Performance MarketingGetting your program off the ground, part 1

Jon Levine

Director of eCommerce

All Inclusive Marketing

Today You Will Learn

• Differences in how programs are run, in-house or network

• Pros and cons of different program management styles

• The importance of research when setting up a program

• Your offer and how to create it

• Jon Levine, Director of eCommerce for All Inclusive Marketing

• Director of Marketing for several industry leading companies over the last 14 years

• Launched and managed affiliate marketing programs for different companies in multiple categories

• Founded and launched three successful online startups

• Featured speaker and panelist at ShareASale ThinkTank!, SFIMA, and Affiliate Management Days conferences and events

About Me

AgendaGetting your program off the ground, part 1

• Building your affiliate program• Networks vs. in-house

• Managing your affiliate program• in-house?• OPM?• What you can expect to get out of a network

• Know your competition• Do your competitors have affiliate programs?• What types of offers do they have?

• Your offer• How much do you pay out?• How long do affiliates have to make a sale?• What about other incentives like bonuses or coupons?

Network vs. In-House

The key to how affiliate marketing works is tracking. You have to know where a customer came from in order to pay a commission to the

correct affiliate. There’s two ways this tracking can be done: in-house or through an affiliate network.

Networks

Pros Cons• Handles all tracking, payment and

tax implications of affiliate program

• Seen as a third-party impartiality

• Central repository for all program terms, creatives and communications

• Robust tools for creating automated commission schedules and bonus campaigns

• Larger recruiting ground for finding new affiliates for your program

• Increased costs. Networks charge commissions on your commissions

• Program details are public and can be seen by your competitors

• Larger networks have so many affiliates that applications can become overwhelming

• Network guidelines can sometimes become restrictive, especially for larger programs.

In-House Tracking

Pros Cons• Diminishing costs that are not

ongoing

• Complete control over program

• Fully-customizable commission and bonus structures

• Potentially higher payouts due to decrease in costs

• All payments and taxes must be handled by you

• No recruitment pool

• Need to create own area on website to house program terms and creatives

• Trust needs to be established due to no third-party oversight

Not an Either/Or

You don’t have to choose one or the other. You can do both!

General Program Larger Affiliates

• Manages payments for larger group of affiliates

• Access to a larger recruiting pool

• Keep costs down for affiliates bringing in the most revenue

• Create better offer due to lower costs

• Create full-customized commission schedules

For programs just starting out, I recommend going with a network.

Program ManagementJust like the decision of where to run your program from, a network or in-

house, you also need to decide who is going to run your program.

Internal Person or Team OPM or

Outside Program Manager

Pros Cons• No additional costs. Person already

on payroll

• Full control

• Completely integrated with all systems and processes

• Knows company culture and brand

• Very accessible and available when needed

• Less experienced than seasoned affiliate manager

• Lack of relationships with affiliates

• Affiliate channel could take a backseat to other tasks assigned

• May not see the value of affiliate program, especially at the very beginning

Program Management: Internal

Pros Cons• Very experienced and can hit the

ground running

• Brings established relationships to the table, usually with high-quality affiliates

• Completely dedicated to the program

• Can make recommendations for different services or program management styles that are better suited for you

• As an outsider, not under your complete control

• Unfamiliar with your brand and culture

• May not be available immediately

• May not be able to see the big picture due to company information sharing restrictions

Program Management: OPM

Program Management: Networks

Some networks offer their own ‘program management features

May be helpful in addition to an in-house affiliate manager, especially at the beginning

Not a replacement for a dedicated person, in-house or OPM

Your OfferYour offer, also known as your commission rate, is what you’re going to pay affiliates

for transactions. There’s a few different kinds, but here’re the three main ones.

Flat Fee

• One amount per transaction

• Usually good for non-monetary actions like form completions

• Never pay out more than fee amount

• Can dissuade bigger affiliates looking for more earning potential

Percentage

• Amount paid is based on percentage of what is sold

• Limitless earning potential

• Incentivizes affiliates to generate larger sales

• Can be costly on lower-margin items

Tiered

• Variable commission based on levels

• Encourages larger affiliates who are able to generate more sales

• Incentivizes smaller affiliates to become larger ones and move up

• More complex to manage because different affiliates are making different amounts

Your offer is based on many factors. Items such as program goals, profit margin, average customer value and others come into play. Each program is unique and it’s something you’ll have to

determine for yourself.

Cookie Duration

No, not that kind of cookie.

The time between when a click happens and

when a sale takes place is called the cookie

duration

It’s called this because a cookie is

‘dropped’ on the customer’s

computer that acts a timer

This can be however long you choose,

from no duration at all to one year or

more

This is a big part of your offer and

something affiliates take into

consideration

Bonuses and Coupons

Bonuses

• Can be used for sales contests

• Can be a reward for hitting specific thresholds

• Can be used as a tactic to get affiliates activated

• Can be part of a ‘signing bonus’ to get affiliates to join

Coupons

• More of a customer- facing tool

• Very active group of coupon affiliates

• Incents both affiliates to push sale and customer to make a purchase

• Effective tool for affiliates to use to drive traffic

Know Your CompetitionAffiliate networks are great for research. Signing up is free and you’re able to research the other companies in your category and see what they offer.

Look at their offer and determine if it’s something you can meet or exceed

See that types of creative they offer and how long their sales window is

Examine their program terms and they do and do not allow

This is not about copying! This is about understanding your competition

Move The Needle

Move The Needle

• Figure out if you want to run your program through a network or run it yourself internally

• Determine if you have a manpower and expertise to have an employee manage your program or have an outside expert do it

• Examine your internal financials and decide how much you can pay out in commissions

• Set your cookie duration and decide whether or not to include any bonuses and/or coupons

• Take a look at other companies in the same category as you that have affiliate programs

First Steps

• There are distinct advantages and disadvantages between using an affiliate network or your own internal tracking systems. Understand them and determine what’s right for your business.

• Managing an affiliate program can be a full-time job unto itself. Do you have the people and talent on staff or should you bring in outside help?

• How much can you pay out in commissions and still be profitable? Look at all of the factors when creating your offer, including network fees, bonuses and coupons.

• It’s almost guaranteed that your competitors have affiliate programs. Figure out what they’re doing and do it better!

Key Takeaways

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