Date: Monday, January 12th, 2009.  Session 4c, 11:30am.
Session Description:  This session outlines how to best manage affiliate relationships to reach major revenue goals without additional budget. Tactics focus on non-monetary incentives to increase affiliate performance. The panel consisted of:

• Chris Kramer, Co-Founder & Media Director, NETexponent (Moderator)
• Darren Eilers, Founder & CEO, DME Media, LLC
• David Lewis, CEO & Founder, Cashbaq
• Kevin Smith, Affiliate Marketing and Business Development Manager, Brown Shoe Co. – Shoes.com

OK, this session wasn’t what I expected it to be.  It seemed more like a session on how to treat or work well with super affiliates, which I’ve attended before and got kind of the same tips from.  Maybe I perceived this wrong, but I expected some tactics on how to creatively promote affiliate programs without money, but it turned out to be how to fire up your top affiliates, and still mentioned money.

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• The majority of affiliates say they make most their money from less than 5% of the merchants they promote.
• David says: compensation does matter.  We’re willing to promote products and brands with zero compensation up front.
• David says: if you know our business, we’ll talk to you.  Without knowing that basic fact, all of the other things you can say don’t matter.
• Darren says, to managers: relationships matter.  Keep in mind that everyone does things differently.  They do expect a better relationship than any other affiliate.
• Darren says, to fellow affiliates: You can’t expect a merchant to call you back unless they have an incentive to.  So the affiliate has to sell you on themselves.  Pitch you.
• David says: the compensation has to sometimes be different for loyalty sites.  Get datafeeds cleaned up.  Better sales will come from that and the creativity affiliates use with datafeeds.
• Darren acknowledges: we know that it’s sometimes an uphill battle for merchants to get the datafeeds fixed by their IT departments, but if the affiliate doesn’t get the datafeed that’s clean, they have to go with someone else.
• David notes that he’s personally working hard to create a standard taxonomy that everyone uses for datafeeds to make that portion of the industry more uniform.
• The key is keeping it updated.
• Chris noted that the number 1 thing affiliates wanted from them are custom landing pages.  The second was product feeds, third promotions and incentives, and fourth was coupon code offers.
• Kevin wants affiliates to know that they can get help when they need it.  The more information we as merchants can give the affiliate, the more money they make, more sales for us.
• David warns that the conversions really have to be solid.  It’s better for the merchant and the affiliate.
• Kevin includes information about the products and company in their newsletter.  He tosses out as much information as he can that will help the affiliates.
• It’s hit & miss in terms of the merchant giving information to the affiliate in terms of what they’ll use.
• A lot of the money they make is reinvested.
• David uses an analogy of a bobsled team for the merchant.  They’re the head of the team and just need the push from the merchant to get rolling down the track.
• Darren advises that you take your top affiliates and let them help you test landing pages.  He’s usually willing to work with merchants that ask for that kind of help since he’ll ultimately receive the benefit.
• Chris warns though that a lot of affiliates don’t want to be guinea pigs and how often are you willing to take the risk?  Darren responded that it depended on how long he’s worked with and trusts the merchant.  He doesn’t mind being a guinea pig if it means he can make more money.
• David warned against merchants making knee-jerk reactions.  Use the data and make decisions based on that.
• Darren says if you know them and spend the time to get to know their business and form a partnership, merchants are usually more willing to give them inside data to help them out.
• Are there three different teams compensated separately?  Many merchants have the SEO team, SEM team, and Affiliate team.  If the program is run correctly the affiliates help all three teams.  it’s all of our sales, not my sales or your sales.
• Kevin says more affiliates looking at CPM than CPA – with the economy there’s not as much money out there for CPA offers anymore since they don’t return like sales do.
• David relayed something he read that said 73,000 stores will close in the US this year (estimate).  If someone comes to them and says they’re cutting their commissions, it’s a mistake but OK, they’ll look at your competitors more.  Someone has something similar and will boldly raise their commissions to stand out.
• Darren warns that before you lower commissions across the board, take a look at your top affiliates.  Weed them out and tier your structure.  Maybe increase compensation for the top affiliates and lower it for the others.
• David says to reward those meeting your goals.
• Kevin notes that they did that and it worked great.
• Kevin adds not to be knee-jerk reactionary.  Try to look at a monthly picture.  For them the 2nd Saturday of every month is their big Saturday Sale, and affiliates know that.  Being transparent helps them stand out.  Allow them to lean on the merchant.  Brand equity is very important.
• Kevin has seen more volume with coupons and loyalty sites.
• Chris shares more poll results amongst affiliates: What matters most before joining?  1. Commissions 2. Product being sold 3. Brand 4. Tracking platform 5. Terms and conditions 6. EPC 7. Affiliate manager/outsourced program managers 8. Return days 9. Action occurrences
• Darren says to look at your affiliate manager very closely to analyze the relationship.  When the AM gets to know what the affiliate does, they can customize incentives specifically for them.
• Darren also says to give your top affiliates your true top performing keywords.
• Chris asks if a big brand can get away with paying less commissions.  Darren says they can if their conversion rates are higher.
• Chris asks how much competitive research do you do?  Darren says they know what the published commission rate is.  They also look at the EPC but that doesn’t really tell them too much.
• David notes that they’re big and kind of already have the big brands, so they ask different questions before they join a new program.  Are you making our life easy?  Do you have an 88×31 non-animated gif?  Do you link to the homepage or deep link?  Is it something we think our members will see as quality?  Does it look like it’ll convert?
• Darren says he’ll try to get a hold of the affiliate manager to work with them to improve their site, but there’s only so much they can do so sometimes it’s hard to do that.
• Kevin creates banners on a daily basis.  They’ll accommodate different sizes if asked.
• Although David says he doesn’t look at banners.  Darren advises that they have to meet the challenges of Google changing, so they need to change.  Banners have been around so long and they’re surprised that there’s still so much emphasis on banners. They do their own creative because it’s faster and they know what will work with their visitors.  If the merchant won’t allow that, it’ll hurt them.  They’ll work within their guidelines for sure.

There was a lot of good information and wasn’t much time for a Q&A session, so there was none.  Despite it not being what I was going in for, it was still a good session and dropped some handy tips from some top affiliates.  There was also some good data points in the slides, so here they are for your viewing pleasure as well:

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Earnings Per Hundred Clicks (EPC):

• Earnings or average payout per hundred clicks.

Many networks rank their merchants by EPC to give the publishers a sense of how active the merchant is with their affiliates.  While some people give a lot of credence to this metric, others just give it a glance in addition to all the other stats available.

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Glossary Definition From ABC’s of Online Marketing by Alexandra Wharton, Issue 22, Revenue Magazine

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So what does this have to do with marketing or affiliate managing? Other than I am in these fields and wanted to share a cute picture of the cat sleeping on the husband, it’s a good metaphor for inactive affiliates.

Now, the only reason our cat is sleeping on him is because he’s asleep and doesn’t know it. If he were awake, the cat would be hitting the floor in less than a minute. At any moment he can wake up and kick Lunchbox to the curb (yes, my cat is named Lunchbox). So since he’s asleep, the status quo of the cat sleeping with him is maintained.

He could wake up at any time and the cat will be gone. An inactive affiliate could wake up to your program at any time and decide to clean house, drop your program, heavily promote your program, or just leave the cat on their lap – you never know. This is a good argument for why affiliate managers should leave inactive affiliates alone and not deactivate them. Use the “wait and see” tactics as a manager. It’s actually less work for you to leave inactive affiliates in the program (but still keep track of how MANY are inactive and reach out periodically) than to continually try to weed them out. And they could end up being great affiliates in the long run.

Now, this is what I’ve heard EVERYWHERE, but I have to tell you – honestly, inactive affiliates annoy me. I understand their reasons for signing up then not doing anything, I really do. I’ve done it myself. But in my professional life, I’m a neat freak. I like to keep the program tidy and make sure that the performers are being represented and those that are asleep at the wheel are not. Additionally, the more inactive affiliates are in our program the more dragged down our EPC gets.

We’re not the first company of our kind with a strong affiliate program, so trimming the fat is necessary to keep our EPC up and really stand out amongst the competition. Right now I see this as a necessary evil of the rat race. Eventually I hope that our EPCs will be good enough even with the less active affiliates to be a more wide open program.

In the meantime, just answer my email and let me help you :p

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