Retailers shift their ad spending from TV, radio and print ads to digital ads.
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Once retailers launch a program, qualify affiliates, set up commission rates and create a payout system, yet another set of issues creeps up the to-do list. Increasing sales is good for both retailer and affiliate, but many affiliates have neither the knowledge nor the resources to sharpen up on page marketing-beyond simply putting up a link. To boost sales, online office supply merchant Staples.com groups its 30,000 affiliates into categories based on performance. Working with performance marketing services provider BeFree, it offers different support strategies for each.
“We implement very aggressive direct marketing programs to change affiliate behavior,” says Kelly Mahoney, chief marketing officer at Staples.com. “If we have a series of sites that aren’t activating [read: driving sales], we look for the incentives that will not only help them load the links, but we also try to create a sales engine that supports staples.com business. We’ve leveraged our relationship with BeFree for ideas to activate a percentage of the Web sites that have signed up for the program but aren’t generating sales.”
To boost affiliate sales, Staples.com recently began paying bonuses on top of commissions. The rates start at 4% for affiliates generating quarterly sales of up to $150,000 and rise to 10% for those hitting $1 million per quarter. Top-performers get perqs to help them sell, such as special communications and early notice about promotions.
Affiliates needing help to sell more aggressively can access a sales “tool kit,” a proprietary site with tips on how to place offers on the site, drive traffic, post links and more. As a result, staples.com’s year-old affiliate program added 12,000 members in the first quarter alone. And though Mahoney won’t say how much, she claims “significant increases” in the number of activated sites, revenue-producing sites, and revenue itself.
What’s clear is that winning programs are moving away from the one-size-fits-all approach that has worked for book and commodity sellers like Amazon and toward customized models. For Mahoney and many other online sellers, that’s the key lesson learned about pay-for-performance marketing over the past year. “The affiliate channel can generate enthusiasm among shoppers with special promotions and activities,” she says. “We’ve seen there are specific barriers with the affiliates in terms of loading links, hosting promotions and driving sales. But we’ve also seen that the more you look at your affiliate programs by segment-type of affiliate, age, technological capacity-and drive promotions that reflect their issues, the more success you’ll have.”
When it comes to selling on the Web, a book is a book-price points aside. If commodity goods with broad appeal are your stock-in-trade, conventional wisdom says to cast your net wide when signing up affiliates. But for e-retailers selling more specialized goods, the shotgun approach frequently misses the target. The burgeoning interest in affiliate marketing has given rise to vendors specializing in the area. They include:
- BeFree, a hosted affiliate marketing program, takes a merchant-branded approach. It boasts more than 165 Web merchant clients linked to 1.6 million affiliates. Among its services, BeFree’s hosted site can be customized to suit a merchant’s look. Tracking and handling payments behind the scenes, it is largely invisible to affiliates visiting the customized site to pick up links or check out sales and commissions.
- Commission Junction manages a network of more than 150 Web merchants linked to more than 200,000 affiliates representing some 45,000 content sites. Under the model, Web sites imbed retailer images directly into their content. Commission Junction also tracks sales and affiliate commissions.
- Dynamic Trade’s suite of marketing programs is wrapped around proprietary technology that tracks, reports and updates affiliate performance. The company also specializes in merchant-to-merchant cross marketing and e-mail marketing.
- LinkShare hosts the LinkShare Network, an Internet marketplace in which some 400 Web merchants can tap tens of thousands of affiliate member sites. LinkShare provides tools and technology to support performance-based agreements from concept to tracking sales and commissions.Affiliate angst: FAQs
The Internet, it’s often observed, simply represents a new-though more interactive-channel for communicating and doing business. In that vein, some observers compare affiliate marketing to retail’s familiar hub-and-spoke networks, with affiliates acting as distributors. Whether new or reinvented for the Web, affiliate marketing is raising questions, including:
Is performance marketing the end of CPM-based advertising?
No, because they address different needs, says Joel Gehman, a consultant at Infonautics, an e-business and consumer research company based in Wayne, Pa. “If I want to solve for the traditional metric of frequency and reach, I still need CPM advertising. I use performance-based marketing if I want to solve for cost per unit-say a lead or a sale.”
Which links drive the best sales?
Text, section and image links have different uses. The better the context match, the greater the chances of conversion. Some of the most sophisticated marketing calls for imbedding a text link deep within a site’s content. Even then, experts favor certain locations. “If marketers are really smart, they’ll put the link at the top or the bottom of the article,” says consultant Declan Dunn. “Like any print media, people tend to read the headline and the bottom of an article.” Some affiliate sites are too image-heavy, he adds. “Even on major-league sites, people ignore the pictures and search for the comfort zone called the blue text link because they know what that does.”