Affiliate, or referral, programs have emerged as a valuable option for marketers suffering through online advertising woes, and those that cultivate leads and nurture their networks could stand to profit, research finds.
The programs were established to take advantage of online reciprocity, whereby a merchant pays a commission to an affiliate for generating clicks, leads, or sales from a graphic or text link located on the affiliate’s site, and a 2003 report of 100+ affiliate managers by AffStat found that more than one-quarter (26 percent) of affiliates have earned a monthly commission that exceeded $10,000.
Furthermore, 13 percent of affiliate managers received $120,000 or more annually with salary, incentives and bonuses, according to the data. A similar report that was released in January 2002 by the same author, Shawn Collins, indicated that only 4 percent of the affiliate managers surveyed had a salary of more than $101,000 annually, with the majority (22 percent) in the $31,000 to $40,000 range.
Nearly two-thirds (64 percent) of the programs have dedicated affiliate managers who oversee the network of partners and are often responsible for creating newsletters, establishing incentive programs, forecasting and budgeting, overseeing front-end marketing of the program, and monitoring the industry for news and trends.
Most (44 percent) of the respondents to AffStat’s survey maintained a program that included fewer than 500 affiliates, and one-third acquired fewer than 10 new affiliates per month. Nearly one-quarter (24 percent) signed up 100 to 500 new affiliates every month, followed by 23 percent that acquired 10 to 50 monthly.
To prove that size doesn’t always equal profit, Shawn Collins, author of the report, segmented the 13 percent of the $120,000+ earning managers: 75 percent have less than 1,000 affiliates; 17 percent had 20,000 to 50,000 affiliates; and 8 percent have 10,000 to 20,000 affiliates. “This is consistent with a trend of affiliate programs being more of a boutique operation — just focusing on a smaller collection of active affiliates,” comments Collins.
The percentage of total transactions that were attributed to affiliates spanned the spectrum: 18 percent indicated that more than 30 percent of their total transactions were generated through affiliates, while 14 percent showed a below 1 percent transaction rate. Nearly a third (30 percent) fell within the 7 to 20 percent range.
Impressions, which Collins defines as an “advertising metric that indicates how many times an advertising link is displayed,” varied wildly on the scale: 21 percent reported that their affiliates generated less than 5,000 impressions per month, while another 21 percent reported more than 5 million.
Nearly half (48 percent) of the respondents indicated a conversion rate — the percentage of clicks that result in a commissionable activity — between 1 and 5 percent, with another 16 percent reporting even higher conversions.
The growing popularity of referral networks is evidenced in a September 2002 Jupiter Research (a unit of this site’s corporate parent) report regarding online holiday advertising. The research revealed a 9 percent increase from 2001 to 49 percent among companies that were utilizing affiliate programs in their marketing plans, making it the second most popular online marketing tool among online retailers for the 2002 holiday season.
| Top 10 Affiliate Programs of December 2002
Ranked by Refer-it
|1||Herbal Sensations Viagra Alternative|
|Note: These rankings are calculated based on the absolute number
of clickthroughs each program received on Refer-it.com.