1. CCT356: Online Advertising and Marketing Class 4: Affiliate Marketing

2. Administration • Articles? • First assignment (online ad critique)? • Reminder: terms at the beginning of every chapter are potentially testable

3. Affiliate and Affinity Marketing • Similar to word of mouth marketing – recommendations from friends drive business • Affiliation formalizes recommendations – a bit of a kick back for referring friends • Performance marketing – more referrals, more $ • Examples? • MLM as the dark side – more on that later

4. Early history • Many traffic building networks (web/blog rings, etc.) • Early history of rewards in adult services (many early e-commerce/advertising innovations come from this industry!) • Amazon affiliate program – selling books and other products through individual blogs, etc. – marketing done by others, execution of sale done by Amazon

5. Affiliate Network Basics • Visitor visits affiliate • Acquisition is triggered, purchase at merchant • Tracking of where sale was triggered • Reward for passing on sale

6. Common Rewards • Cost per action/acquisition (CPA) – fixed commission on sale • Cost per lead (CPL) – fixed commission for potential sale/lead (often more complex deals) • Revenue sharing – percentage of sales returned • Cost per click (CPC) – more traffic building than acquisition centered, prone to click fraud • Affinity reward points (e.g., AirMiles, cash back, etc.)

7. Tracking • Internet affiliate programs = automatic tracking of referrals • Often embedded in URL - text example • Stats collected on impressions, clickthrough, and conversions • Sets up a cookie – cookies are essential in this process. • Why? What do cookies do?

8. Where things go wrong • Multiple referrals, one sale • Alternate models of sale • Technical clashes (e.g., cookie timeouts, changes in data structure, lifelong cookies) • Cookie filters/purging

9. Attribution issues • http://www.slideshare.net/AT-Internet/attribution-in-online-marketing-white-paper-at-internet • Do you aware consumer’s remembered choice? First reference? Last? Some mix of all the above? • Multi-plaftorm, multi-touchpoint models get very confusing very quickly – examples?

10. Considerations • Who are competitors? What are their affiliate networks? (And are they exclusive?) • Who are your target affiliates? (And who may not be your best targets?) • Network considerations – what’s the model, commission tiers, support, cookie expectations etc. • Potential international issues?

11. Related: Affinity Programs • More customer retention than acquisition – keeping people coming back by rewards • E.g., Air Miles, Aeroplanto simple things (e.g., coffee stamp cards, etc.) • Benefits? • Drawbacks?

12. Related: ZyngaGames • Billions of game requests on Facebook • Games all similar – easy to start, slow but steady growth model • Acquiring certain objects require friends’ participation, leading to referral model for user base growth – friends draft friends to play • If you don’t want to bother your friends, you can buy currency to buy out • Best farms on Farmville are bought or really good at annoying friends • Cross-marketing of new properties – games plug themselves • Enough for $7 billion market cap…although a bad reputation

13. Related: Pyramid/MLM schemes • The dark side of affiliate marketing? • Chains of referrals – tiered commissions based on your location in referral network • People at the bottom – only benefit when lower levels are added • People at the top of the pyramid – consistent revenue even if they are doing nothing • A warning on getting involved… • Examples?

14. Related: Social Media Marketing • Referrals without reward – more authentically WOM • Some reward structure at times (e.g., Facebook contests, etc.) but more leveraging good words, references • More on that to come in a few weeks

15. Next week • SEM/SEO – what kinds of things do we need to cover there? • Following week – marketing strategy