CCT356: Online Advertising and

MarketingClass 4:

Affiliate Marketing

AdministrationArticles?

First assignment (online ad critique)?

Reminder: terms at the beginning of every chapter are potentially testable

Affiliate and Affinity Marketing

Similar to word of mouth marketing – recommendations from friends drive business

Affiliation formalizes recommendations – a bit of a kick back for referring friends

Performance marketing – more referrals, more $

Examples?

MLM as the dark side – more on that later

Early historyMany traffic building networks (web/blog rings,

etc.)

Early history of rewards in adult services (many early e-commerce/advertising innovations come from this industry!)

Amazon affiliate program – selling books and other products through individual blogs, etc. – marketing done by others, execution of sale done by Amazon

Affiliate Network BasicsVisitor visits affiliate

Acquisition is triggered, purchase at merchant

Tracking of where sale was triggered

Reward for passing on sale

Common RewardsCost per action/acquisition (CPA) – fixed

commission on sale

Cost per lead (CPL) – fixed commission for potential sale/lead (often more complex deals)

Revenue sharing – percentage of sales returned

Cost per click (CPC) – more traffic building than acquisition centered, prone to click fraud

Affinity reward points (e.g., AirMiles, cash back, etc.)

TrackingInternet affiliate programs = automatic tracking

of referrals

Often embedded in URL - text example

Stats collected on impressions, clickthrough, and conversions

Sets up a cookie – cookies are essential in this process.

Why? What do cookies do?

Where things go wrongMultiple referrals, one sale

Alternate models of sale

Technical clashes (e.g., cookie timeouts, changes in data structure, lifelong cookies)

Cookie filters/purging

Attribution issueshttp://www.slideshare.net/AT-Internet/attribution-

in-online-marketing-white-paper-at-internet

Do you aware consumer’s remembered choice? First reference? Last? Some mix of all the above?

Multi-plaftorm, multi-touchpoint models get very confusing very quickly – examples?

ConsiderationsWho are competitors? What are their affiliate

networks? (And are they exclusive?)

Who are your target affiliates? (And who may not be your best targets?)

Network considerations – what’s the model, commission tiers, support, cookie expectations etc.

Potential international issues?

Related: Affinity ProgramsMore customer retention than acquisition –

keeping people coming back by rewards

E.g., Air Miles, Aeroplan to simple things (e.g., coffee stamp cards, etc.)

Benefits?

Drawbacks?

Related: Zynga Games Billions of game requests on Facebook

Games all similar – easy to start, slow but steady growth model

Acquiring certain objects require friends’ participation, leading to referral model for user base growth – friends draft friends to play

If you don’t want to bother your friends, you can buy currency to buy out

Best farms on Farmville are bought or really good at annoying friends

Cross-marketing of new properties – games plug themselves

Enough for $7 billion market cap…although a bad reputation

Related: Pyramid/MLM schemes

The dark side of affiliate marketing?

Chains of referrals – tiered commissions based on your location in referral network

People at the bottom – only benefit when lower levels are added

People at the top of the pyramid – consistent revenue even if they are doing nothing

A warning on getting involved…

Examples?

Related: Social Media Marketing

Referrals without reward – more authentically WOM

Some reward structure at times (e.g., Facebook contests, etc.) but more leveraging good words, references

More on that to come in a few weeks

Next weekSEM/SEO – what kinds of things do we need to

cover there?

Following week – marketing strategy