Net Gains: It Pays to Effectively Manage Affiliate Programs5 Feb, 2010 By: Christopher Rosica Response
Direct response companies increasingly have incorporated affiliate programs into their marketing campaigns as a cost-effective tool to attract customers and build sales. It’s not only for startups trying to get noticed; even major brands are using this online method to boost business at a reasonable cost, especially in the current economic environment.
But successful affiliate marketing takes careful advance planning as well as an ongoing commitment, and companies need to maintain mechanisms to monitor affiliate partners and track their performance. Oversight is particularly important since the Federal Trade Commission’s (FTC) new amended Guides Concerning the Use of Testimonials and Endorsements took effect Dec. 1, 2009.
Benefits of Affiliate Marketing
Forrester Research has declared affiliate marketing the most effective of all online marketing methods. That may be because affiliates typically use a range of online advertising techniques, including natural search engine optimization, incorporating keywords and phrases, paid search engine marketing, text links, E-mail marketing, display ads, social networks and emerging tactics. They also create content on blogs to get the attention of target consumers.
A major benefit of using affiliates is that the cost of acquiring customers is far lower than it would be using traditional advertising, according to research by McKinsey and Company. Affiliates also provide access to audiences that conventional advertising can’t reach, saving companies money trying to enter new markets. Affiliates can seed a market for new product launches and handle pre-selling.
Enhancing Credibility and Preventing Abuse
As every marketer knows, product claims have landed on the FTC’s radar. In a presentation about the new FTC guidelines, attorney Michael E. Young said: “The affiliate program operator is going to be liable for the misconduct of their affiliates, which means they’re going to have to severely curtail what the affiliates can be using on their sites and in their E-mails in order to promote product and services in exchange for a commission.”
In developing an agreement, don’t neglect even the smallest details, such as stating that affiliates must relinquish domain names at the company’s request. Also, boundaries should be set that prohibit affiliates and their networks from exploiting brand names to serve their own interests. Tools have been developed that keep a virtual eye on affiliates at off-peak times to determine if they’re advertising for the brand name, which increases the cost-per-click ad rates for their own intellectual properties.
Keep in mind that it can be difficult for affiliates to keep track of all in their networks. Include language in any agreement that penalizes affiliates for misbehavior on the part of their network members or sub-affiliates.
Companies need a mechanism to review E-mails and other material posted on their behalf by affiliates to confirm ongoing compliance. Consumers must be explicitly told how their personal data will be used. Monitoring software enables companies to ensure affiliates are not using improper distribution channels to drive up lead-generation revenues, as well as efficiently and regularly review the Web sites of affiliates and any sub-affiliates for misuse of intellectual property or other proprietary information.
Well-designed agreements between marketers and affiliates stipulate what both parties need to do to live up to their legal obligations while allowing them to achieve their individual business objectives.