Affiliate marketing introduction and overview
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Affiliate Marketing

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Affiliate marketing introduction and overview

Affiliate MarketingIntroduction and Overview


Affiliate marketing

Contents

  • What is Affiliate Marketing?

  • Opportunities and challenges

  • Affiliate Marketing – part of the online mix

  • Affiliate marketing process

  • Opportunities and challenges

  • Financial planning

  • Policies on affiliates

  • Affiliate Program Sample Display Program

  • Considerations


What is affiliate marketing

What is affiliate marketing?

  • Online program in which site owners (publishers) display ads and links to generate sales directly into a clients site; on a cost per performance basis

  • Equivalent of having an online sales force working on a commission compensation based model

  • Build a network of financially incentivised “brand advocates”

  • Affiliate Marketing normally involves three parties:

    • Merchant

    • Affiliate

    • Affiliate Network

Your

brand

Network


Affiliate marketing

Merchant

  • Supply terms & conditions, creative, compensation structure and growth of relationships

Affiliates

  • Sign-up to affiliate network, promote merchant on their sites

Affiliate Network

  • Manage billing and tracking of activity through proprietary platform

Role

  • Over ride – based on between 20% to 30% of affiliate payments

  • Maximize volume of transactions

  • Fixed payment per transaction

  • Commission on value of transaction

Compensation

  • Volume of transactions and affiliate payments

  • Total transactions

  • Cost per transaction

  • eCPM – number of impressions to generate one transaction

  • eCPC – number of clicks to generate one transaction

Key success metric

Growth Tactics

  • Increase compensation and provide flexibility on the terms of the program

  • Increase traffic through natural search & PPC

  • Design sites that fulfil consumer missions

  • Increase number of affiliates through aggressive recruitment

Opportunities and Challenges


Affiliate marketing part of online mix

Affiliate Marketing - part of online mix

Reach

Fragmentation

Affiliate

Network

  • Provide reach by aggregating hundreds of small sites (tier 2 and 3 sites) across different content categories


Affiliate marketing

Creative Assets

Affiliate

Network

Console

Terms & Conditions

Tracking codes

Payment system

Tracking of transactions

Merchant

Site

Merchant

Booking Confirmation

Page

Commission Payment

Over-ride Network Payment

Merchant

Affiliate

Program

Affiliate

Network

Affiliate

www.bestflights.com

Affiliate Marketing Process


Affiliate marketing

Opportunities and Challenges

Opportunities

  • Performance based results

  • Complete control of affiliate recruitment and management (quantity ad quality)

  • Establish strong commercial relationship with best performing affiliates - “super affiliates”

  • Maximise reach and exposure at minimal cost

    • Free ad exposure – only pay for results

Challenges

  • Affiliate advertising provides reach across tier 2 and 3 sites and excludes tier 1 sites

  • Attracting quality high traffic sites to affiliate programme

    • High worth product

    • Low bounty payment

  • Require on-going management and optimisation

  • Commission payment to network owner – ranging from 20% to 30% of sale

  • Mid to long term investment


Affiliate marketing

Financial Planning

Affiliate payments (commission or fixed)

Network over ride payments

Internal resource

+

Total investment

-

Gross bookings – cancellations & no shows = stays

Total transactions

/

Cost per transaction

Example of affiliate programme. Thomas Cook payment structure > through

Commission Junction affiliate network. Generates 18% to 20% of all

transactions.


Affiliate marketing

Policies on Affiliate Marketing

Google policy on affiliates:

  • Affiliates allowed to use AdWords advertising.

  • Google will only display one ad for affiliates and merchant sharing the same Display URL per search query.

  • Google restricts the following:

    • Redirect URLs: Ads that contain Display URLs that automatically redirect to the merchant site.

    • Bridge Pages: Ads for webpages that act as an intermediary, whose sole purpose is to link or redirect traffic to the merchant site.

    • Framing: Ads for webpages that replicate the look and feel of a merchant site.


Affiliate marketing

Affiliate Program SamplePPC Program

BT PPC listing

BT Affiliate PPC listing


Affiliate marketing

Affiliate Program SampleDisplay Program


Affiliate marketing

Considerations

  • Affiliate marketing requires on-going nurturing and relationship building > Affiliates have no loyalty to brands

    • How to differentiate program from competitors? Combine financial incentives with flexibility.

  • Evaluate the metrics to pay affiliates on. Bookings or completed stays?

    • Decision should be lead by internal financial objectives and overall market dynamics

  • Affiliate marketing can become a self-funded program. Bookings can be charged back to hotels (dependant on franchise/ownership contracts)

  • Affiliate Network programs cannot be switched “on and off”

    • In 2004 Thomas Cook was force to close down their first affiliate program for lack of funding – set budget run out


Affiliate marketing

Considerations

  • Affiliate Marketing delivers the 80/20 rule – 80% of all transactions will be generated by 20% of affiliates

    • How to differentiate program from competitors? Combine financial incentives with flexibility.

    • Have the network focus on quality of affiliates as opposed to quantity

  • Establish strict terms and conditions with affiliate network and affiliates related to:

    • PPC bidding

      • Usage of brand on PPC copy

      • Bidding on brand and generic terms

    • Use of URLs

    • Length of cooling period between recording of transaction and payment for transaction

  • Assign a third party or internal resource to validate transactions attributed to program – track all transactions through an order id


Affiliate marketing

Contact Us

31/1, Kanakpura Main Road, Yelechenahalli, Beside JyothiKendriyaVidyalaya Bangalore, India-560 102

Phone No:- +9180 3301 3060


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