June 28, 2007, 12:00 AM

Gaining sex appeal, affiliate marketing is receiving more attention

Retailers are aligning e-commerce marketing goals with affiliate strategies.

Affiliate marketing-using one site to drive traffic to another-has long been viewed as a cost-effective way to drive online sales and customer acquisition. But it never has captured the attention of retailers in the same way that sexier marketing tools such as e-mail and search engines have.

That may be changing as retailers discover that an affiliate program can be leveraged to enhance results of an overall marketing campaign. Retailers with successful affiliate marketing programs are aligning their overall e-commerce marketing objectives with their specific affiliate-marketing strategies, says Chris Henger, vice president of affiliate marketing at DoubleClick Performics Inc., an affiliate marketing company.

“This is affiliate marketing growing up,” Henger says.

The more, the merrier

In the past, retailers took the more-affiliates-the-better approach, reasoning they could capture more sales. Now, many online merchants monitor an affiliate’s track record for generating sales and drop the least productive ones, or select affiliates with content tied to the retailers’ products.

“More affiliates, more affiliates, more affiliates is not necessarily the answer,” Henger says.

The number of marketers maintaining large numbers of affiliates is dropping, according to the 2007 AffStat Affiliate Marketing Benchmark report from Shawn Collins Consulting. Only 9% of respondents said they have 10,000 or more affiliates, down from 14% in 2006. In addition, 10% said they had 5,001 to 10,000 affiliates, a drop from 15% last year.

“Advertisers and merchants are focusing on the productive affiliates,” Henger says. “They’re spending their time working the ones that are known producers.”

Affiliates also are beginning to change the way they operate, moving to nontraditional venues such as social networks and customer reviews, says Kerri Pollard, vice president of client development at Commission Junction, a unit of ValueClick Inc.

“They’re really following wherever the consumer may be,” she says. “We’ve seen a lot of change in the consumer with the onset of Web 2.0 and user-generated content. We’re seeing publishers going in that direction.”

Web 2.0 hesitation

However, some online retailers are hesitant about using nontraditional venues, Pollard says.

“Right now, the Web 2.0 world and the user-generated content side are a little scary, especially for some of the bigger brands,” she says. “As they look at the affiliate as an extension of their customer acquisition efforts, they’re making sure as they’re reaching this new consumer that they’re also keeping their brand management guidelines in mind.”

The bigger brands tend to be the most concerned about the possible downside of affiliate marketing in social networks and other nontraditional venues, she says. “There’s a little more dipping the toe in the water with the bigger brands,” she says. “But a lot of them are on the innovator side and willing to see the positive and negative.”

What’s more, instead of focusing on a single customer-acquisition strategy, more affiliates are employing multiple strategies, including paid search, natural search, coupons, incentives, social communities and user-generated forums, Pollard says.

“They’re no longer the one-trick pony,” she says. “The consumer now wants to have a variety of access points and they want a variety of information at different levels. The affiliate, in order to reach that consumer on behalf of the merchant, has to be able to offer all of those things.”

To get the most out of their affiliate marketing programs, retailers need to take a hands-on approach, Henger says. The most successful retailers stay in close contact with their affiliates.

“They’re willing to get on the phone with their big affiliate producers and communicate creative assets on a regular basis-changing out their creatives, thinking about offers and really working the channel,” he says. “Give the affiliates your time, give them your attention, and they seem to work harder for you.”

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