Partner marketing, sometimes referred to as affiliate marketing, or performance marketing is rapidly growing on the web. Parallel to a manufacturing company running a channel of distributors, it helps online companies spread their product faster and deeper than would normally be possible with internal resources alone.
Online Marketing wise, a strong partner channel can help lower your overall cost of acquiring new customers (CPA) while exposing you to niches you wouldn’t be able to tap using your own marketing team (local markets, large websites, groups, and more). Properly executed, a company can gain a substantial competitive advantage in the marketplace, by recruiting numerous active promoters on the web.
Building the channel, however, is a multi-dimensional undertaking. It involves:
- Integrating (or building) a proper affiliate tracking and reporting system.
- Putting together a team to support and incentivize partners.
- Modifying finance procedures to support large-scale payouts (a successful company may have thousands of affiliate partners).
- Ensuring the channel is adhering to company’s brand and Marcom policy.
In this article, I’ll try to provide a useful overview for companies considering entering or expanding their partner marketing channel.
Tracking and Reporting Platform
There are certain functions any system should support. These are the main:
Providing Tracked Links
The system should provide the tracking template for partner links, with static affiliate ID’s and at least one dynamic parameter. A dynamic parameter is a real must have for a high utility tracking platform. It allows dynamic tracking of traffic, beyond the “static” partner id. What is means is that the partner can segment the traffic they are sending to you, according to their logical breakdown and granularity level. By reporting this traffic back to the partner, you allow them to optimize the traffic they are sending to you, and generate more leads / sales.
The system should ideally support referring traffic to any landing page on the website, and not just a pre-defined set of pages or a dedicated partner page. This will help partners to test and optimize their traffic, and generate more conversions for the advertiser.
The reporting system should be an online system accessible 24/7, that is ideally updated in near real time, or several hours (to 24 hours) delay.
It should include a dashboard with the financial snapshot consisting of a balance and payment status.
The Bare Essentials
- Main metrics (clicks, registrations, sales, revenue) on a daily breakdown
- Country, device and landing page breakdown for main metrics
- Support and report on at least 1 dynamic parameter – they may sometimes be called sub ID’s…etc. the concept is that an additional parameter beyond the static affiliate ID parameter can be sent and tracked
- Current balance and paid invoices
- Export to Excel / CSV
- Contact details of an affiliate manager
- Nice to have: Overtime comparison: days of the month, month over month, week over week,…etc. using friendly dashboard/graphs
Powerful Feature – Postback / Server to Server Pixel Integration
- This allows a meaningful conversion event (registration/activation/approval) to be sent from the advertiser server to the partner server.
- Description: the system renders near-real-time notifications of new registrations and transactions of the users referred to your system. The data is sent back to affiliate server upon a GET- or a POST-request.
Providing Marketing Material
The system shall provide marketing banners, in all available languages in the sizes, featuring your latest promotions/features /…etc..
The system should provide suggestions on existing/recommended landing pages (a “killer feature” would be to provide conversion rates per landing page), by language and /or by country.
Tools and Widgets
If you have tools and widgets that can be useful to users, consider exporting them for partners to use.
In case you have great content relevant for marketing, consider exporting it (with proper canonical tagging) for partners to use.
Build vs. Buy
Developing a full blown and effective affiliate system is a large-scale task. Most companies that take their first steps in the channel are better off using a 3rd party affiliate system. This will cost a fraction of the time and money compared to custom development and will expedite the critical “time to market” factor. Furthermore, modern systems such as the ones listed below offer significant customization options.
Among some of the leading tracking/affiliate systems to consider are:
Advanced affiliate marketers may, however, find substantial advantages in building their own system for maximum control and flexibility. This does not need to happen on day 1 or 2, but long-term – should be an option.
Management of the Channel
To properly manage the affiliate channel, a dedicated team will be needed. It can start off small and scale with the growth of the channel. The team’s main functions are:
- Approving and onboarding new partners.
- Working with partners to optimize their traffic for best results.
- Nurturing tier 1 partners with dedicated help, tips, custom deals and promotions.
- Support and troubleshooting.
- Ensuring timely payment.
Rewarding partners should be generous. In the digital economy, the cost of sale for any incremental unit is nearly zero, and the main cost component is marketing.
Bear in mind that the partner is sending user traffic to your website, with no guarantee for any payment, thus taking the full risk upon themselves. This risk should be rewarded broadly if the traffic is turning into actual business. In a competitive market, those that nurture their partners are the ones that get the lion’s share of visibility and traffic.
The following shortcomings will inevitably lead to failure of the channel:
- Bad affiliate system.
- Offering comparatively low payouts.
- Not paying on time – this is a no-no generally in business, but even more so, in a performance based channel.
- Calculating ROI too early – when paying on CPA (cost per action) basis, the advertiser typically takes into account the expected lifetime value of new customers (LTV). However, depending on your pricing model, don’t expect this LTV to be fully realized right away, or just after a short while. It’s advised to give any new channel a certain grace period to grow and to prove its value.
- Failing to actively manage the relationship with major partners.
Summary – Is the Channel Right for You?
The answer depends on your type of product and your marketing strategy. The more online and consumer oriented your product is, the more it makes sense to develop the channel.
Partner marketing should generally not be your first marketing activity. You need a certain maturity, so it’s better to start off with direct marketing via search, social and other channels, and after reaching a level of maturity – and needing more scale – entering performance marketing.