Affiliate Marketing as Part of The Marketing Mix

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Clicks and Mortar
Clicks and Mortar businesses are multi-channel businesses that reach their customers online and using other methods, typically through shopping malls or direct marketing (mail order, telesales). The e-commerce provision of such organisations usually grows out of an existing offline business, which provides credibility, experience and economies of scale to support the online operation as it establishes itself.
Pure-Play Online Retailer
The Pure-Play business model is based solely in an e-commerce environment, reducing costs and increasing the relevance and impact of performance marketing channels.
Both channels are eminently suited to Affiliate Marketing, with different strengths and weaknesses:
Clicks and Mortar retailers benefit from brand recognition and brand reinforcement from offline advertising, but have to balance online and offline promotions carefully.
Pure-play merchants exist solely online and have traditionally been quicker off the blocks to embrace new developments in online marketing. As the performance marketing sector matures the gap is closing fast, but as a trade off online brands are now enjoying the brand recognition typically afforded to bricks and mortar organisations, the biggest example in New Zealand is of course
Delivery arrangements
Pure play retailers can be severely affected by postage delays – for example extended delivery issues around December severely affect online sales.
Several key retailers also offer “collect from store” rather than postal delivery. This can be incredibly useful for customers, but often is not a commissionable sale for affiliates who promote a retail program.
Cross channel leakage
The Internet is a clearly defined research channel for consumers, and affiliates attempt to guide the decision to purchase through their own affiliate links. If the same product is also available locally at the same price then a percentage of consumers will inevitably choose that path. Online only offers and free or discounted delivery are powerful tools to combat this effect and encourage fair attribution of marketing return on investment.
Offline advertising
Brand reinforcement and loyalty works both ways – consumers who are already comfortable with an offline brand may be more likely to interact with it online as well.
Independently tracked affiliate programs
This blog post and most of the posts on mainly refer to affiliate network operated campaigns, but that is not the only way to run a successful affiliate strategy.
Two of the most successful and popular affiliate campaigns – the eBay Partner Network and the Amazon Associates scheme, are run independent of affiliate networks, and accounts for very large amounts of the online sales of these companies – in Amazon’s case, it is up to 40% of all Amazon sales.
Most advertisers can only dream of the success of Amazon, but Amazon Associates is an intriguing window into what affiliates require to make an independent programme a success – these requirements include:
Robust and detailed affiliate reporting
The data presented by Amazon is up to date and detailed, covering order date, cost and even basket contents.
Performance tiers and preferential rates for top performers
The more you sell, the more you earn! It is safe to assume that the very top performing associates have regular personal contact with Amazon, which may affect the terms, resources and commission they receive.
Regular routine communication and personal contact for top performers
Affiliate functionality is often built into e-commerce platforms, or available as an inexpensive / free add-on. The low barrier to entry often leads to poorly managed or abandoned affiliate programmes, as their operators do not fully understand the commitment required. The difficulty identifying active and well managed independent programmes often leads to affiliates choosing to only represent network managed programmes as they know the focus will be given to the activity.
Managing inactive affiliates
Most affiliate networks make it easy for affiliates to join and start advertising new affiliate campaigns.
It’s what they want and reduces one of the barriers of entry to an affiliate promoting that program.
However, by “subscribing” to a programme offered by a merchant, an affiliate is registering their interest, but is not necessarily ready to start promoting yet. Most affiliate campaigns will have a large percentage of inactive affiliates. These inactive affiliates may or may not ever become active members of the campaign.
Inactive affiliates can increase the amount of time it takes to manage an affiliate campaign. If possible though, it is recommended that merchants attempt to “convert” them to become active, rather than deleting or removing them from their programmes.
Subscribed affiliates receive newsletters and communications, so they may simply be waiting for the right deal or seasonal event for them to promote your offering – keep communicating, keep ‘seeling’ your affiliate program to them and they will, eventually, promote the program.
Using Affiliates for brand building in online marketing
CPA Affiliates are rewarded when they generate a transaction or positive action on behalf of an advertiser. With that in mind, brand reinforcement should be treated as an incidental benefit of campaigns designed to drive sales of a retail product or service.
Affiliates represent brands online, but they are rarely rewarded for their impact on brand awareness and recognition since this is hard to measure. An affiliate campaign should give affiliates ample opportunity to be rewarded for their efforts – usually for generating a transaction.
Lead Generation
Lead generation blurs the lines somewhat because it allows affiliates to be rewarded for generating a positive action that may not be a traditional sale. This could be a catalogue request, newsletter sign-up, free membership or competition entry. These actions bring affiliates closer to brand activity, though still in a supporting role.
For affiliates brand reinforcement is useful as a further justification for the merchant to operate an affiliate campaign.
Merchants often cancel their affiliate campaigns if they feel they do not add enough value, so extra brand representation can support the more tangible increase in transactions as a benefit of affiliate marketing.
Merchants can influence the affiliate channels impact on branding by controlling the product and brand information that the affiliate has access to. An affiliate with access to detailed brand and product resources is more likely to understand the product and brand they are representing, allowing for more informed decisions and more compelling representation in their promotions.
De-duplication and Attribution of Affiliate Marketing
Affiliate marketing is probably one only one of several methods used to engage with customers. It is typically operated alongside PPC and SEO campaigns (as well as display, offline, TV, press etc etc).
The affiliate industry understands that several channels can be involved acquiring a customer, and has evolved an industry standard response to help determine whether it should be attributed to the affiliate channel (and trigger an affiliate commission), this is Last Click Wins.
Last Click Wins – Attributing Affiliate Commissions
The default rule adopted by most affiliate networks is that the last channel to contribute to a transaction should be credited with the commission. This is not compulsory – you can adopt any reasonable policy to determine who is credited with the sale. However, any policy you decide on should be consistent, safe and fair.
Best Practice for selective tracking placement (local cookies)
Where it is required to choose which channel is credited with a transaction, the affiliate industry often uses selective tracking placement, or “local cookie tracking”.
Simply put, the affiliate tracking code is only displayed when a commission is due to be paid. This eliminates the need to delete transactions after they have been tracked, and reduces the administration overhead for an affiliate campaign.
Cookie on every possible landing page
Affiliates can send traffic to every page throughout your site, so every possible entry page must drop a local cookie, not just the homepage.
The last cookie must stand
The last referring link that sent the visitor to your site will be credited with the transaction.
The cookie must last at least as long as all of the involved affiliate networks
If your site is choosing between two affiliate networks, one with a cookie period of 30 days and one of 60, your local cookie solution must drop 60 day cookies.
Newsletter / internal attribution
You must not overwrite local cookies with traffic from your internal newsletter or through natural activity inside your site.
Natural / type-in traffic should not be stored as a separate referrer
If a customer arrives at your site through a cost bearing channel (PPC or affiliate) and then returns at a later date through natural search listings or by typing in the web address directly, the last referrer cookie should not be overwritten, and the transaction should still track to the last distinct referrer.
Local Cookie returns no results
In the instance that a transaction occurs and there is no referrer cookie to dictate who the sale originated from, your confirmation page should display all tracking code that has been integrated into the site. This will ensure that all sales are tracked and will ensure that your affiliates don’t lose out on transactions due to technical faults or blocked cookies. This happens very rarely and the likelihood of a sale tracking to two sources in this instance is low, but you are free to cancel any transactions which you feel shouldn’t have been credited.
Paid Listings and Enhanced Services
Just as merchants often utilise more than one marketing channel, affiliates are embracing new streams of revenue.
As affiliate sites develop into genuine web destinations with repeat visitors and unique content their appeal to merchants increases. This allows them to charge for value added services and provide a more complete marketing solution to advertisers. While it may at first seem counter-productive to deviate from the pure CPA model, charging a listing fee allows affiliates to offer services that incur a cost, such as email campaigns, and can fund advertising campaigns to attract new visitors.
The merchant / affiliate relationship is usually an ad-hoc one. Paid listings allow the arrangement to be taken to the next level, establishing the affiliate as a service provider with a vested interest in representing the merchant to the best of their ability.
New concepts for a new generation
The current generation of online consumers is the first generation where purchasing online is a completely viable first choice for routine, seasonal and one -off purchases.
The natural progression which saw the evolution from independent department stores to specialist retailers and out-of-town stockists is ready to take the next logical step away from physical stores to the World Wide Web. This evolution will be gradual – there will always be a high street, but based on current trends “bricks and mortar” stores will be all but eliminated in certain vertical sectors, with “clicks and mortar” losing ground to “pure play” online retailers.
Affiliate marketing offers a unique opportunity for this new level of adoption. While most other online channels simply drive traffic and customers based on an existing requirement for a product or service, the wide range and scope of affiliate marketing means the channel can generate genuinely new customers. This can have a real impact of the decision to purchase.
Affiliate marketers are creative and motivated to design new concepts to “push the envelope”, advancing the industry and creating new opportunities for advertisers. The hugely influential incentive market is a relatively new innovation in an industry that is less than 20 years old, and generates significant amounts of transactions for almost every vertical sector in Performance Marketing.
So what comes next?
The online industry has been shaken up with the mass adoption of mobile computing and Internet access, and the sponsorship of popular operating systems by cornerstones of the internet such as Google with their popular Android mobiles. The new possibilities for mobile applications and ever increasing levels of Internet access are sure to inspire new innovations. This will encourage convergence between existing marketing channels as online activity becomes an integral part of our lives.