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.
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