How to Start an Affiliate Marketing Program

Before attending this Intelligent.ly class on affiliate marketing, I’ll admit I had never even heard the term affiliate marketing before. However, Dan Marques, a Senior Online Marketing Manager at Reebok, and wearer-of-many-hats in other ventures, gave us a general overview of affiliate marketing, and showed us how to utilize it in our own businesses. Here is what I learned from this awesome class:

Affiliate marketing is a type of performance-based marketing in which a business rewards its affiliates for each visitor or customer brought about by the affiliate’s own marketing efforts.  There are four parties in affiliate marketing: the merchant (retailer, brand), the network (contains offers for the affiliate and takes care of payments), the publisher (affiliate), and the customer

There are several major networks which are good to use, including ShareASale, Google Affiliate Network, Linkshare and Commission Junction. Affiliate marketing programs have several pros/cons.  When using an affiliate marketing program, you are paying for performance, it’s quick and easy to launch, it builds your online exposure, and it’s easy to measure ROI. However, it can be time consuming to maintain, and there is a risk of fraud and negative brand exposure.

Pre-Launch Considerations:

Before launching your affiliate marketing program, there are several things you need to consider. First, do you want to manage your program in-house, use network services or use an OPM (Outsource program management)?   Managing your program in-house gives you more control over your brand, but is time consuming. Using network services or an OPM can save you time, but cost you money and give you less control over how your brand is portrayed.

The next thing to consider is your payout method. Common methods include Cost per Action (sign up, purchase), Cost Per Lead (email submission, quote submission), and Percentage of Sales (ecommerce). Other pre-launch considerations:

  • Consider your margin structure–don’t offer discounts you can’t afford to give out
  • Look at the affiliate programs of your competitors
  • Develop a search marketing policy, Trademark usage policy, loyalty/incentivized program policy, and adware/spyware/CAN-SPAM Compliance policy  for your publishers to abide by
  • Create a policy stating how you will attribute your publishers with purchases, leads, etc.
  • Make your policies easy to understand

Launch Checklist:

After launching your affiliate program, recruit publishers. Pay publishers for featuring your product, and then remember to email them at periodically with brand updates, new discounts, etc.  To recruit publishers, reach out to them directly via forums, blogs, competitor mentions, the network, and SEO rankings.  Incentivize your publishers. Give them incentives for taking the first action (adding links to their site), and incentives for their first order. Incentives to improve performance can be exclusive content/offers, tiered payment structure, bonuses for reaching certain levels, increased payout for increased exposure, special landing page, free products, and payment frequency.

When you’re looking to grow your affiliate program, remember the 90/10 rule. 90% of your affiliate channel revenue comes from 10% of your publishers. Therefore, focus on improving your programs with your 10% and those near your 10%. Other considerations upon launching your affiliate program:

  • Start your commission structure low (it’s always easier to go up)
  • Send a welcome email to your publishers, which includes contact information for your program manager
  • Add a link and page on  your website to the affiliate program
  • Put in place a policy for returns/cancelled/fraud orders
  • Sign up for other affiliate programs to get an idea of how they work

Pitfalls to Avoid:

Avoid these common mistakes which can ruin your affiliate marketing program!

  • Coupon/Deal Driven Program:  If you run too many of these, you may be giving away discounts you don’t need to. You may be cannibalizing conversions from your “upper funnel” affiliates and you may be diluting your brand. For your program to be successful, diversify beyond coupons/deals.
  • Paying for Fraud/Refund/Canceled Orders:  Don’t pay your publishers for fraudulent, refunded, or canceled orders. Create a monthly process for reversing the commission on all these orders. Automate this process if possible
  • Beware the Mysterious Affiliate: If you don’t know what they are doing to drive traffic, don’t let them into your affiliate program. If they seem suspicious (having an extremely high conversion rate) ask them to explain their method. If you don’t like their answer, kick them out of your program.
  • Paying Upfront for Placements: Paying upfront never benefits you.  You will almost never generate enough revenue to cover the upfront cost. Instead, align your incentives with the publishers. Increase their commission for the placement, or offer them a bonus if the placement drive more orders

After reading through this overview, you’ll now have the foundation set in place to tackle your own affiliate marketing program.

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