Starting an Affiliate Program?

An affiliate program is a very powerful tool for online marketing, here are just a few brief pointers for merchants thinking of starting an affiliate program. For more please contact us to discuss your requirements

Network VS Inhouse Program.

Major considerations:

In House Software: Affiliate software can be very affordable IDevAffiliate sells affiliate tracking software, that is very easy to use, if a bit limited for around £50 / $99.99. This is a fantastic price when you consider that affiliate networks charge between £500 and £5000 for a sign up (plus ongoing fees, plus override commission).

It is very much worth noting that when you sign up to an affiliate network, you are not just using their affiliate tracking software, but their user base, hosting for banners and payment infrastructure, to name a few features of their service.

Either way you are going to need an Affiliate Manager

 It is my firm founded belief that affiliate programs require an affiliate manager. An affiliate manager oversees the smooth running of the program, recruits affiliates, pushes the current affiliates to keep their promotions up to date, answers the day to day enquires from affiliates and mediates between network, merchant and affiliate.

Other factors in working out costs for your affiliate program include:

• Commission
• Network Override
• Network ongoing fees
• Affiliate Management costs
   

Commission Structure.

This is the crux of affiliate marketing, the affiliates are not going to be interested by a poor paying affiliate program. The affiliate is going to want to see an attractive percentage commission.

Looking at similar affiliate programs on various networks I would recommend starting with a high commission rate but if you can afford it and still be competitive with other programs, hold back a little to allow for ‘bonuses’, special promotions or just a big push at a later date. It is worth considering a sliding scale, offering a range of commissions depending on sales volume, many programs offer a sliding performance related scale.

What Exactly Do You Pay Commission On?

This is up to you, there are several ways of calculating this.

• Basket Value
• Basket Value Inc VAT
• Basket Value including VAT and Postage.

I would recommend that you go with the second option. This makes things more transparent for the affiliate, ie if they sell £100 worth of goods and you were paying commission on the basket value minus VAT the affiliate may wonder why they are seemingly getting less than 8% commission.

In my experience the majority of merchants calculate commissions on the VAT inclusive value.

There is no sense in paying commission on postage, unless you make a profit on this and want to use it as a selling point for your affiliate program.

Network Override

Unfortunatly this is non negotiable in most cases, the network is there to make money and this is the most effective way to do it for them, also it is a % based fee (usually 30% of the affiliate commission) so you need to factor this in when you are calculating your % commission to affiliates, ie if you want to pay 8% commission, you will actually be forking out 10.4% commission, in total, to the network.

Network Fees

Word of advice, if you have a program that will really perform, or you have a track record with lots of stats (basket value, conversion rates etc) you may wish to present this to the network as you may be in a position to negotiate on these fees.
 

Affiliate Management Costs.

No matter what you do, whether inhouse affiliate program or via a network, you really need an affiliate manager. Either outsourced or inhouse, you need one person whos job it is to look after the affiliate program.

April 16th, 2007 Posted by scifind | affiliate marketing, ecommerce, Networks | no comments

Google Everywhere

Last weeks big news is that google had announced their CPA network, this week Google Checkout reached the shores of the UK.

Rather quiet launch - no big fanfare on the main google site, nothing on the google blogs, but the BBC were quick to pick up on the story: BBC News Story

Checkout will compete with both the mainstream card processing services used by many online merchants and auction site eBay’s Paypal service.

It is designed to boost Google’s core money-maker, the selling of online adverts, by offering cheap order processing for its advertisers.

It competes rather well with paypal from the word go, free untill Jan 2008

PayPal = 20p +3.4%
Google= 15p +1.5%

Prices per transaction - basic prices quoted - paypal fees get less the more trade you do with them. Correct at time of writing.

The other big advantage for google checkout is the fact that they are using their dominance in PPC to get the merchants on board

If you are an AdWords advertiser, you are eligible for free transaction processing for some or all your Google Checkout sales each month. For every £1 you spend on AdWords each month, you can process £10 in sales the following month for free through Google Checkout.

This is a big move for Google - some big merchants are already taking them on board.

April 13th, 2007 Posted by scifind | ecommerce, google | 2 comments

Beware Extra Fees On NOCHEX

This information might be of interest to merchants accepting Nochex as a payment option.

Nochex is a low cost payment system ideal for lower volume ecommerce vendors and ebay vendors, often used along side, or inplace of other cc processors or paypal

Nochex - sometimes talked about as the UK paypal - is starting to get complaints in the way that the ‘payement gateway’ processes credit card payments.

On Working Lunch today (BBC2) there were claims that credit card purchases using the Nochex service were treated as cash advances, and because of such they were subject to additional charges and much higher interest rates.

This can be a real pain if you are using the service for ‘micropayments’ - especially downloads, that may only cost the user £1, might cost nearly 5 times that with the addition of credit card fees.

Nochex have responded with the following warning on their payment pages.

Please be aware that a limited number of card issuers may charge you a cash advance fee for funding this transaction by credit card. This is not a charge made by Nochex.

This is accompanied with a link to a very short help article:

Cash Handling Fees
 Some Visa and MasterCard issuers (including Capital One, GM, MBNA, Mint, Sainsbury’s and Tesco) may charge you a cash handling fee when using your credit card to fund a Nochex payment.

If you are unsure whether you will be charged a cash handling fee we recommend that you either speak to your card issuer before you make the payment or choose an alternative card (such as your debit card) to make the payment from.

This fee is not charged by either the Merchant to whom you are sending this payment or by Nochex.

This is slightly worrying. I personally don’t use Nochex, but I do use PayPal alot. I am starting to wonder if there are similar issues with these other ‘Micropayment’ card payment processors?

If anyone knows the answers please post a comment!
 

March 27th, 2007 Posted by scifind | eBay, ecommerce, paypal | one comment

More on Ebay Revenue Share System

A quick update on the ebay revenue share:

As previously announced, from March 1st 2007 we’re introducing a new revenue sharing model for the eBay.co.uk Affiliates Programme. We’re excited about these changes because we think they’ll give you more opportunities to make more money.We’ll still pay you for the new ACRUs (Active Confirmed Registered Users) you send us: there’s no change there. But rather than paying a single fee for bids and Buy it Nows, we’ll be tying your earnings per bid and BIN to the revenue we get for the sold item. You’ll receive a percentage of all the revenue we earn (Listing Fees and Final Value Fees) from all winning bids & BINS made by visitors in the seven days after you send them our way.This means that when you send us quality bidders and buyers who purchase higher priced items on eBay.co.uk, will earn you more. Yes, that’s right: The higher the sale price, the higher the reward. However, be aware that this may not be the case in categories with ‘fixed fees’ such as Motors and Real Estate.

ebay.co.uk will offer 25% of revenue (under £100) up to 50% of revenue - for over £500,000

February 20th, 2007 Posted by scifind | affiliate marketing, affiliate, eBay, ecommerce | no comments

An Affiliate Program Is Not a Magic Bullet for Marketing a Website

Recently I have been hearing of companies being wooed by affiliate networks and then setting up an affiliate program with them without actually doing their own research.

Just putting up an affiliate program is not going to generate sales to make the program worth while. Although this is a paid on performance industry setting up an affiliate program is not simply a paid on results affair. Affiliate networks have setup, monthly and override commission fees, so you are going to have to make a number of sales each month simply to break even.

Even if you are a pretty major brand or have a real something unique to offer is is still a bit much to expect the affiliate program run autonomously. You may even get hundreds of affiliates to sign up in the first few weeks, but this means nothing without sales. Indeed those same affiliates have probably signed up to hundreds of different merchants and the current high turnover of new merchants means that given a few days they will probably forget that they have ever signed up.

So what is the missing piece? You have the sales site and products waiting to go out of the door, you have an affiliate program with a major network, you aren’t getting sales.

The missing piece is actually encouraging the affiliates to actively promote your site. There is a big difference to an affiliate that just adds your banner to one that actively promotes a merchant. Affiliates have limited time with which to promote every merchant that they subscribe to, they end up cherry picking the most lucrative for them. 

This is the role of an affiliate manager. The affiliate manager is the reason that affiliate programs succeed. There are a number of good affiliate managers (including myself) who can help your affiliate program. The best starting point is to contact me and ask how I can help.

Simple message is don’t expect an affiliate program to just grow active affiliates, the affiliates need careful cultivating to promote your site.

February 15th, 2007 Posted by scifind | affiliate marketing, ecommerce | 2 comments

Shopping Cart Software.

Small side track from Affiliate Marketing - but I have been working with various shopping cart packages these past few month on a variety of side projects. Just thought that I would list the major contenders here along with a few thoughts.

osCommerce and Derivitives.

I have been using osC for years but have passed over the original osCommerce package for some of the derivitives.

I have used the major osCommerce derivitive CRELoaded on several projects of late, most notably www.shopscifi.co.uk, www.cricketretail.com and www.somethingsmellsnice.com after a bit of a teething problems a year or two ago with  CRELoaded I have really adopted this as my shopping cart software of choice.

The other major osC derivative shopping cart software is Zen cart, though I have not used this directly I have seen it in action with ForbiddenPlanet  and am quietly impressed by the results. 

All the major osCommerce derived software have great communitys supporting the shopping carts with help, advice and contributions in form of modules

Away from osCommerce software there is still alot of choice.

CubeCart.

I have played with this and it is OK. Nice and tidy. Limited functionallity in the free version - but fork out the £40 (or so) for the full version and add some of the contributions and you have a fantastic little shopping site on your hands.

http://www.cubecart.com/site/home/ - again there is an active forum and dedicated mods and skins site at http://www.cubecart.org/forums/index.php

X Cart

X Cart - Professional - slightly more expensive and there is a very affordable support and a huge range of (paid for) addons. Best thing about this is that it uses Smarty Template Engine based templates, thus making it exceptionally easy to drop chunks of code into a template - ie:

<title>{$entry.Name|title}</title>

<a href={$entry.Name|link}>{$entry.Name|productname}</a>

There is not so much a development community - but a competitivly priced development team to provide help support and extra functionallity .

CMS Addons

It is worth noting that popular CMS systems have ecommerce plugins. Drupal have an ecommerce system see here.

Joomla has an ecommerce plugin - virtuemart 

 Free And Simple eCommerce Solutions.

Ok - so after all this we must pay a quick mention to the PAYPAL shoping cart  - there done it. Ideal for the trader with no programming knowledge - other than the occasional bit of HTML and no budget to get a developer in.

A slightly more elegant system  - free and easy is mals eCommerce this works in a similar way to the paypal shopping cart but can intergrate with a number of different online payment systems a fantastic implimentation of this can be found at http://www.bridal-jewellery.co.uk

February 2nd, 2007 Posted by scifind | oscommerce, cubecart, xcart, x-cart, ecommerce, php, mysql, paypal | 2 comments