& A with the Experts...
Mark Welch is a
journalist, consumer advocate, and consultant. Since April 1996, he has maintained the
"Web Publishers' Advertising Guide," a directory of advertising networks and
opportunities for webmasters (http://www.adbility.com/wpag/).
He recently withdrew from full-time practice as an estate planning attorney to found
Adbility, an internet advertising consulting firm. Earlier, he was a reporter and editor
for InfoWorld and BYTE magazines. He lives and works in Pleasanton, California.
Q: In your opinion, who
has a worthwhile affiliate program and why?
A: Dozens of
vendors have worthwhile affiliate programs, but this really is a very subjective thing. A
particular affiliate program may be extremely worthwhile for one site, and a waste of time
for another site. For example, I have two music pages: one is about Michael W. Smith (a
Christian music artist) and the other is about Semisonic (a rock band). The SheetMusicPlus
affiliate program is a great performer on the Michael W. Smith page, because a lot of fans
come to that page and want to get sheet music or guitar tabs, which are sold by
SheetMusicPlus but are generally not available in any other retail outlet. In contrast,
SheetMusicPlus is an awful affiliate program for my Semisonic page, because the vendor
does not carry any sheet music from this band and I doubt the same level of interest would
exist for sheet music for this group anyway. Unfortunately, it's always easier to identify
the "duds" in the affiliate program category: vendors like Spree.com whose
affiliate programs provide virtually no benefits to affiliates, or vendors like Memory.Net
that simply default on their payment promises. Each site must carefully evaluate each
prospective vendor's product mix, pricing, commission structure, and payout thresholds
before allocating any inventory to that vendor.
Q: How important are
affiliate relationships to the overall marketing plan and what is the relevance to other
parts of the plan? (such as banner ads, email marketing, directories, etc.)
A: In most
cases, the e-commerce vendor with an affiliate program uses it to augment traditional
advertising and promotional efforts. It should really never be the only avenue for
marketing. but in most cases it will rank with PR as the best return-on-investment.
Affiliate marketing also can provide a
pool of data that can be used when making other advertising buys, or seeking other types
of exposure. For example, the results from a particular category of web sites who are
participating in the affiliate program may lead the vendor to buy CPM or click-based
advertising from other sites in the same category, if the measured return is good.
Conversely, the affiliate program may help vendors identify and avoid dead-end site
categories at much lower cost than traditional advertising.
I think it is important to track ALL
marketing activity using the same set of tools that are used to track affiliates: don't
use one system to measure results from CPM or pay-per-click advertising and a different
model to evaluate your affiliate program. For vendors, it's all about
Q: Without naming names,
are you aware of Web sites or publishers that have seen affiliate programs become a viable
Regrettably, I can count these sites on one hand: it is extremely rare for most sites to
earn anything more than nominal income from affiliate programs. And the players whom I
know are earning large sums of money, are extremely quiet about it because they don't want
their revenue usurped by competitors.
One major niche that is profiting from
affiliate programs are the "price comparison engines," which join multiple
vendors programs and then get a commission no matter which way the consumer chooses to go.
But I'm finding that many of these search engines don't include low-cost providers of
products, and thus consumers are starting to distrust them. If they include low-cost
sellers who can't afford to pay sales commissions, then revenue is lost. Catch-22.
I know that less than 2% of my
advertising revenue last year came from affiliate program commissions, although that
reflects a "niche premium" that my site commands for CPM advertising.