In order to not get burnt, especially as a new affiliate, you want to choose affiliate programs wisely.
While some say the choice is as simple as “promoting those who pay more,” I strongly disagree with this simplistic approach. Higher percentages as commissions or impressive flat amount payouts do not mean anything unless the program converts. It can cost you a lot of money and time spent on a wrong program before you realize it was a bad fit in the first place.
Therefore, it is useful to look at every new/prospective affiliate program (or merchant/advertiser) through a prism of 15 factors, keeping also in mind that not any one of them exists in isolation. They are always intertwined and interdependent, and your performance with any affiliate program will always depend on a variety of these variables.
Start right from the merchant’s website. Look at it from two angles: as a consumer and as an affiliate. As a consumer, pay attention to its load time, ease-of-use (both overall and the checkout process, in particular), professionalism, compelling copy and calls to action, and other related factors. As an affiliate, make sure to critically check it for any “leaks,” or ways for the end consumer to take a route that does not lead to commissions. Most commonly, leaks come in forms of toll free phone numbers, online chat assistants that also take orders, links to other merchants, and even AdSense units and affiliate links of their own.
Check the reputation of the merchant you’re planning to partner with. Once again, approach the question both as a consumer and as an affiliate. As a consumer you want to go to independent review sites (these will vary from industry to industry); as an affiliate go to affiliate forums and blogs. If there is something you should be aware of, it should be easy enough to find.
I have seen merchants create replicas of their websites, only with higher prices, to make an affiliate program with high payouts possible. I have also seen merchants increase prices on their main website — again, to allow for a handsome affiliate commission. Techniques like these do not help you sell. Consumers, especially in our age of easy shopping comparisons, are becoming more and more savvy. They won’t buy unless the merchant is truly competitive. This applies to pricing, product selection, and even the merchant’s brand.
4. Market Saturation
Some niches are already too crowded and unless you have something of truly unique value to add into the pre-purchase process, look for a less saturated niche. Newer affiliates will find it especially hard to compete in heavily saturated niches. Take hosting, for example. It’s an interesting niche with plenty of good players (and, unfortunately, quite a few less-than-kosher ones too). But it is way too saturated for a new affiliate.
When you put together a comparative table, which I hope you will do, this will be one of the factors you will obviously list. However, don’t be too hung up on this one. There are many other variables (see the following points) that go into the final formula, which you want to study as well.
6. Commission Recurrence
Some merchants pay commission on new and unique customers only. I do not believe this to be a good practice. In the survey conducted for my Online Shopping Through Consumers’ Eyes book, I asked consumers: “When shopping for products requiring ongoing replenishing (e.g., grocery, ink, bank checks, etc.) and receiving satisfactory service, would you still compare your retailer’s offer to other offers next time you need their product?” Close to 72% replied “yes.” Therefore, it is my belief that merchants that run affiliate programs should compensate every sale equally, or even offer an additional bonus for new customers. However, some limit affiliate commissions to new customers only. Therefore, the need for you to check on this prior to signing up.
7. Terms of Service
In an anonymous poll I asked affiliates if they actually read affiliate program agreements prior to applying into programs. The largest group (38%) said “rarely,” 14% replied “sometimes,” 19% “often,” and only 29% replied “always.” Sobering statistics! Yet elements like commission recurrence, promotion restrictions (e.g., no direct linking from paid search ads, or no use of trademarked terms in URL paths) may be found right in the merchant’s TOS and shouldn’t come to you as a surprise when they start cancelling your commission on “invalid” or ”unqualified” sales/leads.
8. Cookie Life
This is the period of time within which the merchant agrees to compensate you for the referred customer. If it is set at 24 hours and a visitor you refer purchases 25 hours past the initial referral, you will get no commission on that sale.
In the Winter 2013 issue of the Visibility Magazine, I pointed to a short cookie life as one of the mistakes to avoid. However, do not shy away from affiliate programs with cookie life set at 23-24 hours (like Enterprise Rent-A-Car, Amazon, iTunes, Sephora, etc). The first affiliate reaction may be: “Why even bother?!” However, if you dig deeper, you’ll find out that between 85% and 91% of purchases occur within 24 hours of the end-customer’s click on an affiliate link. Combining this reality with the fact that the above-quoted brands, generally, yield higher-than-average conversion rates makes them worth your try, anyway.
Don’t get me wrong, I do not support short cookie life (quite the contrary, actually). I am just saying that some of these programs may still be worth your effort.
9. Conversion Rate
This is one of the most important metrics, which helps you answer a part of the “how much will I be able to earn” question. For instance, if we take a smaller merchant who is paying a 10% commission on all sales and has a 1.5% conversion, and Amazon, which is paying only 4% but has a conversion rate (CR) of some 6% (see http://prussakov.com/AvsW for the basis of this assumption), we will see the following happen on 1,000 referrals (assuming an equal average order value of $10):
1,000 visitors * 1.5% CR = 15 sales
15 * ($10 AOV * 10%) = $15.00 commission
1,000 visitors * 6% CR = 60 sales
60 * ($10 AOV * 4%) = $24.00 commission
As you can see, conversion plays an extremely important role in the affiliate earnings.
EPC stands for Earnings per Click, and most affiliate networks disclose this metric even before you join a network-based affiliate program. Keep in mind that in many cases the EPC figure you see will be tied to 100 clicks sent from an average affiliate in the program to the merchant. So if you see an EPC of $27.49, know that this is the average of how much affiliates of this merchant earn on every 100 clicks they refer.
11. Reversal Rate
Very few affiliate networks (AvantLink, for example, is one of those few) disclose this information upfront, and needless to say in-house programs do not either. Therefore, most frequently affiliates have to find this metric out from their own experience with the merchant. Either way, keep a close eye on this one. Basically, every 1% of the reversal rate implies 1 reversed order per each batch of 100.
12. Tracking/Reporting Platform
Do your homework here and ensure that you’re comfortable with the tracking and reporting platform (be it an affiliate network or their in-house software) that the merchant uses. Not all platforms are created equal, have the same operating terms, and not all “affiliate networks” stand for the same ethical principles.
13. Management & Approachability
Contact the merchant
and affiliate program manager. See how quickly they get back with you and how detailed/to-the-point their response is. You want to partner with someone who cares about your partnership. You’ll see that some merchants do not, or at least don’t appear like they do.
Whether you are relying heavily on banner creatives, deep-linked text links, or product feed, check whether the merchant is providing adequate support here as well. Their creatives must also be 100% affiliate-friendly (remember “leaks”? there is no place for them here either), professional, and effective.
Some merchants offer you a good set of basic links and banners, others offer just a homepage link and a couple of banners, while yet others offer both some basic links and a way for you to create your own (deep-linking to specific URLs). Some would also offer widgets, video creatives, easy product feed import, and APIs. If any of the latter are of importance to you, check if they offer these.
Ultimately, remember that time spent on the preliminary due diligence will pay off in the long-term, safeguarding you from wasted time, money, and nerve cells (which cannot be reproduced).