Affiliate Marketing ROI
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How can I manage the ROI of affiliate marketing?
Basically, there are three cost centers for a merchant running an affiliate program.
You’ve got the commissions to affiliates, affiliate manager or team, as well as the cost for the technology or affiliate network you are using.
Add all of those components up and subtract them from the revenue generated by the affiliate program, and you can determine your ROI.
Just tweak that around until it works for you.
One thing to bear in mind is that one of the biggest costs in affiliate marketing is to roll out a lousy affiliate program.
If you have an offer that is not compelling or a site that is not converting, it can doom the affiliate program.
Do a lot of fine tuning until your affiliate program is as good or better than all of your competitor’s affiliate programs.
Otherwise, you’ll find that you have a lousy ROI.
- Posted in Ask Shawn Collins
4 Comments
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On September 30 @ 7:54 am posted[...] Shawn sprach kürzlich die Thematik ROI eines Affiliate Programms an. In seiner sympathisch simplen Art erklärt Shawn, wie der Merchant kalkulieren muss: Affiliate [...]
Hello Shawn,
I want to say that I really enjoyed reading your Blog today concerning a frequent question asked by many Merchants in our industry.
I would also like to echo or add that launching an affiliate program has many key components. A good point made by you today concerns one of the most obvious but most frequently over looked areas when launching a program and that is “launching a lousy affiliate program†from day one.
It seems that because of a lack of knowledge or experience, Merchants don’t always consider the initial point of entry into the affiliate marketing channel and in turn suffer negative repercussions which include loss of time, money and affiliate relationships. Adequately preparing and launching a positive and strategic affiliate program from day one is critical and will save a Merchant weeks and months of time spent on damage control. At the end of the day, I think we can all agree that a Merchant would rather focus on more important things like growing and supporting a healthy affiliate program and receiving a higher ROI, than wondering what the heck happened!
Nice article Shawn!
Emilio Yepez
reply to this commentAndy Rodriguez Consulting
emilio@andyrodriguez.com
Hi Shawn,
First of all, I would like to thank you about the very rich and interesting content of your blog. And I’ m begging you to keep going with it because we need active affiliate marketers to teach us the pillars of the affiliate marketing and show us the trends of this powerful industry.
About the ROI, the response that you gave is applied only in the case of a cost per sales campaign where you can calculate the revenue. It’s a quantitative indicator, so it’s easy to get the ROI. What if the programme is based on lead generation or even impression?
In these cases the indicators are qualitative, so you can calculate the costs but not the revenues.
That’s why we should consider 2 types of ROI, an economical ROI for the cost per sales programmes and the other it’s a media ROI based on click rates or lead conversion.
“I hope I’m clear. Because I used to writing in Frenchâ€
reply to this commentHello Emna -
In the past, when I worked on an affiliate program with leads, we were able to assign an amount to the value of a lead, so we worked that into the ROI analysis.
In that case, it was a free membership, and we had formulated that each new member averaged into a certain amount of revenue for us, so it was a similar ROI calculation.
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