Affiliate Marketing Overview

Affiliate Marketing

The affiliate marketing landscape consists of key players including advertisers, affiliates, technology and agencies. For an industry in its maturity, it continues to grow year over year becoming a $4.5 billion dollar industry.

Why is affiliate marketing so attractive?

Also known as performance marketing, advertisers love the concept of only having to pay an affiliate when a sale takes place. Unfortunately that is only part of the story. For companies with major brand recognition it can mean paying for sales they would have received anyway. For startups and smaller brands it can mean slower than expected growth as they try to grow their company without investing in other channels. Understanding how to create an affiliate marketing strategy that works for your business will pay off dividends in the future.

How to create an affiliate marketing strategy

I’ve seen too many affiliate programs forget the MARKETING part of their programs. The channel should demand its own resources, budget, creatives, promotions and audience. Here are some basics that should be discussed before launching your program:

  1. Commission Rate – How much you pay affiliates will depend on your margins and/or life time value. It can be setup as a percentage of sales or in the case of lead generation it may be a set fee called a CPA/CPL.
  2. Budget – In addition to affiliate commissions you will need to account for technology costs that can vary from a fixed fee to a percentage of revenue. There may be additional costs for integrating with larger affiliates, paid placements or sponsored blog posts.
  3. Tracking – I have worked with virtually every network  in the last 15 years. Choosing the right network for your brand isn’t easy. None are perfect and there are pros and cons to all of them. The trend towards a SAAS (software-as-a-service) solution continues and for good reason. SAAS providers offer the potential for significant cost savings as your affiliate program scales.
  4. Recruitment – It’s an ongoing process that will help add incremental sales to the channel by selecting the right partners to reach your target audience. Determining the type of affiliates you want to work with will be an integral part of your strategy. Keep in mind working with different types of affiliates requires a different approach, for examples working with bloggers vs coupon sites.
  5. Promotions – Promotions can be a great incentive for an affiliate to give your brand additional exposure, especially if its exclusive to them. Testing and analyzing different types of offers that work best for your affiliates is recommended and there should also be continuity and communication with promotions from other marketing channels if affiliates can be credited.
  6. Creative –  How often your promotions change will likely determine your creative requirements. Banner and email creative are standard for any affiliate program but more advanced programs may benefit from widgets, product feeds and dynamic creatives. If you’re interested in working with bloggers, a guidance document should be made available to make sure they are in compliance, have the latest promotions, hot products and company news.

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I have experience working in the affiliate marketing industry for 15 years, attending and speaking at conferences like Affiliate Summit multiple times. Let’s have a chat and see how we can work together.

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