Affiliate Marketing Expert Evan Weber Interviewed about Performance-based Marketing

Q: Evan, could you please tell our listeners a little bit about what Experience Advertising does?

Evan Weber: Sure. Experience Advertising was started in 2007 to address the vast need for effective affiliate program management with ecommerce companies on the major affiliate networks like CJ, Linkshare, and Shareasale. We function as an agency that manages affiliate programs on behalf of clients, among other agency services. We work with all their affiliates and publishers through the performance marketing channel in order to facilitate them to become better producers and increase performance-based revenue for our clients.

Q: You touched on a couple of interesting terms. Performance marketing, which has also been referred to as affiliate marketing, has been around for years. It has attracted a lot of attention recently. For those of us who aren't quite sure what this is all about, can you please explain what performance marketing entails?

Evan Weber: Well, performance-based marketing is a form of Internet marketing, which focuses on compensating affiliates or publishers (the term can be used interchangeably), for actions, sales or leads usually, that are produced on behalf of an advertiser or merchant. That basically means that if anything sells on the merchant’s website, the affiliate would then be compensated a percentage of the sales or a flat fee, on a performance basis. It could either be a percentage of sale, per lead basis, or a per sale basis, which basically means that a certain action is being created by the affiliate to the advertiser’s website and then a certain dollar amount is then paid out to the affiliate per sale to compensate them for the referral.

Q: When you say affiliate or publisher, this could even be a blogger, right? Or it could be a commercial site?

Evan Weber: Affiliate types run the gamut. It could be bloggers, webmasters, big site owners, email list owners, people with newsletter bases, apps, technologies, bascially anyone who can expose their visitor base, audience, or traffic to an advertiser’s offer or banner advertisement, which would then lead to a click through. Then, when a certain action is taken on the merchant’s website, the affiliate is compensated on a performance basis a certain amount.

Q: You’ve hit on a number of metrics for assessing the performance part of performance marketing. We hear acronyms when you look this up, CPS or CPA. What do you feel is the most appropriate performance marketing metric and why?

Evan Weber: Well, it is up to the individual advertiser or company to come up with whichever model is going to work best for their website. Different companies go on different payout structures. You have to come up with an accurate compensation structure that matches your website and business model. For instance, an online retailer selling electronics would likely compensate on a percentage of sale basis, which is basically calculated on the sale price. If the affiliate directs traffic to the advertiser and they spend $1000 and the affiliate is getting 10% of the sale, they would then get $100 per sale. So, that would be the affiliate payout or commission amount. On a per lead basis, usually what is going on is the advertiser is collecting information from the visitor: “I would like information on insurance” or “I would like information on remodeling my home,” for instance. Once a form is filled out on the advertiser’s website, a lead is then calculated. Then a certain dollar amount is paid out to the affiliate, whether it is $10 or $20 per lead. And then the basis it works on is a per sale basis, which is usually a flat rate or a flat amount per sale (like a membership type site or something where a certain fixed dollar amount is being sold to the visitor or the consumer and then the affiliate is compensated a certain flat rate, like $25 or $30 per sale every time a sale occurs). Those are the three main types of performance-based metrics.

Q" What types of companies are best suited for affiliate or performance-based marketing?

Evan Weber: Any website that’s selling something online, like an online retailer. Anyone generating leads online, a lead aggregator or a company that is looking to generate more sales leads for their sales force. Any company that is running a membership type site. Really, any company that is selling online or doing some type of e-commerce or online transaction or lead generation scheme is then going to be able to leverage performance-based marketing to build a large number of producers for themselves and then compensate them based on all the business that they bring in. Any company out there that has a good, converting website -- they have to have a good performing site in order for it to all work out because once affiliates start generating traffic in their direction, if it is not converting or turning into sales or leads then the affiliates aren’t going to get very excited about it and it’s not going to gain traction at all. So, before anyone jumps into performance-based marketing, they should make sure that they have a really good, performing website that has been tested and improved upon over time in order to hone it for the optimal conversion rate. So, when the affiliates or partners do start sending traffic their way, they are actually making money. Otherwise, it’s going to never really gain what they call: “traction” and grow like it should.

Q: Essentially, the affiliates themselves also have something at stake here, just as much as a retailer might in terms of which affiliates they are dealing with?

Evan Weber: Well, there are many types of affiliates and publishers that can be worked with. There are many different modalities in which affiliates can generate traffic. There are certain types, like incentivized traffic, where points are being awarded or some kind of gift is being worked towards on the part of the consumer where some merchants don’t accept that type of traffic because it tends to skew the quality of the lead or the sale. There’s different types of traffic that affiliates can generate that are better for certain types of models. Search is great for lead generation. Email is great for lead generation. Web placements are better for retail. Coupon sites are good for retail because so many people are searching for coupons these days. So, there are certain types of affiliates and publishers that tend to work better for certain types of performance-based models.

Q: If you were a company looking into this space and trying to get up and running, how much should a company invest in growing their performance marketing channel?

Evan Weber: Well, it’s really a tough question. There are many different factors. There’s everything from who is actually managing your affiliates. You can do it internally. You can do it through an outsourced agency. We are an outsourced agency that manages on behalf of the advertiser. There is a cost associated there. There’s the cost associated with compensating the affiliates in how much money there is in order to pay out the affiliates to increase their productivity. There’s contests you can run. There are various promotions that can be run. That costs money that can be set up to help motivate the base. There’s money that can be spent to grow the program. Various affiliate networks will allow you to do recruiting exercises. That costs money to build the numbers, either through email or through a placement in their network where affiliates can see that a particular merchant is available and how much they are paying out and to give you extra exposure. It really is the sky’s the limit when you ask how much can be spent to grow a performance channel. Obviously, you can bring in a business development person to go out and bring in partnerships on a performance basis, which would tend to work outside of a traditional affiliate network. That can be handled with onsite tracking where you can go out and bring in partnerships with other companies that can place you on their website or in their newsletter and you compensate them on whatever sells, i.e. a performance basis. So, there’s an infinite amount of things that can be focused on and resources and money can be put in those areas in order to grow it. But, it just depends on the company and how aggressive they want to be to actually grow the number of producers and the number of participants in their affiliate channel.

Q: If I were a smaller or mid-sized company with limited resources, there is still not an excessive barrier to entry for me if I really want to get my foot in the door?

Evan Weber: No. There are affiliate networks like the Shareasale.com affiliate network that has very, very affordable start up costs. There are other networks that are more expensive and tend to have more affiliates, but there are all levels of entry into the industry. You can even start your own affiliate program onsite through a company like HasOffers.com, which will basically put an entire affiliate tracking network on your own website where you can bring partners in directly and work with them directly and pay them out whatever you would like to pay them out without having to worry about any kind of affiliate network fee involved. And then there are companies who run an onsite network and they also run in third party affiliate networks, like CJ, LinkShare and ShareASale, in order to gain more exposure by listing themselves in various affiliate networks. So, you can really go small and keep it on your site and keep it real tight or you can open it up to various affiliate networks. And there are CPA Networks, which are smaller affiliate networks, but can product revenue, as well. But, all that takes additional management. The more broadly you spread out your offer or your website into various networks, the more management it incurs and the more you have to watch the numbers, you have to look for any issues, you have to look for any orders that are returning or canceling or that may be fraudulent. So, the larger you scale your affiliate program or your whole performance marketing channel, the more problems that could actually result. You just have to watch it that much more closely. I’m not trying to scare people and say that there are this many problems or anything, but there are issues and problems when you open it up to thousands of affiliates where you don’t necessarily know the nature of all the traffic and you have to look at all the sales that come in and see which affiliate produced the sales and back track your way to see how they are actually producing the revenue.

Q: It’s complex, certainly, and with the pace of technology and changes culturally and socially in society, it sounds like there is a lot going on here. So, as long as I have you, what are some of the latest trends that you see out there in performance-based marketing?

Evan Weber: Affiliate marketing is one large channel of performance-based marketing, but there are other different traffic channels that fit within the realm. They can be on a cost-per-click model. Behavioral re-targeting is all on a CPM or CPC, cost-per-click basis. Technically, it’s on a performance basis because you are paying when someone takes an action, i.e. the click. It’s not based on an actual sale or lead occurring, but it’s still performance based in that they are generating “X” number of clicks for you and then you have to go and pay for those clicks. It’s kind of like a Google pay per click campaign or paid search campaign. Behavioral re-targeting is really the latest and greatest thing in the performance marketing industry, which allows companies and websites to re-target to consumers who come to their website and don’t purchase. Then they go out and surf around the Internet and start seeing that company’s banner showing up on various websites and every time a visitor then clicks and then returns to the website, the advertiser is charged on a performance basis for those click throughs. So, behavioral re-targeting is really the hottest and newest thing in performance marketing and is where everyone is gravitating right now. So, that’s what I would say as far as what is the latest and greatest in performance marketing.

Q: It’s tough to keep up with I imagine.

Evan Weber: Well, it’s a very large industry. It grows every year. Every year more and more affiliates and publishers get into what is known as affiliate marketing where they are representing different advertisers on their site or in their newsletters or in search engines or on Facebook and they are compensated on a performance basis. Very, very large companies that run huge websites with millions of visitors a month are participating in this model all the way down to very small webmasters and bloggers who just want to generate extra income with their site or their traffic. They are placing affiliate banners. So, it really runs the gamut of -- everything online is a possible partner in the performance model. A lot of times as an agency or as a company looking to grow that channel, you have to go out and propose the idea. You have to say: “Hey, I found your website. It looks really great. I see you have a bunch of traffic or a great newsletter. How about partnering with us in our performance marketing channel as an affiliate?” And you have to go out and prospect and bring in partners that way. That’s one thing you can do. The other thing is really leveraging the affiliate networks like CJ and ShareASale in order to maximize the number of affiliate partners that you have in your program and using various strategies to grow the numbers. And also to motivate the base. If you are not growing the base and motivating the base at the same time, you are really leaving out one part of the equation because you always need to be recruiting new people into the program and also trying to motivate your current producers to either start producing or produce more by various strategies like increasing their commission amount, running contests, running promotions, doing fun and exciting things that will get people motivated and get people focusing on your program. As an advertiser, you are going up against thousands of other affiliate programs and really competing with a finite number of performance marketing partners to get their time and to get their resources to focus on your company or your program. So, there is a lot of leg work, there is a lot of personal contacting, there’s a lot of working with people, proposing the idea, suggesting: “Put our banner here” or “Put our banner there”. Making placement suggestions in order to really facilitate getting people promoting whichever advertiser it may be and over time, if you do all these things, the channel will grow. It will grow large and productive. If you don’t do these things – if you are not reaching out, if you are not trying to motivate the current base, you are going to get a lackluster response. You are not going to get as much of what they call: “traction” as if you were really trying to work the thing by really trying to reach out to people and work with them and see what they are doing and propose different ideas. Then it just becomes growing those numbers. Growing those numbers into the thousands and thousands of participants and then producers and then employing various strategies to get your producer base to be more productive and to represent your company more so online.