1. Creating a Winning E-Business Second Edition Taking Advantage of Affiliate Marketing Chapter 7

2. 2 Learning Objectives Define affiliate marketing Explain how affiliate programs function as a marketing tool Discuss how affiliate programs can serve as a revenue source List the elements of an affiliate agreement

3. 3 Learning Objectives (continued) Describe affiliate tracking systems and affiliate management networks Identify affiliate marketing risks and challenges

4. 4 Online Affiliate Marketing Programs A revenue-sharing approach to marketing and promoting an e-business –Also called associate programs or pay-for-performance programs –Merchant or advertiser operates the program –Affiliate or publisher participates in the program Marketing tool for merchant Revenue source for affiliate Require custom links from affiliate site to merchant site

5. 5 Online Affiliate Marketing Programs Pay-per-click (cost-per-click) program –Merchant pays affiliate a set fee for each click-through from affiliate site No action at merchant site is required Pay-per-lead (cost-per-lead) program –Merchant pays affiliate a set fee for each click-through that results in action Make a purchase Complete a form or take a survey

6. 6 Online Affiliate Marketing Programs Pay-per-sale (cost-per-sale) program –Merchant pays affiliate a fee or commission on a sale that results from a click-through Thousands of diverse e-businesses operate affiliate programs –Amazon.com –Dell –1-800-FLOWERS.COM –Rackspace Managed Hosting

7. 7 Online Affiliate Marketing Programs

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10. 10 Online Affiliate Marketing Programs

11. 11 Online Affiliate Marketing Programs

12. 12 Online Affiliate Marketing Programs Advantages to merchant –Tie marketing effort directly to sales –Pay only for results Advantages to affiliate –Additional source of revenue for affiliate who also sells products/services –Primary source of revenue for affiliate who offers entertainment or information

13. 13 Online Affiliate Marketing Programs Participating in an affiliate program –Select the program carefully to ensure a good “fit” –Understand the terms of the affiliate agreement –Add custom links to merchant’s site from affiliate Web pages –Build traffic at affiliate site to increase click-throughs to merchant site

14. 14 Online Affiliate Marketing Programs Selecting an affiliate program –Make certain affiliate site visitors will be interested in merchant’s products/services –Learn about merchant Type of products/services Easy shopping experience Customer support Reputation in the marketplace –Look for competitive fees/commissions

15. 15 Online Affiliate Marketing Programs Affiliate agreement defines program terms –Types of Web sites merchant approves –Guidelines for linking –Schedule of fees and commissions –Terms of usage of merchant logo and name

16. 16 Online Affiliate Marketing Programs Affiliate agreement defines program terms (continued) –Restrictions on type of content at affiliate site –Restrictions on marketing tools an affiliate can use –Liability and other legal disclaimers –Dispute resolution and termination requirements

17. 17 Affiliate Tracking Systems Allow merchant to control how it credits click-throughs Monitor window of time in which affiliate can get credit for a click-through Record and store affiliate information Provide commission/fee reports

18. 18 Affiliate Tracking Systems

19. 19 Affiliate Tracking Systems Affiliate management networks –Third-party entities Recruit affiliates Manage affiliate registration process Track click-throughs Credit affiliates with click-throughs Arrange for commission/fee reporting and payment

20. 20 Affiliate Tracking Systems

21. 21 Affiliate Tracking Systems Well-established affiliate management networks –Commission Junction –LinkShare

22. 22 Affiliate Tracking Systems

23. 23 Affiliate Tracking Systems

24. 24 Affiliate Tracking Systems Affiliate tracking technologies –Custom links containing affiliate information or affiliate and merchant information –Tracking cookies –Third-party tracking software –Application service provider tracking service

25. 25 Affiliate Tracking Systems

26. 26 Affiliate Tracking Systems

27. 27 Affiliate Marketing Risks and Challenges Unethical affiliates –Cookie stuffing Multiple cookies placed on visitor’s hard drive during a single visit to affiliate site –Parasiteware Redirects affiliate links Replaces content of existing tracking cookies

28. 28 Affiliate Marketing Risks and Challenges Unethical affiliates (continued) –Spammers Merchant is responsible if affiliates use spam to promote sites Negative perception of tracking cookies –Many consumers install and use blocking software Block tracking cookies Delete tracking cookies

29. 29 Chapter Summary Affiliate marketing is a revenue-sharing approach to promoting an e-business’s products and services –Marketing tool for merchant –Source of revenue for affiliate Affiliate programs –Pay-per-click (cost-per-click) –Pay-per-lead (cost-per-lead) –Pay-per-sale (cost-per-sale)

30. 30 Chapter Summary (continued) Affiliate program should –Fit with affiliate’s products and services –Fit with Web site content Affiliate agreement defines the terms of an affiliate program Coded URLs and tracking cookies are used to track click-throughs

31. 31 Chapter Summary (continued) Affiliate management network –Recruits affiliates –Manages registration process –Tracks click-throughs –Credits referral fees and commissions to affiliate Risks and challenges –Unethical affiliates (cookie stuffing, parasiteware) –Negative perception of tracking cookies