Now we are clear about what affiliate marketing is, we will look into how an advertiser (also known as a merchant) can go about setting up an affiliate program.

In 1996 there were only a handful of affiliate programs. In 2006 there are tens of thousands and, in order to stand out, advertisers have to make sure they are on the top of their game.

Step 1: Decide whether to hire an Affiliate Manager or not

Bigger advertisers have a team of in-house or outsourced Affiliate Managers. Smaller advertisers with limited budgets often hire a part-time outsourced Affiliate Manager to handle the set-up and maintenance of their affiliate program. Affiliate Managers are often paid on a monthly or hourly rate, the latter can range from $40 to $120 an hour; some also insist on a small percentage of the increase in business resulting from their endeavors.

Make sure you hire an experienced Affiliate Manager who is trusted in the industry and treats clients well. Get recommendations from people in the industry. Affiliate marketing forums are often a good place to hunt out the best in the business: you might like to post a message asking for recommendations.

Many affiliate marketing forums have sections in which advertisers, agencies and networks advertise for Affiliate Managers. ABestWeb is the world’s most popular affiliate marketing forum and the relevant section is here. The UK equivalent is here.

Make sure you get feedback from third parties on potential Affiliate Managers. It is unknown to most advertisers, for example, that most Affiliate Managers get ‘kick backs’ from affiliate networks for recruiting advertisers for them and the less ethical Affiliate Managers will not put their clients on networks that are the most suitable for them but that pay them the most kick backs or belong to their friends.

If you hire an Affiliate Manager then he or she will be responsible for the following steps. If you can’t afford one, then follow our step by step guide to launching a successful affiliate program.

Step 2: Decide whether to launch your affiliate program on a network or go it alone

(i) Custom/off-the-shelf solutions

Advertisers can use their own platforms to generate and track affiliate links, give themselves and affiliates access to the necessary metrics, and calculate how much commission each affiliate is due.
A number of advertisers, like Amazon, have created their own bespoke affiliate program interfaces from scratch. However, a solution as sophisticated as Amazon’s is incredibly expensive.

Other advertisers buy off-the-shelf software. The best known is DirectTrack. Since 1997, DirectTrack has tracked hundreds of billions of impressions, hundreds of millions of clicks and actions, and billions of dollars in e-commerce revenues. DirectTrack powers several hundred advertisers and over 225 advertising networks. It is inexpensive for what it does, and costs from $99 a month upwards.

The next best known solution is Kowabunga! Technologies’ My Affiliate Program which also came to life in 1997. There are also dozens of other affiliate management and tracking scripts (see Hotscripts.com).
There are two advantages to creating your own bespoke software or using something like DirectTrack: (a) it gives you more control than with an affiliate network and (b) you don’t have to pay middle-men override fees to a network.

The downside is that installing and using your own software requires technical know-how, time and patience. Even the best software will have issues and you will need to hire at least one person to ensure everything is running smoothly. Downtime longer than a few minutes will incur the wrath of affiliates and so somebody will have to be able available more or less 24/7 should technical problems occur.

(ii) Affiliate network

The option preferred by the vast majority of advertisers is to launch their affiliate program on one or more networks.

There are hundreds of affiliate networks all over the world and the next Master Class will provide an insight into the most popular ones.

The advantage of joining an affiliate network is that you are not responsible for the setting up or maintenance of the interface. Alongside handling all the technical headaches, most networks also offer guidance and support to advertisers. Your affiliate program will be more likely to attract affiliates as most networks publicize the launch of a new advertiser to their affiliate base.

Affiliates are more likely to join an affiliate program on a major network because (a) they already have an account (b) they are au fait with the interface (c) they trust a third-party affiliate network more than a little-known advertiser and (d) most networks bring together an affiliate’s earnings from different advertisers and make a single, unified payment.

Many affiliates belong to scores of affiliate programs and it would an administrative headache for them if each one had its own login, its own interface, its own linking methods, and made a separate payment each month.

The major disadvantage of using a network is they will usually charge you in three separate ways: a set-up fee, a monthly fee and a percentage of each transaction (known as the “override”). The override is typically between 20% and 50% of the money paid to each affiliate.

Step 3: If choosing to launch with a network, choose the right one

It is critical to choose the right affiliate network or combination of affiliate networks. Each network has its strengths and weaknesses. See the next Master Class to help with your decision.

Depending on the network you chose, you may receive assistance with steps 4 to 7. You can also ask for advice on affiliate marketing forums.

Step 4: Decide on an optimal commission rate

The key to obtaining affiliates is to offer a generous commission for each sale. The higher the commissions, the more affiliates an advertiser will be able to recruit.

While brand name companies can get away with offering less generous commissions (both itunes and GAP only pay 4%), smaller advertisers need to pay more to attract affiliates.

Determining the perfect commission rate is both a science and an art. You will have to consider your profit margin per mean basket size after deducting all costs, add into the equation variables such as the likely lifetime value of each customer and value of having your brand marketed on affiliates’ websites, deduct the network override and Affiliate Management costs, and then decide how much you are willing to pay your affiliates. You will also have to look at what your competitors are paying.

Example: Average basket size (£) = $50 // % Commission to affiliates = 8%

Therefore the affiliate earns $4. The affiliate network override at the median 30% would be $1.20. The total amount you would pay out would be $5.20.

Step 5: Get quality creative made

Affiliates should be provided with a range of linking options (see Master Class III).

You should create a range of text links, email creative, and, if necessary, a regularly updated data feed, you must have professional creative made for the affiliates to add to their websites. A selection of banners should be created. The ones most used by affiliates are 468x60s, 120x60s and 88x31s.

Think outside the banner: to help your affiliate program stand out, you should try to come up with innovative creative. When NotDesigner.com launched a unique interactive unit a month ago it generated a huge amount of publicity for the retailer and countless affiliates added it to their websites.

Step 6: Decide on Pay-Per-Click and Search Engine Optimization policy

Will you authorize your affiliates to use your brand name, its variations and misspellings to market your website in organic and paid search engine listings? The fewer restrictions you have, the more keen affiliates will be to market your wares. On the other hand, you can lose control of your brand and pay out unnecessary commissions if affiliates are permitted to gain more prominent exposure than your own website in search engines.

 Step 7: Create a quality description page and copy to attract affiliates

Your affiliates are your sales force and so they need to be given as much information as possible and be given all the tools necessary to advertise your business. An example of a good description page is this one for Mosaic Holidays.

You should also have well-scripted copy to encourage affiliates to join your affiliate program and this should be used in the description section of your affiliate network/own interface as well as posted in the relevant sections of affiliate and webmaster forums.

Step 8: Liaise with your network to kick-start everything

Contact the affiliate network(s) you have chosen and set up everything to get things going. As well as providing the data in Steps 4-7, you will need to set-up a direct deposit or other method to pay your network fees and affiliate commissions. Most networks are quite sloppy with the logistics and, unfortunately, you will have to double-check to make sure everything is set up properly.

Tip: You can verify how you are presented to potential affiliates by setting up an affiliate account.

Step 9: Hunt out relevant affiliates

This is key to your affiliate program’s success. Register with all the major affiliate forums in the countries you operate in and, if permitted, announce the launch of your affiliate program and what you can offer your sales force that other companies don’t.

It is also worth looking in search engines to see which affiliates are promoting websites in your niche and sending them a polite, personalized email to encourage them to advertise you as well.

Setting up an affiliate program may seem like an arduous process but it is even harder to find good affiliates and encourage them to seriously promote you. Future Master Classes will provide advice on steps you need to take to get your affiliate program to really fly!

But, one step at a time, and the next two Master Classes will provide a ‘Dummies Guide’ to the major affiliate networks in the USA and UK. Who rocks and who does not?

The Master Class series will follow after a special interview in the next Weekly Q. Keep subscribed…

Nadeem Azam, PrimeQ
Public Relations Manager
nazam@primeq.co.uk

 

PrimeQ Moves into Russian Market

Global online advertising network PrimeQ announced it was entering the Russian market and will use its proprietary technology to allow advertisers to gain access to the country’s internet users. The Russian economy is benefiting from the high price of oil and CEO Jason McClain says the nation of 143 million people should not be ignored by UK companies.

PrimeQ Solutions, Inc. has set up a base in St. Petersburg and recruited staff who will work on a multi-pronged entry. Companies around the world will be able to use the interactive advertising network to market their services and products to the vast nation with an increasingly-affluent middle class.

"After years of studying and preparing for the Russian market, we are proud to spearhead a drive into a largely untapped online environment that will grow leaps and bounds over the next decade,” said McClain. "The number of Russian internet users is currently the same as the UK, approximately 28 million people and, in a few years, will be double that of Britain."

Advertisers working with PrimeQ include IPSOS and one of the first campaigns specifically set up for the Russian market is the IPSOS Marketing Research Panel. Owners of websites and mailing lists will be remunerated for every Russian resident completing a survey.

PrimeQ is a leader in providing online advertising solutions for custom lead generation and affiliate networking services. The company owns and maintains hundreds of online properties that generate custom leads, traffic and brand awareness for its clients in multiple verticals.

Online Advertising Spend Rockets to $4.2B in Q3

Internet ad spending grew by more than 30 percent year-to-year to reach $4.2 billion in the last quarter according to the latest Internet Advertising Revenue Report from the Interactive Advertising Bureau (IAB) and PricewaterhouseCoopers (PwC).

The quarter sets a new record, topping the $4.1 billion reported for the second quarter of this year, which brought interactive ad spending to $7.9 billion in the first half of 2006. Revenues in the third quarter of 2005 reached $3.1 billion, and revenues for all of 2005 topped out at $12.5 billion.

"We're close to surpassing the full year revenues from 2005 in the first three quarters of this year, which is very exciting," said Sheryl Draizen, SVP and general manager of the IAB. "Marketers are becoming more confident in the medium. They're spending more, seeing better results, and then returning to spend even more."
The report does not break out spending categories in the first or third quarters of a year, but in its mid-year report there was continued acceleration of growth in search, classifieds and display advertising. In the first half, search took in 40 percent of online revenues, display held 31 percent, and classifieds had 20 percent. Referrals and lead generation comprised 7 percent of the total, and e-mail held 2 percent in the first half.

Courtesy ClickZ News

What would you like to see in The Weekly Q? Are you enjoying the Master Class series? Or do you prefer interviews, articles, book reviews, or news stories? Are there are particular fields you’d like us to focus on: affiliate marketing, search engine optimization, pay-per-click, programming, or website design?

It’s your publication, so let us know and we’ll try to steer The Weekly Q in the direction you would like. Email nazam@primeq.co.uk with your feedback.

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