Private equity firm Apollo Global Management will take Rackspace private in the all-cash deal.
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Others have found success with a different approach. Rist has gone after dormant affiliates who registered for a program but never took any further action by offering them something extra. For an affiliate program he managed in a previous position with an audio equipment manufacturer and marketer, for example, Rist says he generated an incremental $400,000 out of registered affiliates that had never put up a link to the marketer’s site by offering them a higher share of revenue to participate through the holidays, a peak sales time.
“You don’t ever want to leave rocks unturned,” he says. “But you don’t what to put a huge amount of effort into it, either.”
The rules for optimizing an affiliate program can change as it matures, and veteran affiliate marketers say this is where working to cement relationships with those who’ve emerged as top producers, rather than simply maximizing program sign-ups, gets important. One way Jos. A. Bank Clothiers Inc. keeps driving results from its 7-year-old affiliate marketing program with DoubleClick Performics is to give top-producing affiliates special commission incentives to secure prime placement of links and offers on those affiliate publisher sites.
Jos. A. Bank also gives top producers access to more detailed information on upcoming events and offers. The strategies have helped grow affiliate sales on JosBank.com by an average of 40% a year since 2001, the retailer says. “We wanted an affiliate marketing program that would engage consumers, expand our online presence and drive long-term growth,” says Pete Zophy, divisional vice president of e-commerce.
Consultant Collins says selectively offering incentives such as a higher commission or special deals or tools to work with is a good way to lure better producers. Some retailers, for example, will lift their ban on search engine trademark bidding for a small number of chosen affiliates.
“They don’t want affiliates that are simply going to bid on the terms, but there are some affiliates that will do a whole campaign around it,” Collins says. “These affiliates are taking a money risk with a search campaign, and they are doing a lot of hands-on work. The idea is this incents an affiliate to do some of the work on a campaign for you.”
At Drs. Foster & Smith’s 1-year-old affiliate program with network provider LinkShare Corp.-the e-retailer’s first foray into affiliate marketing-the emphasis so far has been on growing the program. To date, Gordon Magee, Internet marketing and analysis manager, has had little concern about vetting or limiting what’s already developed into a program with about 1,800 affiliates. “Part of the value of having a partner like LinkShare is that they screen affiliates for you,” he says.
While he doesn’t rule out special incentives for special affiliates, the program has done little of that so far. “It’s been more about getting our name out in the marketplace and developing relationships with affiliates,” he explains.
Magee also believes that short of any special incentives, affiliates already benefit from the site’s high conversion rate, which he describes as “well into the double digits. We don’t think of affiliate marketing as a one-way street, where we keep offering things to get positioning. We believe there is genuine value for the affiliate simply because our conversion rate is high,” he says.
Where special incentives may most likely come into play for the pet products retailer in the future is with a particular category of affiliates: loyalty sites that offer shoppers something retailers can’t offer themselves. The college savings program at UPromise.com provides one example of that model.
“For us, affiliate marketing has really been a customer acquisition approach. But over time, companies whose brand name is reasonably well-known will have less need for affiliates to get them new customers,” Magee says. “Yet shoppers go to those loyalty sites regularly, and if you’re not there, you won’t get their purchases.”
In settling on the right size and incentives for their affiliate program, experts say marketers should consider the type as well as the number of affiliates. Whether the sites are loyalty and rewards sites, search specialists, community and content sites, or any other type of affiliate publisher, Henger says marketers need to understand an affiliate site’s business model and how it generates traffic to decide whether it’s a fit.
“If you’re a marketer that appeals to all of those types of sites, you are probably going to have more affiliates in your program than someone who says, for instance, that they don’t want a lot of search specialists because they have their own strong search engine optimization program,” he says.
Another factor in calculating an affiliate’s value to a marketer’s program is whether key competitors are linked on that affiliate’s site.
As both affiliates and marketers get more sophisticated, new metrics for quantifying affiliate value are emerging; for instance, lifetime value metrics on the type of consumer an affiliate delivers. But whatever the depth and detail of that assessment, one rule of affiliate program management remains the same: the top-producing affiliates-by whatever valid measure a retailer employs-should get most of the retailer’s attention.
“That’s the single most important thing in growing an affiliate program, even beyond incentives,” Henger says. “Figure out who your top producers are, and then give them your energy.”