Earlier today a misguided individual wrote an article proposing that affiliate marketing was broken. My first instinct was to shake my fist, stand up for my industry, and rip this guy apart. But the more I thought about it the more I saw unfortunately he was right. Kind of…
When he says “The goal for all ecommerce marketers should be incremental sales growth, but that is hard to do when you’re paying twice for an incremental sale with these coupon affiliate sites” he is pretty much correct. It is nearly impossible to have an effective affiliate channel when all you are doing is paying coupon sites for non-incremental behavior.
The big problem here, however, is he paints the whole industry with that big, wide brush. Of course there are a lot of mis-managed affiliate programs out there that are run by people who wouldn’t know what an incremental sale was if it came into their house, gave them a foot rub and a big bowl of ice cream. Sadly enough there are more of these types of merchants and affiliate programs in the industry than there should be. And even sadder many of these are large programs for major retailers. They are wasting SO much money in their affiliate channel that they would be better off scrapping it all together.
Eric’s problem with the industry is exacerbated even more because he is looking at networks that aren’t necessarily known in the industry for having the best interests of the merchants at heart. CJ, LinkShare, and EEAN (the affiliate networks he mentions) push these non-incremental sales practices whenever the can because it lines their pockets.
But here’s the thing: An affiliate program doesn’t have to be run this way and affiliate marketing is definitely NOT broken. There are some awesome affiliate managers out there that know how to manage an affiliate program that generates incremental sales, can recruit content sites and bloggers, know how to work with the coupon sites to generate incremental sales and minimize the non-incremental behavior, and in general run a program that can be a profit center for the merchant.
So what is a merchant to do?
1. Work with a qualified, experience affiliate manager – Don’t just pawn the affiliate program off on an intern, general marketing agency, or someone in the marketing department who has no experience in the industry. This is where most merchants go wrong. Hire someone qualified internally to focus on the affiliate program if the program is big enough to justify a full time employee or outsource it to someone who knows what they are doing. If you need any recommendations please email me and I will be more than happy to connect you with some great affiliate managers who know how to make you money.
2. Work with an ethical affiliate network – Shareasale.com and Avantlink.com are the two networks I would recommend. In my opinion any network beyond those two will be a waste of your money.
3. Whatever you do, don’t let the network manage your program – First of all, it is way too expensive to start. Second of all, they are paid a percentage of the sales so the more sales they make the more they earn. Problem is they are just looking to increase their sales numbers however they can and that leads to encouraging non-incremental behavior from coupon sites, toolbars, adware, etc.
4. Allocate the proper resources – If you want quality affiliate management you have to pay for it but you do truly get what you pay for. If you only want to pay $500 a month you will not see any decent results. Also, you need to be ready to reward incremental behavior. Those costs can be offset by reducing the non-incremental behavior though and in the long run a well managed program will be much less expensive for you.
The affiliate channel can definitely be a benefit to your business if it is run properly. There are no short cuts, it isn’t easy, and it isn’t something a lot of people know how to do but in nearly every case it is definitely possible to have an affiliate program that can make money for the merchant and be beneficial to their business. Drop me an email and I would be happy to point you in the right direction. Affiliate marketing is NOT broken. Bad affiliate marketing is broken but good affiliate marketing is not broken. Not by a long shot.
This is fantastic and spot on. I’ve been in this business now about 10 years and have only seen it grow stronger because there are better OPM’s and Affiliate managers then in the past that actually do care about and watch out for both their affiliates and their merchants, the way it should be.
Well said. The key is quality management.
I disagree. I believe affiliate marketing is dead and has been for a long time. Most people just haven’t seen it. Why you ask, it’s simple – Most affiliate marketers are not the brightest marketers online and simply follow what they believe to be an easy way to make money. This hence generates fraud – bogus clicks, impressions, opens, etc. I believe affiliate marketing has been dead since the company I work for got out of it in 2005. The writing was on the wall and the smart marketers saw it. Why run traffic through a middle man who’s going to skim and possibly not pay you, if you’re a publisher. If you’re an advertiser, why have to deal with junk leads, BOT clickers or fraudulent traffic when you don’t have to? There are much easier ways than trying to generate leads, clicks, impressions or sales from affiliate marketing – and no scammers to deal with.
The other problem with the industry is that there are a lot of scumbags who continue to screw people and not pay their bills, then change their company name and keep it going.
The problem for publishers – You’re 3 months into driving traffic before you realize you are not getting paid.
The problem for advertisers – You’re 3 months into it (and have paid for the traffic) before you realize the traffic, leads and impressions are junk.
If I threw a party at my house and some of the people I invited broke my furniture, pissed on the walls, and threw garbage everywhere would I invite them to another party? Of course not.
Merchants and affiliate managers can choose who they want to work with. If they choose to work with fraudulent affiliates, toolbars, bad coupon sites, etc. of course their program will be garbage. But if they know what they are doing they know which affiliates they should work with, how to recruit quality affiliates, how to minimize bad behavior and so on.
Of course there are scumbags in this industry and I could send you a pretty decent sized list of them but I could also send you an equally large list of merchants, affiliates, and other people in the industry who are great at what they do, know how to drive incremental revenue, and do things the “right” way.
Well said. “I think PPC is broken because I slapped a few random keywords together with no research and let the campaign run on autopilot. I just spent lot of money on nothing!” If you drop an affiliate program into a network and let it run on autopilot, you’re going to get exactly what the author of the other article described.
Like any other legitimate marketing channel, what you get out of affiliate marketing is directly correlated to what you put into it. Affiliate marketing works but you have to know how to set up and run your program to work for both you and affiliates. Like every other marketing channel, to be successful, a program has to be actively managed by someone who understands it.