How to Start an Affiliate Marketing Programme in 3 steps
When businesses are looking to diversify their paid marketing mix beyond Paid Search and Facebook Ads, affiliate and partnership marketing is not often the first channel that comes to mind. Over recent years however, the scope of partnership marketing has expanded far beyond traditional comparison and incentives such as voucher code and cashback players. Influencer marketing, paid PR, and long form content creators are a few of the new(er) verticals that have made the affiliate channel a marketing opportunity suitable for most B2C businesses. Add to that the sustainable, low-risk nature of the channel and it’s no wonder that you might be considering launching an affiliate programme yourself.
Setting up an affiliate channel can be a seemingly overwhelming project at first. In this blog post we will outline the 3 fundamental pillars that will help you navigate through the first three months of your affiliate marketing programme.
Step 1: Choose your affiliate platform or SaaS provider
A core part of running an affiliate marketing programme is setting up the affiliate platform or tech provider you choose to work with. SaaS providers like Impact and Partnerize, and traditional affiliate networks such as CJ and AWIN facilitate affiliate tracking, payment, and creative hosting, amongst other things. Any partner you want to work with can sign up to your affiliate campaign via the affiliate platform’s publisher portal where they will be able to access their tracking link and creative assets needed to set up their campaigns and keep track of performance.
There are various things you need to keep in mind when choosing the right affiliate platform for your business. Cost might be one of the most important factors when you’re first starting out. For a “like-for-like” comparison we suggest you look at the effective % kickback which would be the monthly fee divided by the monthly expected affiliate payments. Secondly, you need to determine whether you want to run the programme in-house or with the help of a service provider or marketing agency. Affiliate marketing agencies like Growth HQ can be a knowledge and resource bridge between your in-house marketing knowledge and resources and the tech you purchase from a SaaS platform. Finally, another important element to consider is the functionality of each of the platforms and the technical capabilities you have in-house to connect their tech to your platform (website or app). From our experience, if you’re a data driven, fast-moving business, a SaaS provider will offer you the reporting and dynamic tech you need at a much more affordable price.
Step 2: KPIs, commission rules and tenancy budgets
Data is the cornerstone of any modern business. Performance marketers need to be on top of analysis and reporting in order to drive sustainable growth. Gone are the days of getting a budget allocated by your finance team at the start of the year, which you desperately try to spend by December 31st to avoid getting penalised the next year. Nowadays, sustainability benchmarks - a target CPA or ROI - are a much more effective method and lead to practically uncapped budgets for those teams and channels that growth hack their way to scale.
At the start of launching your affiliate programme, you will need a clear understanding of your north star KPI - i.e. new users - and sustainability targets - i.e. a certain CPA or ROAS. When setting your test strategy for the first 6-12 months of running your affiliate programme, keep in mind the metrics you need to track and the reporting you need in place in order to reach success.
Furthermore, you’ll need to decide what commission -flat CPA per event or a percentage commission on basket value- will help you reach your sustainability targets. Having a tiered approach to your commission will help you incentivize partners to keep pushing your brand over time.
Tip: Unlocking growth in some of the affiliate verticals would require some monthly testing budget. In particular, content creators are often no longer willing to be paid on a CPA basis only and even employee benefit sites require a one-off integration fee. We usually recommend a minimum of ~2.5k monthly as a starting budget.
Step 3: Find partners that match your business’ audience
Now that you have set up your affiliate platform and determined the KPIs and metrics this channel needs to push, you need to find the partners who will help you achieve your targets. Finding new partners to push incremental growth is the most resource intensive part of scaling an affiliate channel. At Growth HQ we always start by understanding your company’s audience; the characteristics and demographics behind the users you are targeting. Knowing your audience will help you figure out where they “hang out” online, which makes it easier to identify which top, middle and bottom funnel affiliate verticals to test. Furthermore, understanding what problem you're solving for your users or the opportunity you offer them (USPs) is important in order to get your partners enthusiastic about your products or services and help them create more authentic and on-brand content.
Tip: The more open you are to testing a variety of verticals, the higher the potential impact of the channel. None of the verticals need to be or can be scaled overnight, therefore you will have space to test 1-3 partners per vertical in and decide whether you want to continue investing after 8-12 weeks of being live.
Time is your friend
Now that you understand these 3 foundations of any affiliate programme, the final thing you need to frame the opportunity to your senior management is the understanding that it takes longer than 3 months to scale a channel. In the first 3 months your aim is to build the foundations and get a few test partners to understand the tip of the iceberg of potential this channel might offer your company.
A key difference between the affiliate channel and your Paid Social / Search efforts is the time it takes to understand what works for your business. On Google Ads, you can push an ad live and spend £100 overnight, giving you data driven insights into the performance of your marketing campaign straight away. Whereas with affiliate marketing, once you’ve determined the affiliate types you’re looking to test it will take 2-3 months per vertical to reach out to a list of prospects, close deals, onboard partners onto your affiliate platform and get their campaign live. Don’t let this be a barrier to launching the channel though, at most of our clients the affiliate channel is overall the most cost-effective way of driving growth and generates up to 30% of the businesses’ growth over time.
