Affiliate Marketing and your eCommerce Strategy – eCommerce Toronto Meetup

Inundated with all the marketing options available to you online? Have you heard about Affiliate Marketing in the past, but just couldn’t wrap your head around it? Being a business owner in the digital age can be overwhelming sometimes, and we understand that. Last night Ian Francis, our friend and Chief Revenue Officer/Managing Director of Canadian operations for AffiliateTraction, came together with a group of eCommerce professionals and enthusiasts to discuss Affiliate Marketing! AffiliateTraction is one of the oldest affiliate agencies on the planet, with deep experience managing programs for medium sized retailers and brand manufacturers. Ian has done affiliate his whole life. When he started he got paid a penny a click. When he got his first cheque in the mail it was for $5. Since then he’s been active in 300 – 400 programs. He’s managed countless verticals, and now he’s managing some of the largest programs in retail. We are so honoured that Ian came to present and share his expertise with the eCommerce community. In case you were not in attendance, we took presentation notes for you including Ian’s insightful answers to attendees burning questions!

Affiliate Marketing and your eCommerce Strategy

eCommerce Toronto AffiliateTraction

AffiliateTraction’s Portfolio

Affiliate is for everyone, this means you will see a lot of names and different verticals in their work. AffiliateTraction do affiliate programs for all kinds of businesses from billion dollar companies to big-name charities like UNICEF, the American Heart Association on a pro-bono basis. Even if it’s a service based business (ie. 1-800-Got-Junk), or a physical product retailer AffiliateTraction is in that vertical.

If you have some kind of process occurring online: if you’re selling a physical product, you have a shopping cart that can process payments, or you are selling a service online and processing payments, or have any kind of lead capture form for a newsletter, then there are people who are using affiliate to generate revenue for their business.

What is Affiliate Marketing?

Let’s pretend you have a webpage selling a product and to get people to buy what you’re selling you need to be advertising online, right? There are many moving parts to selling online but when you break it down there four component parts to advertising online:

    1. Pay Per Click: Search, Google Ads, Yahoo, Linkedin, Bing, etc.

    2. Marketplaces: eBay, Amazon, etc. Paying for your product to be there.

    3. Shopping Sites: Google Shopping.

    4. Traditional Media Buys: find a website to match your demographics and advertising there.

Affiliate is the 5th component part! The only difference is there’s no cost, except when traffic results in a sale then a commission is paid out. Affiliate marketing is performance based marketing.

The History of Affiliate Marketing

eCommerce Toronto AffiliateTraction

A long time ago, there was more than one search engine in the game, it wasn’t just Google. If you had a webpage you had to ask a search engine to be listed on their directory. Clicks determine how high you were ranked within a search. This then prompted website owners to pay for clicks to drive more traffic, and boom an industry was born! When Ian started out he was first paid a penny per click. This works with single line of code, javascript, called a “Pixel” that fires after a sale takes place and passes along any information that they need to pay out the affiliate.

How does Affiliate Marketing Work?

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There it is, THE CODE! It’s the secret sauce. It’s a singular line of code of Javascript. It goes in your shopping cart and typically on your confirmation page. It’s a pixel – a piece of Javascript that fires after a sale takes place to link the information back to an affiliate. It passes the information necessary to pay the affiliate and how much. Anyone in IT can place the pixel / code on your website in 5 minutes or less.

Core Components of Affiliate Marketing

The Main Players:

    1. Online shopper
    2. Retailer
    3. Affilate
    4. Network
    5. Agency (you pay an expert to take care of it for you)

Affiliate Networks in Canada:

Remember: not all affiliate networks are created equally, they differ in what they offer and the technology they use.

Affiliate Publishers in Canada

What is Realistic to Expect from an Affiliate Channel?

    1. Incremental online revenue (Key word is incremental)

    2. Increased clicks

    3. Trial new technologies (Good for companies looking to expand into new markets)

    4. Trial new online strategies

    5. New customers

    6. Improve brand awareness (Good for smaller players to get your logo next to your competitors)

Affiliate has come a long way. It’s evolved. Anyone who will work on performance can be an affiliate. Retargeting, shopping cart abandonment, email, PPC, pre-targeting etc. All of these marketing solutions can be done on performance, only you just have to allow them into your affiliates.

When you have an affiliate program, it’s your responsibility to recruit your affiliates. On average in Canada – you can see anywhere from 300 affiliates join each program, but larger affiliate programs can have about 6,000 affiliates in it. The classic 80/20 rule is true for affiliates. 80% of your commissions paid out, will go to 20% of your affiliates.

You should NOT Expect from an Affiliate Channel

    1. Build your brand: You have have to be established with other marketing strategies in place.

    2. Improved conversion: It will not improve your conversion as a whole

    3. Guaranteed sales: Your website’s job to convert

    4. Instant sales: Affiliate marketing is incrementa, that means building on a program over time!

What is Next for the Affiliate Channel?

1. Affiliate will continue spilling into other marketing/shopping methods

  • working on performance is the way to go
  • put your money where you mouth is

2. Attribution – pressure on the last click model

  • cost-neutral approach
  • in-the-cart attribution
  • fancy way of saying who do you give credit for the sale for?
  • historically it use to be pay everyone the same. but people have realized that not all traffic is credited equal.

3. Omni-Channel bridging the gap between online and in-store

  • card linked cash back offers
  • geo- targeted discounts delivered on a mobile device and redeemable in store
  • offers delivered directly to a printer to be redeemed in store
  • mobile cash back app requiring a photo of the receipt

Questions and Discussion

eCommerce Toronto AffiliateTraction

What pricing model are you offering you affiliates?

You can pay affiliates anything you want, and that’s the beauty of it! The popular versions though are revenue sharing, or you can do pay-per-click. If it’s not a physical product; like a sign-up or service, perhaps lead generation or sign-ups for a newsletter, you can give them 50 cents per sing-up. The merchant is in control.

What are best practices when it comes to targeting, as a merchant? Right down to age and demographics?

It’s about deciding what type of affiliates you want in your program. E.g. luxury retail category: how do people feel when people see my logo on a website? They are very brand aware want their logo placed in the right sport and want consumers to get warm and fuzzy feeling when seeing their logo. They do a manual review process, to instil this. They’ll ask “Is this a good fit for my client?”, and 99% of the time the answer is, no. On the flip-side some only care about the number they are seeing at the end of the month and are willing to placed anywhere (e.g. on pages with adult content). To make sure all the affiliates are playing by the rules, a compliance team tracks every single link every single day.

From a publisher perspective, how would you leverage this strategy? Can your app be an affiliate for programs? How would you manage that?

The big affiliates work with the networks who have an API, so they don’t have to do anything because it’s automatic. Companies have a product catalogue, dump this in your app to get everything on one page. Join a network that has a majority of the clients you’re looking for, and they will build an API to make it an automated routine.

Is there a place where you can look up how to determine what to pay

AffiliateTraction does an analysis, and finds out all their information like incentives. All the information for an affiliate program is there and not hidden because you want affiliates to see it and join the program.

How do you become more competitive? How do you get in the game?

One thing that’s important to know is that if there’s a affiliate webpage, you have to look at them like real estate. Affiliates know what money they’ll make in any given spot on a page, and will know stats like average of clicks in any day or month. It doesn’t matter what you plug there because they know how much those spots are worth. Publishers are extremely picky with who they’ll plug in.

1. Payout: Very straight forward.

2. Cookie Duration: How much time needs to go buy before we decide whether we give them credit for the sale? Average cookie duration in Canada is 30 days so you need to determine what is fair to give back.People who are high-brow think their brand is better than others will lower the duration to 7 days. Toys-R-Us’ cookie duration is five hours. Theres an e-cig company so the cookie duration is a lifetime – and paying north of 70%!

3. Brand Strength: You have one spot left, who do you pick? Home Depot has a payout of $1.50, but Bob’s Basket Weaving pays out $3 … obviously you’re going to pick Home Depot – brand strength will win. Another popular one is matching the demographics. Air miles targets women 18-35, and will not post a home depot ad on their site, but only things that fit the demographic of their clients.

What about conversion assists and attribution?

There are three types of buckets, which merchants value differently:

1. Introducers: Introduce a shopper to a product, even when they don’t know they’re shopping yet. (e.g. mommy-bloggers)
2. Influencers: Influencers convince those who need reviews and price comparisons to buy.
3. Closers: Are deals and discount sites.

These three people provide the whole shopping experience spectrum. Value them all differently. You should look at what the affiliates are doing and ask yourself about the value this gives your organization.“Give them what they’re looking for”, it gets them to check out.

How is an omni-channel environment influencing the industry?

50% of sales are coming through mobile with “click to brick” and in-store pick up we have a culture of instant gratification, this is why omni is so great! When you walk into a store to pick up what you bought online, you will be buying something else that you see in the store. Advertisers have paid no extra money for that. Customers will most likely buy much more in-store because they have to walk through the store. You’re driving people to your site, and they may not buy online, but if they go into the store they’re going to buy lots of things, and that’s free advertising!

Where do you see affiliate marketing in 5-10 years?

Everything will be mobile and omni! eCommerce will be obsolete, as there are no gaps, it will just be known as commerce. Everything will go to performance and merchants will refuse to put money out for things that won’t provide a good ROI.

Presentation

Affiliate Marketing and your eCommerce Strategy from Demac Media