In this article i will explain the role of online merchants and marketing agencies in affiliate marketing. Both work for the same purpose to generate sales or leads. I will explain the role, purpose and strategy for both but let’s begin with online merchants.
What is an online retailer?
In simple terms retailers sell on the internet via their own ecommerce websites or other market places such as Amazon or ebay. The retailer has the products to sell and customers purchase it via their website, telephone or other online channels. In relation to the affiliate marketing the retailer must have the ability to sell on the website via ecommerce website or at least the ability to take customer details that could be converted into a successful sale on phone or by visiting the customer for other services such as installation or fixing the heating system at later stages. Affiliates earn a commission (fixed or variable) in return of referring a valid customer to the retailer.
Image extracted from iLead.PK affiliate campaign management services.
The image above shows the role of the brand/seller or a retailer in a typical affiliate marketing scenario. The customer visits the affiliate website to view an offer or a deal via search engines or other channels, the customer is then directed to the retailer to make the purchase and in return the affiliate earns a commission for referring the customer to the retailer. The role and purpose of the affiliate and affiliate networks have been explained in the previous articles of the same series.
Why retailers need an affiliate campaign?
Online retailers require as they call it TRAFFIC that I personally believe is not the best expression to explain it. The online retailers acquire potential customers from several sources such as search engines, social media platforms, email marketing and affiliate marketing is also an vital channel to obtain relevant users or customers. All the online channels from where the retailers obtain the users or customers have different setup, pricing and rewarding structures, technical architecture, technology and promotional platform types and the strategy that differs from each other and offer different set of results for each retailer.
I am not a professional designer but have produced a basic image to elaborate how several online channels drive traffic to online retailers. The online retailer has different strategy and rewarding structures with all the channels. In relation to the affiliate campaign, the retailers setup the campaign directly with the affiliate networks or independently with an affiliate tracking technology.
Several months ago I wrote an article “affiliate marketing for online merchants” on this blog. You can read it at this stage that explains the role, purpose and strategies online merchants follow for a successful affiliate campaign.
Types of affiliate Merchants
All types of online retailers aim to promote their products and services via the affiliate channels working in the affiliate marketing arena. The list goes on from a computer retailer such as Micro Direct to a broadband or new telephone line such as BT.
Please read my other article “Affiliate Marketing for online merchants” that would provide you further details on how online merchants promote their affiliate programs and what you could expect from them in terms of commissions, creative and communication methods.
UK Affiliate Agencies
There has been a rise in new affiliate marketing campaign management agencies particularly in the UK in the last three to four years. I have also worked as an affiliate manager for a leading digital marketing agency in Manchester in 2007 for an year that gives me an inside view of their role, purpose and factors of being effective within the affiliate marketing mix.
Five advantages of hiring an affiliate marketing agency
1 - The affiliate marketing agencies have good relationships with affiliate networks that in return can help you get the best deal to setup a campaign on a leading affiliate network. This might include lower setup cost, lower mark up commission and better coverage on the launch of the program.
2 – The affiliate marketing agency provides detailed overview of the market sector and analysis that could be useful for identify how your campaign could potentially perform such as market value, competitor analysis and growth in the sector. Some useful reports could also be obtained from the affiliate networks.
3 - The affiliate marketing agency has trained affiliate managers with quality affiliates in their disposal who can help you kick start the campaign effectively.
4 - The affiliate marketing agency manages your daily affiliate communication, network relation and helps you build new quality high performing affiliate relations in the segment that might involve fetching your competitor placements from affiliate websites.
5 - The affiliate marketing agency provide you detailed weekly, monthly reports with industry insights, your campaign performance, monthly forecasting and advice on managing and streamlining your promotional calendar with other marketing campaigns.
Five disadvantages of working with an affiliate marketing agency
1 – The affiliate marketing agency does not work for free. There is a cost involved and that is different for each agency which may involve setup, monthly management fee, affiliate commission share and travelling to meet up your affiliates if required. The total cost of the affiliate campaign could digest your entire profit share for the sales generated from the affiliate channel. You will need to analyse the total cost and profit margins at least for six months strategy. However, you only have to pay for the unique customer once but that depends on your business such as you may get a unique customer to conduct a sale only once such as installation of a heating service.
2 – The affiliate marketing agency could manipulate the marketing data to show you green signal at the current time but every month the strategy needs changing based on new competitors coming in the marketing arena to take the top affiliate website placements. Always try to have realistic numbers and based on your resources, campaign offers and business type, such as an affiliate campaign for Amazon would perform differently than a campaign for Comet.
3 – The staff at the affiliate marketing agencies moved around to new agencies. You may not get a dedicated affiliate manager to promote your campaign. It could also be a positive sign if the new affiliate manager is more capable to support campaign effectively. Always ask how is managing your affiliate campaign and their experience in affiliate marketing. I have seen agencies hiring students and asking them to search affiliate websites on search engines based on your website relevant keywords and contact them to join your campaign. However large agencies have bank of affiliate databases and software and external applications access such as Hitwise to find the affiliates promoting your competitors.
4 – It might be difficult for an agency to work in line with your other promotional activities such as your campaigns in the print media. I would suggest asking them specifically to follow your promotional calendar to send same message out through all campaigns at the same time. I had about fourteen promotional dates per year to change creative, messages and to deliver unique material through all campaigns that was bringing in fresh customers and provided me with the ability to present the website offers effectively.
5 – You need to track the performance of your campaign with the affiliate marketing agency. If they could not deliver what they promised after a year then it is sign that you need to find another affiliate marketing agency before signing the contract for the following year.
My recommendation for an affiliate marketing agency
The next 4th post in this series is “Selecting the profitable affiliate website segment for your project” that i will publish in a couple of days.