Here’s Why You May Have Been Burned by Affiliate Marketing

Here’s Why You May Have Been Burned by Affiliate Marketing

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In the early days of affiliate marketing, affiliate programs appeared to be a source of easy revenue for online retailers. Because the affiliate channel is a pay-for-performance model, merchants saw it as a simple way to connect with a vast community of bloggers, coupon and loyalty sites while scaling their investment.

Affiliate marketing can —and does– deliver on the promise of performance-based incremental revenue. It’s an incredibly profitable digital channel for brands, often generating a significant percent of their online revenue. Affiliate marketing is also a proven w ay for brands to gain new customers, generate incremental sales and strenthen their brand awareness.

But to realize these results, brands need to have a well-run affiliate program, which likely looks very different than what affiliate program management looked like just a few years ago.

Here are the a few reasons why some brands may feel like they’ve been burned by affiliate marketing in the past and what can be done to prevent those issues from occurring with a future affiliate program.

  1. High Cost/No Incremental Revenue –Low-quality affiliates tend to cannibalize other affiliate partners, including high-quality content affiliates, forcing merchants to pay these lower quality affiliates a commission for revenue that would have come in anyway. This meant that some affiliate programs were essentially costly retention programs masquerading as a new customer acquisition channel. When brands discovered that the revenue from their affiliate programs was non-incremental and that the cost per conversion was higher than they had originally thought, they felt disillusioned by the affiliate model.

  2. Fraud – Mismanaged affiliate programs can be full of fraudulent activity. This includes everything from PPC trademark bidding in which the affiliates bid on the brand’s name in paid search and steal traffic from its branded campaigns, to unscrupulous affiliates sending large numbers of fake orders from a single IP address and then taking the commissions. In some extreme cases it can even mean affiliates pretending to be the brand through various channels.

  3. Off-Brand Affiliate Promotion – Without proper screening, retailers are likely to encounter affiliates who are promoting their offers in a way that is not aligned with how the brand wants to portray themselves in the marketplace. This could include affiliates using old or inaccurate logos, promoting out-of-season products, or promoting old or nonexistent sales.

But affiliate marketing does not have to be this way – nor is it for most brands. The vast majoirty of leading brands in every industry vertical imaginable leverage the affiliate channel in highly effective and strategic ways. And here’s what they do differently:

  1. Better Management. Instead of being managed by whoever is available in-house (typically very junior people with limited experience) or the affiliate network, profitable affiliate programs are often managed by experienced professionals – either in-house or by an affiliate program management agency. Quality affiliate program management includes:

  2. Monitoring. They use independent brand/trademark monitoring services to ensure that affiliates are not using the brand in paid search.

  3. Auditing. They have their affiliate program audited by experts to assess affiliate partner performance, activity and value.
  4. Data Analysis. They depend on data to figure out which affiliate model works for their business.

  5. Looking Beyond the Sale. Good affiliate programs recognize that the affiliate channel adds significant value to the entire marketing ecosystem, including the ability to test the performance and viability other marketing channels before budget is allocated.

Want to learn more about whether an affiliate marketing program makes sense for your brand? Let’s chat!