Promotions: Marketing and Sales 8.12. Affiliate Marketing Networks

Most online advertising is affiliate marketing. It looks, feels, acts, and quacks just like other Web advertising. It differs, however, in how you pay Web publishers to display your ads. For non-affiliate advertising, you usually pay for the number of impressions (CPM or “cost-per-mil” with a mil being 1,000 impressions) or the number of clicks (CPC or “cost-per-click”). But impressions really don’t mean much in terms of revenues and clicks can be faked, so Web site advertisers began paying publishers for how well the ads perform. Paying Web publishers for how well ads perform is what we mean by affiliate marketing―and it also explains why affiliate marketing is often called performance marketing.

In a performance pricing model, you only pay a Web publisher when a visitor clicks an ad, comes to your site, and does something that has value to you, like leave their contact information (cost-per-lead), call your sales department (cost-per-call), or, better yet, buy something. If you’re paying a Web publisher for the “actions,” such as leaving contact information, that a user performs once they come to your site, you’re employing a “cost-per-action” (CPA) pricing model. If you’re sharing revenues from online sales with a Web publisher, you’re employing a “cost-per-sale” (CPS) pricing model. CPS was the original affiliate marketing model pioneered by CDNow and in the mid-1990’s. For instance, in 1995, CDNow encouraged Web publishers to review CDs and link their reviews to CDNow’s product catalog. If a user followed the link and bought the CD, CDNow shared 10% of the revenue with the affiliate.

Where do you find affiliates? Well, you can troll the Web, find some Web site owners, and call them. If they agree to advertise for you, you then set up affiliate tracking software (8.13) so that you can properly compensate your affiliates as well as measure the effectiveness of your campaigns. Where should you look?

  • Personal Web sites―this is where affiliate marketing got its start.
  • Blogs―fast becoming one of the most effective affiliate marketing sources
  • Content and niche sites, particularly sites that review products
  • Comparison shopping sites
  • Shopping or other niche directories (sometimes called affiliate directories)
  • Coupon and rebate sites

Alternatively, you can use an affiliate network, which, like a banner or exit exchange, is a set of member sites that accept affiliate advertising. Also called CPA networks, these networks handle all the affiliate management: they set up and maintain the relationship with the affiliate, they install the tracking software. All you do is put your offer out on to the network. Of course, you never get to have a relationship with any of the affiliates―the names, Web sites, and contact information belongs to the network, not you.

Finally, you could hire an affiliate management company that initiates contacts and negotiates contracts, but most start-ups don’t have the resources to afford these services.

How and what do you pay an affiliate? Any way you and the affiliate deem is fair. About 80% of affiliate marketing relationships involve some form of revenue sharing or CPS, that is, the affiliates get some percentage of the sales they help produce. The typical commission is 10% of the sale.

About 20% of affiliate marketing relationships use some form of Cost Per Action (CPA) payment method―for instance, an affiliate gets $2 for every lead they generate.

If you are using an affiliate network, the network administrator typically takes 20% to 30% of what you pay an affiliate―it doesn’t matter if you’re using a CPS or CPA pricing model. So, in the CPA instance above, when you pay your affiliate $2, you also pay the affiliate marketer $0.40 to $0.60.

8.12.1. Azoogle Ads

Azoogle Ads is one of the largest and most respected CPA networks in the U.S. In operation since 2000, they offer both targeted and untargeted CPA advertising on an affiliate network that includes search engine portals, content sites, contextual sites, and newsletters.

Azoogle Ads is an RFP marketplace. You place your ad specifications (including the ad, day part, geographical region, contextual parameters, etc.) and pricing model in an RFP. Web publishers have dynamic accounts with Azoogle Ads and are constantly monitoring offers and ad performance. A publisher will only see your offer if their site fits your RFP criteria.

Azoogle differentiates itself from other CPA networks based on its software tracking system which includes powerful tools for both advertiser and publishers to maximize their results.

The network supports text, search, banner, and email advertising.

8.12.2. LinkShare

LinkShare is one of the oldest and most respected affiliate marketing management companies and networks in the U.S. and abroad, attracting some of the biggest Web advertisers such as Toshiba, Macy’s, and ATT. Because they are primarily an affiliate marketing management company, their prices can be fairly steep. You must contact a sales representative to work out pricing.

In addition to their network and services, LinkShare’s Synergy Analytics is one of the best affiliate management marketing software packages.

8.12.3. DirectLeads

DirectLeads, owned by DirectReponse, is a network of screened affiliates and proprietary sites (such as coupon and shopping comparison sites). Using either a CPA or CPS pricing model, you pay DirectLeads and they pay the affiliates about 75% to 80% of the performance fee.

DirectResponse also runs DirectClicks, an affiliate marketing network using a pay-per-click model (CPC). Again, you pay DirectClicks for each Web site visitor and they pass on about 75% to 80% of the fee to the affiliate.

8.12.4. ShareASale/FineClicks is a highly respected affiliate network that has signed on more than 2,000 Web-based merchants. Sharesale only runs banner-based CPS (cost-per-sale) affiliate marketing.

The process works like this. You upload your banner ad. You then set a percentage or flat-fee payout for every sale that an affiliate generates. Affiliates then either subscribe or not to your advertising campaign. Sharesale records any sale made through an affiliate and deducts the affiliate payment from your account. When your account runs down to zero, your ad stops appearing on affiliate sites.

Sharesale takes an additional 20% of the amount you pay any affiliate as its operating fee; you must pay a minimum of $25 per month in fees. There is also a $350 fee to set up tracking software on your Web server and a $100 minimum account balance requirement.

Sharesale recently acquired FineClicks, one of the oldest affiliate networks. With FineClicks, you set your ad parameters and payout and FineClicks places the ad on affiliate sites. For their efforts, FineClicks takes 20% to 30% of any CPA or CPS commissions and 35% of any CPC payouts. While there is no setup fee, FineClicks demands a minimum $350 deposit.

FineClicks works the same way as Sharesale. The system tracks leads, clicks, or sales generated through an affiliate partner, pays the affiliates, and deducts the payment from your account. When your account reaches zero, your ads stop appearing.

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