Originally published in DMNews
Since Dell Computer Corp.’s announcement that it would pay Website owners who drive traffic to http://www.dell.com a 1-percent commission on resulting sales was a sure sign that Affiliate Programs are mainstream. Once considered mainly a tool for selling books and CDs, Affiliate Programs are now poised as a staple of online retail.
An Affiliate Program develops when an online retailer creates a network of
affiliated Websites that promote the Merchant’s products or services and are compensated by a percentage of the transaction (usually 5-15%) or with a flat fee for the traffic sent by clickthrough, lead or inquiry. It is a performance-based relationship where your offer is embedded into the content or stores on other sites. The affiliate site displays a link to the merchant on its Web page and receives revenues based on sales and/or traffic. The transactions are driven from their sites directly to the merchant Website.
It gives you the opportunity to go right out to your audience and tell them
about your offer. You can find your customer anywhere among the sites they most frequently visit and a partner they already trust. It gives your affiliate site the chance to offer your audience a special opportunity and a value-added, building their own loyalty and brand name. It gives your potential customer the opportunity to see your offer within relevant context and respond to it immediately (not just from a banner or a button).
Setting up this new sales channel requires a six-step process:
The first decision to make is determining how you will select Affiliates. Are
you going to accept everyone into your program, or will you set up criteria by
which to judge a site as relevant to you? You will need to establish revenue-
sharing splits according to your profit margins, and decide how to pay out on a
transaction-basis, a clickthrough-basis, or a per-action basis. The legal
contract between your firm and your Affiliates will also include the length of
relationship, payment terms, exclusivity, etc.
This step involves selecting a software/service vendor for tracking your
program. There are several firms that offer sophisticated tracking software or
service solutions to manage from affiliate to point-of-transaction. The top
options to consider are ones packaged with your shopping cart software or service,
or ones you can participate to sell multiple products for no fee and little programming, like Amazon or LinkShare. The
program is needed to track impressions, clickthroughs or transactions from the
Affiliate site to your order page, and to provide real-time online reporting of
earned commissions to the Affiliate sites.
The third step is to create the graphic elements that will reside on the
Affiliate’s site. You should develop four to six banners, buttons, and/or other
graphical elements for each offer. Additionally, copy should be prepared to
coordinate with Affiliates’ content for textual links. You may group some
products into a full page ad, called a Storefront. The more you assist the
affiliates, the faster they will set up the link, and the more likely they are
to support your program.
MARKETING AND PROMOTION
The next step is to create a full Marketing Campaign to brand and promote your
Affiliate Program to potential sites. You will list your program with Affiliate
Program directories, such as Refer-It (http://www.refer-it.com). You’ll
identify, qualify and actively solicit new affiliate sites. For Jacques Moret’s
site at http://www.moret.com, they are stimulating Affiliate enrollment through
direct mail and traditional offline PR in their niche market for women’s
activewear and apparel.
If you are already planning a media campaign or banner program, you will want to
include affiliate banners in your media placements. Ensure that the banners
coordinate with your corporate branding efforts and extend them through this
Program. You will also want to coordinate with your other online marketing
efforts, such as inbound linking or newsgroup efforts.
An important ongoing step is working with your Affiliate sites. The process
begins with the site approvals, negotiations and enrollment. Then, you will need
to assist them in setting up your offer on their site, including building a
Storefront. Getting your offer presented in a favorable location on the
Affiliate site is crucial. The more fully that your company expresses its
responsiveness and support, the more successful the Program will be. You may
also consider developing an affiliate monthly newsletter and email system for
keeping in touch with your partners.
The last major step in this process will mostly be automated via the selected
software or service provider; however, tracking, analysis, reporting, and
managing affiliate questions will still require attention. You will have to
reconcile the sites’ commission accounts at set intervals, and make payment to
each site for the balance in their account. Additional issues may include
responding to emails and general customer service.
Overall, the time required to set-up the Program can range from 4-6 weeks for the initial set-up stages. Thereafter, the marketing and management of the program can take approximately 4-15 hours per week. Clearly this time range varies greatly based on number of affiliate requests and your policies for the Program Development.
“With LinkShare’s 150 merchants, we have found that the most successful programs are those that provide a high degree of affiliate support and dedicate a minimum of 20 hours per month to their Affiliate Program. These merchants have seen program sales contribute up to 20% of online revenues,” says Stephen Messer, President, LinkShare Corporation.
Overall, the success of your new Affiliate Program will be determined by:
– The attractiveness of your offer to the competitive offers in the marketplace
– Your ability to attract affiliates
– Your management of the program
– Your level of commitment to continually create new offerings and the creative graphics to support the offer
– Your ability to make your program sustainable to you can focus your activities on acquiring new Affiliates
– Your marketing and promotional commitment