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Should you add affiliate links to your online shop?

Often when online shop owners open an affiliate program, they are tempted to add affiliate links to other sites on their shops. After all, if someone doesn’t buy, why not have a second bite at the cherry and make something out of them with an affiliate link or search engine ads. Is this a good idea? I don’t think so, and here is why…

1. You need to make up your mind whether your site is an online shop that is focussed on converting viewers into paying customers, or an affiliate site sending traffic off elsewhere. One site can’t be both. If you try, you’ll do neither well.
    
2. IMO, adsense only make online shops look cheap, and suggest that what you are selling is not good enough on its own. Wouldn’t you rather sell them some products and get a long-term customer than earn a few (ad)cents
    
3. Genuine affiliates will stop promoting you. Performance or affiliate marketing works when they send you targetted potential customers and you convert them into sales. If you try making money from that traffic in a different way, you aren’t playing your part in the bargain. Certainly, it is up to you what you do on your site, but it is up to affiliates to decide whether they’ll continue to promote you.
    

So, if you want to make more money from your site, focus on improving your offering, look for things that could be losing you sales, and work with your best affiliates instead of against them.

Posted Under: Affiliate Marketing, Website Tips
This post was written by Gayle Dallaston on October 18, 2009 Comments (0)

Ethical issues on affiliate marketing

Listen to this discussion from the USA Affiliate Summit 2209, about ethical issues in affiliate marketing and what each speaker considers crossing the line into unethical practices.

http://blog.affiliatetip.com/archives/ethical-issues-in-affiliate-marketing-3/

Delivery - Not telling

Where do you deliver? How much does delivery cost? These are two questions uppermost in your customers mind when arrive at your online shop and are deciding whether to buy from you. How does your website respond?

I was checking a site we promote today because the owner had asked us to promote delivery to other countries rather than just in Australia. I eventually found the delivery information hidden away in the help section on the site and it said:

Do you ship to my country?
To find out if we ship to your country, first fill your shopping basket and locate the shopping cart basket on the side column of this site. Within this shopping basket there is a link called “calculate shipping”. Once you click on this link there is a drop down list of countries to choose from, if your country is listed then our online store will ship to you.

Imagine the same conversation in a real shop…
Customer: Do you deliver to this place?
Shop owner: Choose what you want to buy and then I’ll tell you.
Customer: How much will delivery cost?
Shop owner: Choose what you want to buy and then I’ll tell you.
Customer: ………………………………………

It’s not difficult to publish a simple page saying where you deliver and how delivery is calculated, and make a link to that page easy to find from every page on your site.

Commission driven sales people and affiliates

Paying for sales on commission, whether base-plus-commission, or commission-only is often promoted as a simple, no-risk, cost-effective solution for marketing. It was quite refreshing to read an alternate view.

Last trip, I bought two books at the airport, the best of the two was “The Knack” by Norm Brodsky and Bo Burlingham. You can see an extract The Sales Commission Dilemma here. While this article discusses the problems of commission-driven salespeople as employees, I think the model of commission-driven affiliates can be even more problematic.

First, you need to decide whether you consider your affiliates to be like commission-driven employees, or whether they are more like businesses acting as distributors on a commission basis for mutual benefit.

If you think they are like commission-driven employees, read the article, add the fact that they are unsupervised, often anonymous, and have no interest in your business other than today’s commission, and then perhaps it’s time to reconsider.

The second option is the way we operate. Affiliate or performance marketing is a fabulous model if you get the right fit and make sure that it works for both parties but just like any business relationship, it requires ongoing management and negotiation to ensure that the mutual benefit remains.

Merchants/advertisers can drop affiliates who damage their brands, or use their resources (datafeeds, bandwidth etc) without creating value in return. Likewise, we can drop merchants who damage our brand by giving poor service to our readers, whose tracking and websites are unreliable, or who provide less value to us than their competitors.

These old-fashioned business ideas - choose your suppliers and distributors carefully, create and nurture long-term business relationships for mutual benefit, stay alert to changes in your marketplace - are just as relevant for internet businesses as any other.

The payment model, set-price or commission-based, then becomes a secondary issue. Commission-based works well when there is mutual risk and benefit. Commission-based provides more flexibility and greater innovation. But commission-based also means less control and more risk which needs to be acknowledged and dealt with.

Does discounting help your bottom line?

I went to Sydney for a travel conference in March - cheapest trip for a long time. Air fares were less than $100 each way. And the hotel (5 star studio apartment) was on special for less than $100 per night too. The thing is, I would have used that airline and stayed in that hotel even if they were the normal price. The discounts were all very well but they didn’t get achieve anything other than saving me some money and reducing the profit of both businesses.

Discounting was a hot topic at the conference, and in almost every discussion I’ve had with business owners since. And today a girl walked into our office giving away discount vouchers for my usual hairdresser. With the current economic conditions, discounts seem to be the first method marketers think of to increase sales or marketshare. But, is it always a clever thing to do?

Here are some questions to ask first…

1. Does it bring in extra sales or push your customer’s decision forward?
2. What effect does it have on your bottom line? Are you still making enough margin to be profitable?
3. What effect does it have on your image?
4. Are you just training your customers to wait until the things they want are on special?

But wait you say, all my competitors are discounting and I have to compete with them. Sorry, but that’s a race to the bottom.

Perhaps a better alternative is to value-add. Why?

1. Because it can achieve the same answers to Q1.
2. Because it costs you less to give your customers something worth $10 retail than it costs to give them $10 discount.
3. Because a gift is remembered more positively than a discount.
4. Think about how you see the shops that have frequent discounting, other than having an end of line/clearance section. Is that they way you want your customers to see you? (It might be if you are a discount store.)

So get creative. A bottle of wine, breakfast voucher or free wifi would have been a good value-add for the hotel.

For retailers, look at small items, accessories or end-of-lines that you can include as free gifts.

As for the hairdresser….

Are you encouraging fake coupon sites?

It can be a shock for online retailers to see a whole list of sites claiming to offer coupons for their online shop when they search for myshopname coupon. “Why do they do it?”, they ask. “It’s not as though I offer coupons.”

Yet, many of these merchants are unintentionally doing two things to encourage the practice. Are you?

Are you encouraging the customers to search for a coupon before buying?
Most shopping carts include a box to ask for coupons during the payment process. These carts were designed by technical people, not retailers. Would you interrupt a real life sales process by introducing the idea that they might get a discount to a customer? Or would you leave it to them to bring up the subject of discounts or coupons if they have one? This is even more pertinent on the internet because when your salesperson (ie your website) helpfully says: do you have one of our discount coupons, all the customer has to do is open a new window and search for yourshopname coupons and up they come. Customer finds the coupon (often non-existent, out of date or intended for other purposes) then completes the sale.You can’t blame the customer for this one, your website made the suggestion. You could even say that it is training the customer to expect a discount from you.

Are you providing a financial incentive to these coupon sites to list you.
No, why would you? Well, if you have an affiliate program, and you allow these sites to join, you are providing them with all the incentive they need - commission on every sale you make where the customer tries the quick search just in case they find a coupon. The purpose of these sites is purely to get in the line-of-fire and get their cookie on your customer’s computer. It doesn’t matter to them what effect it has on your brand, or if your customers are feeling let down after being told there might be a coupon but now there isn’t. No skin off their nose.

So how do you stop it? Here are some steps…

1. Consider how discount coupons fit into your branding.
2. Restrict your affiliate program to affiliates who only offer genuine, authorised coupons or special deals.
3. Get rid of the coupon request on your site if you don’t offer coupons.
4. If you do use coupons, consider a name change - referrer code, valued customer code, etc. These can do the same job as coupons but give a completely different impression.
5. If you use coupons to track the effectiveness of advertising, use additional tracking methods to ensure that the customer actually comes from that source.
6. Consider value add rather than discount strategies.

3 Simple Habits for Monitoring Affiliates

3 Simple Habits for Monitoring Affiliates

Establishing some routine checks for your affiliate program is as essential as balancing your books and making sure you lock the door each night. It’s not hard and will pick up most offenders.

1. Do regular google searches for your name - that means yourmerchantname and yourmerchantname.com and yourmerchantname.com.au - and see what will come up when your customers do this. Look at the paid ads for brand-bidders. Then look at the natural results to see what website affiliates are targeting you. Occasionally check the second page of results too. You can make this easy by bookmarking the links setting up a webpage with the links ready. You need to do this at different times of the day and night, and on weekends. Some affiliates restrict their ppc activity to the hours that the affiliate managers are not working. Some also restrict by geo-targetting so try this whenever you travel too.
2. Search for merchantname coupon, or merchantname discount code to see if there are sites presenting your site and setting an affiliate cookie to claim the sale. Not only do unauthorised coupon sites skew your marketing data, they can mean that you pay commission to the affiliate plus give a discount to the customer when neither the coupon site or the coupon initiated the sale.
3. Learn to read your reports and look for anything out of the ordinary. Look for affiliates with an unusually high or low conversion rate, affiliates that always have a blank referrer address, affiliates whose sales always have a very short time between click time and purchase time. Discuss it with the affiliate to see if there is a valid reason.

Take Control of your Affiliate Program

The online retailers we promote tend to be a pretty savvy lot. They have built some impressive businesses and brands while having to deal with issues like websites, seo, taking credit cards online, chargebacks, couriers and suppliers. However, affiliate marketing can leave them baffled and frustrated. Here are some tips to (re)gain control of your affiliate program and make it work for you.

1. Decide whether you want business partners, a vast commission-based sales force, or a bit of both.
   This is an important step because it determines the relationship you will have with affiliates and how you manage your program.* Business partners are running businesses themselves and will act accordingly. You select them carefully, know who they are and communicate with them regularly… and you both benefit. These are typically long-term relationships.
   * The vast commission-based sales force often touted by affiliate networks comprises of many different types of people. Some will act in a professional and ethical manner, some won’t. Some will welcome communication, some won’t. Some will hide their identities and methods.
   * It is possible to run a program with a few business partners and a number of controlled sales affiliates and manage each one accordingly.
2. Check their identity and reputations.
   Contact affiliates and verify who they are and how they intend promoting your program. Be cautious of affiliates who hide their identity or refuse contact. Affiliate details entered on a form or provided by networks are not necessarily trustworthy (see this forum thread on affiliate identity fraud)… you need to check just like you would check a new employee or business associate.
3. Remember who is working for whom.
   If you have a business-like relationship with your affiliate, they might ask for specific information or services and will justify the request by saying what they intend to do with it and how it will benefit you both. If you have a sales force which demands features (datafeeds etc) without sufficient explanation, check to see if there is mutual benefit.
4. Set your terms and conditions to suit your goals.
   There are two ways to do this:
   * specify what you will accept eg visitor must click on a link on your designated website(s)
   * specify what you will not accept - which requires ongoing research and some knowledge of black-hat techniques.  You will probably find that you are more confident in giving free reign to affiliates that you know but will need to be more restrictive on anonymous affiliates.
   * monitor affiliates and police your terms and conditions
   The more affiliates you have, the more you need to monitor. Develop some simple habits for checking. When you find an affiliate doing the wrong thing, remove them from your program. Share information with other merchants to lighten the load. You need to do this whether you are on a network or running an independent program.

Taking control of your affiliate program is essential. It’s up to you to decide which affiliates are worth the time it takes to manage them. The answer will be different for every business.

Why do you need to manage affiliates?

Affiliate marketing is often promoted as set and forget, no risk marketing. Merchants are told that affiliates are just like a vast commission-only sales force. The only cost is commissions on sales the affiliates bring. Is this too good to be true?

Of course it is. Anyone who has managed an off-line sales team will know that they need to be managed and monitored. Commission-only sales people require even more monitoring because their major incentive will be to earn commission, which may or may not co-incide with the interests of your company.

To manage your affiliates, and ensure that they act in the interests of your business, you need to establish your expectations and set terms and conditions so that everyone knows where they stand. And then you need to monitor them to ensure that they comply.

The normal expectation is that affiliates will promote you in a positive way and increase your sales. It seems so basic that you wonder why you have to say it. But you do because their imperitives are completely different to yours. You are trying to build a business, build or nurture a brand, build loyal customers. They are often just trying to get paid.

So, how does an affiliate get paid? They get paid if their cookie is on your customer’s computer when the customer completes their purchase. It has nothing to do with growing your business, getting new sales, or pleasing your customers.

For affiliates who just want to make some money, there are some easy tactics affiliates can use to make a quick dollar.

First, aim at the pre-sold customer. The closer your customer is to deciding to buy your product or from your shop, the better. That’s why brand-bidding (the customer specifically looking for your website on google) and many coupon sites (the customer ready to buy and wondering if they can save a few dollars with a coupon) do what they do.

It’s also why affiliates will aim at customers who have decided on their product and search for it in google. If affiliates with automated datafeed sites can beat merchants in the search engine listings, they can get paid. Automated datafeed sites (thin affiliate sites) used to be very common. Fortunately the search engines are getting better at excluding them.

Second, appeal to the customers base instincts. Make customers think by clicking on a link, they will find extra discounts, cheaper prices or get something for nothing. That’s why some affiliates build sites to target merchantname coupons or merchantname discount code.

I also have one merchant who has lots of gifts between $29 and $80 with one or two for $19.95. They have a brandbidding affiliate who dispays their URL and has the tag line “All Gifts Are Under $20″ Does it matter? Not to the affiliate because they’ve got their cookie set. To the customer it can look like the merchant is providing misleading advertising.

Third, scatter your cookies everywhere. There are many ways of cookie-stuffing. See http://www.benedelman.org/cookiestuffing/ for just some of them.

Not all affiliates are unethical. I’d say the majority are honest and hardworking. However, the unethical, black-hat affiliates may dominate among the high-earning affiliates. Understanding the methods used and careful management is essential to minimise the risk of using this commission-based “sales force”.

Are you losing money to these affiliates? Would you know?
Is it time to take back control of your marketing and your affiliate program?

Conditional tracking

Conditional tracking is often used by merchants to manage multiple affiliate networks. It involves the merchant using their own tracking to decide which affiliate network is the latest referrer and only showing that network’s tracking pixel on the sale confirmation page.

You can see a full description of how it works at
http://www.paidonresults.com/pdfs/local-cookies.pdf

It’s a good idea, in theory. In practice, there are some pitfalls which need to be watched.

* It relies on everyone knowing how it works. Merchants and networks must ensure that affiliates know if they need to add an extra parameter to deeplinks they create.

* Merchant’s technical staff and affiliate managers must ensure that they set it up correctly.

* Settings on all sets of tracking must be the same eg cookie life, first or last referrer etc.

* This tracking should be used for this purpose only. Using the same tracking for other promotional activities eg newsletters will undermine the accuracy.

This method also fails to pick up rogue affiliate behaviour. If one network harbours adware or other line-of-fire affiliates, the cookies of genuinely referring networks won’t be displayed.

I think it is a good idea to use the extra tracking, but continue to display all networks tracking pixels. If multiple networks track, the merchants own tracking can be used as extra information to decide where the referral really came from. The time differences between the clicks can provide vital clues of rogue behaviour.

That way affiliates can see the cancellations and make their own judgements about the likelihood of its accuracy, check that their own linking is correct, or challenge the merchant if there is an unusual pattern. Merchants too can assess the relative behaviour of affiliates on different networks. Providing full information provides additional checks and accountability.

I had one merchant who used this system to manage the cancellations between their internal program and several networks. They didn’t tell affiliates. Then their staff decided to use the same parameter to track sales from their internal newsletter. The error rate was huge and they nearly lost some good affiliates when they tried to cancel 25% of transaction based on faulty data. However, providing the information in a way it could be questioned put them in a much better position to rebuild trust than they would have been if they’d used conditional tracking and only the one pixel had been displayed.

We are happy to work with merchants to add additional tracking. All you need to do is tell us how the links must be structured.