Affiliate Programs - help or hindrance?

February 19th, 2009

I’ve been pondering this question for a while now. And I can’t quite come down on one side or the other. Are affiliate programs a help or a hindrance?

We operate a small independent ecommerce shop and are always looking for new ways to bring in traffic and prospective customers.

Don’t put your eggs into one basket

Reading through numerous forum postings we have been told what equates to the age old adage don’t put your eggs into one basket - which equates to don’t rely on free search engine traffic alone. If Google, Yahoo, MSN or whoever is next on the scene suddenly takes a dislike to your site then you can go from traffic aplenty to none in a split second.

So spread your marketing by getting into affiliate programs, where voucher sites, discount code sites, banner ad linking, money off sites, and shopping comparison engines all take hold of your content, images and site data and try to promote you, to make you, and them (through commission), money.

Well, that’s the idea anyway - from a merchant’s perspective.

What is the reality

But what is the reality. What is the goal of the affiliate? What is the goal of the affiliate program? Of course, to make themselves money. But which side are these affiliate programs on? Or are they purely impartial?

Does it matter who gets the commission (affiliate) and the sale (merchant) so long as the affiliate program gets their cut. What practices are deemed out of bounds? Will the affiliate program ‘protect’ the rights of the merchant or those of the affiliate?

Now I’ve been working with an affiliate program for a few years and my personal take on this, is that the affiliate program is more on the side of the affiliate than the merchant. They want the merchant to do a great deal of work to earn the priviledge of appearing on a discount code website.

Special Promotions - customers worth having?

Of course, on top of the standard 15% commission (not including overcharge, set-up fees, monthly fees etc) paid to the affiliate they want you to offer a special offer - 40% off or buy one get one free to grab the customer’s attention.

So for a short period you’ll get plenty of customers who want everything at half-price. But are these customers worth having? Will they, at a drop of a hat, go to another special offer on a competitor site, as soon as your special offer finishes?

You’ve not made money on these customers but are hoping to have built a base who you can sell to in future. But they’re not ‘loyal’ to any brand but to cheapness. Unless you go on being so cheap you’ll be out of business, they won’t use you. Basically, are they customers worth having?

Using your content

I have no problem with affiliates using my content to send me prospective customers. But what I’m wondering is, am I really getting the benefit?

They do their SEO tricks and appear higher than - often eliminating - the originating website from the SERPS. So I lose my free search engine rankings and for my troubles I also have to pay 15% to the guy for appearing higher than me, with my content.

Am I stupid?

OK, so I’ve spread my risk, but for what?

I’m losing customers hand over fist who click on the SERP (where I might have been) and then get taken to a comparison engine who tells the customer that someone else is offering the same product at a lower price / on a special offer / just badly placed so that the customer is less likely to click through to me.

What’s your experience?

I’d like to know how other merchants have used affiliate programs; whether they worked well and brought in repeat customers, or whether the merchant decided to end the program deciding it just did not provide the anticipated spread of risk that they thought on starting out.

What I’m wondering is if there are other baskets where I could put my eggs to much more profitable use?

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