Understanding the Nuts and Bolts of Affiliate Marketing

Affiliate marketing is basically an extension of the traditional marketing promotion technique adapted to the Internet’s virtual marketplace where businesses sell products and services online to clients. To date, one of the most successful and effective affiliate marketing programs is the one employed by Amazon – their affiliate program has generated a great source of revenue for the company and their affiliates.

In an affiliate marketing program, a merchant (or company) grants permission to sub-merchants (affiliates) to promote their products or services; in return the affiliate gets a percentage of each sale generated through their efforts (the website links). The affiliate is responsible for sending targeted visitors to a vendor to buy the product, which in turn generates the sales from which they get commissions. This is one of the primary reasons webmasters affiliate their sites with complimentary products and services.

How then does a would-be sub-merchant (affiliate) profit from affiliate marketing?

Although there is no guarantee for success if you engage in the affiliate marketing online business, there are a number of fundamental marketing principles that you need to observe and follow in order to earn your commissions.

1. Customize your website content to compliment the affiliate products and services you market. You stand to gain more commissions by promoting goods and services if what you sell and promote is complimented by your website’s content. In this manner, you get targeted traffic who are more likely to respond positively and purchase what you offer instead of simply putting a banner or text link that is totally unrelated to your content.

Hypothetically, if you are searching for Pomeranians and visit a website with the relevant information and saw a banner for Hummer vehicle customization kit, it is doubtful you would even be interested to click on the banner, right?

2. Generally, niche websites do better compared to all-purpose sites when it comes to generating affiliate income streams because of their related content. A visitor visits a niche website for a one specific reason (the site’s content), therefore he or she is more likely to be interested in the complimentary products and services related with the purpose of their visit. Hit-to-sale conversion ratios are considerably higher on websites that affiliate themselves with complimentary products and services.

3. Make sure that you embed your affiliate links directly to your website content. Embedding affiliate links directly into your web content guarantees higher response rates, which can definitely result in substantial affiliate income.

4. Always use redirects when placing affiliate links in your content. You can easily do this by creating a redirect file, which contains your affiliate link, making sure that the page opens in a new browser window. This also provides protection to your links against affiliate hi-jacking to ensure that you are properly credited for your promotional efforts. Redirect scripts are readily available on Internet script sites.

To put it briefly, in order to be one step ahead in the affiliate marketing program, you should customize your website to fit; make sure to find complimentary products and services that you can promote; integrate your affiliate links directly into your web content and always use redirect scripts to protect your affiliate links from hijackers.

Market Research: Common Business Issues and Their Respective Research Methods

Sizing a Market – This type of market research is designed to create an estimate of the market size (measured by units or dollar volume) that a new product is expected to garner in the marketplace. In general this is usually done for entirely new product category or anticipating the introduction of a new product that substantially changes the competitive landscape in which customers are already familiar (for example, I would suspect that the new premium chewing-gum category that has emerged in the last 18 months might have upset the conventional wisdom of analysts in that industry). Conducting this type of market research can be expensive, so the best place to start is usually by evaluating the off-the-shelf syndicated market research reports that are available for any market of a reasonable size. Sizing a market is almost always a quantitative market research study, although depending on the market specifics it’s possible that there might be a qualitative lead-in activity or even a qualitative follow-up to get more details on a specific portion of the market.

Product Concept Development – Product concept market research is typically designed to provide customer input to help product-marketing managers develop products that more directly meet the needs of the target customer. Typically there are tradeoffs involving ease of use, price, industrial design decisions and bundling options. For the product marketing manager, conducting market research allows them an opportunity to get feedback from the group who is actually going to decide whether they’ll pay the bills or not, the customer. Product concept market research can be done either qualitatively or quantitatively. Generally the direction hinges on the customers familiarity with the product or changes being considered, and a terminology that is well enough understood by the potential respondents to ensure that clear communication is taking place without significant uncertainty that their definitions match what we believe them to mean. If the product category is understood, and the terminology is well enough defined, quantitative research is probably the best bet. Otherwise it’s likely to fall to qualitative methods to ensure a complete understanding of the concepts and to the respective reactions.

Customer Profiling – The intent of customer profiling market research is to create a profile of a typical customer who purchases a certain product or service. Having a complete profile of a customer can be very helpful when defining a design center to develop the next generation of a product category and to ensure that the engineers and marketers have the right person in mind as they make those decisions. Creating a customer profile often includes collecting the following:

Demographics (age, title, physical city of location),
Firmographics (company industry, number of employees, decision making structure around the product category being studies) and
A number of questions about the particular product was purchased, how it was being used, what product it replaced, the number of people using it…
In many cases, customer-profiling research becomes the “bible” as a product development team makes decisions about what features or capabilities would be desired and which other ones would be passed over. For smaller companies conducting profiling market research is often the first type of research that a company does because it’s straightforward and it’s hard to argue with “who are our customers?”.
Positioning Research – Positioning research is often closely related to branding market research, as its function is to understand the positioning of one product relative to another. Much larger companies actually conduct positioning research simply to understand whether or not their “line logic” is clear or understandable by their customers – and doesn’t even get into the complexity of how customers relate their product line with other company’s products. This is often very interesting research because it’s often the case that the positioning developed by marketing managers is sometimes different than the way customers view strengths and weaknesses of different products relative one to another. Sometimes, to the chagrin of marketing managers, the phrase ‘perception is reality’ comes up over and over again in this type of research, as marketing managers realize that it takes more than words on a brochure to change customers’ perceptions of a products positioning. Consider whether a Jaguar holds greater status than does a Mercedes. Which car would you expect to be more comfortable? Which car would you expect to be faster? Having a portfolio buy-up strategy, which calls out the benefits of the next product, without saying derogoratory about the product just down the line, is a challenging task, but that’s where positioning research really shines.

Messaging Research – Messaging research is very closely related to advertising research, although it tests the most basic concepts of an advertising campaign – the most basic idea that is believed to be the primary motivator for a product. As an example, what do you see when you notice a Rolex advertisement? Do they tout the increased accuracy of a Rolex watch over others? Do they talk about how much more shock resistant a Rolex is than another watch? Do they talk about how much deeper in the ocean a SCUBA diver can go with a Rolex than another watch? No, they don’t message on any of these points, instead when you go to their website they show handsome people directing their million dollar yachts through rough seas, they show close-ups of the meticulously detailed watches, they show brave men, obviously risking their lives, climbing to the top of a snowy, distant peak. Their messaging is about living the good life and being ready for any adventure – whether you’re made of that stuff or not – as though having a watch that costs tens of thousands of dollars puts you just a little bit closer to intrepid. At the crux of messaging market research is, what are the few things that we should emphasize if we’re fortunate enough to get a few seconds of consideration from a potential customer? Messaging market research is about finding the blend of unique capabilities or attributes of our product and framing that in a way that makes sense to the people who are somewhat inclined to purchase our product. Messaging research tends to be qualitative because non-verbal communication is an enormous part of communication and many people want to be able to “read” the respondents as they first try to digest our schpeel.

Industrial Design – Industrial Design (or ID as it is more typically called) typically refers to the shape, feel and texture of a product. You could say that the ID of the RAZR phone is a big hit, big enough that other companies are quickly copying it. ID research is focused on understanding what effect the industrial design may play in the purchase of a certain category of product, and how to optimize a product’s industrial design for the target audience. If we all own the same products, it appears that ID is becoming one of the fundamental ways that companies are trying to differentiate products that are otherwise quite similar. ID market research has generally considered best handled in face-to-face qualitative research (often in-depth-interviews with one person at a time). However online capabilities have increased significantly in the last several years and there is a reasonable case for conducting ID research on a web site. If you’re looking for an example of how strong online capabilities have come take a look at the Audi web site – where you can view their cars, pull back, zoom in, view the car from any angle just by positioning the mouse. The capabilities are available from some of the higher end online research houses. The one caveat is that people often want to feel the heft of a product to understand if it’s plastic, metal or wood, understand how quality the finish looks, feel the quality of moving parts. In many cases online research is capable of supplementing face-to-face methodologies and for some product categories may be able to replace it entirely.

Customer Segmentation – Segmentation market research studies attempts to understand what groups of customers exist in a product category in order to more precisely target their needs or to target the needs of a more attractive group (maybe the high quality group, instead of the value driven customers). While these customers may all be purchasing the same products, because they have different perspectives, they’re responses to product changes could be entirely different, so it’s a good idea to understand how large your groups, or segments are, and how they’ll likely respond to the changes that you’re company is considering. This is a type of market research that generally ends with a large quantitative bang. Segmentation research can be quite simple – understanding how customers in the Eastern part of the country dress compared to those down South, or it can involve very high-end statistical analytics that can be very costly. However, good customer segmentation can greatly improve a companies product development and target customer efforts.

Channel Research – This research can take a number of forms depending on the critical business issue. Channel research can be conducted to understand how a company’s channel partners are ACTUALLY behaving, as opposed to how it’s believed that they’re behaving. Channel research can be conducted to understand what is motivating channel partners, or to understand whether a new channel partner that is being considered would be an appropriate choice for a certain product category. This is a very broad category of possible research methods that can span from efforts such as “mystery shoppers” – who walk through a typical customer process and report back on the experience, to price checks or product offering reports.

Price Elasticity – Remember back to Economics 101. As the price of a product increases the marginal value decreases (fair disclosure – I’m not sure that I actually passed EC101) and at some price-point the customers choose an alternative product. This research is designed to understand where that point is for different types of customers. Price elasticity market research really needs to be quantitative although there are times when an initial phase of qualitative research to understand the critical features and attributes may make sense. Pricing research is also very difficult to do because there’s the “monopoly money” syndrome – people tend to make different decisions with a theoretical exercise than they do when the money comes out of their pocket. Price elasticity research really needs to be well planned because there are number of seemingly insignificant but very important details to make decision on.

Direct Mail – A Thing of the Past?

For many Realtors, direct mail is a staple of their to-do lists. Holiday cards, promotional giveaways, just sold cards, new listing brochures, farming neighborhoods, and many more things get mailed every day by Realtors expanding their businesses. However, the National Association of Realtors recently released a study showing that 77 percent of buyers begin their home search online. Most Realtors would take this to mean that their website is now their most important tool to generate leads. So, what place, if any, does direct mailing still have with today’s Realtors?

Price is Certainly a Factor

Compared to website maintenance, web ads, and email, direct mailing can be very expensive. In order to keep your name at the top of buyers’ and sellers’ minds, you need to mail frequently, as many as two or three times a month. Postage prices continually rise, and even the price of a postcard stamp seems oppressive when compared to sending off a quick email.

The cost of producing quality direct mail is steep not only in terms of dollars, but also in terms of time. Think of the hours you spend proofreading, designing, ordering, stamping, and addressing. Is it worth it? There are so many Realtors fighting over the same turf that many Realtors are increasing their farm areas and adding new territory. That budget just keeps going up.

How Is Direct Mailing Working For You?

A simple analysis of your return on investment will show if your direct mailings are still working for you. Do many of your leads mention that they received your postcards? Do former clients remark on your holiday cards and continue to send you leads? Do you feel that you have ample time to explore all marketing opportunities available and that you’re not bogged down with mailing activities?

If you answered yes to these questions, there’s no sense in changing a plan that works. However, always remember to do your research. If 19 of your last 20 leads found you through your website, maybe direct mail can be phased out of your marketing plan.

Direct Marketing; Developing a List

Direct Marketing by mail is a great way to help your sales improve and most businesses who do direct marketing do quite well with it. There are many Money Mailer and Coupon Type Books you can join in with and they say that this increases the letter opening barrier substantially by using such a service. Yet, you are also displaced by many other offers and occasionally by competitors even though most of the coupon direct mail companies guarantee not more than two of any one type of business.

One thing we had learned over the years in the car wash business was that we did quite well by sending out our own post card coupons, no one had to open the letter, it was opened. And the post cards got a preferred rate. Meanwhile we hand addressed them because when our cashier was not busy that was her job and she signed them too.

How come this worked so well? Simple really we had made our own list by driving all the neighborhoods within ten miles radius of our car washes and we looked out side to see what type of car they owned. Needless to say if they drove and old beater car, they were not on the list. Only those with newer cars. It sure worked well when we put forth this little extra effort that way. Consider all this in 2006.