Alex Mifsud, CEO of EntroPay, discusses how the rise of social marketing, in parallel with the boom in web 2.0 technologies, has dramatically changed the landscape for affiliate marketing
Edited by Jennifer Denby
Over half of consumers use the internet to carry out research before making a purchase in shops, educating themselves on the best deals available (Verdict Research, May 2009). With this in mind, marketers cannot afford to ignore the masses of user-generated content and reviews that are available online, as they have an important influence on many consumers’ decisions to purchase. It’s not surprising then, that affiliate marketing has swiftly risen to become one of the most popular marketing channels in the online sector as it allows brands to increase their online standout, leading to increased sales.
This boom has been further propelled as social media has moved into the mainstream. The dramatic increase in the use of blogs and social networks means that effectively anyone can now become an affiliate. For instance, Amazon has launched a new feature called Share on Twitter, which encourages its affiliate network to use Twitter as a new channel to earn commissions: ‘When Twitter users click on the link in your post and make a qualifying sale, you’ll earn referral fees. That’s it.’ Or is it? (Official Amazon Associates Blog) This is another indication that the recent boom in user-generated content has impacted on the development of affiliate marketing through the emergence of micro-affiliates.
Whilst individually these smaller affiliates might not drive much traffic to the merchant’s site, they make up a ‘long tail’ and collectively have the power to drive significant click-through. This ‘long tail’ of micro-affiliates represents a huge opportunity for merchants looking to boost traffic back to their sites, generate buzz and spread messages virally, which in turn leads to extra revenue.
Surprisingly, few merchants are maximising the value of this ‘long tail’ of affiliate marketing. In the past, the general assumption was that the administrative and cost implications of working with so many micro-affiliates would cancel out the potential revenue benefits. New technologies are challenging this reasoning and offer effective ways for brands to successfully take advantage of a booming population of potential micro-affiliates.
One key issue for both affiliates and merchants however is payments. This is related to the fact that the online community is global in nature, yet financial standards and processes often vary from country to country. According to EntroPay’s annual survey conducted at the ad:tech and A4U Expo events in September and October 2009, 34 percent of affiliates are not happy with how quickly they receive their commissions, compared to 71 percent of merchants and networks who are satisfied with the time they take to pay out commissions. The administrative costs of payments are also a sore point as 32 percent of merchants are not happy with the costs associated with their payments processes.
It’s clear therefore that in order to effectively mobilise the global ‘long tail’ of affiliates, merchants need to adopt an efficient system that allows all affiliates to be paid instantly, regardless of the size of each payment. Efficient and regular payment is even more important to those smaller affiliates or “hobbyists” who rely on the revenue generated by their affiliate marketing activity to pay for web hosting and search advertising in order to maintain their online presence.
The rise of social marketing in parallel with the boom in web 2.0 technologies has dramatically changed the landscape for affiliate marketing. Payment is one area where the influx of micro-affiliates has led to new challenges for merchants. Only when merchants have effectively addressed these challenges will they truly be able to leverage the collective power of micro-affiliates and achieve competitive advantage.