This article originally appeared in Smart Insights
The globalization of e-commerce, coupled with a growing American demand for British goods, has many UK retailers eyeing the US market. And with global B2C e-commerce expected to reach $1.5 trillion this year, they’re not alone. Retailers across the world are tapping into this lucrative consumer base with sophisticated affiliate programs.
With global retail affiliates like RetailMeNot, rewardStyle, and ShopStyle gaining in popularity, homing in on consumers who crave your products is becoming easier than ever.
However, it’s important to note that not every retailer is ready for the competitive affiliate landscape across the pond as there are a number of differences you must consider when launching an affiliate program in the United States. These include program management services, industry standards, compliance, and interactions with merchants and networks.
Without a thorough understanding of how US affiliate market operates, your program can’t fully capitalize on this opportunity.
Five Challenges for Your US Affiliate Program
Here are a few obstacles your affiliate program might encounter when expanding to the United States:
US networks largely cover the same geography, and there’s often little differentiation among their publisher bases, especially for their largest publishers. This makes working with multiple networks often unnecessary — unlike Europe, where each country has unique strengths in different areas. For example, we often see people work with Affiliate Window in the United Kingdom, Zanox or Webgains in Germany, and possibly another network in France to get optimal coverage across the biggest EU markets. Also, US networks often offer managed services as a standalone fee tacked onto the performance fee, which puts them in competition with outside agencies for these services. In other parts of the world, the network fee includes account services and a program that might have the support of both of these groups.
2. A Lack of Large, Integrated Agencies
Few large agencies in the United States have dedicated affiliate services, even though they often pretend to in order to win a client’s business or extend to a new market. Instead, the affiliate management in the space is really dominated by smaller firms who focus mostly on domestic programs and rely on an extended base of contractors, rather than full-time employees. These companies tend to have limited experience with larger, complex, and global programs and their requirements.
3. Difficulty Establishing Brand Awareness
Getting your brand in front of the right consumers is always a challenge when launching a new program. If your brand is well-known in the rest of the world but not recognizable in the United States, it might take longer to gain traction with an affiliate program because you’re almost starting from scratch. It’s difficult to earn premium ‘shelf space’ on an affiliate site with a product or service that consumers aren’t familiar with or that is unproven in the US market.
4. Compliance Requirements and a Lack of Standards
The IAB in Europe has been instrumental in driving industry standards that are best practices for many programs and networks, and the industry works closely together on enforcement. In the United States, the industry doesn’t come together in the same way, and the Performance Marketing Association (the industry advocacy group in the United States) has struggled to get key stakeholders to agree to set standards. As a result, the industry lacks consistent toolbar and coupon policies for merchants to rely on and for networks to support or enforce in cooperation with one another.
Also, with specific state tax nexus laws and FTC compliance laws for bloggers, retailers can face heavy penalties if they don’t address laws surrounding online marketing regulation in the United States.
5. Variances in Affiliate Landscapes
Quidco is the largest affiliate in the United Kingdom, a similar market position to RetailMeNot in the United States. However, the data surrounding these partners is completely different, and consumers don’t use the two in the same way. Assuming US affiliates operate like ones in your home country could stifle your program’s success.
Implement a Successful US Market Expansion
Once you’re well-versed on the potential setbacks you could face with US affiliate networks, creating a detailed plan of action can help you dominate this market. Consider these tips for successfully expanding your affiliate program:
Hire a Professional Independent Agency to Manage the Program.
Adjusting to a new market can be difficult. Hiring an objective independent agency to manage your expanded affiliate program can introduce you to new perspectives and inform decisions that will grow your program. You also need to be able to trust this firm with your brand.
Be Prepared to Expand Your Launch Budget.
It’s as much of a brand launch for the affiliate program as it is for the product, so make sure you set aside plenty of time and money to promote the program and get it off the ground. You may want to start with a higher commission level and get out to a few major industry conferences, such as Affiliate Summit. You’ll have plenty of obstacles to overcome, so don’t quibble about commission rates. Set a high opening rate to stir attention and attract early adopters.
Study the Competition.
Look closely at successful US affiliate programs within your vertical. What are they doing right? And, more importantly, what are they doing wrong?
Don’t Rush Into It.
It doesn’t matter how well you execute your expansion; it takes time to gain traction, and rushing into a new affiliate program can hurt your chances for success in the long run. Spend the extra time gauging the differences between your current and future affiliate partners.
Charles Calabrese, vice president of operations at Performance Horizon Group, agrees that many global companies looking to expand into the United States fail to address the cultural implications, which can impede consumer adoption in the rush to expand.
The potential for a US affiliate program is great, but understanding the idiosyncrasies of the US affiliate market can help take you from a foreign retailer to an attractive global brand. Take the time to thoroughly research the key players and networks, and you’ll soon enjoy the financial perks an international consumer base can bring.