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Affiliate marketing is now one of the fastest-growing segments of online commerce, thanks, in part, to its pay-for-performance role in marketing budgets.

Yet many marketers do not understand affiliate attribution. As a result, merchants are unaware that their affiliate sales are inflated—sometimes by as much as 200% to 300%—making their affiliate program a cost center rather than a revenue source. Ouch.

Why does that happen? Because what counts as an affiliate sale is not always clear-cut. Many marketing teams make the mistake of not de-duping their affiliate sales against other channels, such as search engine optimization, pay per click, display ads, email marketing, and so forth. In many cases, the same sale is getting credited to multiple channels.

Identifying Low-Quality Affiliates

Such overcounting is problematic for affiliate programs with a large percentage of low-quality affiliates.

Low-quality affiliates include sites that target current customers (loyalty sites), customers shopping with purchases already in the cart (coupon sites), or people looking for the brand by name (trademark bidders and coupon sites).

Marketing managers take note: Low-value affiliates often account for 90% of affiliate sales. And they not only generate little revenue but also crowd out higher-value affiliates and make it impossible for them to succeed.

By looking carefully at analytics and individual affiliate conversion rates, merchants can identify the lower-value affiliates that are not generating incremental sales or whose sales methods cannot be understood. Examples include trademark bidders and poachers (pay per click and search engine optimization), cookie stuffers, and sites that try to get forced clicks (coupon sites are big offenders) or automatically set a cookie that is difficult or impossible to uninstall.

Identifying High-Value Affiliates

The best way to make sure an affiliate marketing program delivers sustainable results is to recruit and nurture high-value affiliates. They have the ability to affect a purchasing decision, develop brand loyalty in a new audience, and bring merchants the traffic or mindshare they want.

High-value affiliates also often know to promote at the product level, and as a result they should generate 75%+ new customer referrals and a 2%-3% conversion rate, in line with industry norms.

Here are eight tips for identifying and developing affiliates.

1. Realize it's just like sales

Approach finding great affiliates just as you would approach a sales campaign. Identify the best targets, reach out to them personally, and offer them something of value. Follow up. Build the relationship over time.

2. Think like a recruiter

You always need to find the best talent. It's likely that affiliates that come to you won't be top-quality, so go in knowing you'll need to hunt for affiliates that will perform. Don't forget to consider nontraditional affiliates—those who've likely never considered becoming affiliates—that might want to work with you based on your business. For instance, a holiday card company might reach out to photographers and local schools to become affiliates.

3. Research, research, research

Make sure you're reaching out to prospective affiliates that deliver the audience and volume your program needs. Often the best affiliates already refer to complementary products and services, plus create their own content. As a result, they have a thriving brand and community. Many easily available research tools, such as SEM Rush and Alexa, can help identify sites that have desirable SEO or traffic in areas where you want your company to be found.

4. Revisit current relationships

Do a deep dive into your analytics to see what sites have referred quality traffic in the past. Follow up on natural links and people who did blog posts and reviews. Ask them about becoming an affiliate if they talked about your product and liked it.

5. Reach out to your best customers

See that blogger who's a repeat purchaser? She loves your products, and she would likely be honored to become an affiliate. Customers who use you often are likely referring people anyway, so why not formalize the relationship and make it more rewarding?

6. Get personal

Building one-on-one relationships with affiliates is key; and though it might be time-consuming, it will pay off in spades when they are engaged in your brand, new offers, and promotions. Be in touch by phone and email regularly, and attend the conferences they attend.

7. Get creative with creative

Merchandise your offerings to reach different vertical markets. For example, if you're selling jewelry, consider doing a specific promotion around wedding party gifts or around different holidays. Set up creative materials and data feeds by category, then use third-party tools to extend creative reach.

8. Use the right incentives

Everyone wants to be motivated and rewarded for great work. Run cool promotions or contests for high-value referrals, pay more for new customers, and set the most competitive commission rates for affiliates that are creating value. Pay less to those that aren't creating value.

(Image courtesy of Bigstock: Affiliate marketing)

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ABOUT THE AUTHOR

image of Robert Glazer

Robert Glazer is the founder and managing partner of Acceleration Partners, founder & chairman of BrandCycle, and author of Performance Partnerships: The Checkered Past, Changing Present and Exciting Future of Affiliate Marketing.

LinkedIn: Robert Glazer

Twitter: @robert_glazer