The Myths of Affiliate Marketing

There are many myths regarding affiliate marketing that ought to be tucked away where you keep the collected works of the Brothers Grimm, Aesop and Mother Goose. They may be fun to read, but they are disastrous to any affiliate marketing campaign. There are hundreds of these myths circulating, but I’ll deal with the top 10 of them here:

  1. MYTH: It’s good to have a lot of white space in advertisements, brochures and other printed material, and especially on websites.
    TRUTH: Your prospects and customers care a whole lot more about information than blank space. They want to know what your offering can do for them, not that you can afford to run a lot of white space. Usually white space substitutes for powerful ideas, a list of benefits and a fertile imagination. Attention should be drawn by substance, not emptiness. White space is aesthetically pleasing, but profits are even more delightful. Good affiliates are not bamboozled by gorgeous design at the expense of solid ideas.
  2. MYTH: Use short copy because people just won’t read long copy.
    TRUTH: People read long books, long articles and long letters. They read whatever interests them, and the more they’re interested, the more they’ll read. If you give people more data than they need, they’ll either buy from you or they won’t. If you give them less, they won’t buy, period. Studies show that readership of marketing materials falls off dramatically after the first 50 words, but stays high from 50 words to 500 words. That means your non-prospects will turn the page or click it off in a hurry, but your prospects will hang on to every word, trying to learn as much as they can. Many of them will actually wish you had told them even more.
  3. MYTH: It is costly to purchase television time.
    TRUTH: This myth was once the truth, but cable and satellite TV have obliterated it. The cost to run a prime-time commercial in any major U.S. market is now $20 or less, often as low as $5. Better still, cable TV allows you to cherry-pick where your commercials will run so that they air only in communities where your prospects live. You can advertise on CNN, MTV, ESPN, A&E, the Discovery Channel – any satellite-delivered programming. And cable companies will produce your spot for a cost near $1,000, a far cry from the $207,000 average spent on production in 2004. How does TV work for affiliates? Just ask any affiliate who has tried it. TV works wonders for anyone who is reaching the right audience with the right offer. I hope that describes you.
  4. MYTH: Sell the sizzle, not the steak.
    TRUTH: The idea is to sell the solution, not the sizzle. The easiest way to sell anything is to position it as the solution to a particular problem. If you look for the sizzle and not the problem, you’re looking in the wrong direction. Your prospects might appreciate the sizzle, but they’ll write a check for the solution. The job of the canny affiliate is to spot the problem, then offer your product or service as the solution. If you think solutions, you’ll market solutions.
  5. MYTH: Truly great marketing works instantly.
    TRUTH: First-rate sales work instantly. Great limited-time offers work instantly. But great marketing is not made up of sales and limited-time offers alone. These will attract customers, but they won’t be loyal and they’ll be won by whoever offers the lowest price. Great affiliate marketing is made up of creating a desire for your offering in the minds of qualified prospects, then peppering your offers with sales and limited-time offers. But a program of fast-buck marketing usually leads to oblivion. The best marketing in America took a long time to establish itself. Just ask the Jolly Green Giant or that lonely Maytag repairman. And then there’s Amazon.com and Microsoft and Google. None of that marketing worked instantly, but it worked for decades and still does.
  6. MYTH: Affiliate marketing should entertain and amuse.
    TRUTH: Show business should entertain and amuse. But affiliate marketing should sell your offering. This widespread myth is based upon studies that show people like marketing that entertains. They like it, but they sure don’t respond to it. Alas, the marketing community nurtures this myth by presenting awards based upon glitz and glitter, humor and originality, special effects and killer jingles. Those awards should be given for profit increases and nothing else. The only thing that should glitter should be your bottom line.
  7. MYTH: Marketing should be changed regularly to keep it fresh and new.
    TRUTH: The longer that solid marketing promotes a product or service, the better. Guerrilla affiliates create marketing plans that can guide their efforts for five or 10 years, even longer. How long have people been in good hands with Allstate? How long have Rice Krispies snapped, crackled and popped? How long has Intel been inside? Do you think these marketers would be more successful if they kept changing the marketing to keep it fresh? I think not.
  8. MYTH: Affiliate marketing is successful if it is memorable.
    TRUTH: Affiliate marketing is successful if it moves your product or service at a profit. Studies continue to prove that there is no relationship between people remembering your marketing and buying your offering. All that matters is if people are motivated to make a purchase. So don’t aim for being memorable as much as being desirable, because that leads to profitability.
  9. MYTH: Bad publicity is better than no publicity at all.
    TRUTH: Bad publicity is bad for your business. No publicity is a lot healthier for you. People love to gossip, especially about businesses that have allegedly done something so awful that it has been exposed by the media. Guerrillas love publicity but avoid bad publicity because they know it spreads faster than wildfire.
  10. MYTH: All that really counts is earning an honest profit.
    TRUTH: Good taste and sensitivity also count. Marketing, as part of mass communications, is part of the evolutionary process. Affiliate marketing educates, informs, announces, enlightens and influences human behavior. Because it does this, affiliate marketing has an obligation to offend nobody, to present its material with taste and decency, to be honest and to benefit customers. If it does that and earns profits too, it is true guerrilla affiliate marketing.

JAY CONRAD LEVINSON is the author of the Guerrilla Marketing series of books, which are published in 41 languages and are required reading in many M.B.A. programs worldwide. His website is www.gmarketing.com.

Crossing the Line

Years before the Nasdaq tanked and banner advertising died, e-commerce pioneers like Amazon.com and CDNow began partnering with topic-centric websites to drive revenues, paying a commission for each sale referred. The practice spread quickly and became known as “affiliate marketing.” By early 1999, Forrester Research proclaimed “affiliate programs” as the Web’s most effective traffic-driving technique – almost twice as effective as banner advertising.

Consider that by September 1999, more than three years after Amazon launched, there were over 1,000 merchants offering affiliate programs. And by 2000, Amazon’s Associates Program had grown to over 500,000 affiliates. What Amazon founder and CEO Jeff Bezos started as a polite conversation had grown into an entirely new industry, bringing with it affiliate networks, directories, newsletters and a variety of consultants. Affiliate marketing is now an integral part of the Web’s composition. It’s also now widely heralded as the Web’s most cost-effective marketing vehicle.

Still, as affiliate marketing evolved, issues with the model have been exposed. The affiliate community needs to remember that affiliate marketing is not about generating “cheap” advertising, but developing profitable strategic relationships.

But there is a way for merchants to offer a win-win where both merchants and affiliates have a vested interest. Improving technologies now make it possible for the formerly CPS, CPA, CPL performance programs and the CPM, CPC and flat advertising models to unify, creating a hybrid I call the CPP (cost-plus-performance) model.

The CPP combines a paid campaign with a performance campaign and offers the best of both worlds. I see this as the future of affiliate marketing, a wide-open world of performance and payment where the CPP takes back inventory lost to Google’s AdSense and advertisers. The result is a whole new world of opportunities for merchants, affiliate managers and affiliates.

The hybrid CPP is converting former CPM and CPC advocates into affiliate marketing believers. For many top websites, affiliate marketing now represents a chance to loosen the grip of pay-per-click search engines and costly advertising. The most difficult obstacle in affiliate marketing is finding good affiliates with traffic. If a site sells traffic then they must have it, and if you negotiate a cost-plus-performance payout, valuable opportunities begin to open up.

Merchants are also realizing that affiliates need better tools. Technologies such as data feeds, site and shopping cart abandonment (exit traffic) promise to increase EPC and EPM numbers without compromising the visitor’s experience, thereby improving monetization. By offering additional products and services at or after the point of sale, merchants can add revenue without diluting the sales process.

It’s becoming clear to merchants, affiliate managers and affiliates that the line between performance and traditional advertising has been breached.

It started with Google’s entry into the market. Google’s AdSense captured valuable affiliate program inventory, which caused the flexible affiliate marketers to evolve again. The industry’s response was to tangle with the paid advertising side of the market. Google’s method is to pay out for ad space – the same ad space that was used by affiliate marketers. That limits available inventory and changes the Web publisher’s expectations.

Some affiliate marketers using AdSense end up cannibalizing their own market. Why? To get guaranteed income from traffic. If you pay for traffic, you’re guaranteed to get it. The merchants get guaranteed traffic and the affiliates get guaranteed revenue from traffic. This presents a problem, however. Traditional advertising places the risk on the merchants, while performance places the risk on the affiliate. In either case only one has a vested interest in the campaign.

It’s clear from a handful of studies and reports that marketers are frustrated with the current process.

A recent survey of 135 senior-level marketers found that while 60 percent of respondents said defining, measuring and taking action on ROI is important, only 20 percent are satisfied with their ability to do so. In addition, 73 percent reported a lack of confidence in their ability to understand the sales impact of a campaign.

The study, conducted by Marketing Management Analytics, the Association of National Advertisers and Forrester Research in April 2005, was presented in July at the ANA’s 2005 Marketing Accountability Forum.

A Media Life survey of media buyers quantified what most already suspected: media buyers think that only about half of media reps know what they’re doing (MediaBuyerPlanner.com). A significant minority of the buyers – about one in six – have such a low opinion of representatives that they said only 10 or 20 percent are useful.

Complaints centered, unsurprisingly, on time wasting, in the form of over-contacting and proving ill-prepared when conversations do take place. Another big complaint proved to be overly hard selling, with some reps believing that repetition or browbeating may succeed in getting a property on the buy where the numbers won’t.

Half of the buyers said they agree with the statement that the rep problem was “no big deal. Sure, they’re annoying sometimes, but I’m sure they find me equally so. It’s how the industry is set up.” About 45 percent agreed instead that reps are “a necessary evil. Most are okay, but there are a few really obnoxious ones I hate doing business with.”

Even with all the issues, the good news is that the affiliate community is still evolving. Organic search is becoming more competitive. CPM rates are going up. Paid search is becoming cost prohibitive and the need for cost-effective online inventory is becoming stronger, causing the affiliate space to grow at ever-increasing rates. As merchants, affiliate managers and affiliates become even more interwoven, the friction decreases and new forms of integration and aggregation are made possible.

I see it this way: the race is on! In the last year the number of merchants offering affiliate programs has more than quadrupled. Literally millions of websites now participate as affiliates – from personal homepages at GeoCities and Homestead to Fortune 500 companies. And now, more often than not, merchants with affiliate programs are also affiliates.

Whether termed affiliate marketing, collaborative commerce, revenue sharing or syndicated selling, the affiliate space leads the way in the ever-changing landscape of online marketing and has become the Web’s fastest, simplest and most cost-effective marketing vehicle.

As both merchants and affiliates continue to recognize the power of change, affiliate marketing’s best days are yet to come. In a few short years, affiliate marketing looks to become the tail that wags the dog – controlling the majority of the adverting and marketing dollars.

GREG SHEPARD is the CEO of NetTraction, a firm that specializes in deploying, managing and growing affiliate programs. He can be contacted by visiting www.NetTraction.com or by email at cmo@nettraction.com.

Managing Affiliates in a Rapidly Growing Market

Over the past two years, the online real estate traffic volume has increased exponentially. Part of this dramatic growth is driven by the low interest rate environment, but a bigger reason for the increase is the rapid shift in realtor marketing dollars away from offline media – such as print – toward online advertising venues.

Affiliates play a large role in the success of online real estate. While this rapid growth has led to new opportunities, it also brings significant challenges. Merchants who match consumers with professional service providers must maintain a consistent flow of only the highest-quality leads. Low-converting traffic will frustrate the service provider and may eventually result in unwanted churn. The observations following are true in particular for any merchant who matches consumers with professional service providers.

A good affiliate manager must connect the dots from consumer inquiry to affiliate sites prior to approving any potential affiliate. You should strive to determine the main sources of traffic that a potential affiliate brings to the table. Affiliates can generate traffic a number of ways. The most common methods are cost per click (CPC) campaigns, search engine optimization (SEO) and email marketing.

These are all generally accepted practices of online marketing and can be verified by the savvy affiliate manager. For example, if the affiliate is using CPC campaigns to generate traffic, you can verify this by typing in keywords and looking for the affiliate’s ads. If the affiliate is unable or unwilling to provide at least some examples of how the traffic is generated, then you should assume the worst. If you are unable to connect the dots, then it’s possible the affiliate is driving traffic using means such as spyware, incentivized clicks or link hijacking. Connecting the dots is important not only to prevent approving a fraudulent affiliate, but also to gauge the quality and potential volume they can deliver.

In addition to connecting the dots, a good affiliate manager should be able to make the best of a bad situation whenever possible. If a particular affiliate or campaign is under-performing, you need to investigate all possibilities to salvage some or all of the relationship. This can be done by adding, removing or modifying product offerings. You can change pricing. Perhaps most importantly, you can change creative and integration techniques.

For example: an affiliate promoting our brand at a national level wanted to drop the program due to poor results. We offered the affiliate a series of custom city-specific links better suited to his network of local sites and were able to improve the affiliate’s performance significantly.

In another case an affiliate was promoting one of our products but didn’t match the consumers with the appropriate buying service. To turn this around we encouraged this affiliate to start promoting a more appropriate home listings product. This change sent revenue climbing sharply.

In addition to understanding the affiliate- generated consumer traffic, good affiliate managers possess a keen awareness of all consumer traffic channels. To state the obvious: free traffic (SEO or brand recognition) is preferable to inexpensive traffic, which is preferable to expensive traffic.

If free traffic volume increases, the merchant providing professional services should focus more on optimization of existing affiliates and less on recruitment. Aside from ranking traffic by price, you also need to factor in quality. For instance, if SEO traffic is higher quality versus comparable channels, then you should recruit new affiliates that consistently show up well in the search engines for large-volume, relevant searches.

To gain large market share in times of rapid growth, you need to have a flexible affiliate program. One way to do this is to allow affiliates to participate on several different platforms. Affiliates who prefer the online reporting and payment structure of affiliate networks can join under either of those programs. For larger affiliates who want to partner directly, consider offering higher payouts and direct links. On the product side, flexibility could mean offering regularly updated data feeds, including XML feeds and co-branded forms as well as forms of different layout or length. On the payment side, you could let direct affiliates choose between cost per click, cost per lead or even revenue sharing arrangements. This flexibility in terms of platforms, products and pricing is paramount in helping your program expand.

With the recent explosion in Internet advertising, affiliates are bombarded with merchant offers from all angles. To rise above this noise, you need to be an extremely effective communicator. New value propositions such as better payment tiers, contests, fresh creative, case studies, new products and affiliate testimonials must be communicated regularly to existing and potential affiliates. Due to spam filters and overflowing inboxes, email newsletters are becoming a less effective communication method. Try to communicate one on one with larger affiliates whenever possible.

With so many new affiliate applicants each day, it is inevitable that a few bad apples make it through the approval process. To prevent affiliate fraud, you have to routinely deny affiliates that do not respond to initial contact. While the vast majority of existing affiliates play by the terms and conditions of the affiliate program, there are instances where you’ll need to take disciplinary action. In cases where affiliates purchase trademarked broker keywords or if an affiliate violates the CANSPAM Act, action must be taken quickly.

Other challenges include taking steps to monitor cost-per-click fraud. CPC management requires additional time for analysis and closer contact with the affiliates. Each month you need to look closely at the revenue generated per click for each affiliate. Unusual behavior is typically easy to spot and must be corrected quickly. New affiliates – especially those who start on the CPC program – can be given a monthly budget cap to your company’s exposure to any potential click or lead fraud. As trust builds with an affiliate, this cap can be raised or removed altogether.

Merchants offering CPC products should also have analytics tools with robot filtering mechanisms in place, as well as the ability to track click patterns funneled down the merchant’s site. For CPA products, you should monitor each affiliate’s lead-to-close rates and raw lead data on a monthly basis to ensure lead quality.

Implementing tight controls will ensure you have a good handle on your existing base of affiliates, which makes it easier to expand your program as your company grows.


MARIE NILSSON is the affiliate manager for HomeGain, a wholly owned subsidiary of Classified Ventures, based in Emeryville, Calif. She has a background in project management for the telecom and chemical industries and holds a Master of Science degree from Lund Institute of Technology in Sweden.

Don’t Give in to Click Fraud Fears

Click fraud is a potentially serious problem faced by any affiliate marketer who uses pay-per-click (PPC) search engine advertising to market their sites.

One study estimated that between 10 and 20 percent of a PPC advertiser’s budget is lost to fraud. That estimate increased to 50 percent for high-priced, highly competitive keywords.

Unfortunately, there is no guaranteed way to prevent unscrupulous competitors from going click-happy and rapidly depleting an advertiser’s PPC budget.

Solving the problem is tedious and time-consuming. Getting your account reimbursed requires proof of the fraudulent activity. However, detecting click fraud demands effort and resources that most marketers would rather devote to increasing their income – not ferreting out thieves.

No wonder the fear of click fraud has some affiliate marketers running scared. Understandably, dealing with the whole ugly scenario might leave an advertiser feeling frustrated and thoroughly disenchanted with pay-per-click advertising.

Indeed many new and aspiring affiliate marketers are using potential click fraud as an excuse not to try pay-per-click advertising, or to abandon their Internet marketing business plans altogether.

Giving up due to problems that may never arise? What sort of response is that? Any activity, business or otherwise, has its potential problems.

Take something as commonplace as fueling a vehicle, for example. Under certain conditions you may risk starting a spark-induced fire at the pump. Does such a horrible prospect persuade you to sell the car, ride the bus to work and add two more miserable hours to your daily commute? I should hope not. Rational people learn and apply safe fueling techniques to keep from being fried.

Likewise, dropping pay-per-click as an advertising option from your marketing arsenal because you’re afraid of click fraud, or want to avoid the cost of advertising, isn’t the smartest approach to Internet business.

Rather than use PPC, some affiliate marketers rely exclusively on using search engine optimization techniques, an option fraught with its own perils.

First of all, you may wait several months to get your site ranked high enough in the engines to attract visitors, only to discover that your copywriting or the product itself doesn’t convert to sales. So the process begins anew with copywriting, site submissions and another long wait to see the results.

Second, income derived from search engine traffic tends to be inconsistent from month to month, varying with a site’s rank. Imagine having your earnings plummet from $30,000 per month to a paltry $2,000 per month, simply because Google changed its algorithm or de-listed your sites.

I often consult with affiliates who’ve taken the SEO-only route but then need a way to rebuild their shattered businesses. So yes, such catastrophes do occur.

So what’s the answer? It’s simple: use pay-per-click advertising to market your sites. By the way, that’s the same solution many “you don’t have to pay for traffic” marketing gurus use to promote their own products and affiliate programs. Why? Because no other traffic- generation method is as easy to implement or immediately effective as PPC advertising.

I LOVE pay-per-click advertising, and yes, it loves me back. When Yahoo Search Marketing’s (Overture) predecessor, GoTo.com, launched its pay-for-performance search engine in June 1998, I recognized the service as a complete godsend to online marketers and have been using it to successfully market my affiliate sites ever since.

You simply write an ad, input your keywords, set your budget and within minutes a Google AdWords campaign can be sending highly targeted traffic to your site. Yes, minutes, not months!

Clickthrough and conversion rates can be rapidly assessed, most often within hours of starting a campaign. Is the impression- to-clickthrough ratio poor? Simply tweak the ad and test again. If conversion to sales is underwhelming, rework the product review and then resume the flow of traffic to your site with just a click of your mouse.

Don’t know whether you should promote Product A, Product B or both on your site? Pay-per-click advertising quickly helps you find the right answer. Simply create two listings to send traffic to their respective product review pages. Five hundred sets of eyeballs to each page will give you a good reading on which is the most lucrative choice.

You can test conversion rates for various products without having to write an endorsement. Scores of affiliate marketers who don’t have their own websites are making scads of money promoting products as affiliates using PPC. Instead of bringing visitors to a product endorsement page, they send traffic directly to the merchant from Google through their affiliate links.

Perhaps you shun PPC because of horror stories about campaigns run amok and credit cards drawn to the limit? Forget them. There’s absolutely no reason that should ever happen. Most pay-per-click search engines permit advertisers to set maximum daily or monthly budgets. Or you can deposit a set amount into your PPC account, and the campaign will automatically suspend itself when the funds have been depleted. Once you are confident that your campaign is producing satisfactory returns on a consistent basis, automatic funding options are available. Eventually you’ll get to a stage where you can set it, forget it and collect your commission checks – month after month and year after year. Some PPC users complain that increased competition in certain markets is driving them out of business as bid prices skyrocket.

Here’s a simple solution. Don’t raise your bids to compete on the most popular keywords in your niche. Instead, lower your bids or drop those keywords completely. Concentrate on building bigger lists of highly targeted keyword phrases on which your competitors are not bidding. This strategy lowers your average cost per click and increases your returns by driving laser-targeted traffic to your sites.

Targeted traffic is the lifeblood of your affiliate marketing business. Don’t let fear of click fraud or any other potential problem keep you from trying pay-per-click advertising, the easiest and fastest way to get traffic to your sites. Spend a buck and make two, three, four or more. Those benefits greatly exceed any associated risks.

ROSALIND GARDNER is author of the best-selling guide to affiliate marketing, The Super Affiliate Handbook: How I Made $436,797 in One Year Selling Other People’s Stuff Online. Her book is available on Amazon and www.SuperAffiliateHandbook.com.