Editor’s Note:  This is the second in our series of live coverage from the Affiliate Management Days conference. Creating the right deal for you and your affiliates is the topic in this 2nd article in the 2013 series. This series of articles is on topics of interest to businesses that offer affiliate programs. More coverage of #AMDays.

Declan Dunn (pictured), CEO of Dunn Direct Media, spoke at #AMDays about the art of creating the right deal. He spoke about the ongoing challenge of balancing the high acquisition cost of affiliate programs with the right payout to motivate and qualify affiliates.

Here are highlights of his session.  There are 3 things to consider when creating the right deal for affiliates – one that works for you and for your affiliates:

• Mobile:  If you’re not doing mobile, you’re going to be dead in 5 years.
• Data:  Start learning about really managing data.  By understanding data you can determine why customers and affiliates are loyal, and what the long term value of each is.
• Social:  Social media is a communication channel, not an advertising platform. The real value of a business is how many people bought from you more than once. Social influence comes through when social validation happens.

If you are on social or mobile, you probably see affiliates every day, without even thinking about it. The next generation of affiliate marketers will be be data people.  Five percent (5%) of affiliates generate all your sales. If that’s the case, you’re not looking for affiliates — you’re just looking for that 5%.

When you go out and just copy your competition, you are creating no opportunity to differentiate yourself. Adapt and find your own swing of things.

Do you predict when your customers are most likely to buy? Do you ask qualifying questions?  Do you use data to convert higher sales?  What are the key action points and key data points asked of you that you need to keep track of and have access to in order to make better decisions?

You’re going to hear about people talking about attribution, multi-touch points, and it’s not because people are being difficult, but because people are on multiple devices for multiple reasons.

You want to learn how to do mobile properly? Get your attention out of the United States.  Focus on Asia and Europe where they  are exponentially more advanced in mobile strategies and data analysis than we are here in the United States.

Who are the best affiliates?

1. They get attention in social to drive qualified leads
2. High Intention to Buy – Qualify
3. Repeat Customer Retention

New customers – this is what it looks like right now:

• Direct visits (new don’t have to pay to get these customers to your site) – 20%
• Organic Search  - 16%
• Paid Search – 11%
• Others (e.g. CSEs – comparison shopping engines) – 11%
• Email – 5%
• Affiliates – 3%
• Social – <1%

Creating the Deal – Choose from 3:

1. Flat CPA – Customer Acquisition Cost
2. Per Sale Commission – doesn’t work for either party.
3. Per Lead – Financial leads run $5 – $500 at least.

Social is driven by status and subscription. Check out SilverSaver.com – these guys target women in a heavily male dominated industry. No one can touch them because they are going after an industry everyone else is too scared to touch.

The post Creating the Right Deal For You and Your Affiliates appeared first on Small Business Trends.

Below is a live blogging recap of the afternoon keynote “The Science of Influence & Persuasion: Getting What You Want, When You Want It” featuring speaker John Greathouse (pictured left) a partner at Rincon Venture Partners, a venture capital firm investing in early stage web-based businesses.

We’re wrapping up the last session of day two.

6 Major Categories of Persuasion:

1. RECIPROCITY

• People do business with people they like, who show authority, have social proof, and install a sense of fear (of loss)
• Quid pro quo – sustained survival
• Pay it back, pay it forward
• Offer a “our gift to you” – they will pay it forward or pay it back
• The characteristics of effective gifts are significant, unexpected and personalized
• Recipients value favors less over time, where as the giver values the favor more over time.
• Give a gift, coupon, bonus and commission before the affiliate asks
• Never be shy to ask for a favour if you need to
• Create obligations by giving favours freely but return the favour quickly
• Remind a person of past favours, before asking for one
• Offer something “extra” to start the program

2. COMMITMENT AND CONSISTENCY

• If I tell you I’m going to do something, you have to do it to ensure trust
• People judge people based on their behavior
• Create social contracts (which can be stronger than legal contracts) and use silence to elect unambiguous verbal responses
• Follow up verbal agreements with a written reply
• Create signed, non-binding term sheets
• Communicate public affirmation via press releases, tweets, etc.

3. SOCIAL PROOF

• Popular = good. People make fewer mistakes when copying others
• “Award Winning” products, “Best Selling” authors
• People are lemmings…. it’s a survival thing – the more people do or look at something the more people will follow
• The higher the uncertainty, the stronger the social proof is
• Find a peer you can use as a reference and communicate with similar publishers who are displaying the offer

4. LIKING

• People absolutely judge you on your looks (facial expressions, body language, etc.) – this is called “thin slicing”
• Never pre-judge someone: get the facts first, listen to them, then make a decision
• “Prejudging (especially in business) is the kiss of death” – Bob Golomb
• Find similarities and commonalities that you can connect with them on – so they feel they can like you
• Similarities = liking = influence = partnering
• Same tribe = you’re cool (Google+, Facebook, LinkedIn)
• Selling – find legit similarities to gain trust, enhance liking
• Conform to our stakeholder’s realities – Bill Gates
• Tout your weaknesses = honest and trustworthy
• Mirroring similar body language increases liking
• Smiling and shaking your head in a “yes” movement is extremely effective

5. AUTHORITY 

• Uniforms (doctors, military, police) instill authority
• People who dress more professionally tend to be seen as having more authority
• Have someone else introduce you on a call (even if you leave right away) – this will enhance your credibility
• Have a third party referral or recommendation on your site
• Blog, guest post, speak on panels
• Become active on Quora, Twitter, LinkedIn affiliate groups, etc. to help build your credibility
• Leverage the power of “because” – just giving a reason will significantly increase the acceptance of your proposition

6. SCARCITY AND FEAR

• Have limited access and availability of things, limited number of people for a limited time
• People always want what they can’t have
• People prefer to avoid losses rather than increase gains
• Show the value and uniqueness of your product / services

To find out more about the science of influence and persuasion, check out InfoChachkie.com.

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This is live blogging of the morning keynote “Newest Adware & Affiliate Marketing Abuses.” Below is coverage from the session featuring speaker Ben Edelman (pictured left), Assistant Professor, Harvard Business School.

It’s day two at the new Affiliate Marketing Convention, AMDays – a conference created to help affiliate managers and ecommerce merchants better understand how to be successful in the performance based marketing industry.  Below are my notes from Ben’s very interesting session on the issues faced by affiliate managers of the fraud front:

Why affiliate marketing?

• Creativity
• Reach
• Attractive pricing model
• Low risk model

Affiliates earn commissions if three things happen:

• User browses the affiliate’s web site
• User clicks affiliates link to merchant AND
• User makes a per chase

Issues in affiliate marketing:

• Click Fraud
• Hidden links / Invisible banners
• Cookie Stuffing (attaching a tracking code to a user whether they click on the affiliate link or not)
• How to supervise many small affiliates you’ve never met
• Many and divergent incentives: merchant, network, affiliate program manager, affiliate
• How to retain the cost-effectiveness, excitement, flexibility and passion of affiliate marketing

Cookie dropping / cookie stuffing happens in:

• Forums (which tracks to everyone who visits the post the cookie is dropped in)
• Websites (hidden code on a landing page that drops a cookie on everyone who visits that page)
• Mistyped website addresses (i.e.: sears.com vs sea5s.com)
• Popups (if a popup comes up and you close it right away, that affiliate will still get commission for the sale because the popup hit the customer’s computer with a cookie.

Popups and cookie dropping happen with a variety of tools such as:

• Zango
• MossySky
• Seekmo
• nCase
• ePipo
• 180 Search Assistant

In 2006, an affiliate cheated eBay of $10.5 million in commissions from cookie dropping. This affiliate is now in court in a legal battle over these payouts. Nothing has been settled yet.

Supervising affiliates:

• Penalties, litigation
• Identify verification (people make up names and addresses to create fake IDs all the time)
• Some affiliate networks in Europe will now require the affiliate to pay a minimal fee to join (say $1) by credit card so they can verify the legitimate name and billing address of the affiliate. This is to help reduce fraud.

Strategies to dealing with these guys:

• Payment delays
• Don’t pay commissions when you find someone who’s been using fraudulent methods
• Pay a bonus to make good affiliates indifferent (compensate good affiliates for having to wait and focus delays on affiliates who are suspect.)

Who has a take in it?

• Merchant (wants commissions to go down)
• In house affiliate manager (not clear if they care if they want commission to go up or down. Might depend on their compensation model)
• Outsourced affiliate manager (want commissions to go up – they generally earn a percent of the sale as well)
• Affiliate network (want commissions to go up because they also earn up to 30% on affiliate sales)
• Affiliate (wants the commission to go up, because that’s how they get paid)

For the next few days there will be more examples, perpetrators and infractions on BenEdelman.org. Be sure to check out your own programs on his site to see how clean your program actually is.

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This is live blogging of the session “Using Web Analytics to Grow Your Affiliate Program.” This covers remarks during the session featuring speaker Kevin Webster (pictured left), Internet Marketing Manager at Forbes Custom Products, a direct source for custom information packaging products and documentation presentation solutions.

In this session, Kevin Webster highlighted a few great points on how to use analytics and key performance indicators to enhance your affiliate marketing program.

This session covered: 

• Why it’s important
• What’s at stake
• What to look for
• How to use it to grow your program

Major take aways:

1. Why it’s important

• Affiliate traffic should always be growing.
• Channel strategies change the way affiliate marketing works.
• 60% of your revenue could theoretically come from non-decipherable sources.
• 40% of Amazon’s 2011 revenue came through their affiliate marketing channel.

2. What’s at Stake

Loss of proper channel value:

• Social value
• Revenue value
• Stickiness

A foot in the door:

• Open a communication channel with your affiliates.
• Having stats you can talk about with your affiliates will give you a reason to outreach to them.
• Leverage your web analytics to garner trust with your affiliates – talk about the navigation process and issues on your site that you recognize and are working to fix.

Basis for a growth strategy:

• Without fully understanding outcomes, how can you properly plan?
• Also, how do you know what to fix for better performance?
• Don’t get lost by multi-channel attribution – OWN IT
• Make sure you’re properly tagging and tracking things on a micro level so you can properly attribute the value of particular efforts

3. A Basis for Channel Growth

What is your affiliate traffic really doing?

• If it was your PPC / Display traffic, how would you assist in converting?

How do you take it back to affiliates?

• Devise a strategy based on actions, not simply conversion rates.
• Know what’s happening to your super affiliate’s traffic and take it back to them.

4. What am I Looking For?

Diversion:

• What differences do you see in affiliate traffic versus other channels?

Trends:

• Your affiliates might know what is hot before you do. See: Pinterest, Social Media

Segmenting Affiliates:

• Use analytics to create product specific affiliate groups.

5. Know How to Grow

• Look for high converting niches to exploit, then develop specific recruitment strategies.
• Use Google Trends buzz tracking website and Compete.com – ALL THE TIME. Most people miss this.
• Use external analytics to shape your recruitment strategy.
• Match historically effective creative (what worked in the PPC channel to drive customer acquisition, what has driven sales INSIDE your cookie cycle, what has driven sales on First Click – First Click affiliates might end up being your most valuable.)

Recommended analytics tracking tools:

• Google Analytics
• Spring Metrics (for small businesses)
• Piwik (for self hosting)
• Omniture (Corporate level)
• Site Catalyst (Corporate level)

In conclusion, the purpose of analytics is to grow your program performance while fostering better relationships with your valued affiliate partners.  To Contact Kevin Webster, check out KevinWebster.us, Forbes Products or follow him on Twitter @levelanalytics.

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