The Complete Guide to Affiliate Marketing Strategy
Tags: Affiliate Marketing Tips, Affiliate, Affiliate Marketing

This article aims to provide in-depth advice on some of the most popular and the lesser-known, but still highly effective, Affiliate Marketing strategies.

We’ll explore strategies relevant to different Affiliate types, we’ll understand which are the most effective, as well as outline case studies and show a whole host of examples.

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Intro: What this article will cover

Whether you’re looking for strategies to help grow your own Affiliate Marketing channel, or you’re here to learn more about Affiliate Marketing and looking to apply these techniques at a later date — we hope this article covers everything you need.

In this article we’ll explore…

The fundamentals of typical affiliate strategies The affiliate strategies every affiliate manager should know Importance of diversification & tactics that work a treat Exploring strategies for specific affiliate types

Chapter 1: Understanding the big picture

Before we delve too deeply into Affiliate Marketing strategy, this article assumes some knowledge of Affiliate Marketing. You don’t have to be an expert to understand everything we’re about to talk about, but it helps to have a beginners understanding at the minimum of what Affiliate Marketing is and how it works.

Key fundaments when it comes to Affiliate strategy

When we talk of the ‘big picture’, we’re referring to looking at your Affiliate Marketing from a holistic view. And here are some key fundamentals every Affiliate Marketing channel should follow/understand when it comes to strategy…

1. The Big Picture

Let’s remember there is no fixed way to run affiliate advertising. There isn’t a blueprint, nor an out-of-the-box solution to do so. Your affiliate marketing is purely dependent on your brand, the industry and the product you’re selling. Simply put, to maximise your performance in affiliate marketing you need to understand your product and your consumer inside out.

2. The Last Touch

Affiliate marketing is an integral part of the online consumer journey. Most advertisers consider affiliation in their attribution as ‘ the last touchpoint’. Therefore they reward publishers if the consumer came through their site as the final step of their journey and didn’t interact with another marketing channel or other publisher afterwards.

3. Segmentation

Segmentation is absolutely key when it comes to affiliate marketing. Not only regarding strategy, but also your publisher mix, product mix, and marketing mix. We’ll come onto more of this later, but for affiliate strategy and publisher mix, don’t just focus on individual publishers when making decisions or optimising, but treat them as segments to make larger incremental improvements.

4. Diversification

Continuing the theme of segmentation. Most affiliate managers know that overly on one or two super affiliates can be a risky game. It’s important to diversify and recruit different types of affiliates and varying sizes to succeed. This makes up a key part of our strategy points laid out in this document.

5. Learnings

Advertisers should rely on the learnings and analysis of their optimisations to create incremental growth. Your strategy and ultimately your growth cannot be obtained without learning from your past actions. Every campaign test, every new publisher, and each optimisation should be bought together to analyse and learn from. As with all marketing, your data should drive your actions.

6. Performance Marketing

And lastly, let’s not forget what affiliate marketing is — it’s a performance channel. This means everything is trackable, payouts are on real sales. And more so than other performance channels like Display Marketing, you only pay for the sales you make (as most advertisers pay on CPA on rev-share — unless you’ve decided to pay your affiliates on a CPC).

Chapter 2: Typical Strategies

The Typical Publisher Strategy Cycle

Now we’ve covered off a few fundamentals to Affiliate marketing in relation to strategy. Let’s now explore some typical strategies, again from a holistic viewpoint.

Here is the typical strategy per affiliate you work with. If we’re only talking about individual affiliates, from a general viewpoint, this is what your typical cycle involves.

Advertisers will identify an opportunity of a publisher to work with. They then look to get in touch and build a relationship with them to promote your product/service. Next, you may negotiate on commissions, terms and campaigns. Once decided, a strategy/campaign is deployed — the publisher will start promoting your product to their audience using the agreed methods. Once done so, you both analyse the results and optimise accordingly to improve sales. Perhaps they will position your product differently or include a special offer. All of this is the classic cycle of just a one publisher affiliate program.

The Typical Channel Strategy Cycle

Now from the viewpoint of the entire channel, rather than one specific publisher. In general almost all affiliate managers will follow this cycle of activities. Starting at recruitment, then onboarding publishers using key tactics. Once onboarded and campaigns run they will segment their base, whether that’s by publisher, by product, or by customers acquired.

Once full segmentation has occurred to establish what is working and where an affiliate manager will focus on the top-performing areas. They will then optimise and optimise again. With the final stage being adjusting commissions and tweaking exclusive offers, essentially more ingrained optimisation tactics. Until they then start the process again with more recruitment.

Overall a cycle of bringing in new affiliates, focusing on them, growing them, shedding the fat, and then recruiting new ones, occurs over and over again. Over time this results in a healthy and grown affiliate channel.

We call this the typical strategy cycle of an affiliate channel. One that focuses on growth and optimisation.

Segmenting by Top Performing Publishers

Continuing the typical strategy across the channel, we mentioned that segmenting the base is a key part of the cycle. We’ve therefore delved a little deeper into that here and outlined one way of segmenting — by top-performing publishers.

As the screenshot describes, an affiliate manager should be continuously looking at their publisher base and ranking them according to performance. Performance should be measured by your own KPI’s, such as revenue, revenue per lead, CPA or new acquisition. Which ever the main metrics are for you to determine which publishers are the best performing.

Here we’ve split the optimisations required as part of this strategy into 3. Where the top-performing actions should be to captilise on their success and increase exposure. For your medium performing affiliates you should be focuses on moving them into the top category and utilising tactics like tiering commission or improving hospitality/relationship.

For your least performing, you need to decide whether they are worth the effort — in many cases they are, because of the ‘power of the long-tail’ where your long-tail could equal several super-affiliates — see the below image, so don’t underestimate them as a group. In terms of effort, you should deploy tactics to grow their performance, such as special offers, new creative or improved content.

Segmenting by Top Performing Publishers Types

Another way of segmenting your affiliate base as part of your strategy is to split them by publisher types. Some affiliate managers may find they have hundreds if not thousands of affiliates, so for them viewing the base in terms of publisher type, such as aggregator, content, cashback etc, might be the easiest way.

For your aggregators you should always aim to be number 1 in their comparison tables. Introduce special offers to improve your conversion rates, and adjust your text to be as clear on your brand proposition as possible. For your second rung of affiliates, if they are email and content for example, look at where you can boost the quantity of content. Deep dive into the email data and which customer segments are converting. And lastly your least converting, if they are cashback and voucher, look at ways you can improve your cashback rates. Explore what the competition is doing and try to out-do them.

This image gives a more detailed look per affiliate type. So depending on whether it’s your influencers or your aggregators who sit at the top of your segmentation tree, there are ways to optimise and improve their performance.

Chapter 3: Affiliate Strategies every Affiliate Manager should know

Strategy 101

Starting with Strategy 101, this strategy is often forgotten by many Affiliate Managers but it’s one they should all use as a staple to their activities.

It can be described in 3 steps:

Don’t forget the 80–20 rule — as is very common in affiliation, 80% of your revenue often comes from 20% of your affiliates. Think of your group of affiliates as a pyramid, with the few super affiliates sitting at the top, and the long-tail partners propping up the bottom. While the revenue follows the opposite shape, mainly coming from your super affiliates. This though doesn’t mean one should purely focus on the 20%, if anything it means you should always be looking to balance your pyramid and turn it into a square. One that won’t fall over if other variables kick in. Utilise other channels to boost performance (ATL, Display) — this part may be out of your control, as other members of your company may take care of your above-the-line marketing, or Display. The aim though is to align all your marketing efforts to support each channel. This means affiliates will benefit from the success of PPC, SEO and your branding efforts offline. Try to incorporate this into your actions with affiliates. When a big TV campaign is taking place, inform them, and try to adjust your copy and/or promotions to align with it. This will have a big impact on your channel performance. Expand segments & sectors — as mentioned in some of our previous strategies above, expanding your segments and sectors is a key element to the overall strategy, which is why it makes up 1 of the 3 sections of 101. Growing your affiliate base, while diversifying is so important to turn your pyramid into a square. More on diversification later.

The 6 Step Strategy

The 6 step strategy takes Strategy 101 a little further, and breaks it down into 6 key areas. Of course not all of these strategies are relevant to every affiliate program. Some of these may seem high level to you or not important, but the aim is to find a strategy that suits and works for your program. We’ve found the 6 step strategy is relevant to most affiliate programs out there, whichever the sector.

1: Establish your channel KPI — is it sales you want, revenue or quality?

2: Focus on The 3 Levers — affiliate management is a balancing act, you need to manoeuvre the 3 levers; traffic, LTV, conversion rates, in your favour, to succeed.

3: The Balanced Approach — don’t over-rely on one publisher segment or one publisher for that matter. Diversification is key, and more on this coming up.

4: Build and follow a refined Road Map segment by segment — below gives you an example of road map with different tactics per affiliate segment. Each of these should shift the needle in your performance.

5: Access, track performance and implement a monthly process — this refers more to your daily and monthly operations and keeping your house in order. Track and meet, analyse, optimise and plan ahead.

6: Avoid the icebergs and mitigate risk — you need watch out for the hidden risks under the water, such as unforeseen changes, regulation, PR mishaps, or promotions errors. Always look to mitigate risks, such as notice trends, watch your competition, recognise cookie stuffing, illegal PPC bidding and coupon fraud.

Other Strategy Scenarios

Our original objective of ‘acquisition’ is not succeeding — our answer to that is to switch objectives and focus on lead generation. You’ll need to get the internal buy-in to shift, but a shift in objective can work if your seniors support it and you have support from other channels like CRM to follow up on those leads. We’re bringing in a lot of customers but only a last-click basis— most companies are moving away from last click to attribution to multi-touch. In this format affiliates often loses out because it sits at the end of the funnel. In this scenario, you need to continue to encourage a last click view with affiliates, as you do payout on last click. Or you begin to optimise towards multi-touch, which tends to reward more impression based channels. This means altering tactics towards more banner placements and fewer promotions. I have no budget, how can I continue to run an affiliate channel without a sustained budget? — the answer to this is to re-adjust models. This might imply that a lot of your commission agreements are set to CPC or CPM, meaning you’re paying on view or click but not actually conversion. If you’re set to conversion, ie. CPA, then budgets should never be a problem because you shouldn’t be paying more than customer value. If you are then you need to re-negotiate your CPA.

Chapter 4: Why diversification is so important

Definition of diversification

An affiliate marketing tactic for advertisers where you never over-rely on a dominant publisher, group of publishers, segment of publishers or region of publishers.

The tactic underpins the idea that spreading your publishers far and wide, whether it be geographical, industry lead, or segment type will reap the benefits in the long-term and diminish down-turns leading to a more stable channel for growth.

Case study on diversification

In the gaming industry Oddschecker dominate the affiliate landscape. Upon analysis quarter after quarter, they grew and continued to overshadow my other publishers, making over 50% of new sales.

We had a great relationship, they were promoting my brand and the affiliate channel was one of the most successful in the business, accounting for 20% of turnover.

Then suddenly we lost our top placement on Oddschecker. Our odds slipped further down the rankings due to high competition and their account manager changed to a young new recruit, all in the space of a fortnight, meaning starting a new relationship from scratch.

Sales slipped very quickly and the following quarter they fell to just 10% of affiliate sales, dragging the entire channel with it. My error; over-relying on one publisher and not diversifying enough. I should have had other publishers to support them and take their place.

Going forward I ensured that I focused my efforts on bringing my large affiliates up to the level of super affiliate so that I had several successful publishers at the top of my tree. I diversified into different segments and didn’t just rely on comparison sites like Oddschecker. I spread my wings into new regions too, so that not just the U.K. market propped up my portfolio.

Origins of diversification

One should think of their affiliate program as a portfolio of accounts. In wealth management and the investment industry, no financial advisor would tell you to put all your money in one stock or one company. Diversification has always been a long-term secret to success.

This is why when people invest to grow their money they should buy hundreds or thousands of stock types across regions and industries so that if one falls it has far less impact on the entire portfolio. This is where the origins of the diversification strategy really come from.

It’s also prominent in our own lives, many people believe that we should not just focus on one source of income due to over-reliance. Multiple sources can help support and not put too much strain on the other.

Secondly, any good business will tell you that by diversifying products, suppliers and regions it will lead to a much stronger backbone to the company. They would never just rely on one source and neither should your affiliate channel.

Chapter 5: Affiliate tactics that work a treat

Strategies can be broken down into tactics, as we alluded to in step 4 of the 6 step strategy above. Lets explore this in more detail with specific tactics that work very well to grow key affiliates and/or segments.

Encourage Co-branded Landing Pages

Co-branding your landing pages can have incremental impact to conversion rates. Always try to co-brand this part of the journey, and if possible more steps of the journey too, like email or confirmation pages. It all makes it feel like a more interconnected journey, giving the consumer confidence to purchase.

Hospitality & Relationship Management

Such a key part of affiliate marketing management is relationships, particularly with your super affiliates. We recommend the following tactics to ensure that they like you and will keep promoting your brand:

Meet regularly & pay interest in their personal and work lives

Become friends with your counterparts

Make small- talk, go to their parties and invites

Give gifts at Christmas, give free tickets (not bribes)

Invite to your office, make the effort to go to theirs

Exclusivity

Exclusive offers mean that the customer cannot get that offer anywhere else for your product. Most advertisers are willing to offer publishers exclusive offers but only if performance is at an acceptable level or the demand is there.

Introducing exclusive offers and using them to onboard or motivate publishers is one of the main tools you have at your disposal. If you’re going to offer an exclusive discount or promotion to a publisher make sure you negotiate well. You want the top placement for this exclusivity or you want them to refer you another publisher before offering it out.

Also remember, the more you dish out, the less impact they have. They are no longer exclusive, so pick your publishers and offers wisely.

Promotions and Competitions

Promotions and competitions are a great way to motivate your publishers. Promotions to your customers via publishers come in the form of exclusive offers as mentioned above. There are also competitions direct to publishers to encourage them to recruit for you or convert at a higher rate.

Below is an example from BGO who encourage their affiliates to compete against each other for most sales, to win a monetary reward.

We’ve also listed some ideas of competitions, both on the customer side and to publishers.

Managing Churn & Reactivation

Publishers go through a lifecycle on your affiliate channel just like customers do in your product lifecycle. A key tactic is to therefore monitor these closely and notice when the downfall begins and aim to mitigate that drop.

Sudden downfalls could be as simple as tracking issues, or it’s as drastic as they removed your link altogether.

Chapter 5: Looking at specific affiliate types in more detail

Cashback — How to utilise cashback affiliates without canabalising your existing traffic

Cashback affiliates are some of the most successful and renowned affiliates on the web. Famous for turning around the fortunes of not only affiliate programs, but entire businesses too. In the U.K. the most widely used cashback sites are Quidco and Topcashback, both with over 10 million users. They are in fact almost identical in set up, layout and proposition. They offer cashback to customers when they uptake a merchant’s product, service and on the most part their associated offer.

How they work is to pass the CPA onto the customer, so in fact, they don’t take a CPA as a traditional affiliate would. Normally you would pay a publisher say 10% of the sale price or a fixed £100 per verified sale. Though with cashback sites they’ve decided to pass the CPA onto the customer.

How they make their revenue is via fixed tenancy placements — adverts around their site to promote your offers. These can be priced in the thousands, depending on how lucrative the position. So these companies make huge income from the tenancy placements on offer and do not keep any of the CPA, choosing to pass it all to the customer.

Other cashback sites like Easyfundraising or Give As You Live have taken a slightly different approach and pass the CPA onto charities.

The big question that many businesses ask themselves is whether they should be appearing on cashback sites at all? They question it because they don’t want to cannibalise their existing traffic. If you think about it, a growing eCommerce site is seeing their traffic come in from all the usual sources, PPC, Paid Social, Organic etc, and this is already costing them to achieve it. So, why do they want to then pay extra for customers on top via a cashback site? Second too, why do they want to encourage customers to get a discount when they might have come to their site anyway. The main point is that, why reward someone if they would have purchased anyway?

Sites can see a pattern of customers come to their site, bounce, and then reappear after visiting through a cashback site. We’ve all been guilty of adding a pair of jeans to the basket of our favourite shopping site. Only to abandon the journey because we remembered we might be able to get cashback for it instead. So we look on Quidco and there it is, our favourite retailer, so we click through, add the jeans again to our basket and purchase. In turn obtaining a 10% cashback, due to be paid in a few weeks’ time.

So how do businesses get around this problem? Well, there are a few solutions so that you don’t have to remove yourselves from cashback sites. Because let’s face it, you don’t want to not feature on a site with 10 million loyal and active users, let alone several of these sites combined, probably accumulating 25 million users (assuming there is no cross-over, which there probably is in abundance). In order, what you can do to get the most out of them is:

1. Reward mainly for new users – offer cashback just for new customers for incremental growth. It will attract and convert those new users. Saying this, it can work for existing customers if you have trouble reactivating them and you keep the rate low.

2. Offer tiered cashback to encourage higher basket value – if your users are purchasing at £100 a basket, then offer cashback only to those that far exceed that, at £200 for example. Therefore cashback is used as a mechanism to attract higher-value customers.

3. Restrict abuse with tight T&S’s – having tight measures in place to prevent fraud will certainly stop those thinking they can get quick and easy cashback. Having T&C’s that have been reviewed by your legal team will ensure they are robust enough to stop customers finding loop holes and taking advantage.

4. Feature seasonally and time tenancies – some businesses will have clear seasonality with their products. A skiwear brand will normally only spend during colder periods of the year. Cashback therefore allows them to compliment this higher converting period.

Overall, there are several tactics one can employ to protect your traffic and organic sales without losing the huge audiences these sites offer. At the least it’s worth trying, adjusting, optimising and managing these sites carefully to get the most out of them. Like every affiliate and every marketing channel, they take time to find the right suitability and spend for your proposition. It might not be right for everyone but when it works it can be very, very right.

Email Affiliates — understanding how they work to get the most out of them

One of the main affiliate types for generating awareness is Email. Email publishers are considered ‘lead generation’, publishers or networks have a vast database of potential consumers to reach out to. As oppose to cashback publishers who sit at the purchase end of the consumer journey, or content and comparison that sit more on the researching phase.

Email publishers often sit at the start of the journey and are therefore associated more with awareness, branding, or as we said — lead generation than sale completion or purchase.

This appeals to such advertisers as Car Manufacturers who are looking to simply grow their database and encourage test drives, rather than a full car sale online. It works best for industries where the purchase consideration period is far longer and takes the greater decision making time and effort.

Email publishers are simply websites that maintain a targeted email list and are willing to reach out to them on your behalf. These often come in the form of an email feature, placement, or solus — a complete email takeover. Sometimes they appear in weekly or monthly mailers or one-off sends. The solus is often the most effective method as it’s exposure across the entire email.

An email publisher can be a news/media site, like Thisismoney or Lovemoney who would be classed as a content publisher but maintain such a large subscriber base email that can be utilised with the advertisers brand. They can also be coupon or cashback sites where email is utilised.

There are also networks and agencies that have relationships with a huge array of publishers, they group them together and offer advertisers the option to reach thousands or millions of users in one go. All that’s required is your HTML email template, or creative, and landing page link, which is then distributed to publishers via the network.

The benefits to the publisher are the commission earnings they receive in return for the email send. This can be in the form of CPL, CPM or CPA. As email is primarily used for lead generation over sales, publishers often push for CPL or CPM as oppose to CPA, depending on the product they’re promoting. CPM is an impression based pricing model, which is charged on a price per 1000 email recpients. Prices for CPM can range from £5.00 per 1000 email profiles to £100 per 1000 email profiles depending on the quality of the audience.

Email is often considered the fastest way to generate traffic, leads or sales for an advertiser. Email sends can be in the millions, therefore generating thousands of click-throughs and hundreds of conversions in one send. So bulk leads can be captured in a matter of minutes.

As we mentioned previously, networks like advortis.com have publisher partners that have access to more than 9 million unique U.K. email profiles.

The advantages of using such a provider are their reach, their industry connections, particularly long rail publishers, a management service where all you need to provide is creative and landing page and a reporting system showing earnings and conversions.

Another key aspect of email marketing affiliates are the access of data and the ability to segment their base to target exactly who you’re looking for. Unlike other affiliate types, they can really hone in on your potential lead or user. Targeted email campaigns can then take place via demographic, interests, intent, age and whole range of possible segment splits. This all makes it a very appealing outreach program for advertisers.

And lastly, the top tips for utilising these publisher types…

Always vet where they received their data and email lists to ensure quality and relevance. Negotiate on CPM, especially if it’s the first time using them. Imbed a networks fee into the CPL so that they have to work for their reach. Ensure full GDPR, IAB and other regulations are adhered to. Ensure your creative is relevant, clear, tested and in line with their previous email sends. Always optimise by regularly refreshing creative for each campaign.

Thank you for reading this article & I hope you found it useful!

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Disclaimer

The author takes no responsibility for any misuse of information contained in this article. All information has been taken from actual events and imagery or screenshots from free sources. If any owner or brand wishes to have any information removed, they may get in touch. He is not responsible for any copyright infringement as this is used purely for educational purposes and is happy to edit if required.