When to Start an Affiliate Marketing Program

If you want to increase sales and broaden your reach without spending a lot of money, starting an affiliate marketing program may have occurred to you. Affiliate marketing can give you instant access to third party marketers who will help promote your products through advertising, email, and online links in exchange for a commission. Although setting up a program can be quick and easy, it pays to do some critical thinking up front.

If you already have an online store and products to sell, you’re arguably ready to start an affiliate marketing program. If you have been in business for a while and have a handle on the core operational issues, you’re ready. If you are brand new to online selling, you have a lot to learn generally, so carefully consider whether now is the time to use affiliate marketing.

If, however you decide to launch an affiliate marketing program, you can set up your own proprietary program or you can join one of the many affiliate or cost-per-acquisition (CPA) networks like Commission Junction, LinkShare, and ShareASale, assuming you meet the network’s acceptance criteria. For example, Commission Junction requires that you have been in business for a year and have minimal online sales of $50,000 per month. Alternatively, you can connect to some of the third-party networks via shopping cart software. The same shopping carts usually allow you to set up your own proprietary program.

Affiliate Marketing Is Big Business

In Forrester Research’s U.S. Affiliate Marketing Forecast for 2009-2014, it estimates that the affiliate marketing industry will grow from $1.9 billion in 2009 to $4 billion by 2014. The growth will presumably be driven by better affiliate site content and increasingly transparent dialog between affiliates and marketers. (At the present time, some networks hide the identities of affiliates from advertisers to avoid direct conversations between the parties. Many advertisers consider transparency the top priority because they want to know who their affiliates are, what they’re doing, and how to contact them if an issue arises.)

Forrester Research also expects paid and organic search programs to remain areas of focus for affiliate marketers, while social media and display advertising will lag behind. Retail, financial services, and online education will be the top three spenders.

Joining an Existing Network

Companies join existing networks because they get instant access to an established and usually large community of affiliates who are eager to earn new commissions.

Networks vary in terms of the markets they serve, as well as policies and business practices. Nearly all networks have stated policies in place, but not all networks enforce their policies equally. Some target large online retailers while others target lead-driven businesses such as financial services, insurance, or online education.

There are also other important differences worth noting. For example, some networks have fraud prevention programs in place that monitor the actions and reputations of affiliates for the purposes of protecting advertisers and the network’s overall quality. Some of those are also extremely particular about who can sign up as an affiliate (and they may be creating and/or using blacklists to keep disreputable affiliates out). Other networks make it easy for anyone to sign up.

Fraud comes in several forms, including click fraud, shady rebill schemes that lure consumers into “free trials” that result in one or more unwanted subscriptions. There are also other practices that may be less obvious to honest merchants. These other practices include redirecting traffic to a fraudulent web address or altering the marketing materials provided by merchants in a manner that is deceptive or fraudulent. Fraud costs real dollars and can hurt brand images, so make sure any network you engage is capable of supporting your company’s policies.

Some networks also provide campaign management features that allow advertisers to track the success of aggregate campaigns, individual campaigns, and depending on the network, campaign success by affiliate. One obvious benefit of the tracking is campaign optimization, which can increase the overall effectiveness of programs. Another benefit of campaign management, at least in some networks, is the ability to post creative assets such as pay-per-click or display ads that affiliates can simply grab and use. Some networks track any changes affiliates make to the ad copy or images to help mitigate errant behavior.

Setting Up Your Own Network

Forrester Research also estimates that direct payments to affiliates (vs. payment through networks) will account for 57 percent of affiliate marketing spending by 2014. The benefit of setting up your own proprietary network is the ability to control all aspects of the network including fraud management, campaign management, and community make-up.

If you set up your own network you do not have to worry about a third party having visibility into your program and you can avoid being affected by third-party policy changes that can instantly affect your business. On the other hand, you will be solely responsible for setting up and maintaining the network, recruiting affiliates, establishing and enforcing policies, and monitoring fraud.

If you want to establish your own network, you may be able to do so through your current shopping cart vendor, as previously stated. For example, GoECart supports proprietary networks and so do 3DCart, 1ShoppingCart, and many others.

Bottom Line

The operative word for a good affiliate network is “sustainability.” You will want to attract good quality affiliates who can help you grow your business and your brand. Regardless of whether you set up your own network or use a third-party network, make sure you establish policies and practices that help ensure the success of your program. A little homework and critical thinking up front can save you costly mistakes later on.