Affiliate
marketing is old hat and limits an online marketer's true potential.
There…
I said it (and my in-box will probably pay dearly). Seriously, has anyone
bothered to check the return on investment (ROI) of traditional online
affiliate marketing programs lately? I have.
So far,
most marketers are remaining tight-lipped in terms of actual sales revenues
or customers acquired. However, many are beginning to reveal the ugly
truth about performance-based strategies that rely exclusively on affiliate
programs. Most indicate that returns are low with few affiliates delivering
significant activity (sales, customers or actions). If affiliate marketing
isn't our path to customer acquisition utopia, then what is? Before
we explore the answer to this question, let's
briefly look at why the affiliate approach has yielded so little for
so many - as evidenced by the lack of attention being given to these
programs.
As a group,
online marketers generally have not mustered adequate human resources
to grow and properly manage affiliate relationships. Secondly, we tend
to cling to the notion that a superior tracking/reporting technology
tool and a large number of affiliates are the keys to success. Finally,
and most importantly, marketers are not approaching performance marketing
with an integrated mind-set; rather, affiliate networks (generally comprised
of smaller 'homesteader type' sites) are the main tool of choice.
Although
performance marketing is a simple, clean model analysts report that
ROI has been elusive. Why? A majority of marketers are "plugging
into" a third party network of sites via a technology provider
and, in effect, walking away. This is what we've come to know as an
affiliate program. Since resources are scarce and we're all moving at
light speed, little or no attention is being given to day-to-day operational
concerns. Marketers are running programs with one person at the helm
and relying on the technology to do the work (which it cannot). Little
or no time is spent identifying and nurturing highly relevant, profitable
affiliates… providing them with merchandising guidance, incentives,
etc.
In the
end, affiliate programs are placing marketers in a dangerous re-active
stance wherein they are using untargeted, mass communication techniques
(email) to generate interest among teems of small sites. The resulting
flow of inbound affiliate applications often proves to be unmanageable.
In fact, it may, ultimately, not be worth the time investment (from
an ROI perspective) to cozy up with the majority of smaller sites.
Is affiliate marketing evil or not worth the effort? Hardly but marketers
must dedicate skilled resources to such programs - culling affiliates
and actively merchandising through the channel - to boost ROI. Number
of affiliates and whiz-bang technology means nothing. Think qualitatively,
not quantitatively and zero in on Web properties that drive transactions.
Dedicating and focusing resources does work - as evidenced by those
success stories we occasionally hear at conferences wherein 20
percent of a marketer's total sales are generated through performance
marketing.
Jeff Molander is President of Molander & Associates Inc., a strategy
consulting company focused on helping online marketers build performance-based
and collaborative commerce strategies. He can be reached at jgm@molanderassoc.com.