BEST PRACTICES | JUNE 2008
By Laura Pollock and Sean Reynolds, New York Services Team
One of the first steps when setting up a new affiliate marketing program is to createyour baseline offer. When determining the details of the offer, it is important to keep in mind that your publishers have a variety of business models and performance levels. The best affiliate marketing programs take these nuances into account and design offer strategies that accommodate a variety of partnerships. A strong foundation for this strategy is a tiered commission offer, designed to encourage performance growth from individual partners within the program. Read on to find out how to design your baseline offer to achieve the maximum performance from your partners.
How do you create a strategic tiered baseline offer?
Many advertisers design a baseline offer to cover the full spectrum of publisher partners, from the niche content sites to the largest loyalty and shopping portals. When launching a program or reexamining a mature program, consider offering a tiered baseline offer which will encourage performance growth from all your publishers.
A common pitfall of the tiered baseline offer is the expectation that your baseline should encompass all of your publishers. As you engage your larger partners, you will find that many of them merit a private offer, leaving only your core and mid-tier publishers in the baseline offer. The economics of your baseline offer should take this into consideration and set performance tiers at attainable thresholds.
Advertisers often create tiers with thresholds that are too high for core publishers to reach. To encourage your core publishers, consider setting your first performance threshold at 1.5 times your AOV. This ensures that multiple orders per month are required to reach the first tier, but it is also realistic enough to encourage performance out of your core publishers. Once the first tier is reached and the performance is rewarded, subsequent tiers can be incrementally more challenging to further encourage performance growth among your core publishers
How do I create private offers that complement a tiered baseline offer?
There are three primary groups of publishers that most likely will not fall into your target baseline audience: Proven Publishers, Loyalty Volume Drivers and Top Performers. Each of these groups has unique needs that should be addressed more specifically than your baseline offer allows. Read on for more specifics on each of these groups.
Proven Publishers – These are the consistent revenue drivers in your program, who regularly meet or exceed your baseline's top performance tier. A private offer allows you to custom-tailor the offer for specific publishers without changing your broader baseline offer. It also keeps your program competitive within your category.
Loyalty Volume Drivers – The loyalty business model requires that publishers maintain a consistent rev-share from their advertiserpartners, so a private offer is very popular with these partners. Their rev-share must remain consistent because Loyalty Volume Drivers in turn must provide a consistent rebate to their customers. A private offer is also popular with this group because it allows for competitive flexibility as your monitor your competitors’ offerings.
Top Performers – Private offers for your Top Performers are most likely limited-time optimization offers coupled with site placement or enhanced promotion agreements. Unlike other offers, private offers with your Top Performers are more likely to be associated with a single publisher than with an aggregate group. These offers can be flat or tiered depending on the terms of the partnership.
As you monitor your baseline performance, we encourage you to continue to analyze and adjust your offers to best fit your publishers' needs. A properly optimized offer strategy will encourage publisher performance while also allowing you to focus on other strategic elements of your affiliate program.
If you have any questions about setting up or modifying your baseline offer, please consult your LinkShare representative.
