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How affiliate marketing should work

This page became required after the demise of DGM and the complete failure of the entire industry to take advantage of this. It became quite clear that in general, they just don't get it.

Affiliate marketing is generally about connecting affiliates with merchants in a timely fashion in an arrangement which is profitable for all.

Being a good affiliate marketing company involves getting the balance right between those 5 key ideas, and no company gets it entirely right, although the low fuss networks get more of it right than some of the others.

The first thing that happens is that a new affiliate must join a merchant at your network. The harder you and the merchant make this, the more likely it is that competitors do better out of the arrangement.

After dgm went bust we had to find dozens of merchants, and which affiliate networks they had moved to. This should be trivial but it wasn't. Instead we still have not found lots of them after many months.

The merchant should have a link off their front page to their affiliate program page, which should easily convert into new people joining the program. Often these don't exist, or if they do, they point to the program they left over six months ago.

Some merchants think that having an Independent Affiliate Program is clever, but it just doesn't scale, and having lots of additional term and conditions on a network instead doesn't make it scale any better.

The complete merchant list needs to be available from the affiliate marketing company in as many easily usable forms as possible. If I have not joined your network yet, and the merchant hasn't put up a link, I need to be able to see it before I join so I can see if it is worth joining.

Idealy, this should be on a web page optimised so that when doing a search for the merchants affiliate program, it should come up. No affiliate marketing company I know of does this, and some even regard the list (wrongly) as a trade secret.

Similarly, it is useful to be able to generate a .CSV file containing all the merchants on the system, and our relationship with them. That way we can search the list looking for missing merchants, or for programs whose status has changed.

It is an affiliate NETWORK, so lots of useful data is in the system, but nobody uses it yet. Amazon has "people who bought this also bought ...", but no company seems to have "people who joined this also joined ...".

similarly, a lot of the bigger companies have categories. When I join a merchant in a category a message could go out to the merchants I have not got to say I am working in that sector of the market.

More importantly, the number of merchants in the sector being promoted by the affiliate, and the relative statistics across the category provide feedback to all parties about the quality of the affiliate in that category.

It is very important that you have inclusive categories, and not exclusive pigeon holes, especially not a very restricted number of them.

Having hidden merchants has never been a help to any of the affiliates that we have ever met or talked to.

REMEMBER: if we can't find the merchant, we can't join them!!!

After finding the merchant we need to join them. If the network has an overly litigious contract, the affiliate will tend to go away and do the easier stuff first.

We know of networks who were thrown off multiple affiliate websites for having completely unsignable contracts.

We know of others where no work has been done on merchants for months, due to changed contracts, locking all access until the contract has been signed, and lots of changes occuring in the rest of the industry.

Having lots of extra terms and conditions in additional merchant contracts really doesn't help either, especially if you have multiple merchants or parts of the same merchant with similar but not quite identical term, as it takes a lot of time to review them.

If the merchants really insist on having extra conditions at least try and get them to use equivalent wording to the other merchants so that each affiliate doesn't have to figure out the meaning seperately for each merchant. After all, if the affiliate isn't sure, they won't sign, and in the meantime will promote competitors instead who make it much easier.

We know of one network where you can't even tell if there are additional terms until after you have applied for the merchant, and another one where you have to seperately open a popup and agree to the network contract for every merchant.

A problem is merchants who think that in general it matters where the webmaster's postcode is, when the website is international. The New York (and other states) affiliate tax is a special case.

Something which is just daft is merchants who are fussy about how you are paid. It only matters that you are paid on time by the affiliate marketing company, not if it is by cheque, bacs, or paypal. The merchant should not even have access to this information, as it is none of their business.

It helps affiliates if your network says what sort of merchant program it is. Capped programs are not good for small, low traffic sites, and just saying it is capped can prevent the waste of time for the affiliate, the merchant, and the network, as the affiliate can spot it isn't right.

Telling the affiliate if it is manual or automatic approval also helps a lot, because when you are looking for a merchant to work on this afternoon, you don't want to be waiting a week or more just for the merchant to decide.

You apply for a merchant, and what happens in a low fuss network is that you just get approved, or you can tell in advance that approvals will take a while. What happens in the others is that you get stuck at pending for ages.

The worst I have seen on this is six months, from a capped program that didn't have the honesty to say so, and a network that did nothing about it despite repeated urgings to do so. A week is a long time, 2 weeks is way too long, and more than a month is a joke.

I have seen systems where the only way to put supporting information in is at application time. With the better systems you can add stuff at any time.

After it has taken too long to get approved, a lot of the time you get denied instead. Often this is the only information you get from the merchant or the network, and then you need to talk to a human.

At some networks this is easy, at others it is nigh on impossible. It would be really useful at those networks that allow merchants to manually approve if the networks did a better job of representing the affiliate to the merchant, and the merchant to the affiliate.

A lot of this is about the networks using the information they have to do education of affiliates and of merchants, and most of the networks do a spectacularly poor job.

If a merchant is refusing too many affiliates, there is a problem. Either they are running a capped program, without either understanding that they are doing it, or they erroniously turning people down.

If they are repeatedly reversing refusals (which we see happen far too often) then you need to understand what they are getting wrong, so asking them for reasons for denials really helps everyone.

Formalising this process helps even more, because if you can't just say no, you have to actually choose a reason for refusing, which forces the merchant to think before refusing.

If an affiliate is getting too many refusals, you need to tell them what is making a difference, and the same information help with determining this, rather than the affiliate and the network having to just guess.

NOTE: If the merchant has to give a reason, and the same reason keeps cropping up, the affiliate can see this information directly, without the network even having to ask.

Again it takes way too long to get denials reversed, and it is almost impossible at networks where you can't really talk to the humans. If you are lucky, the reversal happens before the merchant has shifted to yet another new network.

NOTE: All this fuss happens before a single link has been put anywhere, and if you are not approved you can't make any money for anyone.

So you are now approved and can put links up. but have you remembered to put the links up? the only way to tell is to order the list of merchants by impressions and see what it tells you.

Often you can't, and when you can it is not obvious which merchants are live and thus capable of generating income for the affiliate. It should always be easy to detect which programs are not live.

If the program isn't live, and links are dead and generating traffic, it is really useful to be told "this dead link is generating traffic from here", and how much. Then you can replace it if you are doing Splat Advertising, or bung up the page if you are doing Select Advertising.

We have seen networks where if you have not generated any sales for the merchant then you don't get any information about the traffic at all. What happens then is the affiliate moves the merchants they can move to other networks where you can get the information.

If there are not good impression statistics for your link, and you are doing Select Advertising the affiliate needs to change the page to improve how well it is linked to and how well it works on search engines.

If you get traffic, but low click-throughs, then more work needs to be done on the page to get the visitors to want to follow the links. If you can't get the statistics, you can't tell which sort of work you need to do.

Now the click-through's are up, we need to see the conversion ratios. if we are not selling anything then either we are sending the wrong sort of visitors, or the merchant is cheating.

This is another situation where the network should be on the look out for affiliates. If the merchant is cheating (for example having a prominent divert to non-paying route like a phone number on the front page) then everyone's conversions will be down a lot.

Almost no networks get this right, and only a few understand how serious this is, as they mostly get paid an up front fee, instead of sharing commission with affiliates.

So, now you have some sales, but the next problem occurs. Because you made a sale you now appear on the merchants statistics. Because the network fees are often badly designed, you can find the merchant having to run a capped program, and the moment you make a sale you get thrown off the program for making them look less good as a merchant.

Again the network needs to be involved, as it is often down to poor pricing policy on the network. If an affiliate is thrown off a merchant, the network needs to be asking the merchant why, every single time. The same goes for too high a number of reversed sales.

If the merchant claims abuse by the affiliate, they need to prove it, as this is usually grounds for removal from the entire network if true, and either not understanding or cheating by the merchant if false.

So now you are signed to merchants, making sales, and earning commission, so there is just the small matter of getting paid. It should be simple, but even this can be a problem.

Independent Affiliate Programs have been seen which will only pay with paypal. Affiliate Networks have been seen which don't centralise the payments from different merchants, so you have to reach the minimum payment cap seperately for each merchant, which doesn't help anyone.

Another problem is the stewardship of money paid by merchants to affiliates. One company just added the payments to company funds, hiding how badly run the company was run and resulting in affiliates not getting paid (which is very bad).

Another paid money out to affiliates before the merchants had paid up, resulting in money having to be clawed back later when the merchant didn't pay.

Best practice is to have the sale occur one month, automatically get approved the next month, and pay out the month after. The merchant can always speed this up if they want to. This is also effective verses credit card fraud.

So here you are with multiple merchants, often at multiple networks, generating sales, and getting paid, so what happens next?

Some significant change occurs, and it gets even sillier.

see also Zyra's good affiliate guide.