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Affiliate marketing: is it a good way to increase profits ?

Affiliate marketing: is it a good way to increase profits ?. Università degli Studi di Bari Facoltà di Economia. Introduction.

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Affiliate marketing: is it a good way to increase profits ?

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  1. Affiliate marketing:isit a good way to increaseprofits? Università degli Studi di Bari Facoltà di Economia

  2. Introduction Nowadays almost 30% of the world’s population has Internet access: that means 2.095.006.005 people, each of them spending an average of 16 hours per month, with a total of 32 billion hours spent online every month! (Source: Go-Gulf)

  3. Italian Internet users are estimated to be close to 26 million, with a greatgrowthsince 2001 (source: Mclink)

  4. What happens during those hours? Is it possible to earn money online as a webmaster or increase profits as an entrepreneur? Why is every website so full of banners and links? Why do we find advertisements even before watching videos on Youtube? Who does earn money? How?

  5. General info Definition: affiliate marketing is a type of performance-based marketing in which a business rewards one or more affiliates for each visitor or customer brought about by the affiliate’s own marketing efforts. The players of affiliate marketing are: • the merchant, also called “retailer” or “brand” • the publisher, also known as the affiliate • the customer.

  6. Affiliate marketing is also known as “a way for a company to sell its products by signing up individuals or companies (“affiliates”) who market the company’s products for a commission” or as one of the best ways to earn money online, also suggested by Robert Kiyosaki, one of the world’s best educator in personal finance. Many hard-working affiliates made a fortune thanks to affiliate marketing.

  7. How does affiliate marketing work? • A company sets-up an affiliate marketing program, which may be in-house or outsourced, using a tracking software that will record visitors’ actions • The webmaster signs up to the program as an affiliate, and gets access to his panel, with personal banners and links • The webmaster publishes banners or links into articles/web pages related to the promoted product

  8. A random visitor clicks on a banner/link • The company’s web server is programmed so that the visitor will be sent to the webpage for the product/service promoted. At the same time the affiliates’ ID will be recorded with the visitor’s session ID (an arbitrary number assigned to each visitor every time he enters the site), so that if the visitor makes any purchases on that session, the affiliate will be credited with their purchase.

  9. Short history Affiliate marketing is the evolution of referral marketing: a method of promoting products or services to new customers through referrals, usually word of mouth. Marketers realized that a referred customer was much more likely to buy a product/service than someone just walking on the streets. Through affiliate marketing, marketers use the same concept of referral marketing, using their websites as means of distribution.

  10. William J. Tobin – PC Flowers & Gifts • Amazon’smyth • Affiliate marketing nowadays. In less than 20 years, affiliate marketing has grown phenomenally. In certain cases e-commerce websites have outperformed their parent offline businesses and grown bigger than them in the process. In 2006 affiliate commission payouts were estimated at $6.5 billion worldwide.

  11. Future growth: mobile market, social medias, social gaming

  12. In-house vs outsourced affiliate programs Affiliate programs are the means through which affiliate marketing works: automated marketing programs where a web advertiser or merchant recruits webmasters to place the merchant’s banner ads or buttons on their own websites.

  13. Whatshould a company do beforelaunching an affiliate program? • Competitor analysis • Commercials • Creatives • Communication • Campaignanalysis

  14. In-house affiliate program An in-house affiliate program is often launched by big companies and businesses to better and directly check their affiliate records, even though they could choose to have different promoting channels: an in-house affiliate program + different outsourced ones. Pros: increased flexibility, saving affiliate networks commissions, better SEO (Search Engine Optimization - is the process of affecting the visibility of a website or a web page in a search engine's results) strategy with proper text links, ad-hoc program.

  15. Outsourced affiliate programs Most companies decide to outsource their affiliate programs since they can use an existing network of publishers and be helped by expert affiliate managers. Unless the company could hire a great affiliate manager or a team which will work just on its campaigns, it is preferred to choose the outsourced option.Pros: use of a network of affiliates, help of an expert affiliate manager, fast growth, fraud screening.

  16. Affiliate networks Definition: “affiliate networks act as an intermediary between affiliates and the merchant’s affiliate program” or“systems where advertisers who want to boost their Internet sales are matched together with website owners who want to boost their advertising revenue by means of an affiliate program”

  17. Benefits: • easy and free to join • all tracking and payments are done by one network • easy way to get deals with big companies • wide offer of banners that can be perfectly added to every website • chance to check every affiliate program’s record before applying

  18. The main affiliate networks operating in Europe are: Tradedoubler, Zanox, Sprintrade, Netaffiliation, AffiliateWindow, Webgains, Buy. Affiliate networks earn commissions every time one of their affiliates generates a sale through his website. Their commission is even called transaction fee or affiliate override.

  19. Tradedoubler: 1,900 advertisers and 138,000 publishers. Yearly gross revenue: 73,000,000 € Zanox: 4,000 merchants; more than 1,000,000 publishers. Yearly gross revenue: 77,000,000 €

  20. Rewardplans • CPM (Cost-per-Mille) – the merchant will pay commissions if their banner is displayed 1.000 times (no clicks on it are needed) • CPC (Cost-per-Click) – the merchant will pay commissions every time a visitor clicks on a banner • CPL (Cost-per-Lead) – the merchant will pay commissions if the visitor signs up to a newsletter/website etc • CPA (Cost-per-Action) – the merchant will pay commissions if the visitor does an action (usually a completed sale, including a credit card transaction)

  21. How can a publisher drive traffic to his website? • SEM – Search Engine Marketing • DEM – Direct Email Marketing • Social media marketing Statistics are checked by using Google Analytics.

  22. Case studies Case study #1Client: HyundaiAffiliate network: TradedoublerReward plan: CPLGoal: generate 1,000 sign-ups for a newsletter with a chance to win a €20 fuel voucherDuration: 5 weeksResults: 1,156 unique visitors, 1,000 sign-ups

  23. Case study #2Client: BimbomarketAffiliate network: ZanoxReward plan: CPSGoal: increase salesDuration: 2009-ongoingResults: sales increased by 25% during the first weeks, new customers all around Europe

  24. Case study #3Publisher: Paolo MoroAffiliate network: TradedoublerDuration: 2002-2008Revenues: €125,369.48

  25. Case study #4Publisher: John ChowAffiliate networks/programs: severalDuration: 1 yearRevenues: more than $500,000! Actually he earns up to $40,000 each month with affiliate marketing.

  26. Alternatives Digital marketing has increased by more than 14% in the last year while traditional advertising spend has decreased by 161%! Marketing channels seem to change as communication methods do: first we had newspapers advertising, radio advertising, than TV advertising, now online advertising is becoming stronger.

  27. Print advertising • Television advertising • Telemarketing

  28. Relatedproblems Performances of affiliates marketing may be falsified by affiliates, using some special techniques. For this reason, most affiliate programs have Terms of Service that contain strict rules against affiliates abuses.

  29. The main problems related to affiliate marketing are: • Email spam • Virus • Spoofing • Affiliate’sincentives

  30. Conclusions

  31. Most of us spend several hours per day on the Internet, never wondering what financial benefits this invention may offer. Internet is often considered an issue that created unemployment, even though it offers income opportunities to absolutely everyone: affiliate marketing is probably the best one!

  32. For further info: www.affiliatemarketing.nicoladisisto.ws nico@nicoladisisto.ws

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