Editorial Articles

Affiliate marketing is now mainstream, being utilised by a whole spectrum of brands. A whopping 95 of the IMRG/Hitwise Hotshops Top 100 published in June 2010 currently have affiliate campaigns live and this trend is replicated across smaller merchants. 

Looking across the leading six affiliate networks there are over 3000 affiliate campaigns live, not taking into account those that run directly, so affiliate marketing is not a niche area any more.

At present it seems to be a given that any merchant worth their salt has to have an affiliate campaign, but more questions need to be asked about how many of these campaigns are actually driving incremental value for the brands involved.

There are incredible benefits attached to a successful affiliate marketing campaign which would sit high on the wishlists of any Marketing Director. The return on investment is generally amongst the lowest of all channels within the online marketing mix. Affiliates increase your presence and reach online, provide you with branding across the web and increasingly offline that you don't pay for. The barriers to entry are incredibly low, with the cost of setting up an affiliate program being negligible and limited upkeep costs are involved until the sales actually start rolling in.

There is also considerable evidence to suggest that affiliates will actively increase your conversion rates and consumer spend as well. Because affiliates are responsible for a large proportion of the pre-sell of your products for you, they are optimising the opportunities for you – and therefore them – to make more money on each customer.

So let's have a look at this. Affiliates spend their own time and money in driving highly qualified traffic to your website in return for payment only when a sale is made – a Financial Director's wet dream and surely a no risk channel, right?

We would argue that whilst there are incredible benefits, there are also inherent risks in running an affiliate campaign. As a brand you will have invested in building brand identity for yourself and with most marketing channels you are able to control how it is portrayed. However as the affiliates are taking the risk, you need to give them some leeway in how they promote you. Clearly they will operate within brand guidelines but this wholesale handing over of control can make some brands a little nervous.

Secondly, there is no point in paying an affiliate for driving a sale that was already coming to you regardless of their interference. Without understanding fully how affiliates are operating there is a considerable danger that brands may pay more than once for a sale.

But understanding how affiliates are operating is becoming increasingly difficult. As affiliate marketing has evolved, it has moved away from being a single channel to become more of an umbrella term covering methods such as price comparison, PPC, cashback, voucher code, email and targeting based on behaviours and trends.

The trick to managing an effective affiliate campaign is to ensure that the positives vastly outweigh the negatives and unfortunately as we've outlined above, it's not an easy channel to master. Added to the factors within affiliate, you also need to take account of how the activity affects your other channels. This may sound scary, but when you consider that the two largest online retailers in the world, Amazon and eBay, invest vast amounts of resource and money into running huge affiliate campaigns then the benefits become more tangible.

So affiliate marketing is absolutely worthwhile, but only if managed correctly. It requires knowledgeable and well-informed strategy, but if you get it right then the potential is exponential.

Chris Bishop
Founder & Managing Director, 7thingsmedia
Twitter: cpbishop