Affiliate Marketing Blog - a Traffic Junction Blog

This article on ClickZ is a bit worrying. It reports on data from comScore Media Metrix, Yahoo! Search Marketing and Media Contacts, which shows that almost 9.8 million travel purchases were made by UK travel shoppers in a three month period from Dec 2005 - Feb 2006 (now that’s the good news!). The alarming aspect is that it may take upto 90 days from the initial search to the purchase for majority of these purchasers.

This has obvious implications on affiliates promoting travel offers. Most affiliate programs don’t offer credit for the original lead for that long. From the traveler perspective too, I doubt if the return visit is going to be direct to the site, particularly after a long gap ie. it could be through another click paid for by an affiliate or through some other source. Either way, affiliates could be losing out quite a bit of commission due to the long cycle time for conversions.

Therefore it becomes imperative for affiliates to ensure that they have mechanisms and the ‘right hooks’ in place to capture the visitor through an opt-in mechanism. The other thing is that affiliates will have to continue to invest in organic search engine optimization. It is more than likely that the visitor is going to repeat a search when he is closer to making a purchase. Ensuring that you are visibile will be akin to getting two bites on the cherry - don’t miss out.

e-Consultancy reports on a study by the Atlas Institute, which shows that a combination of search and display advertising results in much higher conversion rates than adopting only either one of these two online advertising methods.

According to the study, “Exposing search users to display media from the same advertiser results in a 22 percent increase over search alone, suggesting a synergy between these two channels that cannot be measured separately”. The study had a sample size of 10.8 million display ad impressions, 2.5 million search clicks and 1.8 million users.

I’ve written previousy on the pitfalls of over-reliance on one form of marketing (predominantly search) by affiliate marketers (or for that matter, any online marketer). Undoubtedly, paid search marketing is very effective in driving instant traffic that converts, but a marketer could be missing on significant opportunities by not attempting to create visibility through other methods.
I’ve used several third party web analytics — and one thing I’ve found common is the high proportion of “Direct Access” or “No referrers” , when looking at referrer stats.

Evaluating ROI and making decisions on marketing / advertising spend without taking into account this source of unknown traffic (for example) that could be generated as a result of a series of marketing efforts would be a serious folly. For affiliates, only results count — but it’s equally important to question whether we are able to accurately measure everything that should be measured. Taking a tunnel-vision approach to measurement and marketing isn’t the way to go.

There has been a lot of heat recently on the implications of Google Adwords’ algorithm changes related to the quality of landing pages. Many advertisers have been affected with their click costs going up as a result, with reports of many choosing to suspend their advertising. Jennifer Slegg has a detailed report on Search Engine Watch covering both sides of the story. There are several threads on Webmasterworld as well on this topic, while Steve Bryant on eWeek.com asks the moot question: who decides the quality of user experience?

What upsets advertisers is not that stringent criteria have been applied to evaluate landing pages– I doubt if anyone will seriously have any grouse against that– but the fact that they do not know exactly what constitutes a “good landing page”.

It is in everybody’s interests (including Google’s) that Google clarifies this as clearly as it can without divulging its trade and techonology secrets. Reason is, besides a fraction of advertisers choosing to stop the advertising, there is a real threat of Google inadvertently perpetrating click fraud.

Let me explain. An advertiser who feels that his ads have been penalized for low quality score is more than likely to be clicking through to competitors’ ads to figure out why they are ranked high. Now imagine every advertiser clicking through a few ads like this everyday, and you can well imagine the extent of wasted clicks and dollars. This is hypothetical — but certainly possible. Now, one can argue that advertisers are likely to be checking out competitors anyway. Yes, of course. However, the potential for such clicks increasing is significantly higher in a scenario where an advertiser feels that he needs to know a lot more about a competitor’s website than just finding out more about the competitor. There’s a difference.

While on click fraud, Google has reported that an independent third-party inquiry into its click fraud prevention methods has found its people and processes in this area to be reasonable. Now, this is certainly something positive for advertisers, though it will take quite something for Google and Yahoo (or any search engine offering PPC advertising) to eliminate this problem completely.

At the outset, let me clarify that I don’t intend this to sound like self promotion. Yet, I couldn’t resist the temptation to take a step back and reflect on an honor that we as a company are certainly proud of. Traffic Junction was given the “Exceptional performance in affiliate marketing” award at the 2006 CJU Awards at Commission Junction University UK, held in London recently, in recognition of our exceptional performance over the last 12 months. While my colleague Mike Edwards and I are both delighted with this recognition, what gives us tremendous satisfaction is the acknowledgment that we are “an affiliate who is driven to making relationships successful, understanding client needs and sharing their plans accordingly.”

We have conscioulsy placed a premium on building extremely strong relationships with the various partners we work with - be it merchants, the networks (CJ included) or the search engines. We expend significant time and energy on building and maintaining these valuable relationships and taking a partnership approach to get the desired results, which has helped us deliver millions of dollars in sales for companies like eBay, Thomson and Expedia. Partnerships and strong relationsships are the core of our business ethos — and I’ve always espoused much closer ties between affiliates, networks and the merchants to truly optimize this channel– so, it is satisfying to see that being acknowledged.

Obviously, we don’t intend to sit on what we’ve achieved so far, as we believe there’s a lot more we can do for our partners and clients. We are grateful to them for the opportunity to contribute to their business and brand; and we’d like to reiterate to commitment to building strong, mutually beneficial relationships with the companies that we work with and ensure that we are able to consistently devise the best solutions to meet their unique objectives.

As various developments in the recent past have shown, affiliate marketing certainly faces numerous challenges; I doubt if we have any choice but a collective and collaborative effort between the various stakeholders to overcome these.

In my last post, I highlighted the wonderful opportunities that stare affiliates in the face with the phenomenal growth in online shopping. Now here is a dampener. Online shoppers are an impatient lot and they are not ready to give websites too much of a chance in converting them; in fact, it seems that many of these wannabe online shoppers are more than willing to go back to the high street stores if they are not happy with their online experience. And all they need is one bad experience!

The SciVisum eCommerce Regional Rift 2006, does have a lot of positives about online shopping trends; yet, as reported in this article, some of its findings should serve enough advance warning to online retailers to work on imporving the user experience on their websites before the shopping season.

Affiliates have a lot of stake in the performance of a merchant website. Therefore, there a couple of things that affiliates have to do proactively to ensure that they contribute to the sales process (for their own good!). One is to test out the merchant website thoroughly — if necessary, actually go through a trial purchase, and identify the chinks that (can) hinder user experience. Pass on the feedback to the merchant and try to get them to address the issues sooner rather than later. If the merchant doesn’t listen, the ball is in the affiliates’ court to decide whether it is worth promoting a particular merchant whose website is doomed to turn off prospective buyers.

Secondly, track your results with the merchant very closely— yes, life would be great if everything was on auto-pilot and the commission cheques just came in– but it pays to keep a close tab on what is happening with each campaign and merchant one is promoting. It could mean cutting losses and maximising profits.

Top market research firm, Forrester Research is predicting that online shoppers in Europe will spend 100 billion euros this year, reports Netimperative. In fact, the next five years will see this figure more than double, indicating a period of stupendous growth. The growth udoubtedly owes itslef to consumers gaining more confidence to buy online as well as greater broadband Internet penetration.

The UK consumer has been a traditional leader in Internet shopping in Europe. According to the report, an online shopper in the UK will spend an average of about £1,205 this year.

Travel will continue to be the most used e-commerce segment accounting for almost one-third of all online shopping.

Reports of growth in online spending is always great news for affiliate publishers like us. My interpretation of some recent industry stats is that affiliate marketing facilitates about one-fourth of all online shopping. If we were to look at it more conservatively and consider total sales through the affiliate channel as 20% and average commission of 4% on the revenues faciliated, we are looking at 800 million Euros in affiliate commissions in Europe.
(This is my purely my estimation, based on some assumptions that I have taken into account; though I must admit that the figure looks a lot higher than what we’d seen in an e-consultancy report last year).

Can it really turn out to be that big?

As if you didn’t know it! But I thought it always helps to reiterate ‘quotable quotes’ like these from somebody like the President of LinkShare, Steve Denton. This article on InternetRetailer.com, that largely based its story on Shawn Collins’ Affstat 2006 Report, explores how affiliate marketing has become a mainstream marketing channel for online retailers, accounting for almost 30% of sales revenues generated for some companies. This figure seems consistent with the numbers from a recent study by Shop.org on how internet retailers approach marketing for the holiday shopping season.

The article once again highlights how important it is for effective and regular communication between an affiliate manager and an affiliate and how an affiliate really needs to be managed like a part of the merchant’s sales force (albeit, commission-only sales force). Affiliate managers are better off focusing on identifying, recruiting and retaining high quality affiliates than simply trying to build a team of large number of affiliates, not only because of the threat to the company’s brand due to unscrupulous affiliates but also due to the increased norms for accountability.

Many an affiliate program fails because the merchant doesn’t dedicate enough resources to this channel or hires the wrong kind of affiliates. As Denton is quoted saying in the article, “If you are looking at at it as cheap advertising, that’s what you’re going to get.”

After Google settled a law suit pertaining to click fraud few months back, Yahoo has also settled a law suit related to the same issue, albeit at significantly lower terms. The problem with click fraud seriously undermines the value of paid search advertising, and I believe that some of the recent moves by search engines to consider a CPA (cost per action) model could be a result of, at least to some extent, the click fraud problem.

In fact, there are signs that advertisers are beginning to think more closely if PPC is indeed the best way to spend their advertising dollar. A ClickZ article talks about the estimated losses to advertisers on account of click fraud, based on research by Outsell Inc. Jimmy Daniels has also blogged about it on Revenews.

While the message is clear that online advertising is well and thriving, and that advertisers are willing to budget more for it. At the same time, paid search advertising could lose out on getting a bigger share of the pie. Most likely, the increased advertising spend would go for display (CPM-based) advertising (probably, rich media). Question is, how much are the big advertisers willing to bet on affiliate marketing?