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Affiliate Marketing might be the perfect complement, the next “big step” in your current online efforts. I’ll go further, saying, “Through Affiliate Marketing you can obtain a higher return on ad spend (ROAS), than through your Pay-Per Click (PPC) campaigns!”
Lets compare.
Everyone knows e-mail marketing will give you more bang for your buck. You’re targeting customers who are already familiar with your brand, have purchased from you, and know the quality of product you offer. So, you obviously see a great ROAS with e-mail marketing, in most cases, the best of any marketing effort.
PPC offers exposure to a large audience who may or may not have heard of you or your product. However, you also see lots of “looky-loos” who click on your ad, only to go elsewhere. It can take considerable optimization efforts and money to generate a nice steady return.
Affiliate lets you pay for the sale only when it happens, allowing you to control your spend, therefore maintaining a steady ROAS. If you want to spend 10% - offer 10% commission. It’s a great next-step to expand your marketing.
When is an Affiliate Program
right for my business?
Every online store develops at a
different rate, but if you have already started taking advantage of PPC, E-mail and SEO, it’s probably time for you to start an Affiliate Program.
I would rarely recommend starting an Affiliate Program when your store first goes live. You should first have a thorough understanding of your customer base, your top products and worst sellers, how you rank organically for key terms, and your overall marketing spend. Without a few months to a full year of information,
it is not recommended to begin an
Affiliate Program.
An Affiliate Program can expose your brand to new, qualified prospects who may not have heard of you. The right affiliates can help you build Brand Awareness, Brand Equity, and new Revenue!
Get all your ducks in a row.
Learn about your customer base first and translate it to your Affiliate Program. By providing these affiliates with intimate knowledge about your average consumer, top products and more, they can market to a targeted base and optimize their efforts quickly. The better they know your product and your site, the better qualified traffic they send, and you will start to see a profit much sooner.
Words of Warning: I’ve seen it too many times… your PPC isn’t working, and you need a last ditch effort to boost sales, so you try an Affiliate Program. Don’t do it. You would be beginning this undertaking for all the wrong reasons, with highly unrealistic expectations. Affiliate marketing takes time and effort to build. Building affiliate relationships require time and attention, and you may not see a true return for a few months. You need to solidify your other marketing efforts before reaching out to alternate channels like affiliate - it’s just good business.
Note: A fully matured program can account for 10-20% of your bottom
line revenue.
Speaking of moolah…
Money is another important consideration when launching an Affiliate Program.
If you don’t have the right funds readily available, you will be left struggling as the program builds. You need to have the startup capital available to enter an affiliate network like Commission Junction, purchase tracking software, or simply to pay commissions.
Most networks will require an initial setup fee, and a whole bunch of important “optional” add-ons. If you go the network route, make sure you have enough capital available for this, and any escrow account deposits that are required.
When it’s time to pay affiliates, if you don’t have the cash on hand, it’s a bad situation for you, and your affiliates. If you sold $10k this month through your Affiliate Program, owe $1,500 in commissions and already have that $10k spent, you won’t be able to pay your affiliates in a timely manner and they may stop promoting you.
By starting off with realistic expectations, the right information, the proper amount of capital, and a plan, you can begin building an outstanding Affiliate Program.
In Part I of this series, we discussed the basics of affiliate marketing (What is it? How does it work? Who are affiliates?), as well as the benefits of joining a network instead of establishing your own independent affiliate program. We also discussed which network to join.
This segment will explore setup of your new affiliate program, integration with your existing marketing efforts, as well as common missteps and how to avoid them.
Setting Up Your Affiliate Program
Establishing an Affiliate Program is not an overnight project, but requires a good deal of time and patience. After signing on with a network, you will need to set up all of your program details including program description, creative elements, keywords and base commission.
Your affiliate program description is your first opportunity to describe your company, your audience and why the affiliate publisher should choose to partner with you. Prospective affiliates can gain valuable insight into the nature of your business and whether your products are a good match for their audience. Be sure to include target demographics, top products, any ongoing consumer incentives (e.g. free shipping, hassle-free returns, low price guarantee). The more information you provide, the better your affiliate partners can target customers.
Affiliates will scan this description for important information, so make their job easier. Use bullets, hard numbers, and essential details to accentuate the most relevant information.
Repeat some of the same information from your Program Description in an acceptance email for new publishers. By providing this information to the affiliate at the point of acceptance, you’re reminding them of the best type of customer they need to target. Include contact email or phone numbers to open the lines of communication as you move forward.
In addition to your program description, develop creative for links. This can include banner ads, text links and advanced links.
Syncing Your Affiliate Program with Existing Marketing Agenda
When creating the banners and text links, remember to not only develop captivating ads that represent your brand, but ones that sync with your overall marketing agenda. Analyze your yearly promotional calendar so you can plan to advertise any sales or promotions on your website. Remember, your banners will be reaching many people who may have never heard of your store, so be sure to give them a reason to visit.
This is a great opportunity to build and expand your brand. Maintain a consistent look and feel from your banner through your website to develop an identity with the consumer. Because major retailers like Best Buy and Target have established certain colors and themes with their brand, most of us could identify their weekly newspaper inserts even if their logos were missing. A consistent brand identity helps you create established brand leverage.
Overall, keep your message consistent within banners, text links and program descriptions on your website. Keep the same overall color scheme throughout your site, although seasonal variations are acceptable for promotional purposes.
Couponing* through your Affiliate Links
Aside from the generic holiday ads be sure to offer additional special coupon sales through your affiliate links. Many Super Affiliates are coupon/deal sites with a dedicated following of savvy shoppers. By offering regular coupon discounts and free shipping codes, they can send you many additional customers.
* Couponing to build your program will be discussed in Part III of this series.
Do I Need a Product Catalog or Datafeed?
In most cases, yes! The more resources the affiliates have at their fingertips, the more they can promote you and the greater the opportunity for success. By offering links to each individual product through a product catalog or datafeed, affiliate publishers can pick and choose the specific products they would like to promote, or use the whole catalog to promote your entire line through their online mall. Many networks charge for this, but it is a worthwhile investment.
How Much Commission Should I Offer?
Setting a standard commission rate involves a number of factors including the overall industry, trends in competitor commission offerings, and your average profit margin.
Some industries demand a higher commission in the double-digits (10-20%), whereas consumer electronics retailers may only pay 1-4%. By taking into account the average for the industry, as well as your margins, you can offer a competitive commission giving you the leverage you need within the industry.
An example of some average industry commissions:
Clothing & Apparel: 5-8%
Electronics: 3-5%
Flowers & Gifts: 8-12%
Health & Beauty: 8-12%
Home & Garden: 8-10%
If you can offer a maximum of 10%, you may want to offer 8% and hold back the additional 2% for top performer rewards. Also, many times Search Marketing Affiliates can benefit from a 2% “bump” by utilizing the additional money to send more traffic to your site. This benefits your affiliate and your bottom line.
Many affiliates want to know how much that commission percentage is worth to them. If you can earn 10% of $100, or 5% of $500, the 5% is the obvious choice. Be sure to let your affiliates know your average order value. That way they can decide how much to spend promoting your product, based on the average return they can expect.
Common Mistakes During Program Setup:
Online merchants make many mistakes during the setup and lifetime of a program. I’ll explain how you can avoid some common missteps.
1. Expecting too much too soon.
Many merchants open an affiliate program with hopes of instant gratification. Unlike other forms of online advertising, affiliate programs require a significant investment of time and money.
With affiliate marketing, it’s about making connections and forming relationships with the affiliates. Knowing who is promoting your product and the methods they are using, are invaluable in building a successful program in the long run.
2. Thinking of Affiliates as Competition
I’ve heard it time and time again, “why should I help them?” Because they help you! Affiliate publishers are a great value in selling your brand. By providing them with the information they need, they can better position your products in the marketplace.
Many people ask about creating competition within sponsored search results. This is why it is extremely important to supply your affiliates with as much information as possible. Inform them of any restrictions you have regarding bidding on your brand name and other high-performance terms where you don’t want competition, but also give them ideas on where they can pick up some traffic that you may be missing.
By providing the affiliates with information, you empower them to help increase both their bottom line and yours, too!
3. Not Taking Advantage of Available Tools
Why do I want to offer coupons? I’m already giving up a percentage! Why do I need to offer a product catalog?
The more tools you place in the hands of the affiliate, the more you increase the opportunity for product promotion, brand exposure and the prospect of seeing a significant profit.
With the increased exposure for your brand through banners and text links, you have the opportunity to plant incentives for consumers. You may offer 10% commission to your affiliate and wonder why you need to offer a 10% coupon code in the banner. You’re doing it to build customer interest. By using your banners and text links to offer consumer incentives, you can create immediacy, interest and conversions!
Revisiting the product catalog supplies the affiliates with product level links and allows them to promote your program in a variety of ways that you may not have available, or may not have instituted. Be sure to let them know which items convert best so they can promote your top sellers.
Affiliate programs usually involve a significant investment, so use it to its full capacity. Take every opportunity to provide information to the affiliates so they can promote you better. Use your links by meshing them with your promotional calendar. Be in tune with the marketplace, know your top sellers, know your competition and use innovative promotions to gain a lion’s share of the revenue. Your affiliates want to sell your products, so treat them as partners instead of competitors. By beginning with these tactics in place, you can ensure a great jump-start to your affiliate program.
Part III of this Series in the April 2008 issue of eBiz Insider will deal with optimizing your existing program.
