What Is Affiliate Management For The eCommerce Merchant? How To Maintain An Online Affiliate Network
By 2014 the affiliate channel is projected to reach $4 billion. What is affiliate growth attributed to Many online merchants who have taken advantage of this marketing approach have seen increased profits and brand exposure. A recent Forrester Research report discovered that consumers often view deals offered on affiliate sites as superior to the same offer on the merchant's website. Affiliate networks are low-risk investments for ecommerce retailers because the merchants choose the working terms, and pay is typically performance-based. Online merchants use affiliate channels in many ways including:
- To dispose of outdated merchandise
- Trial new offers and connect with bargain shoppers
- Reach specific segments or types of shoppers (who are more likely to visit a topic-focused affiliate site)
- Test entirely new product lines that may not have proven their worth for other types of more risky promotion such as pay per click
The tracking, reporting and payouts for affiliates can be managed in-house with platforms like Ultracart or through an outsourced affiliate network like Commission Junction or Google "Adsense" Affiliate Network. But retailers still play an integral role in this network. To maximize profits, eCommerce retailers must remain in constant communication with their affiliates and evaluate which marketing strategies are the most lucrative.
To answer the question "What is affiliate management?" one must first know the answer to what is an affiliate? An affiliate is a sales representative for an online merchant. Affiliates utilize several marketing strategies to drive traffic to websites in exchange for commissions. The retailer determines the action an affiliate must perform to earn money. Affiliates most often earn commission on their sales, but they can earn money in other ways too, such as persuading a consumer to sign up for a company newsletter, or even just selling clicks on from their site to the retailer's site
What Is Affiliate Advertising?
eCommerce retailers should provide their affiliates with their marketing plans. Some retailers worry about leaking upcoming promotions that might result in delayed sales. But this fear is often unwarranted, and the advance notice given to affiliates can end up reaping more benefits for the retailer. Many merchants create and distribute promotional materials such as banner ads for their affiliates. Dynamic banners are useful because they can be easily changed without merchant-affiliate contact. A merchant can change the content of the ad that appears on an affiliate site. This is convenient for promoting new deals or posting relevant company news.
Other ads must be tailored to fit the niches of retailers' audiences. Optimal affiliate marketing requires more targeted advertising since traffic is being directed from niche sites. Understanding where a merchant's main traffic is coming from will help the company target ads for that source. Merchants will need to create several ads with different images and styles that appeal to the audiences of some of their biggest money-making affiliate sites.
But while variation is important, so is consistency. A brand should be recognizable across all affiliate sites. Logos or slogans should be familiar despite a variety of content on different ads. This is important because merchants can only gain customer loyalty with brand familiarity.
What is an affiliate approach that's lucrative? The answer to this question has multiple variables, but by managing affiliate networks through Ultracart's shopping cart platform, online merchants can avoid the set-up fee and network fees typically charged by bigger networks (usually 15-35% of whatever the retailer pays in commission).
What Is An Affiliat - Merchant Relationship?
What is an affiliate's role within an online merchant's marketing efforts? Ideally, affiliates should be treated as in-house sales representatives. Whether a merchant's affiliate operations are in-house or outsourced, he or she should develop a relationship with whomever is acting as the the affiliate manager at the affiliate site. Together they will determine how to effectively work together and evaluate success.
Online retailers can create a regular correspondence with their affiliates by sending bimonthly newsletters that discusses business news, marketing tips, or incentives to increase sales. Every mailing should encourage affiliate feedback. Merchants want to lessen the distance between them and their affiliates and facilitate an ongoing discussion to both troubleshoot and brainstorm strategies for additional growth. (If this isn't possible because of the sheer number of affiliates, online merchants can often "cherry pick" the larger or higher potential affiliates and concentrate on those.
This provides a great "platform" for further testing and development of materials for the entire affiliate network.) What is an affiliate's timetable for turning sales? This is ultimately determined by merchants' preferences. If merchants notice that an affiliate site that receives a lot of traffic (i.e. through Quantcast, Compete.com, Alexa or one of the other traffic auditing sites) but hasn't begun promoting them yet, they should initiate contact.
They can email specific tips for marketing their businesses and politely inquire about the slow start, offering any assistance necessary to help begin promotion. Some examples of this support include making advertising easy for all affiliates by providing HTML codes in emails to them that already include their tracking IDs. And of course, creating an affiliate account on whatever affiliate management software that is being used such as that offered by some shopping cart software suppliers like UltraCart. Online retailers should grant their affiliates the same respect they do in-house employees.
Affiliates appreciate being addressed by name in a formal letter, rather than "Dear Affiliate." An example of a simple personal touch could be to send personal thank you emails when payments are processed. Because a chunk of an online merchant's revenue can be provided by these affiliates, they must be treated well and paid promptly to encourage similar work. Merchants should respond to affiliate inquiries within 24 hours, establishing a reputable name that resounds through cyberspace.
What Is An Affiliate Network Evaluation Done Properly?
Once an affiliate network is established, merchants cannot let it run itself. Continual monitoring, and data collection and analysis ensure optimization of marketing approaches. While merchants should always be recruiting new affiliates, the sheer number is not so important as the number of active affiliates. According to hefty affiliate marketing sites like Groupon, a healthy affiliate program has at least 30% of its affiliates driving traffic at any given time. Merchants should examine both raw and derived data to assess their affiliate programs. Impressions, clicks, number of sales, sales revenue and commissions distributed are all crucial components in ecommerce data analysis. According to many affiliate managers, merchants should calculate:
- Click Through Rate (CTR) (the number of clicks divided by the number of impressions)
- Conversion Rate (the number of sales divided by the number of clicks)
- Average Order Value (AOV) (sales revenue divided by the number of sales)
- Earnings Per Click (EPC) (Commissions paid divided by clicks)
Merchants can use EPC to evaluate specific affiliate partnerships or the cost-effectiveness of particular banners. Knowing data associated with specific affiliates aids online merchants in growing their companies. They can track the new visitors affiliates acquire through blogs or coupon and deal sites and recruit affiliate specialties accordingly. Customized reports created in an Excel workbook can track these metrics and provide insight into the driving forces of affiliate networks. Tracking the top ten affiliates in a network provides key data for retailers.
Retailers should notice the percentages these affiliates bring them and understand what strategies are effective. An overdependence on a few top affiliates can shatter a company if competitor sites lure these affiliates away. Merchants also must segment their affiliate programs (including affiliates with coupon and deal sites, content sites, or search engine marketers and mobile specialists) and tie all data to its respective marketing approach. Coupon and deal sites may initially drive a lot of new traffic to ecommerce sites because there is little customization involved in this startup process. Content sites take longer to convert sales since affiliates have to create content and manually include tracking links on their sites.
What Is An Affiliate Behavior Set Merchants Should Be Concerned About?
Low conversion rates may suggest a problem with a website. Perhaps the merchant needs to evaluate sales copy, site navigation, load time, or appearance, for example. But positive data may also indicate something is amiss, and a company's affiliate network should be scrutinized. Spikes in sales or add-to-cart rates can be indicative of both good and bad affiliate behaviors. "Cybersquatters" can register variations on merchants' domain names and direct traffic through these sites.
To prevent this from occurring, companies should register .net, .biz, .us and .org top-level domains as well as any common misspellings as "defensive" moves. They can check analytics programs to determine which misspellings are driving traffic and capture them before other potential buyers of those domains. Of course there are times when problems between retailer and affiliate can occur such as:
- Use of old or outdated creative, promotions, products and pricing even after being asked not to do so
- Poor placement or misleading portrayal of merchant advertising
- Click fraud (if a merchant is paying for clicks from the affiliate site)
- Dilution of click potential by over-populating pages with ads or running directly competitive products on the same web pages
- Placing merchant promotions in poor trafficked areas of their sites
When merchants identify problem behaviors, they should first contact the responsible affiliate(s) and ask them to stop. If this action is ineffective, then companies can send a cease and desist order or simply reduce the affiliate's commission. And of course, they can terminate the affiliate relationship by turning off their referral codes so commissions can't be collected.
What is affiliate management for online merchants? It is a focused awareness of all company operations. Merchants must constantly communicate with their affiliate directors to assess company growth and evaluate specific affiliate marketing patterns.