In April I attended an extremely valuable conference called Elite Retreat in which a tiny group of less than 30 individuals met with 6 of the most successful internet marketers on the planet, learning their tricks of the trade.
One of the presenters was Kris Jones, who became so successful as an affiliate marketer that he was able to take his industry knowledge and create PepperJam - the fastest growing internet marketing agency in the world, ranking 293 on the coveted Inc 500 fastest growing companies list. Kris’ company manages the affiliate programs for some extremely successful brands, including 1-800-PetMeds, Jelly Belly, DKNY, and Sesame Street.
Kris was my first and natural choice for this interview on how to start an affiliate program as a merchant because of his deep expertise in this industry.
At what point should a company consider starting an affiliate program?
Kris Jones :: Any business that generates customer leads and / or sales over the internet should have an affiliate program. On average affiliate programs should represent about 20% of overall online sales. With that said, a company should consider launching an affiliate program as part of an integrated online marketing program that takes into consideration search-engine marketing, affiliate marketing, and various forms of online media, including behavioral targeting, display, social media, and contextual advertising.
What affiliate networks do you recommend and why?
Kris Jones :: The affiliate network landscape has changed significantly over the last 12 - 18 months. For instance, the “traditional” affiliate marketing industry that has been dominated by Commission Junction, Linkshare, and Performics since the late 1990’s has seen significant competition from lead generation networks such as Azoogle, Hydra Network, and CPA Empire. While competition among networks for the attention of top affiliate marketers has picked up the truth is that there has never been more opportunity for companies to take advantage of affiliate marketing.
Here is a brief review of each of the major affiliate networks with the pros & cons of each:
Commission Junction (CJ) - CJ is the easiest network to launch an affiliate program and tends to be a favorite among affiliates because of near real-time reporting. The interface is clean, but many affiliates complain that it’s too busy with too many options. Also, CJ is a subsidiary of ValueClick (VCLK), which tends to make them overly corporate and slow to react to complaints and obvious needs for improvement. A clear advantage of CJ over say a Linkshare is that they do not require merchants to sign a non-compete, which means that the merchant if free to launch affiliate program initiatives on other affiliate networks such as Azoogle - for this reason alone, CJ provides the most flexibility over other traditional networks with launching an affiliate program. Over 90% of the programs managed by Pepperjam are launched on CJ because of the advantages I just mentioned. CJ has roughly 2,200 merchants on the network and tends to have a much lower standard for acceptance than the other traditional networks. Top CJ merchants include EBAY, Zappos.com, and Staples.
LinkShare - Linkshare is seen as the pioneer of affiliate marketing and has been in the business since the mid 1990’s - the company was recently sold to Japanese company, Rakuten. While Linkshare has less merchants than CJ they tend to have much better names overall. For instance, top Linkshare merchants include Dell, Saks Fifth Avenue, and American Express. Launching an affiliate program on Linkshare tends to be more expensive than it does on other networks and requires merchants to sign a non-compete, which is a major disadvantage to launching an affiliate program on Linkshare. However, the Linkshare interface is very clean and easy to use. Gaining acceptance into certain programs is very difficult and requires affiliates to go through additional hoops that they would not have to go through on CJ, but the added measures typically results in less competition and more opportunity for the affiliate. One other shortcoming of Linkshare is that pricing tends to be very fragmented with fees being charged for everything from sending external e-mails from the Linkshare interface to gaining access to Linkshare’s product feed solution called Merchandiser. In general, Linkshare tends to be seen as the more “exclusive” affiliate network and includes activity from some of the top affiliate marketers in the business.
Performics - Performics is a division of DoubleClick, a Google company. The biggest advantage and disadvantage of launching on Performics is that Performics not only wants to provide you with network access, but they also want to manage your affiliate program and search-engine marketing. While that might be a good thing it is extremely expensive. Expect to pay double or triple with Performics (for management services) than other comparable agencies such as Pepperjam. Also, since Performics is part of a much larger company they do not provide the same level of intimate account management that a non-corporate outsourced manager may be able to provide. Performics does work with some of the most impressive clients in the business, including AOL, HP, and Sears.
(See comment below from Kristen Hall from DoubleClick addressing these points)
Azoogle - Azoogle is the largest non-traditional affiliate network. Unlike CJ, Linkshare and Performics, the focus of Azoogle is on lead generation. Therefore, if the focus of your business is lead generation you should definitely give Azoogle a try. However, the azoogle model doesn’t work too well with non lead generation companies. For instance, in order to launch on Azoogle you have to pay affiliates a one-time commission based on a specified action ( i.e., filling out a form, making a purchase). In order to be competitive you need to be able to pay the affiliate enough on a lead basis to make their involvement worthwhile. In general, ad networks such as Azoogle lack transparency. In others words, you won’t know who’s generating your leads and how they are doing it - this provides concern to many merchants looking to effectively manage and protect their brand. While Azoogle might not be a good fit for many merchants, they have some of the best affiliate managers in the industry. For instance, it is often said that for a non-agency, Azoogle provides affiliates with outstanding support. Azoogle works with companies such as Blockbuster, Jamster, and the Fruit Company ( a Pepperjam client.)
What special considerations should a company consider for a one-product program like Proactiv Solution or an eBook?
Kris Jones :: One product companies do not tend to perform well on major affiliate networks, especially if they do not have well known brand. One product companies tend to launch their own affiliate program or purchase access to affiliate software from companies like www.myaffiliateprogram.com or www.affiliatewiz.com. However, some one product affiliate programs such as Foreclosure.com (a Pepperjam client) and Proactiv Solution (a Pepperjam client) do quite well. In addition, one product programs tend to perform very well on non-traditional affiliate networks like Azoogle and Hydra Network. If you have a one product affiliate program and don’t want to outsource management I strongly recommend attending affiliate conferences such as Affiliate Summit, which will provide an opportunity to meet and discuss opportunities with large super affiliates who tend to only work on major affiliate networks.
What is a quick checklist for things to do when one gets an affiliate program set up?
Kris Jones :: Here is a list of the top 10:
(1) Select an affiliate network that feeds your specific needs and provides flexibility
(2) Hire a knowledgeable, dedicated affiliate program manager (internal or outsourced)
(3) Determine the commission you can afford to pay affiliates
(4) Make sure you have high quality creatives (advertising), including affiliate banners and text links
(5) Provide affiliates access to a product feed and make sure to update the feed on a daily basis
(6) Set realistic expectations and revenue projections
(7) Add a sign-up link to your affiliate program on your corporate website
(8) Send out a press release announcing the launch of your program
(9) Sign-up (and attend) an affiliate marketing conference
(10) Keep creatives fresh and add special offers & incentives to encourage higher click-through rates and conversions
At what point should a company hire a firm like yours to manage their affiliate program? And at what levels are affiliate programs best managed in-house?
Kris Jones :: Successful affiliate programs are managed by experienced affiliate program managers with an effective strategy for daily account management and a long-term commitment to program growth. Affiliate programs that run on auto-pilot fail. If an affiliate program has the potential to generate at least $10K per month in sales it may make sense to consider outsourcing management. Affiliate program management is a full-time job. Under no circumstances does it make sense for an internal person (especially a company executive or senior manager) to manage an affiliate program unless the affiliate program manager is full-time and solely dedicated to affiliate program management. At Pepperjam our pricing is based primarily on performance and we provide clients with the ability to break our services contract for under performance. In most cases, outsourcing to a company like Pepperjam is the better choice (than hiring internally) since we have close, personal relationships with proven high-performing affiliates and because we spend the requisite time to see a program achieve its fullest potential. Hiring an in-house affiliate manager makes sense for merchants with small affiliate programs or programs with a history of non-performance.
Any suggestions for further reading?
Kris Jones :: We have a blog at PepperJamBlog.com where we cover a lot of issues that confront the affiliate marketing industry. Other great online resources include Revenews.com, AffiliateClassroom.com, Shoemoney.com, and AffiliateTip.com.
Excellent magazines covering the performance marketing industry include Revenue Magazine and the Affiliate Classroom Magazine - both are worth a cover-to-cover read.
This entry was posted on Monday, July 23rd, 2007 at 9:53 am and is filed under Web Strategy, Marketing. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.11 Responses to “How to Start an Affiliate Program for Your Product or Website”
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July 23rd, 2007 at 10:39 am
[…] I was recently interview by Wendy Piersall, a writer for the Entrepreneur.com Blog Network. START READING! […]
July 23rd, 2007 at 3:01 pm
Wonderful interview! Affiliate marketing is an area I am still trying to learn about. It is very helpful to see affiliate marketing from the perspective of the company generating the sales.
July 24th, 2007 at 4:20 am
Hi Wendy,
Excellent interview, and Kris gave a good overview of the affiliate marketing and lead generation (CPA) industry.
Regarding your question about ebooks, I think Clickbank is still the dominant force in that segment, even though their affiliate tracking cookie might not always lodge.
Google is moving aggressively into CPA also, so that’ll be an interesting development to watch.
July 24th, 2007 at 1:00 pm
Hello Wendy,
Thanks for the great interview! We’re expanding beyond our popular line of daddy gifts and have been seriously considering adding an affiliate program as our catalog of products and online sales continue to grow. We’ve been picking the brains of like-minded small businesses over the past few months on the same topics mentioned in your article (commission rates, expected revenue projections, and advertising strategies), so I was thrilled to see your breakdown of these topics along with your pros/cons of the networks.
Thanks again for the great piece. I’m looking forward to updates on the topic as affiliate marketing services and strategies evolve in the future.
Best,
Jason
July 24th, 2007 at 6:27 pm
That’s an inspirational interview for me as a new player in affiliate business. Thank you, Wendy.
July 25th, 2007 at 1:23 pm
[…] If you’re thinking about starting up an affiliate marketing program to promote your own products or services, this interview with Kris Jones from PepperJam Management is a must read - it’s a good, lengthy piece and an entire overview of what it takes to get a merchant affiliate program started. […]
July 25th, 2007 at 2:57 pm
Great article describing the industry, but it definitely does not live up to the title. It does not explain how a person can set up an affiliate program on their website to sell products to customers.
It does explain who the big middle men are and mentions a couple tips for managing campaigns through them but the devil is in the setup first, choice of partner second, and management third.
July 30th, 2007 at 8:47 pm
Very nice interview! As an affiliate marketer, I think there are some very key points made. For example, I was an affiliate for a very high-profile merchant, who suddently shut down their program due to the lack of an experienced affiliate manager.
The affiliate manager is the liason between the merchant and affiliates. He/she needs to know the industry inside and out.
The merchant can then better serve the needs of the affiliates. The affiliates don’t feel left out in the dark when asking questions or making suggestions to the merchant.
July 31st, 2007 at 12:46 pm
I work with DoubleClick Performics, one of the companies that was cited in the story above, and I wanted to provide you with some feedback. DoubleClick Performics does have a long history of offering full-service affiliate marketing solutions to large advertisers, but it is not accurate to describe DoubleClick Performics’ pricing as higher than its peers. In fact, DoubleClick Performics’ prices are very competitive and include a full-service option for large volume advertisers. For other advertisers (who either have smaller programs that do not warrant DoubleClick Performics’ full-service approach or who have internal resources to manage their affiliate program or have another agency managing their program), DoubleClick Performics recently launched AffiliateDirect (http://www.performics.com/our_capabilities_files/capabilities_affiliate_marketing.htm).
I just wanted to provide a more detailed picture of DoubleClick Performics’ affiliate marketing services. I hope it helps. Thanks!
August 6th, 2007 at 3:50 pm
We just launched our GoalGuru.com affiliate program utilizing 1shoppingcart which is extremely easy and effective for start ups and DotComPreneurs. (many mom and pops and home biz will not qualify for management by the firms mentioned above). But there are many solutions for newbies and smaller operations.
We can control every aspect of promotion, autoresponders, commissions, cookies, training, etc and there is no middle man. We were up and running, growing our phenomenal army of affiliates within minutes of setup. It is a must for anyone who wants to integrate a membership site, which we needed for Goal University. (did I mention all for less than $80/month)? As a side note, 95% of the affiliate products we promote use the same affiliate software program we do.
So in addition to your immediate needs, consider the long term Goals for your company and any future product membership launches before selecting your management software. You don’t want to start with one and change it six months from now.
Live Your Dreams,
Jill Koenig
CEO
http://www.GoalGuru.com
September 19th, 2007 at 4:47 pm
[…] How to Start an Affiliate Program for Your Product or Website I don’t think I have linked to Wendy’s new blog before, so here goes… this post is an excellent interview with Chris Jones about starting your own affiliate program. […]