July 26 Clinic Notes
NOTES: These are the notes for
our interactive July 26 clinic on The ROI on PPC vs. Affiliate
MArketing. The recording of the event will be posted here
in a few days.
Which gives the best return on your investment – Pay per Click
advertising, or building strong affiliate partnerships?
Building and maintaining strong PPC campaigns is becoming
increasingly difficult in what has become a very competitive
At the same time, many companies
report poor performance
with their affiliate programs.
The question we asked ourselves is this:
- If companies invest sufficient time
and effort to develop
strong affiliate programs, can affiliates deliver a better ROI than PPC
brief is not to
encourage marketers to abandon their PPC advertising in favor of
strong affiliate program
can deliver additional revenues with a very favorable ROI. Also, with
affiliates working on your behalf, and with some of them using PPC
themselves, you can extend the reach of your total PPC exposure, and
your PPC costs.
::Case Study 1 – Tracking the relative ROI between
the PPC and affiliate programs of National Alert Registry.
While we have been handling their PPC campaigns only for about
year, we have seen a decline in ROI, in spite of making substantial
efforts in a number of areas:
- We have added a number of new campaigns over time, often in
response to current news in the media.
- We have more than doubled the number of keywords we are
bidding on, searching the “edges” for low-cost
tracking their conversion rates.
- We have more than doubled the amount of traffic to the site
However,in spite of this, over the last nine
months we have
seen our partner’s PPC cost per sale going up, and PPC
profits going down.
the same period, they have more than made up for the
decline in PPC revenue and profits through their work on their
increase has been achieved by focusing very tightly not on
recruiting thousands of new affiliates, but by identifying a small
super-affiliates, or strategic partners.
are the results:
NAR – PPC vs. Affiliate Comparison Oct ’05 & June ’06
Monthly profits from affiliate
revenues have increased by 281.57% over a period of just nine months.
::Case Study 2 – Growth in affiliate revenues for
Another of our research partners, NetDetective.com, has been
working with an affiliate program for several years now.
The Net Detective affiliate program has now been running for
years, which makes it one of the longest running programs of its kind
By building and refining the program over such a long period
of time, they are now
in a position where almost 80% of the company’s total
generated through their affiliate partners.
The most significant increase has been over the last year,
time they have recruited a number of new super-affiliates.
As with the National Alert Registry, time invested in forging
partnerships with key affiliates has been shown to dramatically
Here are their results, also over the last nine months. The
figures show payouts
and profits per affiliate, per month.
ND – Affiliate Growth between Oct ’05 & June ’06
Average Payout per Affiliate
Average Revenue per Affiliate
Average Profit per Affiliate
The average profit per affiliate per month has increased by over
over a period of nine months.
::Guidelines – Guidelines for establishing and
running a successful affiliate program.
Pay per Click campaigns can still be a strong channel for many
online marketers. As with any channel, the higher the level of your
expertise in this area, the better your results will be.
::Consider the following guidelines.
- Commit to allocating sufficient resources to fully research
and explore the best way in which to manage your affiliate program,
whether you use an in-house affiliate management solution, or partner
outside supplier like Commission Junction or LinkShare.
- If you are going to use an in-house solution, invest in a
program or service from an established provider. While some companies
have done well with solutions they have built and programmed
takes an enormous investment of time and money and fails to leverage
enormous expertise and experience of other companies.
- When launching an affiliate program, give yourself a
breakeven horizon. It takes time to build a reputation for having a
good program, and to recruit good affiliates.
- While some affiliate programs make huge revenues by having
tens of thousands of affiliates, others achieve the same results with
just a few strong partners.
- Treat your top affiliates as valued strategic partners.
top few affiliates may have the potential to provide you with a
significant proportion of your total revenues.
- Get to know how each super-affiliate operates. Some will
feature your company within an existing, high-traffic content site.
Others will create new sites, specifically to sell your products or
- Be generous with your commissions. Top affiliates make
living as affiliate marketers and invest their resources only in
programs which offer generous terms and are well managed.
- Be prepared to increase commission rates for your top
- Provide affiliates with the marketing tools they need in
order to effectively promote your products or services. These may
include text links, banners, content pages, data feeds and even
- Give affiliates access to detailed reporting on their
performance and sales. Top affiliates will want to track the ROI of
links from their pages…from exposures, to clicks and through to sales.
- Be open to special requests from key affiliates. Some may
ask you to place custom code on your sales confirmation pages in order
to track their own marketing efforts, including PPC campaigns.
- Listen carefully to top affiliates when they critique your
landing pages. Many professional affiliates will have deep expertise in
what works and what doesn’t.
- Be available to top affiliates by email and phone. You
should treat your top performers as important strategic marketing
partners. Being available to them helps build that kind of relationship.
- Appoint a single individual to work with top affiliates, so
they know who their contact person is within your company.
- Enable affiliates to link to any interior page on your
Conversions will be low if you simply attract affiliate traffic
to your home page.
- Work with your top affiliates, learn from them and build
custom landing pages to help maximize conversion rates.
- Alert your affiliates to upcoming specials, deals and new
product or service introductions, so they have time to prepare their
own pages or links.
- While some companies forbid their affiliates to bid on the
company’s “own” keywords, this practice
is not recommended. eBay, Amazon and other major sites freely allow
this practice, as they understand and
have calculated that giving their affiliates free reign is to their
advantage. A common exception is that most companies will not allow you
to bid on
their trademarked names and phrases.
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