Affiliate Marketing: What Marketers Need to Know From 4 Experts

  |  September 17, 2012   |  Comments

Affiliate marketing is about building and maintaining relationships between affiliates, retailers, and networks. Here’s why you should add affiliate marketing to your mix.

Affiliate Marketing, also known as performance marketing, gets a bad rap from many marketers. Why? When you say affiliate marketing, marketers envision someone in his pajamas sitting in front of his computer. The reality is that, for most successful affiliate marketers, nothing could be further from the truth. These performance marketers are laser focused on building revenue streams and are experts at search optimization, social media, email, and conversion

So What’s the Secret of Affiliate Marketing?

The secret of affiliate marketing is so basic that it’s surprising that marketers don’t get it. Affiliate marketing is about building and maintaining relationships between affiliates, retailers, and networks. It’s at the heart of selling. This explains why Affiliate Summits sell out.

To better understand why you should add affiliate marketing to your mix, here’s what four experts with deep experience advise.

1. How do you define affiliate marketing?

  • Dan Chiss (Google Affiliate Network): Affiliate marketing is a performance-based online marketing channel that rewards publishers for driving conversions for advertisers.
  • Shawn Collins (Affiliate Summit): Affiliate marketing is simply online commission-based sales and lead generation. For instance, if somebody made a fan site for the latest hit movie, they could include links to merchandise and tickets. When visitors click the ads and buy, the site that referred those sales will earn a commission.
  • Murray Newlands (Influence People): Affiliate marketing is where one entity drives a prospect to another entity in return for a reward. The traditional way of thinking about affiliate marketing was the owner of a book club website recommended the next month’s book and put up a link to Amazon. If people bought the book, Amazon would reward the book club owner. Now there are many more variations on this approach. While site owners are still paid for sales, they’re also compensated for leads, clicks to sites, traffic which goes to sites and leaves them (paid on the outkick), to mobile app installations and even in-store coupons.
  • Adam Weiss (Rakuten LinkShare). Affiliate marketing is the performance-based segment of the online advertising industry. It offers advertisers the ability to generate sales, leads, or any action on a rev share or CPA basis. These actions are driven by highly targeted distribution partners that offer advertisers a unique value proposition driving increased revenue for all parties.

2. What’s the value proposition for marketers to use affiliate marketing?

  • Dan Chiss: Affiliate marketing can be a cost-effective, low-risk marketing channel that is uniquely suited for zeroing in on conversions, but also plays an important role in influencing consumers at each phase of the purchase cycle. It empowers advertisers to increase the mileage of their marketing efforts, while publishers are rewarded for driving conversions.
  • Shawn Collins: Affiliate marketing enables people to monetize their sites, email lists, etc. with relevant advertising. It's a process that requires frequent testing and optimization, and affiliate success varies from a couple dollars a month to supporting themselves, and even powering entire companies in some instances.
  • Murray Newlands: You’re able to tap into a marketplace of marketing ninjas who can help merchandise your products. Ninjas can be good and bad. Know with whom you’re working and how to manage them. Further, as an adviser to VigLink, one of many affiliate channels, I’ve seen them enable advertisers to expand their reach and make sales through billions of pages of content they’d never be able to get traffic from otherwise.
  • Adam Weiss: The research Rakuten LinkShare did in conjunction with Forrester showed that consumers prefer visiting sites that focus on aggregation and curation of multiple advertisers and/or products. These are the types of sites that an affiliate network will provide to a marketer. Further, we found that these types of sites drive new customers to advertisers, help customers make a final decision when there is purchase intent, and also drive users who tend to spend more money to advertiser sites.

3. How would you persuade a marketer who believes that affiliate marketing cannibalizes his existing sales?

  • Dan Chiss: Marketers should focus on data and try to understand the full picture of their customers’ journeys. Before your customers buy or convert, they may see many different parts of your online marketing campaign – including paid and organic search, email, affiliate marketing, display ads, mobile placements, and more. Each of these elements has an impact on the results you see. Marketing attribution modeling can help you can assign value to all of the factors that contributed to a sale, and make better decisions about where to invest in the future.

    It’s also important to remember that testing is key to optimizing compensation to affiliate partners. Consider building affiliate programs that reward partners for the value that their referral provides to your business. For instance, some advertisers give more credit to affiliates that bring in new customers and provide awareness in the upper-funnel versus those that simply offer coupon codes to customers who are ready to purchase. Experiment to see what works best for your business.
  • Shawn Collins: When an advertiser has an affiliate program, it's essential that the program is actively managed. The cases where an affiliate program can cannibalize the existing sales are when the program is on autopilot. For instance, if there is nobody to monitor whether affiliates are bidding on trademarks, a company could waste funds on commissions for what would likely have been organic sales.
  • Murray Newlands: Once you gain experienced with affiliate marketing, you’ll know which of your affiliates drive what type of traffic by which means. Then you select to work with those people who bring you new, incremental sales that don’t cannibalizing existing sales.
  • Adam Weiss: Affiliates are the ones who are continually innovating and on the cutting edge of ecommerce – building tools and technology that help shape how customers are shopping online and this can only support and augment a marketers current efforts. Customers are becoming increasingly savvy in how they shop online and use the web as a resource for e-commerce and we find increasing usage of affiliate sites as a way to make their final purchasing decision.

4. What kind of resources do marketers need to support their affiliate program?

  • Dan Chiss: Data! Explore all the available analytical tools and reporting your network provides, and constantly evaluate how your affiliate program is helping you meet your overarching business goals. Use free tools like Google Analytics to understand customer behavior and help you get your desired results. Always make sure that solid data supports any business decision that you make, whether that be reallocating budget, adjusting affiliate publisher payments, revising your cost-per-acquisition targets, or updating landing pages.
  • Shawn Collins: I'd recommend that any merchant/advertiser work with one of the bigger affiliate networks. It can be tempting at the onset to go with an off-the-shelf software, but affiliates prefer to work with a trusted third-party. Also, the affiliate networks are frequently evolving their tracking and reporting, while cheaper solutions are often static.
  • Murray Newlands: The obvious one is being on an affiliate network (Google, Commission Junction, ShareASale, or other network). Alternatively you can use your own affiliate tracking software such as Hassoffers, Cake Marketing, or LinkTrust. Next, you need time to manage recruiting and building relationships with your affiliates. To support this effort, you’ll need marketing assets including banners and email templates. Also, you’ll want the flexibility to change to your website as well as business model to make affiliate marketing effective for your company. This means management buy-in.
  • Adam Weiss: I’d say it depends on what you’re selling and what type of distribution you’re looking to reach. But at a high level, as previously mentioned, I think having a person or team to manage the relationships with your publishers is key. You want to ensure you are able to understand and leverage the full value of all the publishers in your program. You also want publishers to understand your brand and what you’re about as a marketer.

    There are also various tools and technologies out there that can make it easier for Publishers to work in your program. Rakuten LinkShare has spent a lot of resources building different tools making it easy for publishers to get links for their advertiser partners as well as to access reports in a streamlined fashion.

When it comes to affiliate marketing, the bottom line is that it helps supplement your marketing mix cost effectively by supporting your reach and conversion efforts.

Have you used affiliate marketing? If so, what has your experience been?

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ABOUT THE AUTHOR

Heidi Cohen

Heidi Cohen is the President of Riverside Marketing Strategies, an interactive marketing consultancy. She has over 20 years' experience helping clients increase profitability by developing innovative marketing programs to acquire and retain customers based on solid analytics. Clients include New York Times Digital, AccuWeather.com, CheapTickets, and the UJA. Additionally, Riverside Marketing Strategies has worked with numerous other online content/media companies and e-tailers.

Prior to starting Riverside Marketing Strategies, Heidi held a number of senior-level marketing positions at The Economist, the Bookspan/Doubleday Direct division of Bertelsmann, and Citibank.

Her blog, HeidiCohen.com, was nominated as a finalist for Top Social Media Blog of 2012 by Social Media Examiner.

Heidi is also a popular speaker on current industry topics.

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