The Performance Marketing Primer

Dipping your toe into the affiliate marketing pool

Jon Levine

Director of eCommerce

All Inclusive Marketing

Today You Will Learn

• What Performance Marketing is

• Who the affiliates are and how they get paid

• What an affiliate network is and what it can, and cannot do

for you

• The different types of offers that can incentivize affiliates

• An introduction to the entire performance

marketing industry

• Jon Levine, Director of eCommerce for All Inclusive Marketing

• Director of Marketing for several industry leading companies over the last 14 years

• Launched and managed affiliate marketing programs for different companies in multiple categories

• Founded and launched three successful online startups

• Featured speaker and panelist at ShareASale ThinkTank!, SFIMA, and Affiliate Management Days conferences and events

About Me

Agenda

Getting started with performance marketing

• Definitions• What is an affiliate program?

• Offer Models• Sales offers• Lead offers• CPA/CPM

• How do affiliates get paid?• What is a network?• Other types of tracking• What is a pixel and how does it work?

• The industry as a whole• How big is the affiliate marketing industry?• Where is it expected to go in the future?

• Defining affiliates• Types of affiliates

• Returns, reversals and fraud

What is an affiliate marketing program?

AFFILIATES

Simply put, an affiliate marketing program is a marketing channel in which outside individuals or companies (affiliates) advertise products or services to potential customers on your (merchant) behalf.

CUSTOMERS

Why would affiliates do this for you? They get paid.

There’s different ways that affiliates get paid and it mainly depends on what kind of offer is made available by the merchant.

SALESThe most common arrangement between an affiliate and a merchant is that of a revenue share. When an affiliate drives a customer to the merchant’s website and a sale takes place, the affiliate gets a percentage of that sale.

LEADSAnother offer that is commonly used in performance marketing is that of lead generation. Instead of a monetary transaction, the affiliate drives traffic to a website with the aim of generating sales opportunities for the merchant. Normally, the affiliate is paid a flat fee for this action.

COST PER ACTION (CPA) / COST PER IMPRESSIONS (CPM)The third most common type of offer is Cost Per Action or Cost Per (one thousand) impressions. The M in CPM refers to the Roman numeral for 1,000, M. In a CPA model, the affiliate is tasked with getting the user to complete an action. This could be filling out a form or joining a subscription program. CPM pays affiliates for showing advertisements to viewers in blocks of 1,000.

How do you know who to pay? You track it.Affiliate networks, such as ShareaSale, has offers, and Commission Junction offer the ability to not only find and recruit affiliates, but to track their sales as well.

The networks do this through the use of a tracking pixel. This pixel not only knows which affiliate sent which click to the merchant’s website, but it also collects the necessary data to record the details of the sale. Everything from the order number, to the type of item, to the sale price gets loaded into this pixel and transmitted back to the network where it is recorded. All of this happens invisibly and instantaneously once the sale is confirmed.

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Do I have to use an affiliate network? Nope.

While affiliate networks make the recruiting, tracking and paying of affiliates easier, they do cost money. If you’re willing to make the investment in an in-house tracking method, you can run your entire program from within.

One way to do this could be through your website analytics. By setting up unique tracking links and campaigns within your analytics, you could do your own affiliate tracking. Depending on the size of your program, this could be beneficial in the long run.

So, how big is the affiliate marketing industry? Huge.

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According to Forester Research, the annual spend on affiliate marketing has grown from $1.6 billion dollars in 2007 to a projected $4.1 billion in 2014.

Additionally, company budgets for affiliate marketing are the third-largest behind Pay-Per-Click and email marketing. (Forester Research 2011)

Are all of affiliates the same? Hardly.

Content Affiliates Coupon Affiliates Price Comparison AffiliatesLoyalty Affiliates

CONTENT AFFILIATESContent affiliates drive traffic to merchants websites by using, you guessed it, content. The most common type of content affiliate is a blogger who writes about a specific subject. By creating unique content, they attract visitors to their site that they’re then able to advertise to.

COUPON AFFILIATESUnlike content affiliates, coupon affiliates usually have very little content on their site. They’re more about the deal. Promoting bargains and discounts is the way they attract visitors who then use the coupons they advertise in a merchant’s store.

LOYALTY AFFILIATESLoyalty affiliates offer their users cash back to shop through their site. Effectively, they’re sharing the commission that the merchant pays them with the customer. Everyone wins.

PRICE COMPARISON AFFILIATESPrice comparison affiliates give users the ability to compare two or more different items to see which one is more suitable. Regardless of which one the consumer chooses, the price comparison affiliate usually wins because they’ll get a share of the revenue from either sale.

Do I have to pay if the customer returns the item? Is there the

possibility of fraud? Don’t worry, it’s been covered.

FULL TRANSPARENCYWhen it comes to affiliate marketing and tracking, everything is transparent. You see when all of the sales come in, who they came from and how much commission will be paid. This information, plus your own internal sales numbers, will help you keep everything inline.

LOCKING PERIODCommissions on transactions are not paid out instantaneously. There is a grace period that must pass before any monies are doled out. This gives you the opportunity to review each transaction, if you choose, and make any adjustments that you deem necessary.

REVERSALS AND RETURNSReturns happen, especially in the ecommerce space. Affiliate networks and tracking mechanisms are fully setup to allow for commission reversals in the event that an item is returned or something unexpected has happened with the transaction.

Move The Needle

Move The Needle

• Based on the type of business you are, determine what

type of offer you’ll use in your affiliate program (revenue

share, lead gen, CPA)

• Determine if you want to use a network to track your

affiliate sales (recommended) or do your own,

in-house tracking

• Look at your key competitors and, if they have an affiliate

program, take note of what they offer

• Determine the type of affiliates that would be right for your

program and create a plan to recruit them

First Steps

• There are several types of offers that can be made in an affiliate program. Find the one that’s right for you.

• Affiliate networks can be an extremely helpful place to start, especially for new programs

• There are many different types of affiliate marketers and choosing the right ones for your program depends on your goals

• The affiliate marketing industry is growing fast and will only continue to get bigger

Key Takeaways

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