Affiliate marketing:is it a good way to increase profits?

Università degli Studi di Bari Aldo MoroFacoltà di Economia

Corso di Laurea in Economia e CommercioAnno Accademico 2011-2012

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)

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 20110

5

10

15

20

25

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Millions of Italian Internet users

Millions of users

• What happens during those billions of hours spent online every month?

• Who earns money?

General infoDefinition: 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-houseConnections 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

OutsourcedExperienced 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 Email Marketing• Social media marketing

Statistics Google Analytics

Case studies

Case study #1Client: HyundaiAffiliate network: TradedoublerReward plan: CPLGoal: generate 1,000 sign-ups for a newsletter with a chance to win a €20 fuel voucherDuration: 5 weeksResults: 1,156 unique visitors, 1,000 sign-ups

Case study #2Client: BimbomarketAffiliate network: ZanoxReward plan: CPSGoal: increase salesDuration: 2009-ongoingResults: sales increased by 25% during the first weeks; new customers all around Europe

Case study #3Publisher: Paolo MoroAffiliate network: TradedoublerDuration: 2002-2008Revenues: €125,369.48

Case study #4Publisher: John ChowAffiliate networks/programs: severalDuration: 1 yearRevenues: 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:

• Email spam• Virus• Spoofing• Affiliate’s incentives

Conclusions

http://affiliatemarketing.nicoladisisto.ws/wp-content/uploads/2012/10/traditionvsaffiliatemarketing2.png

For further info:

www.affiliatemarketing.nicoladisisto.ws

nico@nicoladisisto.ws