A Bright Future for Daily Deal Sites

Optimistic scenario puts sales at $6 billion by 2015

Deal-of-the-day sites, often featuring a group buying component, have taken off over the past year, with startups like Groupon getting big fast and major internet properties like Google and Facebook looking for their own ways to get in on the action.

Consumer spending on deal-a-day offers is poised to grow more than 35% to reach $3.9 billion in the US by 2015, according to a March 2011 forecast by BIA/Kelsey. Deal sites like Groupon, LivingSocial and others have become popular among users who are getting accustomed to receiving deals packaged conveniently in one daily email, eliminating the need for hunting around on the web.

In its most optimistic scenario, BIA/Kelsey projects that daily deal sales could exceed $6 billion by 2015, representing a 47.4% compound annual growth rate. The bullish forecast seems entirely plausible, given Groupon’s meteoric growth from sales of $33 million in 2009 to $760 million in 2010, said eMarketer principal analyst Jeffrey Grau.

“It’s plausible because it appeals to consumers’ desire to get a good deal, and as daily deal sites target offers, they will stimulate consumer demand,” Grau explained. In addition, sites that aggregate daily deals like YipIt, Dealery and Dealnews will make it easier for consumers to find compelling offers.

A pre-holiday 2010 survey by deal site Eversave suggested consumers’ keen interest in using daily deal sites as they prepared their holiday shopping. The survey revealed that 66.8% of US online buyers said they would use a daily deal website for online holiday shopping and 46.2% for restaurants.

Strong consumer interest in the convenience of such deal sites and the entry of new players, including AT&T and The New York Times Co., into the space will only add more options. That could also potentially dilute revenues by making the pie smaller.

“What could derail the market is that people get tired of daily deals,” Grau noted. “People were very excited by the novelty of eBay’s online auction marketplace in its early days but that enthusiasm eventually waned causing eBay to build up its fixed-price sales.”

Cut-up #16 // The Key Components of an Affiliate Marketing Programme

Assessing Your Existing Online Strategy 
Will your affiliate marketing programme add to or conflict with your existing online marketing strategy? The most likely answer is ‘No’. It will give you more work, (and that might be a conflict) but until you launch an affiliate programme the affiliate community is most likely to be sending web traffic to your competitors sites. This means your existing online strategy is actually working against the affiliate activity. 
Affiliate marketing is not a new type of marketing; it’s a new system for paying for marketing services. Affiliates are going to do the same things you do (PPC advertising, email campaigns, banner adverts, offers & competitions etc); they are just going to send you to the people they find because they don’t sell anything themselves. So the question of accessing your existing online strategy is more about identifying how affiliates will fit in. Do you have an effective PPC strategy or can you engage affiliates to strengthen it? How competitive are your processes? Can you offer good after sales service? Which customer profiles do you convert effectively but struggle to find online?



PPIs and their Impact 
PPIs (Programme Performance Indicators) are four statistics unique to each merchant that give affiliates an indication as to the programme’s effectiveness; conversion rate, approval %, EPC (Earnings Per Click) and validation time. Within this section we will define what each of these statistics represents and identify ways in which to improve your figures and therefore encourage more affiliates to promote your brand. 


Conversion Rate - Clicks to Transactions 
This percentage relates to the total number of affiliate sales divided by the total number of affiliate clicks over a given time period. The better your site converts incoming traffic to actual transactions the higher the Conversion Rate. Once affiliate-driven traffic has landed on your site it is up to you to ensure it converts to sales; your site’s usability, pricing, and the special offers available will all affect this. Try to incentivise visitors with the use of promotional codes or the offer of free delivery. Alternatively, supply deep-links or bespoke creative to affiliates. Try looking at your leading competitors’ sites to see what they are offering. Cashback and Reward sites will often convert traffic at a higher rate than other affiliate types as their members will normally have decided to make their purchase before they click through to a retailer’s website. However, do be aware that affiliates who convert at a particularly high rate may be using malicious forms of adware or spyware to generate such results. If in doubt contact the affiliate and ask them to take you through the way in which they promote your site.


Approval Percentage - % of Confirmed Sales or Leads 
This percentage relates to the actual proportion of total affiliate transactions you approve (and hence pay a commission on) over a given time period. For many retailers the percentage of sales that need to be declined on a day-to-day basis is extremely low; credit card declines and order returns are few and far between compared to the number of transactions passing through most websites. In this case it may be worth taking a small financial hit and paying out the commissions on these sales as in turn this will give you a perfect approval % which is very appealing to most affiliates. By looking through individual affiliate performances on your programme you can also identify if there are any particular affiliates which are sending through a high volume of declined sales which can sometimes be linked to fraudulent activity. In this instance you should contact the affiliate to find out how they are driving traffic to your website and see if they need assistance or, as a worst case scenario, see if they need to be removed from the campaign altogether. 


EPC - Earnings Per Click 
This figure represents the total commission earned by your affiliates divided by the total number of clicks over a given period of time. It is a particularly good indicator for any affiliate paying per click on activity as to the return they might see from promoting your brand. Your programme’s EPC is directly linked to your conversion rate as the more an affiliate can get their traffic to convert, the more money they will earn from your programme. So it is good practice to regularly check on the individual affiliate performances on your campaign. If an affiliate is sending a large volume of clicks to your campaign but then not converting sales this will affect your EPC, which will in turn make your programme less attractive to affiliates looking to join new programmes. Whilst your EPC is closely affected by improvements in conversion, you could also consider tactics to raise your average order value, such as promoting high value products to your affiliates or utilising discount codes such as ‘Spend £xx and get £xx off’. 


Validation Period - Period Transactions are Pending 
For most UK networks all affiliate transactions are initially considered 'pending’. The validation period represents the average amount of time taken for a merchant to validate the pending transactions to either ‘Approved’ or ‘Declined’ and therefore pay out or withhold the attached commission. Keep in mind that with most networks affiliates will not be paid their commissions until you have approved the sales, so the shorter your validation period the quicker an affiliate will be paid. An easy way to reduce your validation period, and therefore make your programme more attractive, is to log into your account regularly and validate your pending sales. A small number of UK networks operate a different validation system. Here their system automatically considers each transaction as approved and allows merchants to ‘claw back’ commissions from any declined sales at a later date. In this instance your validation period can be thought of as the time it takes for an affiliate to feel that all of the monies they have been paid are rightfully theirs and will not be reversed.



Recruiting Affiliates 
So now your affiliate programme is live you need to start thinking about how you can attract new affiliates to sign-up. Obviously a competitive commission rate and healthy PPIs is a great way to get the interest of the affiliate community but what are the best ways to promote your programme to get the best possible selection of affiliates on board? This section will look at all of the ways you can advertise your programme to affiliates, plus help you identify ways in which to find the most relevant affiliates for your business sector. 


Network  Newsletters 
Most UK networks communicate with their entire affiliate base on a regular basis, communicating any exciting product developments, new merchant launches and promotional campaigns. Speak to your network to find out what opportunities are available via this method.


A4U Forum 
The A4U Forum (http://www.affiliates4u.com) is a website where affiliates, agencies, merchants and networks can all share ideas and opinions regarding their industry. It is the perfect place to promote new programme launches, upcoming promotional activity and any changes to your programme. However, it can also be used to recruit new affiliates more directly as many merchants will post a wanted-style ad asking particular affiliate types to get in touch. 


Network Blogs 
Most of the major UK networks now have blogs, which they use to communicate with their merchants and affiliates in a much less formal manner. If you use a network it is worth speaking to them to find out if you are permitted to communicate with affiliates via the blog.



Search Engines
One easy way to identify potential affiliates is to have a look around the search engines on keywords that are relevant to your business. Those that are not merchants and are in the sponsored listings are most likely to be affiliates; there may even be affiliates in the natural listings too. If you are unsure as to whether a site is built by an affiliate or not then there are a few tricks you can use to help you solve the mystery. The first is a free service called Who Is (http://www.whois.net) who can provide you with contact details for any registered domain name. If you find a site you like and you cannot find a ‘contact us’ section on the site then Who Is can often provide you with an e-mail address so that you can contact the owner of the website. You can then start up a dialogue and hopefully get them to join your programme. The second is to use existing links on the site to determine whether or not the publisher uses affiliate tracking links. You should be able to simply right-click on any outgoing links and choose the option ‘properties’ from the menu that appears. You will then be shown the destination URL and here is where you will find the tracking if there is any:

You can see in the example above that underneath the image is actually a link that looks like this: http://www.awin1.com/awclick.php?awinmid=425&awinaffid=56192&p=http://www.post-a-rose.com/prod_cat/product_page_5148.html
The first part of the URL tells us which network this link is tracking through. In this case www.awin1.com tells us that this is going through Affiliate Window (http://www.affiliatewindow.com) and if you ran your programme through the same network then you would be able to have the network use the unique identifiers within the rest of the link to identify which affiliate operated the site and how to get in touch with them.


Competitor Programmes 
When trying to establish what will work well for your own business it is often a good idea to take a look at what others in your sector are doing. In the same way you will want to understand who is promoting your competitor’s site and where possible ensure they are promoting your programme too. This is particularly relevant for category or product specific websites that offer links from a range of retailers. Some of the UK networks will also have access to software that allows them to search the internet for sites relevant to your area of business. If you use a network ask your contact if they use Syntryx (http://www.syntryx.com) or Hitwise (http://www.hitwise.com) as these tools can help identify links in and out of relevant websites.


Your Virtual Sales Force 
This is simply a mindset. Affiliates are freelancers; although you would normally pay a freelancer, affiliates get nothing unless they deliver tangible results! They are also (nearly without exception) online (hence virtual). You might have 10 affiliates on your programme you might have 2,000. Either way you will interact with the vast majority of them digitally. Finally they are sales people rather than marketers because they need to be bringing you more than just ‘eye-balls’ or ‘traffic’. They need to bring you paying customers or they earn nothing themselves. The one thing to remember is that sales people are only as good as the product they sell. In the World Wide Web there is a second issue in that customers have to be engaged enough by your website to buy things. So this virtual sales force can be very judgemental and critical of your business. This is both a blessing and a curse and both parties have to learn to live with it. Equip your virtual sales force with good information and the means to convert leads (your website) and you are onto a winner! Brian Edwards of Premier Cookware couldn’t agree more: “I believe that it is important to work WITH affiliates rather than just let them get on. This is why I actively seek feedback and provide marketing materials beyond the datafeed and identify ‘Hot Picks’.” 


Going Beyond the CPA 
For most affiliates the level of commission that they can earn from a merchant is one of the most important factors when choosing which programmes to promote. However, it is not the only thing that they will consider and this section explores the others ways you can motivate and reward your affiliates beyond your CPA.



Cookie Length 
The industry standard cookie length is 30 days, although recent research by ScanAlert (http://www.scanalert.com) has shown that on average transactions occur within 34 hours of the original click-through. This means that for most merchants extending their cookie length to 45, 60 or 90 days would have little financial effect in terms of the commissions paid out. However, the act itself of extending the cookie length, especially if this exceeds those of your nearest competitors, could encourage an affiliate to start promoting your business. It is also worth considering the lifetime value of the customer that the affiliate is referring you. If your own internal research tells you that once a customer has visited they are likely to bring you repeat business then you may feel you can offer affiliates a commission for every additional sale the customer makes. In this case you may want to set a ‘lifetime cookie’ of 999 days. 


Creative 
Although many affiliates do not depend on banner creative to drive traffic to merchant sites, they will still use them to ‘plug the gaps’ in their own site design. Therefore it is essential you keep your creative up-to-date; offering seasonal styles and themes alongside category-specific designs if possible. If you are looking to really develop a relationship with a particular affiliate then one way to give them unique content is to offer bespoke and/or co-branded creative. As well as being an obvious relationship-building exercise, creating co-branded banners or a landing page can also help to increase customer confidence and therefore improve your conversion rate.


Discount Codes 
We have already discussed the growing popularity of discount codes with online shoppers and as a result of this success affiliates are now much keener to get their hands on active discount codes. If you have the functionality on your website to offer codes then consider these as another form of reward to your affiliate base, they not only give them something to offer their own users but can also help increase an affiliate’s conversion for your programme.


Registration or Brochure Requests 
These days most websites have a registration process whereby the user sets up an account and is often subscribed to a weekly or monthly newsletter, other sites offer brochure requests or appointment registration. It is worth considering a CPL (Cost Per Lead) model for this additional service and encouraging your affiliates to earn more money from your programme by promoting it. 


Merchandise 
Everybody loves a freebie and if you have access to merchandise or products then use these to help incentivise your affiliate base. Anything from a free CD to tickets to a football match can really help motivate your affiliates and keep them engaged with your brand. 


Bonus Schemes 
You will often hear it said that affiliates should be treated as an extension of your own sales team; and so in the same way you might incentivise your own staff with performance-based bonuses, you may want to apply the same theory to your affiliates. If this is something you are going to do then take the time to analyse your programme and set targets that are both challenging but realistic – there is nothing less motivating than an impossible goal. You may also want to consider when one target is applicable to all of your affiliates, or whether it is necessary to set separate targets for some of your top performers. 


Private Commissions 
It is true that for most affiliate programmes a handful of affiliates will generate the majority of the sales. For this reason many merchants want to further incentivise their top performers to push their business forward, or want to ensure that their PPC affiliates are earning enough profit to enable them to reinvest in their campaign. To do this many will offer selected affiliates a private commission, a level of commission higher than advertised given to specific affiliates for either a length of time or based against performance indicators.

CASE STUDY #2 // INCREASING GROWTH AND CUSTOMERS FOR ONLINE FOOTWEAR RETAILER BACKGROUND

Cloggs has over ten years experience selling branded footwear online. Cloggs.co.uk, offers top brands including Dr Martens, Converse, UGG Australia, Fitflop and many more, providing home shoppers with access to top brand footwear at low cost.
The site receives 15,000 unique users per day on average whilst the European site www.cloggs.eu, launched in 2008 after an excellent track record with affiliate marketing, receives approximately 4,000 unique users per day.
With a relatively modest marketing budget compared to some of the larger online retailers, Cloggs needed to focus on the most effective marketing measures. In-house activities centred on SEO, content development and site design, to enhance its USPs of great customer service and user-friendly functionality.


APPROACH
Affiliate marketing was acknowledged as the best way to allow Cloggs to compete and build and maintain their online presence. Cloggs had worked with a number of other networks before signing up with Webgains. Webgains was selected because of its European reach and strong reputation for customer service.
Cloggs is 100% committed to making its affiliate strategy work and employs an affiliate marketing agency, Existem am, to help realise this objective. Each month Cloggs plans, produces and sends in advance new promotional codes as well as seasonal campaigns to its affiliates. All supporting marketing initiatives including banners and mid season sales offers must be ready long before the “go live” date to ensure distribution is fully prepared and ready to maximise exposure. Thanks to the transparency and inherent functionality within the Webgains platform, Cloggs can communicate directly with all affiliates involved, or a specific sub-set, and at the same time are able to create bespoke creative for them if required.
Kerry Gunn, Marketing Manager at Cloggs explains the importance of communication with affiliates and how it contributed to the success of the program: "Cloggs has spent time maximising the use of all the relevant communication channels available to increase its contact with affiliates. These channels include - the Existem-am blog, Cloggs Affiliate Blog, Webgains Blog, the Webgains email system, the Affiliates4u Forum and direct msn contact through Existem am. We have found all these channels have really helped to make sure that affiliates are always up to date with our top selling products and also any new products or new brands we launch. We also provide affiliates with the option of exclusive codes to help convert their traffic while promoting their own website.”
Following the success experienced in the UK market with Webgains and Existem-am, Cloggs has now expanded the program into Europe.
Nick Thomas, Company Director, comments on the success of their European activity:
“We have been merchant partners with Webgains for a number of years now and it has provided our online business with a first class and dedicated service that you just don’t get with some of the larger networks.”
“We always get fast support and I find Webgains’ systems the friendliest to use and manage affiliate relationships with. This has encouraged us to use Webgains’ services to enter Europe confidently and the results have been astonishing. The success of our European site in its first year would not have been as profound without the excellent support of the whole Webgains team.”


RESULTS
Gunn says, “Affiliate marketing is a good way of getting into the ‘nooks and crannies’ of the internet whilst targeting unique customers. Affiliates drive a significant volume of our overall number of new visitors. We get completely fresh customers from this channel, with no issue of duplication or conflicts with other marketing efforts from other online channels. Another benefit is that this is completely pre-qualified traffic, which means it is more likely to convert into customers. Conversion of this traffic is actually higher than pay-per-click, shopping feeds and comparison websites.
“The challenge for the future,” Gunn comments, “is finding new affiliates and of course ones who can become key affiliates on our program. It is important to be consistent and find creative ways to incentivise affiliates and keep them loyal.”
The Cloggs affiliate marketing program has grown by 112% in 2008. We fully expect continued growth in the years to come.

Case study // Mazda Affiliate marketing is more than just voucher and loyalty

INTRODUCTION

Mazda originally entered the affiliate marketing space in July 2008 offering affiliates the opportunity to earn commission for brochure requests and test drive bookings. The program launched with a number of restrictions including the inability to deeplink, consequently for the first 18 months activity grew slowly. Towards the end of this period Mazda, Mindshare (Mazda's agency) and Affilinet ran a detailed review of activity and decided a relaunch was required. The successful relaunch demonstrates how Mazda embraced the full spectrum of affiliate business models available and ultimately made the most of this dynamic marketing channel.

OBJECTIVES

* Increase overall program performance by 297.9% to hit the target budget.

* Increase the proportion of test drives generated from 2% to 14% of total affiliate actions.

* Increase actions delivered whilst maintaining an overall CPA commission rate of under £20.

* Establish a broader publisher base with greater reach, using ‘push marketing’ methods. Before the re-launch the publisher base was restricted to automotive content sites.

STRATEGY AND EXECUTION

Following feedback from affiliates and an in-depth review of the program’s performance it was decided that a number of actions would need to be taken in order to improve the performance of the program and expand Mazda’s portfolio of affiliates beyond automotive content sites.

SETTING-UP DEFINED PROCESSES THAT SUPPORT DECISION MAKING

Improving integration between network, agency and client was a key method for the successful re-launch of the program. Procedures were put in place to ensure both agency and network were better placed to make decisions autonomously and in turn respond to affiliates more swiftly. These included the creation of an affiliate profile form for affiliates to complete when applying to the program, which resulted in a more efficient approval process.

IMPLEMENTATION OF END-TO-END TRACKING FUNCTIONALITY TO MONITOR LEAD QUALITY OFFLINE

Before the re-launch Mazda had limited visibility to lead quality, and therefore placed restrictions on the types of publishers used. To overcome this Mazda introduced innovative, end-to-end tracking, which allowed them to tag the lead with publisher information and pass this to their CRM system. With more insight into the quality of leads Mazda opened the program up to a broader publisher base.

ADOPTING AN OPEN APPROACH TO AFFILIATE BUSINESS MODELS

Before the re-launch Mazda implemented a very tight affiliate approval strategy, in essence working only with affiliates that operated websites about cars. With the re-launch Mazda dramatically increased the scope of their affiliate activities by lifting some of its restrictions regarding publishers it worked with and broadening the spectrum of affiliate business models to include email, communities and Facebook arbitrage. This resulted in achieving increased volume and broader reach whilst still paying on a performance basis.

ALLOWING TEST PHASES AT HIGHER COMMISSION LEVELS

With the re-launch of the program, Mindshare and Mazda together with affilinet established bespoke commercials for test drives based on tiered commission structure. This enabled affilinet to target and run test campaigns with new affiliates such as Rocketer, which drive a high volume of good quality test drive leads from Facebook. It also gave more room to negotiate with publishers that drive higher volumes of traffic such as high-quality content sites.

FACEBOOK ARBITRAGE: BEYOND DEMOGRAPHIC TARGETING

Rocketer were recruited in the early stages of the re-launch, to help drive higher volumes of test drive leads from this major new traffic source. They took a ‘test, learn and refine’ approach, and after some test phases and a new bespoke tiered commission structure, ran a successful Facebook campaign. Success was largely due to the use of thousands of ad variants and analysing click to action rates to optimise the activity. As well as the standard demographic targeting, Rocketer were also able to target through user activity on Facebook, such as status updates, groups joined and likes and dislikes.

GIVING PUBLISHERS THE TOOLS THEY NEED TO DO THE JOB

Feedback from publishers showed that conversion rates on the Mazda program were not as good as they could be, and that they could be improved with some changes to the advertising creative. In response Mazda made efforts to improve the effectiveness of their activities by providing a new set of creatives with better imagery and a stronger call to action. In addition they provided trusted partners with brand guidelines to enable them to tailor creative, subject to approval, to suit their purpose. Mazda gave final sign off on all creative allowing them to keep control of how their brand was portrayed. This was supported by Mazda providing affiliates with a full set of demographic profiles by Mazda car model to aid targeting. This innovative and open approach to creative execution gave affiliates more control on conversion, in turn optimising both creativity and performance.

RESULTS AND ROI

Mazda’s re-launch strategy and the methods adopted were key in creating a commercially viable campaign and optimising the affiliate channel. Between January and September 2010 the following was achieved:

 Performance increased by over 297.9% and affilinet had to request 30% more budget.

 The number of test drives increased to 29% of all affiliate actions.

 The number of active publishers increased by 166%. The number of publisher types also rose.

Conversion rate increased, peaking at 8.2% of those who clicked on a Mazda advert.INTRODUCTION

Mazda originally entered the affiliate marketing space in July 2008 offering affiliates the opportunity to earn commission for brochure requests and test drive bookings. The program launched with a number of restrictions including the inability to deeplink, consequently for the first 18 months activity grew slowly. Towards the end of this period Mazda, Mindshare (Mazda's agency) and Affilinet ran a detailed review of activity and decided a relaunch was required. The successful relaunch demonstrates how Mazda embraced the full spectrum of affiliate business models available and ultimately made the most of this dynamic marketing channel.

OBJECTIVES

* Increase overall program performance by 297.9% to hit the target budget.

* Increase the proportion of test drives generated from 2% to 14% of total affiliate actions.

* Increase actions delivered whilst maintaining an overall CPA commission rate of under £20.

* Establish a broader publisher base with greater reach, using ‘push marketing’ methods. Before the re-launch the publisher base was restricted to automotive content sites.

STRATEGY AND EXECUTION

Following feedback from affiliates and an in-depth review of the program’s performance it was decided that a number of actions would need to be taken in order to improve the performance of the program and expand Mazda’s portfolio of affiliates beyond automotive content sites.

SETTING-UP DEFINED PROCESSES THAT SUPPORT DECISION MAKING

Improving integration between network, agency and client was a key method for the successful re-launch of the program. Procedures were put in place to ensure both agency and network were better placed to make decisions autonomously and in turn respond to affiliates more swiftly. These included the creation of an affiliate profile form for affiliates to complete when applying to the program, which resulted in a more efficient approval process.

IMPLEMENTATION OF END-TO-END TRACKING FUNCTIONALITY TO MONITOR LEAD QUALITY OFFLINE

Before the re-launch Mazda had limited visibility to lead quality, and therefore placed restrictions on the types of publishers used. To overcome this Mazda introduced innovative, end-to-end tracking, which allowed them to tag the lead with publisher information and pass this to their CRM system. With more insight into the quality of leads Mazda opened the program up to a broader publisher base.

ADOPTING AN OPEN APPROACH TO AFFILIATE BUSINESS MODELS

Before the re-launch Mazda implemented a very tight affiliate approval strategy, in essence working only with affiliates that operated websites about cars. With the re-launch Mazda dramatically increased the scope of their affiliate activities by lifting some of its restrictions regarding publishers it worked with and broadening the spectrum of affiliate business models to include email, communities and Facebook arbitrage. This resulted in achieving increased volume and broader reach whilst still paying on a performance basis.

ALLOWING TEST PHASES AT HIGHER COMMISSION LEVELS

With the re-launch of the program, Mindshare and Mazda together with affilinet established bespoke commercials for test drives based on tiered commission structure. This enabled affilinet to target and run test campaigns with new affiliates such as Rocketer, which drive a high volume of good quality test drive leads from Facebook. It also gave more room to negotiate with publishers that drive higher volumes of traffic such as high-quality content sites.

FACEBOOK ARBITRAGE: BEYOND DEMOGRAPHIC TARGETING

Rocketer were recruited in the early stages of the re-launch, to help drive higher volumes of test drive leads from this major new traffic source. They took a ‘test, learn and refine’ approach, and after some test phases and a new bespoke tiered commission structure, ran a successful Facebook campaign. Success was largely due to the use of thousands of ad variants and analysing click to action rates to optimise the activity. As well as the standard demographic targeting, Rocketer were also able to target through user activity on Facebook, such as status updates, groups joined and likes and dislikes.

GIVING PUBLISHERS THE TOOLS THEY NEED TO DO THE JOB

Feedback from publishers showed that conversion rates on the Mazda program were not as good as they could be, and that they could be improved with some changes to the advertising creative. In response Mazda made efforts to improve the effectiveness of their activities by providing a new set of creatives with better imagery and a stronger call to action. In addition they provided trusted partners with brand guidelines to enable them to tailor creative, subject to approval, to suit their purpose. Mazda gave final sign off on all creative allowing them to keep control of how their brand was portrayed. This was supported by Mazda providing affiliates with a full set of demographic profiles by Mazda car model to aid targeting. This innovative and open approach to creative execution gave affiliates more control on conversion, in turn optimising both creativity and performance.

RESULTS AND ROI

Mazda’s re-launch strategy and the methods adopted were key in creating a commercially viable campaign and optimising the affiliate channel. Between January and September 2010 the following was achieved:

* Performance increased by over 297.9% and affilinet had to request 30% more budget.

* The number of test drives increased to 29% of all affiliate actions.

* The number of active publishers increased by 166%. The number of publisher types also rose.

Conversion rate increased, peaking at 8.2% of those who clicked on a Mazda advert.

Affiliate Marketing // Tracking solutions

Tracking sales and leads is the heart of Affiliate Marketing, without the ability to track results reliably performance marketing doesn’t exist. Affiliate Tracking is surprisingly simple. Each time a visitor clicks an Affiliate URL the Affiliate Network will set or store tracking information on the visitor’s computer so that the Affiliate Network knows which Affiliate referred that visitor to that Merchant.
The Affiliate Network will provide each Merchant with their individual HTML tracking code. This is added to the page at the end of any action the Merchant is paying Affiliates for, normally this goes onto the “success” or “thank you” page shown to the visitor after making a purchase. This tracking code will pass order or lead data to the Affiliate Network. When the Affiliate Networks tracking code is shown, for example after each purchase, the Affiliate Network will read back its tracking information, which was previously set, and pay commission to the Affiliate, if any, who referred the visitor making the purchase or lead.
Currently, Affiliate Networks in the UK operate on a “last click wins” basis, this means if before a transaction takes place multiple Affiliates refer the same visitor, only the last Affiliate who sent the visitor before the transaction takes place will be paid the commission. Other methods, such as splitting commission amongst all the Affiliates who referred the visitor, are currently in the early stages of consultation within the industry.



TRACKING METHODS
Most commonly, browser cookies are used to store tracking information. Unfortunately, some reports have stated that privacy concerns result in almost 40% of users routinely deleting their cookies. Newer web browsers make deleting cookies a one click process and even offer private browsing, where cookies are not stored or set. It sure sounds like we should just give up! Luckily, Affiliate Networks for a number of years have been investing in ‘cookieless tracking’ to ensure performance continues to be reliably tracked.
Cookieless tracking is the ability to track sales and leads without solely relying on traditional browser cookies to store the tracking information. There are numerous forms of cookieless tracking, and most UK Affiliate Networks will use at least one or two forms. These are used in addition to regular browser cookies, and will normally only be called upon in cases where there is no cookie available to use, in other words they are fall back options used when no regular cookie is available. Regular browser cookies are still the primary form of tracking.
In a recent survey Affiliates rated reliable tracking as the 3rd most important aspect of an Affiliate Program. This is understandable, since Affiliates are investing time and money into generating sales/leads for a Merchant - they don’t want to worry about their performance not being tracked reliably. If Affiliates believe a Merchant has reliable tracking, then they will have the confidence to support the Merchant. When a Merchant is considering which Affiliate Network will run their affiliate program, the tracking technologies that each network can offer them, should be a key factor in their selection process.
There are 5 common methods for cookieless tracking used today by most Affiliate Networks. Merchants & Affiliates should ask their Affiliate Network which methods they support.



FLASH COOKIES
Since version 6 of Adobe Flash Player, Local Shared Objects has been available to flash movies. These work much like regular web cookies, and offer flash movies with the ability to store data on the user’s computer and read it back at a later date. It is the closest replacement to traditional cookies available. When the visitor clicks through an Affiliate URL, the Affiliate Network will load a flash movie which sets the necessary tracking information. When a sale or lead takes place, another Flash movie will be loaded by the Affiliate Network to read the tracking information.
IP TRACKING
One of the most basic forms of cookieless tracking is to use the users IP Address. The IP Address is recorded when the user clicks an Affiliate URL. Later when a sale or lead takes place, the IP Address of the user is again taken and compared to the IP Addresses which previously clicked an Affiliate URL. If a match is found, that can be used for tracking. However, increasingly ISPs are using proxy or cache servers, so many users may share the same IP Address. Also dynamic IP allocations – where the user will have a different IP Address each time they connect to the Internet, means this isn’t a very reliable form of tracking and certainly cannot be used long term. It can be used for limited periods of time however – so for example, only used if that same IP Address clicked an Affiliate URL in the last few hours, you can then be pretty certain it is the same person who clicked the link. You do still have to remove and ignore common proxy and cache servers.
ETAG/CACHE TRACKING
It is possible to track visitors using the browsers web cache by manipulating the Etag or the Last Modified date of a page or file. Each time a browser requests a page it first checks its cache, and then sends a request to the server asking for the file if it has been modified since the version in the local cache, or if the file has a different Etag. Using this it is possible to cache a file in the user’s cache which contains the tracking information or to assign a different Etag to each visitor. It’s certainly not as flexible as other methods as it is much harder to update the information stored in the cache once set, also users tend to clear their cache regularly or have set a maximum size for their cache, so it's always being refreshed. However, this method will certainly help in situations where regular cookies are blocked from being set by the browser or third party software.
VOUCHER CODES
Recent years have seen a massive surge in voucher codes which is only going to grow as users become more and more savvy looking for a bargain. Voucher codes can also be used for tracking depending on the tools offered by your Affiliate Network. By creating unique customised voucher codes for a single Affiliate, your Affiliate Network can assign commission coming from sales which use that voucher only to the Affiliate who was assigned the unique voucher code. This opens up opportunities for Affiliates to promote the vouchers in printed or offline media, where an Affiliate URL cannot be clicked.
DATABASE TRACKING
Even with the best tracking platform, the time span of a cookie and even cookieless tracking options may be shorter than the time a visitor may take to make a purchase. A visitor may take days, weeks or sometimes even months before making a purchase, especially when it comes to high value ticket items. Merchants who prompt or encourage visitors to sign-up to a newsletter or create an account prior to purchase – perhaps with the incentive of exclusive offers or discounts, are able to make use of database tracking.

Once a Merchant is able to convert the user into giving their details, such as an email address, this can be assigned to the Affiliate who sent the visitor. Whilst no commission is paid at this stage, it means either the Affiliate Network or the Merchant knows which Affiliate is due commission when the visitor makes their purchase. This means that cookies are no longer used and it is a more permanent form of tracking, only failing if the visitor uses either different account details or email address. Your Affiliate Network may be able to make this process easy, meaning minimal development or integration cost to the Merchant.


In total, cookieless tracking accounts for 10-12% of all sales and leads.
Certain Merchants show a higher percentage of cookieless tracking. Adult toy/gift Merchants have a higher percentage of cookieless tracking than other types of Merchants, with Food/Drink and Health & Beauty Merchants showing the lowest percentage of cookieless tracking being used.



WHEN IS COOKIELESS TRACKING USED?
Every Merchant will pay Affiliates commission for sales which happened within so many days of the last click taking place. This is referred to as the “cookie period”. For example if a Merchant offers a 30 Days Cookie, it means sales which take place within 30 days of the last click will be tracked and paid to that Affiliate. The same principle applies to when cookieless tracking is used by the Affiliate Network.
Are cookieless tracking technologies only needed when a Merchant offers a long cookie period? Is relying only on regular cookie tracking reliable for short period of time? The answer is no. 



THE FUTURE OF COOKIES
Each time a new version of a web browser is released brings with it more ways for users to block, clear or reject cookies. One recent example is Private Browsing. In Private Browsing mode, the user can browse websites without history being recorded or cookies set, this is now a standard feature of most new browsers. In these modes existing cookies are not transferred over, and cookies set within this mode are not stored.
Internet Explorer 9 when released will offer a new featured called Tracking Protective List. This is a list of websites which can or cannot set regular cookies on the user’s computer. However, a useful feature is that websites themselves can suggest the domain names which need to be added to the user’s white list. Therefore, websites which rely on third party domains being able to set their cookies, such as their Affiliate Networks, should be able to prompt the user to add these to their white/allow list. At the time of writing this it is unclear how the integration of this will work. This is certainly better than a complete block of cookies.
Newer browsers also offer new creative ways of cookieless tracking which will continue to provide an important fallback to regular cookies. Already some features in HTML5 offer the potential for cookieless tracking.
The good news is cookies are used for more than tracking users. Try disabling cookies and browsing your favourite websites, the constant prompts to log-in to each website is enough to make anyone re-enable cookies! Users take for granted the ability to visit sites such as Facebook, Twitter and Hotmail and be instantly signed in. This is all made possible with cookies, so they are not going away anytime soon and will continue to be a primary form of tracking for Affiliate Networks. Along with the continued investment by Affiliate Networks in other forms of tracking, the future of reliable tracking for Affiliates is assured.

A hunter shoots a bear // Fluidly engaging video campaign

6 Excellent Small Business Websites To Learn From

6 Excellent Small Business Websites To Learn From

A different approach to Affiliates' Reward // Quality Click Pricing and the eBay case

Affiliate programs are designed to pay affiliates for leads and sales, and payouts reflect an assumption that all leads and sales are valued the same. Little attention has historically been paid to the quality of a lead and its lifetime value to the merchant. However, when eBay brought its affiliate program in house, the company gained access to detailed performance information and, along with it, important insight into the value affiliates were actually delivering to eBay.

When the eBay Partner Network team analyzed the data, it became clear that the existing Cost-Per-Action (CPA) payment structure was not optimal for either eBay or many of its best affiliates. As is the case with most other CPA payment models, eBay rewarded affiliates for the quantity, rather than the quality, of their traffic. The tiered payout structure meant larger affiliates earned more per sale or lead than smaller affiliates, despite the fact that affiliates with small niche content sites often drove the highest quality traffic. One of the reasons for this is that people are typically more engaged with and interested in a particular product when they are on a site dedicated to that product, as opposed to a site that reviews or discusses hundreds or thousands of different products.

In addition, eBay found that the amount paid to an affiliate for each new user generated was not necessarily aligned with the long-term value of that user. In many cases, the company was overpaying affiliates who were bringing in low quality new users and underpaying affiliates who were bringing highly engaged eBay shoppers.

Understanding these issues, the eBay Partner Network team saw the need to radically change its compensation structure in order to both accurately reflect the true value affiliates generated for the site, and to reward affiliates fairly for valuable traffic. The result was Quality Click Pricing.

Twitter // How to increase traffic to your site and stimulate more engagement with your brand

GETTING STARTED

First, if you haven’t already, sign up for a Twitter account. Choose a handle that best represents your brand – for example, if the name of your site is “Fashion Mall,” try to secure @FashionMall as your Twitter handle. Obviously, Twitter’s popularity has made it more difficult to get the exact moniker you want, but try and get it as close as possible.

Once you’ve registered, you’ll want to make sure your profile is complete. Make sure you talk about your brand in a succinct way in the description field, and be sure to include your site URL. You’d be surprised how many businesses don’t do an adequate job filling in these pieces of information leaving potential followers bewildered about who you are and what your business does.

CONTENT IS KING

The type of content you create and share on Twitter is essential to your success. Ideally, the goal is to get people to click on links you’ve shared that bring them back to your website. You accomplish this by creating content of interest on your web properties and distribute those links via your Twitter account. That means you have to make sure there’s a constant flow of new and exciting things happening on your site.

Be careful about using Twitter solely as a megaphone. Your followers want a well-rounded experience in regard to the types of content you share. Make a point to comment on, and share, content you discover from other relevant sources in your industry. So, if you’re an auto site, don’t just link to content from your own blog. Instead, share links from other auto sites and comment on why you think it’s interesting or valuable to your followers. This conveys that you’re interested in building a community, not just shilling your wares all the time.

BUILD YOUR COMMUNITY

Building a substantial community on Twitter can take some time. If you want a genuine, passionate set of followers, there are no shortcuts.

First off, use Twitter’s search function to locate other users that are interested in the same things in which your brand specializes. Follow them. Take a look at their recent Twitter stream and make comments on any tweets you find interesting. Try to offer a unique perspective or add value in some way. Saying “hey, nice tweet” or “yeah, I agree” doesn’t add much to the conversation and just increases the noise level. Over time, the community will notice your participation and will follow you back.

Second, make sure your customers know you’re on Twitter. Make sure that your handle appears on all of your marketing collateral including your homepage, blog and any email communications. This holds true for any other social channels you participate in, including Facebook, YouTube and Tumblr. This lets your base know that you want to interact with them in a variety of ways.

Finally, make sure to nurture your Twitter community. Nothing makes followers lose interest faster than a social media account that is left unattended for long periods of time. Try and make it a priority to find at least one thing to say on Twitter everyday. This will show your growing community that you’re present and engaged.

I’d love to hear about your experiences using Twitter to build your brand presence. Please leave a comment below.

The Twitter Book

Cut-up #15 // Recruiting and activating publishers

Publisher recruitment is the ongoing process of attracting, activating, and retaining publishers. Recruiting affiliate publishers into your program involves building a program foundation and running your program.

Building and running your program

In most affiliate programs, approximately 80% of network sales come from 20% of the affiliates. Affiliates are generally large to mid-size publishers, and include many VIP publishers.
Running your program is an ongoing process that involves:

• Finding previously hidden, but valuable, publishers over time.
• Researching new affiliates in your chosen Network.
• Recruiting business classes that are productive or underrepresented in the program.
• Researching sites with other affiliate programs to compare publishers with your your own list.
• Contacting content sites and inquiring about advertising opportunities.

Publisher perspective on recruitment

When developing your recruitment strategy, try to anticipate what affiliate publishers would value most, and target your program to the publisher's specific business class.
Publishers choosing affiliate programs will generally review the following:

• Similar advertisers they're already working with
• Whether new advertisers will strain existing, profitable relationships.
• The risk of managing a new program.

To address these concerns, you should prepare all of the following information about your:

• Earnings per hundred clicks (EPC)
• Average conversion rates
• Products or services, as compared to your competitors
• The revenue share or bounty you're willing to pay
• Any additional benefits (such as increased revenue share, launch incentives, or special consumer offers) you have
• Creative assets (and data feeds, if applicable)

Activation Strategies

In many cases, simply providing the right tools, communications, and incentives will encourage publishers to start driving sales quickly. In other cases, you may need to add bonuses or commissions for publishers who engage within a specific time period. And, of course, once publishers start making sales, their loyalty to your program is more assured.

Building Program Awareness

Simply listing your program in an Affiliate Network won't necessarily attract top publishers. You must build awareness of your program first. For example, you can:

• Email newsletters to the network.
• Highlight sales, coupons, or new products.
• Ensure that the affiliate recruitment link on your website leads to compelling information about your programs' benefits.
• Use external affiliate forums to spread the word.

Working with different publisher classifications

Here are some tips for working with different publishers:

Loyalty and reward publishers

• Many shoppers are more loyal to the publisher site than to the advertiser. By increasing the passback offered by competitors, you can maintain or increase market share within the loyalty site.
• Loyalty sites provide a clear consumer benefit and can create a recurring source of revenue.
• Co-branded landing pages can add credibility and increase conversions. Shoppers who see a publisher logo and a reminder of the passback they'll earn on purchases are often more inclined to buy.

Community and content publishers

Community and content publishers:

• Are the experts on their members and a valuable resource for designing consumer offers.
• Require detailed product information, consumer offers, unique selling propositions, and other detailed content.
• Can evangelize advertiser benefits (such as quality products, selection, and customer service).

Search specialist publishers

• If you have a search program, search specialists can focus on the search terms that supplement your current strategy.
• If you're working with a limited budget or a competitive vertical, search specialists can assist in a long tail strategy.
• Search specialists buy traffic to test a program and absorb risk at the beginning of a test. Because ROI is critical to search specialists, you might consider increasing revenue share for these publishers.
• Consider allowing search specialists to use URL assets.

Shopping and promotion publishers

• Coupons can improve conversions and new customer acquisitions.
• Exclusive offers attract publishers, who in turn can offer a greater value proposition to consumers.
• Exclusive offers can improve your visibility on publisher sites.

Coupon tips:

• Use coupons to encourage sales of lesser-known products and influence demand in the marketplace.
• Set redemption deadlines or coupon codes expiration dates to bring about faster purchases.
• Offer coupons to first-time customers to drive new customer acquisition.
• Increase the average order value by offering coupons valid on orders exceeding a specific amount.

Affiliate Program Management: An Hour a Day

The Complete Guide to Affiliate Marketing on the Web: How to Use and Profit from Affiliate Marketing Programs

eBay Partner Network // A concrete affiliate program example