Affiliate marketing is one of the big growth areas that Australian business still appears to have not yet accepted as a viable marketing channel. The basic idea behind affiliate marketing is where your business rewards affiliates for leads/sales they generate via their external marketing activities. It is more commonly referred to as “performance marketing” by digital marketing agencies.
Why should business use affiliate marketing?
The main benefit is that its performance based so you have to pay when affiliates deliver leads or generate sales. It is also a great platform as it overlaps with other marketing methods both offline and online.
One of the bigger advantages for business is that it also allows you to reach new markets via sometimes unorthodox techniques. This is not to say the methods are illegal or unethical but just that affiliates may have greater insight into particular marketing techniques and can scale their marketing campaigns better than you or your competitors could ever do.
Who uses affiliate programs?
Typically e-commerce is a big user of affiliate marketing as they are able to offer a % of a customer’s total purchase as an incentive. I know that lead generation is still a massive area of growth and can work very well via the affiliate model as your time and resources you are willing to invest are often limited. The other insight is that lead generation is relevant to most industry sectors as everyone is looking for more sales leads at a lower cost and need the ability to scale up to meet targets if other sales channels slow down.
Affiliate marketing is a great technique for most businesses as they can focus on growing their share of business generated online while often also reducing their acquisition costs. A good affiliate marketer may not always be cheap but it’s often far more cost effective than traditional methods and is scalable. If you work closely with your affiliate marketers and provide insights and feedback they can also look to continuously improve the quality of leads they generate over the life of the campaign.
Biggest Sectors for Affiliate Marketing
- Gambling
- Adult
- Travel
- Education
- Retail
- Finance
- Mobile Phone
- Franchises
- Broadband
- Webhosting/Domains
Why Performance Marketing Works better?
The benefit to business is that your affiliates are not focused on just trying to get clicks/page views they need the visitor to do more than just visit if they want to receive payment. The benefit for business is they get more targeted visitors as affiliates need the best possible chance of a conversion. The risk is shared between the business and the marketer.
How a business can improve affiliate programs?
Transparency is a big area for business to focus on as you want to ensure you balance sharing what is not working but also what is performing really well. It’s not just the affiliate that needs to improve their campaigns, you also need to improve conversion rates on your landing pages, keep your web content current, and optimise your checkout process. How much you give back to your affiliates is also dependant on your internal resources that you have assigned for the campaign.
Common Affiliate Compensation Methods
- Pay Per Lead
- Pay Per Sale
- Pay Per Call
- Cost Per Acquisition/Action
- Cost Per Click
- Revenue Sharing
Common types of Affiliate Websites
- Comparison Shopping Websites
- Loyalty (Points/Cash back)
- Coupon Websites
- Rebate Websites
- Shopping Directories
- Niche Websites
- Content Rich websites
How your Business can track affiliates
- Call Tracking Numbers – Jet Interactive/Skype
- Unique Lead Generation/Forms – Unbounce/Performable
- Web Analytics Tracking URLS – Google Analytics URL
- Affiliate Tracking Software – HasOffers,Avangate,Omnistar
- Affiliate Networks – ShareaSale,ClixGalore,DGM,Commission Junction
How your business can use affiliates?
If you sell goods or services you can benefit from affiliate marketing. I’m struggling to think of a single business that could not benefit by including affiliate marketing into some of their online channels.
Example
If you were a Garage Storage company and have a website setup to drive quote enquires from consumers to purchase custom storage solutions. They already have a single contact form that they could easily add Google Analytics campaign tracking URLs to understand what website partners generated a successful form completion. All of this when setup correctly can be found easily within your Google Analytics Goal reports.
Garage Smart also have a 1300 tracking number on their website that they could dynamically swap out depending on the source or location of the visitor, so they could adjust this to track AdWords, Email Marketing or Affiliate traffic. Their website has a download product catalogue feature that could offer pay-per-download for affiliates but unless carefully controlled and tracked could lead to click fraud. Because their website only has a 2 simple conversion points it would not yet be cost effective running Affiliate Tracking software just yet, but this might change if they allowed some of their storage products to be made available to purchase online. They could then track any purchases made from new, existing or referral customers and attribute the commission to the right business partners. This is just a simple example of how one business might be able to use performance based marketing, how could your website benefit?
What can go wrong?
Any successful affiliate program needs to have the following clear terms & conditions, guidelines and transparency. A successful affiliate program will also have a dedicated resource or point of contact to mediate, monitor and control your affiliates.
What business should watch for in your affiliates?
While most successful affiliates have proven track records and even references, you must always watch for cowboys. Some of the less ethical affiliates might:
* use spamming
* infringe of your trademarks
* infringe on your competitors trademarks
* use false advertising
* cookie stuffing
* adware
* pay users to submit fake leads
How to think about affiliates?
You should think about affiliate partners as an extended sales team that work on commission only looking to generate as much business as your budgets will allow. Affiliates are often very targeted and focused marketers and who often have a different business model to you and just need a business partner to monetise their traffic or sell a physical product.
Don’t wait for your competitors to beat you
It’s likely your competitors are already using some aspects of affiliate marketing, so you need to start thinking on how you can improve your website and talk with your web designer on how can make sure you can track everything.
It’s always best to start with a baseline using Google Analytics, add a website contact form and track the successful form submissions as a goal in Google Analytics. Now add in a 1300 or Skype tracking number unique to your website and see how much business your website is actually generating and then plan for how much you need it to generate.
