Sooner or later, every online shop and every B2C provider gets to the point where affiliate marketing becomes an exciting option. Be it because of the excessive dependency on Amazon, the ever-increasing expenses in display marketing and Adwords bookings, or simply because someone has thrown the possibility of their affiliate partner program into the room. After all, this is the only branch of marketing that does not require a fixed budget due to its performance-based billing.
The next logical step is to consider what such an affiliate strategy should look like. And that is precisely the point at which most of them, whether they lack experience and know-how, almost throw in the towel again. This is exactly where this article – written by Tibor Bauer, one of the best-known affiliate experts in the affiliate scene – should intervene and provide initial assistance.
To start an affiliate partner program, some preliminary considerations are necessary. The main points are
- Partner models
- Commission model
- Coupon theme
- Internal/external workflow
- Objectives and expectations
Let’s go through all the points together. It is essential to deal with each issue in advance and to have the answers in your pocket before you start. Once you have clarified all the points, putting it on is a trifle.
Which Affiliate Network Should I Choose?
The two most important questions are:
- In which country should the program start / should the program later be accessible internationally
- Is the product a specialty or standard eCommerce?
Choosing a local affiliate network is always good if you are limited to one country. There are account managers who know the country, learn how affiliate works, and have the right successful partners from the government on their speed dial.
However, suppose it is evident in advance that the partner program will sooner or later be rolled out in different countries. In that case, you should look for a network partner who can cover these countries (preferably locally). It’s much easier and often cheaper to start with a network in a new country than to choose a new one repeatedly.
Nevertheless, one should also consider a possible 2-network strategy. Choosing an international network and a smaller, local network may be helpful.
The second question concerns the product itself. Special networks include digital products, banking, insurance, telecommunications, and erotica. Depending on the country, exceptional networks are dedicated to a specific topic. If you have one of these products, it is advisable to contact these networks.
Otherwise, it doesn’t matter where you go. Almost every network has similar tracking technology, and every affiliate can be found on practically every web. The decisive factor should be the offer made by the network, one’s own experience with the respective network, and the experience of the person who will ultimately be responsible for the program because this person has to deal with the functions and peculiarities of the network day after day.
Affiliate marketing is a people business – it’s less about what and more about how and with whom.
Which Partner Models Should I Allow? Which Ones Are There?
You can say that affiliate marketing can be used to map everything else you do in terms of marketing activities, but everything depends on CPO and CPL (per sale and lead). Essentially, you work with the following partner models
- Retargeting – something like Criteo but on a sales basis
- Cashback – e.g., Shoop. The partner passes on the part of his commitment to the end customer
- Coupon Pages
- Content Pages – Pages that deal with the topic of the product or the target group
- Closed Groups – like employee benefits, the offers are only available to a specific group
- Display partner – instead of CPM (CPM), everything on a CPO basis
- Loyalty – like Payback or Deutschlandcard
- CSS Partners – Affiliates who place ads on GoogleShopping, for example
- Adwords Partner
These partners arguably account for the most significant portion of affiliate sales volume. There are other great technology partners, but that would go beyond the scope. The question here is who should be allowed to get involved in the affiliate program. Every company has to make this decision for itself.
If voucher marketing is a thorn in the side of one shop, these partners mean the best sales solution for another shop. There may already be direct cooperation with the loyal partners, which prevents collaboration with others of this kind. Every program operator has to make their own decisions.
It would be advisable at the beginning, if possible, not to do without any of the partner models. You can evaluate during operation and optimise the program according to its development.
How Much Should I Pay My Partners?
There is already an article on the topic “What does affiliate marketing cost” briefly discusses the costs. However, the following points should be added to the consideration.
- Do I want to commission new and existing customers separately?
- Do I want to create an attribution model where the order in the customer journey decides who gets how much?
- Should I make a commission scale that rewards good/better affiliates with higher commissions?
- Do I want to pay different commissions for different products/product groups, or do I want a mixed calculation?
And one more critical piece of advice: Don’t forget the network fee whenever you make a calculation. Since networks usually base their prices on the publisher’s commission, the reasonable costs per sale or lead are always the publisher’s commission plus the network commission. So if the network calculates a 30% network fee on the publisher’s commission, the reasonable costs are calculated with a basic commission x 1.3. If the network fee is 25%, the bill is basic commission x 1.25, etc.
What Do I Have To Consider Technically?
Tracking in affiliate marketing is the be-all and end-all. Without monitoring, the partners and the network cannot be paid, and there is no way to measure the affiliate program’s success. There are a few considerations and important notes.
Depending on which website or shop software is used, there are already ready-made plugins from the software manufacturers for affiliate networks. With every setup, the technology first asks for the software.
If you want to connect retargeting, pretargeting, and some other technical partners, you need to install a tracking container in addition to standard tracking. Depending on the network, there are one or two different codes that need to be implemented. Here you should find out in advance whether the in-house technician or the technical service provider for the website is familiar with it and whether the website offers the possibility for affiliate marketing.
Regarding retargeting, an HTLP, a high-traffic landing page, must also be created. The site prevents the in-house server from overloading with additional virtual traffic.
A tracking switch is essential if you want to start with several networks. Otherwise, you run the risk of being paid twice for sales. Here, too, it must be clarified in advance who is familiar with it and whether you may have to buy additional services or solutions.
The topic of 1st part of tracking is now an essential point in monitoring. Implementing this or another alternative technology to classic third-party tracking is necessary. Here, however, the network can help at any time.
How Do I Deal With The Topic Of Vouchers?
As already mentioned, vouchers are a blessing or a curse depending on the shop. Some providers generally work without vouchers. Allowing voucher partners also makes no sense. There are various considerations if vouchers are in circulation or will be in circulation in the future.
- Are partners allowed to use the so-called “Ehda vouchers”? (These are vouchers on the “eh-da-are” page)
- Should partners only be allowed to use coupons and promotions created for the affiliate channel?
- Are partners allowed to promote promotions that take place in other media?
- Should sales that were not generated with pure affiliate campaigns be remunerated?
- Do I only want to design campaigns for affiliate partners?
- Should I / can I provide separate landing pages for the affiliate channel?
As you can see, this should be thought through in advance. There are undoubtedly other exciting questions on the subject.
- What does the daily workflow look like?
- Do I even have the human resources to deal with the topic properly?
- Does a particular position for affiliate management have to be created?
- Do I have to buy in the external workforce and consulting services?
- If so, what would that cost me?
- Are other departments involved in the affiliate marketing processes, or can “short official channels” be used?
- Do different departments possibly need to be trained/aware of affiliate matters?
The last two points, in particular, are essential, especially in larger companies. Wrong understanding or small department wars can be directly noticeable in the lack of sales.
When Is My Affiliate Marketing Successful?
Although last, this point is sometimes the most important. It is not only necessary to define rational and healthy expectations, but also to constantly evaluate and optimise the results. For optimization, however, you need goals. How do you know if what’s going on is good or not? Goals and expectations are not the same things.
The affiliate channel is expected to generate additional sales and support the other media. However, the objective can be expressed in precise numbers. The affiliate channel accounts for between 5% and 15% of total sales. This varies depending on how many other media are used, how much is allowed and forbidden in the affiliate and how strong your program is compared to the competition.
Clear goals are significant, especially in the first year of the partner program. It’s not about achieving those goals. It’s about gaining experience and discovering if the affiliate marketing channel has the power to go in the right direction.
It is only in the second year that you can use the collected results and experiences to re-evaluate the achieved goals and set a new, optimised goal. Challenging intermediate goals such as KPIs are just as important as soft ones. Soft plans can include reaching a certain number of publishers, concluding a special agreement, booking possible special placements, etc.
As you can see, there are many points to consider. The thoughts listed are only a part of what you must think when restarting.