An Affiliate Channel is a very efficient way to spend your marketing dollars. In fact, a recent study found that the affiliate channel ranked #1 for Customer Acquisition. Pair that with the low cost-per-acquisition (CPA) structure of affiliate marketing, and you have an incredible model for incremental scalability.
All that said, once your affiliate program is humming along, there’s always ways to maximize your affiliate budget and “trim the fat” of any excess spend that may be holding you back.
Here are 4 ways to increase the efficiency of your spend in your affiliate program, without scaling the program back in any way.
Work consistently with tried and true publishers
As your program matures, you’ll have top performing affiliates rising to the top in terms of overall production and availability for your brand. Build these relationships up, then leverage them by running placements a few times over with them. This strategy brings a number of efficiencies to your program.
- It’s more efficient to focus on a producing publisher and run multiple tests with them, than it is to try a bunch of “one-and-done” placements with partners who may or may not perform for you.
- It also brings in the notion of “bulk discounts” for placements into your negotiations and potentially cuts costs for you that way.
- Because of your strong relationship, both parties are more open to negotiate these types of placements. They’re usually more receptive to CPA increases and hybrid models as well.
- Lastly, because of your long-standing relationship with these publishers, there’s an unspoken understanding that they will continue to produce for you and that you will treat them right. Point that out to the partner and let them know you appreciate working with them. That’s way more efficient than having to optimize a partner who hasn’t produced anything for you and may not be in the program the following month.
Pro Tip: When rolling out the above strategy, focus heavily on your “Tier Two” affiliates – those mid-level content publishers that produce good content, but you know they could drive more sales for you – since those are the partners who are typically most willing and able to negotiate on a CPA basis. Plus, they have room to grow!
Don’t just apply a flat baseline of 5% commission to your program and leave it. CPAs are customizable for a reason, and they can make your program very efficient. If a partner isn’t performing, drop their commission down and use that as an incentive for them to pick up performance. If a partner is excelling, see what more they could do for you if you gave them a commission increase and there you go – you just scored a CPA-only placement.
Also, don’t be afraid to apply product-level commissioning to your program or certain affiliates. This strategy applies different commissions on specific SKUs that are promoted by an affiliate. If you have a diverse range of products, all with different margins, this allows you to consider those margins and offer a higher CPA where you can and a lower CPA when your margins are tight.
Custom commission rules in networks
Depending on what affiliate network you’re working in, you should have options for “Custom Commission Rules”. I mentioned an example of these above – SKU level commissioning. Another example of custom commission rules is “Cart Sniping” technology, which gives $0 commissions to an affiliate if they entered the click-path within a certain time window of the customer adding a product to cart. Another rule that’s widely available is promo code commissioning which only pays commissions on sales made with promo codes that are found available within the affiliate network. If a sale is made with an unknown promo code, that affiliate earns $0 on that sale.
These rules, and others like them, ensure that you’re only paying out commissions on sales that you deem valuable as the advertise.
Optimize fees of networks
This recommendation combines strong relationships and your network partners in an effort to ensure you’re getting the deal you should be.
Most affiliate networks charge some form of fee, like an affiliate commission, on each transaction processed through their platform. Outside of startup costs, it’s how they make their money and continue to develop their technology. Depending on the network and your relationship with them, it’s worth asking if you can get this processing fee lowered at all. This question is highly dependent on the network, your relationship with them, the strength and longevity of the program as a whole, and a bunch of other factors. It’s a question worth asking though in an effort to increase efficiency and avoid unnecessary spend. You may have to agree to a long-term contract, sign an exclusivity agreement with the network, or set up direct deposit with your bank, but there could be 1-5% savings on the line with every sale – that’s substantial!
As an affiliate agency, we work closely with all the major affiliate networks and have very strong relationships with all of them.
Ask us how we can help make your affiliate program spend more efficient today!