Affiliate attribution is one of the hottest and most controversial topics in the performance marketing industry today, and many Internet retailers are trying to figure out the best approach.

Not only is it a consideration for the affiliate channel, but it’s becoming an even bigger factor as more companies move toward omni-channel.

The question remains: how do you fairly compensate affiliates for their involvement with your customer based on the touch-points they’ve had during the purchase path?

How Attribution Works

An attribution model allows Internet retailers to track the different ads or “touch points” that result in a sale or other defined action taken by a consumer, giving credit to each touch point that contributed to that conversion. This can include different marketing channels or programs in-house, as well as affiliates that have interactions with that consumer leading up to the sale. Traditionally in affiliate marketing, the sale is credited to the last click prior to the conversion.

While it’s a hot topic, according to a recent Econsultancy study on marketing attribution, only 54% of businesses carry out any form of attribution; but, of those who do, 89% say attribution had a positive impact on their business, with 29% saying the impact was major.

Mobile is one of the main drivers behind Internet retailers wanting to have a better understanding of the customer journey, as consumers are using mobile devices to read online product reviews and price comparisons in brick-and-mortar stores (showrooming).

What Does This Mean For Affiliates?

Well, it depends on who you ask. Some affiliates like that Internet retailers are moving toward affiliate attribution, as the last-click-wins model is often limiting.

Affiliates involved early on in the sales funnel, such as content marketing or review sites, may be especially interested in this approach. While a blogger or review site may educate and influence the consumer or even change the consumer’s purchase decision entirely — they receive no credit or compensation if the consumer clicks through a subsequent affiliate link or ad with the last-click-wins affiliate attribution model.

Other affiliates are not pleased if they’ve built their entire business around being in the right place at the right time in affiliate marketing. Coupon websites often get miscategorized as right place/right time affiliates; however, I disagree. While there are plenty of websites advertising coupons on the Web, there are well-established coupon sites that have a large following and influence that help bring the customer across the finish line.

Affiliate attribution helps complete the picture so you have a better understanding of the true value affiliates bring to your affiliate program while exposing those that are merely opportunistic marketers.

Figuring Out Affiliate Attribution

Wondering if your organization is ready to roll out an affiliate attribution model? There is not a one-size-fits-all attribution model that works for affiliate marketing; so, it’s important to understand what all is involved. Here are a few things to consider when thinking about affiliate attribution:

1) Understand the technical requirements. The first thing you need to determine is whether or not it is technically feasible to implement an affiliate attribution model. Does your affiliate network have the capability to support affiliate attribution models to payout commission? Do you have the technical resources available to implement?

2) Understand your existing data. Most companies have the data, but lack the analysts to make sense of it all. Data is virtually worthless unless you can analyze and understand what it is saying about your affiliate program. Have you done a deep-dive into your analytics and weblogs? Do you understand how your customers are finding you?

3) Get all stakeholders involved. Redefining or implementing a new affiliate attribution model can quickly turn into a land-grab, or worse, a political battle, if the context and expectations are not-well defined and communicated. Be sure to get all stakeholders involved early. Having their buy-in will set the tone that this is a cross-functional business discussion that requires input from everyone that has revenue responsibilities in marketing.

Implementing An Affiliate Attribution Model

Implementing a new affiliate attribution model can be a significant change within a marketing organization and for those affiliate partners working hard to promote and advertise your brand. It is important to understand the implications and have clear communication, both internally and externally, with those that may be impacted.

Affiliate attribution should not be a strategy to pay less commission to your affiliates; it should be a means to pay affiliates that have more influence with consumers a higher margin for delivering more value within your affiliate program.

Big data is making it easier for marketers to understand each interaction a consumer has with your brand leading up to the sale. With Internet retailers needing to better understand their customer to justify marketing spend and increase their return on ad spend, 2013 could be the year of affiliate attribution.

Yes, and here’s why. For affiliates, once they’re approved for a program, there’s a lot of information they need to curate in order to set up a new merchant on their website. And, depending on the type of affiliate, there can be quite a bit of work involved. That said, many merchants have still been slow to make necessary marketing materials and other resources available to affiliate partners.

Some merchants are concerned about having resources publicly available to affiliates on the website, which is understandable given the risk of savvy competitors being able to access certain product information. However, there are ways to ensure only authorized affiliate partners are accessing the information by hosting the assets behind a secure login, either on your website’s affiliate portal, or making resources available through the affiliate network.

What Affiliates Want But May Not Be Asking You For

Creating a repository of marketing materials and relevant resources for affiliates can be a means of creating sustainable growth in your affiliate program. These should include:

• Content: Approved copy to be used in merchant and product descriptions
• Brand Guide: Guidelines that clearly defines how affiliates can advertise your brand and products on their website, logo usage, brand colors, fonts, etc.
• Marketing Collateral: Sell sheets or marketing collateral for top selling products or categories, with competitive differentiators
• Creative: Optimized banners, email templates, and other assets that are approved for affiliate use
• Program Updates: Ensure affiliates can easily find information around current promotions, contests, and other relevant information program information
• Automation Tools: Widgets, APIs or data feeds that will help affiliates ensure they’re advertising the latest products and offers on their website

Making these resources available to new affiliates can make it easier for them to add you to their website — and, in some instances, give you priority as a new merchant. For your existing affiliate partners, having access to resources will ensure they’re always promoting the current offers and products.

The Business Case: A Means To Drive Sustained Growth In Your Affiliate Program

Because each affiliate program is uniquely different, it’s always a good idea to start a dialogue with different affiliate partners to figure out what they find most valuable. Try to get feedback from different types of affiliates you’re working with.

While input from your active affiliates is important, also take into consideration affiliates that are not active. Maybe there’s something they need from you to start promoting your program, but haven’t had an opportunity contact you about it. You never know, you could find yourself with an opportunity to activate a new affiliate partner in your program.

When I asked the team at Offers.com about the resources they find most valuable, Paul Snyder shared: “Information about top selling products or categories and top converting offers are all very helpful. If there are a limited number of products or they are fairly complicated, a one-pager explaining the features and benefits helps our editorial team when they are preparing content.”

So. when setting up a program that makes sense. But, is there any value in having these resources available to existing affiliates that are already in the program? According to the team at Offers.com, the answer is yes: “While the main time we need that information is during setup, we like to make a pass every quarter or so when looking for optimization opportunities with merchants we’re working with.”

Empowering Your Affiliates Is A Good Thing

While I try to avoid clichés, when it comes to affiliate marketing, “knowledge is power.” Making resources available to affiliate partners so they can more effectively advertise your products and offerings makes sense. If you don’t, you may see some traction with affiliates, but it will be more difficult to sustain growth and incremental revenue in your program.

While there may be concerns about making too much information available, if your affiliate program is well managed, you can minimize the risk of product materials or other information ending up in the hands of snooping competitors. Making these resources available to partners shows affiliates you are committed to them being more successful and providing them the tools to make more money, making the reward much greater than any perceived risk.

Without searching too hard, you can find hundreds of different affiliate networks on the Web with new ones popping up daily. CPA (cost-per-acquisition), CPL (cost-per-lead), CPS (cost-per-sale), CPC (cost-per-click), CPM (cost-per-1k impressions) — it all can become very confusing quite quickly. 

At the end of the day, you just want to know:

1.  What affiliate network is best for my business?

2.  What types of affiliates are most successful in the affiliate network?

3.  Which affiliate network will help me acquire the most new customers?

Figuring out answers to these questions isn’t as daunting as searching through the ~16,100,000 results Google returns for Affiliate Networks.

Having helped customers evaluate and choose new affiliate networks, I thought it would be helpful to highlight a few simple questions that will help you better evaluate and find the best affiliate network for your business.

Questions That Will Help You Choose

Below are five questions that should help you determine the best affiliate solution for your business.

1.  What types of merchants find the most value in your affiliate network?

Ask for a list of merchants similar to yours and why they are successful in the network. While you may not want to run on the same affiliate network as your biggest competitors, there is value in knowing what categories of merchants perform best in the network. If you’re a technology company, you may want to think about how well your program will perform in a network specializing in health & beauty.

2.  What affiliate models are most prominent in your affiliate network?

Ask about the types of offers that resonate best with affiliates in the network. This question will help you figure out the pay-for-performance model that gets affiliates excited in that network. If you’re looking for an affiliate network that will serve as a platform to grow e-commerce sales, be absolutely certain that the network is e-commerce centric with affiliates that like rev-share splits on a Cost Per Sale basis.

3.  What types of affiliates are most successful in your affiliate network?

Identifying what types of affiliates are most successful in the affiliate network and their marketing methods is very important. If you do not allow affiliates to do pay-per-click (PPC) or promote your products using coupon codes, a network with heavy hitting coupon and search marketing affiliates is probably not worth much of your time.

The affiliate network should be able to provide you a breakdown of split percentages of the different affiliate types in the network. If they can provide you this information, be sure to clarify whether or not this is “active” affiliates or a measure of their overall affiliate base.

4.  What measures does the affiliate network take to minimize fraud?

Unfortunately, affiliate fraud is something that continues to be at the forefront of the performance marketing industry. While larger brands tend to be the target for fraudsters, small and medium-sized merchants can quickly find themselves in the cross-hairs of the “bad guys.” Ask how the affiliate network monitors fraud as well as their policy and process for dealing with fraudsters in the network.

5.  What type of support should I expect working with your affiliate network?

Once the ink dries on the contract, what sort of customer experience are you in for with that affiliate network? Ask for a list of merchants that you can speak with that are similar to your business in terms of affiliate revenue or projected affiliate revenue.

Most important is that you speak with merchants that have the same service level agreement (SLA) with the network as you’re considering or lower. If you have an affiliate management agency or are signing up for a lower-tier SLA to manage your program in-house, speaking with a merchant that has a network-managed or top-tier SLA may not be relevant or as helpful.

Choosing A Network & Moving Forward

Creating a matrix to evaluate different affiliate networks is probably most effective. Your matrix should information around the questions above as well as other factors that will influence your decision, such as: upfront cost, contract term, monthly network fees, etc.

Quantifying each of the items in your matrix with a weighted value will make the selection process more efficient by making sure everyone involved in the decision process is on the same page.

Once you’ve selected an affiliate network to handle the tracking, reporting, and commission payment of your affiliates — it’s time to think about who’s going to be managing your affiliate program.

As previously mentioned, affiliate networks sometimes offer managed services for an additional fee. Some merchants find that retaining an affiliate management agency is a better option. At the end of the day, you need to find the best affiliate network and affiliate management solution that fits the needs of your business.

Image via Shutterstock

If you’re managing your affiliate program in-house and you don’t have much affiliate management experience, you may find yourself in a “first date” situation with your affiliate partners. Like any first date, things can get awkward if you misstep or don’t know how to interact with your affiliate partners.

If your company has retained an Affiliate Management Agency, you can let the agency take the lead to ensure you’re getting started on the right foot and doing things the right way. Regardless of your affiliate situation, I wanted to share some ideas around how you can improve your affiliate relations in 2013.

1. Understand An Affiliate’s Preferred Communication Method & Availability

Many times your affiliates may have a day job or other responsibilities that they need to attend to during the day when they are not available to take a phone call or exchange emails.

While your goal as an affiliate manager should be to help your affiliates earn enough commission to allow them to be a full-time affiliate marketer, you also need to recognize and understand their current situation and communication preferences.

If your affiliate has a 9 to 5 job, understand that they’re likely easier to communicate with via email, and their response is likely going to come late at night or early in the morning. It’s important to respect their communication preferences and the best time(s) to reach them. If you can’t figure it out by how and when they respond to your correspondences, just ask.

2. Listen To Your Affiliates, Understand Their Needs & Bring New Ideas To The Table

Have you ever found yourself in a situation with a sales person where they have not asked any questions about what you need and clearly have no clue about what you want? I have, and so have many affiliates working with affiliate managers. As an affiliate manager, sometimes the best thing you can do is research an affiliate’s website, ask relevant questions, and listen to what your affiliate has to say.

Once you have an understanding of what your affiliates need, then you can present ideas and opportunities for them to become more successful in your affiliate program. If you have a meeting with one of your affiliates and don’t have a clue about their website or how they promote advertisers, you’re better off rescheduling the meeting after you have the opportunity to do your homework.

3. Ask Your Affiliates For Constructive Criticism & Feedback On Ways You Can Improve Your Program

While it may be difficult to ask and humbling to hear the answer, asking your affiliates about ways you can improve your affiliate marketing program could be the best solicited advice you can ask for — whether you like it or not. This is probably best accomplished by asking questions via email or by creating a spreadsheet that has a scale where affiliates can rate various aspects of your program.

You can keep it simple or allow affiliates to provide free-form feedback — your choice. Be sure to thank affiliates if they personally submit feedback. If it is anonymous, send out a communication summarizing the results and action items you plan on implementing as a result of their input.

Of course, what you do with the information your affiliates provide is most important and will show your affiliates how much you value their opinion.

4. Provide The Resources To Help Your Affiliates Become More Successful

Making useful resources available to your affiliate partners can be easier than you think. You don’t need to create a separate affiliate microsite to make these resources available, either. Walk down to your marketing department and ask them for any collateral or product marketing materials they have sitting around.

If they have it electronically you can easily send this out to affiliates. If it’s hardcopy, figure out the best way to scan it and convert to a PDF. Making these types of marketing materials available to affiliates will help them understand your products, brand, and target audience.

If there are any concerns around confidentiality, update your affiliate program Ts & Cs to include language about privacy and/or mutual non-disclosure.

5. Personality Can Go A Long Way In Affiliate Management

One thing I’ve learned in business that holds true in affiliate marketing is that people like to know there’s an actual person behind the email and at the other end of the phone. That means be yourself and let your personality show.

Being professional and understanding the core business of your affiliates is absolutely critical to being a successful affiliate manager, but it’s your personality that will make you memorable.

There are many things that go into building strong relationships in business — but at the heart is being able to effectively communicate and create solutions to complex challenges. Affiliate management is no different.

The most successful affiliate managers know that the key to success is having great relationships with your affiliate partners and doing things the right way consistently. At the end of the day, if you help your affiliate partners become more successful in the program, they will help you be a more successful affiliate manager.

Having a game plan for both channels will ensure partners are participating in the program best suited for their business while minimizing cannibalization and channel conflict.

To create an effective multi-channel marketing strategy, it’s important to have well-defined channel partner programs so you can evaluate prospective partners efficiently and on-board them in the appropriate partner program.

Defining Affiliates & Reseller Programs

Defining your affiliate and reseller program is the first step in creating a multi-channel strategy. By “defining” the program, I’m referring to having criteria and requirements for each partner program and ultimately figuring out who’s an affiliate partner vs. who’s a reseller partner.  To do this effectively, you need to understand each channel’s business model and how they add value.

Affiliate Program

Many times, affiliates are going to be a lower-cost partnerships because of the pay-for-performance and scaleable nature of the channel. Think of affiliate partners as your virtual sales force advertising products on their website, blog, and social network, referring customers to the merchant to complete the actual transaction and earning a commission for referring the customer. They are not processing actual transactions on their website, but referring the consumer to the merchant to complete the purchase.

Some affiliates, such as loyalty and cash back, may have their own members that they bring to the table — people that joined the loyalty program for cash back or other incentivized rewards. Most affiliates will drive traffic through a variety of different methods including search engine marketing/paid search; social media campaigns; newsletters and email; mobile; or by ranking organically for keywords of the products they are advertising. What is most important is that your affiliate program has clearly defined guidelines on acceptable marketing methods that affiliates must agree to when joining the affiliate program.

On the legal end of things, affiliate partnerships are typically managed contractually with a simple click-through agreement that affiliates “sign” electronically when they apply to the program. While some affiliate networks will have standard terms that affiliates  need to agree to, merchants within the network may also have special terms and conditions that affiliates must agree to that could include paid search guidelines, branding requirements and types of affiliates allowed into the program.

Reseller Program

Resellers are just that — reselling products that they purchase from the manufacturer at a discounted rate. They both resell and take care of product fulfillment. While affiliates are primarily a new customer-acquisition channel, resellers bring a blend of new customers to the table, but also maintain their own customer lists and may provide value-add services post-transaction. Resellers will often have a storefront e-commerce website that their customers can purchase through, or they may have sales people in the field that are responsible for managing geographical territories or specific customers.

As such, resellers may be more involved in the actual sales process and may offer exclusive product bundles.

Marketing methods of resellers vary greatly depending on the size of the reseller and how established their business is. While smaller resellers that do not have strong brand recognition may run paid search and social campaigns around specific products, larger resellers may leverage their brand strength in their marketing campaigns as well. Larger resellers may also be up-selling their existing customers with value-add services, such as implementation and integration services, training, and offering support.

Contractually, reseller agreements tend to be much more complex. While companies may have thousands of affiliates in their affiliate program, they may only have a handful of resellers, each having unique and complex terms associated with their contract. Contracts may include exclusivity to specific geographic regions, products, or value-add services the reseller provides.

Evaluating Affiliates & Resellers

While creating affiliate and reseller partner programs may be a daunting task, if you’ve done a good job defining each partner program, the actual vetting process to figure out “who-goes-where” should be relatively simple.

While resellers may have previously been considered to be more “established” businesses than affiliates, this no longer holds true. Some of the largest affiliates on the Web employ hundreds of people to run the business and can be part of larger media conglomerates. As such, it’s best to simplify the process of identifying which partner program is appropriate by asking a few simple questions of each partner and their business model

1.  Will this partner be processing the actual transaction and managing fulfillment?

For the most part, affiliates are not going to be processing transactions and managing fulfillment onsite. Affiliates will refer the customer to the merchant to handle the actual transaction, while resellers likely have a point-of-sale system or e-commerce storefront so customers can purchase the product directly from them. There are exceptions to this where a reseller prefers to act as more of an affiliate by purchasing through their affiliate link instead of purchasing and managing inventory; but in most cases, these “resellers” are better managed as an affiliate

2.  Who “owns” the customer information for the customer the partner refers?

Resellers are typically more interested in owning the customer data once the transaction occurs. There are instances where affiliates, particularly cash back or loyalty websites, will require the consumer to register and create a user account, but that is to ensure they receive their cash back or rewards for purchases completed through the affiliate site.

3.  How is the partner going to be promoting and advertising your products?

Resellers typically have an established customer base that they’ll be selling your products into, while affiliates will aggressively advertise your products through different promotional methods. As such, resellers tend to do more relationship selling than affiliates, which are relying on Web traffic volume.

4.  Are there any value-add services that the partner will provide before, during, or after the transaction occurs?

When resellers are capable of offering services like first-line customer support, installation and implementation services, they become value-add resellers and truly differentiate themselves from affiliate partners. Whether or not the partner has these capabilities should weigh heavily in determining which partner program is best for their business and yours.

Multi-Channel Marketing Strategies

Not sure where to start or what the best multi-channel marketing strategy is for your business? Start small. Test different strategies that enable you to measure the overall effectiveness of affiliates and resellers.

1. Segment the products that are available to partners in each channel

If you have a broad product catalog that is easily categorized, this is a great multi-channel strategy. B2B or enterprise-type products that have longer sales cycles or are complex products will be better sold through resellers, as they can offer more support throughout the sales process than affiliate partners can. Transactional consumer products that require little to no pre-selling will likely be more cost-effective when sold through the affiliate channel.

2. Create Tiered Partner Programs

Instead of just having an affiliate program and a reseller program, create tiers within each channel partner program that have special perks and incentives for your partners.

On the affiliate side, you can have an affiliate program that is available to anyone interested in applying. But you can also easily create a private “invite-only” affiliate program that has perks like: increased commission, approval to do paid search on branded keywords, and early access to deals or new product releases.

The same concept holds true with resellers. Create different tiers (Silver, Gold, Platinum, etc.) that offer benefits and perks to resellers when these statuses are attained. These tiers can be based on overall sales volume, number of customer support inquiries attributed to the reseller, or other profitability metrics that incentivize your resellers to become better partners and add more value to your business.

3. Test promotions and offers by channel

Try running different promotions by channel and see what types of offers perform best. For affiliates, this could be simple coupons or allowing them to promote refurbished or “open box” items. For resellers, you may test different product bundles and cross-promotions.

Image via Shutterstock. Used with permission. 

While it may take a little more doing to get your affiliate program planning done during the peak shopping season, it can also be the best time to do so because of the increase in performance and affiliate activity in Q4.

Increased revenue means higher visibility within your organization, making it easier to be top-of-mind with those approving budgets for next year. Increased affiliate activity means that any inefficiencies in your affiliate marketing program are likely a significant pain-point for you at the moment, and will inspire innovation and improvement.

I wanted to share a simple to-do list that will help you get started in thinking about ways to improve your affiliate program in 2013.

1.  Create Your 2013 Affiliate Marketing Plan

An affiliate marketing plan is one of the most valuable documents you can create for your affiliate program, yet many affiliate managers do not take the time to create such a document. Your affiliate marketing plan should serve as a month-by-month blueprint for the year.

Some of the best affiliate marketing plans I’ve seen include: promotional calendar, affiliate communication strategy, affiliate incentives, scheduled product releases, creative refresh timelines, and other items critical to managing your affiliate program efficiently.

A couple of things to keep in mind when you’re creating an affiliate marketing plan. First, it shouldn’t be a how-to-guide for your boss; it should serve as your own strategy guide. Keep it at a 30,000 to 50,000 foot view.

Second, your affiliate marketing plan will likely change at some point during the year, and that is ok. Different initiatives will take priority during the year; being able to pivot your affiliate marketing plan is just as important as creating it.

Last, if sitting down and writing a 12-month affiliate program just isn’t feasible — start with the first half of the year or even quarterly.  The best affiliate managers are reviewing and revising their plan every three to six months to ensure it aligns with current priorities.

 2.  Create A Professional Development Plan With Your Personal Goals For The Year

Now that you’ve created a plan for your affiliate program, invest the time to create one for yourself. Creating a professional development plan each year helps you set your own personal goals and be accountable.

These can include developing a certain skill-set that will advance your career, or revenue goals that you hope to achieve through the affiliate program that year. It can also include something outside of the office, such as getting involved with an industry association.

What’s most important in creating a professional development plan is that the tasks listed on it should help you achieve a desired goal, the tasks should be feasible/achievable, and you should share it with others to keep you accountable.

If your organization requires professional development plans, they already know how valuable they are. If not, it could be an interesting pitch to your boss as a strategy to bring your team together and grow professionally.

 3.  Create Or Update Your Affiliate Recruitment Pipeline

While Q4 is great for increasing affiliate revenue; historically, it tends to be horrible for recruiting new high-caliber affiliates. Many top affiliates will go on a merchant freeze in the months leading up to and into Q4 — until the peak holiday shopping season is over.

The reason some affiliates impose a merchant freeze is the same reason Internet retailers and e-commerce businesses impose a code freeze in Q4: you don’t want to introduce anything new that could have a potential negative effect on traffic, page indexing or revenue.

If you don’t have one already, create an affiliate recruitment pipeline. Each time you identify an affiliate that aligns with your brand and product offering, add them to your pipeline and track your progress. To keep things manageable, limit this to strategic affiliate partnership opportunities. This can all be done via spreadsheet; however, if your company uses a CRM system like Salesforce or Batchbook, you may be able to go that route and avoid duplication.

4.  Affiliate Program Clean Up

While Q4 might be a difficult time to recruit new affiliates into your program, it is a great time to step back and analyze your existing affiliate base and identify ways to refresh the program.

An affiliate program refresh can include: improving the categorization of your existing affiliates, deactivating inactive affiliates, and revisiting your approval criteria for affiliate approvals to align with current and upcoming marketing initiatives. If this is the first time you’ve done a program clean up, and you are hesitant about doing a program clean up in Q4, put together a plan for Q1.

• Categorize your affiliates: Creating and assigning categories to your affiliates is an easy way to improve the operational efficiency of your affiliate program. It also enables you to run sub-campaigns that target specific affiliate groups. Possible categories include affiliate type (coupon, paid search, loyalty, etc.) or sales performance (active, inactive, no sales in 3 months, etc.) In some cases, affiliates may belong to multiple groups, such as coupon and inactive.

• Deactivate inactive affiliates: Sometimes, there is a notion to recruit as many affiliates as possible into an affiliate program. When merchants focus on quantity of affiliates in the program rather than quality, they can quickly find themselves in trouble. Opening up your program to everyone can increase exposure to fraud and affect your program performance — which can include decreasing your overall conversion rate through the affiliate channel.

• Realign your affiliate approval criteria: It’s a good idea to review and assess your current affiliate approval criteria on a quarterly or semi-annual basis. As priorities shift, you need to make sure you’re recruiting and approving affiliates that align with your current marketing objectives.

5.  Identify The Resources You Need For Success In 2013

After creating your affiliate marketing plan, making a professional development plan, updating your affiliate pipeline, and getting your program ready for Q1, you may find that the work needing to be done exceeds the bandwidth of currently available resources. It might be time to hire someone or retain an affiliate management agency or OPM (outsourced program manager) to support your affiliate marketing initiatives.

Having multiple people managing the affiliate channel is common as the affiliate program grows, providing more revenue and more affiliates.

While you can hire and train a new employee, it may be more strategic to retain an affiliate management agency. Partnering with an affiliate agency is a turnkey option that will bring outside experience and industry expertise — reducing the time it takes to begin delivering results and having a positive impact in your affiliate program.

This year’s event was no exception, as I had the opportunity to spend time with industry veteran and overall nice guy Andrew Kardon from JoeShopping, who I’ve worked with for almost seven years.

Since I respect his expertise, I wanted to get his thoughts on recent changes in the industry, as well as learn how he evaluates merchant programs as an affiliate today.

Andrew, how did you get your start as an affiliate and how long have you been in the industry?

I’ve actually been in the industry for over 10 years. My business partner and I started long ago, because he wanted to get a website going that talked all about online shopping.

At the time, there were so many different ways to shop online: reverse auctions, comparison shopping sites, rebate sites, etc. Online security and payment options were brand new, so consumers were super skeptical about shopping online.

So we started a site called WebBuyingGuide.com that was heavily editorial in nature just talking about shopping safely online, as well as discussing the many different ways to shop. There was a small sidebar on the site about online coupon codes. That got some buzz, so we gave it a full page. That got even more buzz, so we ended up rebranding the entire site and turned it into a full-on affiliate site of coupons. We’ve been affiliates ever since.

There is a lot of emphasis on the financial rewards of this industry. What motivates you as a publisher to work with different advertisers?

In any business, making money is the main goal. When it’s your own company, certainly it’s an even more pressing motivation!

But beyond the almighty dollar, for me personally, I just love working in this industry. I love talking with different agencies, different affiliate managers, and in particular, different brands.

With social media playing a huge role in companies’ marketing plans these days, working on campaigns directly with big name merchants is a great motivator to me.

Even something as simple as having a conversation with Sierra Trading Post on Twitter (@sierratp) is just awesome. I’ve actually had a number of Twitter conversations with companies that led to follow-up emails, which, in turn, led to us doing various partnerships.

Affiliate marketing is a fluid industry that has experienced a lot of changes in the last 24 months. What are some of the most significant shifts you’ve seen since becoming an affiliate?

Hmm. Good question. I’m sure there’ll be 10 more changes before someone finishes reading this article.

Affiliates, for the most part, are at the extreme mercy of Google. Rank well and you’ll do well. But over the years, the regular SEO tactics no longer give you the same advantage they used to, since everyone’s using them. And more recently — thanks to Google’s Panda and Penguin updates — affiliates are getting hit harder than ever.

More competition and a tougher battle to climb the Google ranks makes for a real daily fight. On the flip side, while you are still seeing tons of fly-by-night affiliate sites popping up and disappearing quickly, you’re also seeing a lot of veteran affiliates sticking to their guns and stepping up on the quality content.

The biggest changes, again, have to be thanks to social media. Affiliates are trying to find ways to stick their links anywhere they can on Twitter, Facebook, and even Pinterest.

When researching merchants, what are the three things you evaluate before deciding to join an affiliate program?

Well for us, the first thing is whether they’ll even work with someone based in New York. If they’re someone we really want to work with, we’ll push like mad and offer to sign all sorts of papers and contracts to be able to work with the Affiliate Tax law.

We also look at the site itself. Is it nicely designed? Do they offer quality products? Is it a super scummy site that’s just trying to spam users? We only want to work with quality, reputable companies, so if something looks fishy, we won’t bother.

We also look at how many resources they offer to us. Not just the number and quality of banners and links available in an interface, but whether they have a main affiliate manager we can talk to regularly.

I’m more inclined to work with a smaller, mom-and-pop type shop than a huge merchant if it means I can get a really good relationship going with the affiliate manager. It means I have access to someone to discuss exclusive coupons and revenue increases, as well as other potential sponsorship opportunities. Relationships really are critical.

Why have you remained in affiliate marketing as long as you have?

What else am I going to do? But seriously, I’ve had many jobs in my life and like most affiliates, I can multi-task.

I come from an editorial background, so I love writing and can always do that on the side. Or do that as a main job and continue affiliate marketing on the side.

The beauty of the industry is that it’s so virtual, you can do it anywhere, anytime. It’s also a wonderfully fun and fascinating industry. Everyone loves to shop. Everyone knows major brands, so getting to work with them as mini-salesmen is just awesome.

The industry is evolving as quickly as the Internet is evolving, so the one thing you can safely say about affiliate marketing is that it’s never boring!

Thanks, Andrew, for sharing your insights with me and the readers of Marketing Land!

Early stage affiliate programs are often a new revenue stream contributing to ecommerce growth, a lead generation mechanism for your sales force, or a medium to increase new user signups and subscriptions — very exciting stuff that everybody in your company loves to hear about.

But what happens when your affiliate program has lost its “new car smell” and the proverbial honeymoon phase is over?  What initiatives and strategies encourage continuous growth in an established affiliate program that will enable you to build upon the foundation you’ve created?

Like A Fine Wine, An Affiliate Program Gets Better With Age

As your affiliate program grows and matures, finding incremental revenue opportunities becomes more challenging.

Sometimes a pivot in your affiliate strategy is needed to take your affiliate program to the next level. Early on it’s easy to focus on recruitment and filling the funnel of affiliates joining into the program.

Paid placements and other “spend-money-to-make-money” strategies offer great short-term revenue spikes that will improve overall program performance, but also present risk in the event they dry up or become less effective.

When affiliate sales growth begins to slow, being able to identify ways to increase profitability and decrease your program expenditures is an important factor in creating a sustainable affiliate program that continues to add value to the business.

Three Ways To Improve The ROI Of An Established Affiliate Program

Here’s a scenario; maybe it sounds familiar:

• Your affiliate program experienced dramatic growth in the first 18 months, contributing approximately 15% of your company’s ecommerce business.
• Sales growth is starting to slow down or even plateau.
• You’re working closely with affiliates and taking advantage of placements and other opportunities to gain exposure on their website, blog, social network, and newsletter.
• You have the right publishers in the program and maintain a balanced portfolio of affiliates.
• Your boss has tasked you with finding incremental growth opportunities and figuring out ways to improve the ROI of your affiliate program.

Here are a few ways to improve affiliate channel performance for your business, without alienating your current publishers in an established affiliate program.

A Commission Structure Refresh

When was the commission rate for your affiliate program initially set?  A better question yet: is your commission structure aligned with the current growth objectives of your organization?

Commission rates tend to be a component an affiliate program that is “set and forget”. Before launching the affiliate program, you review your profit margin by category and/or product line, do a quick competitive analysis on commission payout levels of your competition, and then choose your affiliate program commission rate.

Unless you’ve gone out of business, there have likely been new goals and objectives set to grow particular areas of the business.  This could be acquiring customers that fit into a particular category and profile or growing particular product categories that are most profitable. It is important to architect and refresh your commission payout structure so it supports current initiatives.

Most affiliate tracking platforms and networks have the capability of multiple commission payout levels based on products, product categories, or variable actions. Having different commission rates based on product categories is not a new concept, but as web analytics and business intelligence platforms improve, you can segment customers, begin creating customer profiles based on consumer behavior and base commission payouts accordingly.

This enables you to pay a higher commission rate for new vs. returning customers or for certain customer profiles if you know the lifetime value of the customer profile (i.e. how much they will spend on average with your company after that initial purchase).

If there is data that you can share publicly about customer profiles, your publishers will be better able to adjust and target their campaigns towards those consumers. The more insight you provide around monthly, quarterly, and annual goals increases the likelihood of your publishers being able to help you reach these objectives.

Cost-Effective Affiliate Platforms

There are many benefits of using a trusted affiliate network as the platform to launch and build your affiliate program. The most reputable affiliate networks serve as check/balance ensuring publishers are paid accurate commissions in a timely fashion for advertisers they work with.

Networks can also make it easier to work with affiliates you would not otherwise be able to reach. An example of this could be top loyalty and affinity publishers that have technical integration requirements so they can attribute sales and reward members for making a purchase through their site.

Depending on the network and the size of your affiliate program they can also be very expensive, but what are the alternatives? When it comes to affiliate tracking software, there are two options: build your own or license a third party solution.

Building your own affiliate tracking platform is risky and expensive. If your organization is not prepared to handle monthly affiliate payments, custom reporting questions/requests, and order inquiries you could jeopardize existing affiliate relationships. There are also ongoing development and maintenance costs, and creating a comprehensive solution that meets the needs of your publishers is a daunting task and could limit the types of affiliates you are able to work with.

Recently there have been new solution providers creating innovative affiliate tracking platforms that are winning awards and taking the performance industry by storm. Companies like HasOffers and PHG are creating cost-effective affiliate tracking solutions that offer advertisers and publishers robust reporting, advanced tracking capabilities and an open architecture platform that make it easy to integrate in to existing systems.

While a standalone affiliate tracking solution may not be the best option for new affiliate programs, they can add value and provide cost-savings for large established affiliate program.

Introducing New Affiliate Tools

One challenge facing both early stage and established affiliate programs is how to activate more of your publisher base —whether you have 100 affiliates in your program or 10,000.

If you look at a tenured affiliate program, like the Amazon Associates program, they have an affiliate portal where publishers can find affiliate tools that help Amazon bridge the gap between recruitment and activation for their affiliates.

In addition to activation, creating tools for your publishers can improve the performance of your long-tail affiliates that may be only generating one or two sales each month. The most successful affiliate programs recognize the value and are able to quantify the value as a means of growing their established affiliate program.

Identifying and developing relevant affiliate tools takes time and will likely require you to build use-cases and a business case, but the return on investment can be worthwhile.

We recently wrapped up a client success story and discovered that over 10% of their monthly affiliate revenue was generated through and attributed to their affiliate tools.  In an established program, increasing affiliate activation and generating 2% – 3% incremental revenue is a good benchmark.

While Facebook’s IPO and subsequent lawsuit has been at the forefront, social sharing site Pinterest made a splash last week when they announced raising $100 million from Japanese e-commerce giant Rakuten.

Rakuten, the parent company Buy.com and Linkshare, has deep roots in internet retailing and performance marketing.

In an interview, the CEO of Rakuten said that Pinterest is growing exponentially in Japan, and that he wants Rakuten to grow with Pinterest to become the payment platform used when Pinterest users purchase something off the site. In Japan, a reported 75% of internet users have a Rakuten ID, like people in the US would have an Apple or Amazon ID with payment information associated.

This partnership could catapult Rakuten into competition with the likes of ecommerce giants like Amazon and Apple, if this becomes a method of payment in the Western hemisphere. I thought this move by Rakuten was smart, as Pinterest has tested several monetization methods but has yet to finalize its overall strategy.

Is Rakuten’s alignment with Pinterest a sign of things to come: performance marketing companies investing in startups that do not have a definitive monetization strategy? It’s definitely a trend worth looking at, both for prospective affiliates and for merchants.

The Next Generation Of Affiliate Marketers

If you look at the taxonomy of affiliates in the performance marketing industry today, they generally can be categorized as Loyalty, Coupon and Deals, Niche Content, Search, and Product sites.

There are also businesses leveraging affiliate marketing as part of their revenue model; affiliates that could be categorized as “emerging partners”.  These include service providers and technology companies that leverage the performance marketing as either part of their core revenue stream or as an incremental growth driver.

This concept is not new. Businesses like GoldenCAN, Skimlinks, VigLink, and others have grown successful businesses by being part of the affiliate marketing ecosystem.

But there are new companies emerging that are disrupting traditional business and monetization models. These companies are taking services and products that people and companies previously had to pay to use and changing the revenue model to be performance driven.

This can be seen with internet marketing companies like VE Interactive, who provide a technology platform that enables eCommerce companies to re-target customers that abandon the shopping cart in order to improve conversion. Email re-targeting is certainly not a new concept, but VE Interactive is changing the game by offering their technology free and working as an affiliate partner instead of charging merchants for their service.

3 Questions You Should Be Asking, Whether You Are A Startup Or Not

1.  Are there existing business alliances that make better sense as an affiliate partnership?

Oftentimes there are “strategic” partnerships that do not yield the projected revenue or value that are better suited for the affiliate channel than dedicating business development resources to manage and grow the relationship.

This can be true with partnerships your business initiated or vice versa. I’ve seen this most often with technology businesses that have both a reseller channel and affiliate channel. There is sometimes confusion about who goes where, and what makes a good affiliate partner vs. what makes a good reseller partner.

Resellers typically have a pre-existing customer base and are adding value by offering some level of service after the sale, while affiliate partners are focused on marketing activities that drive new customer acquisition.  Low-volume resellers are often times better as affiliates as they can earn more in the form of commission and merchants can test the waters with little to no risk.

2. Are there other performance marketing companies that would make good acquisition candidates?

There are several approaches to identifying companies that would make a good acquisition target for your business. Crowd sourcing is one of the most efficient and effective ways to accomplish this.

If your company has an affiliate program, this could be a good place to start if you think of your affiliate program and/or network as a derivative crowd sourcing platform.

Assuming your company has an affiliate program that is managed well and your affiliate manager is vetting affiliates based on them aligning with your business, products, and core values, your most successful affiliates could be good acquisition candidates.

Here’s why.  First, if your affiliate partners are driving significant revenue it means that they understand how to effectively market and promote your brand and products online. With the exception of arbitrage affiliates, this can lower the risk associated with an acquisition and enable you to better evaluate their business and the value they will add.

Second, given the scalable nature of affiliate programs, you are constantly onboarding new affiliates through proactive affiliate recruitment.  This can create a pipeline of new opportunities and allow you to approach acquisition targets differently than your competitors.

3.  Are there new revenue opportunities for your business leveraging performance marketing?

As a business, you likely have vendor agreements in place that you should review and see if adding revenue share elements is a feasible way to grow the relationship. This applies to relationships in which you are the vendor and ones in which you are the customer.

Sitting in the customer “seat”, ask your vendors about ways to grow the relationship.  Adding a performance incentive to the agreement could be a great way to control upfront costs and add a collaborative spirit to the relationship.

As a vendor, adding performance component to your agreement shows your customers you have “skin-in-the-game” and a vested interest in ensuring they are successful.  Regardless of the side of the table you are sitting on, performance marketing can add an interesting new dynamic to your business relationships and can result in incremental revenue.

Staying on the pulse of the competitive landscape is critical in affiliate marketing given the fluid nature of the industry and how quickly things change — but how do you differentiate your affiliate program from your competitors to ensure you are attracting and retaining the right affiliates?

There are things that you can be doing with how you’re communicating with affiliates and the information you make available to them, that will easily set your affiliate program apart from the competition. Let’s explore how you can differentiate your affiliate program and ensure you’re working with affiliate partners that align with your business and help you build a healthy and sustainable program.

Start with Why

If you’ve read Simon Sinek’s book, you know what I’m talking about.  If not (and you have 18 minutes to spare) I encourage you to check out his TED Talk.  The concept and theory Simon uses centers around answering a simple question: “Why?”

When individuals and businesses effectively articulate their core values, their Why, it inspires action, trust, and loyalty. Simon highlights this by exploring the achievements and accomplishments of Apple, Martin Luther King Jr., and the Wright Brothers and how their successes defied everyday assumptions of the time.

Meanwhile, most individuals and businesses today continue to communicate and market What they do and How they do it. I would argue this holds true for most affiliate marketing programs as well, and if you spend any time reading affiliate program descriptions and affiliate communications, you might agree with me.

As an affiliate manager, think of the different touch-points you have with affiliates as opportunities to communicate and engage with them as your target audience.  Your affiliate program’s first impression often comes in the form of:

• A program overview page on your company’s website
• An affiliate forum or blog
• Program description and overview with your chosen affiliate network
• Auto-responder communications
• Affiliate newsletter

Ensuring your messaging is cohesive and talks to your company’s Why will make it easier for affiliates to associate with your brand. If your affiliates believe in the core values of your company, it creates a partnership with a foundation rooted in a shared cause or passion instead of just a commission check.

Think of this as an affiliate marketing trickledown effect as potential customers that are visiting your affiliate websites are likely drawn to those same shared values.

Define Your Three Uniques

Let’s explore what makes your business and your affiliate program unique. Have you ever written down what makes your company and affiliate program unique? Think of a unique not as having the highest commission payout or the longest cookie duration amongst your competitors, but three defendable differentiators.

What’s a defendable differentiator? The first differentiator will set yourself apart from 85% of your competitors. The second differentiator, when combined with the first differentiator, will set you apart from 90% of the competition. The third differentiator, when combined with the first and second, will set you apart from 98% of the competition. These defendable differentiators could include:

• Brand
• A unique suite of services
• Being 1^st to market with a new idea, product, or service
• Patent/Trademark/Copyright
• Geographical

How do you carry these differentiators through to your affiliate program? By making this information readily available to your affiliates so they can use it to add value to your brand and promote your products better than your competitors.

There’s often resistance in sharing “too much” information with your affiliates. While you may not want to share your trade secrets, there is a wealth of information that you can provide your affiliates that will help them differentiate how they’re promoting your brand and products, and thus, setting you apart from your competition.

Your Niche, Target Market And “The List”

Someone once told me that the #1 rule of affiliate marketing is finding your niche. While I agree with this statement, the same holds true for business in general.

It’s a safe assumption your niche has likely played a factor in why your company is successful (or not). Depending on your industry, your niche may or may not be easily identifiable by your affiliates.

While you may not want to publish this information online, it is certainly valuable information easily discussed on the phone or by email with your affiliate partners. If, as an affiliate manager, you take this into account when you’re reviewing and approving affiliate applications, you should have affiliates that already align with your niche, or derivative of your company’s niche.

If you know your niche and your affiliates know your niche, you can begin to define your Target Market. Your target market is what you’ll typically want to know in order to identify affiliates with a particular demographic of readership.

While matching your target market with the demographics of your affiliates is somewhat “Marketing 101,” you can use your affiliates to test how your brand and message resonates with a new demographic or in a new market.  Once you have nailed down your niche and target market, you can pretty quickly begin to identify your list of ideal customers and then align your affiliate program so that it helps you reach them.

My Challenge To You

Applying this information and creating an actionable plan to implement is always a challenge — especially if you’re not familiar with your company’s core values and Why. If you are not familiar, I challenge you to find out who in your organization can share these with you.

If they do not exist, establish the Why for your affiliate program. Begin using your Why in conversations and communication with your affiliates, colleagues, and management team.

Being able to clearly articulate these core values with others around you should evoke emotion. See how it resonates with others and if it changes the types of conversations you have during the day.  If you accept this challenge, please share your experience and let us know what impact it has made.