Affiliate marketing:is it a good way to increase profits?

Università degli Studi di Bari Aldo MoroFacoltà di Economia

Corso di Laurea in Economia e CommercioAnno Accademico 2011-2012

Introduction

• Nowadays almost 30% of the world’s population has Internet access: around 2 billion people

• 32 billion hours spent online every month! (Source: Go-Gulf)

Italian Internet users are estimated to be close to 26 million, with a great growth since 2001 (source: Mclink)

• What happens during those billions of hours spent online every month?

• Who earns money?

General infoDefinition: affiliate marketing is a type of performance-based marketing in which a business rewards one or more affiliates for each visitor or customer brought about by the affiliate’s own marketing efforts.

The players of affiliate marketing are:•the merchant, also called “retailer” or “brand”•the publisher, also known as the affiliate•the customer.

Merchant

Publisher

Customer

• One of the best ways to earn money online (Robert Kiyosaki)

• Many hard-working affiliates made a fortune

How does affiliate marketing work?

• A company sets-up an affiliate marketing program • The webmaster signs up to the program as an

affiliate• The webmaster publishes banners or links

• A random visitor clicks on a banner/link

• The company’s web server is programmed so that the visitor will be sent to the webpage for the product/service promoted.

Short history

• Affiliate marketing nowadays

Future growth: mobile market, social medias, social gaming

In-house vs outsourced affiliate programs

Affiliate programs are the means through which affiliate marketing works

What should a company do before launching an affiliate program?

• Competitor analysis• Commercials• Creatives• Communication• Campaign analysis

Affiliate programs

Affiliate networks

“Affiliate networks act as an intermediary between affiliates and the merchant’s affiliate program”

Benefits:

• easy and free to join• all tracking and payments are done by one network• easy way to get deals with big companies• wide offer of banners that can be perfectly added to

every website• chance to check every affiliate program’s record

before applying

The main affiliate networks

• Main ones: Tradedoubler, Zanox, Sprintrade, Netaffiliation, AffiliateWindow, Webgains, Buy.

• How they earn their transaction fees

Tradedoubler: 1,900 advertisers and 138,000 publishers. Yearly gross revenue: 73 million €

Zanox: 4,000 merchants; more than 1 million publishers. Yearly gross revenue: 77 million €

Reward plans

• CPM (Cost-per-Mille)• CPC (Cost-per-Click)• CPL (Cost-per-Lead)• CPA (Cost-per-Action)

How can a publisher drive traffic to his website?

• SEM – Search Engine Marketing• DEM – Direct Email Marketing• Social media marketing

Statistics Google Analytics

Case studies

Case study #1Client: HyundaiAffiliate network: TradedoublerReward plan: CPLGoal: generate 1,000 sign-ups for a newsletter with a chance to win a €20 fuel voucherDuration: 5 weeksResults: 1,156 unique visitors, 1,000 sign-ups

Case study #2Client: BimbomarketAffiliate network: ZanoxReward plan: CPSGoal: increase salesDuration: 2009-ongoingResults: sales increased by 25% during the first weeks; new customers all around Europe

Case study #3Publisher: Paolo MoroAffiliate network: TradedoublerDuration: 2002-2008Revenues: €125,369.48

Case study #4Publisher: John ChowAffiliate networks/programs: severalDuration: 1 yearRevenues: more than $500,000! Currently he earns up to $40,000 each month with affiliate marketing.

Alternatives

• Print advertising• Television advertising• Telemarketing

The main problems related to affiliate marketing are:

• Email spam• Virus• Spoofing• Affiliate’s incentives

Conclusions

For further info:

www.affiliatemarketing.nicoladisisto.ws

nico@nicoladisisto.ws