September 20th, 2006

Where does affiliate marketing fit in?

In general, the interactive marketing world seems to focus mostly on tried and true tactics like search engine marketing, email marketing and web advertising. Now, the hot words of the day seem to be “mobile marketing”, “online video” and “social networking”. But what about affiliate marketing? This often ignored marketing strategy contributes to a major portion of sales for many online retailers. Amazon.com, with perhaps the most popular affiliate program in world, has estimated figures of up to 30% of their sales coming from their hundreds of thousands of affiliates (Amazon does not disclose actually figures on this).

Affiliate marketing should definitely be given more of your attention. As an advertiser, if you can find the right publishers (aka “affiliates”), you can increase your marketing reach drastically and only have to pay out on a CPA (cost-per-action) basis. This means your ROI is essentially… whatever you want it to be. For website and email publishers, if you have a targeted and loyal audience, then promoting affiliate products can be a great way to monetize this traffic.

So how can you get started? Advertisers will need to first decide on their program’s objective and offer. Think about what makes sense for you: percentage of sales, or a fixed payment amount for a newsletter subscriber or just a landing on your site. The other main components are resources and technology. Building an affiliate program, while it may be very lucrative in the long run, requires significant effort. Along with this, the technology of tracking your program is not always easy to bring in house. For many organizations, it makes sense to consider an outsourced affiliate partner. Some of the most popular and respected include Commission Junction, LinkShare, and Performics, but there are many others for different needs. These services are usually able to completely handle the technology to serve ads, track sales and payments, as well as give you access to their own network of affiliates.

The process is usually much simpler for publishers. In general, most affiliate programs are completely free to sign up for, so it makes sense to try a number of different ones to see what works for you. Try doing some research by looking for programs from sites of online retailers you trust, or sign up for an account with each of the outsourced affiliate partners mentioned above to get access to countless other programs. Look for products that you think will sell easily, and are related to the content of your site/email. The more relevant a product is to your users, the more likely they are to buy it. Also, try to find programs that offer good and varied marketing materials that you would like to use.

Try to think beyond the hype, and give this little talked about but potentially highly-effective marketing tactic a chance. Maybe you will be the next Amazon.com (likely not, but worth a shot).