Mark Warrick - Affiliate Marketing Specialist
Affiliate marketing enables you to a create a scalable marketing network of individuals who get paid only when they provide results. Think of the publishers as an outside sales force of limitless size that require no money up front to work for you and who only get paid when they provide results. Webmasters put a link, a banner, rich media, or even your entire product catalog on their relevant website. When an action takes place, whether it be a click-through or lead form filled out or a sale, the transaction is recorded and attributed to the person that sent you the lead. Through a tracking system, you tally up all the commissions each month and pay your affiliates.
Is Affiliate Networking Right for You?
When deciding whether or not it makes sense to participate in affiliate marketing, there are some things that need to be considered first:
How many other companies are offering the same product service as your company? Are they doing any search engine marketing? Are they doing any affiliate marketing?
Example 1: Music/Video Store Owner
You own a small retail store. You have all sorts of media from current releases to used CDs and DVDs. You are able to stay competitive as a retailer because of your very low store overhead and a good connection to your distributors. Additionally, you run a trade-in program so that people can obtain credit for their old CDs and DVDs toward the purchase of new CDs and DVDs.
Conclusion: If you're dealing with mainstream media, you won't be able to compete in the online music sales world because you face competition from such giants as Amazon.com, BMG and various other distributors, however, you may be able to compete in the used and niche media worlds. For example, you sell titles that are not generally available in retail stores. You should have product data feed that is updated daily with your current used inventory. Your target webmasters are on the high-end of the scale since they would need to integrate your data. You'll need to be careful in selecting affiliates that have high traffic levels and who appear to be trustworthy. Example: SecondSpin.com
Example 2: The Local Real Estate Agent
You're currently spending hundreds, if not thousands of dollars each month on mail campaigns. You have a website and even have signed up for MLS listings inclusion into it. You're considering an affiliate program and are willing to pay $20.00 dollars for each new lead.
Warning! Check your competition. Unless you're living in an area of somewhat low population, chances are, there are hundreds, if not thousands of other realtors in your area.
Conclusion: An affiliate program probably would not make sense. In the average metropolitan areas, you're overwhelmed with competitors. Your competitors are willing to spend a LOT more money advertising online than your affiliates.
Although affiliate marketing is generally best suited for companies that are selling tangible goods, it can also be used for service providers. There may in fact be a publisher out there with a highly relevant website where your ads could be shown.
Example 1: Tangible Goods
You sell a unique widget that has grown in popularity with infomercials, magazine ads, and radio ads. People know your brand but they might not necessarily know where to find your products. Furthermore, your product is so unique and "cool" that people start blogging about it.
Conclusion: This is a perfect case for doing affiliate marketing. Essentially, you've done most of the PR work so far. Now all you need to do is cast a wider net by developing a big network of affiliate publishers. Example: AsSeenonTVGuys.com/
Example 2: Professional Services Provider
You're a certified financial consultant who specializes in retirement planning. Your website has a plethora of information. You also have a series of online forms that guide your new clients through the discovery phase and help you to help them better. But you're finding that while a lot of people start the process, they bail out.
Warning! It's possible that your target clients need some hand-holding to get them through the complex process. If you're going to do affiliate marketing, you should keep the form simple (Contact info only) and pay your affiliates on a cost-per-lead basis (completed form).
Warning! You'll need to have a pretty sophisticated form that prevents fraudulent form postings intended to drive up your affiliates' commissions.
Conclusion: Although your service offering is complex, by screening your new affiliates carefully and monitoring the leads coming through for accuracy, affiliate marketing might help you - especially when you consider what each new client is worth to you! If the cost of paying for a lead is less than all your other advertising, then it probably makes sense. Your target webmasters are going to be experts of the financial services industry.
Reach of Your Affiliate Network
Most of my affiliate marketing clients opt to join an existing affiliate network like Commission Junction, Share-a-Sale, LinkShare and Performics vs. trying to develop their own network with in-house affiliate tracking software or managed services like DirectTrack. While you have more control over in-house tracking and the overall technology costs of using a managed tracking system are lower than that of the affiliate networks, they are both missing a critical piece: the publishers. Essentially, by joining the affiliate networks, you are buying your way into access to the publisher network. When considering which network to join, the important question to ask are: "How many publishers in your network have websites relevant to my product or service and what kind of traffic levels are they currently seeing on the publishers' websites."
Cost of Affiliate Marketing
Generally speaking, the larger the publisher network, the higher the cost of entry. Cost of entry is the price you pay for access to the network and the initial setup cost for your affiliate program. Additionally, it is the monthly payouts in terms of monthly transaction fees and commissions. Some affiliate networks may also require that you maintain a deposit with them to cover expected commissions. The key questions to ask here are: "Can I afford the cost of entry and do I have enough profit built into each product that I can cover offer a competitive commission to my affiliates while covering the costs of being in the network?"
Time and Participation
Managing an affiliate network requires time and participation. At the very least, you'll be involved with evaluating each new affiliate that signs up. On an ongoing basis, you'll need to monitor transactions for fraudulent activity and you'll need to be responsive to your affiliates' demands and questions. If you cannot devote the time, your program will not work. If you are unresponsive to your affiliates technology needs (for example, providing data feeds when requested), you'll lose the best affiliate publishers. And if you're simply not answering questions in a timely manner (within 24 hours), your program will not work. You'll also need to monitor the activity of your affiliates to make sure that they are not depleting your brand name by use of unauthorized and copyrighted terms in their search marketing campaigns, email campaigns, etc. Depending upon the volume of active publishers, the frequency of change in your products and other factors, you might even need to employ somebody part or full-time to manage your affiliate program.
Developing an Affiliate Marketing Strategy
Developing an affiliate marketing strategy involves researching the competition, determining the feasibility, projecting the costs vs. expected returns, and evaluating whether or not the company has resources to manage the program. If you feel you're ready to enter the affiliate marketing world and are willing to put the resources into it making it happen, I can help you develop a strategy. And if needed, I can manage your affiliate program. Click here for my contact information.