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Creating a Winning E-BusinessSecond Edition
Taking Advantage of
Affiliate Marketing
Chapter 7
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Learning Objectives
• Define affiliate marketing
• Explain how affiliate programs function as
a marketing tool
• Discuss how affiliate programs can serve
as a revenue source
• List the elements of an affiliate agreement
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Learning Objectives (continued)
• Describe affiliate tracking systems and
affiliate management networks
• Identify affiliate marketing risks and
challenges
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Online AffiliateMarketing Programs
• A revenue-sharing approach to marketing and promoting an e-business– Also called associate programs or
pay-for-performance programs– Merchant or advertiser operates the program– Affiliate or publisher participates in the program
• Marketing tool for merchant• Revenue source for affiliate
• Require custom links from affiliate site to merchant site
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Online Affiliate Marketing Programs
• Pay-per-click (cost-per-click) program– Merchant pays affiliate a set fee for each
click-through from affiliate site• No action at merchant site is required
• Pay-per-lead (cost-per-lead) program– Merchant pays affiliate a set fee for each
click-through that results in action• Make a purchase• Complete a form or take a survey
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Online Affiliate Marketing Programs
• Pay-per-sale (cost-per-sale) program– Merchant pays affiliate a fee or commission on a sale
that results from a click-through
• Thousands of diverse e-businesses operate affiliate programs– Amazon.com– Dell– 1-800-FLOWERS.COM– Rackspace Managed Hosting
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Online Affiliate Marketing Programs
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Online Affiliate Marketing Programs
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Online Affiliate Marketing Programs
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Online Affiliate Marketing Programs
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Online Affiliate Marketing Programs
• Advantages to merchant– Tie marketing effort directly to sales– Pay only for results
• Advantages to affiliate– Additional source of revenue for affiliate who
also sells products/services– Primary source of revenue for affiliate who
offers entertainment or information
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Online Affiliate Marketing Programs
• Participating in an affiliate program– Select the program carefully to ensure a good “fit”– Understand the terms of the affiliate agreement– Add custom links to merchant’s site from affiliate Web
pages– Build traffic at affiliate site to increase
click-throughs to merchant site
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Affiliate Tracking Systems• Allow merchant to control how it credits
click-throughs
• Monitor window of time in which affiliate can get credit for a click-through
• Record and store affiliate information
• Provide commission/fee reports
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Affiliate Tracking Systems
• Affiliate management networks– Third-party entities
• Recruit affiliates• Manage affiliate registration process• Track click-throughs• Credit affiliates with click-throughs• Arrange for commission/fee reporting and payment
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Affiliate Tracking Systems
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Affiliate Tracking Systems
• Well-established affiliate management networks– Commission Junction– LinkShare
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Affiliate Tracking Systems
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Affiliate Tracking Systems
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Affiliate Tracking Systems
• Affiliate tracking technologies– Custom links containing affiliate information or
affiliate and merchant information– Tracking cookies– Third-party tracking software– Application service provider tracking service
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Affiliate Tracking Systems
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Affiliate Tracking Systems
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Affiliate Marketing Risksand Challenges
• Unethical affiliates– Cookie stuffing
• Multiple cookies placed on visitor’s hard drive during a single visit to affiliate site
– Parasiteware• Redirects affiliate links• Replaces content of existing tracking cookies
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Affiliate Marketing Risksand Challenges
• Unethical affiliates (continued)– Spammers
• Merchant is responsible if affiliates use spam to promote sites
• Negative perception of tracking cookies– Many consumers install and use blocking
software• Block tracking cookies
• Delete tracking cookies
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Chapter Summary• Affiliate marketing is a revenue-sharing
approach to promoting an e-business’s products and services– Marketing tool for merchant– Source of revenue for affiliate
• Affiliate programs– Pay-per-click (cost-per-click)– Pay-per-lead (cost-per-lead)– Pay-per-sale (cost-per-sale)
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Chapter Summary(continued)
• Affiliate program should– Fit with affiliate’s products and services– Fit with Web site content
• Affiliate agreement defines the terms of an affiliate program
• Coded URLs and tracking cookies are used to track click-throughs
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Chapter Summary(continued)
• Affiliate management network– Recruits affiliates– Manages registration process– Tracks click-throughs– Credits referral fees and commissions to affiliate
• Risks and challenges– Unethical affiliates (cookie stuffing, parasiteware)– Negative perception of tracking cookies
