Special Report: E-Commerce & Catalog Technology: Is Affiliate Marketing Worth the Effort?

Let’s be frank. It’s been a while since anything interesting has turned up in the realm of online affiliate marketing. Yet that could change. And soon. We need to know how and when to exploit the next performance-based marketing opportunity.

Rest assured, there are exciting new opportunities for catalogers big and small in affiliate marketing — but serious challenges also lie ahead.

From managing the intersection of search and affiliate programs to diversifying the mix of distribution points, the key question multichannel merchants should ask is: How can affiliates be encouraged to send us more incremental sales or new customers?

Affiliates: Friends or Foes?
It’s a harsh reality: Web affiliates are taking a beating in search marketing. If you’ve been involved in affiliate marketing for more than a year, you’ve likely seen declining sales or leads from search-focused affiliates.

Newbies and veterans of performance-based strategies are noticing affiliates competing for searchers and wondering how to handle it. Do you ban them from using some tactics? All tactics? Do you partner selectively with them?

Beyond coupon and incentive-shopping affiliates, where's that affiliate innovation of years past? Web marketing’s hands-down darling strategy has promised that everything from mobile devices to video is the next great panacea for customer acquisition. Of course, catalogers themselves aren’t expected to test the waters. Those clever, innovative affiliates are going to help … again. Just as they did with paid search, affiliates will test the waters and pave the way.

We’ve seen a few Jellyfish.coms and Buzzillions.coms pop-up on the radar, but overall it’s been fairly stagnant. Video and mobile have tremendous potential, but both require a lot of up-front capital, which new affiliates don’t typically have.

Tough For Cash-Tight Newcomers
“Affiliate marketing has evolved, and it’s difficult for newcomers to jump in without any capital and start making money,” says Chris Finken, co-founder and chief information officer of OrangeSoda.com, a campaign management solutions provider. “Blogs remain a popular tool for affiliate marketing ‘on the cheap,’ but successful affiliates are still making great money without experimenting with video and mobile.”

Finken also believes many catalogers have turned their backs on affiliates, viewing them as expendable. “It’s hard to go back to the affiliates you’ve dismissed and say, ‘Please be innovative, and if it works I promise we’ll pay you.’”

Bold, New Relationships
How can catalogers work with what they have at their disposal today? Paul Moss from lead-generation company Trouvé Media has been developing what some will find to be a radical approach. It’s built on active investment in affiliates themselves — their business models.

Moss insists on providing feedback loops to affiliates, offering them transparency on internal performance data (i.e., conversion). Marketers must consider going the extra mile to support proven affiliates by subsidizing their marketing efforts, he says.

Moss matches some of his best affiliates’ costs on search engine optimization services and/or provides landing page A/B optimization tools. He wants “affiliates to capitalize on areas outside of our core competency and/or create wider distribution.”

Moss pays affiliates based on their individual performances and holds them accountable. He’ll release underperforming affiliates after they’ve been given a fair chance.

“We only want to focus our internal marketing energies on where the volume is — typically where it’s most expensive to play,” Moss says, noting that he follows Chan Kim’s book “Blue Ocean Strategy.” Kim preaches allowing partners to help exploit less competitive, lower volume, but significantly lucrative markets.

“I’ll approach affiliates and subsidize their efforts on natural search if they’re focusing on a smaller yet lucrative niche,” Moss says. “That’s if I believe they can dominate it.”

Pockets of Innovation
Most catalogers find such investment a difficult pill to swallow and rely on affiliate networks to scale their efforts. This begs the question: What are affiliate networks doing to support affiliate innovation? What tools and educational support are available to open new doors?

AvantLink is taking an open source approach to innovation, opening its system to affiliates for further development rather than simply offering them a boxed solution. AvantLink makes a bevy of RSS-enabled tools available to affiliates and advertisers.

“We’re offering merchants the ability to maintain ‘on sale’ and ‘deal of the day’ RSS campaigns for affiliates to publish on their sites,” says Gary Marcoccia, AvantLink’s marketing director. “Affiliates can promote ‘subscriptions’ to the same RSS feeds.”

In addition to gaining sales, the key in generating feed subscribers from the site, Marcoccia says, is that affiliate IDs get embedded in links from the deal feeds for as long as they’re in use.

LinkShare recently unveiled FlexLinks, a new linking technology allowing cost-per-action tracking to be “wrapped around” any kind of content. Publishers then post clickable, social-oriented content in the form of widgets or videos.

Advaliant Founder and President Jivan Manhas believes this is among the more promising tools for affiliates and publishers to use in this space. He says networks need more flexibility, “open” technology platforms and tools that foster greater distribution opportunities across platforms such as mobile, video, offline and audio.

VideoClix and Beyond
Innovation doesn’t reside solely within networks. On the video front, VideoClix makes individual objects in video content clickable and linkable, so you could click on a scene in a video like it were a link in text. The potential for affiliates to get involved seems huge, given how nonintrusive these links are for the viewer.

April Graham, affiliate marketing manager of TicketsNow.com, manages a team of three affiliate account managers and uses a new system called The Partner Maker. The company connects marketers with top affiliates, optimizes relationships for more sales, and secures communications details and history with affiliates. This is especially helpful when rotating in new hires.

“Affiliate networks are finding new ways to meet our growing needs,” Graham says, “but others are finding ways to help drive sales and scale, as well.”

Ultimately, multichannel marketers have to step up and do more with what’s at hand today and find new ways to experiment. Easier said than done for sure, but trying bold, new approaches with affiliates may end up separating the winners from the losers. The only way to sustain a healthy affiliate marketing channel in today’s uncertain world is to create unique, unquestionable value within it.

Jeff G. Molander is CEO of Molander & Associates, a performance marketing consulting firm. He blogs at www.jeffmolander.com and hosts a weekly experts roundtable podcast, Paying for Performance (www.payingforperformance.com). You can reach him at jeff@jeffmolander.com.