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Affiliate Marketing Is Alive and Very Well

  |  November 24, 2000   |  Comments

With the closure of several big-name companies has come the closure of several big-name affiliate programs. But don't think the sky is falling on affiliate marketing. It isn't. Here are some tips to keep your program healthy and growing.

The recent shakeout of dot-com companies has cast a pall over the Internet workforce. In the past weeks, we've seen the closure of a number of high-profile companies, including Garden.com, MotherNature.com, and Pets.com.

With the closure of big-name dot-coms has come the closure of big-name affiliate programs. This has resulted in a Chicken Little syndrome among affiliates and affiliate managers.

But do not fret: The sky isn't falling on affiliate marketing. In fact, it's alive and well. The demise of some affiliate programs is sadly a case of bad business plans happening to a good marketing model.

Naysayers Need Not Apply

Evel Knievel once said, "For every adversity, there is an equivalency to benefit. Sometimes you just have to look for it." That said, while some companies and their affiliate programs are struggling, the affiliate marketing industry is growing at an unprecedented rate. And affiliate payouts are rapidly on the rise.

In the third quarter of 2000, Be Free handled more than 6.3 billion customer promotions (impressions), an increase of 44 percent from the previous quarter and 449 percent from the same period a year earlier.

According to a recent study from Forrester Research, pay-for-performance models will account for 50 percent of online advertising budgets by 2003, up from 15 percent in 1999.

And Nielsen//NetRatings reports that in March 2000, banner ads had a click-through ratio of less than half of one percent, while CTRs for the Commission Junction network are between three and four percent.

In November 1999, the highest commissions paid to date in affiliate marketing were reported in Dan Gray's book, "The Complete Guide to Associate & Affiliate Programs on the Net: Turning Clicks Into Cash." An updated list (see below) was compiled in November 2000 by the United States Affiliate Manager Coalition, and the combined total of the top 10 payouts has nearly doubled, from $181,460 last year to $346,881 in 2000. This is a testament to the continued growth and success of affiliate marketing.

Highest Commissions Paid to Date (November 2000)

Best Practices for Affiliate Managers

While affiliate marketing can have a very positive impact on a company, a great affiliate program does not happen spontaneously. The best affiliate programs invariably have the best affiliate managers. The top affiliate managers understand the industry because they play an active role in developing their programs.

In the next year, there will be three important conferences and seminars in affiliate marketing. These events will provide an invaluable opportunity for industry education and networking.

The Institute for International Research 2001 Online Allies conference (January 24-26 in San Francisco) is a two-day, two-track event with an optional third day of workshops that will focus on methods, strategy, management, legalese, and privacy issues.

internet.com's Affiliate Solutions (in London in March and San Francisco in April) is a one-day seminar that addresses issues in affiliate marketing from the perspectives of affiliates, merchants, and solution providers.

AffiliateFORCE 2001 (April 19-21 in Miami, Fla.) is a three-day conference of educational seminars and training for affiliates and merchants. This event is unique in that each day is focused on a segment of the industry (solutions, merchants, and affiliates).

For those affiliate managers who will not able to attend the conferences, there are some active affiliate manager email discussion lists frequented by the top affiliate managers. There are regional lists in New York City and San Francisco and a list for the entire United States.

Know Thy Affiliates

Affiliate marketing knowledge is essential, but it's not everything. The top affiliate managers know their industry, contemporaries, and affiliates. Coming on December 6, there will be a unique online event that combines education, networking, and interaction with affiliates.

The Affiliate Webinar is a free online affiliate seminar in which industry experts get together with affiliates and merchants for a series of themed chats plus all of the trappings of an offline conference: success tools and resources, networking, door prizes, and more.

This event is a good litmus test of which affiliate programs are striving to succeed and which are ambivalent. After all, there are hundreds of affiliates already enrolled for this free event, and they heard about it from their affiliate managers. Can your affiliates count on you to inform them about resources to succeed?

Consult With an Expert

Affiliate programs arise and develop through the natural selection of small, inherited variations that increase their ability to compete and survive. There is a sort of "survival of the fittest" among affiliate programs and the companies they complement.

In cases in which a new program wants to move quickly past the affiliate marketing learning curve, there are some excellent consulting resources at its disposal. Although lots of companies are offering consulting on affiliate marketing, not a lot of people have an insider's knowledge of what works. For what it's worth, if I needed help launching a new program, I would contact a small handful of people.

The preeminent service for getting an affiliate program off the ground is ADNet International. ADNet launches and develops performance marketing for companies of all sizes, and its team includes Patrick Anderson and Declan Dunn.

There are two dynamic and knowledgeable affiliate marketing consultants that have an intimate knowledge of Commission Junction and the industry as a whole. Keith Kochberg, formerly a merchant with Commission Junction, runs the boutique marketing consultancy, imarketing ltd. Linda Woods, former resource programs manager with Commission Junction, offers an array of affiliate marketing services in her new incarnation as the Affiliate Goddess.

Across the pond in the U.K., Neil Durrant offers affiliate marketing consulting in addition to the tools and resources that he makes available to affiliates and affiliate managers within his network of affiliate marketing sites.

Although the dot-com landscape is constantly changing, these changes aren't signs that the sky is falling. Rather, they are evidence of business evolution. Inevitably, some of the players will leave us, and new start-ups will develop into our competition. It's natural selection in the dot-com world.

To shamelessly paraphrase Mark Twain, the reports of the death of affiliate marketing have been greatly exaggerated.

Postscript

In a recent column on the history of affiliate marketing, I mentioned the early directories (Refer-it.com and AssociatePrograms.com) that helped to chronicle the industry. I neglected to reference another early player, Adbility, which also played a part in the early days of affiliate program reviews.

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ABOUT THE AUTHOR

Shawn Collins

Shawn Collins is a Co-Founder of the Affiliate Summit conference, Co-Editor-in-Chief of FeedFront Magazine, and has been an affiliate marketer since 1997.

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