Performance based marketing. 4 major pillars:
- publisher/affiliate (3rd party)
- customer/end user
- network/offers for affiliates
16% of e-commerce comes from affiliate. It can be B2C and B2B.
CPA is revenue received by a publisher when he or she sends user to an advertiser who converts. Acquisition is conversion, it involves a transaction or purchase, advertisers pays only for converts. CPL is cost per lead. Revenue received when publisher generates a lead for an advertiser on their site. Usually involves user filling contact form.
Revenue share, not fixed amount per conversion. Advertising costs are defined by revenue.
Risks of affiliate marketing
- CPAs can be dangerous. No guarantee, expensive, frauds. Better avoid in the beginning.
- Conversions - sending traffic with no conversions, so, no revenue. This can be due to non-targeted traffic or fraud.
- Aligned interests - don't compete with yourself. Merchant + affiliate = partnership. Same space = problems.
- Cash flow and receiving revenue
- Tracking performance
Merchant AND affiliate, not OR:
- phase 1 = being the affiliate
- phase 2 = being the merchant
- you can be both
Merchants must have
- product or service
- definition of conversions
- commercials (numbers): how much to pay and to generate
- platform (private or network)
- tracking sales and numbers (software)
- realtime reporting
- platform to communicate
- platform to upload offers and product feeds
- be able to select affiliates
- track metrics like CPA, CPC, CPM...
Recruiting and managing affiliates
- web searching
- attractive payment structures
- know your affiliate motivations
- communicate and be adaptive
- treat with care
Questions to ask
- size of audience
- who is the audience
- how does the affiliate communicate with them
- frequency of communication
- past comparable performances
- Alexa rank
- low risk
- search affiliates
- builds your authority and ranking
- ready made networks and providers
- 24/7/365 workforce