Earlier this morning Neil Strother, an analyst from Forrester Research, has published a post on Forrester.com where he explained why affiliate marketing is an excellent solution for companies that are trying to drive new business “in tough times” and being limited by “constrained budgets”.
Among the arguments used were (a) “very reasonable” costs of starting an affiliate marketing campaign, and (b) the fact that in a recent survey a majority of online businesses stated that they “would spend more in online advertising if they had proof it would increase sales”. Unlike the majority of other online marketing channels, this is precisely the way affiliate marketing works: only if there is a sales increase, the advertiser’s/merchant’s marketing spend increases as well (as affiliates are predominantly paid on performance basis).
Strother also quoted Commission Junction whose analysis shows that launching an affiliate program can bring in anywhere “between 5% and 30% of incremental online sales”. As I have written earlier, the percentage is always highly dependent on (i) the development of the online business at the moment of starting the affiliate program, and (ii) the niche in which the business operates. I have seen affiliate programs boost merchant’s sales by as much as 40%.
Coincidentally, also earlier today, Lisa Riolo, a veteran of the affiliate marketing industry, has tweeted about an interview she gave to Andrew Warner where she talked about basics of affiliate marketing (both from the merchant and affiliate perspectives), tricks and techniques affiliates use, the importance of testing, mediators involved, etc, etc. If you have some time to listen, and want to learn more about the affiliate channel, you may find the interview here.