An Advertiser’s Guide to Working with Affiliate Networks

It was just last week that I received a call from an advertiser looking to work with an affiliate network to drive sales for his exercise insoles product. He had just launched the ecommerce site, and appeared to salivate over the idea of performance marketing and what it could do for his business. “You mean I only have to pay you when I sell a product? Sold baby, sold!” I recall him saying. After having reviewed his offering, it was clear that much more work was required and that he simply wasn’t ready on many levels. And off I sent him, like a grade 5 student, to complete a homework assignment to get him prepared.

This scenario has played over and over again in my daily work life as VP of Sales for MediaTrust. All too often we receive calls from advertisers with great products that are unfamiliar with the nuances of performance marketing, how affiliate networks operate, and what is needed to be ready. These experiences have inspired me to share some high level thoughts on how advertisers can be better prepared, so here goes:

1) Know Your Numbers

a. Affiliate networks will want to know how well your offer converts (what portion of the clicks turn into sales/leads), so make sure to track that. This conversion rate metric is used as ammunition when affiliate managers have to sell your offer to affiliates. The higher the conversion rate, the more appealing your offer is. If you have the conversion rate broken down by traffic type (email, web, search etc.), that’s even better.

b. Make sure that your payout is competitive (you can view your competitor’s payouts using offer engines like tracking202.com, affiliate scout, and offervault.). Affiliate networks will compare your payout to industry norms, so do your homework here and don’t waste their time.

c. Make sure you’re well funded. Affiliate networks can drive huge volume so be prepared. If you have continuity programs, make sure you have enough cash flow to be able to pay your affiliate network bills before you get paid by the consumer.

2) Know Your Pricing Model

a. What model should you choose? CPA? CPL? Rev-Share? Hybrid? If you are an ecommerce site with multiple products to sell, perhaps a rev-share model may work better than a fixed CPA (cost per acquisition) payout. If that’s the case, make sure the CPA network you choose has rev-share tracking capability, or work with a rev-share platform like Commission Junction that specializes in that. Remember, affiliate networks (aka CPA networks), are for the most part, blind networks – the traffic source is unknown to the advertiser. Rev-share platforms allow affiliates to apply directly to you (so you know who they are), but you have to manage them and promote your offer yourself. With CPL (cost per lead) campaigns make sure you know your customer lifetime value (LTV) so that you can offer a competitive payout and not get burned.

3) Know Your Offer and Make it Competitive

a. Have multiple language landing pages with LOCAL content. What resonates with consumers from Des Moines, Iowa, may be quite different with those consumers from Paris, France.

b. Make your offer unique – incorporate video (www.livefaceonweb.com is a cheap way to go for commercials), click to call technology, testimonials, open untapped geographies, accept multiple currencies, offer a soft sell approach (hook consumers in with lead gen or free trial), explore different pricing models, offer to run contests, etc.

c. Communicate the demographics of your customers to the affiliate network. This will help affiliates better target your market and will help them achieve a higher ROI, which means more volume and quality traffic for you.

d. What is your value proposition? How is it different and why should a network promote it? What are the features and benefits?

e. Better monetize your path to be able to offer a higher payout- monetize abandons through responder emails and exit chat windows, incorporate opt-in cross sells/up sells, monetize confirmation pages with CPC feeds, etc.

f. Be compliant – read up on recent FTC online marketing regulations, Can-Spam, new credit card regulations, and other best practices literature.

4) Know Your Traffic Types

a. Traffic sources have changed over the years. It’s no longer just web, email and search. The more traffic sources you can accept, the argument goes, the more volume you can expect. Consider virtual monetization facebook applications, social media advertising, mobile and CPA TV/Radio ad networks (like RevShare) as possible traffic sources. Note that traffic quality will differ between traffic types, so I would consider testing these before accepting this traffic on a network. If you’ve found that email works best for your type of offer, share your success with the network so that traffic type can be better leveraged.

5) Know Your Technology

a. Make sure you can track affiliate network traffic. There are many off the shelf applications, including Direct Track, Hitpath, Affiliate Pro, etc. that do a decent job and don’t break the bank.

6) Make Sure Your Offer is Optimized

a. Affiliates don’t like to be guinea pigs so test your offer through media buys and make sure your landing page and digital assets (banners, emails, etc.) have been optimized for network distribution. If affiliates get burned, they won’t want to run your offer again. There are many books, whitepapers and sites on multivariate testing/analytics and best practices so reviewing these could prove helpful. Google Website Optimizer is a free application for analytics worth using as well.

b. In terms of landing page best practices, be mindful of what attributes your page should have. Remember: the site must build Trust, must service a Need, must Help them with something, and give it to them in a Hurry.

7) Know Thy Network

a. Let’s face it, there are 100’s of affiliate networks out there. This is what happens when there are low barriers to entry, high demand and commoditized technologies in an industry. Not all networks are equal however. Make sure they have excellent affiliate screening processes, fraud detection technologies, great reputations (check out wickedfire and other blogs/forums), are connected to good industry associations (like the Performance Marketing Alliance) and have an appropriate affiliate base to promote your offer. Interview your network as much as they interview you and leverage performance marketing groups in social media sites like LinkedIn to obtain more feedback from objective sources.

b. Working with multiple networks – this idea that if you work with more networks, the more money you’ll make. This is not entirely true. Given the optics that affiliates have these days through offer engines, the industry has been greatly commoditized. As such, affiliate networks are increasingly competing on price and when advertisers work with multiple networks, affiliates will leverage this and bounce from one network to a higher paying one. Ultimately the networks experience margin erosion so much that they need to call the advertiser and ask for a higher payout – therefore costing you more money. I would suggest working with 1-3 good networks max.

We’ve all heard the cliché, “Your success is our success” and that couldn’t be more true when working with affiliate networks. They can be valuable partners in your overall marketing strategy, so in the interest in making performance marketing successful for you, make sure to do your homework.

Should you have any questions or would like to chat, I’m always available at jmossanen@mediatrust.com.

I just got off the phone with Mark Roth, the CEO of OfferVault and AffiliCert. I asked him to pen a guest post to bring us all up to speed on AffiliCert’s progress. As most of you know, AffiliCert is attacking the problem of publisher fraud from the private sector. They hope that their efforts will lead to an industry of certified and verified publishers. Mark’s overview is below:

For those not familiar, Affilicert is an affiliate certification program, dedicated to combating fraud committed by affiliates in the CPA/Performance Marketing industry, and to facilitating the approval process for legitimate affiliates. We do this by providing the community of networks with a stream of legitimate affiliates who have been through our rigorous screening process.

STATUS

We are now in the final stages of development on the AffiliCert platform and expect to go live on February 22^nd. We have partnered with Payoneer a registered MasterCard Merchant Service Provider, which allows us to provide the most rigorous screening procedure in the Industry, including KYC (Know Your Customer), BSA (Bank Secrecy Act), AML (Anti-Money Laundering) and OFAC (Office of Foreign Assets Control) and many other stringent checks to assure that only legitimate affiliates obtain an AffiliCert Certification. Additional checks include, phone verification, email and physical address verification, website verifications and many other checks. With the extensive and sophisticated fraud identification procedures we are employing, we are able to certify both US based and international affiliates.

Participating networks (there are over 50 networks so far) will receive an AffiliCert network login and gain access to certification data on our approved affiliates. Networks will be able to look up affiliates by name or ID# to check certification status and will also have access to daily/weekly lists of newly certified affiliates. This list may be used as a prospecting pool from which to recruit new affiliates

OUR VALUE

As the situation exists now, each network spends an enormous amount of time screening affiliate applications, only to turn away the vast majority as potentially fraudulent and not worth the risk to do business with. Affiliate managers’ time would be far better spent helping their existing affiliates to become more successful, therefore increasing the income of all parties involved.

AffiliCert aims to take the burden of screening largely off the hands of the networks, thus freeing up the affiliate managers time for more valuable tasks.

From the legitimate affiliates’ perspective, there are great benefits as well. Any affiliate getting started in the business knows all too well the frustrations of having their applications denied by one network after another. It’s really not their fault, but they are getting caught in the cross fire, collateral damage in the fight against fraud. Now with the emergence of AffiliCert, the legitimate affiliate will have a much easier time getting approved into any of our participating networks. There will be a nominal application fee, and of course they must pass the screening process, but once issued an AffiliCert ID, it will be smooth sailing. As an added benefit, each affiliate that becomes certified, will receive an AffiliateCert debit card, issued by Payoneer. If affiliates choose to recieve commission payments this way, the CPA networks can issue payments directly to their Affilicert debit card which can be used as a credit card or to take out cash at ATM’s at thousands of locations worldwide. US residents can even transfer their funds from their card, directly into their bank account. For international affiliates, this is hands down the quickest and easiest method to get paid.

Among the many networks participating in the AffiliCert program are MediaTrust, Unique Leads, Market Leverage, Neverblue, Rextopia, Revenue Street, Elite Clicks Media, Affiliateer and Affiliate venture Group.

We are excited to be launching on February 22^nd when we will begin taking affiliate applications. Fraudsters need not apply.

This week the show is packed full of Peter Figueredo of NETexponent. We normally try to keep our segments between 2-3 minutes, but during our talk with Peter, there was so much great insight and information that we had to keep the camera rolling. I found it especially interesting to get Peter’s take on how much he thinks affiliate marketing is evolving.

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A New Era in Performance Marketing

Happy new year to all! Earlier this month at MediaTrust, during our first weekly Sales Team meeting of 2010, we reflected back on 2009 for what it was, what made it successful, pitfalls to avoid and the lessons learned. Having been involved in the CPA industry for 5 years now, I have seen a number of significant changes and trends that have taken place in performance marketing — yet nothing compares to the volatility and instability our industry is currently experiencing. As Director of Publisher Management, one of the observations I communicated to my team is that our industry is in a “new era of change”.

The new era of our industry is driven by a desire for sustainability with new regulatory and compliance guidelines impacting the majority of business practices (especially for third tier advertisers that are involved in continuity programs otherwise known as “negative billing”). These rebill-oriented free-trial campaigns reached their peak in 2009 in terms of its dominance and overall volume on most CPA networks. Much has already been written about the driving force behind all that demand, and the reasons for its popularity and success in the consumer marketplace – as well as the risks associated if left unchecked. All the players involved including; Advertisers, Networks, Affiliates (and their traffic sources) each created their own ethical boundaries by which to operate, however the amount of profit and increasing competitive pressure eventually fueled a tipping point.

From a Network standpoint, the risks associated with assuming that business models are up to standard (or ignoring potential liabilities) are simply too high. The payment structure of most networks – weekly payouts to performing Affiliates and collecting monthly or semi-monthly payments from advertisers have resulted in millions of dollars in outstanding payments from advertisers. Add to that costly litigation which can end up including Affiliates, damaging even more relationships, and the risk factor is further multiplied.

On the Publisher side, a major shift in mindset and strategy is taking place as forward thinking Affiliates re-evaluate how and what they promote. Attending Affiliate Summit West in Vegas last week was a confirmation of this as many discussions revolved around such topics such as how to realign and thrive in a climate of increasing regulation and enhanced T&C’s. Most seem to agree that many of the fundamentals are the same and that it is about seeking realistic, value-add opportunities – with the potential for scalability and healthy ROI (It was refreshing to see this new kind of eagerness and determination to work together and seek out these opportunities).

Focusing on future opportunity in 2010 looks extremely promising if we understand the drivers for change. Expect MediaTrust to be on the forefront of the latest trends and to lead the charge through significant investment in our technology and people. We are aggressively hunting for new advertising opportunities in the existing CPA pool while also swimming upstream. Our growth strategy includes selecting new and unique campaigns in niches that have high growth potential in all forms of acquisitions – CPA, Lead Gen and Rev Share. Our philosophy is that in order to be an industry leader, one must lead by example, continuously adapt and innovate in order to dominate. We highly value our partnerships but we are also selective about where and with whom we align. For those willing to adapt and innovate along the way, the future is exciting and the path to continued success is being paved with opportunity. If you are at that stage of building your business and are open to new ideas about how to grow, we invite you to have a conversation with us.

At long last, we have a winner in our Amazon Kindle Contest. We had hundreds of people enter the contest and we have chosen our winner. Anthony Kirlew is from Phoenix and he entered our contest on January 5th.

How did we choose the winner? We tried to make it as fair and simple as possible. First, we compiled the number of entries in list form. Then we used a random number generator to pick a number between the parameters set. We then counted down the list until we hit that entrant. We checked to make sure that he was following us and that he had tweeted the appropriate phrase. Anthony had met both of those criteria.

Anthony, please send an email to sparent AT mediatrust DOT com and provide your mailing address so we can ship your prize. Over the next week or so we’ll be purchasing the Kindle and loading it up with our picks for the Top 10 Marketing Books of 2009!

Congrats on winning and thank you to all those that entered!

This year’s Search Engine Strategies (SES) will have a free affiliate track. The link to the agenda is here.

The folks that run the event (same guys that publish ClickZ) tell us that they are stepping up their coverage of the affiliate performance channel to make sure that the channel is better understood and more deeply covered by the press.

This is great news for the industry as it means that more tier 2 and tier 1 advertisers will be exposed to the efficacy of the performance channel and learn how to properly leverage pay-for-results marketing.

To register for the event, head on over to the site

We look forward to seeing you at the show!

Today we released a mobile version of our blog for populat phones like the iPhone and Blackberry. That means that you can check out our great content while you’re on the go or maybe at a conference. The mobile version formats the blog in an easy to read and easy to browse format for most popular mobile devices.

We know that this isn’t earth-shattering in terms of technological advances, but it’s another way for us to create a better user experience while you interact with MediaTrust and our content.

Because we just released it, it should be considered Beta and there may be some kinks we’ve yet to find. If you notice any funkiness on your mobile device, please let us know in the comments.

Have a great weekend!

“Buddy, let me take you to nice strip club. The girls are clean, you will have good time, no joke. Trust me. Free ride.”

This shady and slightly aggressive offer from my cab driver was the first thing I heard after arriving in Vegas for Affiliate Summit West last week. I declined, but I heard the offer again – multiple times from multiple drivers. Fed up, I finally asked a driver why this was so common. He kept his mouth shut at first, but a $10 “donation” was enough to get him talking. I came to a vivid conclusion after our conversation: These guys are affiliate marketers!

Let me explain. The drivers (affiliates) all work for larger taxi companies (CPA networks) who have long running deals with Vegas gentlemen’s clubs (merchants). Every time a a tourist (customer) is brought to a club (conversion), an attendant (tracking link) marks down the driver’s license plate (referral code). The driver is awarded a certain number of points (commission) based on how much money the tourist is worth (eCPC). Once the driver earns a certain amount of points, the taxi network and the driver both receive a kickback. Cab drivers who bring in a high volume of clients (super affiliates) are rewarded with all sorts of extra benefits, including cash bonuses and private dances (private dances).

This point system shares many qualities with CPA networks. The amount of money a driver earns is based on factors like distance from the hotel and quality of the strip club, traits that affect the conversion rate. The more difficult it is for a driver to convert a tourist into a degenerate club goer, the higher his payout is. A club that is further away from hotels is willing to pay more for a conversion, since these locations save money on real estate costs and have a harder time attracting average tourists. High end gentlemen’s clubs pay drivers more, since they attract a more lucrative client. However, if a cab driver continuously brings dead beat tourists or college kids to high end clubs for a higher payout, he may lose his job or his legs — this is the system’s method of preventing fraud.

Why does Vegas use this system? Gentlemen’s clubs recognize that their biggest hurdle is their distance from the highly populated Vegas Strip, so they created their own affiliate marketing system to overcome the issue. Online merchants who have trouble reaching their audience do the same thing when developing affiliate campaigns. While the online climate may not be as vice-ridden as Sin City, we can learn a thing about the evolution of online marketing by taking a quick look at the real world.

Now who ever said affiliate marketing was boring?

Win an Amazon Kindle Pre-Loaded with the Top 10 Marketing Books of 2009!

Earlier today we published our picks for the Top 10 Marketing books of 2009. We believe that reading any, or all, of these books will help you to elevate your business to the next level. That said, you can go out and buy them yourself, or you can enter our swanky little contest to win an Amazon Kindle pre-loaded with these books.

You only have to do two things to enter:

1. Make sure you are following us on Twitter.

2. Tweet out the following: Attendance at ASW + @MediaTrust list of Top 10 Marketing books of ‘09 = becoming a better marketer! Details: http://bit.ly/4qIYl1 #ASW10

Because we believe in the value of education in our industry, we want to reward those that are taking the next step to expand their knowledge of Performance Marketing by attending Affiliate Summit West in Las Vegas. After you follow the instructions above to enter our contest, make sure you stop by the MediaTrust Meet Market Table #34 to drop your business card off for an extra chance to win. To be clear, you don’t have to attend ASW to enter, but it could help your chances.

We’ll be picking a winner on February 1st, so you have until then to enter. Good luck!

UPDATE: We’ve had a few inquiries, so I wanted to be clear that this contest is open to entries worldwide. So get in there and Tweet from far and wide!

Today, our publisher partners will be getting a quiet (but very significant) upgrade. (Think iPhone 3G vs. iPhone 3GS)

Our engineering and product teams have been busy optimizing our Publisher site so that the MediaTrust experience is even faster and smoother.

Marc Tibbitts, our VP of Engineering commented: “With this release, we have made huge improvements in performance across the entire application. This will mean that publishers will be more productive on the MediaTrust Platform and can spend more time earning!”

Here are some of the details of the upgrade:

Increased speed: We have reduced HTML “payload” by making use of cachable libraries so pages load even faster. We have also reduced the number of lines of code by 8x.

Even more productive user experience: We have streamlined the user interface and simplified our URLs.

We hope our publishers enjoy the upgrade! As always, we look forward to your input on further suggestions for features or improvements. Please email product@mediatrust.com with your ideas.