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If Google, Yahoo, MSN or whoever is next on the scene suddenly takes a dislike to your site then you can go from traffic aplenty to none in a split second.
So its key to spread risk with one option being to use affiliates.
But what is the reality. Does it matter who gets the commission (affiliate) and the sale (merchant) so long as the affiliate program gets their cut. What practices are deemed out of bounds? Will the affiliate program 'protect' the rights of the merchant or those of the affiliate?
I've been working with an affiliate program for a few years and my personal take on this, is that the affiliate program is more on the side of the affiliate than the merchant. They want the merchant to do a great deal of work to earn the priviledge of appearing on a discount code website.
Of course, on top of the standard 15% commission (not including fees) paid to the affiliate they want you to offer a special offer - 40% off or buy one get one free to grab the customer's attention.
So for a short period you'll get plenty of customers who want everything at half-price. But are these customers worth having? Will they, at a drop of a hat, go to another special offer on a competitor site, as soon as your special offer finishes?
You've not made money on these customers but are hoping to have built a base who you can sell to in future. But they're not 'loyal' to any brand but to cheapness. Unless you go on being so cheap you'll be out of business, they won't use you. Basically, are they customers worth having?
I have no problem with affiliates using my content to send me prospective customers. But what I'm wondering is am I really getting the benefit?
They do their SEO tricks and appear higher than - often eliminating - the originating website from the SERPS. So I lose my free search engine rankings and for my troubles I also have to pay 15% to the guy for appearing higher than me, with my content.
OK, so I've spread my risk, but for what?
I'm losing customers hand over fist who click on the SERP (where I might have been) and then get taken to a comparison engine who tells the customer that someone else is offering the same product at a lower price / on a special offer / just badly placed so that the customer is less likely to click through to me.
I'd like to know how other merchants have used affiliate programs; whether they worked well and brought in repeat customers, or whether the merchant decided to end the program deciding it just did not provide the anticipated spread of risk that they thought on starting out.
[edited by: skibum at 8:48 pm (utc) on Mar. 17, 2009]
[edit reason] removed link [/edit]
OK, so I've spread my risk, but for what?"
Questions for you:
Do you really think you can be everywhere for every key phrase with your one site?
Would you rather have one site some places for some keywords or 50 sites dominating the serps and driving traffic to you?
Or would you rather have those 50 sites dominating the serps and all helping to drive traffic to your competitors instead?
It is a lot of work to manage, and to get good positions you need to give discounts etc. We have definitely seen times when the affiliate program loses us money. But at other times it is very profitable.
In the month of March, affiliate referrals accounted for approximately 15% of our total revenue and in this kind of economy where people are scared to spend, i'm very reluctant to give that up. So, i'm not going to. I'm going to let my affiliates continue to #*$! my products and send visitors my way. Those visitors tend to come back because we are a good company with good solutions and great customer service/support.
If these affiliates are ranking higher than you, it's not really a problem so long as they're referring visitors over to your site. But then it's up to you to convert those visitors into buyers, isn't it?
I would suggest offering a month-long incentive, maybe jack up your commission 5-10% for one month. Your affiliates should scramble to #*$! your product higher if they see they'll be getting a higher return, but you have to convert those visitors. After that month, you lower your commission back to the normal. I bet you dollars to donuts that the majority of your affiliates aren't going to go back to their old ways as far as not #*$!ing your products or your site. So you should see an ongoing benefit as a result of a temporary incentive. Know what i mean?
I don't expect to be everywhere but what appears to be happening is that a great number of the good rankings I used to have I've lost out to affiliate programs who are using my content / product titles.
OK, so I can accept that so long as the affiliate grabs the customer and then sends them to me. But what appears to happen is that once the customer goes to their 'comparison' website they then flog them off with more google adwords or to a different competitor.
So they've taken my ranking spot and lost me a customer to boot.
Surely that's a negative