The affiliate marketing model has more than demonstrated its capacity to drive significant online revenue for brands – and does so with one of the lowest cost per action (CPA) structures and the highest return on ad spend (ROAS) of any marketing channel.
The world’s leading brands know that having an affiliate program can be a boon for sales, brand awareness, new customers, driving quality, high-value leads, innovative partnerships and cost-effective conversions – IF it’s managed properly.
If it’s not, companies could face off-brand messaging and marketing, fraudulent activity and lackluster growth, among other issues.
Fortunately, almost all those downsides can be avoided when an affiliate program is developed from the outset with an effective strategy.
The following 6 tips are essential for companies – and those responsible for overseeing their affiliate program – to carefully consider, especially if you don’t currently have a program or you have a program that’s not performing well.
1. Determine your “Why” behind starting/having an affiliate marketing program. Is your goal to drive incremental sales? Increase overall revenue? Attract a niche audience? Drive high-value leads while paying partners on a CPA basis? Increase your ROAS and decrease your CPA?
In affiliate marketing, each objective can require a different approach. For example, incremental sales efforts are usually focused on gaining new customers. As such, that strategy is likely to involve working with affiliate partners who can a) attract that audience and b) be open to getting compensated after they bring a new customer to your company.
However, if your goal is to drive quality, high-value leads – and only pay for those leads after they’ve been generated – then your partner and compensation strategy is going to be different from an incremental sales strategy.
Your goals, objectives and KPIs are all an essential part of bringing on the right partners into your program, determining your compensation structure with them, selecting the right technology platform to use for your program, developing the most effective go-to-market campaign strategy, and knowing what actions you want to track and measure. Each of these are all a critical piece of the affiliate marketing pie (i.e. the strategic output of the “Why” behind your affiliate program).
2. Get tactical with your technology. The technological components of an affiliate program should not be underestimated or overlooked. Choosing a technology partner that has the right capabilities to meet the present and future needs of your program is essential.
Want to use an attribution model other than first or last click? Make sure your technology network or platform can accommodate that. Want to work with partners beyond coupon, deal and loyalty sites? Evaluate whether those partners are open to using the network or platform you’re considering for your affiliate program. Some networks and platforms may have higher fees or limited technology capabilities that may detract certain partners from joining a program.
From their performance tracking and measurement capabilities to their fee structure and attribution aptitudes, evaluating the tactical elements of your technology partner should be a key part of your affiliate program strategy.
3. Assess affiliate types. Ten years ago, the choices of affiliate partners were more limited. Most affiliate marketing programs at that time primarily comprised of coupon, loyalty and deal sites with the occasional content blogger thrown into the mix for good measure. While those players are still certainly impactful in today’s affiliate marketing world, the affiliate playing field has expanded exponentially.
Today, brands can effectively partner with just about anyone – even other companies – through their affiliate program. This framework is called Performance Partnerships® and is one of the reasons why the affiliate marketing model is one of the most effective routes to take if you want to scale your business and build transparent, mutually-beneficial partnerships for your brand. What’s more is that the affiliate model is structured so you’re paying your partners after they’ve delivered on a pre-determined action (e.g. a sale, new customer, lead, etc.).
4. Consider the competition. For continuity, it can be helpful to check out how your competitors structure their affiliate program in terms of commission rates, cookie lengths, etc. Not so you copy them, but so you have an idea for what affiliates are familiar with for similar type programs and have a foundation for which to build and optimize your own program.
For example, if your competitors are paying out an eight percent commission to their partners, then it might be wise to do something similar. Setting your rates too low can turn high-value partners away. Too high and you may find it challenging to meet your CPA and ROAS goals. With this in mind, it is also important to build in some flexibility into your program so that you can pay high-performing, VIP partners slightly more if your goals support that approach.
Looking at a competitive analysis can also help determine what cookie lengths will be best for your affiliate program. When a potential consumer clicks on an affiliate’s link, do you want their cookie to track for one day? Seven days? Thirty days? While the industry standard is thirty days, that doesn’t necessarily mean it applies to your business model (e.g. flash sales).
5. Be mindful of budget. Affiliate marketing’s reputation for being a low cost channel with high returns is well-earned. Ensuring that’s the reality for your affiliate program requires careful thought and strategy around what a realistic budget is, including commission payouts to partners and for additional avenues of exposure (e.g. promotional events, branding opportunities, commission bonuses, giveaways, product reviews, paid placements, etc.).
While not necessary for every affiliate marketing program (depends on your program’s goals) companies are likely to see positive results, both short- and long-term, if some budget is allocated for additional program exposure.
6. Contemplate your creative. Like other marketing channels, affiliate programs require creative assets (e.g. banners, copy, etc.). To be the best partner possible to the affiliates in your program, your strategy should include a process for how and when creative resources will be developed for your program.
This is especially important should you choose to work with content partners or bloggers in your affiliate program. Their readers will be more intrigued by a blog post that features eye-catching product and lifestyle images coinciding with an explanation of your product or service versus just reading text about it.
When it comes to creative, the phrase “You eat first with your eyes, then your mouth” is an apropos metaphor. Therefore, it’s important to equip partners with assets to help them AND your brand be successful.
At a minimum, it’s highly recommended to update your creative quarterly so that they reflect your site’s current look & feel and keeps your affiliate partners interested.
Having a solid strategy in place that includes these 6 important tips, will help position your brand for success and help ensure you achieve the performance goals you’ve established. Remember, what you put into your program will determine what you get out of your program.