Shawn Collins: Thank you for Gene Kavner, joining us today for a little chat. If you’re not familiar with Gene, he was formerly of the Worldwide Leader of the Amazon.com Associates program. He’s also an experienced entrepreneur and very active in the affiliate business. He’s a blogger with the site AffiliateBrand.com. It’s great to have you here, Gene. globalnews
Gene Kavner: Good morning, Shawn. Thank you. Same here.
Shawn: Great. Just have a handful of questions here. I’d love to hear what you think about them. I’ll jump right in. One thing I’m curious How would you define affiliate marketing, and how is it different than a traditional advertising?
Gene: Well, actually, affiliate marketing is not very well understood. We all understand what advertising is basically a merchant or somebody that’s got something to sell would typically approach a media, whether it’s offline media, such as newspaper or television, or an online website, and purchase some impressions effectively, purchase inventory that they would have and allow their product to be introduced to their viewers or customers or readers of the website. Affiliate marketing actually is the same formula for getting traffic, except for it’s the other side of the coin. This is when the merchant would come up with a set of tools that would allow websites to come to their site, grab those tools, and display those merchants’ products without necessarily the merchant needing to go and establish a relationship with those particular websites. In fact, merchants would not necessarily even need to know all the different websites that are grabbing their tools and displaying those products with the merchant on their site. So effectively it’s the same thing it’s who needs to approach who. In traditional advertising it is the merchant who approaches websites, and in affiliate marketing it’s basically the websites approach the merchant. finance
Shawn: Ok. Great. That was a nice explanation. Maybe I’ll have to crib that once to get a lot of family and friends asking what affiliate marketing is all about. I always have to try to figure out what to tell them there. Also, with your experience on the affiliate management side, what do you consider to be some essential elements for an affiliate program? wilmslowdecorators
Gene: Well, I’ve made the list. There’s actually about seven really important items of any affiliate program that every single program should have. Not too many merchants or affiliates follow all of those steps, but I’ll go through them as quickly as I can. I have a little bit more information on my site, but number one is; Affiliate program is a relationship between a merchant and an affiliate or a website. Every single affiliate knows who their merchants are, but merchants typically are not even made aware who all the affiliates who sign up. Certainly merchants do not need to contact every single affiliate, but they should have information as to who these affiliates are. They should have their names. They should have their email addresses. Any affiliate that is performing very well they need to establish a relationship with them and understand what is driving that affiliate. sarah-j
Number two; every single merchant needs to also understand how, what I call elastic every single affiliate is. There are some affiliates who will make more money for a merchant if a merchant were to pay them more. Then there are certain affiliates that, if you pay them more, they will not necessarily drive additional traffic. For example, affiliates that did, on paper, click inventory out there to drive traffic to a merchant will actually make more money for the merchant if the merchant were to pay them more. So merchants need to be aware who those affiliates are. Affiliates such as bloggers typically depend on the traffic they get over the internet, so if you pay them more, it is not quite likely they will drive additional traffic to the merchants, so merchants need to be aware of the distinction between kinds of affiliates and pay them on a different scale based on the type of an affiliate they are. 123sporters
Next is; every single merchant needs to be able to offer their affiliates tracking ID’s. That’s point number three. These affiliates have different ways of driving traffic to the merchant. Some ways work, and some ways don’t work. Tracking ID’s is what allows affiliates to understand which of their marketing mechanisms works, and which of them don’t work, so they can focus just on the marketing efforts that work. Without these tracking ID’s, an affiliate, which has some marketing programs work and don’t work, they do not know which ones work, which ones don’t, so they could be likely to drop the entire program if overall it’s not performing, rather than focusing on the performing marketing techniques.
Number four: merchants need to be able to incentivize affiliates to produce more traffic and more sales for them. They need to be able to offer what’s called ladder compensation system. As an affiliate, if you sell more of the merchant’s products, you should get accumulatively larger percentage of sales than somebody who is not doing too much in sales. This incents affiliates to do more and more and more for the merchant.
Number five; some affiliates are just better at negotiating, so merchants need to have a way to compensate different affiliates differently. Not just based on the kind of an affiliate they are, but simply based on the fact that some affiliates want to make more money, and some affiliates do not, are not as good at negotiating and you can simply pay them less. There are some very big affiliates that simply will not deal with a particular merchant if their pay structure is too low. However, that merchant doesn’t necessarily need to raise the fees for everybody. Some affiliates would be happy to make what they make. There needs to be a way for a merchant to select this affiliate will make so much, and this affiliate will make so much.
Direct links; number six. Direct links are also extremely important. In the days of Google, where we all depend on free search traffic coming to our site, a merchant should get a second benefit of an affiliate program, which an increase in it’s page rank to the site. If affiliates offer direct links, linking directly to a merchant’s site, that causes a merchant’s site to go up in its page rank. If an affiliate program redirects these links through the program, the merchant does not get the same benefit. It is really important for an affiliate program to allow a direct link from an affiliate to the merchant.
Number seven; and this is the last point, but it’s not any less important than any of the other ones: Every merchant program should have a two tier affiliate program, meaning if an affiliate finds another affiliate for that merchant, the merchant should compensate that first referring affiliate for that find, based on sales that second merchant makes. Effectively the two tier structure incentivizes people not only to sell merchant product but also find other people, other affiliates, who sell the same merchant’s product. It effectively serves this double benefit to the merchants.
