Your affiliate marketing questions answered

By Paul Skeldon November 18, 2017 - 9:42 am

We asked Mark Russell, managing director at Optimus Performance Marketing, to answer a few of the key questions relating to affiliate marketing: is it any good, what are the pitfalls and just how easy is it to implement?

In what ways is affiliate marketing competitive with other advertising platforms?

Some thought is needed to separate affiliate marketing from other online channels as the customer journey may touch upon a number of channels – paid search / seo / e-mail and display.

Affiliate marketing can be viewed as part of the mix, contributing to the sale, the last click model determining the attribution of that sale to the affiliate channel.

The use of analytics and a de-duplication policy based on transparent criteria will ensure that affiliate sales arising from situations that are clearly not attributable to the channel can be declined, thus eliminating any competition / duplication of sales attribution.

What are some of the benefits for advertisers?

The clear benefits to advertisers of the affiliate channel are it’s relative cost effectiveness vs other channels. Achieving positive ROI is however contingent on understanding the costs of affiliate marketing (fixed and variable) as well as having a clear cost of sale target that needs to be maintained to deliver profitable sales.

Looking at promotional strategies that add value, understanding the tactical value of discounts and short-term incentives to build longer terms sales volumes and the ability of affiliate databases (cash back and voucher code affiliates in particular) and business models to drive new customers further adds to the overall cost effectiveness of the channel.

Is it easy to take advantage of and what should people do next?

Getting an affiliate programme is relatively simple, however running it well and maximising the available opportunities often proves less easy, so it is important to have a good understanding of what you want to achieve and the technical, creative and above all time requirements needed.

To this end it is worth talking to your peers or seeking the advice of expert practitioners to understand what is required ongoing to running a successful programme and what scope there is for your particular company to drive sales.

Are there any pitfalls?

In a word – yes! However the vast majority of them are avoidable through good planning and understanding of the channel and a “hands on” strategy of managing the programme.

What are the indicative costs and what could the result be?

There are two types of cost involved – fixed and variable. Fixed costs are any integration fees payable to the affiliate network as well as any monthly charges.  These charges vary by network and the level of service being given to the client.  They may also include agency management fees and any other third party costs such as product feeds / tech resource if not done in-house.

Variable costs are those driven from sales – affiliate commissions and network override (30% or less – often negotiable).

In terms of results a typical programme (six months+ old) will typically account for between eight and 15% of total online sales for a merchant. This will vary in accordance with the sorts of affiliate partners that are being worked with and the existing sales base of the merchant (catalogue / offline etc).

Would you recommend that ecommerce websites become affiliates too?

We would not recommend a merchant becomes an affiliate as well, as promoting the services of companies not directly linked to a merchant’s brand causes customer confusion as well as meaning potentially generating sales from other affiliates traffic that the referrer will not earn on.

This causes customer confusion as well as alienating potential affiliates from working with the merchant.

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