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October 02, 2008

Planning Your Affiliate Marketing Strategy

Affiliate_marketing So you've decided to choose affiliate marketing as part of your online marketing strategy.

You've researched affiliate software and finally chose an affiliate marketing partner.

Now it comes down to the nitty-gritty of deploying your affiliate program.

But wait! How have you structured your affiliate program? I mean, have you considered how it's actually going to work and integrate with your overall business model? There are a lot of different directions in which you can take your affiliate marketing strategy, but you have to remember that affiliate marketing is just one part of your business' picture. Your business model and your brand should still take primacy.

After all, as a marketing strategy, an affiliate program should add value and drives sales by serving the needs of your business model, not the other way around. In fact, affiliates should never be responsible for more than 30-40% of your revenues -- otherwise, you just become one big super-affiliate yourself.

Some questions you need to ask yourself, then, are:

  • What is your retail philosophy?
  • What are your priorities?
  • Why did you choose affiliate marketing?
  • What kind of affiliates are you looking to partner with?

Depending on how you answer these questions, chances are your philosophy of affiliate marketing fits into one of three general categories.

Big Spender

The big spenders are those who focus on working with so-called super affiliates. They want to maximize results fast, and focus on creating buzz around their affiliate program to do so. This might include elaborate booth set-ups at industry conferences such as Affiliate Summit, and sponsoring parties at these event to bring affiliates to them.

Such brands are also prepared to spend significant funds to get top affiliates into their affiliate program, and will do so by offering affiliates high commissions, gifts, and other incentives.

Pros Can deliver quick, impressive results. Conferences activities can create brand recognition and subsequently attract new affiliates. Saves time by ignoring smaller affiliates.
Cons High costs to maintain relationships. Your program depends on just a few affiliates. Expensive and risky to compete with other affiliate program for the same super-affiliates.

Relationship Focus

Brands with the longtail in mind generally take a relationship-based approach. This approach is about ensuring that affiliates have the tools and resources they need to promote your products effectively, and become better affiliates.

Such programs will also reach out to affiliates to offer support and tips, as well as a variety of marketing tools, such as banners and widgets.

Part of a relationship-focus is also a measured approach, where trial periods are used to evaluate affiliate performance, and high performers are rewarded with better commissions. This requires more advance affiliate tracking software, but such software also help maintain the faith that affiliates have in the program.

Pros Relationship building makes it easier to penetrate the affiliate community. Better intelligence on which promotions work and why. More program stability because of a wider affiliate-base.
Cons Results can be gradual. Managing affiliate relationships can be time consuming. Some affiliates may leave just as they become effective.

Necessary Evil

When affiliate marketing is seen as just another sales tactic (rather than a marketing strategy) that's needed because competitors are doing it, then it's a necessary evil. There is little to no relationship with affiliates, and they are seen merely as freelance salespeople.

Consequently, the program will have a simpler commission structure for all affiliates, and affiliate tracking software will be basic.

Pros Lower overhead. Require little to no time to manage.
Cons Difficult to build a presence in the community. Hard to attract super-affiliates.

The Gist of It All

Affiliate marketing is a cost effective way to drive online sales. The only catch is there are a lot of different products and services that can be sold online. The climate of the online market that you compete in is going to shape much of your business model and, consequently, your etail philosophy.

The way you structure your affiliate program, then, should reflect that philosophy. If it doesn't, you're probably going to experience inefficiencies at the organization level because you'll constantly be struggling to fit a square peg into a round hole.

So before you define all the terms of your affiliate program, take a look at my original four questions:

  • What is your retail philosophy?
  • What are your priorities?
  • Why did you choose affiliate marketing?
  • What kind of affiliates are you looking to partner with?

Armed with the answers to these questions, you'll be ready to create an affiliate marketing strategy that's just right for your business.

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