How to Grow a Profitable Affiliate Channel
This panel was well moderated Declan Dunn and had panelists with very little overlap in their area of expertise and focus. Beth Kirsch of LowerMyBills represented the more traditional Affiliate side, Amanda Watlington of Searching for Profit represented the search based affiliates, Peter Figueredo (that’s pronounced fig-your-a-dough, Declan) of NETexponent was there to talk about cooperative marketing, and Marissa Levinson of SixApart explained how blogs can complement an affiliated program.
Beth talked a bit on the basics of affiliates, breaking them into four groups: coupons/loyalty sites, CPA networks, search affiliates, and traditional affiliates. Even with this diverse group, each with different needs and methods, she boiled it down to a very simple statement. She said “If you think that this business is about anything other than making money, get over it.” This may sound harsh, but the bottom line for an affilate really is money. There may be a few that are in it for glory or self importance, but the rest (and the ones you as a merchant should really care about) are in it to make money and further their business. Make sure you can do this for them, and you can succeed. Beth likes to think of affilates as “the biz dev farm team with the goal of developing deeper partnerships.”
Amanda noted that although the overall Internet audience is not growing very fast any more, there is massive growth in search. SEM spending was $5.75 billion in 2005, with an expected spend of $7.2 billion in 2006. Much of this is from affiliates who are leveraging organic and paid search to drive users to their sites and merchant sites. Referring to search’s Golden Triangle, Amanda emphasized that it is all about real estate and that “the more real estate you own on the page, the more you drive results. It is all about coverage, all about real estate.” The way to do this is with the help of you affiliates, who are as Amanda said, “wonderful search marketers.” You need to be able to drive your competition off the page, and you need affiliates to help you with this. With “appropriate agreements and arrangements” (with regard to trademarks) with select affiliates, you can dominate the golden triangle, and possibly the whole page.
Peter talked about something rarely done in the affiliate area, cooperative marketing. This is where you barter with your partner instead of just offering them monetary compensation. One example of this was the New York Times Store and The History Channel, who exchanged inventory and did a cooperative email exchange. Each included offers from the other, and there was no monetary compensation. Other times you do have to pay for performance, such as another NYT Store deal that had Art.com selling NYT prints on the Art.com site. The imporatnt thing is to think about synergistic opportunities and expand you potential partners to deal with. If you can create a win-win situation that has a simple contract and no payments, then you can open new markets and increase sales.
Marissa opened with a graph illustrating the exponential growth of blogging. It has been doubling every six months, and currently there are 34.5 million blogs. She explained that blogs are often (but not always) smaller, but very niche. You have a passionate and dedicated audience who have trust in the blogger. This makes them an “influential” who can be a powerful promoter of affiliate deals. Since blogs are the epitome of contextual content, conversion rates can be quite a bit higher than normal. Another reason to target blogs is that “blogs are the darlings of search” right now, with blogs often rising faster and ranking higher than the merchant’s own site. For this reason she recommended separating the blog from the main site, going as far as suggesting that hosting them on different class C addresses was very advantageous. She concluded by recommending that affiliate programs should be managed through a blog. With SEO advantages added to the effective communication enabled by a blog, you can bypass email and it’s issues. Add in an RSS feed for the blog and even for affiliate links, and you might have a killer solution that the bloggers and non-bloggers would love.
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