As any marketing program, affiliate program requires a budget. While it is true that comparing to many other types of online advertising, affiliate marketing generally requires a significantly smaller budget, it does require one. Below you may find a basic breakdown of expenses that you should be prepared to incur:
- First of all, you will have to pay for the platform on which your affiliate program will be run. Be it an affiliate network or an affiliate program tracking/management software, you will be either charged some setup fees, or have a choice of one-time or monthly fees [more on networks in this post and on software here].
- Secondly, you will want to put together a creative inventory for your program (banners, deep-linked text links, and possibly even Flash and video creatives). If you will have to hire someone to do this for you, this will be an additional investment.
- Thirdly, (a) if you’re a online retailer, you will want to supply your affiliates with a detailed product feed, or (b) if you sell services online, you’ll want to experiment with different landing pages. Depending on your in-house capabilities, this may cost you something in programming, or web-design and conversion optimization fees.
- Finally, and most importantly, you will have to have someone manage your affiliate program (from its announcement and recruitment of first affiliates on through the ongoing policing of affiliate compliance with your program’s rules, activation of stagnant affiliates, keeping the program fresh and attractive, etc, etc). Non-management is not an option. You may either have one of your in-house staff handle this, or hire an outsourced affiliate program manager [more about OPMs here].
The sum total of all of the above 4 expenditure points can vary anywhere from a few hundred to a few thousand dollars; and much will depend on your (or your company’s) own involvement in the affiliate program’s setup, launch and management.
5 thoughts on “How to Budget an Affiliate Marketing Program”
Great points in this article. One other expenditure that is often over looked is the start-up promotional budget for the affiliate program. Once in place the affiliates will take on most of these costs.
Fraser, what exactly do you mean by saying that “once in place the affiliates will take on most of these costs”? They actually won’t.
Once the affiliate program is in place, and affiliates are promoting the program, the company will have less of an expense as the affiliates will be promoting the companies products etc. there are many free ways to promote these but many affiliates will pay to promote. Normally the commissions will outweigh the costs if done right.
True (and that’s the beauty of performance based marketing), but practically all of the above-quoted points — payments to affiliate platform (unless you buy a white label solution), expenses to create banners and other creatives, as well as landing page, and, most importantly, affiliate program management expenses (unless you do all of these yourself) — will actually not be taken care of by affiliates.
My point exactly!