Rocky Fu’s Blog

What is affiliate marketing? Simply put: with affiliate marketing, you pay certain amount of money or percentage of commission ONLY when an desired action happens.

Sounds perfect, isn’t it? Using an affiliate network to market your products sounds like hiring dozens, hundreds or thousands of sales people WITHOUT offering a basic pay!!! Wrong!

How Affiliate Marketing Hurts You

1. Increased search marketing costs. When people try to get your products or services sold, one of the online marketing channel is no doubt search engine marketing. When more and more people bid for the same set of keywords, the cost per click would no doubt keep increasing. If search engine is one of your online marketing channels, this is what you need to do:
   • Track the overall ROI. Has your return on investment increased or dropped since you have adopted another marketing channel? If it increases a lot, at least:
   • Make sure your total net profit is going up. Is there anything you else can do?
   • Discuss with your affiliate network and add one policy: no PPC is allowed to use for affiliates. Make sure you watch closely on the traffic and conversions when the policy change happens.
2. Duplicate payment to affiliate networks. I came across lots of advertisers who tried to join as many affiliate networks as possible. The logic is simple, “we ONLY pay when they can sell the products”, or “we can reach more customers.” Fair enough. What these advertisers didn’t realize is the possible duplicate commissions paid to affiliates.
   Example case study: When a visitor lands on the advertisers website via an affiliate URL (let’s say affiliate network A), leaves the website without any conversion, and comes back via another affiliate network B URL, both affiliate network A and B would normally take it as a conversion in their network; so, the advertiser is supposed to pay for 2 sales while there is actually only one. If advertiser pays an agency on performance based model and a visitor converts through paid search and then affiliate URL, the advertiser also ends up paying double commissions for only one conversion. Here is how you can deal with it:
   • set the conversion rule straight up front. e.g. Last click wins. It’s not perfect but advertisers must make it very clear to different marketing vendors either search or affiliate network.
   • implement one web analytics tracking across all networks.
3. Reputation damage. Didn’t you come across a sales guy who promised a perfect product and you found it not so after you bought it?
   • Publishers on affiliate network may promise functions or features the products doesn’t offer.
   • The product or service might be introduced / exposed on a website that might damage the brand image such as adult sites and gambling sites.

   What you need to do for reputation management:

   • Carefully select affiliate networks who perform quality control. There are hundreds of affiliate networks and many of them simply accept all publishers’ applications.
   • Review the affiliates report and check out the credibility of the publishers who promote your products or services.
   • Use tools to monitor online buzz about your company, products, and brands.

Now you know affiliate marketing is absolutely not perfect. So, be careful when you adopt it.

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