Are Affiliate Paid Placements Worth the Cash? – By Stephanie Harris

by Sara Szado on January 10, 2016


feedfront-33 cover-188x240Affiliate program management is a time-intensive process that requires constant recruitment, optimization, and maintenance of the program. For a program to be well managed, an affiliate manager must have a solid sense of prioritization and know what will work, what might work, and what won’t work.

When it comes to affiliate placements, is it worth the time spent on research and negotiations, and ultimately, the cash? Our data indicates a successful ROI will come down to a few key factors.

In a pure, short-term ROI analysis from Q4, the best placements are in October. We see an average 12% cost-to-revenue ratio, with November and December at 14% and 15%, respectively. The cost of placements tends to go up in November and December given consumer spend behavior on the two peak shopping days, Black Friday and Cyber Monday.

Therefore, from an ROI perspective, the ratio increases slightly. If a merchant is not retail-focused, Q4 may not be the best time to leverage these pricier placements just for the peak shopping exposure.

Placement Cost
Cost negotiation depends on the appetite for risk. To limit the potential downside, try to negotiate for a temporary increase in affiliate commission in return for additional exposure. This allows the merchant to stay within the CPA boundaries and often doesn’t require additional budget approval. This is a good method to “pre-test” whether or not buying a placement with that affiliate would be lucrative.

Flat bounty placements will often give you the biggest return. This is in line with the “more risk, more reward” model. These are often leveraged during the holiday season to help stand out from the competitors, push great deals, or get in a coveted “Buyer’s Guide”. In our agency experience, the highest cost placements have proven to generate the most revenue.

Merchant Offer
While the burden of the placement’s success relies heavily on the affiliate’s influence on their traffic, it’s important for the merchant to help with the conversion piece of the puzzle. Merchants should be prepared to provide a top-converting, best-of-web offer.

In most cases, when arranging the placement, the affiliate will request an exclusive offer, semi-exclusive offer, or vanity code. These will mean nothing if the offers won’t convert on the merchant site.

If the merchant cannot offer one of these, passing to the affiliate a choice from the top three converting banners will ensure an asset that best resonates with the intended audience.

Like any other marketing initiative, affiliate paid placements require testing and reporting. Keep analytics on the performance and costs of all of the placements and work to determine the highest value opportunities. Then, budget 80% toward placements that have previously performed, and 20% toward new opportunity testing for a fresh, data-driven paid placement strategy.

Regularly re-evaluate the landscape of opportunities and how your particular program performs to ensure you’re always getting the best bang for your paid placement buck.

Stephanie Harris is CEO of Schaaf-PartnerCentric, a premier affiliate program management agency.

This article appeared in issue 33 of FeedFront Magazine, which was published in January 2016.

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