Successful Affiliate Marketing for Merchants

by Shawn Collins, Frank Fiore

Overview

If you¿re an online business, instead of paying for an ad, like a banner, you pay for the result – the sale. This is called affiliate marketing. Pay for Performance will show anyone conducting business online, how to plan, implement, and manage a successful affiliate marketing program. The reader will find valuable Web resources such as tracking software and contract templates with the guidance of this book. There will also be direction for the reader to focus the content and develop the right affiliate model for the type of business. It will also provide case studies of successful programs as well as failures and scams to demonstrate and teach the lessons of building a successful program.

Product Details

ISBN-13:	9780132797030
Publisher:	Pearson Education
Publication date:	04/11/2001
Series:	Que-Consumer-Other
Sold by:	Barnes & Noble
Format:	eBook
Pages:	352
File size:	6 MB
Age Range:	18 Years

About the Author

Shawn Collins is the manager of the ClubMom.com affiliate program, which he launched in March 2000. Prior to joining ClubMom, Shawn served as the Affiliate Manager for Refer-it.com, as well as the Senior Marketing Analyst for Medsite.com. His bi-weekly columns on affiliate marketing appear on ClickZ.com, and he has been the guest columnist for a number of online and offline publications, including SAM Magazine.

Additionally, Shawn founded the United States Affiliate Manager Coalition, a professional organization of affiliate marketers, as well as co-funding Affiliate Metrix, Inc., a research, analysis, and benchmarking initiative for the affiliate marketing industry. Shawn co-founded the Affiliate Webinar, an online conference for affiliates and affiliate managers, with CashPile.com.

Frank Fiore has been involved with e-commerce from its inception and knows it from both the consumer and merchant side of the equation. He is an established e-commerce expert and author of three books on e-commerce entitled "e-Marketing Strategies", "The Complete Idiot's Guide to Starting an Online Business" and "Dr. Livingstone's Online Shopping Safari Guidebook." He is the Online Shopping Guide for About.com and President of Concurrent Commerce Technologies, an Internet applications service provider specializing in dynamically price-enabling products and services on the Net.

Read an Excerpt

Excerpt from Chapter 1

...must be creative and timely. It takes time to implement, must offer competitive compensation, be able to educate affiliates to sell, and reward the best affiliates .to keep there loyal to the program. Affiliate programs are not a marketing panacea. Successful affiliate programs require creativity, effort, focus, and, yes, money. And what about the affiliates? How difficult is it for them to sign up for your program?

In reality, the process of becoming an affiliate is pretty straightforward. The interested affiliate simply reads your affiliate agreement, accepts the terms, and fills out a registration form on your site (or on the site of an affiliate solution provider). In most programs, the affiliate controls the content, creatives, and placement of your link, although there are some storefront programs such as vStore (www.vstore.com) that provide the total package by customizing a Web page with the look and feel of the affiliate.

So how popular is affiliate marketing?

In the bookstore category, Barnes and Noble.com had well over 100,000 affiliates by mid-1999 and, according to Giga Group (www.gigaweb.com), is adding 400-500 affiliates per day. But that's nothing compared to Amazon.com. At last count, it had over 500,000 Web sites in its popular affiliate program.

And it only gets better. By 2004, ForresterR Research estimates that half of the projected $33 billion in worldwide online advertising spending will be performance-based. Jupiter Communications fur- ther estimates that 25% of Internet retail sales will be acquired through sites using the affiliate advertising model by 2002.

As you can see, affiliate marketing is rapidly moving into the mainstream of e-commerce and becoming an invaluable marketing tool for online companies. Small- to medium-sized online businesses that use affiliate marketing properly can gain more than an increased customer base. When they see an affiliate program on high-profile Web sites around the Net, consumers believe that a company is bigger and more established than it really is.

Be Free, one of the leading affiliate solution providers, encourage and facilitates closer relationships between its merchant customers and select, top-tier affiliates, whom it calls Performance Partners.Performance Partners are primarily, but not limited to, sites that serve large numbers of shoppers (such as shopping engines and other shopping aggregators), and sites with large, loyal member bases, such as loyalty sites, rebate sites, and charity program sites.

For those companies that already have a large presence in e-commerce, an affiliate program is a strategy to help maintain that presence and position.

Affiliate Marketing Program Components

So what makes up a successful affiliate marketing program? The following are some basic components that a merchant should provide its affiliates, and components that potential affiliates should look for in a merchant's affiliate program.

First, and most important, are commission payments. You must decide whether you will pay affiliates a commission on sales only, or pay them by some other incentive. Here are your choices:

• Pay per-click-An affiliate is paid per visitor they send, for example 1 cent per visitor it sends to your site.
• Pay-per-lead-An affiliate is paid if a visitor it refers submits certain information, for example joins mailing list or requests further information.
• Pay per-sale-An affiliate is paid a percentage or flat rate for each sale it generates from visitors it directs to you.

Another thing to consider is to combine residual commissions with a per-lead or per-sale commission structure-commissions paid to an affiliate for subsequent purchases made by referred customers, or perhaps a higher commission on a first-time sale.

The next thing to consider is credibility. Does your site communicate a sense of confidence and security to your customers and potential resellers? Do you offer online, real-time stats for affiliate and sub-affiliate commissions, including traffic stats? Does your affiliate program receive positive reviews in the affiliate directories? Next on the list is the agreement. Do you have a fair and equitable contract for your affiliate members? Does it include language to ensure that you will only make substantive changes to the agreement "in good faith" with the affiliate?

Another important component is marketing resources. Will you regularly provide your affiliates with compelling, contextual content about your products and services? Will you give your affiliates market-tested text links, banners, sales letters, and testimonials?

And don't forget communicating with your affiliates. You must stay in touch with them on a regular basis, giving instruction and encouragement through newsletters and tutorials. An integral part of this is to foster a sense of community through regular chats, contests, and an e-mail discussion list.

Finally, there's customer service and support-and not just for your customers but for your affiliates as well. Be prepared to answer e-mail messages, faxes, phone calls, snail mail, and instant messages from your affiliates promptly and professionally.

Keep these basic program components in mind, and you will go a long way towards building and maintaining a successful affiliate marketing program.

The New Cornerstone

Affiliate programs have made a big impact on the landscape of Internet marketing and have swept through the Internet like wildfire. The affiliate program is becoming a central component in an online company's operations and a cornerstone of their marketing strategy. But we've seen only the first phase of this marketing approach. There are many changes and competitive improvement; taking place now, and more are soon to come.

Michael J. Moody, President, Replicate-It.com, stated that everybody that is anybody now has an affiliate program. But they are just beginning to fine-tune their approach, and forward-looking program managers and marketers will need to adapt their operations to this ever-changing marketing strategy.

The first phase of affiliate marketing is aptly called the click and bye approach. This is currently the most dominant form of affiliate program on the Net today. It works like this: When a merchant's link is clicked on at an affiliate's site, the site visitor is whisked off to the merchant's site. In this model, the affiliate loses the traffic it painstakingly acquired.

This system worked well for companies such as Amazon.com, however, affiliates are becoming increasingly dissatisfied with the clickand-bye model and want to see more click-and-buy marketing models, where their visitors make a purchase but stay on their site. In addition, affiliates want to be credited with any and all sales in the future made by customers they referred to a merchant. There are programs now and in the works that address this affiliate concern that use pop-up windows and mini-stores, and customizes private label Web sites that keep both the sale and the visitor on the affiliate's site.

Trends in Affiliate Marketing

Along these lines, a report from Forrester Research says that retail and media firms will increasingly share ownership of traffic, revenue, merchandising, and content to drive revenue and increase brand awareness. For the "New Affiliate Marketing Models" report, Forrester interviewed 50 retailers with active affiliate programs that have been in place for at least three months. On average, these retailers have more than 10,270 affiliates that currently generate 13% of total online revenues. Forrester stated that today's affiliate marketing programs would probably evolve from one-size-fits-all links to one of three models: syndicated boutiques (see Figure 1.3), e-commerce networks, or elastic retailers.

Syndicated boutiques will replace simple links at small content sites, featuring pop-up microstores that use automated merchandising and store-building tools to offer a small selection of branded products for purchase without leaving the content. The report says small niche sites will be able to convert customers on the spot through affiliation with brand names, and intercept new customers who elude advertising by offering bonuses to first-time buyers. An example of this type of model is Vstore.

E-commerce networks, media and merchant sites can create new buying opportunities by combining exclusive content with relevant product offers. When an article generates interest, commerce networks can deliver a one-click buying experience from a known and trusted merchant who delivers the product, the report says. An example of this type of model is ePod (www. epod. com) (see Figure 1.4).

Elastic retailing evolves when merchants that target similar customer bases and offer complementary product lines create affiliations among themselves, the way commerce networks link strong content to commerce. Merchants will partner with complementary retailers to meet all their target customers' needs for advice, recommendations, and products. In sharing the cost of merchandising, retailers spend less per customer without changing their vertical economies of scale, the report says. Examples of this type of model are yet to come.

Here are some other trends that are, or soon will be, hitting the affiliate marketing scene, according to Moody...

Table of Contents

Introduction.

I. WHAT AFFILIATE MARKETING CAN DO FOR YOUR BUSINESS.

1. What Is Affiliate Marketing?

Pay-for-Performance-Advertising Versus Marketing. A Brief History of Affiliate Marketing. Defining Affiliate Marketing. Affiliate Marketing Program Components. The New Cornerstone.

2. The Benefits of Affiliate Marketing.

The High Cost of Customer Acquisition. Is Your Business Suited for Affiliate Marketing? The Benefits of Affiliate Marketing. Other Affiliate Marketing Uses.

3. Become an Affiliate Yourself and Earn Income.

News and Features. Web, Media, and Consumer Opinion Searches. All-in-One Content Programs. Have Your Affiliate Team Join Affiliate Programs.

II. SETTING UP YOUR AFFILIATE PROGRAM.

4. Step One-Planning Your Affiliate Program.

Setting Up Your Affiliate Program. What Do Affiliates Want? Review Your Competition.

5. Step Two-Choosing Your Program Model.

Affiliate Program Models. The Creatives.

6. Step Three-Getting the Word Out.

Step One-Crafting Your Message. Step Two-Building Your List. Step Three-Registering with Directories. Step Three-Newsletters, Discussion Groups, Mailing Lists, and Other Promotional Strategies. Step Four-Contracting Out Your Recruiting. Step Five-Using PR and Advertising.

7. Step Four-Choosing the Right Affiliates.

Know the Affiliate Types. Acquiring the Super Affiliate. Choosing the Right Affiliates. Activating the Non-Participating Affiliate.

8. Step Five-Creating Your Affiliate Agreement.

Affiliate Union Certification. The Elements of an Affiliate Agreement. Legal Issues. Monetary Issues. Delivery of the Affiliate Agreement. A Sample Agreement.

9. Step Six-Tracking Your Affiliate Program.

The Elements of Tracking and Reporting. Do It Yourself Versus Third-Party Provider. Choosing a Third-Party Solution Provider. Third-Party Solution Providers. Low-Cost Affiliate Solution Provider Services. Making Sense of the Numbers.

10. Step Seven-Paying Your Affiliates.

Payment Plans-How Much to Pay. Payment Plans. Dealing with Program Fraud.

III. MANAGING YOUR AFFILIATE PROGRAM.

11. Managing Your Program.

Personnel Requirements. Keeping Your Program Fresh.

12. Communicating with Your Affiliates.

Affiliate Newsletters. Targeted E-mail. Tutorials. Discussion Boards or Forums. Webrings. Chat Sessions. E-mail Discussion Lists. Other Feedback Mechanisms.

13. Supporting Your Affiliates.

Servicing Your Affiliates. Provide An Affiliate Support Site. The Eight Things Every Affiliate Should.

Appendix A. The 10 Deadly Sins of Affiliate Marketing.
Appendix B. Affiliate Marketing Master Plan.

Previous Weeks. Week. Week. Week. Week. Week. Week. Following Weeks.

Appendix C. Affiliate Directories.
Glossary.
Index.

Foreword

Foreword

By, James L. Marciano

The affiliate marketing space has matured quite a bit since 1994, when' the Olim brothers began their first affiliate program at CDnow. The 'buyweb" program revolutionized advertising and marketing on.the Internet by shifting the "burden of response" from advertisers to content producers.

1996 saw the birth of affiliate solution providers - the software needed to track sales by Webmasters - with the introduction of LinkShare and Be Free. That same year, Amazon launched their affiliate ("associates") program, which became a prototype for others in the pay-for-performance industry to follow.

I'd consider myself one of the early adopters of affiliate marketing, and I didn't join my first affiliate program until mid-1997, when I was looking for incremental revenue for TheSquare. com, an executive recruiting firm that serves as the "talent agent" for a network of more than 50,000 alumni and students from the Ivy League and other top schools.

As I scoured industry publications and search engines for details on affiliate programs, the information wasn't always easy to find. What was needed was a search engine for affiliate programs, with ratings and details. I launched Refer-it.com in late 1997. Other affiliate directories quickly followed, including AssociatePrograms.com, CashPile.com, and ReveNews.com. In early 1999, I held the first Affiliate Solutions conference in NYC, where over 200 e-commerce managers, software companies, and Webmasters gathered to share best practices in the emerging affiliate industry.

By mid-1999, affiliate marketing emerged as the most cost effective way for marketing managers to acquire new customers. And by 2000, over three thousand companies and a 'million Webmasters had jumped on the affiliate bandwagon. As companies got focused on profitability, affiliate programs began to play a central role in their overall marketing strategy. Pay-for-performance marketing was no longer a cocktail party catchphrase, but a gateway on the "path to profitability."

As with any marketing program, affiliate programs don't run on autopilot. The successful merchants in affiliate marketing not only launch a program with best-in-class member agreements, commissions, and tracking software, but also manage and support their best performing affiliates for optimal results. Shawn Collins and Frank Fiore have done a tremendous job of packaging the industry's best practices so that you too can succeed in affiliate marketing.