Graham Keen, affiliate marketing manager at Buyagift, puts the success down to the performance-based model. “The affiliate knows they’ve got to try and get that good traffic through to you, to make it convert, or else they’re not going to earn anything. It means everyone puts the effort in.”

Brain believes one of the main benefits is the access to niche retailers and the long tail of the market. “It’s about tapping into those incremental sales you wouldn’t get through any other channel,” she says. “You’re getting your brand on sites it wouldn’t normally have appeared on.”

Commission rates

Commission can be a percentage of basket value or a flat rate, depending on whether you’re using it for sales or lead generation. How much you pay will depend on a number of factors. Conduct a competitor analysis, identifying affiliate programmes in your marketplace. Look at how much your rivals are paying, and what incentives they’re offering.

You also need to consider how much margin you’re making. At Affiliate Window, merchants can set up commission groups within their account. “If I was a gardening website, I might have a really small profit margin on seeds, and could only afford to pay 2% of the basket value. On my sheds I make a big profit margin, so I’d incentivise affiliates to push sheds by offering them a greater commission, say 10%, because I could afford to,” says Leigh.

Buyagift was losing money selling attraction tickets, and had to put a new commission level in place. But Keen advises against making a campaign too complex: “I think you can be overzealous about it and put in so many different levels that it can become a bit confusing,” he says, adding that you need to be sure about exactly how much you can afford to give away.

“Often people launch into their programmes, throw a load of money at it, and then a month later say, ‘we’ve got to cut back’. It sets a bad tone from the outset.”

Making it work

Before you start, you need to make sure your website is already working well. “When affiliates are looking at taking up a programme, they aren’t just going to consider the commission rate, they are going to look at the conversion rate of the website,” says Brain.

“The quality of the site they’re driving traffic to is important, because they could be offered £100 per sale in commission, but if they’re only going to convert one in 10,000 clicks, then it’s not going to earn them any money.”

According to Brain, one of the biggest, and most common, mistakes that business owners make is to set up an affiliate programme and then just let it run. “You need to tweak it on a regular basis. That instils confidence in your affiliates as well because they know that you’re embracing the channel, you’re willing to invest in it and to assist them in driving traffic.”

Communicate

Successful affiliate programmes thrive on communication. Keep your affiliates up to date with news of new products, key successes, price cuts or any incentives you’re running. At Firebox, commission rates are tiered, so those who make more sales can earn a higher rate as a reward.

“We don’t have set criteria for affiliates, but I find the ones who bring in the most new customers are those that can find new ways to talk about our products,” says Brown.

That said, it helps to provide affiliates with a range of different tools, be it banners, copy for emails or their website and a product feed – a spreadsheet with details of all your products.

“It’s important to give them plenty of information about products so they can create relevant links quickly,” says Brown. “This can be automated – we have a feed that affiliates can download. They can even plug it into their own site to use for functionality, such as price comparison. It gets updated on a daily basis, so the information stays accurate.

“We give affiliates access to banner ads, product videos and text links. Of these, text links bring in the most sales – an affiliate will write an article or paragraph about Firebox and link some of the words within it to relevant pages on our site. PPC adverts also count within the text link category.”

Is it for you?

Before you start, think about all the costs that affiliate marketing might entail. When looking at your profit margins, don’t just think about the commission you’ll be paying out, but also the network fee, and whether you’ll be paying an agency or someone to run the programme in-house.

Brown recommends reading the IAB (Internet Advertising Bureau) handbook on affiliate marketing before you start (www.iabuk.net).

“The most common pitfall is not getting the basics right before launch,” she says. “Don’t expect affiliates to come to you. If you want to stand out from the crowd you’ll need to really shout about your company and programme. Think about your unique selling points and why affiliates should promote you.”

Keen concurs: “You get out of it what you put in. Merchants that put a lot of time and effort into their affiliates and understand it seem to get the rewards and the loyalty, more than the ones who see it as a  cheap and easy way to get traffic.”

Glossary

A rundown of affiliate marketing buzzwords and what they mean

CPA – cost per action. Commission model where you only pay out when a pre-defined action takes place. This differs from the CPM (cost per mille, ie per thousand impressions) model typically used for display ads

Network override – the way the networks make their money. A percentage of the commission is paid to the network on top. The industry standard is 30%

Content widget – A dynamic promotional tool that links back to different areas on your site (whereas a banner will link back to just one page). Affiliates can hand-pick products to promote in the space, with each one linking back to the page where that product sits on your site