Have you budgeted for a robust and profitable affiliate program? According to a recent survey by Forrester Research – Affiliate Marketing, Search Marketing (SEM), and Organic Traffic are the top acquisition sources for web retailers. Affiliate marketing is a very cost effective source for acquiring online customers. Forester reports that 91% IR Top 500 retailers have an affiliate program on at least one of the top affiliate networks, which Forrester identifies as Commission Junction, LinkShare, Google Affiliate Network.
- For pure-play online retailers Affiliate Marketing ranked 3rd after SEM and Organic.
- For Multichannel retailers and Manufacturers Affiliate Marketing ranked 2nd after SEM.
What Forrester fails to mention is that a well managed affiliate program can boost natural search rankings and shift the risk of Search Marketing from the merchant to affiliates that are SEM experts. Forrester’s numbers only reflect the current state of the industry. Sadly, most merchants have sub-par affiliate programs that dramatically under-perform. From MGECOM’s vantage point, it is clear that as SEM continues to increase in cost, the pay for performance model of affiliate marketing is looking more attractive and proving more effective for a growing number of merchants.
The answer depends on a number of factors. An Affiliate Marketing program is likely to be successful if these key conditions can be met:
- Successful, experienced & trusted proactive program management is selected.
- The product portfolio presents a combination of volume and price that will justify the investment of an affiliate program.
- The sale or lead can be credited via a trackable means. Tracking technology is evolving rapidly and includes support for text links, banner ads, and telephone calls (a more recent tech development), among others.
When e-Merchants meet the above criteria, there are verdant supporters of the effectiveness of Affiliate Marketing programs. According to Mike Abolafia, e-Commerce Director at Taylor Gifts, “Affiliate marketing should be a main component of the online marketing strategy for any online business selling goods or services. With a fixed cost it has the least risk and can generally allow you more room to spend on other channels.”