Working in the organic search industry, I’ve often had large search marketing clients who envied the success of their affiliates, which sometimes outperformed their own in-house search marketing efforts. But Carolyn Tang Kmet opened my eyes to the ways that search affiliates can actually be beneficial to smaller businesses that lack the resources to develop and manage marketing programs in-house.
I work with Kmet at Groupon — the daily deals site — where I'm a search-engine-optimization manager. She’s director of affiliate marketing for Groupon — the affiliate page is here — and the recipient of the Affiliate Summit Pinnacle Award for "Affiliate Manager of the Year 2010." Over lunch recently, Kmet and I shared our search marketing and search-affiliate experiences. I asked her for tips for small to medium-sized retailers considering affiliate marketing. What follows is a summary of that conversation.
Prior to joining Groupon, Kmet led the client services team at ShareASale, a leading affiliate network. Earlier, she led affiliate programs at Orbitz, the travel site, and Collectibles Today, which is now The Bradford Exchange, a marketplace for gifts and collectibles.
Let’s start with the basics of affiliate marketing. Search affiliates use search marketing practices — search engine optimization and pay-per-click advertising — to promote a merchant’s products. In return, the affiliate receives a share of the revenue earned from the traffic driven to the merchant’s site, or a fee per lead generated. Many affiliates also use other online marketing channels like email marketing, newsletters, blogging, and social media to reach as large an audience as possible. Affiliates tend to work with many retailers through large affiliate networks like Commission Junction, or through smaller ones like ShareASale, which targets smaller retailers by charging smaller fees.
PEC: What sizes and types of businesses are best suited for affiliate marketing programs?
Kmet: “One of the benefits of the model and the reason why any business can take advantage of this marketing channel is because it’s always performance-based, so you’re always going to pay out on revenue share or you’re going to pay on a cost per lead. The other benefit is that it can offset a lot of the marketing responsibilities internally. So if you don’t have a full-on marketing team, if you don’t have anybody focused on search engine marketing, if you don’t have anyone focused on reaching out to blogs or whatnot, you can actually use affiliates to do this.
“Affiliates are able to send emails out to their databases, they’re able to bid in the search engines on terms that are relevant to you. So if you don’t have an internal search team you can actually rely on affiliates to fulfill that function. And again, since it’s based on revenue share, that means they’re bearing the risk and they’re paying the cost per click and you’re still only paying on a revenue share basis on anything that converts. So, yeah, I think any business can do it.”
PEC: But doesn’t the business just end up having to manage the affiliate program anyway? Isn’t that just a shift in how marketing resources are used rather than a lessening of marketing resourced needed?
Kmet: “In terms of resources, or being able to manage an affiliate program, if you have someone internally who can manage it for you that’s always great. Having an internal person means she is going to be closer connected to your promotions, she's going to have a better idea of what needs to be promoted when, about what your margins are. It’s a lot easier. But there’s also the ability to hire an outsourced program manager. These guys already have a lot of relationships with affiliates built up and they can just help you run your business, help you run your [affiliate] channel.”
PEC: I always thought it would be a problem if your affiliates out performed you in search, outbid you in PPC, but what you’re saying is that could actually be beneficial.
Kmet: “It depends on whether or not you have somebody doing it for you. If you have search affiliates who are either doing PPC or SEO or anything like that, you should definitely maintain a good relationship with them because you definitely don’t want them bidding on your trademark if you’re doing [search marketing] in-house. If you don’t, then it’s never a bad idea to work with [search affiliates] directly and have them fulfill that function.”
PEC: How do you create and maintain relationships with affiliates? Is money the only real motivator?
Kmet: “Money is not always the key factor. With search affiliates, yes, money is definitely a factor because they are going out there and they’re paying by click. But if you can work with them and say here’s a couple of products that we’d like you to promote, and have them build their keyword campaigns around products that you know are coming out, that really helps build a relationship because they don’t often have insight into what’s new or what’s happening. They’re not as closely tied into the product releases as you might be. So by giving them that heads up, that goes a really long way in building a relationship with them.”
PEC: So it’s kind of like with public relations, where you build a relationship with a journalist based on the scoop. "I’m giving you this scoop and I’m trusting you not to break the news until it’s ready."
Kmet: “Yeah. And they know that if they break that they’re never going to get anything from you again. So it works out well.”
PEC: Is having a successful affiliate program all about the number of affiliates in your stable?
Kmet: “You’re trying to activate them. Most men are always concerned with numbers, so they’re always asking how big, how many affiliates do I have, how many affiliates are in the program, how many affiliates did I get this week, how many affiliates did I get this month. But it’s really not about quantities. It really is about what percentage of them are actually active at any given time. By active I mean how many are actually driving a click at any given time. Typically, in a healthy program we like to see at least 30 percent of the affiliate base actually driving a click. Each day, each month, whatever.
“One of the best ways to do it is to identify some high-potential affiliates — these are affiliates that have really great sites but maybe they haven’t started driving you any traffic — and then reach out to them directly. Offer them some sort of sales promotion or a sales goal and make that first one really easy to obtain, something like $100 in sales. Make it really easy for them to hit that and then reward them for doing so.
“The other way to get affiliates active is definitely do a regular newsletter. A lot of people underestimate the potential or importance of this. But if you think about it an affiliate is joined to hundreds and thousands of different retailers' affiliate programs. It’s really hard to make your affiliate program stand out. One of the best ways to do this is through a newsletter that is informational. The whole idea about a newsletter is you want to teach them [the recipients] something about your business so that they understand why it’s going to benefit them to promote your business over someone else’s business. Teach them about your seasonality. Teach them what your average order is. Teach them what your demographic is. And by giving them these tools they’re essentially a virtual sales force. So giving them these tools makes them a better sales person and a better marketer.”
PEC: Isn’t there a problem with competitors posing as affiliates and learning your secrets?
Kmet: “You know what? They never do. I think the information you give to your affiliates is not something your competitors would not be able to figure out on their own if they really looked for it. All you’re trying to do is just to make it easier for affiliates [to get the information]. I’ve been an affiliate marketer for over 10 years and I’ve never really had any problems with that.”
PEC: What sorts of pitfalls or abusive tactics should etailers who are new to affiliate marketing look out for?
Kmet: “Trademark bidding. And always watch out for cybersquatting. If an affiliate is out there to make a quick buck, those aren’t affiliates you really want in your program because they don’t really add any value. They’ll go out and just get variations on your domain name and direct all the traffic through an affiliate link. In actuality, you should own the domains.
“You should always check to see where your traffic is coming from. You should run reports on a weekly basis and see if you see any spikes. So if you see a spike in sales or a spike in traffic that’s either an indication that you’ve got a really great affiliate or it’s an indication that you have a really bad affiliate. Either way, you’re going to want to take a look.”
PEC: When you find an abusive affiliate, how do you fix it?
Kmet: “Well first of all, you ask them to stop. That’s step one, because maybe it really is a mistake. Who knows. Step two, actually, and I prefer this to a ‘cease and desist letter,’ is to actually just drop their commission rate to 0 percent. That way you still get the traffic but they don’t get paid anything and at some point they’re going to realize what they’re doing. And it’s especially effective if they’re bidding on your trademark and they’re not allowed to. Because then you start getting all this great free traffic that they’re paying for, and eventually, hopefully, they’ll realize what they’re doing and stop on their own. If you kick them out of your program your affiliate links break and that’s a bad customer experience. And you don’t want to lose the traffic.
“In terms of cybersquatting, it’s really hard to recover a domain name. I mean there are services that you can use, but [they are] pretty expensive. So it’s probably not worth it for a smaller business. That’s something you’ve got to do in advance,” [by defensively registering domains related to the site’s primary domain.] "Make sure to register the .net, .biz, .us, and .org TLDs [top level domains], as well as any misspelled domains. Check the site’s analytics to see which misspellings drive search traffic to the site and grab those domains before cybersquatters get them.
PEC: Any last tips?
Kmet: “Creative. You can’t underestimate the importance of having the right kind of banners. I guess one of the easiest tools for a merchant is to use are dynamic banners. These are banners that affiliates can put up on their site and then you merchandise them on your end. So let’s say for most of the year it shows default branding, but then during the holidays you update it to show something Christmas-related. Or you update it to show something Black Friday-related. So once the affiliate puts [the dynamic banner] up on their site they never have to do anything and you actually get to manage all that merchandising. So in a sense, you kind of create your own advertising network.
“Affiliates can choose whatever they want, if they want a static brand banner you can provide that as well. But in addition to your static banners you can provide these dynamic banners. We’ve found that a lot of bloggers prefer [the dynamic banner] because they never want to have to think about updating the advertising on their sites.”