Gordon Gekko and Pareto’s Principle Intersect in Affiliate Marketing

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The following is what Vikram Vora of Shaadi.com Matrimonials had to say in response to the question, What is the Future of Affiliate Marketing?

In Affiliate Marketing, the 80 – 20 rule applies (i.e. 80% of your revenue comes from 20% of your affiliates).

It is advisable to work with a selected group of affiliates and maintain your relationships with your exsisting affiliates, at the same time build new relationships. It is a continuous process, and a challenging task for todays affiliate manager.

You cannot expect your affiliates to perform without them having constant support from the merchant with respect to ideas, creative etc.

From the view point of affiliates as far as Cost per Sale Programs, where conversion happens, after the user is repeatedly driven to the site, affiliates need to exercise patience for revenues to be generated.

The first 3-6 months do not result in much of revenue generation, but once revenues are generated, they get better with time, and compensate the affiliate for the lull period. Few affiliates persist in the program to experience the Snow Ball Effect, where revenue builds upon itself.

Normally, affiliates equate the revenue with the opportunity cost of their property. Little do they realize, that they are getting an entire infrastructure, probably worth much more than millions of dollars in investments free of cost, and they can benefit directly from a share in the revenues.

Along with the investment, they also get to leverage the brand equity of their merchant. From the view point of a merchant as far as Cost per Sale Programs, where conversion happens, after the user is repeatedly driven to the site, managing an affiliate network is like maintaining an entire sales force.

The merchants have to strive to remain in constant touch with their affiliates and ensure that relationships are formed. They continuously have to provide tools that will aide the affiliates in promoting their brand.

Typical challenges that a merchant faces are:

1. High attrition.

2. Issues such as cookie stuffing, parasitic behavior of affiliates.
3. Slow conversion affiliate marketing, as it has been proven to potentially lower cost of acquisitions as compared to other online drivers, such as paid placement and media buys, will remain and grow.

To summarize, affiliate marketing can be compared to a investment made in a stock. It always gets better with time.

How would you answer the question, What is the Future of Affiliate Marketing? There are no right or wrong answers.

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5. Google vs. Affiliate Marketing