Navigating the Affiliate Marketing Channel with Craig McGlynn Episode 2: What Is An Affiliate Program?
This article is the second in an ongoing informative series written by Craig McGlynn, the VP of Agency Sales at leading Affiliate Management Agency Perform[cb]. The series will cover topics of interest to people in the Affiliate Industry, considering launching an affiliate program, or needing help scaling an existing affiliate program.
So you are thinking about starting an affiliate program and are focused on increasing ROAS – you probably have a multitude of questions and are feeling overwhelmed, unsure of even what to tackle first. Luckily for you, I’ve worked with hundreds of marketers as they take their first steps into the affiliate channel. Below are answers to some of the most frequently asked questions that marketers have when starting an affiliate program.
What is an affiliate program?
Amongst affiliate marketers, one of the most common jokes is that people have no idea what we do, even our relatives. I always joke about the fact that I have to explain to my mom what I do several times a year. Even seasoned marketers tend to scratch their heads when considering affiliate. The Oxford Reference actually gives a pretty solid definition of affiliate marketing: A revenue-sharing system in which website owners are paid a small commission whenever clicking on a product link leads to a purchase. In a nutshell, affiliate allows the marketer to only pay when the desired action is taken by the consumer. Can’t beat that guaranteed ROAS.
81% of US advertisers use affiliate marketing, and 84% of publishers use affiliate marketing links in their marketing mix, so it’s fair to say that pretty much everyone is already in the game – especially your competitors. To keep up with them, you’ll need to start playing too. Also, not to sound like a broken record, but you can’t beat the ROAS because affiliate is the only channel in which you pay only for real customers – not impressions or engagement.
Who is right for the affiliate channel?
Historically, the affiliate channel was a playground for e-commerce companies selling physical products in a few key categories. To this day, some of the strongest players with the most profitable programs are brands with physical products. However, over recent years we’ve seen service providers and B2B companies find success within the affiliate channel along with their D2C counterparts. I have seen amazingly strong affiliate programs in every category from insurance, traditional banking and finance, fintech, all the way to fashion, home, electronics and supplements, and pretty much everything in between. Nearly 90% of US adults shop online, so it’s no wonder brands are having success!
What is the rule of thumb for the size of affiliate?
A regular question I get from affiliate marketing newbies is “how big is this opportunity?”. The answer is that it depends on several variables and factors such as the brand’s vertical, the types of offers, the sensitivities to publisher categories, the amount of advertising you do in other digital channels, and more. The general rule of thumb is that a solid, mature affiliate program should contribute usually between 15% and 30% incremental sales to your total e-commerce channels.
What risks are involved?
A poorly executed or unattended affiliate program leaves a brand at risk for exposure to fraud, low-value tactics (such as your own affiliate’s bidding against your own search terms), and brand misrepresentation such as your ads appearing adjacent to brand-inappropriate content. Just a few of the staggering statistics that punctuate this point are $50B and 25%. $50B is the size of the criminal enterprise known as ad fraud, and 25% is the amount of every digital dollar spent that actually reaches the consumer, per Adweek. A well-managed affiliate program can actually protect your brand from falling victim to these low-value tactics and other forms of leakage in ad spend.
What are the rewards of an affiliate program?
Aside from the rewards of incremental revenue upside and guaranteed ROI mentioned earlier, the beauty of affiliate marketing is that you are able to leverage a large network of publishers who come with an audience of loyal readers and followers and who, on a performance basis, talk positively about your product or service. The true spirit of the affiliate channel is that people aligned with your mission, who command a regular readership or group of followers, tell that constituency to buy your stuff! Sounds too good to be true, right? That’s exactly what affiliate marketing is and after over a decade, it’s why I’m still kicking around this channel – because it works – and it’s fun!
Want to learn more about how the affiliate channel can work for you? Connect with an affiliate management expert today!
Stay tuned for our next installment and if you missed them, check out the other articles in this series: