CCT356: Online Advertising and Marketing Class 4: Affiliate Marketing

Administration Articles? First assignment (online ad critique)? Reminder: terms at the beginning of every chapter are potentially testable

Affiliate and Affinity Marketing Similar to word of mouth marketing – recommendations from friends drive business Affiliation formalizes recommendations – a bit of a kick back for referring friends Performance marketing – more referrals, more $ Examples? MLM as the dark side – more on that later

Early history Many traffic building networks (web/blog rings, etc.) Early history of rewards in adult services (many early e- commerce/advertising innovations come from this industry!) Amazon affiliate program – selling books and other products through individual blogs, etc. – marketing done by others, execution of sale done by Amazon

Affiliate Network Basics Visitor visits affiliate Acquisition is triggered, purchase at merchant Tracking of where sale was triggered Reward for passing on sale

Common Rewards Cost per action/acquisition (CPA) – fixed commission on sale Cost per lead (CPL) – fixed commission for potential sale/lead (often more complex deals) Revenue sharing – percentage of sales returned Cost per click (CPC) – more traffic building than acquisition centered, prone to click fraud Affinity reward points (e.g., AirMiles, cash back, etc.)

Tracking Internet affiliate programs = automatic tracking of referrals Often embedded in URL - text example Stats collected on impressions, clickthrough, and conversions Sets up a cookie – cookies are essential in this process. Why? What do cookies do?

Where things go wrong Multiple referrals, one sale Alternate models of sale Technical clashes (e.g., cookie timeouts, changes in data structure, lifelong cookies) Cookie filters/purging

Attribution issues online-marketing-white-paper-at-internet online-marketing-white-paper-at-internet Do you aware consumer’s remembered choice? First reference? Last? Some mix of all the above? Multi-plaftorm, multi-touchpoint models get very confusing very quickly – examples?

Considerations Who are competitors? What are their affiliate networks? (And are they exclusive?) Who are your target affiliates? (And who may not be your best targets?) Network considerations – what’s the model, commission tiers, support, cookie expectations etc. Potential international issues?

Related: Affinity Programs More customer retention than acquisition – keeping people coming back by rewards E.g., Air Miles, Aeroplan to simple things (e.g., coffee stamp cards, etc.) Benefits? Drawbacks?

Related: Zynga Games Billions of game requests on Facebook Games all similar – easy to start, slow but steady growth model Acquiring certain objects require friends’ participation, leading to referral model for user base growth – friends draft friends to play If you don’t want to bother your friends, you can buy currency to buy out Best farms on Farmville are bought or really good at annoying friends Cross-marketing of new properties – games plug themselves Enough for $7 billion market cap…although a bad reputation

Related: Pyramid/MLM schemes The dark side of affiliate marketing? Chains of referrals – tiered commissions based on your location in referral network People at the bottom – only benefit when lower levels are added People at the top of the pyramid – consistent revenue even if they are doing nothing A warning on getting involved… Examples?

Related: Social Media Marketing Referrals without reward – more authentically WOM Some reward structure at times (e.g., Facebook contests, etc.) but more leveraging good words, references More on that to come in a few weeks

Next week SEM/SEO – what kinds of things do we need to cover there? Following week – marketing strategy