Chapter 1 - a Profile of the New Generation Affiliate 6

Introduction 4

Chapter 1 - A Profile of The New Generation Affiliate 6

The Affiliate Sales Team 7

Chapter 2 - The Merchant’s Role 8

Work closely WITH the affiliate manager 12

Chapter 3 - The Importance of “Partner-In-Sales” Vision 14

Partner Psychology 14

Chapter 4 – Chose Your Product Wisely 16

The Product-Affiliate Improvement Cycle 16

Making Good Products Better 16

Developing New Products from Old Ideas 17

Bad Products Help Your Competitors 17

Pricing 18

Chapter 5 - How Affiliates Choose Merchants 20

Chapter 6 – The Six Types of Affiliates 23

Super Affiliates 24

Power Affiliates 25

Multi-Merchant Affiliates 26

Niche Affiliates 27

Webmaster Affiliates 27

“Scraper” Affiliates 28

Chapter 7 – Training 31

More Reward, Less Risk 31

Why Train the Under-Achievers 33

Training Without “Micro-Training” 35

Chapter 8 - Program Side Training Options 37

Non-Interactive Training Ideas 37

Interactive Training Ideas 40

Chapter 9 - The Role of The Site Visitor 47

Chapter 10 - Newsletters 49

What Affiliates Want to Read 49

Chapter 11 – How to Recruit and Retain Super Affiliates 52

A Program That Converts 52

Flexibility 53

Profile of the Super Affiliate 53

How to Locate Potential Super Affiliates 54

Contacting Super Affililates 57

Direct Mailings 58

Snail Mail Letters 58

Postcards 59

Gifts 59

Three-Dimensional Mail 59

Advertising 60

Use the Phone 60

Chapter 12 - Advanced Promotional Tools For Super Affiliates 61

Custom Pages 61

Let Them into Your Check-Out Process 61

Customized Reports 61

Data Feed Integration Software 61

Bridge Copy and Bridge Links 63

Chapter 13 - Why Do Affiliates Fail? 64

Chapter 14 - Fight Failure with Best Practices 72

Key Affiliate Marketing Best Practices 72

Chapter 15 - Motivating Affiliates with Competitions 75

Motivation in Action - A Successful Example 76

Conceptualizing - The Formula 78

Prizes That Motivate 80

A Case Study in Prize Selection 81

Chapter 16 - Promotional Methods 88

Promoting Results and “Who’s Winning” 89

Chapter 17 – Advertising 91

DMA’s Internet Marketing Advisory Board (IMAB) Best Practices for Online Advertising Networks and Affiliate Marketing 91

Low Cost Advertising 93

Directories and Low-Cost Promotions 93

Paid Advertising 97

High Circulation/High Traffic Advertising 99

Pay Per Click 101

PPC Worth Trying 101

How to Track Your Advertising to See if It Is Profitable 104

Chapter 18 - Spam and Email Compliance 108

Where to Read The CAN-SPAM Act 109

Chapter 19 - Why Care About Spyware? 112

The Role of Affiliate Networks in Spyware Prevention 117

Chapter 20 - Maintaining Your Program 123

Technical Maintenance 123

Relationship Maintenance 126

Squares 131

Chapter 21 - Outsourcing Options 134

Choosing an Affiliate Network 135

Introduction

It used to be easy to set up an Affiliate Program. All a company had to do was to make a copycat site – a site exactly like the main company’s. Then when a person was interested in selling the product, a new site was set up, imitating the main one, except with the affiliate’s tracking number on it.

Today, simply having an affiliate program does not guarantee success. Every program must compete with thousands of others, not merely for consumer dollars but for truly motivated affiliates.

Today’s top affiliate managers - the ones who work for multi-million dollar affiliate programs - have mastered the art of putting together a top-of-the-line affiliate sales team.

What about the programs that don’t? They fail to get good ROI from their affiliate channel. Most failing programs don’t shut down altogether, because discontinuing a program can be a terrible move - affiliates have a long memory for failures. A weak program often limps along, constantly tweaking the commission structures and payment plan, and further alienating affiliates. Eventually the program is considered an ongoing cash drain instead of a vital revenue resource.

Why is it that so many affiliate programs get lackluster results? Because they don’t have super managers who focus on leading winning remote sales teams. Mediocre programs spend too much time recruiting instead of getting the most from the affiliates on their rolls. They allow those who could be their best affiliates to fall through the cracks. And they aren’t proactive in building strong personal relationships with their potential super and power affiliates.

It doesn’t matter how grand your product or service is. No product sells itself. You must do what today’s best managers do. You must treat your affiliates as a sales force that represents you and your products to the Internet at large.

Today’s Affiliates want to stand out in a crowd, they want their own unique, customizable web sites, and they want add things to it as often as they want. We call these affiliates “new generation” because they have evolved from the side of the Web that is not dominated by keyword search. Understanding this new generation of affiliate is very important to the survival and success of your program

These new generation affiliates are emerging from the relationship side of the Web, which you will hear commonly called Web 2.0. They spend most of their online time in the world of email, blogs, social networks, bookmarking spaces, and community-based search - not typing keyword-based queries into a search engine.

This new generation does not consider Affiliate Marketing a hobby. They want their marketing efforts to offer “job satisfaction” - producing wealth while providing an outlet for their ideas and passions, and they want opportunities to monetize Internet traffic via creative relationship marketing or vertical markets (industry or niche-targeted).

They are looking for an online business model that intersects with the way the Web - and the online user experience - is evolving.

Most of these new generation affiliates will not show up on your traditional tracking radar. In fact, top managers have discovered that you can’t label this type of affiliate according to single-merchant sales volume. The managers who don’t understand these affiliates often make poor decisions about where to apply support, training, and management resources.

In order to prosper in today’s new world, you need to understand the training and sales process from the point of view of these new generation affiliates. You will also need to understand what their obstacles are, so you can effectively guide them from sign-up to sales. I think it’s important to identify the profile of the new generation, and explain a little more about what they expect from the affiliate industry.

These affiliates see affiliate marketing as an alternative career choice - the operative word being “career.”

Throughout this book I will make reference to statistics discovered in the AffStat Report, which was done by Shawn Collins Consulting. “Nearly two-hundred affiliate managers from a cross-section of the industry were surveyed on their overall statistics, as well as a number of issues about their affilate marketing channels, such as staffing, recruiting, and management for the AffStat 2006 report.” These figures represent important Merchant Facts and Figures from real life Managers, so pay particular attention to these statements.

Now, on to the New Generation of Affiliate Marketers.

Chapter 1 - A Profile of The New Generation Affiliate

The new generation of affiliates are sharp Web-literate individuals who spend considerable time online communicating, learning, researching via bookmarks and directories, and yes, shopping.

They are quiet visionaries who intuitively sense that the Internet is turning into an interactive marketplace, not just a media channel that sells online classifieds and commercials. They are the ones who first used the Internet to make social connections - not to shop or do marketing - and prefer to use relationships and shared interests to drive online monetization.

They have above-average entrepreneurial spirit and creativity, but their efforts are often undermined by below-average technical competence, They don’t want to be locked into a single source of online revenue, preferring to hedge risk via multiple streams of income based on a variety of online interests and passions.

I’m not saying that this new generation will completely replace the older generation. There will always be a certain number of super affiliates who will be very successful and generate excellent revenue for the programs they promote. We know that vast amounts of Web traffic are driven by keyword-based searches, and super affiliates who “buy money” via large-scale pay-per-click can generate big revenues.

But today’s manager needs to build an affiliate sales force that can adapt to the Internet of the future. This means minimizing reliance on one type of affiliate and one affiliate business model and recognizing that there are different types of Affiliates that must all be catered to. Some things, like specialized training will be the same for all, however, many of the factors that are put into place for affiliates must take into consideration the different types of affiliates and what niche they specialize in.

You will find that some affiliates will do most of their marketing via blogs, where others like to do comparison-shopping or coupon sites, or put up an entire shopping mall site and work with various merchants to get as many products as possible on one site. And then there are the writers in the bunch who love to put up content sites to make money, and some people are just technically oriented and would rather work with data-feeds, or search engine arbitrage (using PPC to drive traffic through their sites).

So, as you can see, there are all kinds of affiliates out there, and I’m going to try to give you as much information as I can on how to work with this diverse sales force.

The Affiliate Sales Team

I used to think of the Affiliate sales team as just the affiliates. However, the sales team actually has five players. The players are:

§ The Merchant (who is often also the manager in a startup or microcompany)

§ The Product (yes, the product has a living, breathing role)

§ The Affiliate (not in the plural; each affiliate is an individual “traffic satellite”)

§ The Site Visitors (who become prospects once they go to your affiliate’s site)

§ The Affiliate Manager (who needs to make everything work together)

The team starts with the merchant, the company or individual who creates, owns, licenses, or distributes the product or service. Sometimes the merchant and the manager are the same person, as in a home-based business or a small startup company.

The product plays a key role because no amount of marketing can magically transform a bad product into a quality product. Bad products are those that are defective or fail to live up to the marketing promises. Those failed promises mean returns, chargebacks, and consumer complaints. Even the most super of super affiliates will run away from bad products, no matter how high the commissions are.

The affiliates, in turn, absorb the cost of attracting targeted traffic - site visitors who will click through to the product or service on the merchant site.

While affiliates can be very creative in making the product attractive to prospects, in the end the merchant still has to close the sale and deliver quality. So the merchant must offer a seamless order process with no glitches.

And then there’s the affiliate program manager. This may be the Merchant, or a hired hand whose only job is to manage the company’s affiliates. Until recently, the Merchant was also the Affiliate Manager. However, the management of a team of affiliates has become so imperative, that 71% of the companies surveyed had dedicated affiliate managers to manage the team of affiliates generating sales. Whether you are a family member, an employee, or an outsourced manager, you can become a powerful force for making this sales process work successfully. You become a source of valuable business intelligence, a key player in lowering customer acquisition costs, and the leader of the sales team who drives revenue into the business.

Chapter 2 - The Merchant’s Role

The affiliate profile is changing, but so is the role of the merchant. The merchant is the owner, creator, manufacturer, provider, and/or distributor of the product or service your affiliates are promoting.

If you are a manager in a corporate affiliate program, the merchant is clearly the company. If you work for an affiliate-outsourced management firm, you may be managing programs for multiple merchants, each with quite different products or services.

But sometimes the affiliate program manager and the merchant are one and the same person. In a home-based business, you may very well be creating products or offering services while trying to manage your affiliates at the same time. If you are a merchant who chooses to run your affiliate program yourself, you will also have special leadership challenges.

Luckily, as a “solo” merchant-manager your challenges may actually be easier to solve than those of a corporate affiliate manager. After all, you can make all the decisions yourself. The downside is, unless you have a budget for outsourcing, you also have more work to do. Between developing products and leading your affiliates, you may find your time - and patience - worn more than a little thin.

The merchant’s role is very specific in the affiliate sales system. Merchants must almost be a jack of all trades as they:

§ Hire an affiliate program manager committed to the company and the industry (for enterprise-level programs)

§ Take seriously any feedback from the manager on consumer shopping experience and product intelligence (for everyone)

§ Make sure that the highest possible percentage of click-throughs turn into sales (for everyone)

§ Strive for the best possible product and fulfillment quality (for everyone)

§ Pay competitive commissions to affiliates, based on margins and industry standards (for everyone)

§ Provide adequate budget for technology and tools that will support affiliates and the affiliate manager (for everyone)

§ Work closely with the affiliate manager (for everyone)

§ Determine if all affiliates will be accepted, or if the program will be limited so network members can earn a meaningful income.

So, what does this all mean to you, lets take a closer look at them all:

Hire a quality affiliate program manager (for enterprise-level programs)

It is possible, and even desirable, for many small- to medium-sized companies to outsource their affiliate management. However, according to the AffStat 2006 report, only 11% of the managers surveyed outsource their Affiliate Management programs. That means that 89% of current merchants have an in-house affiliate program.