What Not to Do

So often life is reduced to a set of rules – steps that if only followed will lead to the promised land. Even my own past columns are no exception. But just like touching a hot stove, sometimes the best lessons are learned the hard way. Of course, it can be just as powerful to see your best friend’s hand burnt. Let’s see if we can learn a few vicarious lessons, to avoid getting burnt ourselves.

Pay as little as you can…

One of the gripes I’ve been hearing from readers? Merchants short-change affiliate sites by paying a commission only on purchases made from affiliates’ sites. Worse, some readers complain that after an affiliate makes the first referral, merchants busily set to work trying to get the newly acquired customer to skip the affiliate site on later visits.

Here’s what to look for as both affiliate and merchant.

Remember, merchants run affiliate programs to acquire customers. That’s the raison d’ jtre for affiliate programs. If merchants don’t succeed in getting customers from affiliate sites, eventually there may be no merchants (you get the point).

The best merchants design their programs with this understanding – that the affiliate site may be cut out of the loop on subsequent purchases. Accordingly, good merchants set payouts based on the lifetime value of the customer, not simple transactional values.

And here’s why affiliates want these “visitor-thieving” merchants working for them. Merchants that retain customers the best are able to offer better payouts on the initial purchase.

Consider a book sale at Amazon that earns an affiliate a 15 percent commission. The same sale at B&N nets only 7 percent. Amazon is likely losing money on the higher commission, but rewards affiliates for the value of acquiring a new customer – a customer that will spend on average about $120 annually.

Don’t update your affiliate marketing materials…

Another interesting paradox is the lackluster banner creative found in many affiliate programs. Merchants spend piles of cash on interactive agencies, creative production and media testing for branding campaigns. When it comes to affiliate programs, however, more than a few merchants seem content to build it and forget it.

Managing affiliate creative materials requires the same diligence as any other marketing activity. Without the right tools, affiliates are hard-pressed to succeed. Make sure you have a variety of IAB sizes. Think about the colors available. Feature banners that work equally well on light and dark backgrounds. Prune underperformers from time to time, replacing with new test banners. Don’t underestimate the power of text links. Invest in them by writing short descriptions that can be put to quick use by affiliates.

If you’re following our column, you know that context-specific product links are the current push. Think about ways for affiliates to link to more targeted areas of your site. The more granular the content offering, the better.

Now let me turn to some recent headlines and events.

Affiliate Headlines

IBM unveiled the creation of an affiliate marketing program intended to drives sales on IBM.com. The program is powered by BeFree, while a separate deal with SmartAge.com calls for its members to be recruited as affiliates. Commissions are one percent on hardware and four percent on software.

A few weeks ago we mentioned SoftLock. Seems the company is close to closing a deal with iSyndicate. The early word is that SoftLock content from publishers such as Standard & Poor’s, Morningstar and G2 News will now be offered to over 170,000 iSyndicate affiliates.

Chicagoland-based Dynamic Trade has partnered with CompuBank to allow affiliates to receive electronic commission payments. So-called eCommPay happens whenever accrued commission payments reach $25. No more checks in the mail.

In other news, BeFree announced it will acquire TriVida Corp., a developer of personalization technology in a $170 million all-stock transaction. BeFree will exchange about 1.56 million shares of its stock for all outstanding shares of TriVida.

Perhaps our most controversial news comes from last Friday’s announcement that the U.S. Patent Office issued Amazon.com a patent for its affiliate program. In an Associated Press report, patent attorney Walter Linder said, “A lot of web sites … will have to change their affiliate programs to get around this.”

This comes on the heels of Amazon’s September patent for one-click ordering, which resulted in a preliminary order against B&N while the suit is pending. A group called NoWebPatents.org is organizing a boycott of Amazon over its patents on basic Internet technologies. Look for a future column devoted to affiliate marketing patent issues.

Conferences and Events

AffiliateForce2000 reports more than 400 attendees with a few weeks to go. In addition to playing emcee for day two, I’ll be moderating a panel of affiliate network providers, including CJ, ePod, iMediation, LinkShare, Nexchange, OneMinuteShopper, PlugInGo and Vstore. Write me at joel@irant.com with your suggested questions. The conference runs March 15-17.

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