Affiliate Marketing:Affiliate Managers, How do you know if a product/service would not do well in an affiliate program? How do you pick the right affiliate network?
I have been managing affiliate programs for the last 5 years or so as an Outsourced Program Manager and, while I've launched successful affiliate programs and managed to make them earn significant, incremental revenue, there are some that are just not catching on. I had to pull many a plug on programs that are not getting traction as fast as clients (and their marketing budgets would allow) want to.
One thing I always explain to clients is that getting results from an affiliate program takes time (I usually give it 4-6 months to ramp up)
I would like to hear your thoughts on this. Is there a rule of thumb in terms of whether or not an affiliate program is right for a product or service and are there any strategies to make sure you don't hemorrhage marketing money on an affiliate marketing channel that's just not going to work?
Here's a few based on my experience:
- An affiliate program would not work for a company that has products with low enough margins and services/subscriptions that have short customer LTVs. With programs like these, as an affiliate manager, you are forced to formulate a commission/incentive structure that's just not going to be attractive to affiliates.
- Commission Junction, GAN, and LinkShare do really well for retail merchants who sell tangible products. They are the most expensive as far as launch costs would go but given the right mix of offers (high demand product, high enough commission rates, offline brand recall) could be the fastest to generate incremental revenue for companies. These networks are good for clients with bigger budgets and understand that, for the first few months, an affiliate program is an investment more than a profit channel.
-Digital Products (i.e. software, downloads etc.), do better in networks like Clickbank, A4D, etc.
- For clients who have limited marketing budgets, SaS is a great choice because of low monthly minimums and barriers to entry. You could spend a fair amount of time developing the program without taking huge monthly minimum hits like you would if you were in the first tier networks.
Interested to hear yours.
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In my experience, if a product/service is already selling successfully online, an affiliate program will do well with it.
It all comes down to recruiting, activating, and retaining affiliates who can reach a relevant audience.
As far as a company having slim margins that leave little for the affiliates, the commission rate doesn't really matter in isolation. It's all about the commission rate and conversion rate to arrive at the EPC.
A high converting, low margin item can yield quality affiliate commissions.
As you mentioned, budget, type of offer, etc. play a role in the best affiliate network for a given product or service. I would suggest checking which networks are being used by competitors in the vertical, as well as assessing your needs with the affiliate program.
Then, get demos with the short list of affiliate networks that make sense for the particular product/service.