Affiliate marketing: is it a good way to increase profits? Università degli Studi di Bari Aldo Moro Facoltà di Economia Corso di Laurea in Economia e Commercio Anno Accademico

Introduction Nowadays almost 30% of the world’s population has Internet access: around 2 billion people 32 billion hours spent online every month! (Source: Go-Gulf)

Italian Internet users are estimated to be close to 26 million, with a great growth since 2001 (source: Mclink)

What happens during those billions of hours spent online every month? Who earns money?

General info Definition: affiliate marketing is a type of performance-based marketing in which a business rewards one or more affiliates for each visitor or customer brought about by the affiliate’s own marketing efforts. The players of affiliate marketing are: the merchant, also called “retailer” or “brand” the publisher, also known as the affiliate the customer.

Merchant Publisher Customer

One of the best ways to earn money online (Robert Kiyosaki) Many hard-working affiliates made a fortune

How does affiliate marketing work? A company sets-up an affiliate marketing program The webmaster signs up to the program as an affiliate The webmaster publishes banners or links

A random visitor clicks on a banner/link The company’s web server is programmed so that the visitor will be sent to the webpage for the product/service promoted.

Short history Affiliate marketing nowadays Referral marketing William Tobin Amazon

Future growth: mobile market, social medias, social gaming

In-house vs outsourced affiliate programs Affiliate programs are the means through which affiliate marketing works

What should a company do before launching an affiliate program? Competitor analysis Commercials Creatives Communication Campaign analysis

Affiliate programs In-house Direct control Money saved on commissions Outsourced Use of a network Fast growth

In-house Connections may be limited and finding new affiliates might prove to be a challenge It is risky to hire an unexperienced affiliate manager This is not a one person job. It requires networking and people skills, technical expertise, graphic design and newsletter management Often, program management is a secondary task for in-house managers as other responsibilities take priority Many in-house managers have an employee mentality, requiring direction and permission on even the smallest decisions Affiliates need to deal with several affiliate managers for several different companies Outsourced Experienced managers have already estabilished an extensive network of affiliates Experienced managers know what works and what does not Estabilished managers will have a team of experts to handle all facets of affiliate program management The managers focus in on managing an affiliate program with few distractions Managers are business owners. Their income is based on performance, giving them incentive to do good work Often the manager acts as one point of contact for multiple merchants, making it easier for the affiliate to promote several programs at once

Affiliate networks “Affiliate networks act as an intermediary between affiliates and the merchant’s affiliate program”

Benefits: easy and free to join all tracking and payments are done by one network easy way to get deals with big companies wide offer of banners that can be perfectly added to every website chance to check every affiliate program’s record before applying

The main affiliate networks Main ones: Tradedoubler, Zanox, Sprintrade, Netaffiliation, AffiliateWindow, Webgains, Buy. How they earn their transaction fees

Tradedoubler: 1,900 advertisers and 138,000 publishers. Yearly gross revenue: 73 million € Zanox: 4,000 merchants; more than 1 million publishers. Yearly gross revenue: 77 million €

Reward plans CPM (Cost-per-Mille) CPC (Cost-per-Click) CPL (Cost-per-Lead) CPA (Cost-per-Action)

How can a publisher drive traffic to his website? SEM – Search Engine Marketing DEM – Direct Marketing Social media marketing Statistics  Google Analytics

Case studies Case study #1 Client: Hyundai Affiliate network: Tradedoubler Reward plan: CPL Goal: generate 1,000 sign-ups for a newsletter with a chance to win a €20 fuel voucher Duration: 5 weeks Results: 1,156 unique visitors, 1,000 sign-ups

Case study #2 Client: Bimbomarket Affiliate network: Zanox Reward plan: CPS Goal: increase sales Duration: 2009-ongoing Results: sales increased by 25% during the first weeks; new customers all around Europe

Case study #3 Publisher: Paolo Moro Affiliate network: Tradedoubler Duration: Revenues: €125,369.48

Case study #4 Publisher: John Chow Affiliate networks/programs: several Duration: 1 year Revenues: more than $500,000! Currently he earns up to $40,000 each month with affiliate marketing.

Alternatives Print advertising Television advertising Telemarketing

The main problems related to affiliate marketing are: spam Virus Spoofing Affiliate’s incentives

Conclusions

For further info: