Affiliate MarketingAffiliate MarketingIntroduction and OverviewIntroduction and Overview

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• What is Affiliate Marketing?

• Opportunities and challenges

• Affiliate Marketing – part of the online mix

• Affiliate marketing process

• Opportunities and challenges

• Financial planning

• Policies on affiliates

• Affiliate Program Sample Display Program

• Considerations

Contents

What is affiliate marketing?

Online program in which site owners (publishers) display ads and links to generate sales directly into a clients site; on a cost per performance basis

Equivalent of having an online sales force working on a commission compensation based model

Build a network of financially incentivised “brand advocates”

Affiliate Marketing normally involves three parties:

1. Merchant 2. Affiliate 3. Affiliate Network

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Opportunities and Challenges

Merchant Supply terms &

conditions, creative, compensation structure and growth of relationships

Affiliates Sign-up to affiliate

network, promote merchant on their sites

Affiliate Network Manage billing and

tracking of activity through proprietary platform

Role

Maximize volume of transactions

Compensation Fixed payment per transaction

Commission on value of transaction

Over ride – based on between 20% to 30% of affiliate payments

Total transactions Cost per transaction

Key success metric

eCPM – number of impressions to generate one transaction

eCPC – number of clicks to generate one transaction

Volume of transactions and affiliate payments

Growth Tactics Increase compensation and provide flexibility on the terms of the program

Increase traffic through natural search & PPC

Design sites that fulfil consumer missions

Increase number of affiliates through aggressive recruitment

Affiliate Marketing - part of online mix

Affiliate Network

Provide reach by aggregating hundreds of small sites (tier 2 and 3 sites) across different content categories

Reach

Fragmentation

Affiliatewww.bestflights.com

Merchant Affiliate Program Merchant

Booking Confirmation Page

Merchant Site

Tracking of transactions

Commission Payment

Over-ride Network Payment

Affiliate Network

Terms & Conditions

Creative Assets

Affiliate Network Console Tracking codes

Payment system

Affiliate Marketing Process

Challenges Affiliate advertising provides

reach across tier 2 and 3 sites and excludes tier 1 sites

Attracting quality high traffic sites to affiliate programme High worth product

Low bounty payment Require on-going

management and optimisation

Commission payment to network owner – ranging from 20% to 30% of sale

Mid to long term investment

Opportunities Performance based results Complete control of affiliate

recruitment and management (quantity ad quality)

Establish strong commercial relationship with best performing affiliates - “super affiliates”

Maximise reach and exposure at minimal cost Free ad exposure – only

pay for results

Opportunities and Challenges

Affiliate payments (commission or fixed) Network over ride paymentsInternal resource

Financial Planning

+

Total investment

/

Total transactions

Gross bookings – cancellations & no shows = stays

Cost per transaction

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Example of affiliate programme. Thomas Cook payment structure > through Commission Junction affiliate network. Generates 18% to 20% of all transactions.

Google policy on affiliates: Affiliates allowed to use AdWords advertising.

Google will only display one ad for affiliates and merchant sharing the same Display URL per search query.

Google restricts the following:

– Redirect URLs: Ads that contain Display URLs that automatically redirect to the merchant site.

– Bridge Pages: Ads for webpages that act as an intermediary, whose sole purpose is to link or redirect traffic to the merchant site.

– Framing: Ads for webpages that replicate the look and feel of a merchant site.

Policies on Affiliate Marketing

Affiliate Program SamplePPC Program

BT Affiliate PPC listing

BT PPC listing

Affiliate Program SampleDisplay Program

Affiliate marketing requires on-going nurturing and relationship building > Affiliates have no loyalty to brands How to differentiate program from competitors? Combine

financial incentives with flexibility.

Evaluate the metrics to pay affiliates on. Bookings or completed stays? Decision should be lead by internal financial objectives and

overall market dynamics

Affiliate marketing can become a self-funded program. Bookings can be charged back to hotels (dependant on franchise/ownership contracts)

Affiliate Network programs cannot be switched “on and off”

In 2004 Thomas Cook was force to close down their first affiliate program for lack of funding – set budget run out

Considerations

Affiliate Marketing delivers the 80/20 rule – 80% of all transactions will be generated by 20% of affiliates How to differentiate program from competitors? Combine financial

incentives with flexibility. Have the network focus on quality of affiliates as opposed to quantity

Establish strict terms and conditions with affiliate network and affiliates related to: PPC bidding

Usage of brand on PPC copy Bidding on brand and generic terms

Use of URLs Length of cooling period between recording of transaction and

payment for transaction

Assign a third party or internal resource to validate transactions attributed to program – track all transactions through an order id

Considerations