A few years ago, I authored a guide to incentive marketing titled Mastering Incentive Websites. In it, I shared my observations of the industry and detailed the steps I took to create Topaz Financial, a network of Incentive Websites that ultimately drove more than 100,000 advertiser actions. Topaz Financial was also chronicled in the spring 2006 Issue of Colby Magazine. As we head into a new decade, I want to share two pieces of advice that I hope those who currently are in or aspire to be in incentive marketing, may find useful.
Free Trials are The New Leads
Several years ago there was no shortage of advertisers eager to partner with incentive marketers on a pay-per-lead basis. As I sit here writing this in 2010, it’s readily apparent that the pay-per-lead has gone the way of the dodo. The few pay-per lead programs that remain grant payouts well below what’s required to actively promote them. Pay-per-lead offers have always been the incentive marketer’s Holy Grail since they enable conversion rates that are many times those of pay-per-sale affiliate programs. Furthermore, pay-per-lead programs offer more consistency than pay-per-sale programs since the payouts are fixed rather than a percentage of a final sale. Fixed payouts are always more attractive to users and convert at a significantly higher rate.
It should come as no surprise that in the Incentive marketing space, what matters at the end of the day is conversion rate. Each element of an Incentive Website, from the visitor funnel to the individual offers must be tuned to drive the highest conversion rate and ultimately the highest revenue per visitor. In 2005 we experienced conversion rates as high as 20% on certain pay-per-lead offers.
As true pay-per-lead opportunities (think lead generation) have evaporated, a related model remains a viable source of conversions: free trials. Most obviously, free trials involve no immediate cash outlay from users, lifting conversion rates. Secondly, the purchase funnel is far shorter and more direct than nearly all pay-per sale funnels. Free trials are an offer type where the merchant’s goals are directly aligned with yours. The difficulty with pay-per-sale affiliate programs is that the purchase funnel is long and can be downright confusing to the user. Many pay-per-sale affiliate links will direct users to a landing page that is either irrelevant or too high in the purchase funnel. This is often an intentional merchant tactic since not all sales or actions may be required to generate affiliate payouts. You should always read the fine print in the terms of every pay-per-sale affiliate agreement. Free trials are a key strategy to keep your incentive marketing competitive this decade, and as models of digital media distribution continue to evolve, the opportunities will only grow.
Don’t Go In-House
If the volume of actions you drive becomes significant, it’s more than likely that the merchant will seek to bring your relationship in-house. Removing the affiliate network from the equation results in deep and immediate cost savings for your merchant partner – since affiliate networks charge merchants as much as 30% of each completed action, merchants will happily bump up your payout as an incentive to lure you in-house. My advice is simple: Don’t do it. While the prospect of higher payouts may seem alluring, in-house relationships can be fraught with trouble even among the most reputable merchant sets.
Affiliate networks provide a valuable service to you by acting as a powerful intermediary. If you’ve gone in-house and a merchant decides to bilk you, there’s no recourse. The merchant is only risking your relationship. In fact, if you have a blowout month in which you are owed a large commission check, an unscrupulous merchant may simply decide that the risk of losing your referrals is worth stiffing you on the check. In an affiliate network, this merchant’s actions would jeopardize their relationship with that network’s entire affiliate base. Good networks will de-activate deadbeat merchants and fight for you if you’ve been wronged. Some merchants will reverse or cancel more transactions than they should, and the network is a valuable arbiter of such disputes. You’ll likely find that your network is eager to lend their ear when you have issues. They recognize that the integrity of the network rests on a quality publisher and merchant base. You can’t have a quality network without both. And don’t forget, the network gets paid when you do! So when the phone rings from your top payer’s affiliate manager, say yes to the free schwag, but say no to going in-house!
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