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WHAT IS AFFILIATE MARKETING?
Affiliate Marketing is a method of driving sales of a product or service using a third party sales force who only get paid on results.
The merchant (sometimes known as the ‘advertiser’) is the company or individual with a product or service to sell.
The affiliate (sometimes known as the ‘publisher’) typically owns websites, or promotes online in some other way such as ‘paid search’ or ‘email marketing’.
To facilitate the relationship between merchants and affiliates there is tracking software of some kind. In most cases, merchants opt to use 3rd party tracking software provided by an 'affiliate network'.
The network acts as an intermediary between merchant and affiliate and actually takes all the hard work off the shoulders of both parties.
From the very start it is vital that you understand that your affiliates are your virtual sales force. They will be driving new traffic, new customer acquisitions and ultimately sales through a variety of methods that won’t cost you anything unless a sale or agreed action occurs.
WHY IS AFFILIATE MARKETING GOOD FOR MY BUSINESS?
Affiliate marketing is the most effective form of online advertising.
The reason is because you are paying on results which means you are getting more sales for less risk.
DOES AFFILIATE MARKETING REALLY WORK?
Yes, as an online advertising channel Affiliate Marketing generated more than £3 billion in sales for UK retailers and companies in 2007. Affiliate Marketing is not just for BIG brands, the majority of those selling online can utilize this channel.
WHO ARE AFFILIATES?
Affiliates vary in size and marketing approach but most use a number of techniques to drive traffic to your site via the affiliate program. These techniques can be:
* Paid Search (Google Adwords, Yahoo Search! MSN etc) - This is a specialist area and there are affiliates out there who have years of experience, keyword lists in their thousands and will take the risk of the CPC in return for just the commission on sales.
* Email Marketing - A number of affiliates have techniques for growing large email lists and we can tap into these to market your products
* Content - Writing unique content and pages to feature different products
* Blogging - No explanation needed on this one!
* Datafeeds - Using your product databases and optimising for SEO or price comparison sites
* Cashback Sites - Where the affiliate gives a % of their commission back to the consumer
* Voucher/Reward sites - Where the affiliate collate voucher deals for the consumer.
* Shopping Sites & Directory Sites - Where affiliates lists hundreds of merchants.
WHY SHOULD I WORK WITH AN AFFILIATE NETWORK, AS OPPOSED TO HAVING MY OWN DIRECT PROGRAM?
The main reason to work with a network is you attract a larger pool of affiliates. You have to think that at any given time an affiliate could be promoting hundreds and hundreds of merchants. No affiliate would ever bother logging into hundreds of private affiliate programs to check stats – there are simply not enough hours in the day! The other bonus for an affiliate other than centralised reporting is an affiliate network will issue one cheque a month to the affiliate. So if an affiliate only earnt £1 in commission from your affiliate program then they will get paid.
There are a variety of affiliate networks available to merchants these include Tradedoubler, Affiliate Window, Webgains, Paid On Results, Affiliate Future, OMG, Affilinet, Commission Junction, to name just a few. Networks generally charge a setup fee, in some cases a monthly fee and they take a % of the commissions paid to affiliates commonly known as an 'override'. These costs usually cover themselves within a couple of months of running a program.
WILL AN AFFILIATE NETWORK MANAGE MY PROGRAM?
One of the major confusions in Affiliate Marketing is that retailers/ merchants join an affiliate network and expect the sales to naturally roll in and the network to promote and manage the affiliate program, this is not true. The network is simply a middle man to faciliate the relationship. Your program will benefit from expert management from either from an inhouse marketing person or 3rd party/outsourced agency. As an agency (PeekABoo Communications) offer value to merchants by initially making sure affiliate marketing is right for their product or service. We set the commission structure which is right for the merchant and also attractive to affiliates. We know affiliates and as such have established relationships with them, this helps to jump start any affiliate program and to ensure continued success with those affiliates. We understand potential conflicts with other marketing channels so can configure a program correctly from the onset. Like affiliate network costs, outsourced management costs usually pay for themselves in a few months leaving you to make some ROI on the affiliate program and reap the rewards of new customers and those essential repeat orders.
IS AFFILIATE MARKETING RIGHT FOR ME?
Anyone considering affiliate marketing or any online marketing and PR should do a SWOC analysis.
What are your STRENGTHS as a business? Examples: - Your business may have; Fast delivery Unique products Exclusive deals with wholesalers Low prices High profit margins
Strengths are easy but what are your WEAKNESSES? Examples: - do you suffer from; Long delivery times Limited product lines Low stock Poor margins
Be honest with yourself, as affiliates will identify weaknesses in your program and you need to have planned responses.
What are your OPPORTUNITIES? Examples: - To be the first online retailer for a specific product.
To become the online leader for a specific sector To be the fastest growing company in your sector
And lastly what are your CHALLENGES? Examples: - To compete against high-street brands, To get your prices inline with those of your competitors.
To get your delivery times down
To reduce refund requests
To increase conversion rates
To increase awareness
In business if you know your strengths and weakness you can play them to your advantage. If you have enough unique selling points to set you apart from the competition then it's likely you can benefit from affiliate marketing.
I WANT AN AFFILIATE PROGRAM WHAT DO I DO NEXT?
If you are going to try and setup a program on your own then these are the steps;
Find out of your competitors have affiliate programs, which networks they are on and what commissions they are paying affiliates. Just go to the affiliate networks and usually they have a Merchant page which shows their programs.
Make sure you have enough unique selling points to position your company against competitors who may have affiliate programs
Set your commission structure - don't just copy what your competitors do you need to set the levels which are right for your business.
Talk to affiliate networks, remember they vary in price and this is where an Agency can help as like us can broker you a deal.
Create some banners, I recommend a basic set which includes: 468x60, 120x600, 234x60, 120x60, 88x31, 125x125, 300x250. You should update the banners at least every 8 weeks.
Create some logos, I recommend: 88x31, 120x60 and 120x90
Create your Terms & Conditions: Such as do you allow affiliates to bid on keywords, are there any sites you don't want to work with.
Integrate the tracking and make test transactions - this is all done with the affiliate network
Then finally when you are live you can start talking to affiliates and asking them to support/promote your products.
You should allow a 3 month bedding in period to establish your program, but you should see sales coming through from Month 1 if you have recruited the right partners.
This article was written by Helen Deehan. Helen's understanding of the digital landscape is second to none and since the late 1990s she has built up impressive credits across the entire digital media and marketing spectrum. With in-depth experience both agency and client side her client list has included; Great Little Trading Company, Marks and Spencer, Laithwaites, Esure, Currys, Butlins, Kelkoo, Figleaves, Buena Vista International, Disney DVD, Dixons, The Link, and Laura Ashley to name just a few.
Helen now works with a growing number of smaller retailers helping them both build their brand online and drive sales. If you are looking for Affiliate or Online Marketing Services please contact Helen at Peek A Boo Communications or by emailing helen@peekaboocoms.co.uk
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