Forum Moderators: skibum
Affiliate sites were stereotyped as “banner farms”, not worthy of the webmastering craft. And, indeed, many early efforts at affiliate marketing were just that.
Over time, however, there has emerged a cadre of affiliates, sometimes called “Super Affiliates” who take affiliate marketing very seriously. Some rely on affiliate marketing as their sole source of income.
Using the latest SEO methods, they rank well for pertinent keyword combinations, utilize PPC and generate significant traffic leading to sales conversions for merchants. (This commentary will not address the pay per lead/click model)
Some of the early stigma still remains. Often you see affiliate marketing referred to as a “scheme”. And some directories turn up their nose. But, I sense that a level of respectability is growing for those who operate as affiliates. This cuts through various levels of e-commerce. Many merchants have adopted affiliate marketing as an integral part of their business plan. They welcome the increased business affiliates generate. Merchants benefit by having a dedicated sales force, affiliates benefit and consumers find what they’re seeking.
Some site owners cry out that affiliates are walking off with traffic that is rightfully theirs. Generally, these are people who do not see affiliate marketing as an effective means of developing a profitable sales channel.
Successful affiliates are operating as value added marketers. Merchants are beginning to appreciate this fact. Many now have a dedicated affiliate manager on staff and provide remarkable levels of support. A number are now actively recruiting top affiliates and cutting special deals with them.
Traditional brick and mortar vendors by and large have not really embraced the affiliate business model beyond seeing it as sort of an orphaned advertising machanism. I predict, however, that traditional merchants, in time, will shift toward affiliate marketing as a viable profit center.
I see this as a growth industry. Webmasters dwelling in ivory towers need to get used to it.
I just left a meeting with a merchant who uploaded their entire BACKEND [150MB] to our server and will allow us to take the $ in our merchant account and then pay them a % of each sale. :)
I love the idea of promoting products I'm enthusiastic about and some of the affiliate mgrs I've met have bent over backward to help me, making feel very much like a valued partner as opposed to a branding mechanism.
Webmasters in their ivory towers? Sod 'em, let 'em stay there... I'll be earning the cash thank you very much!
Nick
In essence, what you saw were "the big boys" who had developed traffic and were offered these CPM and CPC programs from Burstnet and the other big ad networks out there while smaller, lower traffic sites had to go with the pay per performance model - i.e. you get paid IF someone buys something.
Unfortunately, for these smaller, lower traffic sites, putting the same number of banners on their pages as the big guys brought similar click-through ratios, but then the conversion needed to happen. Sites who weren't busy enough to be eligible for the "easier way" would often go weeks or months without a conversion.
Then, more and more of these sites started offering more things - more variety in hopes of having their visitors see something - anything - on the page that they might like to buy. And, there you have the birth of the "banner farm."
Now, as CPM is virtually a thing of the past and with CPC moving steadily along the same path for the average to even above average web site, virtually all sites without their own line of products are having to use the "pay for performance" model to earn any revenue. This is especially true for information based sites - there just aren't the money making options available as there used to be.
So, as more and more webmasters are "forced" to come down out of their ivory towers, there is generally more and more acceptance. There are also technologies available and in continued development which greatly enhance conversion rates - thus making it actually possible to make a few bucks at it.
Sure, "banner farms" are still and, I believe, always shall be frowned upon in general, but as time goes on, people will find better ways of presenting their affiliated products. As we move away from "Banners" toward better (meaning more accurate, less obtrusive, and more tailored) means of getting the information visitors WANT to see, the acceptance will continue to grow.
The move away from banners can be seen clearly on most decent affiliate programs. Almost all of them now provide "deep linking" and or "search boxes" which provide a valuable way to show it on the site and get right to the "enter my credit info" without going through a lot of steps. (Much of the problem in the past with affiliate programs was that you'd visit a site, find something you wanted, click a banner, then you'd have to find it all over again on the actual site where you were going to buy it - how lame is THAT?) There are also some programs in development (and a few already in place) which are delivering the actual products, pricing, details, and even one click shopping cart additions where the customer never leaves the originating site until they've already made the decision to buy. This is going to improve general acceptance by surfers and the industry over the next year or so.
So, yeah, it's getting there. Slowly, but surely.
G.
I really never could understand why some directories like Yahoo and DMOZ don't want to list professional affiliate sites. Affiliate sites are a very real and functional part of the online marketing landscape, functioning much like sales representative organizations in the B&M world.
Affiliates let the merchant focus on what they do best ... close the deal, take orders, fullfill the orders, etc., while the affiliates focus on what they do best ... bring targeted and pre-sold traffic to the merchant.
This is especially true for information based sites - there just aren't the money making options available as there used to be.
And many of these sites rely on banners for the income to make the site worthwhile. The "players" know this, and offer next to nothing.
Otherwise I'm out of my depth :) I'll be a few steps behind nick_w in investigating the wonders of affiliate marketing
Affiliates are uniquely situated to assist merchants in targeted strategies likely to bring about conversions.
Every week our company gets requests from people who would like to sell our products on their website. Here is what they all seem to want:
1) No physical inventory
2) They want us to handle all returns
3) They want us to use their invoices
4) They want us to ship to each customer they get individually
5) They want a large wholesale discount
Here are the two setups that we use:
1) If we are doing 100% of the fulfillment, handling returns, changing our system to use their invoices, I see very little value in this for us and therefore find it difficult to offer a decent discount.
2) If we ship a large shipment to the affiliate, and they do all the fulfillment, invoicing and handling of returns, it is easy for me to justify a larger discount because we are shipping in volume for very little maintenance on our part.
When we ship to the customer and we are doing most of the work, I have a tough time giving more than a 10% commission on the sale (and that's pushing it). I don't like this setup. I rarely feel that OUR WORK justifies THEIR commision.
When we ship to the affiliate and they do all the work, I can give them 40% or even 50% of the sale. I prefer this method. They get a good discount; and they are earning it with THEIR WORK.
So here is my advice. First, invest in some inventory or at least buy in volume. Secondly, the more work we do, the less value I can pass on. Third, it is extremely helpful if you manage your own inventory (ie - keep returns for later resale, stock popular items).
With [u]zero physical inventory[/u], we are approaching [u]zero value[/u] on my end. There was a time when wasn't true. Four years ago, our company had no website and very little internet presence. I really feel that affiliates need to change with the times. Sure, I can give people some money for referrals or sales, but this type of setup is pretty trivial compared with my customers who have a physical inventory.
PS - Our company sells shoes.
In reality, though, sites wishing to become afiliates should probably start to get paid more on a "commissioned employee" or "independant sales reps" structure than the current "here, I'll give you what I would have spend on ads" structure. I think we'll start to see these rates coming up in a while, but it'll be a way down the road, yet. The reason for this is that there are some additional costs including added server volume and development of better technologies (Amazon has dumped close to a quarter million into it's new Web Services development - I wish I could remember the link to where I read that... sorry).
Once the technologies become pretty standard (or someone like CJ or LINKSHARE comes up with an out-of-the-box means of providing deep linking and/or remotely delivered data solutions), the companies will have that extra 10% to play with and 20-25% commissions will become more the norm - at least I HOPE they will.
Another problem for the host company worth mentioning is the fact that the more effective the means, the less idiot-proof it is. Any idiot can put up a banner. Someone with basic skills can put in a search box, but populating that search box with what the customers are looking for takes some more advanced knowledge. Then, when we get to XML or other remote data distribution, you're looking at an even more complicated process where only the veteran web designer dare to tread.
My application which delivers product information, prices, one click buying, and all of that has taken me a month to build so far (at a good 3-4 hours a day - and a good many 12 hour days in there). Imagine, if you will, some webmaster who's made a few Geocities pages and is wanting to break into selling books or movies and trying to learn XML and either XSLT or SOAP, while still trying to master ALT tags. For them, it's better to stick with the banners and search boxes.
Some day, though. Some day....
G.
I'm saying that distributors are almost always more profitable than affiliates. And I'm saying that advertising or displaying a product with no inventory is far less valuable to me the wholesaler than a true distributor.
>distributors are almost always more profitable than affiliates
As always, that'd have to be qualified to the specific product or service. When I consider the lack of overhead and management duties in my own online sales network, I'd say just the opposite.
[edited by: rcjordan at 9:39 pm (utc) on Aug. 28, 2002]
In your first post, you were comparing the setting up web based distribution centers which may or may not be more profitable to you. True, if the guy who just wants to get the sale and hand it over to you wants 50%, you ain't gonna make diddly, but if he wants a 10-15% cut for doing all of the marketing and customer qualification before you ever hear a word from them, then chances are, you're going to make about the same in the end as if you had sold that one item by yourself. Obviously, the less you have to do, the lower your cost is. That's not what's at issue in this thread. We're talking about Afiliate Programs gaining respectability and the trends toward further functionality and profitability for all involved in that specific type of program.
There's plenty of potential for building programs that would work for your distribution model theory, but let's start a new thread and leave this one for afiliate talks.
G.
...web based distribution centers...
If this would mean having to find some way to house an inventory of multiple shoe brands in varying sizes,etc. in order to operate as an affiliate, the very idea gives me an enormous headache.
Yeah, lets get back on topic.
If I give you $10 commission on a $100 pair of shoes, and 1 in 5 customers returns the product because it didn't fit, and I have to login to your site every time you get and order, and once a month I have to process your commission, and every time I change my prices I have to tell you to do the same thing, and then you have questions about availability, and then we end up needing to troubleshoot a problem with counting clicks or sales every month, and your software doesn't talk to my software very well...it is quite possible that I don't desire the help. Instead, I would rather put my efforts into my own marketing.
I just painted a pretty negative picture and I'm aware that many of the above problems can be minimized. But for it to be worth it to me, it needs to be REALLY EASY.
How do you guys go about making it really easy? Or are we simply talking about joining programs like Amazon or Wal-mart? I hope we are not, because there are many products that the BIG GUYS don't sell that have enormous potential. I think there is a greater likelyhood of finding a niche when you find unique products for a targeted audience.
The whole idea of marketing - focusing on that - and nothing else is what makes it attractive to me as somebody who's obsessed with search engines :)
Some of the programs I've been involved with had varying levels of 'features' and now, many of those same programs have even more features, with even better things that are available to their members.
Also, another thing I've noticed is the trend to stay away from the term 'affiliate' and say 'partner' instead. While that's not a legally binding 'partnership' in most cases, it does serve to place a small, but powerful distinction on the program in question.
Even though I'm not affiliated with 'amazon' I highly doubt that most people who market that, or a program through CJ think of themselves as "partners".
purposefully ignoring the off topic stuff about web based distribution - argh, that sounds like a terrible night mare :)
The title of the topic is "Is Affiliate Marketing Gaining Respectability?". My answer is: No, I believe affiliates are often more work for little profit--UNLESS the maintenance required is low. I went a step furthur in saying that people might want to consider not just referring sales, but actually making them on their own. That is where the word "respectability" comes into play. Please explain where I'm off topic. Indeed, I do seem to be missing the point (said in good cheer).
The point I was hoping to make is that there are clear signs that this business model is expanding and gaining more widespread use. The fact that more and more merchants are moving to affiliate marketing, pouring money and increasing resources and energy into it and enhancing affiliate compensation indicates a move toward acceptance as a mainstream component of e-commerce.
This is not to say that the naysayers such as yourself are crumbling into oblivion. Growing pains are inevitable, and there's a long way to go.
What may well occur is that much bigger fish will be attracted to these waters in an effort to chase out the moms and pops like myself. Whenever a good thing is discovered, the big guys will muscle in and try to monopolize it. On the other hand, one has to wonder whether larger enterprises would have the agility that the little guys bring to the table. I don't have to assemble a committee and prepare a formal marketing plan to try something out.
It is a common misunderstanding in the corporate world in general as evidenced by the fact that most comapnies have a "Sales and Marketing Department" but very few have a "Marketing and Sales Department".
Sales is all about and exchange of values, usually Currency for Products or Services.
Marketing is all about finding prospects who may be interested in the Product or Service available for sale.
Of course there are in themselves generalisations. There are different types of sales people from "Sales Takers" right through to the Gung Ho "Damn the Torpedos" Sales Extractor. And there are meny different forms of Marketing from Brand Building, Viral Marketing right through to the NewSell approach of Information Merketing. The unfortunate mistake a lot of companies make is pouring more resources into getting the sale then finding the lead.
I have had may fair share of both Marketing and Sales and quite honestly prefer the Marketing aspects. I think I am about "saled Out".
I don't do any Online Sales, I don't sell anything. But I am active in Online Marketing. Affiliate Marketing is all about finding leads for the company selling the product, and as such it is a much misunderstood tool within a companies arsenal. The benefits are a breadth of ideas, concepts, and expertise without expanding the internal marketing department or resource allocations significantly.
The object of product selling companies is to make a profit, just like any other company or person. Now, what if there was a way to increase sales, and therefor profit, without increasing initial expenses? Would that be if interest?
So the question that companies selling products online need to ask themsleves is "if someone could increase our sales in a respectable manner by exploring different marketing ideas and niches than those we already use AND it costs us virtually nothing, would that be worth a comission fee to those people increasing our resultant sales and profit?"
Having said that, affiliate marketing is not for everyone and is not applicable to all products. And there certainly has been a stigma associated with the affiliate market in general, much the same as car salesman, real estate agents, and so on.
However I am of the opinion that the tide is turning, even to the extent of the product companies keeping a closer eye on the activities of their affiliate to "clean up" the industry.
My2cents.site?affiliateID=Woz
Onya
Woz
As you may well see, I have some personal dealings with affiliates and distributors, but I have to admit that my views are limited to my line of work.
Let me now support you in saying:
Virtually all shopping cart software now has an affiliate module either built in or purchased as a separate component, and like it or not, affiliate programs are going to grow as a result of this. My company will be expanding it's relationships with affialiates as a result of recent upgrades in our shopping cart.
I'm sorry if I came across as purposely trying to push the topic away from where you were going with it. It's just that in my experience, i have seen a far greater number of success stories when people actually become involved in the complete process of planning, marketing, selling and then distributing.
Quote:
"The fact that more and more merchants are moving to affiliate marketing, pouring money and increasing resources and energy into it and enhancing affiliate compensation indicates a move toward acceptance as a mainstream component of e-commerce."
-excellent point
I also like Woz see many merchants policing their affiliates to insure that the sites representing them are not misleading to the public and present a good image of the company/product that the affiliate is promoting.
Heck I just wish the cat wasn't out of the bag so much as it's more competitive now than it was in 1999 to do affiliate marketing :). That having been said, there are now a lot more merchants willing to realize this new marketing avenue so there are more products to market now than in the early days.
One of the problems it appears that you are stuck with is that you've got software on the affiliate's site (you said that you've got to log onto their site to do chargebacks). I'd imagine that it's not only a pain in the butt as someone running a marketing program like this, but it is bordering on nightmarish.
Another problem you are giving yourself is allowing your marketing partners to publish pricing and even availability details on their own sites. This is also going to be a hellish time for you. If you had a way to devliver accurate and up-to-date pricing and availability information (a lot of places are doing something as simple as an IFRAME solution, though it isn't compatible with all browsers), then your life would be considerably more rich with night after night of restful sleep.
Chargebacks, though, will always be your biggest headache. And, no matter whether you make the sale, or I send you the sale, 1 in 5 are going to come back - but then, you have that chargeback percentage already figured into your price, anyway (or at least you should).
If you can adress those two main issues (not bringing the customer to YOU for the sale itself, and not allowing affiliates to publish pricing and availability details - or finding a way to deliver it to them) your respect - yup, even yours - for afiliate marketing will be greatly enhanced. I promise.
G.
Congatulations Mike_Mackin! Thats what I call a "nice hit".
At work people have a hard time understand just what I do ;-) It is kinda fun at time. Many think it is very exciting as I do and wish me luck (most). My boss thinks I am a scam artist ... hee hee
Sounds good to me, by the time the masses understand what affiliate marketing can offer I will have a stong base to stand on (god willing).
Bottom line for me is that I can see it growing, and becoming more of the norm online.
Here's to all the crazy online affiliate marketers!
Cheers,
Chef Brian .....(best month ever this month ....no huge house on the hill but I will get there)
