Thanks to @casegilbreath for providing one of this week’s top questions. Remember, get your questions about advertising, business, the economy and more answered every Wednesday by posting comments to blog posts or on Twitter @JZspeaks via #askjz.
Jordan – what are your thoughts on performance marketing, affiliate marketing, CPA advertising?
Affiliate marketing, also known as performance marketing, is a marketing practice in which a business rewards one or more affiliates for each visitor or customer brought about by the affiliate’s marketing efforts. The moment a customer is gained, a part of the profit from that customer goes to the affiliate as a commission. Cost-Per-Acquisition or Cost-Per-Action (CPA) advertising is an online advertising process in which an advertiser only pays per conversion, whether it’s a lead or a sale.
Since Zimmerman Advertising’s partners are national retailers, I’m going to answer this question from the perspective of brands. There are certain products and services that naturally lend themselves to these types of marketing efforts. And there are lots of pros to doing so. For instance, affiliate marketing provides more distribution outlets to sell your products and services. More websites will likely generate more sales, especially if they are niche sites. You don’t have to directly manage the sales process if you bring affiliates on board. Affiliate marketing can provide valuable market research because it allows you to reach different consumers through a variety of websites. Brands can also be assured of targeting a specific section of people interested in their product, while also cutting down on the cost of traditional advertising. Banner ads on affiliate websites also draw interest and drive consumers to visit your website.
That being said, like most things in business, affiliate marketing is not “one size fits all.” There are definite downsides. Brands have little control over affiliate activity, which can also be associated with spam. There can be costly set-up and maintenance fees associated with affiliate marketing efforts, as well as high commission costs. Affiliate partners may also engage in false advertising and misleading customers, which can result not only in the loss of potential customers but also in damage to the brand’s reputation. Also, affiliate marketing currently lacks industry standards for training and certification.
So what should brands do if they’re considering engaging in these types of marketing efforts? You need to make sure your affiliates are a good fit for your brand, and that they are accurate and consistent on your behalf. The company you’re partnering with should be savvy in new media marketing as well as traditional channels, and have the necessary infrastructure to effectively market and promote your product or service. You must have methods in place to track and measure ROI efficiently and accurately for each individual affiliate you have, which is easier than ever before thanks to new technology. Lastly, affiliate marketing efforts should only be considered as part of an overall integrated marketing strategy.
What do you think? I always like to hear your thoughts. You can reach me here or on Twitter @JZspeaks via #askjz.