July 26 Clinic Notes

1

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

marketplace.

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

    advertising?

 Please note that the purpose

of this

brief is not to

encourage marketers to abandon their PPC advertising in favor of

affiliate

marketing.

 Instead we are suggesting

that a

strong affiliate program

can deliver additional revenues with a very favorable ROI. Also, with

skilled

affiliates working on your behalf, and with some of them using PPC

advertising

themselves, you can extend the reach of your total PPC exposure, and

reduce

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

a

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

    words and

    tracking their conversion rates.

  • We have more than doubled the amount of traffic to the site

    generated

    through PPC.

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.

Over

the same period, they have more than made up for the

decline in PPC revenue and profits through their work on their

affiliate

program.

This

increase has been achieved by focusing very tightly not on

recruiting thousands of new affiliates, but by identifying a small

handful of

super-affiliates, or strategic partners.

Here

are the results:

NAR – PPC vs. Affiliate Comparison Oct ’05 & June ’06

 

October, 2005

June, 2006

PPC Sales

4,427

3,667

PPC CPA

$6.71

$9.43

PPC Profit

$14,564.83

$2,099.65

Affiliate Sales

983

4,501

Affiliate CPA

$4.00

$5.00

Affiliate Profit

$5,898.00

$22,505.00

KEY POINT:

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

Net Detective.

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

over nine

years, which makes it one of the longest running programs of its kind

on the

web.

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

revenues are

generated through their affiliate partners.

The most significant increase has been over the last year,

during which

time they have recruited a number of new super-affiliates.

As with the National Alert Registry, time invested in forging

strategic

partnerships with key affiliates has been shown to dramatically

increase revenues.

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

 

October,

2005

June, 2006

Average Payout per Affiliate

$701.35

$2,315.99

Average Revenue per Affiliate

$2,686.87

$6,731.93

Average Profit per Affiliate

$1,985.52

$4,415.94

KEY POINT:

The average profit per affiliate per month has increased by over

122.41%

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.

  1. 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

    with an

    outside supplier like Commission Junction or LinkShare.

  2. 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

    themselves, this

    takes an enormous investment of time and money and fails to leverage

    the

    enormous expertise and experience of other companies.

  3. When launching an affiliate program, give yourself a

    12-month

    breakeven horizon. It takes time to build a reputation for having a

    good program, and to recruit good affiliates.

  4. 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.

  5. Treat your top affiliates as valued strategic partners.

    Your

    top few affiliates may have the potential to provide you with a

    significant proportion of your total revenues.

  6. 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

    service.

  7. Be generous with your commissions. Top affiliates make

    their

    living as affiliate marketers and invest their resources only in

    programs which offer generous terms and are well managed.

  8. Be prepared to increase commission rates for your top

    performing affiliates.

  9. 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

    complete stores

    delivered by javascript.

  10. 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.

  11. 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.

  12. 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.

  13. 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.

  14. Appoint a single individual to work with top affiliates, so

    they know who their contact person is within your company.

  15. Enable affiliates to link to any interior page on your

    site.

    Conversions will be low if you simply attract affiliate traffic

    to your home page.

  16. Work with your top affiliates, learn from them and build

    custom landing pages to help maximize conversion rates.

  17. Alert your affiliates to upcoming specials, deals and new

    product or service introductions, so they have time to prepare their

    own pages or links.

  18. 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.

—————————————————————-

To get the most benefit from these experiments:

You can apply for a Research Partnership and participate in

our

calendar of experiments. To read more about the qualifications, click

here:

https://www.marketingexperiments.com/research_call.asp

We promise to do our best to help you discover what really

works.

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1 Comment

  1. Howie Cheney says

    During the conference you mentioned that you might include within these notes – or add a separate topic – on tools used to build an affiliate network. I was wondering if that is still in the works. If not, could we have a private email exchange on pros/cons of the tools that you’ve reviewed and/or tested?

    Thanks,

    Howie

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