Affiliate Marketing FAQ

What factors should be considered when deciding to launch an affiliate program?

Outlook: When considering how effective the affiliate channel will be, it is important to understand the key metrics of a site. Large brands have traditionally performed better in this channel; however, niche brands with strong margins can build effective programs, assuming a one-year ramp-up period.

Program Costs: Your product margin must be considered in determining affiliate commissions, but in general, affiliates receive 6% to 8% commission. Management costs vary depending on a merchant’s location and internal resources. Ideally, staffing costs devoted to supporting a mature program should be no more than 10% total affiliate sales.

Marketing Goals: The affiliate channel should be viewed through the lens of your key marketing objectives. If you are in acquisition mode, this channel may be worthwhile. If you are in retention mode, you may want to put more of an emphasis on other tactics such as email marketing.

Internal Communication: Effective programs are run in conjunction with other marketing efforts—not in isolation. You should consider the structure of your overall marketing mix, and where your resources are being spent. A well-run affiliate program leverages creative and integrates a consistent marketing messaging.

What are the stages of development for an affiliate program?

Launch Mode: This includes all of the steps necessary to get an affiliate program off the ground. On a large network, launch timeframe is usually six months, although technical implementation should not take longer than four weeks.

Basic: After the first six months, a program goes into basic growth mode. This includes heavy emphasis on continued recruitment of high-performing affiliates into the program, as well as optimizing relationships with top players. New merchants should begin testing special affiliate incentives at this stage.

Advanced: Mature programs (more than two years old) will grow—if they’re well managed. At this stage, processes such as advanced affiliate segmentation and customized creative placement enable a merchant to fully leverage each partnership. However, plateaus can occur when merchants manage mature programs, but fail to address affiliate concerns. A lack of consistent communication, creative update and recruitment will result in stagnation.

Autopilot: If a program is completely left alone (with approvals on auto-approve) it is considered to be on autopilot. While sales may continue to trickle in, you will lose the attention of your partner.

Re-Launch: If an affiliate program has reached a plateau, it should be re-tooled. This involves a review of all affiliate "touch points"—the main forms of communication with your channel. In the right hands, such a program can be turned around.

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