AFFILIATE MARKETING IN E-COMMERCE

An affiliate is another website that promotes your products for a fixed or revenue share reward on sales made by referred traffic to your site. Affiliate marketing can be a good way to increase your traffic and sales without making up-front costs for that traffic. They key, of course, is the right execution.

The first thing to consider is what kind of reward you are able to provide affiliates. To do this, you should have a pretty clear idea of what your general profit margin is, especially when you’re going the rev share route. Also consider the rewards you’re thinking about from the perspective of the affiliate. The most interesting affiliates either have highly trafficked websites in your niche or huge e-mail databases in your niche. Why would they promote your site over others? To differentiate yourself from your competitors, provide reasons for why your shop will get more sales on the traffic they send, or offer different and/or better rewards than your competition.

If there’s a website or e-mail list in your market that has a disproportionate amount of attention, it can be very fruitful to approach them directly to work out some sort of affiliate partnership. This depends on what you can bring to the table.

The second early decision is wether to set up your own affiliate tracking system or to join an affiliate network. An affiliate network is a place that connects affiliates (publishers) to e-commerce sites. There are three main advantages to affiliate networks:

1. Your affiliate programme is listed for all publishers on that network to see. The bigger affiliate networks have tens of thousands of publishers.
2. The affiliate network arranges for payouts to all the publishers that have driven sales to you. You’ll just get one periodic invoice from the affiliate network.
3. The affiliate network arranges most of the tech work. Your store will have to install a measurement pixel and usually has to provide a product feed.

In order to provide these advantages, the affiliate network takes a cut of the sales commissions the affiliates receive.

Be careful when enlisting with more than one affiliate network. It’s possible that one of your customers comes to your site from multiples sources at different times. Improper implementation of the tracking pixels will lead to two or more commissions being paid for a single sale! We advise to use one affiliate network unless there’s a very solid reason not to. There are hundreds of affiliate networks, we don’t know them all. Comments on good affiliate networks are welcome!

The main advantages of setting up your own affiliate tracking system:

1. No middle man (affiliate network) costs
2. More flexibility in the structure of your rewards programme
3. More flexibility in terms and conditions

Additionally, even though many niche markets have thousands of publishers, there are only a handful of parties who can drive a considerable amount of traffic and sales. Using your own tracking system you can arrange special deals with them easier. This comes at the cost of more administration overhead (manage invoices and payments from your publishers yourself) and tech overhead (manage the affiliate tracking system yourself).

In an upcoming post we’ll discuss (at a general level) how to deal with tracking pixels from multiple affiliate networks, and how to arrange your product feeds best.