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Affiliate marketing:
is it a good way to increase profits?
Università degli Studi di Bari Aldo Moro
Facoltà di Economia
Corso di Laurea in Economia e Commercio
Anno Accademico 2011-2012
Introduction
• Nowadays almost 30% of the world’s
population has Internet access: around 2
billion people
• 32 billion hours spent online every month!
(Source: Go-Gulf)
Italian Internet users are estimated to be close
to 26 million, with a great growth since 2001
(source: Mclink)
Millions of Italian Internet users
30
25
20
15
Millions of users
10
5
0
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
• What happens during those billions of hours
spent online every month?
• Who earns money?
General info
Definition: affiliate marketing is a type of performance-based
marketing in which a business rewards one or more affiliates for
each visitor or customer brought about by the affiliate’s own
marketing efforts.
The players of affiliate marketing are:
• the merchant, also called “retailer” or “brand”
• the publisher, also known as the affiliate
• the customer.
Merchant
Publisher
Customer
• One of the best ways to earn money online (Robert
Kiyosaki)
• Many hard-working affiliates made a fortune
How does affiliate marketing work?
• A company sets-up an affiliate marketing program
• The webmaster signs up to the program as an
affiliate
• The webmaster publishes banners or links
• A random visitor clicks on a banner/link
• The company’s web server is programmed so that
the visitor will be sent to the webpage for the
product/service promoted.
Short history
Referral
marketing
William
Tobin
• Affiliate marketing nowadays
Amazon
Future growth: mobile market, social medias, social gaming
In-house vs outsourced affiliate
programs
Affiliate programs are the means through which
affiliate marketing works
What should a company do before
launching an affiliate program?
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Competitor analysis
Commercials
Creatives
Communication
Campaign analysis
Affiliate programs
In-house
Outsourced
Direct
control
Use of a
network
Money saved
on
commissions
Fast growth
In-house
Outsourced
Connections may be limited and finding new
affiliates might prove to be a challenge
Experienced managers have already estabilished
an extensive network of affiliates
It is risky to hire an unexperienced affiliate
manager
Experienced managers know what works and
what does not
This is not a one person job. It requires
networking and people skills, technical expertise,
graphic design and newsletter management
Estabilished managers will have a team of
experts to handle all facets of affiliate program
management
Often, program management is a secondary task
for in-house managers as other responsibilities
take priority
The managers focus in on managing an affiliate
program with few distractions
Many in-house managers have an employee
mentality, requiring direction and permission on
even the smallest decisions
Managers are business owners. Their income is
based on performance, giving them incentive to
do good work
Affiliates need to deal with several affiliate
managers for several different companies
Often the manager acts as one point of contact
for multiple merchants, making it easier for the
affiliate to promote several programs at once
Affiliate networks
“Affiliate networks act as an intermediary between
affiliates and the merchant’s affiliate program”
Benefits:
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easy and free to join
all tracking and payments are done by one network
easy way to get deals with big companies
wide offer of banners that can be perfectly added to
every website
• chance to check every affiliate program’s record
before applying
The main affiliate networks
• Main ones: Tradedoubler, Zanox, Sprintrade,
Netaffiliation, AffiliateWindow, Webgains, Buy.
• How they earn their transaction fees
Tradedoubler: 1,900 advertisers and 138,000
publishers. Yearly gross revenue: 73 million €
Zanox: 4,000 merchants; more than 1 million
publishers. Yearly gross revenue: 77 million €
Reward plans
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CPM (Cost-per-Mille)
CPC (Cost-per-Click)
CPL (Cost-per-Lead)
CPA (Cost-per-Action)
How can a publisher drive traffic to his
website?
• SEM – Search Engine Marketing
• DEM – Direct Email Marketing
• Social media marketing
Statistics  Google Analytics
Case studies
Case study #1
Client: Hyundai
Affiliate network: Tradedoubler
Reward plan: CPL
Goal: generate 1,000 sign-ups for a newsletter with a
chance to win a €20 fuel voucher
Duration: 5 weeks
Results: 1,156 unique visitors, 1,000 sign-ups
Case study #2
Client: Bimbomarket
Affiliate network: Zanox
Reward plan: CPS
Goal: increase sales
Duration: 2009-ongoing
Results: sales increased by 25% during the first weeks;
new customers all around Europe
Case study #3
Publisher: Paolo Moro
Affiliate network: Tradedoubler
Duration: 2002-2008
Revenues: €125,369.48
Case study #4
Publisher: John Chow
Affiliate networks/programs: several
Duration: 1 year
Revenues: more than $500,000! Currently he earns up
to $40,000 each month with affiliate marketing.
Alternatives
• Print advertising
• Television advertising
• Telemarketing
The main problems related to affiliate
marketing are:
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Email spam
Virus
Spoofing
Affiliate’s incentives
Conclusions
For further info:
www.affiliatemarketing.nicoladisisto.ws
[email protected]