Affiliate marketing: Online retailers’ best friend

For many online retailers, affiliate marketing is their best friend. It works like a tireless virtual sales team, being paid commission only on very specific, measured results. While the UK affiliate market reaped £4.6bn in 2010, according to the Econsultancy’s Affiliate Marketing Buyer’s Guide 2010, its actual worth is probably far greater. “Although the overall percentage of online retail sales driven by affiliate marketing is 8%, for many blue chip merchants, particularly in retail and travel, this figure is much higher,” says the guide. This is because ‘sales leads’ are not taken into account in the official statistics – many millions of pounds of shop sales are generated from affiliate marketing activity. 

eBay Europe senior director of internet marketing Sasha Berson says affiliates play a crucial part of the online giant’s marketing mix. “Our affiliate partners have their unique audiences that are attracted by the value these sites bring to the users’ online shopping trips – be it through comparison shopping, unique content and community, loyalty programmes or myriad other innovative solutions,” she says.

Big retailers such as Tesco and Argos typically work with hundreds of affiliates, using a broad mix to reach specific audiences. There are large ‘top tier’ affiliate networks like Commission Junction and LinkShare, which provide account management and handle email marketing, co-registration, pay per click (PPC) and classic affiliate banners to be run on their affiliate’s websites. Then there are the ‘publishers’ (special interest websites, individual bloggers that recommend product), loyalty and reward sites, and PPC and search affiliates. Affiliate publishers, in particular, work well for eBay, says Berson, because they appeal to enthusiasts in a wide variety of areas from fashion, to technology to cars. eBay also acknowledges many transactions would not have happened without the publisher’s involvement, and rewards them fairly. “We compensate our affiliates handsomely for high-quality traffic,” says Berson.

The personal touch

However, not all retailers work with affiliates to best effect. Paul Bolton, director of product and corporate strategy at multichannel consultancy IVIS Group, says: “It’s easy to spend a lot of money and not necessarily get the best results, particularly when it comes to PPC, as people coming through might rarely convert to buyers.” He believes retailers need to be more targeted and work with affiliates to offer more personal, relevant and location-specific promotions.

Some affiliate experts think retailers are losing margin and damaging their brands by focusing too much on discounting at the expense of promoting fresh product at full price. Vicki Day, fashion blogger and owner of www.fashionablemaven.co.uk, says: “If more retailers embraced and understood the affiliate market they could really generate sales but at the moment no one seems to join the dots.”

She’s frustrated by the complex sign-up process, but her main criticism is that the majority of information sent by retail PR teams is pushing discounts. She says the blogger’s job is to pick out a jewel of a product and put it in the spotlight to generate interest and big sales, but believes most retailers don’t understand that approach. Those who do include Jaeger, LK Bennett and John Lewis, says Day: “They know the value of getting people excited about product at full price.”

Boden affiliate marketing manager Tanya Lejman says discount affiliates have their place – for instance Boden works with VoucherCodes.co.uk. However, it also works with many content sites such as Shopstyle and Sheerluxe. “Content affiliates are an especially important part of our programme as they give us the ability to share unique content about our products with a large range of consumers we may not have otherwise had access to,” she explains.

The right result

Steve Borges, co-founder of ecommerce specialist Biglight, says discounting through affiliates will help drive sales quickly, which suits many online retailers, but he acknowledges the need for some brands to also focus on “rich content” affiliates. “These are more likely to drive long-term interest in your website, and they are a great way to reach a whole new audience, beyond the existing email database,” he says.

Software based on intelligence gathered on previous returns from affiliate activity can help retailers generate the best possible ROI. Bolton says it has worked with Tesco in this area to help ensure the best-performing affiliates get used for specific promotions. He insists it isn’t about cutting down on the number of affiliates used, but more a case of making more intelligent use of them. Bolton says: “The days of sitting back and waiting for affiliates to deliver are long gone.”