Affiliate marketing is a traffic driving practice in which a business rewards one or more affiliates for each visitor or customer brought about by the affiliate's own marketing efforts. That sounds simple enough.
From a business standpoint affiliate marketing is advantageous because it uses a "pay for performance" model. Meaning, the merchant does not incur a marketing expense unless results are accrued (excluding any initial setup or ongoing costs).
Some quick facts:
- U.S. affiliate marketing spending will reach $4.1 billion in 2014, up from $1.6 in 2007. (Forrester Research)
- Affiliate marketing was used by 28% of all marketers (DMA Digital Marketing Practice and Trends)
- 46% felt the channel was very cost-effective, 48% felt it was quite cost-effective, Only 6% thought it was not cost-effective (lowest of all channels) (Econsultancy and R.O.EYE)
If it is so easy and low cost why wouldn't everyone be on board? Managed correctly, affiliate marketing can be one of the most effective tactics in your interactive marketing toolbox. However, too many people jump into a network or buy the software without having an affiliate marketing plan. Slightly editing a famous movie quote they go under the assumption of “If we build it, they will come.” Like any other interactive tactic, resources and commitment are the keys to being successful. When educating clients on the potential of affiliate marketing we use the 4 P’s; Plan, Prepare, Promote & Protect.
- Plan: Before launch you need to consider the bandwidth necessary to run the program.
- Contractual costs and commitments
- Management resources (Agency, Internal, or Consultant)
- Base Creative Development
- Prepare: Once the contract is signed there are a number of steps before launch.
- IT Network / Software implementation
- Affiliate rules of engagement
- Resource assignments
- Promote: You need to ‘sell yourself’ and provide Affiliates the resources in order to make them successful.
- Your Value Proposition (Bio, best-selling products, promotional plan, key metrics)
- Base Creative assets (Text links, copy, keywords, banners)
- Advanced assets (Product catalog, rich media, coupons, video, offline, etc.)
- Affiliate recruitment
- Protect: Your brand and products now have more exposure.
- Affiliate approval method
- Establish brand guidelines around keywords
- Network and SE monitoring
- Reporting and analytics
If done right, Affiliate marketing can draw customers in and be a low-cost incremental source of revenue via a “Virtual Sales Force”.