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Building a mailing list as an affiliate marketer

One of the challenges of being an affiliate marketer is maintaining your own customers. When visitors get to your website one of your main goals is to send them off through an affiliate link to gain commission, visitors that don’t click through to a merchant don’t generate you any affiliate revenue. Ideally you would like them to come back to your website again in future in order to generate recurring revenue and not have to continually acquire only new customers. The problem is though, now that they have found what they are looking for from a merchant they may no longer need your website. One way to combat this and lure visitors back is through a mailing list.

A mailing list is one of those things which seems easy enough in principle but is actually something that you really to focus on and devote time to.

The first thing you really need is something worth mailing to people, this can be a number of things which I will expand on below including: product deals, site updates, unique data, competitions, cashback and joining a club/ community.

Product Deals
Deals are one of the primary things an affiliate can offer a mailing list subscriber. As an affiliate you no doubt either use software or research products you are looking to promote. You are generally in a good position to source great deals that a customer may otherwise miss just visiting the one merchant. This is something you need to plan ahead on though. If you are doing this by hand the time taken to craft one mailout has to be a consideration. If by software, you need to think about whether or not the deals will be relevant to subscribers. For instance the best deal on a baby pram is only going to interest a small niche group of customers, if this isn’t on topic for your site then interest will be low.

Site Updates
If your site is built around a stream of unique content this can be your mailing list offering. Great on topic new content will keep users coming back. This will only work though if you have high quality content, no one is going to want to come back to read the latest 300 word summary you brought online for SEO value.

Unique Data
Affiliates are generally aggregators of products/ services and deals. What you offer collectively is something that people can’t just get from the one merchant. Having this information across multiple merchants allows you in some cases to generate unique insights that won’t be possible from a single providers own data. A good example of this is Adioso, where you can signup for any email which will alert you when there are good airfare prices on routes that you have searched. A single airline could offer this, but would only include their own prices, reducing the effectiveness.

Cashback
Another very popular model is cashback, giving your users a percentage (or all) of your commission as a payout. Users will usually signup for cashback, providing you with an opportunity to send out cashback reminders and, with permission on signup, a more generalized mailout.

Competitions
People love competitions, a good prize is a great incentive for people to signup for a mailing list. A competition can also allow you to become the merchant and create your own affiliate program to drive traffic to it. Competitions can tie into your current promoted products and you may even be able to acquire your prizes at a cheaper rate in partnership with the merchants you are promoting. A word of warning though, there are plenty of low quality leads that will jump at the chance of getting in the running for free stuff. The kind that you are very unlikely to convince to pay for anything. So while subscribers may skyrocket, you may not see a lot of conversions from your mailouts. As a explain below, it is important to track conversions to continue to improve your mailouts into the future.

Build a community
Building a community around your offering is something that many want to do but only a few succeed. A community involves many people spending time around your website, obviously there aren’t enough people to go around for everyone to be able to do that. Rand Fishkin, one of the biggest names in SEO, has a lot of good advice on how to go down this path. It follows though that with a successful community people will be more than willing to signup for updates and other types of mailouts.

Next you need to make a commitment to actually using the list, often the time spent creating incentive for people to join and putting the code in place will be for nothing if the mailing list just sits unused or used in a haphazard or informal way. Sure you can start collecting now for the future, but I think the whole process works a lot better when coupled with an active newsletter. With a long gap visitors may forget even ever visiting your website.

You should also uphold the law which varies from region to region but usually involves not tricking users into signing up, giving mail out content that the user expects based on the text around their signup and providing an easy way for users to unsubscribe. 3rd party mailing list managers such as mail chimp, while providing plenty of other great features, will cover you on legal requirements.

3rd party software also generally gives you something else you should really have to make full use of your mailing list: user tracking. Knowing things like how many users are on the mailing list, how many have unsubscribed and what links in the mailout are being clicked on can help you better tailor a more effective mailout.

Give it a try, even if initial performance is bad, by committing to it, tracking results and iterating over successive mailouts you are likely to find eventually success. You will also learn a heap in the process, managing a mailing list is an important skill for the modern affiliate marketer

Amazon Associates Tracking Support Added To AffClicks

Amazon Associates, one of the biggest affiliate networks in the world, is now available as a network to connect to in AffClicks.

Despite it’s size we held off for some time on integration. The network is notoriously difficult to extract all the statistics an affiliate wants, the information available is weighted heavily towards amazon. Given their size and inventory they are able to get away with sub standard reporting. We wanted to provide the same level of statistics we are able to provide for the other affiliate networks we have integrated.

The core of the problem is that Amazon Associates doesn’t allow a custom passthrough (or subid) to set when one of your users clicks through one of Amazons affiliate links. You are provided with a comparatively small number of tracking ids which you can use to differentiate sales. In practice using Amazon Associates from their UI though, this usually means lumping things into broad tags and getting little to no visibility tracking individual sales. You are also unable to determine which items were bought in the one transaction, as you only get a listing in terms of individual items.

AffClicks has solved this problem by automatically creating a large number of tracking id tags and rotating through them. Then using a series of factors to determine which user the tag maps back to when a transaction is made. This gives you things such as grouping items into transactions, click through time, visitor ip address and the referral term and landing page your visitor landed on. You can also choose not to have the custom tags created and just aggregate the items brought with your other affiliate networks connected in AffClicks.

Give it a try today, we are eager to hear users feedback and suggestions regarding this feature. As well as any profit improvements stemming from the extra data now at your fingertips.

Why Every Affiliate Marketing Business Can Benefit From PPC Advertising

Affiliate marketers tend to have strong opinions about PPC. They may have put it in the too hard basket with or without trying it, they might have spent lots for little result or they may have even been banned and are still scratching their heads on exactly where it all went wrong. When we talk about PPC for the most part we are talking about Adwords. Sure there are other choices out there, the most prominent of which is Microsoft’s adCenter which allows you to advertise on Bing and Yahoo. The fact is though, even their combined volume is small compared to what you can get through Adwords, making Adwords the best bang for buck in terms of traffic your ad is exposed to.

Many affiliate marketers think that their business isn’t suited to PPC, their model not being built around direct calls to action that quickly send new visitors off to merchant’s sites. An example of this could be a travel search site that includes affiliate links for people to buy flights after they have picked routes and dates. Usually a site like this isn’t going to see a high conversion rate for each visitor. Many visitors will get confused with all the possible search options, others will just be using it as a guide to plan their trip or are just comparing prices. With travel you also get a lot of “window shoppers”, people that are looking at what is available without looking to make an immediate purchase.

As a rough guide to conversions I will put down some approximate numbers (feel free to disagree with these, they are somewhat based on experience and somewhat based on general feelings I have from affiliate marketing experience). For a single page with a direct call to action, such as links to a few targeted merchants in a niche, you might hope to get a conversion rate (a conversion here being a click through to a merchant) of 50-60%, but little reason for users to ever revisit your site. For a page with a bit more going on, still targeted, but including multiple merchants, multiple product choices, links to other pages and features on the site to visit, you might be looking at 30-40% conversion as being good (Of course this additional build out should benefit you by covering a wider collection of deals and giving you a far biggest list of relevant keywords. Also hopefully in making your site useful enough that people come back to in and not head straight to the merchant next time). This is still giving users a fairly direct path to merchants, just giving more options. Once you are providing users with a blank slate landing page with a large amount of possible search options and multiple levels of interface to get to a merchant you might be looking at 5% or less conversion rate. Of course with this type of model you are looking to acquire return customers that love the service enough to recommend it to friends.

It is pretty easy to run some numbers on a site not suited for PPC by virtue of conversion rate and determine it is a waste of time. Such numbers may be:
25 cents cost per click (relatively long tail term)
5% conversion
$5 cost per conversion
10 average conversions per sale (or any commissionable action)
$50 cost per commissionable action
$10 average commission

With those numbers you are $40 out of pocket on every time you earn commission,  the break even point a 25% conversion rate (assuming the other assumptions remain unchanged). You would also have to factor in how many of those paid visitors end up using your site again, telling friends, signing up to a mailing list or other services you offer. Even with all this though, advertising around general terms (which can cost a lot more than the CPC mentioned above) is probably not going to be a long term winner. Branding could come into play, using advertising as somewhat of a loss leader to get a critical mass of users. Although unless you have a lot of money in the bank your probably looking for direct quantifiable returns on your spend.

Another slightly different business model to consider is an informational site, to borrow from travel again you may have built up a site that has lots of quality articles on what to do when traveling to a certain place. Again your going to have affiliate links on things where available (and probably also running some ads) but users are primarily after your content rather than your offers. Many will come, read articles, then leave the site without clicking on any offers. This isn’t a bad thing, you may rank for a large number of terms and have repeat visitors, it will just mean individual PPC clicks will have a lot conversion and therefore a negative expected return.

So what can you do with PPC if you fit one of these lower conversion models?

More specific landing pages, use a different model for your PPC visitors.
From the simple math above, the low conversion rate isn’t going to make you a direct profit. What you can do though is pick out specific offers and either build a landing page around them or simply deep link people into existing functions of your website that would usually take user actions to get to. So instead of advertising on “travel search” or “travel search australia” you advertise on “melbourne to sydney”, “fly from melbourne to syndey” or  “cheap travel syndey to melbourne” etc. These ads can have destination urls that pre-populate your search engine for the specific Melbourne to Sydney route, you could also pre-pick a date range to give the user an instant idea of price. From this users will only require a small amount of actions to convert. Users searching for the specific route are also more likely to be looking to buy than those browsing around your site.

For a site with many informational articles the strategy would be to pick specific offers and target the article around that. So instead of a topic  ”Where to go in New York”, you would target a single New York attraction on which you are able to earn a decent commission and make the whole page about that. One thing you must be careful of though is being considered a bridge page by Google. This means that they decide the only purpose of your page is to send people to another site. If you have a decent collection of unique content on your site though which internal links between it you should be fine.

Promote special offers.
Merchants are frequently trying to push special offers. While the normal affiliate offers you are using might not work for PPC, building something around a really good special or unique opportunity might. This can be a good opportunity to test PPC against a limited set of keywords/ landing pages without rolling it out to you whole site.

Get a feel for keywords, where further SEO efforts are best placed.
Baring some amazing extra source of traffic, not being a PPC affiliate basically means you are an SEO affiliate (or amazing at social networking). Optimizing for organic traffic can be a very effective strategy, large amounts of free new or returning visitors is always going to be desirable. What is hard though is starting, initially you don’t have a great big list of keywords that work well and you also don’t know which are going to be dead ends. It is really hard to know where to best spend your time producing content and link building. Bidding across some broad match terms can quickly give you an idea on the type of traffic you get, the keywords they use and whether they convert. A broad match is a keyword which will display for that particular search query, as well as an other closely related ones. That way from a few keywords many different, more specific search terms are found that can be targeted.

Test features/ concepts.
Following on from the last point, if you are considering branching out into different areas or even using different content around your current offers you really want to know quickly whether the new ideas will fly. Usually it takes time to build up search rankings for new terms in organic results, this could be wasted time when you find out that traffic from these searches isn’t converting well. Google’s keyword tools can give you a rough idea of expected search query volume but what visitors will do once they reach you site is a big unknown. The fastest way to test this is PPC.

Learn.
Even if right now your affiliate marketing business is unable to make PPC work at all, there is always the experience you will get by giving it a shot. Adwords is both a powerful and extremely complex tool, an important once in any marketers arsenal. AffClicks simplifies the experience, putting it in the reach of even the smallest part time affiliates but there is still a learning curve there that can only be overcome once you get stuck in and run some ad campaigns.

Once a campaign is running, the affiliate marketers next big question is how am I going to track the results? Without a specialized tool this is a difficult task, if you are a merchant doing direct sales you can put conversion code on your sales thank you page and have little problems tracking ROI. For affiliates though you don’t control the sales process so most of the time this isn’t an option. One of the core motivations for AffClicks is to get around this issue, although we have extended a lot further to build a comprehensive solution for PPC affiliates.

Currently this isn’t available as we still need out API implementation approved by Google but the commission aggregation component plus much more is, signup for beta on affclicks.com if you are interested.

I would love to hear others opinions on PPC and affiliate marketing, what have you found successful? What has just cost your money? And any problems you have had that more advanced tools could solve.

Affiliate Commission Percentage and Cookie Length

Two key metrics publishers take into account when picking sales affiliate campaigns are commission percentage, which is the percentage of total sales value on referrer sales which they receive and cookie length, which is the period of time after the initial referral the affiliate is entitled to commission for.

These metrics can be hard to compare though, am I better off taking the higher commission rate with a short cookie time? Or should I take a lower cut and bank on the fact that customers will return during the cookie period to make additional purchases?

Another factor to consider is also the tracking methods used by a network. Standard cookie tracking deteriorates over time as people will either clear their cookies or have browser settings or automated programs that do it for them. According to statistics from the  Affiliates4u 2011 performance marketing guide, after 30 days 43% of sales are coming from alternative tracking methods. This means for a network using standard cookies your commission is getting cut by 43% after 30 days, a longer cookie length, whether this stat just gets worse, may not be very beneficial.

To provide a rough guide I have analyzed some of our personal account merchant referrals over a long enough period of time that they would be pretty stable, especially for the first merchant. The first merchant is on a 30 day cookie and is recorded from a pool for 20,814 sales over 17 months. The second merchant is on a 45 day cookie and is recorded from a pool of 2526 sales over 6 months.

This first chart for merchant A shows that 59% of sales occurred within 24 hours of the original click, this would mostly be people who clicked through and purchased in the one internet usage session, but also include those who may have made a mental or physical note to come back later in the day and make a purchase. As you can see this tapers off quickly with less than 5% of sales coming in the second 24 hours period and settles around the 2% mark for each day of the first week. Taking into account the perviously mentioned issue of regular cookies being removed over time it seems that after the first week there is a fairly uniform chance that someone will return on any given day to make a purchase.

It may be better to think in terms of the next graph, the amount of total sales completed on or before each day of the cookie period.

Here we can see that by day 10 you have 80% of the sales value. To get an idea of how cookie length and value would be interrelated here we will insert some numbers to put a figure on different levels of revenue. Say that you have 1000 sales at an average of value of $100 with a commission percentage of 10% over the 30 day period. This means the total revenue over the period is $10 * 1000 sales = $10,000, $8000 of which comes in the first 10 days. Meaning if your commission was changed to 15% on a 10 day cookie you would get $15 * 800 sales = $12,000 which would be better value but unless you have a rough idea of the distributions of sales you are getting from merchants it may not be clear.

In merchants we have ran 2 commonly offered cookie lengths are 30 and 45 days, to get an idea of difference between these 2 we examined the second merchant.

 


 

Here we see an even more pronounced effect towards the first 24 hours, with about 85% of sales occurring in the first 24 hours. It also features a similar tapering off after the first couple of days. What we want to check here though is how much extra revenue does having an extra 15 days of cookie length generate and if presented with competing offers, one of which offers a longer cookie for less commission percentage on each sale, what is the best course of action?

The graph confirms what you would have already been suspecting from previous graphs. The extra 15 days only generated an extra 2% of sales. 45 days at 10% or 30 at 12.5% are offers you may be likely to see. Using 1000 sales at an average of $100 per sale again as an example, with the first offer you would get $10 * 1000 = $10000 and with the second you would get $12.50 * 980 = $12250. For both methods to break even you would need 20% of sales to come in the additional 15 days of cookie time. It is possible that depending on the products being sold this could happen but from the data we have to go by here it’s definitely not in our niche.

Another aspect to consider is that of sub sales, those are purchases by customers referred that have been completed in transactions after their initial transaction by a merchant. Sometimes these sales will attract a different commission rate than first sales as some merchants feel they have already paid for and acquired the customer and shouldn’t be rewarded as handsomely on additional transactions that still occur in the cookie period. This data is taken again from merchant A, but from a smaller poll of 6952 sales which could have their sub sales more accurately tracked. From this, 8.3% of sales were sub sales and their distribution across days is show below.

Apart from the first day when people tend either buy things across multiple transactions but in the same session of browsing, there doesn’t appear to be a great pattern in when people come back. It could be said though that people who have purchased are more likely to come back across the cookie period than those which haven’t before. When considering a different rate for sub sales it is useful to figure out what percentage of your sales are sub sales, also what is considered a sub sale, is it just people making a second transaction on the current cookie or is it also those that had your cookie 6 months back and have just required it and made their first purchase on this cookie?

AffClicks is well poised to pose and answer these questions on others in future about affiliate marketing with anonymous user data (opt in of course). Will be interesting to see how it develops and any extra data we can provide to better inform affiliate marketers and help them make better decisions in their businesses is a great thing.

The Future of Affiliate Marketing – Part 2

This is part 2 of our 2 part series on the future of affiliate marketing to coincide with the panel on the topic at Affili@Syd which we, unfortunately, were unable to attend owing to flight cancellations. Rob wrote the first post which took a broad look across many areas of the industry with an eye towards the technical side. Here I (Murray) present my views with an eye towards the business side of things.

Does Google still matter to affiliates in 2011?
Google, and to a lesser extent Bing and Yahoo, are still the primary drivers of traffic to affiliate websites. To a certain extent some affiliates have managed to successfully leverage social networking platforms such as Facebook and Twitter. The tools provided to date by these platforms for small-scale advertisers are unfortunately still quite primitive compared to Adwords which has been (at the time of writing) more than a decade in development.

In recent years Google has taken a much harder line with various types of affiliate business models particularly (but not limited to) those it regards as engaging in the following activities:

  • Arbitrage
  • Bridge pages
  • Get rich quick Schemes
  • Mirroring and framing
  • Misleading and inaccurate claims
  • Information harvesting

Affiliates deemed by Google to have been engaging in some of these practices have for the most part been given the opportunity to improve their “site quality”. Others, however, who had promoted get-rich-quick schemes (common on lower quality networks), made-for-Adsense (MFA) sites as well as email address harvesting sites (give me your email address and you could win $500 worth of free dog food and a lifetime supply of spam), were banned from using Adwords altogether unless they “changed their business models”. The infamous “Google Slap” was beefed up by the folks at Mountain View into a killer blow with an algorithmic baseball bat.

Consequently many affiliates found themselves booted off the Adwords platform and were forced to find alternative sources of traffic in order to make a living. Some of these included the Bing/Yahoo alliance (and other smaller search engines), social networks, display advertising and the adware/spyware-driven pay per view traffic (PPV).

It has been suggested by many people in the performance marketing industry that “Google hates affiliates” or that Google has “declared war” on affiliates. In our experience this is not the case. It is, however, probably fair to say that Google hates lazy affiliates but tolerates hard-working ones with approved business models. As regards affiliates engaging in models, practices and techniques of which it disapproves, a “war” is not an entirely inaccurate descriptor.

The announcment of a new landing page “quality score” system in late 2005 almost went by unnoticed. Like an unmanned drone dispatched late at night to spy on its enemies, a new landing page quality score bot was unleashed upon unsuspecting Adwords user’s websites. Within hours a machine-driven algorithmic judgement on “landing page quality” was handed down upon tens of thousands of affiliate websites. Suffice it to say, the “Google Gods” were displeased with what they found and apparently not in a forgiving mood. Thousands of webmasters were slapped overnight with $10 minimum bids across the board and, for all practical purposes, banned from the platform. Compelling “victim impact statements” lodged to Adwords support the next day by affiliates hit by the slap were simply brushed aside.

Advertisers were shocked and dismayed to discover that this wasn’t an algorithmic glitch or a bungled roll out of the new bot. It was part of a carefully planned strategy to aggressively weed out lower quality sites and had the full approval of the company founders Larry Page and Sergei Brin. These events of December 2005 were the opening salvo in a highly systematic and and increasing sophisticated campaign Google has waged since then against so-called “thin” affiliates who in their view deliver “a poor user experience” with little value-added original content.

These events kicked off a reaction among many affiliates not entirely dissimilar to the one outlined by Elizabeth Kübler-Ross who detailed what people experience when they told they are about to die. Commencing with denial:It’s surely just a temporary technical/algorithmic glitch“. Through to anger:Why me? I spend 6 figures a month on Adwords. God damn it they owe me!” Through to bargaining: “Please just tell me what I did wrong? I promise to be good.” Followed by depression: “Looks like it’s game over for me”. And ultimately acceptance: “Hmm, is there life after Google?”.

Many thousands of affiliates and unsuspecting webmasters were totally wiped out by minimum bids of $10 and simply surrendered. Other more savvy affiliates were eventually able to pick themselves up, dust themselves off and slowly recover from the quality score bot carnage by registering new domain names and adding new content such as reviews, articles and price comparisons. Since 2005 Google has not relented and has continuously raised the bar for affiliates seeking to use their platform.

These developments have meant that Adwords then (and Adwords today) is simply no longer an option for large numbers of “ma and pa kettle” wanna-be performance marketers looking to supplement the income from their day jobs. The official line from Google is that quality score is primarily designed to improve the overall relevance of search results for Google users and also to improve the ROI for advertisers. People who can’t devote the time, resources and energy or who don’t possess the know-how to improve their quality scores are now simply forced to find other sources of traffic or give up all together.

For those affiliates, however, who have been able to satisfy the Google landing page algorithms the introduction of landing page quality score has actually proven to be a positive step in some respects. This is because it has reduced competition from other less savvy affiliates who had been driving up the costs of keyword auctions with MFA sites and thin “bridge pages” which linked directly to merchants.

Is the “bridge page” affiliate model dead?
For affiliates for whom search engine marketing is an important traffic source, content is critical. Content can draw people to a site and keep them coming back regularly for updates. The Google search algorithm loves high quality original content – even more so now after the recent panda update. Content often takes the form of user reviews, price comparisons, articles and blogs. It is no longer sufficient for affiliates to quickly knock up so-called “bridge” landing pages to send traffic to merchants. The search engines have progressively made these kinds of pages impossible to advertise on paid search and have taken steps to remove them from organic search.

Quality though can be a double edged sword for affiliates. Generally the primary goal of an affiliate’s website is to send highly-targeted traffic to a merchant’s site so that the traffic can convert to sales and leads for which the affiliate receives commission. If, however, the affiliate has built an outstandingly content-rich site it may be the case that users have too much choice of what to do and either get confused or consume the content and leave without clicking through to a merchant. In reality the best click through rates are often obtained with thin bridge pages containing a single, large “click here now” button to send users through to a merchant. Consequently affiliates need to find the a balance between building sites with loads of quality content to satisfy the search engines whilst still providing plenty of easy exit links to merchants so they can monetize the traffic. It comes back to the business model as well. Are you trying to send as many people through to merchants as quickly as possible on their first visit or are you trying to build an audience that will convert later without a continuous ad expense to keep attracting them back? Juggling both of those requirements can be difficult.

Is the future mobile?
Mobile is without doubt going to be a vitally important component of eCommerce and affiliate marketing in the years ahead with the sales of Smart Phones predicted to exceed the sales of PCs. In 2011 the percentage of mobile users who purchased something via their mobile devices was 13%. In addition to making mobile-friendly landing pages affiliates will need to consider if their niche lends itself to the development of a mobile application. If it does it could open the door to copious amounts of quality free traffic. Although the development of a smart phone app is a much more demanding process technically for traditional affiliate marketers, if it is well designed and marketed it can provide a massive source of new traffic to generate qualified leads and sales.

Ideally affiliates should develop a traditional site optimised for a PC, a mobile site for smart phones and tablets as well as a mobile app. Such a strategy would future-proof an affiliate’s traffic sources; however, it runs the risk of diverting time and attention away from the affiliate’s traditional means of acquiring traffic (ie. the standard website optimised for a PC) which may still deliver a better ROI for the time and money invested. As an interim measure affiliates should at the very least start to track traffic and conversions from mobile devices and tablets separately from traditional PCs and Laptops and build up a profile and knowledgebase of their mobile traffic so that they can make informed decisions about whether it is in their interests to invest time and money in optimising their sites for the mobile platform.

What kind of analytics tools are useful for affiliates?
We believe that high quality landing pages, built to appease an increasingly fastidious Google algorithm, combined with the use of third party analytics tools such as Google Analytics as well as a new breed of specialist affiliate-friendly apps likes Afflclicks are going to provide the most profitable outcomes for affiliates in the long run. The concept for Affclicks arose after many years of running performance marketing campaigns virtually blind. We realised that Google Adwords’ conversion tools were exclusively geared towards the requirements of eCommerce merchants with no options available for affiliates to measure how effective their PPC activity is at a granular level once a site visitor has clicked through to a merchant – other than through tedious manual correlation of IP addresses which is so time consuming as to be completely impractical. Other products we sampled either proved to be ineffective in terms of gathering the required PPC and commission data to effectively determine profitability or were geared towards agencies and were cost prohibitive.

Affclicks has been designed to help affiliates invest their hard-earned in the areas of their business that drive revenue and profits and cut their costs on activities that are not delivering a solid ROI. The primary focus of the application to date has been PPC keyword and adgroup performance analysis. However the application has recently been expanded to encompass organic search data analysis. There are plans afoot to increase the scope of the application even further to include landing page and ad creative performance analysis. Common tasks such as the pausing of unprofitable keywords will be automated and/or semi-automated via sophisticated user-defined business rules and will take much of the grunt work out of maintaining large PPC campaigns. If in spite all of the barriers to entry Google has erected, your site makes the grade in terms of quality score, Affclicks can help you tweak and fine tune your PPC campaigns to perfection squeezing the maximum possible ROI from the platform.

The Future of Affiliate Marketing – Part 1

This is part 1 of a 2 part series we are doing on the future of affiliate marketing to coincide with our panel at Affili@Syd on the same topic. Unfortunately now that we are unable to make the panel these posts can now be taken as a summarization of our views.  I (Rob) will be taking a look at the progression of the technical side of Affiliate Marketing while Murray will take a closer look at the business side of it.

The way the future will affect your affiliate business is probably strongly tied to the model you are using. I identify 2 main models: those in which your product is presenting affiliate products in a way which you consider to be more useful to the end user than them going directly to the merchant and those in which your main product is some other form of content or user interactions which you are using affiliate marketing as a way of monetizing a user base.

One of the key drivers of change in affiliate marketing is Google. Google makes up the vast majority of search traffic that most sites receive (dwarfing it’s nearest rivals Bing/Yahoo), it has the power to both build and break vast content networks as sites like Mahalo have found out. In the past, when Google was just beginning search advertising, the restrictions on what you could advertise were weak, placing down a single landing page with a few links could produce a large return for affiliate marketers. Of course in many cases this wasn’t overly useful to end users, as with most platforms (Facebook, Apple app store etc) there is a gold mine for early adopters before things settle down and quality rises to the top. A large portion of Google’s revenue, 96% in 2010 in fact, relies on users continuing to find Google ads to be useful enough to click on.

The result is new rules which effect the way affiliates advertise, a couple of instances which can results in bans are made for Adsense arbitrage and bridging pages. Made for ad sense pages are ones which have been created with the primary purpose of getting the user to click on the Adsense ads to drive profit to the publisher. The arbitrage component is when the publisher is bidding on Adwords with the intent of making more money per click through Adsense than it is costing them in Adwords. A bridge page is when Google considers that the primary purpose on the landing page you are advertising is to drive traffic to another page, in this case products on a merchant’s site. Bridging pages are a little harder to avoid, especially when your main product is presenting merchants products.   Google expects each site to value add around the products being presented. Stuff like comparisons to the same product at different merchants, user reviews and ratings, professional reviews and additional descriptions. This is driving a lot of change in affiliate websites as what was once thriving, profitable campaigns are now no longer being allowed onto Adwords, the time of a one page affiliate site is coming to a close.

Those publishers using affiliate marketing to monetize their original content are also facing hard times and a changing landscape courtesy of Google. Recently Google introduced the Panda search update, aimed ranking content lower which was deemed to be from low quality content farms or taken from other online sources. This has had the unintended side   effect of making it harder for legitimate to rank above those either outright taking or rehashing their content. Google search results is mostly a winner take all game, with around 50% of searches resulting in the first result being clicked on. Having this converted first position for the keywords relevant to your business can easily be the difference between turning a decent profit and making a loss. You may ask, why isn’t site the that has invested the time in creating relevant and useful content being rewarded with the best results? This is mostly due to an arms race between Google those working on search engine optimization. Many of those creating spam sites using other content are also well honed at optimizing their websites to be exactly what the Google algorithms are looking for, leaving the smaller operators coming off second best despite investing in producing content.

 

Example Click Rankings : Taken From A Leak Of AOL Search Data in 2006, read more: http://www.agent-seo.com/seo/click-distribution-percentages-by-serp-rank/

 

Despite the hype around social networking being a saviour for those sick of having to deal with Google’s effective search monopoly I don’t think search marketing is going away any time soon. While social will work for certain affiliates, those that can cultivate an audience around their offering and engage them regularly (similar to those that have successfully ran discussion forums in the past), those looking to acquire users and push them quickly to convert won’t see a great deal of help from social ads of a basic social presence. The motivations behind the users that is seeing your ad on a social networking website are very different. With search they are actively seeking out the product that your keyword is matching for, on a social network they are generally conversing with friends and aren’t in a buying frame of mind. Ad’s that attract their interest and send them to a Facebook page based around it rather than trying to directly convert will see far better click through rates. It is possible social sites such as Facebook may eventually take hold with enhanced search engines drive be social recommendations rather than algorithms but this is still in the distant future. It is more likely we will see search engines like Google leverage social recommendations to aid algorithms rather than replace them as we are seeing emerge with the +1 button.

In addition to Google creating a need for more complex websites consumers are pushing in this direction to. Consumers have progressively grown more tech savvy and have placed more importance on the online medium as a primary method for both product research and purchase. While I don’t agree with needing a full blown system of product comparison, searching, sorting and user reviews around every affiliate site consumers are certainly demanding more of the sites which they visit. For those interested in attracting repeat customers much though must be put into creating unique value over the merchant sites you are linking to.

Unfortunately all signs are pointing towards the future becoming increasingly difficult for newcomers to affiliate marketing. Becoming established though is becoming ever more valuable as increasing amounts of consumer purchasing is done online. This is driving more merchants to consider opening up their businesses to affiliates as a new revenue stream. Merchant uptake of affiliate programs, especially in Australia has been fairly slow, many of the established retail brands like Harvey Norman, Kmart, Target and Myer are only now realizing that online is quickly becoming consumers preferred way to purchase.

As affiliate marketing grows the technology powering it becomes more important. Many affiliate networks currently have out of date software that make it hard for the affiliate marketer to get all the information they need to run their business. The more progressive networks though are moving towards things like cookie-less tracking to ensure affiliate based sales aren’t missed, comprehensive reporting, prompt payments and API’s which allow users to both retrieve performance data and access product feeds to automatically update their websites. On the Australian front I look forward to the launch of Commission Factory which appears to be a network that will embrace these technology changes needed to support the increased sophistication of affiliate marketing into the future.

Networks are also turning an eye towards mobile, the new boom area in computing. While mobile can be similar to traditional online experiences there are tighter restrictions because of screen size and the intermittent/ slower nature of connections. A very recent movement in mobile is known as responsive design, basically this means using media queries in CSS3 to apply different types depending on the screen dimensions of the viewing device. I think as there is support from more devices for this standard it will be used more and more to manage a single presence across the normal web and mobile without having to maintain individual projects.

Mobile also allows for location based services, which depending on your site/ app can be used to choose what to present to a user. An example of that is only showing content relevant to local merchants to a user when they view your page, this especially works well when it’s services that you are selling. Many are seeing the value, despite the extra effort required, in building native apps for platforms such as iOS and Android. Caution must be shown here though, as building native apps generally requires a separate technology stack for each platform, resulting in either a steep learning curve and maintenance for affiliates building these apps themselves or a hefty bill to outsource quality the building of quality apps which pass Apple’s and other review processes. I would recommend, if going down the app path as an addition to your current offering to build a html app first to test the waters before investing in platform specific apps.

As affiliate marketing gets more complex it is important to track as much data as possible, even if the data may not be able to be used now. An example with Affclicks is that I was recently thinking about tracking amount of sales that come x number of days after a click through to a merchant to determine things such as is a 10% commission with 60 day cookie deal better than a 12% commission with 45 days cookie deal. While that currently isn’t a feature, having the data there allows these future inferences to be made. Another few areas of tracking which may be on the rise is A/B testing, heat mapping mouse movement and also heat mapping eye tracking. A/B testing is when a the same page is displayed to users with different small variations in order to measure which variation has the most positive impact. In terms of affiliate marketing this may be measured on either click throughs to merchants or commissionable sales/lead from the merchant. Tracking mouse movement with a heat map can show what is grabbing users attention and what is confusing them, leading them to click away from your page rather than convert. Similarly eye tracking tests are easier than ever to conduct with companies such as GazeHawk using webcams to conduct them.

A example of what a mouse tracking heat map looks like, identifying where the most attention is given on the page. Source: clicktale.com

Affiliate networks exist to serve the interests of both the merchants and the publishers/marketers, Google serves their own interests and those of their end users both in advertising and organic search results. This means that they both aren’t always serving the affiliate marketers best interests. That’s where Affclicks comes into the equation, built from the ground up by affiliate marketers for affiliate marketers specific to their needs across both the search marketing side and the

Increasingly, having the best offering means joining programs across multiple affiliate networks, without good aggregation software though this has meant a large increase in the affiliates workload to monitor these efforts through different reporting interfaces. Also even with mastering these offerings reconciling commission with organic and paid search efforts has been a challenge. Going forward software like Affclicks a similar will be key to maintaining increasingly complex affiliate marketing efforts.

Affclicks makes it easy to manage the many networks a modern affiliate business may use.

Changes have and will continue to present challenges for affiliate marketers, the barrier to entry has increased in recent times and looks set to continue to do so. For affiliate marketers that can overcome this barrier though there is a wealth of new opportunities, both now and into the future. Having the right tools to navigate the affiliate landscape and ensure that your effort is being placed in the right areas has never been more important.

 

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