An Affiliate Marketing Primer: Chapter III

Two weeks ago, I began discussing the seven important decisions advertisers need to make before starting an affiliate program, and I touched on the first two decisions. Last week, I covered the next three. Today, we round out the discussion with the last two points.

The Care and Feeding of Affiliates

Many affiliate program managers put out newsletters — usually by email — to all the affiliates each month. This can be a good idea, especially when there’s a lot of information available to help all the affiliates increase their click and purchase rates. But some affiliates complain of vacuous newsletters, regularly sent and bereft of meaty content. In that context, a few or occasional newsletters with meaty content might be more effective than regular newsletters that contain more fluff.

Increasing the offer to affiliates can reinvigorate the level of care they expend on your program. Sometimes this can even be done in test batches, offering a special incentive to a certain group of sites to see what type of results the advertiser might expect if the new offer were rolled out to the whole market. More and more affiliate programs are stratifying their offers so that the higher-performing sites get even higher percentages of the purchase. This way, each affiliate has an incentive to reach for the next level of compensation.

Advertisers must put the same scrutiny and care into the affiliate creative as they do with the advertising creative. Unfortunately, many affiliate programs languish in a creative desert. The creative process for affiliate programs needs to be as dynamic and iterative as that of other marketing efforts. Stale creative will work as poorly on an affiliate’s site as it will on a media buy site.

The Weeding Out of Fraudulent Affiliates

Finally, the affiliate program managers will need to weed out the fraudsters. Every affiliate program will eventually be targeted by someone who will try to trigger payments without delivering real customers. They can do this in a variety of ways. Here’s a common one:

If an affiliate program offers to pay affiliates a dollar for each person it sends over to register for a product newsletter, a fraudulent affiliate could exploit the situation using a “hotlining” technique.

With this technique, the fraudster creates a new Web site that contains some sort of information that people seek. A common device is a password to a pornography site. But to get to that password, the user will first have to sign up for the advertiser’s newsletter through this “affiliate” site. The fraudulent affiliate might use one of the words on the newsletter’s post-sign-up page as the password. In this fashion, it can tell visitors to its own site that they must fill out the advertiser’s form to get to the page, “where you must use the third word in the first sentence” for the password. Each time someone uses that page to get at the pornography password, the affiliate program advertiser pays the fraudster a dollar.

Precisely because the affiliate programs have become so automated, the industry has become susceptible to these types of practices. Most major programs have a person who spends at least part of his or her time looking out for these types of tricks within the list of affiliates. They can most times be detected by looking for affiliates that give great traffic numbers but few subsequent purchases. A list of these can be spit out of many of the automated affiliate program packages.

The outsourced affiliate program management companies are doing an increasingly good job of weeding out fraudulent affiliates. In the early days of the industry, they had little incentive to reduce the number of affiliates, but now the market features so much competition that this is quickly becoming a major point of consideration among companies.

At least one of these companies uses a clever application that thwarts fraud by posting passwords to affiliates only in JPEG format. This prevents the automated fraud programs from “reading” the number online. A human wouldn’t even be able to tell the difference, but a fraud-detecting computer looking to access a new affiliate program membership program would see only a graphic file.

This issue has already created more pressure to conduct deals based on transactions rather than on clicks or other measures that can be so susceptible to fraud.

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