David and GoliathAffiliate Marketing for SMEs

A4uexpo London 2008

14th October

What is a SME?

• An enterprise which employs less than 500 people; has an annual turnover of less than €100m and/or balance sheet assets of less than €86m; and has no more than 25% of its capital or voting rights owned by a larger firm or public body (European Commission definition).

Characteristics of a SME?

• Typically small marketing budget

• Lack of in-house resource

• No scale advantages

• ‘Hands-on’ approach

• Quicker decision-making processes

• Often niche retailers

• Often high-growth

What can Affiliate Marketing bring to the party?

• Tactical marketing

• Strategic marketing

• Brand building

Tactical marketing - characteristics

• Short Term in nature

• Focus on market share (or brand building)

• Akin to trade marketing

• Tools employed: high commission rates, discounted prices, competitions with high-value prizes, open ppc policy, discount vouchers

Case Study: Gift Merchant

Case Study: Gift Merchant

Period Comm(£) Sales(£) Num Sales Imps Clicks CTR(%) Conv Rate(%) EPC38,961.00 263.92 1,458.18 40.00 73,424.00 7,680.00 0.10 0.01 3.44 38,991.00 1,156.97 7,556.11 149.00 103,327.00 10,893.00 0.11 0.01 10.62 39,022.00 4,423.06 29,481.55 730.00 435,661.00 17,057.00 0.04 0.04 25.93 39,052.00 7,011.62 46,584.93 1,128.00 778,920.00 19,270.00 0.02 0.06 36.39 39,083.00 1,265.05 8,535.68 243.00 528,470.00 9,084.00 0.02 0.03 13.93 39,114.00 1,320.63 8,657.64 246.00 54,706.00 7,280.00 0.13 0.03 18.14

15,441.25 102,274.09 2,536.00 1,974,508.00 71,264.00 7.07%(avg) 3.01%(avg) 18.07(avg)Totals 15,441.25 102,274.09 2,536.00 1,974,508.00 71,264.00 0.00%(avg) 3.56%(avg) 21.67(avg)

Program

What can Affiliate Marketing bring to the party?

• Tactical marketing

• Strategic marketing

• Brand building

Strategic Marketing - characteristics• Long Term

• Ongoing partnership between merchant and affiliate

• More Focus on niche and bespoke optimised sites

• Tools employed: SEO, Flexible ppc policy, competitions, discount vouchers, email offers, tiered affiliate commission rates,

Case Study: Niche Retailer

Case Study: Niche RetailerProgram Period Comm(£) Sales(£) Num Sales Imps Clicks CTR(%) Conv Rate(%) EPC

01/01/2007 733 13,864 410 74,062 4,014 0.054 0.102 18.270 01/02/2007 786 14,523 422 538,891 4,726 0.009 0.089 16.620 01/03/2007 1,132 21,127 603 303,840 6,129 0.020 0.098 18.480 01/04/2007 1,162 22,075 654 142,733 7,446 0.052 0.088 15.610 01/05/2007 1,375 25,812 741 195,449 7,511 0.038 0.099 18.310 01/06/2007 1,626 30,382 965 109,582 8,416 0.077 0.115 19.320 01/07/2007 2,008 37,876 1,207 100,203 7,496 0.075 0.161 26.790 01/08/2007 2,332 43,319 1,406 79,281 8,515 0.107 0.165 27.390 01/09/2007 2,667 48,529 1,546 115,644 9,106 0.079 0.170 29.280 01/10/2007 3,124 58,150 1,721 152,799 10,079 0.066 0.171 31.000 01/11/2007 3,216 57,476 1,722 489,425 9,335 0.019 0.185 34.450 01/12/2007 2,735 50,258 1,488 306,660 7,628 0.025 0.195 35.850 01/01/2008 4,841 83,382 2,341 217,803 11,717 0.054 0.200 41.320 01/02/2008 4,335 58,939 1,710 211,929 11,942 0.056 0.143 36.300 01/03/2008 4,539 82,391 2,448 296,661 15,627 0.053 0.157 29.050 01/04/2008 6,106 98,417 2,985 318,598 14,324 0.045 0.208 42.630 01/05/2008 7,407 106,957 3,360 677,735 16,172 0.024 0.208 45.800 01/06/2008 8,148 114,524 3,469 846,238 21,528 0.025 0.161 37.850 01/07/2008 10,150 130,688 3,995 856,605 21,643 0.025 0.185 46.900 01/08/2008 14,421 144,224 4,496 1,059,685 20,464 0.019 0.220 70.470 01/09/2008 13,875 138,846 4,369 1,139,062 21,939 0.019 0.199 63.250

96,720 1,381,758 42,058 8,232,885 245,757 4.49%(avg) 15.80%(avg) 33.57(avg)

What can Affiliate Marketing bring to the party?

• Tactical marketing

• Strategic marketing

• Brand building

Branding - characteristics• Short - medium Term• Focus on making the brand known

Reach to target demographic Agreed brand attributes Agreed contextual associations Agreed promotional methods

• Free for Merchants• Tools employed: Open PPC policy, semantic

targeting on content, pops,

So What?

• Affiliate Marketing is efficient for SMEs because:No wastage - only pay for actual salesLow risk channelFree brandingBudget can grow with salesEasy and inexpensive access to Network

affiliate baseCan rely on Network account managers

Key Success Factors!They sound simple but you would be amazed!

• Plan with your account manager

• Understand the economics of your business

• Communicate with your affiliates

• Stick to your agreements (really!)

• Pay your affiliates (yes, really!)

• Introduce changes with appropriate warnings

Don’t get it wrong!

What can Affiliate Marketing bring to the party?

• Tactical marketing

• Strategic marketing

• Brand building

Questions?

• Hero Grigoraki: Effective Discount Voucher Code Wed 15th, 11 – 12 pm Platinum 5 & 6

• David Crystal: Website Linguistics,Wed 15th, 16.30 – 17.30 Platinum 5 & 6