The stat above is from the IAB OPM study (April 2017), which is one of several highlighted in my introduction to affiliate marketing, a tactic that not only delivers good ROI, but can be considerably better at driving ecommerce sales, subscriptions and other conversions than display ads.
But not every affiliate marketing program will deliver the same return on investment and not all those sales will be incremental.
A survey by Viglink (May 2017) of US affiliate marketers found that 27% of merchants said their affiliate marketing revenue did not meet expectations and 64% of publishers said the same. The survey didn’t explore why affiliate marketing failed to deliver on expectations, but it’s worth a wager that the merchants are partly to blame, both for their own disappointment and that of their affiliates.
Like anything in digital, a successful affiliate marketing program is based on careful planning, research, strategy and management. Whether the mission is to improve ecommerce sales, customer registrations, trials or downloads, for immediate or long-term impact, the affiliate advertiser must:
- Establish the goals of the program.
- Decide on the right profile of affiliate to deliver the program.
- Decide how you will reward different types of affiliate.
- Make sure the most deserving affiliates get paid accordingly.
- Create content suitable for each affiliate.
- Put someone in charge of approaching affiliates and reviewing applications and managing relationships.
- Optimize your website to convert the new traffic when it arrives.
1. Establish affiliate marketing program goals
An affiliate marketing program is made up from a balanced mix of affiliate partners. Setting clear goals for what the program will achieve will help you identify the particular affiliates and types of affiliate you wish to recruit.
Short-term or long-term?
Is there an immediate short-term goal, such as creating hype and momentum for a new product or shifting some slow-moving stock as the end of the quarter or season approaches? Then maybe a big-bang incentive campaign is the right choice.
Or is this a long-term play to gradually recruit affiliates that will help you launch into a new geography or gradually expand your customer base and revenues over years? Then you need to partner with the sites to which shoppers continually return to for advice, reviews and ideas.
Jules Bazley, vice president, commercial development (EU), CJ Affiliate explains:
There are specific types of affiliate publishers that retailers find work best for them, usually this comes down to specific business interests and strategy. If a retail brand is looking for a high volume and a quick turn-around, then the obvious choice are vouchers and cashback sites. That’s a meaningful way of generating sales.
However those looking to create more long-term value from affiliate may be better off looking at mid-tier partnerships such as content publishers. Typically, CJ’s retail advertisers work with a broad mix of publishers to give them a custom ratio of affiliate publisher types, generating both fast turn-around and long-term gain.
Who is the target customer?
Are you recruiting new ones or retaining and selling more to existing ones? Are you aiming to win a financial, energy, telecoms etc. customer from a competitor?
Think about how they shop, what sites they read and emails they subscribe to. Pick affiliates that specialise in your business niche and those that attract your target customer. See the women’s sportswear guide on Mumsnet pictured above.
What problem are you trying to solve?
Are too few visitors coming to your site or are you failing to convert the visitors into customers? Would retargeting via affiliates help reduce the worrying number of abandoned carts?
Is this an investment for future sales and loyalty?
Do you want people to sign-up for a trial service or receive a free sample? Is the goal to increase sign-ups for your email newsletter or drive downloads of a mobile app?
2. Decide on the right profile of affiliates to deliver the campaign
Affiliate marketing has historically been dominated by so-called incentive affiliates (e.g. cashback sites). They have become popular with value-conscious consumers and with businesses that wish to drive quick results.
The IAB UK Consumer Insights Survey (February 2017) found that in the last six months 43% of shoppers had visited a comparison shopping site; 36% entered a competition; 26% had signed up for a newsletter; 25% visited a voucher code site; 23% visited a loyalty site; 20% had consulted a subject expert website; 17% had visited cashback websites; 16% had visited an independent blog site.
However, it is unlikely that incentive sites are the only sites that consumers will visit on the path to purchase. They may not be the most useful to either the consumer or the advertiser and a program mix that is over-weighted with incentive sites may mask the value of and divert rewards from other affiliates.
So what might a balanced affiliate marketing program look like for an ecommerce merchant? Evan Weber, CEO, Experience Advertising, a Florida based affiliate agency, explains:
- Relevant websites in the merchant’s niche. These provide a true upside and a source of new customer acquisition.
- Bloggers offer similar benefits as relevant websites. They can do product reviews and help with product announcements.
- Conversion affiliates that help websites increase conversions and remarket to departing customers, such as SaleCycle.com or ReachDynamics.com.
- Content monetization affiliates that insert merchant links on keywords in relevant content on participating blogs and news sites, e.g. VigLink.com or SkimLinks.com.
- Incentive affiliates, including cashback and loyalty portals, with membership bases that pay or reward their users a cashback percentage of each sale they purchase through the portal’s links. US examples: eBates.com, HooplaDoopla.com. UK examples: Quidco.com.
- Email Marketing – including the advertiser’s creative within the targeted emails of affiliate partners and dedicated email publishers. Affiliate gets paid on any sales or leads that result.
User research will help identify the publishers that are popular with your customers or potential customers. Web analytics tools are useful, but will only show the sites which the user visited directly before your own.
In addition to the news and blog sites that populate every niche, some sectors have spawned their own specialist affiliates.
The fashion business has a number of so-called shopping discovery engines (SDEs) which allow visitors to search for fashion products by style or colour across number of outlets. Shopstyle (recently acquired by eBates) for example, claims to have delivered $1 billion in ecommerce revenues to a network of 1,500 retail partners. Other SDEs include Polyvore and Lyst in the US and Snap Fashion in the UK.
In sectors such as finance, insurance, utilities and telecoms, specialist aggregator / comparison sites, such as the UK’s Comparethemarket.com, MoneySuperMarket and uSwitch drive a large share of volume of typical affiliate programs, reports Aftab Aslam, head of client development (UK&I), Tradedoubler.
The portfolio of affiliates is a very important consideration when choosing an affiliate network. Publishers with an established affiliate business are likely to work with particular affiliate networks and may be reluctant to join another to work with you. Request a list of affiliate members that are relevant to your business from each network.
A quick way to find out if your target publisher a) uses an affiliate network b) which particular network is to search on a tool such as SimlarTech or BuiltWith. It’s not fool proof, but faster than a search for buy-now links, or affiliate advertiser information on the publisher website.
3. Decide how you will reward different types of affiliate.
It is important to determine which sites play the most valuable role in influencing the purchase decision and decide whether they should be offered a higher incentive to reward them or stop them working with a competitor.
Affiliate fees vary incredibly. Evan Weber says it’s common for retailers to pay 5-15% in percentage of sales, but in some industries it’s much more. In web hosting the affiliate may take 100% of the first year’s fee. Similarly, cost per lead (CPL) can range from $5 to $100. For example, in the US a health insurer might pay $20-50 per lead.
Retailers commonly reward affiliates differently. Some retailers have varied rates for distinct product types. Amazon, for example, which operates the largest affiliate network in the world, pays 0% for wine, 3% for toys or 8% for Amazon Kindle devices, as can be seen on its Amazon rate card pictured below. Until March 2017 Amazon paid affiliates more if they sold more product.
Other retailers have varied rates for different types of affiliate. The ASOS UK affiliate program (AWIN affiliate network) pays up to 5% commission, but pays cashback and loyalty partners “0% commission for existing customers and 10% for new customers” and pays voucher-code partners 3%.
4. Make sure the most deserving affiliates get paid
Traditionally, affiliates are paid on a last click basis, which means the last site visited receives the commission. So if the customer’s last port of call was to check an offer on a cashback site, then any previously visited affiliate, no matter how influential to the customer, will receive nothing.
This may help to explain why Viglink finds that 64% of publishers are dissatisfied with the results of affiliate marketing.
Discuss with your affiliate network if it is possible to a) track all customer interactions with affiliates and b) if it is possible to reward different partners on a shared revenue model.
Karl Wood, senior manager, network development, Rakuten Marketing Affiliate Network:
The latest trend is to split out commission based on the affiliates’ contribution to a sale using attribution. Our insights and attribution platform helps retailers re-evaluate the significance of upper funnel contributors such as bloggers and influencers and redefining at what stage of the consumer journey an acquisition is entitled to a commission and ensure this is identified and rewarded.
5. Create and provide content suitable for each affiliate
Hopefully the message is getting through that balanced affiliate programs should use a variety of publisher types.
The problem is different publishers will have distinctive content requirements. Merchants may need to produce logos, buttons, images, banner ads in appropriates sizes and formats, and make available product descriptions, and text in different lengths and styles, up-to-date pricing and offers and multimedia content, such as videos.
Depending on the publisher requirements these will be provided through product feeds, APIs or via download from the merchant or affiliate network.
This means merchants must have the creative capability in-house or outsource to an agency.
Tradedoubler’s Aftab Aslam:
Content requirements depend on the environment. An incentive site is restrictive, but the text needs to be offer led, or compelling to cater for that audience. Where content restrictions aren’t at play, then the text needs to be informative, highlight benefits or amplify any offer-led messaging.
Having an up-to-date, robust product feed is a must for any multi-product advertiser. Compliance and accuracy of content is a big consideration, both affiliates and brands need to ensure information is both relevant and updated for the end consumer.
It’s important to move away from a one-size fits all messaging approach, and tailor content for the affiliate site in question. This requires methodical planning, but ultimately the rewards are greater.
6. Put someone in charge of managing relationships
Affiliate programs do not run themselves. Simply joining a network with an attractive portfolio of publishers does not guarantee that many (or any) will instantly start promoting your products and services.
Finding, recruiting and managing publishers requires careful research, often some wooing and deal making. Some companies have a dedicated affiliate manager(s), others will work with an affiliate agency, or use the in-house agency at the network.
Jules Bazley says “Advertisers work in different ways, but most networks provide both ‘self-service’ and ‘managed’ programmes. The industry is very much relationship driven, so having someone with good contacts and experience working with affiliates is key to success.”
An application form to partner with the fashion shopping discovery engine ShopStyle.
7. Make sure the website is optimized for conversion
Lack of traffic and on-site conversions should be helped by recruiting affiliates, but not if the fault lies with the website itself. It doesn’t matter how many prospects the affiliate sends if there are problems with usability, e.g. customers can’t find what they are looking for or links don’t work; or the user experience is poor, e.g. they need to fill our lengthy forms.
Retailers need to take their site through a process called conversion rate optimization before launching their affiliate program. This is a series of website tweaks, improvements, and tools that help to improve the overall click to sale rate on the website.
Affiliates need to earn conversions from the traffic they are driving to the merchant’s website. If they don’t make what they expect, they may become frustrated that you invited them to promote your products and their efforts didn’t create income.