Welcome to an exclusive interview with Mike Allen, a well-known affiliate marketer, recipient of the “Affiliate of the Year” 2009 Pinnacle Award and Founder of Shopping Bargains. At the Affiliate Management Days SF 2013 conference (April 16-17, 2013), Mike will be participating on the “Inside the Mind of the Super Affiliate” panel and here, I’ve decided to pick his brain before the conference.
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Question: If you were to emphasize one important issue that every affiliate manager should be paying more attention to, what would it be and why?
Mike Allen: One size does not fit all. In many cases, affiliate managers would benefit by being more creative and flexible in how they evaluate and interact with affiliates.
For instance, the 80/20 or 90/10 (or perhaps even 98/2) rule suggests that the vast majority of affiliate channel sales will be attributed to a small minority of the total affiliate pool. On the surface it looks like only a few affiliates are success stories while most are either absent or weak performers.
However, a clever affiliate manager will drill down into the numbers for all affiliates and find some jewels. It could be, for example, that a majority of new customers are coming from small affiliates while the top 3 performing affiliates, due to great search engine rankings, are mostly intercepting previous customers.
Other variables to consider when evaluating the individual impact of affiliates are average order size, click/sale conversion rate, and the commission rate paid to each affiliate. Once these values are known and evaluated in light of the program’s internal numbers, an affiliate manager is better able to reach out with incentives and customized offers to maximize the effectiveness and growth potential for each affiliate within their program.
Question: What do you see as the main areas of opportunity for online (and affiliate) marketers in 2013 – 2014?
Mike Allen: This is a difficult question to answer without first noting a major challenge certain affiliate channels (especially coupon and deal affiliates) are facing today.
In many ways, I feel the Google Panda update of 2 years ago made things much more difficult for most small and medium-sized affiliate marketers. As I understand things, this update was different from a routine algorithm change because it is a filter that excludes specific websites that the algorithm would have otherwise allowed within the results.
Put in economic terms, the “middle class” of affiliate marketing was severely impacted as many medium affiliates saw their search engine rankings evaporate. The resulting shakeout left only a relatively few, larger affiliates, within the field who were then rewarded with even greater search rankings and, therefore, traffic. Because Google only has room for 10 “free” spots on their first page. The rich get richer as premium placements translate into enhanced exposure and sales. Regarding any keyword, if an affiliate doesn’t rank on the first page – then for all practical purposes they don’t exist.
What does this mean for affiliate marketers?
I believe it means everyone else not found on this coveted real estate must work differently than they did a few years ago. As one who lives in a small town, this post-Panda environment reminds me of the typical small town grocery store’s response to Walmart’s arrival within their market. How the small grocer responds determines whether or not they survive. They can either fold or nimbly innovate by offering quality and services that are outside the scope of what Walmart can offer.
In light of these changing circumstances, what’s an affiliate to do?
I think there are even more options now as search engines are not the only gatekeepers in 2013. Social media and mobile channels provide amazing potential for niche and smaller affiliate marketers and here is why: Most smaller affiliates have the ability to touch and interact with their customers on multiple levels.
These affiliates are often the face of their company and trusted as an expert. As such, they provide credible information in the form of opinions, comparisons, commentary, photos, product reviews, how-to articles and more via videos, blogs and curated data. They fill in the blanks and answer the questions that customers often have. They serve the more difficult and picky customers. They provide information that is often missing from “big box” retailers and even the manufacturer.
In short, they provide solutions – which is always welcomed by buyers and, I feel, remains affiliate marketing’s strongest opportunity.
Question: If you could go back 3 years, what would you do differently in your approach to online marketing?
Mike Allen: It’s too bad that experience is something we get after we need it. If I had the ability to go back, I would make sure we diversified our traffic streams instead of relying primarily on organic keywords in Google.
What Google (or Bing) gives they can take away. If we build a good email list or forum or a loyal Facebook or Pinterest following, then we have largely Google-proofed our endeavors. Therefore, if I could go back, I would make sure we were well invested in social media and other eyeball-rich environments.
I would also blog more. It’s a very effective and interactive way to share our expertise and provide solutions to customer needs.
Question: Running an affiliate website that targets frugal consumers, what have been some of the more interesting observations of online buying behavior?
Mike Allen: In December 2012, during a local television interview I said that based on the unusual volume of 40% off coupon codes that remained beyond the Black Friday/Cyber Monday period, I suspected that many retailers were not hitting the internal numbers they needed. I also noticed that average order sizes for many retailers were not as strong as seen in a typical Q4.
This made me fear that our economy was not nearly as strong as the government wanted us to believe.
Sadly, about a week ago the government’s own numbers showed my suspicions were accurate as the economy actually shrank. Over the years, I’ve found it surprising how closely trends I’m seeing in affiliate marketing correlate with macro trends in the economy. It makes me wonder if real time affiliate marketing data could be used to accurately predict macro economic activity months before government reports are published.
Question: We often hear that coupon affiliates are seldomly adding value. What do you say in response to such statements? And if an affiliate website that’s distributing coupons and discounts can indeed add value, can you give us 3 ways how an affiliate manager can enhance this arrangement?
Mike Allen: Just like we can eat well or badly, a retailer can coupon well or poorly. Certain foods, like eggs and butter, often get a bad rap while the real problem is likely an out-of-balance lifestyle. The same can be true for coupons. Coupons can encourage higher order sizes or shrink them. Coupons can erode profits or expand them.
So what’s a retailer to do?
There are many options but here are three things that can make a significant difference:
Instead of banning coupon affiliates, I suggest retailers embrace them when possible: As long as coupons exist, coupon sites are not going away. If a retailer does not affiliate with a coupon site, that doesn’t mean their coupons won’t end up being posted there. Instead, it means that coupon site is not governed by any affiliate agreement so they can post anything – including unauthorized coupons and even bogus ones.
So, my suggestion is to embrace as many reputable coupon sites as possible to control or manage the space. A merchant’s affiliate agreement should clearly lay out the terms for coupon posting and, if they want to work with you and earn commission, the coupon site will have to follow your rules. It’s win-win that way.
Carefully plan your coupon strategy: Plan it just as customers carefully plan their shopping cart size to maximize coupon discounts and free shipping thresholds. You know your average order size so don’t coupon any minimum below that.
For example, if your average order size is $80 you might consider a $10 off $100 coupon. That means you and your customer both give up $10, but bottom line, you grow your average order size by $10, which, now $90, represents a 12.5% improvement. If you had discounted just $5 off $75 then you would likely end up with a lower order size than before. That would cannibalize your sales numbers and would be a poor coupon strategy. That would be a lose-lose strategy for you and your affiliates.
Make sure you can control the coupon box in your shopping cart: If possible, auto-populate the coupon code there and automate the discount displayed in the shopping cart when an affiliate link is clicked from a coupon site. If a coupon link wasn’t clicked, consider suppressing the coupon box altogether. If you cannot do that, then create a generic “placeholder” coupon and message it as your everyday low price or similar.
The goal is to discourage your customer from leaving the shopping cart to search for a coupon – you don’t even want them to think of that option. You also don’t want them to have any doubt in the back of their mind that they are getting a good buy or your best price.
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The upcoming Affiliate Management Days conference takes place April 16-17, 2013. Follow @AMDays or #AMDays on Twitter. Early bird registration runs until February 22, 2013. When registering, make sure to use the code SBTAM250 to receive an additional $250.00 off your two-day (or combo) pass.More in: AMDays