MarketingExperiments Blog: Research-driven optimization, testing, and marketing ideas

Affiliate marketers have it tough these days. So many affiliates are attracted by the promise of building a business without having to involve themselves in the details of actually filling orders. With a marketplace so saturated, it’s difficult to get any kind of ROI out of affiliate campaigns.

So, how can affiliate marketers increase their ROI?

The same way a merchant would increase its ROI: by providing enough perceived value to guide the prospects to, and through, the offer.

Of course, increasing ROI is always easier said than done. And because that’s part of the job of our research analysts, Adam Lapp, Associate Director of Optimization teaches an optimization training class every Thursday here at MECLABS. In it, Chris Rochester, one of our research analysts, developed a treatment homepage for affiliate website Safari.com as a thought exercise.

Click to enlarge

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Now, before I go any further and show you Chris’ treatment, it needs a heavy disclaimer. Because Safari.com was submitted by one of our Web clinic audience members, we didn’t have any actual metrics for the site. In other words, Chris may not have made the suggestions he did in the treatment had he seen the real data behind the site.

Fortunately, our Associate Director of Optimization, Adam Lapp, developed some example metrics Chris could work from. So here’s some imaginary background for you…

  Read more…

My colleague, Robert Reynard, and I just returned from Affiliate Summit. Special thanks to Shawn Collins and Missy Ward for having us. This is not the first time I have been, but nonetheless it impresses me to see the number of people who have an interest in this space.

Affiliate Marketing Regulation

One of the most interesting topics this year was around government actions which are threatening many who have profited from this space for many years. The Federal Trade Commission (FTC) is cracking down on Internet sites that profit from promoting other’s products or services without disclosing within that promotion that they received some sort of compensation from the company.

Compensation in this instance is not limited to cash. Let me give you an example that I heard at the show:

Let’s say a stay-at-home mom begins a blog to help other stay-at-home moms. A diaper manufacturer sees that blog and decides to send her a box of diapers with the hope that she would try them on her children and then blog about how well they performed.

That mom must disclose that this was a gift from the manufacturer and she must disclose that this blog post is partial to them for that reason, even if she would have blogged about “the diapers making it through the night without leaking” anyway and was in no way influenced by the fact that the diapers were a gift. In other words, even mommy bloggers could be held liable for product reviews.

This may be an extreme example, but thanks to some who may have been taking advantage of consumers through use of exaggerated claims and fake reviews and testimonials, it has become a necessary part of affiliate marketing.

Google Adwords frustration

Another hot topic surrounding this event was affiliate frustration with the Google Adwords program. Over the last year, many affiliates who used Google Adwords to advertise their site(s) were notified that they were no longer welcome to use the Google advertising platform.

OK, so “notified” may be a bit of a stretch, typically the way they found this out was without any sort of notification at all but rather by noticing that sales are lower or perhaps non-existent and logging into their Adwords account to troubleshoot.

After looking around for a bit, they probably found that everything seemed to be in order. On the surface at least. They then may have scrolled over a status column which, when hovered over, opens a small box showing a users Quality Score. To the affiliate’s surprise, the Quality Score ranking that once read 7/10, 8/10 or even 10/10 now says 1/10.

A 1/10 Quality Score ranking in Google Adwords is about as effective at removing advertisements as deleting the campaign altogether. Worse yet, starting over with a new campaign will not help. An advertiser’s Quality Score remains with their domain.

I have heard, but this has not been confirmed by Google, that the only way to receive a 1/10 Quality Score across an entire account is for a Google Policy Team Member to manually place this on the account…meaning that this does not naturally occur. Perhaps this is why affiliates have affectionately labeled this occurrence a “Google Slap.”

Can you imagine being in business one day and out the next? That is what is happening to some of these affiliates. So why would Google do this? After all, affiliates are paying them, right? Well, Google, like the FTC, is probably reacting to the bad apples. Google is fanatical about protecting its customers (i.e. search users) and if it takes hurting some legitimate affiliate’s business to protect customers from the bad apples, it looks like Google is okay with this concession.

What this may mean for 2010

It will be interesting to see how both of these situations play out over this year. I counted 46 businesses from the advertising and marketing industry that made last year’s Inc 500 list of the fastest-growing companies, private companies.

Many of these businesses have deep roots in the affiliate marketing business. Their growth rates have skyrocketed on the backs of affiliates using Google Adwords to advertise, and in some instances have grown off of sites that now must alter their pages to abide by the new FTC guidelines.

Will these companies be able to adjust their business models and continue these impressive growth rates in the face of these new obstacles? Share your thoughts in the comments section of this post or start a conversation with your peers in the MarketingExperiments Optimization group.

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During our August 26 web clinic on optimizing affiliate marketing, several participants wanted to know more about setting up and measuring their programs. We’ve distilled those questions for the latest edition of our Ask an Optimizer column.

Q: What kinds of businesses are suited to using affiliates?

I think businesses that are devoted to ecommerce or lead collection are going to be exposed to the greatest number of affiliates — especially those that are somewhat familiar for your marketplace.

Q: How do you identify & recruit the best affiliates?

Form a good relationship with affiliate networks/managers. Also, watch forums for affiliates that seem like they are worth approaching. A word of caution: some of the “top contributors” to these forums are not always the most successful. Approach with caution some of the “loud mouths” out there.

Having competitive payouts and reasonable offer terms are a must, and will also be attractive for recruitment.

Q: Are there any options for regionalizing affiliate marketing?

Yes, but traffic is going to be much smaller. Also, some of the bigger affiliates are not going to fool with these restrictions. I would team up with other companies in the same space, and just sell the leads that are not pertinent to your area of service.

Q: Which affiliate marketing tool is most effective? Banner ads, text ads, email campaigns, or mini web sites?

It depends on the offer and the audience the affiliate is trying to reach.  If you are promoting a good offer, you should develop most of these elements. Don’t handcuff the effectiveness of your affiliates and your business with a lack of materials. Make sure that you are tracking the effectiveness for each of these communication methods, as you might find some interesting data.

Q: How do I find niches I can be confident will yield sales? Or how do I test rapidly?

Testing rapidly is a good way to jump to conclusions, and fail. Obviously if the disparity is huge that is one thing, but do not rush to conclusions because we have all seen how internet traffic changes.  Do not ditch your confidence levels and testing best practices.

Q: How do I mix the “best techniques” for landing pages with “Google rules” for quality score?

Part of Google’s rules with quality score are items that you should have anyway. For example, a big part of quality score is how relevant the page is to the target keyword/phrase etc. I often see people suffer by trying to communicate too much within the images on a page. Make sure that good and relevant information isn’t contained in unreadable (to Google) images.

We also talk about having continuity between your ads and landing page. So make sure you have headlines that match keyword/phrases and will reassure the user they are in the right place, plus score relevance points with Google.

Q: What’s the simplest way to track keywords that are converting or predict them?

Talking to your offer company and discussing tracking options can open up true conversion tracking for you.

For prediction, if you are already running traffic, look at your CTR rates and try to estimate with this new traffic (keywords) — is it more relevant or general?  With that, try to look at what you are going to spend with this new traffic, and the conversion rates you are already observing.

Then factor the quality/relevance of the new traffic, and ask yourself: will the spend this traffic requires still allow me to be positive? Prediction really just comes with time and seeing what works. There is no guaranteed formula.

For more info, check out last week’s list of additional research and resources on affiliate marketing.

Have additional questions? Other things you’d like to Ask an Optimizer? Use the comments section below or tweet me at: @ctrentmarketing

If you’re an affiliate marketing novice, you and I have plenty in common. A few weeks ago, I knew little about the ins and outs of affiliate programs: how they work, the players involved, how to get started or how it fits into the typical multichannel marketing mix.

That’s partly how we arrived at today’s web clinic on the subject.

Back in 2003, MarketingExperiments tested affiliate programs, interviewed affiliate industry pros, and published an extensive, two-part research report on the topic: Affiliate Marketing Tested, Section 1 & Section 2. In 2006, further experiments by our team led to another research brief: The ROI on PPC vs. Affiliate Marketing.

Upon review, it seems many of those findings and recommendations still hold true for affiliates and merchants today.

And after our director of channel optimization, Aaron Rosenthal, and analyst and affiliate specialist Rob Reynard returned from the buzzing Affiliate Summit East show, we felt the time was right to revisit this topic and look at some new affiliate experiments we’ve conducted — including how those tests achieved gains of up to 165%.

Research and resources for affiliate marketing novices

For our web clinic, 57% of early registrants characterized themselves as “novices”  and 27% called themselves “experienced” in this area. So the following shortlist contains a dozen of the best articles, research, forums, and related resources we’ve seen that can help those who are just starting out.

• 2009 Affiliate Summit AffStat Report
• The Future of Affiliate Marketing
• Is It Time to Affiliate?
• Affiliate Marketing Blog
• Affiliate Classroom Blog
• Affzilla: Affiliate Marketing Tools
• Sugarrae: Affiliate Marketing
• Shoemoney.com (see cutting through the BS)
  
• Media Trust Blog: Podcasts
• Reputation Management for Affiliate Marketing
• 5 Star Affiliate Programs Forum
• ABestWeb Affiliate Marketing Forum

Let us know if you find these resources helpful and be sure to check back next week, when we’ll be posting Q&A and takeaways from today’s clinic.

Reminder: Our web clinic hashtag is #webclinic and you can follow us @MktgExperiments.