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As we approach the pre-Christmas rush many advertisers will be looking to launch affiliate incentives as part of their fourth quarter marketing campaigns.

But with affiliate marketing continuing to show strong growth, advertisers can expect increased competition for exposure on the best affiliates’ sites. So what makes an affiliate incentive successful and what ideas might advertisers want to avoid?

There are three golden rules in designing affiliate incentives:

  • Know what you want to achieve.
    Very often this might not be a simple increase in sales. Recruiting more affiliates, reactivating existing ones, or gaining better placement on affiliates’ sites could also be objectives that you choose to design your incentive around.
  • Make it as simple as possible.
    Affiliates will be deluged with communication about incentives in the run-up to Christmas. If they have to read more than a few lines to understand what you are offering or what they have to do to be successful, it is likely to be ignored.
  • Make your incentive as inclusive as possible.
    The best-designed incentives are those that have the lowest barrier to entry so that as many affiliates as possible feel they can participate.

Which incentives work

Rather than offering cash prizes, one of the most effective ways to incentivise affiliates is to offer them a ‘money-can’t-buy’ reward. Examples might include VIP tickets to sold-out sporting fixtures, gigs, or other events. Gift and experience advertiser Buyagift can claim to represent the gold standard here, offering six of its affiliates the chance to go on adventure weekends to destinations such as Monaco and Las Vegas.

Advertisers looking to recruit new affiliates to their programmes should work with their affiliate network to identify strong affiliates with a proven record in their sector, and approach them with a generous private commission increase for the first month on the programme. Similarly, if you are looking for ways to reactivate your existing affiliate base, start by looking for those that have dropped off over the last year and make contact to negotiate a private, performance-based incentive in return for additional exposure. Make sure you can be flexible with their creative requirements to get the most out of this: consider offering co-branded banners, email creative or landing pages.

Whilst there are drawbacks to using cash as an incentive, you might still consider offering bonuses to affiliates who drive particularly on-target customers. For example, you may value new customers over existing ones or, conversely, loyal and persistent ones.

Consider awarding affiliates bonuses for driving these kinds of customers, perhaps giving a £100 bonus for every tenth new customer, for instance. Often this is more effective than a prize draw or an incentive based on who sells the most as affiliates are clear about what you as an advertiser are looking for: do x and they get y; they are not dependent on how well other affiliates participating in the incentive are doing.

What doesn’t work

The crudest incentives are those that reward only affiliates generating the most sales. The problem here is that the same, top-performing affiliates will always win whilst smaller affiliates will feel shut out. Instead, advertisers should consider ways to re-engage their base. A very simple way do this is to reward on the percentage increase, rather than the number, of sales produced.

Winner-takes-all prize draws are also unattractive to the vast majority of affiliates for similar reasons. Instead of offering one large prize, advertisers should try to keep their incentives as inclusive as possible and offer a number of smaller prizes to attract more participants.

As well as offering trips to Bali, Cannes and Venice, experience retailer Red Letter Days won this year’s A4U Award for Best Advertiser Incentive thanks to the inclusiveness of their offer.

By tiering the volume targets and increasing the prize values as the targets got higher they were able to offer guaranteed prizes to a wider range of affiliates who in return produced collectively a 152% increase in revenue through the affiliate channel year-on-year. The chances of winning ‘low-chance’ or ‘no-chance’ contests are vastly disproportionate to the effort affiliates would need to expend to win them. One affiliate noted wryly, “If I wanted the ‘chance’ of winning something I would play the lottery”.

Being an affiliate is no longer a bedroom art. The industry is now fully mature and many affiliates are themselves sizeable businesses. Cash prizes of £100 no longer motivate them as the money is swallowed up in the company’s coffers, reinvested and, of course, taxed. Other low-value but ubiquitous incentive prizes include Xboxs, LCD TVs and iPods: anyone wanting one of these is likely to have bought one already. However, iPads are new enough to still have currency as an incentive and, like laptops, are productivity tools that affiliates will always find a use for.

Lastly, advertisers should remember to follow through on what they have promised and reward successful affiliates for their efforts. One advertiser running a “free flights” incentive was forced to admit the flight on offer did not involve getting on a plane; rather the prize was a flight of the kind attached to the back of a dart!

In preparing Christmas marketing plans, advertisers should remember that affiliates represent a rich tapestry of innovative opportunities but that competition for their support is fierce. With most affiliates joined to a plethora of programmes a well thought-out incentive will grab their attention and engage them creatively at the most lucrative time of year.

Owen Hewitson

Published 6 September, 2010 by Owen Hewitson

Owen Hewitson is Client Strategist at Affiliate Window and a contributor to Econsultancy.

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Comments (1)

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Depesh Mandalia, Head of Digital Marketing at Lost My Name

Completely agree with the Red Letter Day mention - this recognition and award is reflective of their team. They're passionate and caring about the affiliate channel, very responsive and as much as the incentive helps, so does having a passionate team *within the merchant*. It's no good setting the best incentive without supporting your affiliates to achieve this.... if merchants are reading this take note from someone who's been on both sides of the fence... Top and middle AMs are increasingly becoming viable businesses and not bedroom AMs as noted above so treat them as one....

about 6 years ago

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