The goods that keep top-producing affiliates working for you
By Mary Wagner
Ravenwood Marketing isn’t an online retailer, but it’s partly responsible for hundreds of thousands of dollars of sales each week for many online merchants. Ravenwood is a so-called superaffiliate, a web site that pushes a high volume of qualified traffic to online merchants, accomplishing that through efforts that go well beyond simply pasting up links to merchant sites.
Ravenwood focuses on paid search. Its partners are very large merchants and other online marketers whose keyword programs on search engines may cover a million words or more. On that scale, it’s beyond merchants’ abilities to maximize the potential value of each keyword, so Ravenwood does some of that for them. It bids actively for paid placement on keywords, perhaps as many a 100,000 or more of a merchant’s million terms, creates copy that compels shoppers to click on these links, and in so doing takes on some of the risk of paid keyword clicks that don’t convert.
Ravenwood gets a commission from the merchant when a referral drives a sale or lead. It drives referrals effectively, having been profitable in the paid search arbitrage businesses since it launched six years ago, according to Dan Murray, Internet search strategist. In return for driving high sales and leads, it gets incentives and rewards from merchants that an Average Joe affiliate never sees. These include advance notice of key promotions, confidential marketing information, and commissions above and beyond what merchants list on their rate card.
Those are just some of the benefits that merchants use to cement relationships with top-performing affiliates. In an economic climate in which both consumers and marketers are looking to squeeze as much value as possible out of every dollar, pay-for-performance affiliate marketing, in which merchants most often pay on sales rather than on clicks, is claiming more of marketers’ attention. And to turn the heads of the best affiliate producers—and keep them in the fold—retailers are offering a broader and more innovative variety of incentives, promotions and tools, and higher rewards for delivering.
Affiliate marketing is light years away from its early days when a content site—for instance, one launched by a woodworking enthusiast to post furniture-making information—might put up a link to a seller of woodcrafting tools. Plenty of such enthusiast sites exist today, driving small amounts of traffic to e-commerce sites. But alongside them, other sites have turned affiliate marketing into a serious business in which companies like Ravenwood can make a significant difference in an e-retailer’s revenue.
“Ten years ago, affiliates were largely personal sites where the operator would just put up a banner. These days it is a lot more sophisticated, with affiliates coming in many flavors,” says Shawn Collins, president of Shawn Collins Consulting and a specialist in affiliate marketing.
Because of the growing role of affiliates, it’s important for an online retailer to understand what will make a successful affiliate invest more in driving traffic to one retailer’s site versus another’s.
What affiliates want
At the top of affiliates’ wish list are offers not widely available elsewhere, because those are the offers that will produce clicks and purchases. “The least useful promotions are ones that offer no real value to our members,” says David Lewis, CEO of deal-finder site Cashbaq, a member of the Commission Junction affiliate network. “Offers that are available on the store’s web site all the time shouldn’t be promoted as a hot deal.”
Top performers are seeking—and getting—special content to use, exclusive offers and coupons to put up, tools such as widgets, and even co-branded landing or product pages bearing their messaging on the merchant’s site. Some get summit meetings with individual merchants to plot strategy. On occasion, they get clearance to bid on the merchant’s trademarked terms in search engines, something merchants usually prohibit in order to control how their brand is presented and because consumers who type in a retailer’s name likely will find their way to the retailer’s site on their own.
Typically, that privilege supplements the retailer’s own ongoing paid search bidding, and it’s attached to conditions, such as setting bid ceilings to keep the price of trademarked keywords from getting too high, prohibiting the affiliate from bidding on particular search engines, or restricting bidding on trademarks to a limited time.
Why would a retailer let an affiliate bid on the retailer’s trademarked brand? “If an affiliate is doing a big paid search campaign, they may be bidding on hundreds of thousands of keywords and they’re losing money on some. By giving them the brand to bid on, merchants are giving them some high-converting terms to balance that off,” Collins says.
Affiliates and the economy
Merchants have come to view affiliates as a key online marketing channel. 79% of online retailers participate in affiliate marketing and 64% say they’ll place increased priority on affiliate marketing this year, according to a survey by Forrester Research Inc. In the same survey, online retailers reported that affiliate programs accounted for 7% of their new traffic, placing it third in effectiveness below search engine marketing and organic search, and above such tactics as banner ads and comparison shopping engines.
The merchants spent on average just over $700,000 annually on affiliate programs—the third-highest spend after portal deals and paid search. And they reported spending on average $12 to $24 per order in their affiliate marketing programs, making the tactic less expensive on average than all others except for new portal deals, search engine optimization and e-mail to the house list.
The weaker economy is encouraging some retailers to invest more heavily in their affiliate programs. “Affiliates are a higher percentage of our sales than in past years,” says Stacey Georgoulis, affiliate and partnership marketing manager at Petco Animal Supplies Inc., which uses the Commission Junction affiliate network. “This is most likely due to the current state of the economy, which has resulted in a high consumer demand for and interest in discounts, coupons, rewards and points programs, all of which are big drivers in our affiliate marketing initiatives.”
Other marketers are also putting more emphasis on affiliates, says Kerri Pollard, general manager of Commission Junction. “Commission Junction is seeing a greater investment from marketers in their affiliate channels, evidenced by increased affiliate commissions and more consumer promotions. We believe these investment dollars are being diverted from other, less cost-effective and less measureable channels,” she says.
Collins notes that it isn’t the first time affiliate marketing has survived—thrived, in fact—in a down economy. Collins says online marketers turned increasingly to affiliate marketing in the downturn of the early 2000’s because spending was based on performance rather than impressions. “At the time, companies were folding but I didn’t see many affiliate managers being laid off,” he says. “And so far today, I’m not aware of any cutbacks or layoffs in any affiliate marketing programs, or programs being affected in any other way.”
Exclusive club
While any affiliate that produces traffic and sales earns commission and other rewards, it’s generally a small minority that performs well enough to gain access to exclusive incentives and tools.
At Petco, for example, the affiliate program that includes about 1,500 publisher sites generates about 20% of the online retailer’s traffic and sales. But 85% of the results come from 2% of the affiliates, and it’s those highly productive partners that get most of the retailer’s attention. “The time we spend with top affiliates is in direct proportion to the amount of revenue they’re producing,” Georgoulis says.
Ice.com late last year launched a new feature so far available to a few dozen top affiliates that lets the online jewelry retailer easily incorporate affiliate-specific messaging on pages on both Ice.com and sister site Diamond.com, both participants in LinkShare Corp.’s affiliate network. This ranges from a simple welcome message—“Welcome, (affiliate’s name) shoppers,” for instance—to placing the affiliate’s logo on a page or even co-branding a product page with an affiliate.
Only three or four affiliates have been given custom, co-branded product pages at Ice.com and Diamond.com, says Paresh Vadavia, affiliate program manager for the e-retailer. Some 15 to 50 have pages with the affiliate’s name welcoming consumers clicking through from their sites, and about 10 have their logos displayed on the merchant’s page when consumers click through from the affiliate site.
“With a lot of retailers, that affiliate messaging is not there,” Vadavia adds. “It solidifies the relationship and reassures shoppers they’re still shopping with the affiliate.”
Another way to take advantage of the shopper’s relationship with an affiliate is to move the entire buying experience to the affiliate site. Instead of just displaying a banner ad for martini glasses from Swank Martini Co., affiliate Whattodrink.com displays the products for sale and lets the shopper make the purchase on its site. That makes for a faster purchase than clicking on a banner ad and going to the Swank Martini site
The purchase on Whattodrink.com,
which does not have its own e-commerce functionality, is made possible by a data feed from Swank Martini and the KB store creator application from Kowabunga, a provider of software and services for managing affiliate and other performance-based online ad programs. The application credits Swank Martini for the sale and Whattodrink.com for the commission. Conversion rates on affiliate sites that use the KB store creator are 5% to 20% higher than simple banner promotions, depending on the type of affiliate site involved, the quality of its creative resources and other factors, says John Vehlewald, division director at Kowabunga.
Tracking sales
With top-producing affiliates pushing thousands of dollars in sales to merchant partners each week, it’s critical that merchants be able to track what’s coming in from which affiliates to ensure that credit goes where credit is due. Retailers also want to identify where volume is dropping off as well as up-and-coming affiliates who may merit their increased attention.
Vehlewald of Kowabunga says affiliate network platforms differ in their ability to provide highly detailed information about affiliate performance that can be important in helping a merchant distinguish between top performers and also-rans.
For example, a merchant may see that an affiliate is driving a lot of sales because it earns a large commission check each month. But the merchant also needs to identify which sales come from customers that had come to the merchant’s site through its own paid search efforts and then hopped over to an affiliate site to get a discount. Without that information, the merchant could be paying twice for that sale, once through its paid search campaign and a second time in the form of a commission to the affiliate.
“Transparency becomes a huge issue,” he says. “It must be accurately tracked to help merchants make better decisions about their ad spending.”
Another task facing merchants is to recruit affiliates that can show the potential of growing into top producers. Affiliate networks can supply merchants with reports on the performance of affiliates in their networks, making the network the first place the merchant can look for new affiliate relationships to cultivate.
In addition, affiliate networks often have information about some affiliate sites not in their networks from discussions with those affiliates or research, says Pollard of Commission Junction. For a fee, Commission Junction also will recruit prospects and run reports to identify out-of-network affiliates that fit a particular merchant’s profile. Web measurement services such as comScore Inc. also can provide merchants with information to help evaluate affiliates, Pollard adds.
Relationships rule
Though the affiliate space has evolved rapidly, one feature of the best-producing affiliates has stayed the same—their success rests in large part on building key relationships with a select group of merchants. And the most successful merchants have done the same with top-performing affiliates.
A good relationship may even trump the size of the revenue share a merchant offers when it comes to winning the loyalty of a top affiliate, says Vadavia of Ice.com.
While offering incentives such as customized content, exclusive discounts on products and higher commissions for its top producers, Vadavia says, “The most important thing affiliates are looking for is what relationship they have with you. If they are making $10 from us and $15 from the next merchant, they may not go with that merchant because they have a good strong relationship with us and they are happy with us.”
Pollard estimates that about 40% of Commission Junction’s merchants provide special offers and promotions to top affiliates, and she says such offers do more than move the needle on sales. Rewards such as higher commission rates and exclusive offers also serve to strengthen the relationship, she says. “Often affiliates feel like they are not considered part of the team even if they are driving significant revenues,” she says. “The recognition that the merchant sees them and realizes what a great job they’re doing helps.”
That type of recognition is essential to maintaining relationships with top affiliates, according to Pollard. “Merchants don’t treat all customers alike,” she says. “They shouldn’t treat all affiliates alike, either.”
mary@verticalwebmedia.com
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