A few truths have emerged during the 20+ years affiliate marketing has been part of the marketing mix. I have found three to be particularly important for affiliate managers to learn early in their careers. Once they are internalised, managers can start employing specific strategies associated with each that will help them best navigate their new position and set them up for success.
First, appreciate how much of a relationship business affiliate marketing is. Your success is highly dependent on the development, maintenance and growth of your network.
Cultivating relationships can have a tremendous and lasting impact on your performance, beyond simply growing your network. The more you can develop these relationships, the better you will be able to capitalise on “choice” opportunities as well as troubleshoot any program hiccups that would be much harder to navigate without a friendly face.
When I began my career in affiliate marketing as an advertiser (so many years ago), I didn’t know anyone in the industry. That quickly changed after my first affiliate conference, and I realised that by attending industry events and being engaged, I was able to put actual faces to the names of contacts at some of the best known publishers out there. The seeds of future business relationships were often sewn at these events.
I maintained fairly constant communication with all of my new business contacts and enjoyed developing those connections into strong working relationships. There are a lot of great people in this industry. It was a pleasure in and of itself getting to know my contacts early on, both in a business sense and on a personal level. By developing those relationships, I had contacts offering me remnant advertising inventory, increased site presence and expedited turnaround on promotions (this was before a lot of the automated tools in place now). Due in large part to developing those relationships, my affiliate program grew from $100K in my first year to over $1 million in my second.
Second, understand that as your network grows, the majority of your volume will naturally start to come from a curated minority of your partners. The old ’80:20′ rule holds true in affiliate. Set performance goals that spread your volume more broadly.
In a perfect world, you want to cultivate as many productive relationships as possible. However, as your publisher network grows, you’ll start to notice that—by virtue of strategic fit, optimisation and attrition—the majority of your production will likely come from a select few. Understand this tendency early on to help guide your efforts from a diversification perspective.
A good strategic goal for a manager should be to lessen the concentration of your contribution base (from 80:20 to 70:30 or even 60:40). By no means is this an easy task, but the more you can diversify your contribution base, the more an affiliate manager insulates themselves if a large client’s program experiences unexpected difficulties or otherwise underperforms.
Some of the tactics I found particularly helpful to this end are to keep regular activation campaigns in your marketing calendar, A/B test and optimise those campaigns along the way, and of course, be vigilant and keep a healthy pipeline of new prospects.
Finally, recognise the attractiveness of affiliate as a channel. Its highly controlled cost structure and historically favourable ROI are powerful those tools for advertisers/brands.
Key to maintaining a healthy pipeline of new prospects is understanding two of affiliate’s major selling points: a controlled cost structure and favourable ROI. Since the advertiser is only paying a commission for what is sold and/or a commission to the affiliate network or provider, the total cost is a controlled, pre-figured ROI. And the affiliate portion of a business, depending on the programme’s size, is usually run by a one to three-person team. Factoring acquisition costs and headcount together (considerations can be made for creative design and tech hours), the total cost still compares strongly against many other marketing methods that involve higher media costs, and require longer development time and/or a larger staff and payroll.
The affiliate channel becomes even more lucrative when advertisers integrate their programme to commission differently for new vs. return customers and create tiers of commission in line with their profit margin for a given category or product. Even greater hidden value and be uncovered when affiliate is leveraged for other internal business units/needs, such as finding new sales leads, helping to scale the enterprise side of a business or bridging a social media gap.
While these truths are more or less accepted tenets in the industry, the true value presents itself when taken a step further and leveraged with real strategy. Together, they’ll lead to success for any manager getting their start in affiliate marketing.