What is affiliate marketing?

What if the restaurant gave you 10% of the bill of every friend you recommended it to?

They’d be paying you a finder’s fee.

Online, this is affiliate marketing.

What is affiliate marketing?

Affiliates: an extended sales force

““A performance based A performance based online marketer, sending online marketer, sending targeted traffic targeted traffic to a specific website”to a specific website”

Who’s who?

Affiliate / Publisher

•Sends targeted traffic

•Publishes adverts

•Earns commission

Merchant / Advertiser

•Wants targeted traffic

•Has products to advertise

•Pays commission on successful referrals

Affiliate Marketing Strategies

• Affiliate marketing– One firm’s Web site (affiliate site)

• Includes descriptions, reviews, ratings, other information about a product linked to another firm’s site (offers item for sale)

– Affiliate site receives commission• For every visitor following link from affiliate’s site to

seller’s site

– Affiliate saves expenses• Handling inventory, advertising and promoting product,

transaction processing

Electronic Commerce, Ninth Edition 69

Affiliate Marketing Strategies (cont’d.)

• Affiliate commissions– Pay-per-click model

• Affiliate earns commission• Each time site visitor clicks link, loads the seller’s page

– Pay-per-conversion model• Affiliate earns a commission• Each time site visitor converted from visitor into

qualified prospect or customer

Electronic Commerce, Ninth Edition 71

Affiliate Marketing Strategies (cont’d.)

• Affiliate commissions (cont’d.)– Affiliate program broker (clearinghouse or

marketplace)• Sites running affiliate programs• Sites wanting to become affiliates

Electronic Commerce, Ninth Edition 72

Affiliate Marketing Strategies

• Cause marketing– Affiliate marketing program benefiting charitable

organization– Visitor clicks on link (on affiliate’s Web page)

• Donation made by a sponsoring company

– Page loads after visitor clicks donation link• Carries advertising for sponsoring companies

Electronic Commerce, Ninth Edition 70

A brief history

Source: MarketingSherpa

2006: $6.5 billion paid!

The

step3proce

ss

The 3 step process

Performance based relationships

Action and Reward

CPL – Cost per Lead

CPA – Cost per Action

CPC – cost per click

e.g.

1 – 10 sales: 10% commission

11 – 25 sales: 11% commission

26 – 50 sales: 12% commission

51 or more sales: 15 % commission

Super Affiliate!

Revenue Share

The Key : Tracking

What is a What is a cookiecookie and how does it help? and how does it help?

http://www.firebox.com/product/1201

http://scripts.affiliatefuture.com/AFClick.asp?affiliateID=238&merchantID=214&programmeID=3897&mediaID=0&tracking=cube_world&url=http://www.firebox.com/index.html?dir=firebox&action=product&pid=1201&usg=AFQjCNGdHpzAasCefzDnyUBPxnagxqzvTA

Tracking in URLs

A note on cookie periods and commission

1. Click to advertiser from network, affiliate

or search listing

3. Expose appropriate vendor based on

‘last vendor’ cookie

2. Fulfil transaction1st Click

2nd Click

3rd Click

Search Affiliate wins 100% of payout

Types of Affiliates

Search

Blogs

Wikis

Micro-blogging

IM

Personal portals

Social networks

Meta

-searchDesktopUser-generated content

Soci

al sh

op

pin

g

Pro

du

ct revie

ws

Social Bookmarks

Podca

sts

Personal Blogs and Web Sites

Niche content

Coupons and Promo sites

Email newsletters

Loyalty sites

Comparison

Social Applications

Search affiliates

Affiliates and Search

• Payment on CPA basis, not CPC

• Search marketing spend passed on to affiliates

• Greater keyword coverage

Affiliate Networks

“3rd party technical enablers, linking merchants, affiliates and their transactions”

•Tracking solutions & reporting•Hosting creative•Recruiting merchants and affiliates

•Quality control of affiliates and brand compatibility

•One payment solution for merchants / commission handling

•Tracking the market e.g. search developments, new technology etc.

Network benefits

Some examples

Costs

• Usually no affiliate joining charge

• Merchant set up costs – followed by monthly fee (based on level of support)

• Set commission earned by affiliate

Basic Tools of the trade

Merchants : Product Feeds & Creative

Setting up an Affiliate campaign

• Define the goal

• Own programme vs. affiliate network

• Competitor analysis

• Test tracking software for possible conflict with existing tracking

• Promote via forums or network

Tips in a performance market

1. Pay affiliates as much as possible

2. Focus on conversion optimization

3. Niche products can benefit

4. Go global (if possible)

+ and -

Pros

• Merchants only pay when goals are achieved.

• Sales force and branding potential just got bigger

• Low barrier to entry for both affiliates and merchants.

Cons

• Loss of brand control.

• Affiliate programmes can be time consuming to manage, and often require dedicated staff.

Other Issues