The business world is abuzz these days with talk of affiliate programs. And while the eyes of some marketing professionals glaze at the subject, it’s hard to ignore the success of Amazon.com and CDnow in building active affiliate networks almost overnight of 230,000 and 207,000 respectively.
Some affiliate advocates view these programs as the 21st century’s alchemist bench, a tireless money machine with little or no variable costs. As with most rosy assessments, this view underestimates both the front-end planning and ongoing efforts necessary to make these programs a success.
Affiliate networks are founded on basic capitalistic principles — content sites such as ESPN.com or Housenet.com feature products related to their content and receive a commission for sales from merchants. However, the evaluation of what type of affiliate network to set up is not as basic. There are many issues a merchant must evaluate.
A merchant considering an affiliate program first has to decide what type of affiliate program it would like to develop. There are two options available: build a private network of sites that feature the products or participate in a public network that has multiple merchants providing products to multiple content sites. The primary advantage of the public network is the immediate access to hundreds or thousands of sites wishing to sell products. However, in both a private and public network, the initial considerations and ongoing maintenance are virtually identical.
For an affiliate program to be efficient and effective, the following considerations need to be made:
* What are the requirements regarding a site’s subject matter and what mechanisms can be used to block undesirable sites? Online merchants will want to ensure they have a mechanism in place in which they can control the types of sites that display their products. Our experience has shown that a merchant will reject approximately 5 percent to 10 percent of sites.
* How easy is it for content sites to view the products and select what they would like to feature? It’s very important that the process be quick, easy and intuitive. Site owners have a multitude of tasks to accomplish each day and if this process is complicated or time consuming, they will not spend the time to keep their product selection current and up to date.
* Does the affiliate program provider offer customer service support? As affiliate sites sign up and feature the products, many of them will have technical questions. If the affiliate program provider does not provide support for these types of questions, you will need to assign an internal resource to do so.
* For public affiliate networks, is there already a critical mass of businesses to bring required traffic? If that is not the case, separate public relations, promotion and advertising efforts may be needed to boost the number of sites that sign up to become affiliates.
* How are referrals tracked? This can provide valuable additional marketing information to affiliate members. Some networks may only measure the gross number of visitors to a site. Others provide additional information, such as the number of total impressions as measured by the pages viewed. For example, many of the merchants we have worked with have found that product specific links are much more effective than general links. Thus, Housenet.com visitors are up to two times more likely to click through to the Burpee.com garden store if a specific product such as a tomato is featured, as opposed to a general link that states “Click here to view vegetables from Burpee.com”.
* How are commission payments handled? Does the affiliate program provider help or offer any assistance with this process? As the number of affiliate sites grows, the automation of this process can become critical.
Once an affiliate relationship is established, companies need to keep the effort in perspective. Results from an affiliate network build over time, taking at least three and perhaps six to 18 months to produce adequate traffic. An important part of increasing traffic from affiliate sites is maintaining ongoing contact with the affiliate members. Our experience has shown that without ongoing contact, only 10 percent to 15 percent of sites that sign up to become affiliates will actually proceed to the next step of featuring products on their site. It’s very important to send newsletters and updates to affiliates regularly, prompting them to update and maintain the products they have featured on their site.
Without a doubt, affiliate networks hold much promise. But independent of their extended ramp-up time, affiliate programs should not be the only part of the advertising effort, or even the sole Web-traffic builder. Advertising in other media, public relations and promotion all must work in concert to funnel potential Internet traffic. Indeed, affiliate programs will only work as part of an integrated marketing effort.
These programs can be highly effective, but need close attention to succeed. Affiliate programs may not spin golden fleece, but will provide a solid return when companies give them a consistent effort.
Michael Avery is marketing manager of electronic commerce at the online services unit of printing and information management company R.R. Donnelley & Sons Co., Chicago. His e-mail address is [email protected].
