers as potential sales leads.
  • Comparison sites offer valuable consumer tools in order to direct traffic to the site and then funnel it back out to merchants who pay them.
  • For example. iRead allows you to display personal likes. The developer is an affiliate, and earns commission if a purchase is made from a link on the application.
  • Some of the most successful Affiliate Marketers are those who promote various merchants through paid search: PPC advertising on search engines. As these affiliates seek to find the highest Earnings Per Click (EPC) for the lowest Cost Per Click (CPC), this is also referred to as search arbitrage.
    Essentially taking advantage of the price discrepancy between what they pay per click and what they earn per lead/referral

    THESE ARE SOME OF THE BIG GUYS.
  • A comprehensive affiliate programme can also assist indirectly in your search effort.
    Many affiliates are search experts in their own rights , and extend your key word coverage or bolster your efforts - depending on how niche your product is. You are not paying for the affiliate presence in search results but rather their effectiveness… from PPC to CPA .
    This means , affiliates absorb a decent portion of your search costs .
  • •Tracking solutions &Reporting
    •Hosting creative
    •Recruiting merchants and affiliates
    •Quality control of affiliates and brand compatibility
    •One payment solution for merchants /commission handling
    •Tracking the market e.g.search developments, new technology etc.
  • Merchant pays 30% of all commission paid out to affiliates to Affiliate network.
  • What is needed to get involved
  • Product feed :

    An XML or CSV product feed basically is a way of providing information about the products on a merchant’s website in a way that breaks up the information easily, and is standardised.
    Usually contain the following information for each product:
    product name
    product URL
    product picture
    product price
    description
    shipping price
    in stock / out of stock
    Function of product feed

    What do feeds allow affiliates to do:

    Feeds allow you to create content for your site based on their best selling products.
    combine product from multiple Merchants into consolidated units ,creating related product offerings.
    Allow affiliates to stay up to date with product changes.
    Direct link to products – shorten the distance to purchase



    Creative:

    Your shop windows. Well tested to maximize conversions. Affiliates will attract people into their sites, but your creative needs to help channel them out to your site.
  • In general:
    Paid search affiliates = PPC
    Bespoke websites = SEO
  • What is needed to get involved
  • Define the goal e.g new biz = awareness and traffic
    2.Decide: run own programme vs............ affiliate network:
    If choosing a network ask yourself:
    Kind of affiliates represented by network
    Where are your competitors represented
    Fees
    Support offered
    Countries covered by network
    3. Competitor analysis including:
    Commission tiers
    Cookie periods
    Creative offering
    Which affiliates they work with and incentives on offer
    4. Test tracking software for possible conflict with existing tracking
    5. Recruit affiliates! And promote via forums or network
  • Define the goal e.g new biz = awareness and traffic
    2.Decide: run own programme vs............ affiliate network:
    If choosing a network ask yourself:
    Kind of affiliates represented by network
    Where are your competitors represented
    Fees
    Support offered
    Countries covered by network
    3. Competitor analysis including:
    Commission tiers
    Cookie periods
    Creative offering
    Which affiliates they work with and incentives on offer
    4. Test tracking software for possible conflict with existing tracking
    5. Recruit affiliates! And promote via forums or network
  • Define the goal e.g new biz = awareness and traffic
    2.Decide: run own programme vs............ affiliate network:
    If choosing a network ask yourself:
    Kind of affiliates represented by network
    Where are your competitors represented
    Fees
    Support offered
    Countries covered by network
    3. Competitor analysis including:
    Commission tiers
    Cookie periods
    Creative offering
    Which affiliates they work with and incentives on offer
    4. Test tracking software for possible conflict with existing tracking
    5. Recruit affiliates! And promote via forums or network
  • Define the goal e.g new biz = awareness and traffic
    2.Decide: run own programme vs............ affiliate network:
    If choosing a network ask yourself:
    Kind of affiliates represented by network
    Where are your competitors represented
    Fees
    Support offered
    Countries covered by network
    3. Competitor analysis including:
    Commission tiers
    Cookie periods
    Creative offering
    Which affiliates they work with and incentives on offer
    4. Test tracking software for possible conflict with existing tracking
    5. Recruit affiliates! And promote via forums or network
  • Define the goal e.g new biz = awareness and traffic
    2.Decide: run own programme vs............ affiliate network:
    If choosing a network ask yourself:
    Kind of affiliates represented by network
    Where are your competitors represented
    Fees
    Support offered
    Countries covered by network
    3. Competitor analysis including:
    Commission tiers
    Cookie periods
    Creative offering
    Which affiliates they work with and incentives on offer
    4. Test tracking software for possible conflict with existing tracking
    5. Recruit affiliates! And promote via forums or network
  • Pay affiliates as much as possible – its an incentive driven model and there is little to no product loyalty . High conversion mean lower commissions to attract affiliates.
    Niche, long-tail product focus can benefit an affiliate e.g google ‘pumps and ponds’ (http://www.pondsandpumps.co.za/)

    It’s important as an affiliate to keep in mind that affiliate marketing is true web business – meaning if it’s a product that can sell online your market is global.

    More accurate geo targeting will further promote specialised niche traffic and products, ‘thickening’ the long tail.
  • Pay affiliates as much as possible – its an incentive driven model and there is little to no product loyalty . High conversion mean lower commissions to attract affiliates.
    Niche, long-tail product focus can benefit an affiliate e.g google ‘pumps and ponds’ (http://www.pondsandpumps.co.za/)

    It’s important as an affiliate to keep in mind that affiliate marketing is true web business – meaning if it’s a product that can sell online your market is global.

    More accurate geo targeting will further promote specialised niche traffic and products, ‘thickening’ the long tail.
  • Pay affiliates as much as possible – its an incentive driven model and there is little to no product loyalty . High conversion mean lower commissions to attract affiliates.
    Niche, long-tail product focus can benefit an affiliate e.g google ‘pumps and ponds’ (http://www.pondsandpumps.co.za/)

    It’s important as an affiliate to keep in mind that affiliate marketing is true web business – meaning if it’s a product that can sell online your market is global.

    More accurate geo targeting will further promote specialised niche traffic and products, ‘thickening’ the long tail.
  • Pay affiliates as much as possible – its an incentive driven model and there is little to no product loyalty . High conversion mean lower commissions to attract affiliates.
    Niche, long-tail product focus can benefit an affiliate e.g google ‘pumps and ponds’ (http://www.pondsandpumps.co.za/)

    It’s important as an affiliate to keep in mind that affiliate marketing is true web business – meaning if it’s a product that can sell online your market is global.

    More accurate geo targeting will further promote specialised niche traffic and products, ‘thickening’ the long tail.
  • It’s pay for performance marketing, so merchants are only paying for growth.
    The merchant sales force just got bigger, as well as its branding potential.
    There is a very low barrier to entry for both affiliates and merchants.

    £800 to join a network, monthly costs – free to £300 p/m
  • It’s pay for performance marketing, so merchants are only paying for growth.
    The merchant sales force just got bigger, as well as its branding potential.
    There is a very low barrier to entry for both affiliates and merchants.

    £800 to join a network, monthly costs – free to £300 p/m
  • It’s pay for performance marketing, so merchants are only paying for growth.
    The merchant sales force just got bigger, as well as its branding potential.
    There is a very low barrier to entry for both affiliates and merchants.

    £800 to join a network, monthly costs – free to £300 p/m
  • Note: these negatives are more applicable when no network is involved !

    There are seldom contracts in place between affiliates and merchants. (Particularly if little notice is given, affiliates might have spent time and money setting up promotions, only to have the campaign pulled out from underneath. Most infamously, ASOS.com did this a couple of years ago)

    There is still little to no industry regulation

    Some merchants fear a loss of brand control.

    Affiliate programmes are not easily scalable.

Transcript

  • 1. What is affilia te marketing? Thursday, November 19, 2009
  • 2. What is affilia te marketing? What if the restaurant gave you 10% of the bill of every friend you recommended it to? They’d be paying you a finder’s fee. Online, this is affiliate marketing. Thursday, November 19, 2009
  • 3. Affiliates: an extended sales force Thursday, November 19, 2009
  • 4. “A performance based online marketer, sending targeted traffic to a specific website” Thursday, November 19, 2009
  • 5. Who’s who? Affiliate / Publisher Merchant / Advertiser • Sends targeted traffic • Wants targeted traffic • Publishes adverts • Has products to • Earns advertise commission • Pays commission on successful referrals Thursday, November 19, 2009
  • 6. A brief history Thursday, November 19, 2009
  • 7. Thursday, November 19, 2009
  • 8. 2006: $6.5 billion paid! Source: MarketingSherpa Thursday, November 19, 2009
  • 9. The 3process step Thursday, November 19, 2009
  • 10. The 3 step process Thursday, November 19, 2009
  • 11. Performance based relationships Action and Reward Thursday, November 19, 2009
  • 12. CPA – Cost per Action CPL – Cost per Lead Thursday, November 19, 2009
  • 13. CPC – cost per click Thursday, November 19, 2009
  • 14. Revenue Share e.g. 1 – 10 sales: 10% commission 11 – 25 sales: 11% commission 26 – 50 sales: 12% commission 51 or more sales: 15 % commission Super Affiliate! Thursday, November 19, 2009
  • 15. The Key : Tracking Thursday, November 19, 2009
  • 16. What is a cookie and how does it help? Thursday, November 19, 2009
  • 17. Tracking in URLs http://www.firebox.com/product/1201 http://scripts.affiliatefuture.com/AFClick.asp? affiliateID=238&merchantID=214&programmeID=3 897&mediaID=0&tracking=cube_world&url=http:// www.firebox.com/index.html? dir=firebox&action=product&pid=1201&usg=AFQjC NGdHpzAasCefzDnyUBPxnagxqzvTA Thursday, November 19, 2009
  • 18. A note on cookie periods and commission 2. Fulfil transaction 1st Click 2nd Click 1. Click to advertiser from network, affiliate or search listing 3rd Click 3. Expose appropriate vendor based on ‘last vendor’ cookie Thursday, November 19, 2009
  • 19. A note on cookie periods and commission 2. Fulfil transaction 1st Click 2nd Click 1. Click to advertiser from network, affiliate or search listing 3rd Click Search Affiliate wins 100% of payout 3. Expose appropriate vendor based on ‘last vendor’ cookie Thursday, November 19, 2009
  • 20. Types of Affiliates Thursday, November 19, 2009
  • 21. Thursday, November 19, 2009
  • 22. Social networks Podcasts Meta-search Wikis Social Bookmarks Social shopping Blogs Personal portals Product reviews IM Micro-blogging Desktop Search User-generated content Thursday, November 19, 2009
  • 23. Personal Blogs and Web Sites Thursday, November 19, 2009
  • 24. Niche content Thursday, November 19, 2009
  • 25. Coupons and Promo sites Thursday, November 19, 2009
  • 26. Email newsletters Thursday, November 19, 2009
  • 27. Loyalty sites Thursday, November 19, 2009
  • 28. Comparison Thursday, November 19, 2009
  • 29. Social Applications Thursday, November 19, 2009
  • 30. Search affiliates Thursday, November 19, 2009
  • 31. Affiliates and Search • Payment on CPA basis, not CPC • Search marketing spend passed on to affiliates • Greater keyword coverage Thursday, November 19, 2009
  • 32. Affiliate Networks Thursday, November 19, 2009
  • 33. “3rd party technical enablers, linking merchants, affiliates and their transactions” Thursday, November 19, 2009
  • 34. Network benefits Thursday, November 19, 2009
  • 35. Network benefits • Tracking solutions & reporting Thursday, November 19, 2009
  • 36. Network benefits • Tracking solutions & reporting • Hosting creative Thursday, November 19, 2009
  • 37. Network benefits • Tracking solutions & reporting • Hosting creative • Recruiting merchants and affiliates Thursday, November 19, 2009
  • 38. Network benefits • Tracking solutions & reporting • Hosting creative • Recruiting merchants and affiliates • Quality control of affiliates and brand compatibility Thursday, November 19, 2009
  • 39. Network benefits • Tracking solutions & reporting • Hosting creative • Recruiting merchants and affiliates • Quality control of affiliates and brand compatibility • One payment solution for merchants / commission handling Thursday, November 19, 2009
  • 40. Network benefits • Tracking solutions & reporting • Hosting creative • Recruiting merchants and affiliates • Quality control of affiliates and brand compatibility • One payment solution for merchants / commission handling • Tracking the market e.g. search developments, new technology etc. Thursday, November 19, 2009
  • 41. Some examples Thursday, November 19, 2009
  • 42. Costs • sually no affiliate joining charge U • erchant set up costs – followed by M monthly fee (based on level of support) • et commission earned by affiliate S Thursday, November 19, 2009
  • 43. Basic Tools of the trade Thursday, November 19, 2009
  • 44. Merchants : Product Feeds & Creative Thursday, November 19, 2009
  • 45. Affiliates : Entire spectrum of web tactics Thursday, November 19, 2009
  • 46. Setting up an Affiliate campaign Thursday, November 19, 2009
  • 47. Thursday, November 19, 2009
  • 48. • Define the goal Thursday, November 19, 2009
  • 49. • Define the goal • Own programme vs. affiliate network Thursday, November 19, 2009
  • 50. • Define the goal • Own programme vs. affiliate network • Competitor analysis Thursday, November 19, 2009
  • 51. • Define the goal • Own programme vs. affiliate network • Competitor analysis • Test tracking software for possible conflict with existing tracking Thursday, November 19, 2009
  • 52. • Define the goal • Own programme vs. affiliate network • Competitor analysis • Test tracking software for possible conflict with existing tracking • Promote via forums or network Thursday, November 19, 2009
  • 53. Tips in a performance market Thursday, November 19, 2009
  • 54. Tips in a performance market 1. Pay affiliates as much as possible Thursday, November 19, 2009
  • 55. Tips in a performance market 1. Pay affiliates as much as possible 2. Focus on conversion optimization Thursday, November 19, 2009
  • 56. Tips in a performance market 1. Pay affiliates as much as possible 2. Focus on conversion optimization 3. Niche products can benefit Thursday, November 19, 2009
  • 57. Tips in a performance market 1. Pay affiliates as much as possible 2. Focus on conversion optimization 3. Niche products can benefit 4. Go global (if possible) Thursday, November 19, 2009
  • 58. + and - Thursday, November 19, 2009
  • 59. Pros Thursday, November 19, 2009
  • 60. Pros • Merchants only pay when goals are achieved. Thursday, November 19, 2009
  • 61. Pros • Merchants only pay when goals are achieved. • Sales force and branding potential just got bigger Thursday, November 19, 2009
  • 62. Pros • Merchants only pay when goals are achieved. • Sales force and branding potential just got bigger • Low barrier to entry for both affiliates and merchants. Thursday, November 19, 2009
  • 63. Cons • Loss of brand control. • Affiliate programmes can be time consuming to manage, and often require dedicated staff. Thursday, November 19, 2009