Affiliate marketing – Solving the affiliate puzzle

Considered a murky world by many, affiliate marketing now plays an influential role in the advertising schedules of travel brands. Adam Woods investigates


It is curious that affiliate marketing retains something of a low profile, given that there can’t be many marketing channels that deploy quite so many people as this one.


The prevalent picture of affiliate marketing today, as painted by both the networks who collectively manage the system and the retailers who pay for it, is one in which merchants benefit vastly from huge, loyal, virtual sales forces made up of many different kinds of websites, both amateur and professional.


The numbers are there to support such an assessment. Networks have redoubled their professionalism and creativity in recent years, with the effect that the growth of the affiliate marketing channel in 2006 was unmatched by any other form of online advertising besides search, netting £2.16 billion in sales for UK-based merchants.


These days, affiliates – now referred to in the trade as publishers – no longer simply host forlorn, seldom-refreshed banner ads on amateurish and occasionally inappropriate sites; they create relevant content and brands of their own to draw traffic on behalf of their clients. And while blogs and tiny, one-man websites still help to harvest the Long Tail, they can also act as fierce, credible brand advocates, sowing positive referrals for their advertisers as they roam the web on their own travels.


The strength of affiliate marketing is in the sheer number and diversity of stakeholders, according to TUI new media affiliates manager Peter Norwood.


“If you are doing a search campaign, you have got a search agency, you have got a media-buying agency and that’s it,” he says. “If you are doing affiliate marketing, you can build up a multitude of relationships.”


As larger companies have come on board, there is a sense among networks that brands are becoming more aware of the need to invest in the channel and integrate it with their overall online marketing strategy, feeding appropriate creative to publishers as seasons, offers and real-world priorities change.


The remarkable fact about successful affiliate programmes across the board is the way they adapt the best practices of the offline sales world. Intelligent networks are developing relationships between the most prolific affiliates and the brands themselves, organising face-to-face events and feeding the travel agents’ content, such as editorial, video guides to particular destinations, even offers on real-time inventory, to third-party publishers.


If it all sounds familiar, it should. “My take on affiliate marketing has always been that the travel industry, although not necessarily an early adopter on the technology front, was by far the earliest adopter of the concept – because high-street agents have been acting as affiliates for more than 30 years,” says David Hall, head of communications at affiliate marketing specialist Affiliate Window, which counts the likes of SilverJet, Page and Moy, Warner and LowCostBeds as merchants.


Aggregators such as Lastminute and Expedia, for whom affiliate marketing is a fairly obvious bolt-on, have made highly effective use of affiliate marketing.


Leading independent affiliate network Buy.at picked up the Best Use of Affiliate Advertising prize at the Travolution Awards in April for its work with LateRooms, the late-availability hotel database, which generated a return of almost £2 million in sales.


But the revolution in the travel sector has been the migration of the inventory owners themselves into the space that was once dominated by online aggregators such as Lastminute and Expedia, for whom affiliate marketing was a fairly obvious bolt-on.


TUI saw immediate returns when it turned its attention to affiliate marketing little more than a year ago (see case study), while the client lists of leading operators such as Commission Junction, Affiliate Future, Buy.at, Digital Window, TradeDoubler and Webgains read like a comprehensive run-down of the travel industry’s key names.


If there is a secret art to successful affiliate marketing, besides the tracking technology that makes it all run, Buy.at chief executive Kevin Cornils believes it to be good account management. Where a network representative has employed intelligence and creativity to identify appropriate partners for a given campaign and given them the resources to empower themselves, he suggests, you will see affiliate marketing making a genuine difference.


“Account management is probably the most underestimated factor in terms of its importance, certainly outside the affiliate marketing community,” he says. “While there might be some overlap in the more general travel sites we use, each of the campaigns is very different.”


The perfect affiliate, for travel firms, is one who is prepared to put some work into their site, creating their own editorial content, making intelligent use of the material supplied and even generating their own brand.


Beyond this, the beauty of the model is in its ability to draw together many different online voices, loud and quiet. For instance, a cruise brand’s affiliate network might include everything from the larger price-comparison and incentive sites, down to blogs run by cruise-obsessed individuals.


While it might be nice to imagine that affiliate sites can generate loyal traffic of their own, in practice most of them will attract consumers with paid search. That means a good affiliate will often also have some search expertise, and consequently it is no surprise that, as the market has grown and the need for technological know-how has become more pressing, dedicated affiliates have begun building genuine businesses of their own to maximise their effectiveness.


“Three years ago, the average affiliate might have been working on their own, probably part-time, and now the bigger ones have developed into proper firms in their own right, with search marketing specialists, web developers, designers, the whole lot,” says Cornils.


The development is largely a positive one, as it means affiliates are bringing their own resources to bear on their advertisers’ brands. But without clear guidance, it can get complicated, particularly where brand-bidding is concerned.


There are companies that allow their affiliates and resellers to bid on their flagship brands and pull in as much traffic as they can by those means, but those who don’t permit the practice have good reasons. Competition over key words drives up search costs for all, including the brand itself.


“These days, it is a bit more sophisticated than ‘yes, you can’ or ‘no, you can’t’,” says Mike Teasdale, planning director at multi-disciplinary online agency Harvest Digital.


“More often, brands are prepared to let their affiliates bid on brand terms, but with conditions: they don’t want to see you higher than position three, for instance, or that you can’t bid over this amount.”


A parallel danger for brands wary of being hijacked by their own affiliates is that they end up hamstringing their own ‘sales force’.


Some companies take such a hard line on brand-bidding among their affiliates that they oblige them to enter their brand as a negative across their campaigns, with the result that a simple search for the brand and its key product category could easily return the brand in prime position, followed exclusively by all the rivals and unrelated retailers who had bid on the category as a search term.


The controversy has an ironic side in view of Google’s recent announcement that, on any given day, 20%-25% of all its searches are for terms that have never been entered before.


Logic suggests, therefore, that brands need all the help they can get in mopping up as many unusual search terms as possible, and this may be the major contribution of the legions of smaller affiliates.


The corollary of regarding affiliates as a helpful virtual sales force, of course, is that they need to be treated as employees of a kind, and ought to be rewarded properly for the work they do. “You hear some people describe it as a cat-and-mouse situation, but it is best when it works for everyone,” says Teasdale.


The complexity of the so-called customer journey, particularly in travel, can create a situation where no one medium can convincingly claim to have been the key influencer. But where a consumer follows an affiliate’s link, chooses a holiday and then picks up the phone to book, the third party needs to know its contribution to the sale has been registered.


It is in travel companies’ interests to act in good faith, which is why they have collectively experimented with several solutions to that problem. One of them, as used by Cruise Thomas Cook, is to design a special landing page for affiliates which gives no option to book by phone. Likewise, some operators will pay out on leads or even on brochure requests, not just sales, while many look to their networks for technological solutions.


“Some travel merchants like to have a higher conversion rate over the phone than online, so we might have to provide technology to enable affiliates to drive that traffic and still get paid,” says Cornils.


Without sharp technology, over-generous merchants can easily find themselves buried in double or triple-accounting. “You might attribute and reward 10 sales to an affiliate, 10 to search and 10 to a partnership, when in truth, you might only have 20 sales in total,” says Commission Junction UK managing director Alison Guise.


The smarter travel companies understand the potential for such duplication, which is why even those with in-house affiliate marketing managers tend to make some use of networks, which can recommend tracking software such as Atlas or DoubleClick or design a solution of their own.


In certain instances, the appropriate payouts are inevitably hard to determine, but the stock of affiliates appears to be rising in the eyes of travel brands.


“We’ve found that our travel advertisers, who have traditionally given the bigger payouts to the pay-per-click companies [such as Google, Yahoo! and their own affiliates], are starting to pay out more money to the CPA guys,” says Reid.


The CPA model is often what attracts brands to affiliate marketing in the first place, but as the channel develops and particular affiliates begin to demonstrate their genuine value, instances of valued partners being offered cost-per-click deals are increasingly common.


Which all goes to show that, one way or another, the dark art of affiliate marketing is finally coming into the light.



What is affiliate marketing?


Affiliate marketing is incredibly simple in concept: brands invite third-party websites to host links, usually in the form of banner ads, buttons or text ads, and these affiliates are paid according to a cost-per-action (CPA) model when a click results in a sale.


The practice is nearly as old as e-commerce itself, but, as with so many online businesses, the sector got a few things wrong before it started getting things right.


Certainly, it took both networks and merchants a little time to realise there was an art to getting the most out of such an apparently straightforward, risk-free model. Badly managed networks would put clients on sites that did their brands no favours, while the retailers themselves would provide little collateral for affiliates to work with and then lose faith and abandon ship when their campaigns did not have immediate impact.


“In the past, people have approached it with unrealistic expectations,” says Harvest Digital planning director Mike Teasdale. “It isn’t a tap that you can just turn on and off as required. You need to have quite a long commitment to the channel and be patient about how long it takes to get results coming through.”


At the cutting-edge of affiliate marketing, things are nonetheless becoming much more immediate. Affiliate Future, an online travel specialist, has been pioneering real-time ads for its publishers, offering flash boxes with live offers instead of static, generic creative.


“It is what we are calling the second generation of affiliate marketing,” says Affiliate Future CEO Maz Darvish. “It is getting away from banners and buttons and text links and starting to look at actual travel inventory, turning that into advertising material for publishers.”



Case study


As a relatively recent entrant to the affiliate marketing channel, TUI stands as a perfect example of the impact a cleverly run campaign can have on sales from a standing start. Working through Commission Junction and across its leading brands, TUI saw its sales from affiliate marketing rocket from 0% to 10% of its business within one year.


“TUI has been successful, because it has pushed towards it,” says Matt Reid, client development director at Commission Junction. “It has a huge amount of content, and the hard part is to push that out, but if you put it in the right hands, publishers can build entire sites on the back of this myriad information.”


Among TUI’s initiatives, more than a year ago, was a series of video podcasts with affiliate tracking. More generally, the company ensures its creative is up to date and relates to the most relevant offers available, on and offline.


TUI new media affiliates manager Peter Norwood maintains relationships with the affiliates across the TUI brands, and while he concedes he works more closely with the high-volume referrers, he makes it his responsibility to keep the entire network informed.


“We try to keep everyone up to date with where the brand is, what we are looking to do, what’s hot, what’s not, and we might give extra commission on certain products at certain times,” says Norwood. “It comes down to creative and it comes down to communication.”



Trade rules



  • * Provide affiliates with a point of contact. Treat them like the commission-based sales force they are
  • * The more they have to work with, the better they can do their job. Feed them branded content and use imagination in creating the ads they host
  • * Not all affiliates do good work. Monitor the network to weed out those that damage your brand
  • * Ensure publishers are compensated for their leads, even where the sale is eventually effected offline
  • * Don’t abandon an affiliate network – reports of bad behaviour spread far faster online than good notices
  • * Successful affiliates can provide genuine brand insight – monitor what makes their sites work


How a car-rental company uses affiliates


Sally Hinds, leisure marketing director, Alamo Rent A Car and National Car Rental


The wide array of online marketing opportunities we have at our disposal today is particularly exciting. But the challenge for many businesses is managing volume while making sure online marketing budgets work hard.
So it was with a degree of caution that we tried affiliate marketing just over 12 months ago.


By working with affiliates we can utilise their expertise at search marketing and benefit from a whole range of search terms they bid for that we couldn’t possibly hope to ‘own’.


In this way they increase our brand visibility on search engines.


Affiliates also offer wider visibility of our banner creative. This is on a cost-per-acquisition basis rather than cost per impression, which suits our business better. The ability to tier payments according to destination also increases the flexibility.


By working with affiliate networks we have widened our reach and work with a large number of contacts through one single point. The result is we are managing the expectations of affiliates to get the volume right and build a profitable base of business. 


But what about the potential negatives? Alamo and National are both brands with a strong heritage and brand values are vigorously protected. By marketing our brands through affiliates there is always the concern of maintaining image and ensuring that the customer is not confused about how to access our services direct and visit our ‘official’ websites. In addition, pay-per-click prices can be inflated by affiliates – we are bidding alongside them on certain search terms. 


Then there’s the issue of double counting and tracking customers who shop around. For example, a customer could check an affiliate site, before switching to a shopping portal such as Travelsupermarket, then book direct via Alamo.co.uk. We pay affiliates on a post-click basis, which is standard within the industry. This makes measurement and pinning down the source of the reservation very difficult.


Nevertheless, affiliate marketing is working. Our objective from the outset was to be conservative rather than set over-aggressive terms with no longevity. This means we have been able grow affiliate opportunities tactically, while managing their expectations, our budget and the revenue opportunity versus other online routes to market.

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