Predominant compensation methods
Eighty percent of affiliate programs today use revenue sharing or cost per sale (CPS) as a compensation method, nineteen percent use cost per action (CPA), and the remaining programs use other methods such as cost per click (CPC) or cost per mille (CPM).
Diminished compensation methods
Less than one percent of traditional affiliate marketing programs today use cost per click and cost per mille. However, these compensation methods are used heavily in display advertising and paid search.
Cost per mille requires only that the publisher make the advertising available on his website and display it to his visitors in order to receive a commission. Pay per click requires one additional step in the conversion process to generate revenue for the publisher: A visitor must not only be made aware of the advertisement, but must also click on the advertisement to visit the advertiser's website.
Cost per click was more common in the early days of affiliate marketing, but has diminished in use over time due to click fraud issues very similar to the click fraud issues modern search engines are facing today. Contextual advertising programs such as Google AdSense are not considered in the statistic pertaining to diminished use of cost per click, as it is uncertain if contextual advertising can be considered affiliate marketing.
Performance marketing
In the case of cost per mille/click, the publisher is not concerned about a visitor being a member of the audience that the advertiser tries to attract and is able to convert, because at this point the publisher has already earned his commission. This leaves the greater, and, in case of cost per mille, the full risk and loss (if the visitor can not be converted) to the advertiser.
Cost per action/sale methods require that referred visitors do more than visit the advertiser's website before the affiliate receives commission. The advertiser must convert that visitor first. It is in the best interest for the affiliate to send the advertiser the best-targeted traffic as possible to increase the chance of a conversion. The risk and loss is shared between the affiliate and the advertiser.
Affiliate marketing is also called "performance marketing", in reference to how sales employees are typically being compensated. Such employees are typically paid a commission for each sale they close, and sometimes are paid performance incentives for exceeding targeted baselines. Affiliates are not employed by the advertiser whose products or services they promote, but the compensation models applied to affiliate marketing are very similar to the ones used for people in the advertisers' internal sales department.
The phrase, "Affiliates are an extended sales force for your business", which is often used to explain affiliate marketing, is not completely accurate. The primary difference between the two is that affiliate marketers provide little if any influence on a possible prospect in the conversion process once that prospect is directed to the advertiser's website. The sales team of the advertiser, however, does have the control and influence up to the point where the prospect signs the contract or completes the purchase.
Saturday, August 30, 2008
History Of Affiliate marketing
Origin
The concept of revenue sharing—paying commission for referred business—predates affiliate marketing and the Internet. The translation of the revenue share principles to mainstream e-commerce happened almost four years after the origination of the World Wide Web in November 1994.
The consensus of marketers and adult industry insiders is that Cybererotica was either the first or among the early innovators in affiliate marketing with a cost per click program.
During November 1994, CDNOW launched its BuyWeb program. With this program CDNOW was the first non-adult website to introduce the concept of an affiliate or associate program with its idea of click-through purchasing. CDNOW had the idea that music-oriented websites could review or list albums on their pages that their visitors may be interested in purchasing. These websites could also offer a link that would take the visitor directly to CDNOW to purchase the albums. The idea for remote purchasing originally arose because of conversations with music label Geffen Records in the fall of 1994. The management at Geffen wanted to sell its artists' CDs directly from its website, but did not want to implement this capability itself. Geffen asked CDNOW if it could design a program where CDNOW would handle the order fulfillment. Geffen realized that CDNOW could link directly from the artist on its website to Geffen's website, bypassing the CDNOW home page and going directly to an artist's music page.
Amazon.com (Amazon) launched its associate program in July 1996. Amazon associates could place banner or text links on their site for individual books, or link directly to the Amazon home page.
When visitors clicked from the associate's website through to Amazon and purchased a book, the associate received a commission. Amazon was not the first merchant to offer an affiliate program, but its program was the first to become widely-known and serve as a model for subsequent programs.
In February 2000, Amazon announced that it had been granted a patent (6,029,141) on all the essential components of an affiliate program. The patent application was submitted in June 1997, which predates most affiliate programs, but not PC Flowers & Gifts.com (October 1994), AutoWeb.com (October 1995), Kbkids.com/BrainPlay.com (January 1996), EPage (April 1996), and several others.
Historic development
Affiliate marketing has grown quickly since its inception. The e-commerce website, viewed as a marketing toy in the early days of the Internet, became an integrated part of the overall business plan and in some cases grew to a bigger business than the existing offline business. According to one report, the total sales amount generated through affiliate networks in 2006 was £2.16 billion in the United Kingdom alone. The estimates were £1.35 billion in sales in 2005.[6] MarketingSherpa's research team estimated that, in 2006, affiliates worldwide earned US$6.5 billion in bounty and commissions from a variety of sources in retail, personal finance, gaming and gambling, travel, telecom, education, publishing, and forms of lead generation other than contextual advertising programs such as Google AdSense.
Currently the most active sectors for affiliate marketing are the adult, gambling, and retail industries. The three sectors expected to experience the greatest growth are the mobile phone, finance, and travel sectors. Soon after these sectors came the entertainment (particularly gaming) and Internet-related services (particularly broadband) sectors. Also several of the affiliate solution providers expect to see increased interest from business-to-business marketers and advertisers in using affiliate marketing as part of their mix.
The concept of revenue sharing—paying commission for referred business—predates affiliate marketing and the Internet. The translation of the revenue share principles to mainstream e-commerce happened almost four years after the origination of the World Wide Web in November 1994.
The consensus of marketers and adult industry insiders is that Cybererotica was either the first or among the early innovators in affiliate marketing with a cost per click program.
During November 1994, CDNOW launched its BuyWeb program. With this program CDNOW was the first non-adult website to introduce the concept of an affiliate or associate program with its idea of click-through purchasing. CDNOW had the idea that music-oriented websites could review or list albums on their pages that their visitors may be interested in purchasing. These websites could also offer a link that would take the visitor directly to CDNOW to purchase the albums. The idea for remote purchasing originally arose because of conversations with music label Geffen Records in the fall of 1994. The management at Geffen wanted to sell its artists' CDs directly from its website, but did not want to implement this capability itself. Geffen asked CDNOW if it could design a program where CDNOW would handle the order fulfillment. Geffen realized that CDNOW could link directly from the artist on its website to Geffen's website, bypassing the CDNOW home page and going directly to an artist's music page.
Amazon.com (Amazon) launched its associate program in July 1996. Amazon associates could place banner or text links on their site for individual books, or link directly to the Amazon home page.
When visitors clicked from the associate's website through to Amazon and purchased a book, the associate received a commission. Amazon was not the first merchant to offer an affiliate program, but its program was the first to become widely-known and serve as a model for subsequent programs.
In February 2000, Amazon announced that it had been granted a patent (6,029,141) on all the essential components of an affiliate program. The patent application was submitted in June 1997, which predates most affiliate programs, but not PC Flowers & Gifts.com (October 1994), AutoWeb.com (October 1995), Kbkids.com/BrainPlay.com (January 1996), EPage (April 1996), and several others.
Historic development
Affiliate marketing has grown quickly since its inception. The e-commerce website, viewed as a marketing toy in the early days of the Internet, became an integrated part of the overall business plan and in some cases grew to a bigger business than the existing offline business. According to one report, the total sales amount generated through affiliate networks in 2006 was £2.16 billion in the United Kingdom alone. The estimates were £1.35 billion in sales in 2005.[6] MarketingSherpa's research team estimated that, in 2006, affiliates worldwide earned US$6.5 billion in bounty and commissions from a variety of sources in retail, personal finance, gaming and gambling, travel, telecom, education, publishing, and forms of lead generation other than contextual advertising programs such as Google AdSense.
Currently the most active sectors for affiliate marketing are the adult, gambling, and retail industries. The three sectors expected to experience the greatest growth are the mobile phone, finance, and travel sectors. Soon after these sectors came the entertainment (particularly gaming) and Internet-related services (particularly broadband) sectors. Also several of the affiliate solution providers expect to see increased interest from business-to-business marketers and advertisers in using affiliate marketing as part of their mix.
Affiliate marketing
Affiliate marketing is an Internet-based marketing practice in which a business rewards one or more affiliates for each visitor or customer brought about by the affiliate's marketing efforts.
Affiliate marketing is also the name of the industry where a number of different types of companies and individuals are performing this form of Internet marketing, including affiliate networks, affiliate management companies, and in-house affiliate managers, specialized third party vendors, and various types of affiliates/publishers who promote the products and services of their partners.
Affiliate marketing overlaps with other Internet marketing methods to some degree, because affiliates often use regular advertising methods. Those methods include organic search engine optimization, paid search engine marketing, e-mail marketing, and in some sense display advertising. On the other hand, affiliates sometimes use less orthodox techniques, such as publishing reviews of products or services offered by a partner.
Affiliate marketing—using one website to drive traffic to another—is a form of online marketing, which is frequently overlooked by advertisers. While search engines, e-mail, and website syndication capture much of the attention of online retailers, affiliate marketing carries a much lower profile. Still, affiliates continue to play a significant role in e-retailers' marketing strategies.
Affiliate marketing is also the name of the industry where a number of different types of companies and individuals are performing this form of Internet marketing, including affiliate networks, affiliate management companies, and in-house affiliate managers, specialized third party vendors, and various types of affiliates/publishers who promote the products and services of their partners.
Affiliate marketing overlaps with other Internet marketing methods to some degree, because affiliates often use regular advertising methods. Those methods include organic search engine optimization, paid search engine marketing, e-mail marketing, and in some sense display advertising. On the other hand, affiliates sometimes use less orthodox techniques, such as publishing reviews of products or services offered by a partner.
Affiliate marketing—using one website to drive traffic to another—is a form of online marketing, which is frequently overlooked by advertisers. While search engines, e-mail, and website syndication capture much of the attention of online retailers, affiliate marketing carries a much lower profile. Still, affiliates continue to play a significant role in e-retailers' marketing strategies.
How to Choose an Internet Marketing Consultant
If you are in the process of recruiting a new internet marketing consultant I have always found it tough to hire any particular consultant although I have broken down some ways to figure a good one from a bad one.
Practice what they preach - Whenever someone comes for an interview at Freestyle Media for say an account management position I always ask to see what their skills are like using the internet. If they cant use a computer very well nor browse through the internet, how in the world would they be able to help our clients market themselves better on the internet. I do the same with consultants. If I am hiring a PR consultancy I look at their PR and their online marketing, If I am hiring an accountant I would love to see their books (not always possible) or if I was hiring an internet marketing consultant I would look at their internet marketing.
I like how they Think - With lots of consultants I find that you can’t sample their work. It’s almost like you need to take a leap and just hope they know what they are doing and that they can deliver what they promise. I always look at consultant’s blogs and read some of their thoughts. I try and understand how they think and see if that fits in well with what I am doing.
Experience - I always like seeing what a consultant has done for someone else and then I always ask them, “What can you do for me?” I want to hear ideas. I want to hear comments and suggestions on what could be improved. I like hearing powerful questions that uncover the real issue. When I hear that I can tell this person gets to the heart of the problem and can diagnose the problem. It doesn’t mean they can fix it, that is another story. Although they have ticked the first box of knowing what is the problem. Personally, I never trust logos on peoples resumes or websites because its too easy to get a small job from some random person and say it was all your work.
Fred Schebesta’s Internet Marketing Consulting
I myself do a lot of internet marketing consulting to corporate companies like Qantas, Sanitarium, Thomson Education Direct and McDonalds. I prefer working in a workshop style for developing internet marketing strategies after I have provided a lot of research and insights from my internet marketing research.
Practice what they preach - Whenever someone comes for an interview at Freestyle Media for say an account management position I always ask to see what their skills are like using the internet. If they cant use a computer very well nor browse through the internet, how in the world would they be able to help our clients market themselves better on the internet. I do the same with consultants. If I am hiring a PR consultancy I look at their PR and their online marketing, If I am hiring an accountant I would love to see their books (not always possible) or if I was hiring an internet marketing consultant I would look at their internet marketing.
I like how they Think - With lots of consultants I find that you can’t sample their work. It’s almost like you need to take a leap and just hope they know what they are doing and that they can deliver what they promise. I always look at consultant’s blogs and read some of their thoughts. I try and understand how they think and see if that fits in well with what I am doing.
Experience - I always like seeing what a consultant has done for someone else and then I always ask them, “What can you do for me?” I want to hear ideas. I want to hear comments and suggestions on what could be improved. I like hearing powerful questions that uncover the real issue. When I hear that I can tell this person gets to the heart of the problem and can diagnose the problem. It doesn’t mean they can fix it, that is another story. Although they have ticked the first box of knowing what is the problem. Personally, I never trust logos on peoples resumes or websites because its too easy to get a small job from some random person and say it was all your work.
Fred Schebesta’s Internet Marketing Consulting
I myself do a lot of internet marketing consulting to corporate companies like Qantas, Sanitarium, Thomson Education Direct and McDonalds. I prefer working in a workshop style for developing internet marketing strategies after I have provided a lot of research and insights from my internet marketing research.
5 signs its time to change agency
If you want some reassurance that its time to switch agencies below are the top 5 ways to determine when enough is enough.
1. Your agency is Slow to get your campaigns out the door for you – Have you noticed that your campaigns take forever to get out the door? Is it taking even longer and longer to get things from your agency? I will let you in on a secret, you are either a small client in a big pond or a big client in a small pond. When you are a small client in a big pond it means you are not a very profitable client as the amount of work it takes to give you service is not profitable. You might want to look for a smaller agency. If you are a big client in a small pond you will get good people working on your account but then you will eventually find that these will be replaced by others that aren’t as good. The good people who used to work on your account are now hunting for another client. My advice here is to look for a bigger agency.
2. Your ads aren’t coverting but your agency is winning creative awards – Awards are great but sales are better. If your agency isn’t really a direct marketing agency and they keep talking about the creative concept as opposed to the triggers that will get your advertising converting, you might want to switch agencies to a more direct response focused one.
3. Don’t understand direct response –Just like with your creative looking all pretty but not selling if your agency isn’t advising you on ways to increase qualified response you might want to consider switching agencies. Its easier to create sales generating campaigns when your agency talks the same language and you don’t have to keep coaching them on basic tactics to make the creative sell. Its time to stop being frustrated by your agency pushing back on you telling you that the creative would be better with a smaller call to action and a more creative headline. You know what works and its time to work with an agency that work for your targets not for creative awards.
4. When a campaign performs poorly your agency doesn’t care – This is a clear sign that your current agency is just treating you like a number and don’t care about what you are trying to achieve. The better agencies know your targets and feel the pain as much as you do when a campaign doesn’t work. Proactive suggestions on ways to get the campaign to recover as opposed to waiting for you to make a decision as to how to fix the problem is what you are looking for.
5. The costs don’t justify the value – Champagne “long lunch” agencies are fine if they deliver high quality work along with their high price tags. If you are looking for direct response hard hitting creative that converts and wins ADMA effectiveness awards I would suggest a more value orientated agency would work better. The creativity and speed of delivery of the campaign to get it to convert is what you are looking for. This way you will probably do a larger volume of campaigns or increase your media exposure of your campaign with the money you save.
1. Your agency is Slow to get your campaigns out the door for you – Have you noticed that your campaigns take forever to get out the door? Is it taking even longer and longer to get things from your agency? I will let you in on a secret, you are either a small client in a big pond or a big client in a small pond. When you are a small client in a big pond it means you are not a very profitable client as the amount of work it takes to give you service is not profitable. You might want to look for a smaller agency. If you are a big client in a small pond you will get good people working on your account but then you will eventually find that these will be replaced by others that aren’t as good. The good people who used to work on your account are now hunting for another client. My advice here is to look for a bigger agency.
2. Your ads aren’t coverting but your agency is winning creative awards – Awards are great but sales are better. If your agency isn’t really a direct marketing agency and they keep talking about the creative concept as opposed to the triggers that will get your advertising converting, you might want to switch agencies to a more direct response focused one.
3. Don’t understand direct response –Just like with your creative looking all pretty but not selling if your agency isn’t advising you on ways to increase qualified response you might want to consider switching agencies. Its easier to create sales generating campaigns when your agency talks the same language and you don’t have to keep coaching them on basic tactics to make the creative sell. Its time to stop being frustrated by your agency pushing back on you telling you that the creative would be better with a smaller call to action and a more creative headline. You know what works and its time to work with an agency that work for your targets not for creative awards.
4. When a campaign performs poorly your agency doesn’t care – This is a clear sign that your current agency is just treating you like a number and don’t care about what you are trying to achieve. The better agencies know your targets and feel the pain as much as you do when a campaign doesn’t work. Proactive suggestions on ways to get the campaign to recover as opposed to waiting for you to make a decision as to how to fix the problem is what you are looking for.
5. The costs don’t justify the value – Champagne “long lunch” agencies are fine if they deliver high quality work along with their high price tags. If you are looking for direct response hard hitting creative that converts and wins ADMA effectiveness awards I would suggest a more value orientated agency would work better. The creativity and speed of delivery of the campaign to get it to convert is what you are looking for. This way you will probably do a larger volume of campaigns or increase your media exposure of your campaign with the money you save.
Friday, August 29, 2008
Opt-in e-mail advertising
Opt-in e-mail advertising, or permission marketing, is a method of advertising via e-mail whereby the recipient of the advertisement has consented to receive it. This method is one of several developed by marketers to eliminate the disadvantages of e-mail marketing.
Opt-in e-mail marketing may evolve into a technology that uses a handshake protocol between the sender and receiver.[6] This system is intended to eventually result in a high degree of satisfaction between consumers and marketers. If opt-in e-mail advertising is used, the material that is e-mailed to consumers will be "anticipated". It is assumed that the consumer wants to receive it, which makes it unlike unsolicited advertisements sent to the consumer. Ideally, opt-in e-mail advertisements will be more personal and relevant to the consumer than untargeted advertisements.
A common example of permission marketing is a newsletter sent to an advertising firm's customers. Such newsletters inform customers of upcoming events or promotions, or new products. In this type of advertising, a company that wants to send a newsletter to their customers may ask them at the point of purchase if they would like to receive the newsletter.
With a foundation of opted-in contact information stored in their database, marketers can send out promotional materials automatically. They can also segment their promotions to specific market segments.
Opt-in e-mail marketing may evolve into a technology that uses a handshake protocol between the sender and receiver.[6] This system is intended to eventually result in a high degree of satisfaction between consumers and marketers. If opt-in e-mail advertising is used, the material that is e-mailed to consumers will be "anticipated". It is assumed that the consumer wants to receive it, which makes it unlike unsolicited advertisements sent to the consumer. Ideally, opt-in e-mail advertisements will be more personal and relevant to the consumer than untargeted advertisements.
A common example of permission marketing is a newsletter sent to an advertising firm's customers. Such newsletters inform customers of upcoming events or promotions, or new products. In this type of advertising, a company that wants to send a newsletter to their customers may ask them at the point of purchase if they would like to receive the newsletter.
With a foundation of opted-in contact information stored in their database, marketers can send out promotional materials automatically. They can also segment their promotions to specific market segments.
CAN-SPAM compliance
The CAN-SPAM Act of 2003 authorizes a US$11,000 penalty per violation for spamming each individual recipient. Therefore, many commercial e-mail marketers within the United States utilize a service or special software to ensure compliance with the Act. A variety of older systems exist that do not ensure compliance with the Act. To comply with the Act's regulation of commercial e-mail, services typically require users to authenticate their return address and include a valid physical address, provide a one-click unsubscribe feature, and prohibit importing lists of purchased addresses that may not have given valid permission.
In addition to satisfying legal requirements, e-mail service providers began to help customers establish and manage their own e-mail marketing campaigns. The service providers supply e-mail templates, as well as methods for handling subscriptions and cancellations automatically. They also provide statistics pertaining to the number of messages received and opened, and whether the recipients clicked on any links within the messages.
The CAN-SPAM Act was recently updated with some new regulations that went into effect on July 7, 2008.
In addition to satisfying legal requirements, e-mail service providers began to help customers establish and manage their own e-mail marketing campaigns. The service providers supply e-mail templates, as well as methods for handling subscriptions and cancellations automatically. They also provide statistics pertaining to the number of messages received and opened, and whether the recipients clicked on any links within the messages.
The CAN-SPAM Act was recently updated with some new regulations that went into effect on July 7, 2008.
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