Adam Boettiger

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Affiliate Marketing 101 – The BasicsMyths & MisperceptionsBuilding BlocksRoadblocks & LandminesReal-Life ExamplesQ&A

AFFILIATE MARKETING 101 – THE BASICS

WHAT is Affiliate Marketing?

WHAT IS AFFILIATE MARKETING?

“Affiliate Marketing is an Internet-based marketing practice in which a business rewards one or more affiliates for each visitor or customer brought about by the affiliate's marketing efforts.”

“Affiliate marketing is the equivalent of having an online sales force working 24/7 to sell your product or service and being compensated only if and when actions occur.”

WHAT IS AFFILIATE MARKETING?

“Affiliate Marketing is paying for advertising based solely on the end result generated.”

WHAT IS AFFILIATE MARKETING?

1800Flowers.com ForgetfulHusbands.com

COMMONLY USED TERMS

Pay-Per-SalePay-Per-LeadPay-Per-ClickPay-Per-ActionBounty – Affiliate Payment“Your offer is not converting for us.”

EARLY ROOTS OF AFFILIATE MARKETING

CDNOW CIRCA 1994

AMAZON.COM CIRCA 1999

WHO USES AFFILIATE MARKETING?

AdultRetailPersonal Finance Gaming and gambling TravelTelecom & Mobile PhoneEducationPublishing

WHY AFFILIATE MARKETING?

Low RiskIncredible ReachEstablish a larger footprint in search enginesQuantified ROIScalable (under the right conditions)

IS AFFILIATE MARKETING RIGHT FOR MY BUSINESS?

It depends…

Yes, everyone wants to pay only for resultsYes, most brands online can benefit from oneNo, not everyone has what it takes

BUILDING BLOCKS

Core Program Components

Merchant, Retailer or BrandNetworkPublisher or AffiliateCustomer

CORE PROGRAM COMPONENTS

InternalProgram ManagerCreative / DevelopmentTechnologyBilling & PaymentsExternalAffiliatesAffiliate NetworksBrokers

ROLES

MerchantEmpower affiliates to succeedProvide the tools they need to do so

AffiliateCreate volume (leads, sales or actions)Make money

Affiliate NetworkCreate volume by aggregating reachMake money

MEASURING SUCCESS

MerchantCost Per TransactionTotal Transactions / Total RevenueAffiliateeCPM / eCPCTotal RevenueAffiliate NetworkVolume of Transactions / Total Revenue

COMPENSATION

Merchant – Incremental salesAffiliate - % sale or bounty per actionAffiliate Network - % aggregate sales/actionsAgency

Retainer (T&M)Hybrid (T&M + % bounty)Performance (% bounty only)Creative / Dev

TYPES OF AFFILIATES

Search affiliatesComparison shopping websites and directoriesLoyalty websitesCRM sites that offer charitable donationsCoupon and rebate websites that focus on sales promotionsContent and niche market websites, including product review sitesPersonal websitesWeblogs and website syndication feedsE-mail list affiliatesRegistration path or co-registration affiliatesShopping directoriesCost per action networksWebsites using adbars

Media Buying

• We’re the client/agency• We have the gold• We make the rules• If you don’t like it, tough• Don’t call us, we’ll call you• Publishers sell us• We eat rate cards for breakfast• Adversarial (almost)

Affiliate Marketing

• Inverse of power• Publishers & networks hold the gold

• Far more collaborative• True partnership

• Publishers assume 100% of risk• Publishers can (and will) fire

agencies & clients

FUNDAMENTAL DIFFERENCES

MYTHS & MISPERCEPTIONS

“We can build an affiliate program with little or no budget or resources.”“We can turn an affiliate program on and off.”“Publishers will compete for our ad budget.”“If we build a program, they will come.”“We’re Brand X. Everyone wants to do business with us.”“Affiliate marketing is a waste of advertising dollars.”“An affiliate program will run by itself, just like cruise control on a car.”

NEWSFLASH: IT’S ALL ABOUT THE BENJAMINS

Does your site convert well?How does your offer compare to others?Do you have killer creative?Are you using a known tracking system?How does your offer back out?Is your program capped or uncapped?Is there a real opportunity for your partners?Are you imposing too many restrictions?

WHERE DO WE BEGIN?

Four Phases:Pre-Program EvaluationStrategic PlanningPilot ProgramRollout / Growth

PRE-PROGRAM EVALUATION

Is your client or company a good fit for an affiliate program? How would you know?

Do you have the right resources?If no, can you secure them?Do you have the authority to effect change if needed?Is your company willing to change if needed?Do you have the right mindset?

STRATEGIC PLANNING PHASE

Outline a short-term pilot program and long-term planIdentify key internal/external resources & decision-makersSecure a budget and program managerDeploy & test a tracking/reporting systemOutline how billing and AP will be handledInvolve core affiliate partners in your strategyEstablish KPIs & define successDevelop ad creative and landing pagesConsider A/B & split testing optionsSet policy

KEY PERFORMANCE INDICATORS

Volume - Actions per day, week or monthGross revenue generated (CLV x actions)ROASCost Per ActionCost Per VisitorValue of branding/awareness as a side benefitHow do these compare to our other channel costs?

PILOT PROGRAM

GoalsTo prove efficacyTo identify speed bumps and road blocksTo measure & benchmark KPIs

Allow a minimum of 120 daysTest a variety of ad creative and landing pagesEngage with a handful of affiliates / networksBuild a solid foundation that can be scaledReport successes visually to executive teamPlan for a rollout

ROLLOUT / GROWTH PHASE

Capped or Uncapped?Involve affiliate partners in growth planningPartially automate the recruitment processConsider additional creative developmentReview how your offer and bounty compares to competitorsSolicit input from affiliate partnersRoll up your sleeves and grow your gardenContinually quantify success to executive teams

CHALLENGES, LAND MINES & ROADBLOCKS

Tier 2 & 3, not so much Tier 1Ongoing management & optimizationCommission 20-30% of saleSignal-to-Noise Ratio of AffiliatesClient (individual) or Brand not a good fitProgram not a priority to brandMinimal allocation of resourcesOften difficult to secure corporate buy-in

CONSIDERATIONS

Long-term investmentNo brand loyaltyRequires careful nurturingCan’t be switched on and offControl works against you80/20 rule appliesTerms & Conditions

REAL LIFE

JENNY CRAIG

JENNY CRAIG

RESULTS

250% ROI on pilot programLowest Cost Per Click, Cost Per Lead and Cost Per New Customer of all media channels, online and offlineGrowth Phase began July 2009High six figure revenue generated in 2009425% ROASGrowth continuesOn target to generate seven figure revenue in2010

RESOURCES

www.abestweb.com

RESOURCES

www.affiliatesummit.com

QUESTIONS?Adam BoettigerDigital Strategist

The New GroupAdam.Boettiger@thenewgroup.com503.989.2668 @AdamBoettiger