Quality is never an accident …it is always the result of high intention,
sincere effort, intelligent direction and skillful execution
–William A. Foster

If you’ve attended Affiliate Summit West 2012 (or are subscribed to the magazine) you have a copy of the latest FeedFront. For those of you who don’t have it, I’d like to draw your attention to my newest published magazine article — one entitled Seven Precursors of Affiliate Marketing Failure.

I believe that there are 7 major ways to fail at affiliate marketing. In the article I outlined 4 reasons why merchants/advertisers fail, and 3 reasons for affiliate failure. Here they are:

◊  Merchants fail in instances when they

(1) have unrealistic expections of what affiliate marketing is, how it works, and what it will do for them,
(2) try to manage affiliates who are 100% self-managed and hate that “managerial” approach,
(3) expect something for nothing, and/or
(4) launch their affiliate program, and then let it roll on “cruise control”.

◊  Affiliates, on the other hand, fail when they

(1) aren’t devoting the time to thorough due diligence and education,
(2) fake passion, interest, and/or hard work, and/or
(3) fail to diversify and focus on only one niche, or one marketing method.

Whether you are an affiliate or a merchant — the problem most frequently “lays in the misalignment of hopes, goals, expectations and realities” of what works and what doesn’t.

You may download the full issue of this FeedFront here. My article may be found on page 10. It’s got a number of other excellent article in it, and I certainly recommend at least flipping through it.

Inspired by David Meerman Scott‘s older (but, nonetheless, genius) post on social media marketing, today I would like to take a stab at explaining affiliate marketing in just 88 words:

• You can strive for visibility in search engines (Search Engine Marketing)
• You can earn attention by creating engaging social content (Social Media Marketing)
• You can bug your customer through email (Email Marketing)
• You can market through mobile devices (Mobile Marketing)
• You can buy text links or banners (Display Advertising)
• You can employ traditional channels (PR, TV, radio, print)

Or you can embrace all of these by starting an Affiliate Marketing program, equipping independent marketers to promote you through all of the above and get compensated on performance basis.

I’ve defined affiliate marketing several times before, but besides the performance basis, it seems that never in my blog have I really underscored something I’ve talked about in my latest book — the fact that affiliate marketing is really not a marketing channel, or a type of marketing. On page 9 of my book you’ll read:

“It exists on the crossroads of all other types of online marketing… It is more appropriate to understand it as a special marketing context, the undergirding principle of which is its performance-based remunerating model. This model works with any time of marketing: display, contextual, video, social media, and other types of advertising, as well as search engine marketing (SEM), email marketing, and other methods. The only difference with the pre-affiliate model is that advertisers post-pay and do it for the actions of their choice, as opposed to pre-paying for the actions of the publisher’s choice.”

Note: in the above quote, advertisers = merchants, vendors, businesses, while publishers = affiliates [more here].

Only one thing must be corrected in the above quote — affiliate marketing now embraces not only the “online” marketing contexts, but also the offline ones (e.g.: radio/TV, print, direct mail, telephone marketing, etc).

Typically, yield is being used as an investment term that reflects a return on investment (ROI) normally expressed as a percentage, and tied to a period of time. Since ROI is what affiliate marketing is all about, a week ago I asked merchants to help me determine the yield (or percentage of sales) that their affiliate marketing programs bring in (as compared to the overall online sales in the company).

We’ve had 35 merchants participate (thank you very much for taking the time, as it will help others get a better understanding of what to expect), and here are the results of that poll which has closed earlier this morning:

We can see that the spread is pretty wide. It seems to me that splitting the votes into 4 groups would make the above pie-chart a bit more digestible:

1. Low yield (under 8%) — 40%
2. Moderate yield (9%-15%) — 29%
3. Moderately high yield (16%-35%) — 21%
4. High yield (over 50%) — 11%

Conclusions? I’ll take a stab at drawing some:

1. As initially stated, much will depend on the size of your online business, and the sales volume it generate(d)/(s) before the introduction of the affiliate program.
2. Also, as stated before, merchants operating in some niches (less crowded ones, more online-friendly ones, etc) may see a better yield (from affiliate marketing) than others.
3. The yield will also be greatly conditioned by your affiliate program’s T’s and C’s (some programs choose to exclude certain groups of affiliates [e.g.: PPC, couponers, incentive sites, etc], others auto-decline affiliates on one reason or another, and so on).
4. Finally, the results of any affiliate marketing campaign are always directly dependent on the amount of time, money and effort the business invests in the development of their affiliate program.

In a nutshell, an array of situational variables will determine the outcome, and no, there is no easy one-size-fits-all answer to the question of what to expect. I stick to my original answer: aim at least at the 15%, and strive for more; but don’t expect much unless you’re closely involved in the development of your affiliate program (read: manage it! don’t leave it on a cruise control).

If anyone has other (complimentary or even opposing) views on this subject, I would appreciate you expressing them via comments under this post. Many thanks in advance.

Over two years ago replying to a question of what percentage of sales an affiliate program can bring I wrote:

Much depends on (a) the size of the business at the point of starting the affiliate program, and (b) the niche in which the business operates. In reality, it is next to impossible to quote the exact percentage. If it’s a small business in a moderately crowded niche, 40-45% is a realistic growth to expect. If, on the other hand, it is a Fortune 500 business with a solid online presence and a good flow of Internet sales prior to starting the affiliate program, a 10-15% growth is a great result to achieve through the affiliate channel.

Yesterday, as I was listening to Ozon.ru, one of Russia’s top if not the top online retailers or the Amazon of Russia, present at the Russian Internet Forum in St. Petersburg, I’ve heard them quote some impressive stats. Regardless of the fact that roughly 80% of their customers choose cash-to-courier as their payment method (the “beauty” of present-day Russian e-commerce), they’re growing and currently getting some 4 million UVs, carrying 1 million products, having 1k employees, and registering gross sales of some 4 billion RUB (which currently equals some 143 million USD)/year at a rate of ~6,200 orders/day. Answering the question of of what percentage of their sales come referred through affiliates, one of Ozon’s directors, Anna Matveeva, replied that between 10% and 13% of the e-tailer’s sales are affiliate-driven. That makes up a range of $14.5-$18.6 million/year which is impressive not only for Russia.

I’ve asked some major American online merchants the same question, but most of them sent me replies saying “sorry, we’re not able to share that information” or something along similar lines. DaySpring.com, a Hallmark subsidiary, whose affiliate program we manage, did agree to share their numbers though; and I’m happily linking to all of their online properties, in return. Jesse Lane, the company’s Internet marketing director, shared that Year To Date 2011 numbers have been 12% to 14% of all online store sales. This seems to roughly match the range that Ozon has quoted above.

If you’re reading this as a merchant (or an affiliate program manager), I could really use your help now. Here’s a 100% anonymous poll that I’m inviting you to participate in:

I hope the above poll will help us all understand what part of an e-tailer’s sales can be affiliate-driven a bit better. Many thanks in advance for your votes.

In case you haven’t yet heard, Affiliates4u.com has released its 2011 “Performance Marketing Guide”, and I’ve just picked up my copy.

It is an impressive 143-pages-long reference book on all things performance marketing, and the best part of it is that it’s available for a free-of-charge download (so, it’s an eBook of a kind).

On the first 60 pages of it, the Guide gives the reader an overview of Search Marketing, Mobile Marketing, Display Marketing, E-mail, Social Marketing, and Behavioural Retargeting.

Naturally, the largest part of the Guide is devoted to Affiliate Marketing. In it, the authors discuss different types of affiliates, affiliate networks, commission types, role of cookies, product feeds, and much more. There are plenty of examples, case studies, and up-to-date statistics that you don’t want to miss.

The part in the “Affiliate Marketing” section that I’ve appreciated the most was the “Analytics” part. Web analytics is an area that deserves significantly more attention that many affiliates and merchants currently devote to it. The authors of the Guide outline 4 processes and objectives of web analytics: (i) data gathering, (ii) identifying business goals, (iii) understanding your visitors and their intent, and (iv) making actions based on factual data [p. 122]

Here’s an excerpt from this part:

When it comes to performance marketing, wheather you are on the advertiser or publisher side, data analysis is essential to working well with the other party and producing the best results possible. Performance marketing is a win-win situation… but making it work well requires a lot of in-depth analysis and once you… have started tracking the visitors who are converting, you will need a program which will let you drill down the data to establish what people are buying, when they are buying it, where they are buying it from and how much you are paying out versus how much you are making. [pp. 127-128]

If you haven’t downloaded your copy of the Performance Marketing Guide yet, you may do so here. It’ll be worth your time. I’ve really enjoyed it.

At the end of last week Rae Hoffman-Dolan (aka “Sugarrae”) has published an excellent infographic explaining what affiliate marketing is, and how exactly it works. Before Rae’s “step by step visual” the one that I’ve seen used more frequently than anything else was this one and variations of it (example 1, example 2). It was a good one for a simpler visual explanation; and I, actually, used something very similar on the cover of my newest book. Another one I particularly enjoyed was the HasOffers graphic. Now we also have this one (click to magnify it):

[image provided courtesy of the Sugarrae affiliate marketing blog]

I think both Sugarrae and Randy Krum did an excellent job on it.

I have only one thing to add: for the performance-based remuneration model (which is the backbone of affiliate marketing) to work, there doesn’t necessarily have to be a link or a cookie. There are situations when neither is required. Besides cookieless tracking solutions (which aren’t as widely spread, so I won’t pause on these much), here are two scenarios when there will be no click (hence, no cookie set), but the rest will work exactly per Sugarrae’s or the traditional affiliate marketing scenario (namely: the merchant will recognize the referral, and credit the affiliate the commission due):

Situation #1: Pay-per-call scenario — When, employing a pay-per-call solution, a merchant has a capability of assigning unique phone numbers to its affiliates, and attributing commissions based on what number the lead/sale came from.

Situation #2: Exclusive coupon codes — When a merchant has a way of distributing unique coupon codes (similar to buy.at’s solution, or what ImpactRadius offers in the U.S. as well) which track back to the affiliates they were originally assigned to, regardless of who published them.

Again, that was an excellent infographic, but both affiliates and merchants should understand appreciate that performance/affiliate marketing does go beyond clicks and cookies now.

When a friend or family member asks you: “So, what exactly is it that you do for living?” what do you reply? How do you explain affiliate marketing to someone who has never heard of it?

I love how Eric Nagel puts it in the header of his blog: defining “affiliate marketer” as one who “makes money by making other companies money.” Eloquent and so true!

One of my personal favorite analogies is an ice cream truck one:

Short Explanation

You’re a kid. It’s a hot summer day. You know that an ice-cream truck passes your neighborhood, but stops on a street just around the corner. You work out a deal with the ice-cream truck driver where he would pay you a 20% commission of every ice-cream sold to the kids that you bring to him. You’re an affiliate/performance marketer now.

Longer Explanation

You’re a kid. It’s a hot summer day. You both possess the knowledge of the ice-cream truck’s route, and have access to and means of influencing the ice-cream truck’s primary target audience. You agree with the ice-cream truck’s driver on a remuneration he would pay you 20% of every sale for every customer you refer to him. The guy is interested in growing his business even more, and agrees to pay you a 30% commission if your monthly referred sales exceed 20, and 40% if you send more than 50 sales/month… So there you have it. We’ve also covered an example of a performance-based incentive.

How do you explain affiliate marketing to friends, family, or someone who has never heard of it?

With the fairly recent Google’s “Farmer” Algorithm Update multiple bloggers (affiliates in particular) became concerned (subject also brought up by Joe Sousa in his recent post here), and started wondering if they (as content producers) may be affected by it.

The short answer is: “No, as long as what you produce is unique and quality content.”

For more detailed explanations/commentary, I’ve contacted four established SEO experts and book authors, and would like to bring you their opinions in what follows:

Quality content that’s keyword rich, but written with users rather than search engines in mind will always triumph. Sure, search algorithms change, and will continue to do so. Rankings will change. But articles and blog entries will continue to be found and spidered. Following the basic guidelines always helps: frequent updates, links, tags, a decent CMS. Content is what powers the web, and that’s not gong to change any time soon.
– Rebecca Lieb, Author of The Truth About Search Engine Optimization

If your blog can be viewed as featuring duplicate content, or mostly non-unique content, you should be worried. As that’s not the case for your average blogger, and is more relevant to spammy sites, I wouldn’t worry about it.
– Gab Goldenberg, Author of The 7 Curiously Obvious Rules Advanced SEOs Rely On

What’ll happen to article based content search? In general, Google’s latest “content farm” algorithm change was manual (versus automated) and intended to penalize sites with what Google perceives as low quality content. I imagine, another way of looking at what Google is attempting to reduce or penalize is content that was solely created to rank in search-engines for purposes of some form of arbitrage. Either way I’d say that any content that is likely to be perceived as low quality is at risk of being pushed out of the SERP’s. For instance, if articles are poorly written and written specifically to rank on search-engines they are at risk. In addition, Google has always had specific rules about duplicate content – in this way, using article distribution as a primary strategy for building links was always shortsighted. So the moral of the story is to make sure that you are writing high quality, unique content and that it fits into a larger strategy to rank well on search-engines and ultimately provide the end user with value.

Is it just the article sites or are keyword content blogs in danger? As mentioned above, any content that is likely to be perceived as low quality is at risk of being pushed out of the SERP’s — this includes blogs that exist solely for the purpose of ranking well on search engines. I’d strongly advise to build a site around the content, encourage user generated content, interact with readers, hold contests, open social media accounts, leverage word of mouth and buzz marketing strategies, and build links as naturally as possible.
– Kris Jones, Author of Search Engine Optimization: Your visual blueprint for effective Internet marketing

I personally don’t think blogs are in danger from the Google Panda/Farmer update if they have established a credible brand that engages its audience well. We know from Google that this is an algorithmic change and they are looking to de-emphasise “sites that copy others’ content and sites with low levels of original content”

SEOs have naturally speculated about the signals which would enable Google to identify this type of site. For example a high proportion of ads above the fold. But Google have said this isn’t a signal. Instead I think its useful to turn it on its head and think about how Google can identify a site with quality content that engages its audience. Obvious signals of a quality engaging blog are a higher proportion of:

• Original content (many Article sites posts are reposts from blogs and press releases
• New backlinks compared to new articles
• Comments
• Social mentions via Twitter of Facebook
• Bookmarking via Google Bookmarks/Toolbar
• Brand name searches

All of these signals are features of an engaging brand, that’s what successful SEO is about in 2011, so if your blog has these features there’s not too much to worry about. But these features aren’t natural features of a retail site for instance, so it’s not clear how Google differentiates these type of sites — perhaps there is also some on-page analysis of the semantic markup and use of images.
– Dave Chaffey, Author of E-Business and E-Commerce Management: Strategy, Implementation and Practice

Being a blogger myself I don’t view this Google’s update as any kind of immediate or even precedent type threat. If you have something to add to the above, I would, of course, love to hear your thoughts as well (please use the “Comments” area below for it).

I’ve had a privilege to speak at PubCon South 2011 which, as is already customary for the Spring PubCons, took place in Austin, TX on March 8-9, 2011. Beautiful weather, great crowd of people, quality sessions, and great discussions. Even though I flew over just for the first of the two days, I have thoroughly enjoyed it.

Among other great “tracks”, Day 1 had a dedicated “Affiliates” track:

Many well-known affiliate marketing experts spoke during the five sessions you see listed above. On panels and solo presentations we’ve seen Shawn Collins, Missy Ward, Brook Schaaf, Chuck Hamrick, Peter Hamilton, Adam Riemer, Jerry West, Keith Posehn, and multiple others. Here are just a few of the pictures I’ve taken during the affiliate marketing sessions:

Besides the above ones, I’ve had over 80 other photos taken (including some from Jeffrey Eisenberg’s keynote on Day 1), all of which you may view on AM Navigator’s Facebook page here. Come check it out, and tag the people you know!

Also, I’m happy to announce that I already have an invitation to speak at PubCon Las Vegas 2011 later this year (November 8-10). Looks like Days 1 and 2 will have “Affiliate Conference” sessions, and from what I hear, the Las Vegas conference is significantly busier than the Austin one. I believe, in 2010 PubCon Vegas had over 2,600 attendees. Looking forward to it (as is Peter Hamilton from HasOffers; see the picture below), and hope to see you there too.

Since the beginning of this year, a number of excellent articles and blog posts were produced by affiliates who provided us, affiliate program managers, with some invaluable information, and I just can’t help but point out 3 of these articles to you.

Here they are in a chronological order (read not only the posts themselves, but also the comments under them):

• How to Choose an Affiliate Offer to Promote by Eric Nagel: Earlier in the year, Eric talked to “a handful of successful affiliates” to see how exactly “they choose an offer to promote”. From his post we can pick up some interesting observations (all of which apply both to individual “offers” and to affiliate programs overall). Affiliates mention competitiveness and brand recognition, payouts and “who manages the program”, how promising the program is long term, and more.

TAKEAWAY: There is a wide array of factors that influence affiliate’s choice. Some are more important than others. Don’t focus only on the ones I blogged/wrote about. Talk to (or even poll) your current affiliates, and take heed to articles/feedback like the above one.

• I Don’t Read Your Newsletters by Logan Thompson: Logan says he doesn’t read 95% of affiliate newsletters he receives, and discerns the 5% that he knows are gonna have “valuable information” from the rest by (2) whether he has “solid relationship” with the affiliate manager who has sent it, (2) frequency of newsletters (“one really good newsletter about once a month” is better than “once or twice a week” but lacking valuable information), and (3) quality (judgment frequently based on the quality of previously-received newsletters).

TAKEAWAY: Value your affiliates’ time, and appreciate the value of building relationships with affiliates

• Five Ways to Get an Affiliate’s Attention by Tricia Meyer: To compel an affiliate to work with you, Tricia advices to (1) give them practical advice on how they can effectively promote your product/service on their website, (2) be reachable, (3) supply affiliates with tangible samples of your products, (4) establish uniqueness of your affiliate program, and (5) “build a relationship with the affiliate”.

TAKEAWAY: Remember (and practice!) the 7 Rs of effective management/leadership, and don’t forget about building those relationships (obviously, the underpinning theme of all three above-mentioned articles) too.

Whether you are a merchant with an affiliate program or an affiliate program manager, there is much to learn from the above-quoted posts. After all, there is no better way to find out what affiliates want from your program and your management approach than to hear it from them.