The 5Cs for setting up an affiliate programme
Affiliate marketing continues to flourish as a key digital marketing tactic supporting a wide range of e-commerce sectors driving new revenue streams, and according to the IAB, the sector is now worth over £4bn. A recent Econsultancy affiliate report highlighted the growing importance of affiliate marketing with key insights including:
- 48% of affiliates drive at least £5k per month for merchants, compared to only 31% of affiliates who were generating this much revenue in 2009.
- 30% of affiliates are now sending at least 20,000 visitors a month to merchants' websites
Affiliate Action Plan: the 5 C's
I've put together an affiliate action plan covering 5 key elements you should consider when managing a program, they are: Competitor analysis, Commercials, Creatives, Communication & Campaign Analysis. Some of the actions listed are to help your affiliate program stand out from the competition.
1. Competitor analysis - Before launching your affiliate program a competitor analysis should be completed to understand your market sector and to define a point of differentiation
The competitor analysis will provide you with qualitative research on the competition, market position and how you can differentiate your program to create your USP.
Key actions to consider:
- Listen to your market - It's important to understand how your competitors' affiliate programs are perceived within the industry. Monitor competitor brands and keywords through Google Alerts. Look to monitor review websites, affiliate forums and use Social Media tools to listen to the market, views and opinions of customers and affiliates of your competitor programs.
- Who's setting the benchmark? - Perform a SWOT analysis on your competitors affiliate programs, what commission tiers are offered, what's the size of their affiliate base, are there any corporate publications that provide a breakdown in how much revenue their affiliate channels generate? And look for the opportunities, what are your competitors not offering the market?
- Exploit Gaps/Opportunities - From the SWOT analysis, a number of gaps & opportunities should now be identified and should provide you with a strategy. Defining a Gaps and Opportunity analysis can be very effective if you're operating in a crowded market place and are looking for a way to stand out to recruit affiliates to your program.
2. Commercials - Through internal and external research, this will help you define the level of commission/incentives to offer to your affiliates
- Override fee - Remember to take into account the override fee that you need to pay the affiliate network. Most networks charge a 30% override which is based on the commission you are prepared to pay your affiliate base. For example, if you offer 10% commission rate to your affiliates , you would also need to pay and additional 3% to the network as the override fee.
- Tiered Commission Levels - As your program matures, a cluster of key affiliates will be responsible for a large volume of sales so it's essential you retain this core base to your program by incentivising their performance such as providing a tiered commission structure. It's important to continue to look at incentivising the "long tail" of your affiliates by providing them with bonus commission levels depending on the sales they generate per month.
- Bonus - Introduce "Bonus level" commission tiers to help sell through end of line products or If you're a retailer that produces "own brand" products, you may well have more margin to play with by offering a higher commission level.
- Voucher codes / Cashback sites - A tactical opportunity to help push key products or promotions through a voucher code incentive. The better promotion you can provide, the more real-estate you can look to command on incentive based sites such as Voucher Codes or Quidco. Voucher / Cash back sites continue to dominate the retail sector and have replaced historical dominance of PPC affiliate activity, partly due to the increased costs in running PPC campaigns.
3. Creatives - Create a portfolio of banners - it's time to be nice to your design team!
Issues to consider here include:
- 55% of affiliates consider text to be the most effective linking method to a merchant website, with banners (36%) and datafeeds (25%) also voted the most popular form of promotion (Source: Econsultancy).
- Banner sizes - Ensure you're providing a rich mix of banner inventory for affiliates to use on their sites - these can be generic based or targeted around key products/services as well as promotions being run through your seasonal campaigns. Make sure you're providing a wide range of banner sizes and being able to use your in house resource to create tailored creatives- it's essential your business can react to changes in the market as and when an opportunity presents itself.
- Recycle - Look to re-use creatives from your other digital marketing tactics and re-use within your affiliate program e.g. Infographics from your SEO strategy, email campaigns, video promotions - all of these can be used to power your affiliate campaign and reach out to new affiliates to join your campaign
- Keep it fresh - Make sure you're keeping your creatives fresh and updated - there is nothing worse in seeing banners promoting out of stock products or Christmas promotional creatives being run in July!
4. Communication - it's essential you're communicating with your affiliate base to ensure a successful program
- Sell yourself - Create a "contact us" section - this should include all relevant contact and day to day info on your affiliate program e.g. what the commission levels are, who the contact points are within your company, specific terms and conditions that affiliates need to be aware of e.g. do you allow brand bidding? Do you welcome PPC & voucher based affiliate activity?
- One 2 One - Ensure you're communicating with your affiliates and networks frequently through phone, email or ideally face to face so you can build up a good working rapport. Don't forget your affiliate base is essentially an extended work-force so they need to know what your program is about, latest promotions and campaigns running.
- Get out of the office - Get out and about and meet your affiliates, use the time to understand their thoughts, comments and views on how you could better operate your program and what you're doing well (it may not be necessary to just increase commission levels!). Getting out and about is perfect if you're looking to drum up support for your program around a seasonal promotion
- Introduce an Open Day - Launch an annual open day at your offices - Invite your affiliates to come and visit you and the team, introduce them to your product lines, future plans and product promotions you have planned for the year. The key here is to really get their buy-in and that they feel part of your business.
- Keep the buzz alive - Don't let you're program become bland, boring and out-dated! - keep up interest levels by running competitions for your affiliates on a monthly/fortnightly basis, update your program with new creatives and seasonal promotions
- Make yourself available- Promote your contact details using social media, phone and email and build up your reputation and rapport with your network. Become a point of contact for your company and grow your reputation within the industry by getting involved on forums and industry get-togethers.
- Never make assumptions - Ensure you're communicating changes to the program with your affiliate base and affiliate network, don't assume they know all the decisions that are made in-house which will have a potential knock-on effect to the affiliate program and thus damage your reputation
- Create a Content Plan - This should be a simple overview of the key product promotions planned for the year that you're looking to promote to your affiliate base. By sharing your content plan this will help your affiliates plan in advance. The content plan could be around key sales periods of the year e.g. Valentines day, Mothers day or if you're in the sports industry - product launch days, sporting occasions etc.
5. Campaign Analysis - What are you going to monitor and measure?
Below is a list of KPI's that should be considered to assess the effectiveness of your campaign with the objective to generate sales:
- CTR (Click-through Rate) - the total number of ad clicks divided by the total number of ad impressions
- Impressions - the total number of times your ad is shown. This is a good metric to understand the effectiveness of a banner creative
- Conversion - the total number of visits divided by total number of sales generated
- Average Order value - of sales through the program
- Active affiliates - a good indicator to assess the health of the program i.e. of the total number of affiliates signed up, what is the % that are: generating sales or click throughs, not participating in the program - this provides you with an opportunity to segment your communication message to different affiliate segments.
Feel free to add your own thoughts and comments on how you monitor, manage and measure the performance of your affiliate program