The UK affiliate market is still growing - it was worth £4bn in 2009, up from £3.8bn in 2008, with over £240m being paid in affiliate commissions (source: Econsultancy). With such high stakes, it's an unsurprisingly competitive market where mindshare matters.
What is Affiliate Marketing?
Affiliate marketing is a popular marketing model, using 3rd party websites to drive traffic to your website in return for a commission on any sales generated. It's a low risk investment because, set-up and admin costs aside, you pay for sales, not clicks. This enables you to set commission levels that work with your margin structure to control your ROI.
A traditional view of affiliate marketing assumes a push-pull exchange with brand owners creating content/offers and their affiliates promoting these assets, usually via an affiliate network like Affiliate Window or Commission Junction.
However, the smart money is on partnership, viewing an affiliate as a strategic business partner with whom you can build a long-term, mutually beneficial commercial relationship. This article takes a peek at why relationship building should be the cornerstone of your affiliate program.
Why is Partnership Important?
Most affiliates with significant visitor numbers (let's assume over 5000 visits per month) are running their websites as a full-time business. It matters to them who they work with and how seriously their partners take them.
Put yourself in their shoes. Brand X hasn't spoken to you since you joined their program; all you get are generic promotion banners to put on your website. The eCommerce Manager at Brand Y e-mails you every week with trading updates and special offers. She calls at least once a month to find out what you're up to and how business is doing. You get to know her; she asks what she can do to drive more traffic and sales via your website.
Who would you give more affiliate love to? It's not rocket science but it takes care and effort to nurture lasting relationships. The power of affiliate marketing lies in working together to produce compelling, creative offers for your affiliate partners' customers.
How Do You Build Partnerships?
Whilst any human relationship demands the ability to respond to opportunities and issues as they arise, structuring your communication will help you manage your affiliate base.
The following are proven techniques:
- Publish a monthly newsletter to your affiliate base to keep them updated with your business news.
- Send personal e-mails to your top affiliates at least once per month - the subject should suit the demands of the partnership.
- Call each of your top affiliates every month to see how they're doing and find out what else you can provide them to help them drive traffic to your website.
- Produce fresh campaign assets every month to give your affiliates fresh content to show their customers.
- Run special promotions unique to top affiliates to reward them for their support.
- If you're lucky enough to have a few affiliates that deliver a chunky revenue stream, go and visit them every now and then - take them out to lunch, buy them a few drinks and get to know them better.
- Attend industry events where affiliates and merchants come together to discuss what's going on - you get to meet the people behind the websites and you learn what other people are doing.
- Get stuck into affiliate forums and discussion groups online to get your name out there and to learn - Affiliates4u is a great place to start.
Whatever you do, make sure that you maintain the personal element to communication. It's helpful to use a framework to structure affiliate management but the framework should be used to support your efforts, not to define them.
With Which Affiliates Should You Build Relationships?
You've got thousands of affiliates - have you got to do this with every single one? Not unless you want to cry yourself to sleep! The challenge is to identify best performing affiliates as well as those who you think have the greatest potential to add value and drive relevant traffic to your website.
Finding the best performers is easy - look at your affiliate reports to see who drives the most traffic and how the traffic is converting to revenue.
Defining which websites have the greatest potential is a bit more involved. First, you should define what makes a great website for your brand - is it audience reach, or quality of user experience, or both or something else? Once you have these criteria, each time you vet a new affiliate application, sense check against the list and if the website ticks the boxes, add the website to a list of ‘ones to watch'.
There's no hard and fast rule for the maximum number of affiliate partners with whom to maintain a direct relationship, but it's advisable to restrict this to 10-20 for each person in your affiliate team.
How Can You Manage An Ever-growing Affiliate Base?
The best way to manage your affiliate base is to divide it into logical segments:
- Create a segment for Super Affiliates, those that regularly drive the most traffic and revenue.
- Set a reward structure that incentivises improved performance e.g. partners in the Super Affiliate segment will be rewarded with a higher commission of 15%.
- Set criteria for each segment so that affiliates can see what they have to achieve to progress to the next segment e.g. each affiliate must generate 50 or more sales per month to join the Super Affiliate segment.
- Run tactical and seasonal campaigns alongside your core commission structure to drive traffic and revenue e.g. offer a £100 cash bonus for the first affiliate to generate £500 revenue for your new product range.
- Produce campaign assets (banners, text, video, landing pages, etc.) that are global (i.e. available to every affiliate) and local (i.e. only available to specific segments) to improve your targeting.
- Explore the potential of optimised landing pages for a few of your affiliates
- Review your affiliate base at least every 3 months to prune - remove websites that no longer meet your partnership criteria (but make sure you inform the website owners as to why).
- Use your web analytics, not just affiliate reports - dive into the detail of how affiliate traffic performs in comparison to other digital channels and look at how you can improve your website to drive conversion.
Make sure that you stay in touch with your affiliates. Send e-mail newsletters to every affiliate partner informing them of business news, latest offers, new products and any changes to your affiliate program. Don't forget that behind each affiliate website is a person and most people like a little bit of attention.
The value of partnership is demonstrated by the Affiliate Window case study for Kitbag available on the IAB website.
This article was written by James Gurd, guest writer and blogger at user experience consultancy, Webcredible. They run a range of fantastic training courses including Google Analytics training and social media training.
- 10th August, 2010: Initial post