Growth Any Business Can Afford
Big brands and small niche retailers alike take advantage of affiliate marketing opportunities. And they’ve got the right idea. Affiliate marketing is a way for advertisers to work with lots of publishers on a pay-for-performance basis – no sales, no cost. You can’t get much more cost effective than that with your marketing dollar.
Here’s how it works – affiliates use their own websites, direct marketing and independent marketing channels to promote advertisers’ products in exchange for a percentage of tracked sales. Third party networks – Commission Junction, LinkShare, Tradedoubler, Zanox, cleverbridge, Shareasale, and many more – offer campaign support, tracking codes, recruitment tools, reporting and payment processing. Through these networks, advertisers find, communicate with and pay affiliates. But even the best networks need ongoing, hands-on management to continue driving growth, which happens to be something we know a lot about.
Affiliate program management is the glue that holds the advertiser-affiliate relationship together. Ideally, affiliate programs should work with other paid acquisition channels to complement your company’s overall marketing efforts. And when it all works together, these well-structured, well-run affiliate programs can often drive 10% to 20% of total online revenue.
Getting The Balance Right
You might ask, “Aren’t affiliate channels dominated by coupon and loyalty sites?” To some degree, yes. Many of the largest affiliates offer coupons and loyalty goodies, and it’s not uncommon for a small percentage of top publishers to drive the lion’s share of program revenue. However, it’s still important to cultivate new relationships with a wide range of affiliates. Maintaining balance and breadth is critical to the long-term health of affiliate programs.
Content affiliates – a somewhat catchall term for affiliates whose promotional methods span the spectrum but who tend to produce rich, relevant content that drives incremental traffic – are particularly important to connect with. Think blogs, forums and review sites. Regular, active engagement with these affiliates is key to establishing a loyal and lucrative partnership.
A great way to discover content affiliates is through keyword analysis. Check out what websites are showing up on Google for high value keywords. Start with your top converting keywords and target sites with high visibility for those terms. Users are probably going to visit those sites while browsing for your products. Make each site an affiliate partner and capture those sales!
Program managers have to work hard for those affiliates, providing them with fresh and compelling marketing content plus the right mix of incentives. The more engaging the program, the more likely affiliates are to become loyal to the advertiser’s brand, improving the chances of driving sustained traffic over time.
Here are a few tips for optimizing your program to attract content affiliates:
1. Provide them with content. Not only will you make their job easier, you’ll also ensure that their promotions are consistent and on-brand.
2. Engage with your affiliates and make recommendations to help them better monetize existing content.
3. Offer different blends of incentives to motivate your affiliates. Don’t give every affiliate the plain old “vanilla” offer. Reward your top earners and incentivize newcomers with a tiered approach.
To balance out large publishers, advertisers should aim to build a solid base of affiliates who make smaller revenue contributions but help create a sphere of influence. This secondary base may also enhance metrics like Earnings Per Click (EPC), making the program more enticing to other prospective affiliates.
So what exactly does sustained growth look like?
Since 2012, ROI DNA has managed an affiliate program for a popular security software company. In the past 12 months, top line revenue in the affiliate channel has grown 2,500% with monthly sales projected to exceed 6 figures. ROI has been consistently above 250%. Their affiliate base has expanded by almost 300%. On average, a quarter of affiliates are actively promoting the product – an important benchmark for a healthy program.
Within the same 12 months, the program also experienced a 3,600% increase in impressions and 7,100% increase in traffic. One of the best-kept secrets of affiliate marketing is the boost a program gets to their overall impressions, at a low and fixed cost, since an advertiser only pays for conversions. In this way, affiliates become essential to an advertiser’s sales force by spreading brand awareness. This affordable exposure can be particularly valuable for young brands.
Now for the number we really like – over 95% of this advertiser’s affiliates are content publishers relevant to the computer software vertical, including blogs about software, computers and gadgets as well as review sites. Many of these affiliates work in the technical services sector, providing computer support or IT services, as opposed to working as professional or semi-professional marketers. The result? A growing segment of affiliates leveraging their own traffic to supplement revenue through affiliate referrals.
It’s also worth noting that this advertiser’s SEM campaigns simultaneously drove a 200%-plus increase in conversions at lowered costs per acquisition. Affiliates and paid search worked in tandem to drive explosive year over year profits. This well-coordinated, cross channel effort is a standout example of overall marketing strategy. It creates a nice top of funnel awareness boost that many mistakenly wouldn’t attribute to a well-run affiliate program.
Here’s a quick list of considerations for growing a healthy affiliate program:
Balance – A successful, sustainable affiliate program requires the right balance of affiliate types.
Diversity – High profile publishers do play a key role in many programs. However, don’t overlook smaller and more specialized affiliates. They’re hugely important for increasing brand awareness, recruiting other affiliates and providing long-term stability that drives profits and growth year to year.
Guidance – An experienced affiliate program manager can help get the balance right with affiliates to build a long term and sustainable stream of revenue for your company.
Brand Lift – The best-kept secret of affiliate marketing is the net brand effect. Larger top of funnel awareness, driven by affiliate impressions, can have a significantly positive effect on brand recognition and profits, especially for newer brands.