Chapter 9, Affiliate Programs
Outline
9.1
Introduction
9.2
How an Affiliate Program Works
9.3
Selecting an AffiliateProgram Reward Structure
9.3.1
PayPerClick Model
9.3.2
PayPerLead Model
9.3.3
PayPerSale Model
9.3.4
MultiTiered Model
9.3.5
Hybrid Model
9.3.6
CPM (CostPerThousand Model
9.4
Attracting Affiliates
9.5
Monitoring An Affiliate Program
9.6
Affiliate Solution Providers
9.6.1
Commission Junction
9.6.2
LinkShare
9.6.3
Be Free
9.6.4
ClickTrade
9.6.5
PlugInGo.com
9.7
Website “Stickiness”
2001 Prentice Hall, Inc. All rights reserved.
Chapter 9, Affiliate Programs
Outline
9.8
9.9
9.10
9.11
9.12
Becoming an Affiliate
Examples of Affiliate Programs
Affiliate Program Examples By Industry
Costs and Taxation of Affiliate Programs
AffiliateProgram Directories and Search Engines
2001 Prentice Hall, Inc. All rights reserved.
9.1 Introduction
• Affiliate program
– A form of partnership in which a company pays affiliates
(other companies or individuals) for prespecified actions
taken by visitors who clickthrough from an affiliate site to a
merchant site
• In this chapter, we discuss:
–
–
–
–
Costs
Benefits
Program reward structures
Programbuilding options
• Tracking and affiliate solution providers
– Directories and search engines that provide affiliate and
partneringprogram resources
2001 Prentice Hall, Inc. All rights reserved.
9.2 How an Affiliate Program Works
• New income streams
• Merchant
– The company that advertises on another company’s site
• Affiliate
– The company hosting the advertising in return for a reward
based on predetermined terms
– Affiliates act as an extended sales force
• How it works
– Merchant places banner on affiliate’s Web site
– When a person clicks through to the merchant’s site via the
advertisement on the affiliate’s site and makes a purchase, a
commission on the sale is typically awarded to the affiliate
• “Winwin" situation
2001 Prentice Hall, Inc. All rights reserved.
9.3 Selecting an AffiliateProgram
Reward Structure
• Program reward structures
–
–
–
–
–
–
Payperclick
Payperlead
Paypersale
CPM (costperthousand)
Multilevel, or multitiered
Hybrid model
• Implementation of appropriate reward structure(s)
depends on the type of site and its product mix
2001 Prentice Hall, Inc. All rights reserved.
9.3.1 PayPerClick Model
• Payperclick model
– Rewards an affiliate for each clickthrough that is generated
from a banner ad hosted by the affiliate
• A clickthrough is when a person clicks on the banner
advertisement on the affiliate site and is taken to the merchant
site
– Easy for affiliates to generate dishonest clickthroughs to
“run up the numbers”
– Sites that depend on advertising rates use this model to
increase traffic
– GoTo and Lycos
2001 Prentice Hall, Inc. All rights reserved.
9.3.2 PayPerLead Model
• Payperlead model
– Rewards affiliates based on the number of qualified leads
generated
• Potential customers that have expressed interest in a product or
service and meet requirements determined by the company
• Can include new customer registrations and having visitors
sign up to receive a newsletter or use a free demo
• Mailsweeps.com
2001 Prentice Hall, Inc. All rights reserved.
9.3.3 PayPerSale Model
• Paypersale model
– Also known as the commissionbased model
– Compensates its affiliates for each sale resulting from
affiliatehosted advertisements
– Rewards to the affiliates based on sales are typically larger
– express.com
– Virtual store
• Allows affiliates to sell merchant’s products without requiring
visitor to leave the affiliate’s site
2001 Prentice Hall, Inc. All rights reserved.
9.3.4 MultiTiered Model
• Multitiered model
– Also known as the multilevel model
• New affiliates are recruited by current affiliates, who are then
rewarded with a percentage of the new affiliates’ revenues
– Twotiered model involves only the original affiliate and its
recruits, also known as subaffiliates
• ValueClick
2001 Prentice Hall, Inc. All rights reserved.
9.3.5 Hybrid Model
• Hybrid model
–
–
–
–
Combines features of multiple models
Can make an affiliate program more competitive
Can increase the cost for the merchant
FreeShop.com
2001 Prentice Hall, Inc. All rights reserved.
9.3.6 CPM (CostPerThousand)
Model
• CPM (costperthousand) model
– Requires the merchant to pay the affiliate a fee for every
1000 visitors that simply view the merchant’s banner on the
affiliate site
– Not used as often as the other models because merchants
prefer to pay for actions
– CPM is often used to price traditional advertising methods
2001 Prentice Hall, Inc. All rights reserved.
9.4 Attracting Affiliates
• Grow affiliate program and increase profits
• Try posting announcements on message boards
• Newsgroups
– Online discussion groups
– Spamming and unwanted advertising are unwelcome and
can against rules
– Deja.com
• Directory
– A site that provides aggregated information and links to sites
relevant to specific topics
• Determine reward structures and commission
amounts of competitors
2001 Prentice Hall, Inc. All rights reserved.
9.5 Monitoring An Affiliate Program
• Use tracking information
– To analyze effectiveness of programs, make improvements,
monitor payment schedules and identify strongest affiliates
• Creating tracking solutions
– By creating duplicates of every Web page, each affiliate can
link to an individually assigned page
• Referred visitors will click through to only the mirror page
(the duplicate page) designated for that specific affiliate,
allowing companies to record these visits separately
• Costs include time, hosting and updating mirror pages,
payments, marketing, creditcard processing and customer
service
• Affiliate program software
– AffiliateZone.com, My Affiliate Program and ProTRACK
2001 Prentice Hall, Inc. All rights reserved.
9.6 Affiliate Solution Providers
• Affiliate solution providers
– Companies that can provide endtoend solutions for a
company’s affiliate program
– Recruit affiliates and merchants to participate in programs,
conduct accurate tracking, provide detailed reporting for
merchants and affiliates and distribute commissions
– Fees may be required for affiliate solution services
2001 Prentice Hall, Inc. All rights reserved.
9.6.1 Commission Junction
• Commission Junction offers design,
implementation and management services (B2B
affiliations)
– No fee to become affiliate, merchants charged a fee
– Application service is Web based
• Do not have to download or upgrade any software
– Instant tracking and reporting in real time
– Makes monthly payments to affiliates for merchants
• EnContext solution
• Services to merchants include SmartMatch
SmartTrack SmartZones SmartStats SmartServe
SmartPay
2001 Prentice Hall, Inc. All rights reserved.
9.6.2 LinkShare
• LinkShare offers affiliate programs for B2B and
B2C
• Affiliates can join payperclick, payperlead and
paypersale programs for free
• Merchants can use The LinkShare Network , a
Private Label Network or a combination of the
two to develop affiliate programs
– LinkShare Network provides merchants with access to
companies that have become affiliates through
LinkShare
• LinkShare Synergy
– Private Label Network allows merchants to sign up
affiliates through their own Web sites
2001 Prentice Hall, Inc. All rights reserved.
9.6.2 LinkShare
LinkShare’s home page. (Courtesy of LinkShare Corporation.)
2001 Prentice Hall, Inc. All rights reserved.
9.6.3 Be Free
• Be Free, Inc. BFAST (affiliateprogram enabler)
– Allows companies to target affiliates in a segmented manner
– Rewards and compensation determined by the merchant
– Be Free tracks impressions, clickthroughs and sales for both
the merchant and its affiliate partners
– Be Free records each time a promotion is viewed or acted
upon
– When a sale is made, Be Free receives information through
its connection with the merchant’s site
– Reporting.net is used to provide performance information
2001 Prentice Hall, Inc. All rights reserved.
9.6.3 Be Free
Be Free’s performance-marketing for page merchant. (Courtesy of Be Free, Inc.)
2001 Prentice Hall, Inc. All rights reserved.
9.6.3 Be Free
Be Free demonstration: How promotions work, step 1. (Courtesy of Be Free, Inc.)
2001 Prentice Hall, Inc. All rights reserved.
9.6.4 ClickTrade
• ClickTrade is part of Microsoft bCentral
• Webbased service provides tracking and payment
services
• Payperlead, paypersale or hybridmodel
program
• Merchants have control over affiliate links and
banners
• Charges 30 percent of any merchant payments to
affiliates
• Companies can sign up to be affiliates for free
• Provides reports including tracking of affiliates
2001 Prentice Hall, Inc. All rights reserved.
9.6.5 PlugInGo.com
• PlugInGo.com Affiliate Network
–
–
–
–
–
–
–
–
Webbased solution for affiliate programs
Affiliate Mail Center
Online message boards
Rewards members through PlugInGo Points that Pay
Reports can be produced daily, weekly or monthly
Performs paymentprocessing services
Companies can join as affiliates for free
Charges onetime setup fee and a commission of two percent
of every sale or lead made through the network
2001 Prentice Hall, Inc. All rights reserved.
9.7 Website “Stickiness”
• Stickiness of a site
– The ability to keep people at a site and interested in its
content
• Update content frequently, carefully organize a
site, provide quality customer service to keep
visitors browsing
• Merchants can offer virtual stores to affiliates
– Offer ecommerce capabilities to sites that want to
participate in affiliate programs, but also want to keep
visitors at their sites
• Nexchange and CrossCommerce
– Can control their brands’ presentation on affiliate sites
2001 Prentice Hall, Inc. All rights reserved.
9.7 Vstore.com Feature
• Vcommerce Corporation provides sites with
storehosting opportunities through vstore
.com
– Manages creditcard transactions, order fulfillment,
customer service and hosting of the storefront
– Provides stepbystep process for design and
implementation
• Select a category from the listed choices
• Select a subcategory to further concentrate on a particular
market
• Choose a store design, store colors and store typography
• Personalize store with a name, slogan and logo.
• Provide personal information such as email address, name,
phone number and commission payment information
2001 Prentice Hall, Inc. All rights reserved.
9.7 Vstore.com Feature
Sample store from vstore.com. (Courtesy of Vcommerce Corporation.)
2001 Prentice Hall, Inc. All rights reserved.