Today’s post was written by Kush Abdulloev, Affiliate Program Manager at VMInnovations (a Lincoln, NE based online retailer), who is speaking at Affiliate Management Days (San Francisco 2012) on types and value of affiliates [more]

If you are about to launch an affiliate marketing program you will be bombarded with hundreds or even thousands of applications and can feel overwhelmed, like I was.  You may have the urge to auto-approve everyone, because after all it is easier and the more affiliates you have the better — right?  Wrong!

Being selective with whom you work and understanding the value of your partners is crucial to running a healthy and profitable business.  When managing an affiliate program those same rules apply because affiliates are your business partners.  Affiliates act as a liaison representing your company and goods to prospective buyers, and as such should be carefully evaluated.

Merchants should be on the lookout for affiliate partners who drive profitable incremental sales while offering value to their own readers without employing questionable tactics.  Approving a rogue affiliate can bring a world of hurt to your bottom line and most importantly to your program’s reputation.

Affiliates use a variety of marketing methods to promote merchant’s goods and based on these methods we can divide each affiliate into a category.  As an affiliate manager, it is in your best interest to know each of your affiliates strength, capabilities and concerns. In this post we’ll take a look at some of the most popular types of affiliates from a bird’s eye view:

1. By far the most common type of affiliates you will see applying to your program will be coupon sites.   Majority of coupon sites typically target consumers who are at or near the end of the purchasing funnel.  It is important to partner with coupon affiliates who can drive significant amount of “new” traffic via their loyal subscriber base.   Unfortunately for every valuable coupon affiliate there are hundreds of copycats who simply try for rank with “your brand + coupon” keywords without offering any real value.

2. Content sites play an essential role in this industry. They range from passionate bloggers to niche communities that provide helpful or entertaining information to folks who are interested in the subject matter.  It could be a blogger who writes about running a marathon and has an affiliate link pointing to Nike Running shoes; or a whole forum dedicated to running with affiliate banners that span across the home page.

3. Comparison shopping affiliate sites help consumers instantly find the right product at competitive prices.  These sites rely on merchant’s data-feed and generally rank very well in organic search results. It is not uncommon for a comparison shopping site to list products from hundreds of thousands of merchants while serving millions of unique visitors each week.

4. Search marketing affiliates utilize pay-per-click (PPC) advertising to drive traffic to their own site or, if merchants allow it, directly linking to merchants site.  Depending on if merchants have an open or closed PPC policy, search marketers can target product keywords or merchants brand name/trademarks.   Having a solid program agreement detailing what sort of PPC activities are allowed and monitoring such activities is vital to an affiliate programs’ success.  There are also search marketing affiliates who manage merchants PPC campaigns, essentially acting as an outsourced PPC marketing agency.

5. The majority of top earning affiliates on most affiliate networks are cash back & reward sites.  These loyalty programs offer rewards (rebates) to their users when buyers purchase a product through their affiliate link. Example: merchant offers 6% commission for every referred sale; rewards site will sign up for said program and promote a 3% rebate to their readers thus splitting the earnings. Shoppers love to save money, so coupling that with the recent financial crisis and you have an answer for explosive growth of cash back and reward sites.   Just checkout the trend for consumers searching for “rewards” after the recession hit the US in December of 2007:

By allowing ethical rewards sites with a loyal community of followers become an affiliate, you can earn new customers.  However, once you go that route you’ve basically decided to cut your profit margins in half – forever.  Unless you have a good reason to work with cash-back affiliates I would keep them out of your program.

6. Among rewards sites there are certain types of cause marketing affiliates (a.k.a ParasiteWare) that should be highlighted.  These affiliates utilize browser helper objects, toolbars & pop-ups to poach on transactions that were driven by other marketing channels.  Geno Prussakov wrote a fantastic article about how these affiliates work and why you should exclude them from your program.   Unfortunately some affiliate networks encourage merchants to work with such “top producers” noting that these affiliates will deliver great results. The sad truth is that most uninformed merchants take that advice to the detriment of their company.

There are a variety of affiliate marketers out there ready to partner with you, some can boost your affiliate program other can hinder it.  Being well informed about the types of affiliates can make all the difference in your program and company’s growth and success.

Interested in learning more about finding the right value added affiliate partner for you? Then I invite you to attend the session “Keys to Running a Healthy, Profitable Affiliate Program”.  More than the basic overview, this session will cover relevant engaging case studies — no boring slides! Specific B2C/B2B examples and actionable recommendations designed to help merchants avoid pitfalls and exceed their affiliate marketing objectives will be discussed.

Kush Abdulloev is the Affiliate Program Manager at VMInnovations, a Lincoln, NE based online retailer that has served over half a million customers since 2005. Under Kush’s management VMInnovations affiliate program has reached ShareASale’s Top 100 PowerRank within 4 months and is experiencing triple digit growth month to month. Kush is also a passionate marketing strategist who specializes in increasing VMInnovation’s websites online visibility, brand awareness and sales by implementing and improving search engine optimization (SEO), pay per click (PPC) and social media operations. Come hear him speak on Types and Value of Affiliates & Keys to Running a Healthy, Profitable Affiliate Program on March 8 at AM Days SF 2012.