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Affiliates Forum

    
How effective is Affiliate traffic vs Search Engine traffic?
What, really, is the main benefit of having affiliates?
Sebastian




msg:547715
 9:47 pm on Nov 20, 2002 (gmt 0)

Let's say that you run a web site which sells a successfully selling product. Since widgets are not in stock right now, we'll say you're selling placebos.

Now, your site already has a good track record of selling specially trademarked placebos, and gets a large amount of well targeted search engine traffic.

Given that the site already is well trafficked and the search terms are well targetted, would starting up an affiliate program, where other sites recommend your placebos, going to really be worthwhile?

What is the main benefit of having affiliates? The possibilities are
a) To drive traffic to the placebo site
b) To presell the idea of the placebos, and generate a much higher conversion (sale) rate than regular traffic

Of course, these benefits are what we'd all hope good affiliates would do. However, what do affiliates do well in reality?

Does affiliate traffic convert any better than traffic with targeted search engine terms?

 

oilman




msg:547716
 10:19 pm on Nov 20, 2002 (gmt 0)

Basically this is how I see affiliate marketing...

On your own you have one site that people can find the SEs - with a good affiliate program you could have thousands of sites - potentially you could be making money off the entire top 10 at Google.

Bosslady




msg:547717
 12:01 am on Nov 21, 2002 (gmt 0)

Great viewpoint, sure made me stop and think.
Now back to the drawing board and changing plans midstream.

eljefe3




msg:547718
 1:12 am on Nov 21, 2002 (gmt 0)

Selling placebos via an affiliate program would be like selling any product with commission only salespeople in the brick and mortar world. The more people you have presenting your product, the more sales you will make.

oilman




msg:547719
 3:05 am on Nov 21, 2002 (gmt 0)

And don't forget that affiliate sales are performance based - you only payout when your affiliates makes sales.

Dante_Maure




msg:547720
 4:40 am on Nov 21, 2002 (gmt 0)

Of course, these benefits are what we'd all hope good affiliates would do. However, what do affiliates do well in reality?

Does affiliate traffic convert any better than traffic with targeted search engine terms?

Keep in mind that only a small percentage of affiliates will actually produce any sales... but those who do, can potentially do so very very well.

The very best affiliates do much more than simply slap up a banner ad and expect profits to roll in. They will bring pre-qualified visitors to your site via personally written recommendations or reviews. Many "super" affiliates have an audience that they already have credibility with, so these targeted referrals can be invaluable.

A great deal has to do with the psychology of sales.

A visitor that comes via the search engines doesn't know you from uncle and is likely to have their guard up quite high when visiting your sales page.

On the other hand an affiliate that uses your product and speaks highly of it is much more likely to deliver prospects that are receptive to your offer.

Sebastian




msg:547721
 2:21 am on Nov 27, 2002 (gmt 0)

The very best affiliates do much more than simply slap up a banner ad and expect profits to roll in. They will bring pre-qualified visitors to your site via personally written recommendations or reviews. Many "super" affiliates have an audience that they already have credibility with, so these targeted referrals can be invaluable.

That's a good answer. Affiliates should be there to soften up their audience, so that by the time their readers click on the link to your site, they're already convinced to buy.

I wonder how many affiliates are really that good though...

Go60Guy




msg:547722
 2:56 am on Nov 27, 2002 (gmt 0)

There's another aspect of this from the merchant's POV. Let me paraphrase from my earlier post in another thread.

The merchant, in many ways, has much more to gain from affiliate marketing than the affiliate. While the affiliate gets a commission for a one time sale, or perhaps more than once from the same customer, if there's a cookie, the merchant, on the other hand, acquires a customer. The affiliate has to hope that the customer will return to the affiliate's site after the cookie expires. More often than not, however, the affiliate relies on a parade of new customers.

The merchant then can market directly and repeatedly to affiliate referred customers who are already familiar with the merchant's site and offerings. Therein dwells the cash cow.

Customer acquisition is one of the toughest steps in the process of internet marketing. Having a core of effective affiliates working on your behalf helps in overcoming this hurdle.

This will work only if the merchant is dedicated to treating the affiliate as a true partner in the venture. Good compensation, long cookies, support and communication from an affiliate manager, timely payment, incentives, etc. go a long way toward making it a success.

While its true that only a small percentage of affiliates will be truly productive, they, alone, can furnish a rocket boost to your business if you treat them right.

It can all work, and work very well, for the astute internet merchant.

Dante_Maure




msg:547723
 3:26 am on Nov 27, 2002 (gmt 0)

Good points on every count Go60Guy, and one of the reasons that my favorite affiliate programs offer "lifetime" commisions with multi-year cookies and repeat commisions whether they come through my link or not.

That being said , there's still a great opportunity for savvy affiliates even in the absence of such generous offerings.

As an affiliate all you need to do is have a strong grasp of marketing, build content, and drive traffic.

As a merchant, while the profit potential is far greater, there is order fulfillment, credit card processing, customer service, chargebacks, legal liabilities, payment schedules for affiliates, and countless other headaches to deal with.

Bradley




msg:547724
 3:56 am on Nov 27, 2002 (gmt 0)


Its the 80/20 rule in marketing. 80% of total affiliate revenue will be generated by 20% of the affiliates.

swoop




msg:547725
 3:42 pm on Nov 27, 2002 (gmt 0)

New to the board here.

Good point here about the 80% - 20%, I've read that a lot on a great deal of affiliate message boards.

How many of you encourage affiliates to do PPC search engines for the products you sell on your website?

Dante_Maure




msg:547726
 10:41 pm on Nov 27, 2002 (gmt 0)

Good point here about the 80% - 20%, I've read that a lot on a great deal of affiliate message boards.

The 80/20 rule as it's most commonly called is actually an expression of the Pareto [cepa.newschool.edu] Principle.

Though online in general, and with affiliates specifically, it really looks more like 90/10 or 95/5.

Which is an expression of Zipf's Law, and while off topic, may be a worthy subject for an entirely different post. ;)

RoadRash




msg:547727
 2:39 pm on Nov 28, 2002 (gmt 0)

If your site can convert the visitors to buyers, who cares where they come from? I personaly think you cant go wrong wtih an affiliate program, if the terms are good for you, and your partners.

Mike_Mackin




msg:547728
 2:53 pm on Nov 28, 2002 (gmt 0)

>How many of you encourage affiliates to do PPC search engines for the products you sell on your website?

I do suggest that PPC can be used at the beginning while you wait for page ONE listings in the SEs. Then turn off the PPC account and keep it for insurance if the SEs "make a mistake" and drop you for some reason.

The cost per click is dependent upon how well your site can pre-sell the product/service before using the affiliate backend as your e-commerce solution.

Sebastian




msg:547729
 7:48 pm on Dec 10, 2002 (gmt 0)

Bosslady

Great viewpoint, sure made me stop and think. Now back to the drawing board and changing plans midstream.

What were you originally planning, and what ideas have you changed?

Sebastian




msg:547730
 7:51 pm on Dec 10, 2002 (gmt 0)

I personaly think you cant go wrong wtih an affiliate program, if the terms are good for you, and your partners.

Has any merchants had any bad experiences with affiliates promoting things for them?

Namaste




msg:547731
 9:30 pm on Dec 29, 2002 (gmt 0)

Just can't seem to see the benefit setting up an affiliate program vs. putting those same resources on Search Engine related work.
In the current search engine scenario, the opportunity cost of running an affiliate program is just too high. After all an affiliate program does require resorces: make banners, manage affiliates, manage software, keep accounts, make payments, etc. Now if you out all that energy into SEO you'd be better off.
The only circumstance under which you should go for affiliate marketing is after you have exhausted all SEO possibilities.

eljefe3




msg:547732
 2:28 pm on Dec 30, 2002 (gmt 0)

>>Just can't seem to see the benefit setting up an affiliate program vs. putting those same resources on Search Engine related work.
In the current search engine scenario, the opportunity cost of running an affiliate program is just too high. After all an affiliate program does require resorces: make banners, manage affiliates, manage software, keep accounts, make payments, etc. Now if you out all that energy into SEO you'd be better off.

Actually you can get some software to run the affiliate program and you can ousource the banners etc. at a very reasonable cost and can almost get the whole thing running on autopilot. One person should be able to handle most of the duties of 50 QUALITY affiliates.

>The only circumstance under which you should go for affiliate marketing is after you have exhausted all SEO possibilities.

I would much rather go out and recruit direct competitors and complementary sites to sell for me than to compete against me. This way everyone wins :). Imagine if some of the more successful MLM brick and mortar companies didn't set up "affiliates" where they would be ( No names mentioned here due to copyright violations but we all know quite a few successful MLM companies out there as well as companies that only pay their sales staff on sales made and not a salary).

mayor




msg:547733
 5:14 pm on Dec 30, 2002 (gmt 0)

Sebastion, compare the ROI on affiliate sales against the ROI on other forms of traffic and sales generation and customer acquistion. I think you'll see why these programs have been a part of the marketing program for thousands of successful businesses, large and small alike.

Sure, you have to manage your affiliate program, just like you have to manage all facets of a successful marketing operation, both online and offline.

przero2




msg:547734
 5:27 am on Dec 31, 2002 (gmt 0)

Performance based marketing programs like affiliate channel should be a no brainer for a merchant. I have seen studies comparing the performance of different channels and found that affiliate channel outperforms others hands down!.

2_much




msg:547735
 9:43 am on Dec 31, 2002 (gmt 0)

I do think it's a matter of managing resources. Having researched affiliate program softwares, they tend to be expensive and perhaps not viable for a small business. That's the advantage with SEO - you can start and make progress with low budget. With an affiliate program, however, you need to find good affiliates and provide proper support to them.
I have an affiliate program on one site and it's been active for about 6 months. In that time we've had 200 people sign up, out of which only 22 have made sales. Out of this 22, most of these affiliates have only made one or two sales. I admit we haven't spent much time developing the program, but for us search engine marketing has been far more lucrative.
I guess it boils down to a cost-benefit analysis - how much do you have to sell to pay for the program plus time spent maintaining it? Once you have the figures down, then you can determine how viable a solution an affiliate program is.

Grumpus




msg:547736
 1:00 pm on Dec 31, 2002 (gmt 0)

Since we're on the topic of starting a new program here, I'd like to bring up something I've thought would go toward making a very attractive afilliate program (at least for me).

One of the biggest complaints I hear from people who have afilliate sites is that once they send you the sale, you (the merchant) do everything you can to make sure the customer comes back to you rather than going back through them for the next sale. That's fine and I understand why it's done - the program is for "marketing". It's not a franchise, it's an "Afilliate Marketing Program".

But... Let's say you've got 10% to play with (for simplicity sake). Rather than paying out 10% on every sale made from a click, I think it would be great for merchants to pay out 8% on the click and put aside 2% and assign it to the Affiliate who first sent the customer to the merchant for a sale. In other words, Joe buys a placebo from you on a click from Sally's site. Joe's account now gets marked with "Sally" as the original referer. So, if Joe comes directly to you or comes in from another site, or whatever, Sally gets 2%. If you manage to get Joe buying directly from you from there one, fine - you save the 8% and pay out the 2% as "loyalty money". If he buys from another site, you pay out 10% (2 to Sally and 8 to whoever the other one was), but 10% was the target percentage, anyway. You'd only actually pay out the 10% on a very small percentage of overall sales, and associates would love you because you keep paying them on re-orders so long as they remain "active".

<shrug> I dunno. Something along those lines would be very attractive to me - especially in consumables.

G.

pharm_boy




msg:547737
 12:24 am on Jan 1, 2003 (gmt 0)

Man, so much to say...

First, in answer to the original question. We have several affiliates that convert near 20%, some quite a bit higher and some much lower. Some are great at sending PPC traffic, some great at SEO and others truly skilled at prequalifying the click on their own sites. In any case, affiliates can drive sales, lots of sales.

An affiliate program also doesn't have to be hugely resource intensive. Avoiding the 80/20 rule can help quite a bit there. It's that 80% that don't produce that also require the bulk of your resources. If you can figure out how to avoid recruiting them in the first place...

Actively recruit affiliates that know the business, and you're likely to get affiliates that both produce well, and require a lot less support.

I was in here a few months back asking about recruiting methods. Our program was new at that time. It now accounts for about 90% of overall sales. It's been an amazing time.

One of the things I've learned is that affiliates who already promote sites like ours, are among the best performers out there. If they can sell for our competition, it stands to reason they can sell for us - with a cookie that lasts until the sun burns out, if that's what it takes to get them.

Affiliates, we program managers are competing for YOU.

If you send a customer and the site tries to close them on the phone, or only uses a 12 minute cookie - move on to the next program. If you know what you're doing, and can deliver sales, there's a program out there that will bend over backwards for you. Find it, and stick with them.

I'm sure I missed about a million things here. Anyway, happy New Year!

Namaste




msg:547738
 9:09 pm on Jan 2, 2003 (gmt 0)

ej3, we're only talking about opportunity cost of seo vs. affiliate in this thread, so the MLM example dosen't apply.

Lets look at this another way. Lets say you are successful at setting up 500 affiliates. How will those affiliates reach out to their customers...you think they are gonna burn ad. $$$? They will either use an existing list, or rely on search engine traffic. So, ultimately, you are reaching the same people in a less efficient fashion.

pharm_boy




msg:547739
 2:55 am on Jan 3, 2003 (gmt 0)

Namaste,

I'm confused how it's less efficient. The resources it would take to match the coverage achieved by those 500 affiliates is pretty staggering when you think about it.

Each of those 500 has their own specialty. Some may focus on SEO, or email marketing or even PPC engines (Yes, some affiliates do spend advertising dollars), while others focus on converting visitors from their specialized content sites. Some try to cover all your available products, and others stick to a few specifics they know they can sell.

The variety of traffic generation and sales approaches provided by those 500, is far greater than anything most of us could do on our own.

A merchant can spend their time trying to master each and every available means of traffic generation (and they likely should learn as much as they can), they can pay marketing professionals for the same services, and/or they can offer a cut of their margins to anyone that can produce sales (often those same marketing professionals). In my experience, the last is the more efficient of the lot...

Dante_Maure




msg:547740
 8:34 am on Jan 3, 2003 (gmt 0)

ultimately, you are reaching the same people in a less efficient fashion.

Hardly, and here's why...

"I would rather make 1 percent on the efforts of 100 people than 100 percent on my own efforts." - John Paul Getty

Not to mention when it's 1 percent of the efforts of 500 or 1000+ people.

And here's the real kicker:

I don't have to choose one or the other.

I can have 1 percent of the efforts of 100 people and 100% of my own efforts.

Search engine rankings are a fluid dynamic. If I had to, I'd gladly trade the same volume of traffic from a single top 10 listing in the SERPs for a permanent recommendation posted on 5 highly targeted and well respected websites.

Guess what? I don't have to trade. Neither do you. You can take both... to the bank.

A single site's top rankings can disappear overnight while the traffic from firmly established websites with a loyal visitor base can be very very stable.

Picture this...

  • Affiliate Ace Aaron gets 100 visitors a day from his partnerships with 100 different highly targeted websites and newsletters.

  • Search Savant Sandy gets 10,000 targeted visitors a day from Google.

    Who do you think is sleeping more soundly at night? ;)

    Don't get me wrong... I'm all for ranking highly in the SERPs, but as every long time SEO knows, the search engines can be a fickle lover. Establishing multiple streams of traffic means that my business is far less susceptible to the changing tides of the search seas.

    you think they are gonna burn ad. $$$?

    Of course they will. Click on any random selection of top Overture bids and ezine ads. You'll find that an enormous number of them lead to sites that are earning their money pushing affiliate links.

    use an existing list..

    And just how are you going to reach the loyal customers and subscribers of these lists? Many of the best lists do *not* accept advertisers, and a personal recommendation from a trusted source to a loyal targeted readership can provide a higher conversion ratio than any other form of advertising bar none.

  • jbrausch




    msg:547741
     5:32 pm on Jan 5, 2003 (gmt 0)

    I completely agree with Dante. In today's market, SEO means "Google". That's all of your eggs in one basket. When Google decides that your site is breaking some rule; all of your eggs are broken. You lose 100% of your traffic if you focused on Google SEO.

    However, if you focused on affliate programs, link exchange (for the actual traffic it brings - not to get favor with Google), PPC, newsletter articles, newsletter advertisements and a wide variety of other ways to promote your site... your eggs are spread out into so many baskets that no one event can hurt your business.

    I know from experience! Google destroyed my business 2 years ago because some SEO emailed them that I was cloaking (she cc'ed me). Google never checked it out. They just banned me. Somehow, Google still likes the SEO that sent the false allegation. Her site is still in the SERPs.

    I rebuilt from the ashes. I haven't had a single visitor from Google in those 2 years to my now thriving business. I now see no single source of traffic that I can't lose and continue to thrive. That's the way to approach things for the long haul.

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