Why So Many People Crash In Affiliate Marketing

More and more people are lured into affiliate marketing and you might be one of them. Indeed, affiliate marketing is one of the most effective means of generating a full-time income through the Internet. It’s a fair deal between the merchandiser and his affiliates as both benefit from each sale materialized.

Like in other kinds of business, a great deal of the profits in affiliate marketing depends on the affiliates selling, advertising and promoting strategies. Everyday, as affiliate marketing industry expands, competition heightens as well so an affiliate marketer must be creative enough to employ effective and unique ways to convince potential buyers to purchase or avail of the products and services offered.

Compared to traditional advertising practices, affiliate programs are more effective, risk-free and cost-efficient.

Reasons people fail in affiliate marketing

So why do many people still fail in affiliate marketing? There are a lot of reasons and a lot of areas in the program to look into.

The most critical aspect in the affiliate program is advertising. It is the most important thing all other kinds of business as well; many affiliate marketers fail in this aspect because they lack hard work. Although it pays to be lucky, you cannot merely rely on it. Affiliate marketing isn’t as simple as directing customers to the business site.

You must invest in yourself

If you want to earn big, of course, you have to invest time and great amount of hard work in promoting the products. The competition is very high and customers nowadays are very wise, too, as earlier mentioned. After all, who doesn’t want to get the best purchase? That is, to pay less and get more in terms of quality and quantity.

Being prepared is critical in affiliate marketing

Lack of preparation is also a reason why one fails in affiliate marketing, whether he is a merchandiser or an affiliate. Part of the preparation is researching. On the part of the merchant, he has to be highly selective in choosing the right affiliate websites for his affiliate program.

In order to be sure he has the best choices, he must have exhausted his means in looking for highly interested affiliates whose sites are sure fit to his products and services.

The affiliate site’s visitors must match his targeted customers. On the other hand, the affiliate marketer must likewise research on the good-paying merchandisers before he signs up for an affiliate program.

He must ensure that the merchant’s products and services match his interests so he can give his full dedication and attention to the program.

He can get valuable information by joining affiliate forums, comparing different affiliate programs and reading articles on affiliate marketing where he can get tips from experienced affiliate marketers on how to choose the best merchants and products with high conversion rate.

Your website is critical to the success of your affiliate business

The website is a very important tool in the whole affiliate program. You should plan how your site is going to be, from domain name to the design, the lay-out, the content, and ads, as a marketer.

Some users are particular about what they see at first glance and thus when they find your site ugly, they won’t spend their time looking at your site. On the other hand, there are those who want information more than anything else. Marketers with “rich-content” web sites are usually the ones who prosper in this business because the content improves traffic to the site.

Websites with high quality contents and relevant keywords are the best optimized sites. Having the right information about the product and service and not just a bunch of empty hyped-up advertisements will allow you to earn big in affiliate marketing even when you’re asleep.

If you’re not able to sustain the interest of your site visitor, you won’t be able to lead them to purchase. No click-through means no sale and thus, no income on your part.

Selecting a top level domain name is also crucial to the success of the affiliate program. Lots of affiliate sites don’t appear in the search engine results because they are deemed by affiliate managers as personal sites.

Major search directories and engines would think of your site as a transient one and thus, they won’t list it in the directory.

Know first what you are going to promote, before you decide on the domain name. Even if they feature the exact products the customer is looking for, the customer might think the site is not relevant and becomes weary of the site contents.

An educated affiliate is a successful affiliate

Above all, an affiliate marketer must be willing to learn more. Certainly, there are still a lot of things to learn so an affiliate marketer must continue to educate himself so he can improve his marketing strategies. Many fail because they don’t grow in the business and they are merely concerned about earning big commissions quickly.

If you want long-term and highly satisfactory results, take time to learn the ins and outs of the business. Continue to improve your knowledge especially with the basics in marketing ranging from advertising to programming, web page development, and search engine optimization techniques.

Likewise, study the needs and wants of your site users and how different merchandisers compete with each other.

If your initial attempts are failures do not give up. Keep plugging away. Do not get disappointed. You see, thousands are attracted by the possibility of generating skyrocketing incomes through affiliate marketing and so they sign up in any affiliate program without carefully understanding every aspect of the business.

When they don’t get instant results, they quit and sign up for another program and repeat the process of just copying links and referring them to others. When you sign up for an affiliate program, don’t expect to get rich in an instant.

Work on your advertising strategies and be patient. Stay focused and become the best student you can be and you will not be one that crashes in affiliate marketing.

Robin signing out

How to Set Up an Affiliate Marketing Program – Small Business Guide

If you are not currently doing affiliate marketing then you are really missing a trick.

Affiliate marketing evolved from the simple concept that if another website sends you a visitor and that person becomes a customer of yours then you should say thanks to the other website by giving them a small piece of the pie.

Affiliate marketing has now become a lot more complex but the basics are still the same. You want as many sites as possible to be shouting about you to their visitors so that they come and see your wares, and then in return you pay a suitable reward to that site based on your business profitability and margins.

In this article I will go through a few of the things that a newcomer should consider when setting up an affiliate marketing programme:

1) The best commission/reward structure for your business

2) The best network/s to work with based on their affiliate base e.g. the kinds of affiliates that are with them and that they tend to attract.

3) How to get visibility on the key affiliates websites and with the affiliate network.

4) Working on new promotions and incentive schemes to motivate affiliates to promote you rather than your competitors.

Deciding on an affiliate reward structure for your business The first thing to look at is your new customer recruitment costs, e.g. If over one month you spend £5000 on marketing and you recruit 100 new customers then your new customer recruitment cost is £50. Cross reference this with your customer lifetime value(if you know it) to work out how much commission you can pay your affiliates.

A Basic explanation of how you could calculate this is as follows: The customer lifetime value will be the average top line profit that each customer brings you over their lifetime.

To calculate a customers life time value the best way maybe to take a group of customers that you recruited within a months date range and to track their spend over a few years, you will lose some of these customers, but others you will maintain so you need to have a good sample size for the calculation to be worthy.

e.g.

1000 customers recruited in June 2008.

  • Over the following 2 years they spent an accumulative 1,000,000GBP therefore you have a customer lifetime value of 1000GBP
  • BUT
  • Cost of goods sold were 700,000GBP
  • Business fixed costs were 100,000GBP
  • Variable business costs were 80,000GBP

Therefore a total profit for these 1000 customers of 120,000GBP over 2 years, and a per customer profit of 120GBP/customer.

This is obviously a very rough fag packet example but it is worth doing this exercise so that you can then determine the profitability of all of your marketing channels through looking at what their cost per new business customer acquired is and comparing it to the customer lifetime value.

Anyway, to keep from steering too wide form the point of the post… From this figure you can then determine how much you are willing to spend per customer on your affiliate marketing.

You now know that if you spend 120GBP per customer acquisition then you will break even on that customer so if you build in that you want to make 50% profit and spend 50% of the customer value then you can spend 60GBP per customer acquired.

Now, if you work out the average number of orders of those 1000 customers over the 2 years then you will know your average order size through dividing total revenue by total orders.

Say for example that the average number of orders was 4 then you will have an average order size of 250GBP.

So based on this if you can spend 60GBP per new customer order then your commission level for “new” customers can be just under 25%.

However, not all orders are from “new” customers so you could do one of 2 things:

1) Decide to average out commission across all sales by saying that every 1 in 4 customers is new therefore you can pay 6% commission overall

2) Decide to have a higher level of commission on new business orders and a lower level on other orders e.g. 10% and 5% respectively (although you will need to have the backend website functionality available to track different customer segments).

As well as the cost to the end affiliate you will need to figure in a network cost. As a basic guide this is about 25-35% of the commission paid to the affiliates. Therefore if you pay affiliates £1000/month then you will also need to pay your network a fee of around £300/month so this needs to be factored in when determining commission levels.

Always set your commission levels slightly lower than you can afford so that you have the option of increasing commissions for seasonal promotions and for giving high performing affiliates added incentives etc.

What is the best affiliate network for me? The amount that the affiliate networks are willing to disclose to you will depend on your skills as a negotiator and also the potential size of your business for the affiliate networks.

Approach all of the big networks – Tradedoubler, Buyat, Linkshare, Commission Junction, Affiliate Future and Clickbank, explain that you are going to be setting up an affiliate marketing program and that you want as much information as possible on why you should go with them.

Ask them:

  • How many affiliates drove a sale for them last month?
  • So that you can compare their size and reach with others
  • How many affiliates are promoting merchants in your industry?
  • So that you can see their reach in your vertical
  • How much revenue did they drive for your entire industry last month?
  • To judge the level of bottom line success in your vertical. You should also look (if possible) at the % breakdown of the revenue by affiliate e.g. what % of revenue is made up by the top 5 affiliates? Is there a lot of long tail/small affiliate opportunity?
  • How many new affiliates did they recruit last month?
  • To judge how actively they are growing and how proactive they are.
  • How many new merchants did they recruit last month?
  • Ditto, are they an arrogant and lazy network?
  • How many merchants from your industry are with them? (good to go with the bulk as there will be a good affiiate base ready to promote you if they are already promoting your competitors).
  • Who are the biggest 5 affiliates working with them?
  • Who are the biggest 5 affiliates with them for your industry?
  • How much commission will they charge on sales?
  • Can they run multiple commission rates?
  • Can they do lead generation on a fee per lead basis?
  • What does their management fee include? How much support and help can you expect from them with affiliate recruitment/reporting/problem shooting/industry updates?
  • What technology do they offer that is unique to them?

If you can get a fair bit of detail on all of these questions then you should be in a good position to approach the negotiating stage and play them off against each other. Obviously the amount of leverage you have and how far you can go will largely depend on the size of your business and what kind of revenue you will bring the affiliate networks. Make the networks excited about your marketing and growth plans. Explain your past performance and what your plans are for the next year – if they see you as an expanding and growing brand then they will stretch further to meet your needs.

By the time you have got to this stage you will have your preferences, go with the data, the best deal and your gut feel. If you like and get on with the people on a genuine level and trust that they will take your business seriously and will spend time promoting you then go with them, but only if the commercials and their business proposition stack up too. Getting visibility with the key affiliates for your market Once you have your account set up and you are ready to go the first thing to do is to put together a target list of affiliates that you want promoting you. Rank the affiliates on the list by potential and then work with the networks on getting the best real estate possible on the affiliates sites.

Get the affiliate network to give you a list of every affiliate who has driven a sale for any competitor of yours (that is in their network) within the past 6 months. Ask the affiliate network to rank the affiliates in order of revenue driven (obviously without the sensitive data) if they mess up and give you the sensitive data (unlikely) then all the better. Put together a promotional plan for the first 3 months and make sure that your offers blow the competition out of the water. Affiliates are businesses in their own right so are just interested in promoting the merchant who can earn them the most cash, so if you give them a better % commission and your conversion rate is as good as your competitors or better then you will quickly win them over. Check out the top affiliates EPC (earnings per click). You then need to work out how you can give them the opportunity to earn over this with you – basically calculate: (site conversion rate x (commission rate per sale X Average order size).

Ensure that the affiliate network have agreed to give you featured merchant status for the first month and that you are featured all over their website/blog/twitter/facebook etc and emails.

Email all of the other affiliates straight away introducing yourself as their support at your company, explain your proposition, affiliate program terms (commission rate etc) and explain that you have an unbeatable offer for the first month that is going to have sky high conversion rates.

Save some fat in the promotional spend plan for the top affiliates so that you can offer them something special for a great location on their site.

Once you have the top 10 on board and are recruiting the long tail through the email then get on the phone and work your way down the list getting more and more affiliates on board, there will be many that you cannot get hold of and/or who do not reply; do not be disheartened as this is normal, affiliates are busy people. Just try to think of good ways to grab their attention and leverage all contacts at the network to aid you in getting in contact with the affiliates.

Keep in close contact with the network – let them know that you will make them work for their commission, be thankful and complimentary when they are good but beware of them being more lazy after the initial flurry – you need to hold the pace for at least the first 3 months and then it should start to get easier as you have some secure relationships that do not need too much maintenance. This applies to both affiliates and the networks.

New affiliate promotions to get the affiliates promoting you instead of your competitors This is obviously a tricky one with no clear right/wrong way. There are a few rules that I would stick to though:

Keep things fairly simple – as mentioned above affiliates are busy so if you come up with a highly complex (however fun) promotional idea they may just switch off before you sell it in to them.
Keep things fresh – do not just dole out the same old promos every month to the affiliates, there will be no real incentive for them to keep promoting you and trying new things for you if they already know how it will perform on their site.

If possible base your promotions for the top affiliates around their site and what works well for them e.g. if you sell T-shirts and cushions and one site is flying on the cushions then give them special offers around cushions.

Use the data you have after each promo – see what works for who and try to understand their site use profile so that you can meet their needs.
Show your face at affiliate events, make friends in the industry, do people favours and just generally enjoy yourself as if people see you being fun and positive socially then it will impact the business relationship you have with them.

If anyone has anything that they think could be added to this post then just let me know and I will add it in. All the best with your affiliate marketing!

The Ins and Outs of Affiliate Marketing Campaigns

Let the professionals help you… in mass:

Affiliate marketing networks provide an environment where companies who have something to sell (Advertisers) meet with companies who know how to sell it (Publishers). Many large Affiliate marketing networks provide hundreds of products to be sold to their network of thousands of publishers.

Affiliate marketing networks generally work on a performance basis (CPA), where you only pay when a sale or lead is generated for you. You receive a sale or lead at a predetermined cost and then award the affiliate network with a bounty for generating the sale or lead for you. The Affiliate network then pays their publishers for generating sales on your behalf, minus what the network keeps for itself for putting the deal together. This may sound similar to a shopping portal, however there are some distinct differences. A shopping portal places your products in direct connection with the online shopper. Affiliate marketing networks place your products in direct connection with publishers (marketing or media companies.) Each publisher will then use their own resources to generate sales for you, be it PPC, SEO, email, banners and the like.

Not every product or service will work with an affiliate marketing campaign, and many affiliate networks will not accept your offer unless certain criteria are met. The average website is not “marketing ready” for an affiliate marketing campaign, and often requires a redesign or a separate website to allow for easy sales or lead conversions. Most sales lead generation campaigns work across affiliate marketing networks as long as you are not trying to collect too much information, or information that makes your customers feel nervous such as a social security number. For product sales, you need to present a very attractive offer like “a free 7 day trial for a diet pill”, “free services for 1 month”, or anything that can be considered a low risk bargain. An offer such as “a 42 inch plasma screen Television for only $1,597” will not work. As always, there are exceptions, and you may need to work closely with your affiliate manager to produce a campaign that will be popular amongst the publishers.

Due to the nature of the affiliate networks, they can be volatile and risky, and are not recommended for any company until they have a lot of internet marketing experience under their belt. The overall sales potential of affiliate network marketing can be enormous, and any time gigantic sales numbers come into play, so do gigantic risks. Many affiliate networks have what are known as “Super Affiliates” who have the potential to generate hundreds of thousands of dollars in sales commissions each month. The volatility stems from both the marketing power available through an affiliate network, along with the performance-based environment they provide.

For the most part, the publishers who do the selling through the affiliate networks are greedy. They want to sell only the products and services that yield them the most revenue. It is their right, after all, because they are working on a performance basis and assume all marketing risks. If a good offer comes across an affiliate network, where a lot of money can be made, many publishers will market the product and sales will come streaming in. If a product comes in that does not generate good, or at least acceptable, revenue for the publishers, they will chose to not market the product and sales will be almost nonexistent. It is difficult to find the right balance to satisfy all parties involved (advertiser, publisher, affiliate network, and potential customer.) All parties must be happy in order to yield a successful affiliate campaign. The swing between a high performing campaign and an unpopular one can be tremendous. This volatility introduces significant risk, which comes in three flavors.

Affiliate Network Marketing Risk:

  • (1) Not enough business You have put significant time and resources into building an Affiliate marketing campaign. You have commissioned all types of marketing creative, website design and even bulked up your sales staff. Despite this preparation, your offer is not a money maker for the publishers, and they are not marketing your campaign. Your expenses have increased in anticipation of increased sales that simply never materialized.
  • (2) Too much business You hit the nail on the head… Your offer is hot and the publishers love it. They love it so much that sales flow in faster than you can handle. Your call center can handle 50 leads per day but the publishers are generating 200. For each sale or lead made you must pay a commission whether or not you can address it. You are literally downing in too much business, and your pocketbook can’t hold out long enough to expand accordingly.
  • (3) Cheating You didn’t invest much effort in validating your sales or leads. Your affiliate marketing campaign is generating a lot of leads, but sales are not happening. You are receiving numerous disconnected phone numbers, invalid credit card numbers or people who say “I only signed up for the free gift.” Leads are coming in, but a bunch of crooked publishers are submitting fake information to get paid as if their data was real. Notice how that last lead had a Texas area code, their zip code was “12345,” they stated they live in Alaska and gave you the credit card number “4444555544445555.”

Many Affiliate marketing networks will also ask if they can run your campaign exclusively. This means that they are the only affiliate network that can provide your offer to the world. There are some distinct advantages and disadvantages to running your campaign exclusively with one network.

Exclusive Affiliate network Campaign Advantages:

  • Your Affiliate marketing campaign manager may pass your campaign on to other affiliate marketing networks, and manage your account for you. This saves you considerable time by not having to seek out new networks, organizing campaign launches, marketing creative, and other tasks required to launch a new campaign.
  • You will not have to pay startup fees or sign contracts for the affiliate marketing networks that your affiliate manager passes your campaign on to. You simply work under your single agreement with your affiliate manager. This can save you thousands of dollars in startup costs, and lots of time.
  • Affiliate marketing networks use exclusive campaigns as “bragging rights,” and often give priority to their exclusive campaigns. Your campaign is more likely to be advertised to the publishers and given special attention. This helps to get your campaign noticed by the publisher, and ultimately increases sales or lead flow.

Exclusive Affiliate network Disadvantages:

  • Your campaign manager will outsource your campaign to other affiliate marketing networks. You will not know exactly who is marketing your offer and therefore the quality of the web traffic coming into your website is unknown.
  • Your affiliate manager may not be as ambitious as you. Your campaign may not get passed on to other affiliate marketing networks, and because it is an exclusive offer you can’t pass it on to other networks. Growth may become stifled.
  • The publishers who run your campaign through outsourced affiliate networks will not receive as high of a payout (sales commission). There are effectively two affiliate marketing networks: Your direct affiliate network and the outsourced network. More hands are in the pot, taking money and leaving less for the publishers themselves. The decreased publisher bounty with result in decreased interest in your campaign, so the outsourced affiliate marketing networks will not be as productive as if you worked with them directly.

Most affiliate networks will want to incorporate email marketing into your campaign. This is strongly recommended, as sales or lead generation volumes could be significantly higher. If you do allow your campaign to be email marketed, you will need to be able to maintain an email suppression list. The suppression list is a list of email addresses of people who want to opt-out from receiving your offer. An opt-out link must be provided on your email marketing creative where people can opt-out from your offer. You must then supply the suppression file to your affiliate network so they can in turn pass your suppression file to their publishers. This is a part of the Can-Spam law and it can be effectively managed with a small opt-out landing page connected to a simple database. Make sure you provide an updated suppression file to the affiliate networks at least once per week.

Launching affiliate marketing campaigns that convert:

  • Your goal is to generate a campaign that puts the most money possible into your publisher’s pockets, while also generating a profit yourself. Keep in mind that a break-even campaign is also a successful campaign as long as you can re-market to your clients and generate additional sales, upgrades, etc.
  • Design your campaign to maximize conversions. Minimize the clicks needed to purchase a product, or have your lead generation form on the home page. Don’t collect information that you really do not need, or that people do not like to give out (like an SSN.) You may have to build a unique website for the affiliate marketing campaign if your current website is not fine-tuned for affiliate marketing.
  • You are competing against all of the other campaigns on an affiliate network, not just ones selling the same thing you are. Publishers optimize the offers they market and drop the poor performing campaigns. Design an offer that works both for you and your publishers; your affiliate manager can help.
  • Make the steps necessary to allow your campaign to be email marketed by the publishers. This means you will need to create Can-Spam compliant email marketing creative, an opt-out page linked to a database, and provide access to an updated suppression file (a text dump of your database suppression file.) Email marketing will significantly amplify your campaign’s effectiveness.
  • Develop a large selection of various marketing creative, lots of standard size banners, multiple email creative, multiple email titles and subject lines, various text links and so on. Your affiliate manager will provide you a list of critical media types and sizes, but try to provide more than their minimum requirements.
  • Stay on top of lead quality and fraud. No matter how advanced your validation system may get, someone will try to sneak fake data past you. Make sure that you can track all lead sources, including the subIDs that are passed on through the affiliate network.
  • Every time you make a change to your website, submit a test to ensure that the affiliate campaign is still running as it should be. If your website has an error preventing sales conversions or introduces tracking problems, you may be asked to pay the publishers for their lost business. Remember that your broken website will affect many companies who stuck their neck out for you.
  • Be prepared for large volumes of leads, or no leads at all.

The risks associated with affiliate network marketing are many, and they are significant. You must be on your toes, thinking ahead and quick to move if things turn sour. But if you come prepared and design an offer that the publishers love, the financial rewards can be enormous.