Be Careful with Affiliate Marketing

August 4, 2009

Affiliate Marketing can be a great way to make money for retailers online, but there are certain pitfalls and tricks that we come across and I thought I would share one that may be common to everyone else but was certainly new to my client and me.  If you need more information about affiliate marketing please look here.

Full disclosure: The client discovered this trick, I wish I could take credit for it, but it was brought to my attention.

Coupons can be a very effective marketing tool if they are used correctly.  Many affiliate sites are deal or coupon  based  and build a following through visitors looking for deals.  However many of these coupon sites are really nothing more than vulture sites who are taking money from transactions that they did not contribute to.  Here’s how it works:

Let’s say you are at Staples.com and getting ready to checkout.  On the checkout page there is a box for a coupon redemption code.  You don’t have a coupon, but you wonder if there is one out there, so you go to Google and search staples coupon (there are over  190,000 searches for variations of that search every month) and see some sites that offer a coupon.  You go to the site and it says click here for the coupon code, you click, probably see an expired coupon or maybe just a special offer, and staples.com opens up in a new tab, or it just redirects through.  At this point a cookie has been dropped on your computer and when you go back to the site, with or without a coupon, and complete your order, a pixel fires and that coupon site gets paid a percentage of your order.  They contributed nothing to the process but get a nice percentage of the sale.

The client who discovered this did because they have not offered coupons in over six months, yet his highest grossing affiliates are all coupon sites.  This client is going to remove the coupon code from his checkout cart which should alleviate the problem.  But what if he wanted to use a special coupon for email customers?  At that point he would have to consider removing coupon affiliates from his program.

It is kind of like the wild west out there in affiliate marketing, and while I would never recommend that businesses not use it, it is very important to make sure you are managing your program actively and watching out for fraud.  It is programs like this that can keep affiliate marketing out of the mainstream and not allow many small businesses who should be affiliate marketing to take advantage of it due to the time commitment needed to run a clean mutually beneficial affiliate campaign.

Affiliate Marketing for Small Businesses

February 4, 2009

It seems that affiliate marketing is still the misunderstood stepchild of online marketing and most small businesses don’t use it all. However, if it makes sense, affiliate marketing can be a major part of a marketing campaign for small businesses. So what is it and how can you use it?

Affiliate Marketing at its most basic is putting a independent sales force to work marketing your business who only get paid if the traffic they drive to your site actually converts. It should be a purely cost per action style of marketing, not pay per click, or pay per impression, but only paying when sale is made or a lead is generated. Wikipedia has an article on Affiliate Marketing that we think provides a good explanation and history.

So how do you do it? The easiest and most efficient way to start an Affiliate Program is to join one or more Affiliate Networks, such as Pepperjam, LinkShare, or Commission Junction. This puts your offer out to a huge number of affiliates, many more than you could find yourself. They also give you the tools to distribute approved advertising and set the terms for your campaign. All sales and traffic are tracked through a cookie and pixel system. When a prospective customer is on an affiliate site a cookie is dropped on their browser when they click through to the advertiser site. After they purchase from the advertiser a pixel fires on the confirmation page. This pixel transmits information back to the network, providing the affiliate id, the amount of the sale and other relevant information. The advertiser account is debited the predetermined percentage or amount and that amount is transferred to the affiliate.

Affiliates drive traffic to the advertiser sites through many means, including coupon sites, pay per click campaigns, review sites, email marketing and banner advertising. The best affiliates or Super Affiliates actually run businesses that focus solely on driving traffic to advertiser sites. They are professional and very good at what they do, and they are the people you want marketing your site.

This all sounds good right, so what are the downsides? Well there can be several reasons a small business might avoid affiliate marketing. The first is price. Advertisers need margins high enough to make money while still paying a competitive amount to the affiliates. There are also start up costs to any affiliate program: building the ads, network fees, monthly minimum fees, and the advertiser website might need upgraded. There are also fraud issues, and an affiliate program can take a lot of time to run properly, especially in the beginning.

There are firms, including Raise, that manage programs for advertisers. Would this make sense for your business? Check back as we will go over the what affiliate program managers do and their responsibilities.