As MarketingSherpa has reported for more than six years now, the biggest problem with affiliate and CPA marketing has always been the merchant-affiliate relationship.

You'd think they'd get along. 9-40% of typical online merchants' sales are affiliate driven, and 100% of the affiliate's business is dependent on third-party offers. Yet like marketers and resellers in many industries, distrust runs rampant.

This February and March, affiliate marketing consultancy PartnerCentric (formerly Affiliate Goddess) set out to help resolve part of the communication gap. They convinced 16 merchants, ranging from financial services such as USA Dental Care to apparel shops such as International Male, to send out an affiliate survey.

A grand total of 1,041 affiliates responded, with average monthly revenues in the tens of thousands. These ranged from coupon sites to paid search advertisers and niche content sites.

You can scroll below to download a 16-page PowerPoint on the results. In the meantime, here is MarketingSherpa's take on the data:

Classic Online Ads Currently Dominate

Two years ago, if you'd asked affiliates for the primary ways they promoted programs, the top two answers would have been search marketing and email marketing. Thanks to increasing search marketing competition and email privacy concerns, neither of these made the top answers for early 2006.

Instead, affiliates' most used tactics were:

Text links 19.88%
Banners 18.80%
Content 18.40%

Wow, did anyone expect banners to make such a comeback? Partially this can be explained by the fact that the largest chunk of respondents -- 44.5% -- were themselves niche content sites. The second-biggest group was coupon and discount shopping sites at 26.9%. The smallest groups were freebie sites (0.7%)and bloggers (0.6%).

This indicates to us that the nature of successful affiliates has changed somewhat from salesmen-without-brand-names (email promo list owners, SEM specialists) to branded sites.

And, in turn it indicates the nature of the customer driven through affiliate marketing may have changed somewhat as well. Instead of a what-the-heck click on an ad served by whomever, they are more likely to be clicking on a "we recommend" link on a trusted site. This means the consumers may be more likely to convert. However, they also are more likely to stay loyal to the brand they came from rather than going direct to a merchant in future.

We'd love to see some data on this. Unfortunately, very few merchants have tracked the quality and loyalty of their affiliate-driven traffic over many years (too few, in fact, track it now.)

Affiliates name their biggest marketing challenges:

Nope, contrary to many merchants' expectations, "commissions/payout" was the LEAST named challenge by affiliates. So, yes, affiliate marketing is *all* about the money. The affiliates themselves are smart enough to know increased commissions won't help them the way other factors can.

Biggest problem? Bad conversions. 441 respondents (27.04%) said they wished merchants could improve everything from landing pages to checkout processes so the clicks they sent would convert into cash. "We're sending you good shoppers," the affiliates seem to be saying, "but then you're lousing it up on your end."

Next biggest problem: merchant inaccuracies, such as outdated coupons and data feeds at 17.78%. Again, the affiliate is sending a perfectly good click over, but your product or special offer isn't there anymore to convert them.

If you are a merchant more on the 9% of the affiliate-driven-revenue pie slice, we bet you don't dedicate as many resources to keeping up your data feeds and promotional info for partners as you should. Which in turn means you may slip to 5%-8% next year ... all the while convinced by the data that affiliates aren't any good so it’s not worth investing in.

It was nice to see that 8% of affiliates said they had no challenges at all. (Awfully confident bunch though, huh?)

What would help affiliates generate more business? Results

When asked what merchants could do to help affiliates generate more business ... well then, yes, 24.67% said a higher commission would be nice. This makes sense for the search and other paid advertisers in the crowd who simply can't afford certain media buys (or arbitrage) without a certain amount of back-end.

So, if you want to in essence pay more for media, these affiliates are more than willing to buy it for you.

However, commissions were only answer #3. Top of the wish list at #1 was "more content".

In fact 30.02% of affiliates said if merchants would only hand over more articles, reviews, etc, they could place that content on their sites and generate clicks for you from it. The great thing is, content *is* essentially free. And you don't have to ask your IT team for help. Often a little extra copywriting time per week can work wonders for your program.

Second hit on the wish list -- 25.09% wanted better datafeeds and coupons. This makes sense given what challenges affiliates said they were having with non-updated feeds currently.

Only 15.40% wanted more training, and we suspect these are the newer, less profitable affiliates. That's not to say they won't be profitable or big someday. However, there's such a mountain of training material available online for affiliate marketers, that we suggest you license the best of it, add an icing of specifics for your niche to the cake and then offer it to promising new affiliates to help them along.

After all, growing your own super affiliates is probably easier than convincing any more of the roughly 125 true super affiliates to come be your programs' best friend.

Answers: What would motivate you quickly to promote a merchant's program?

If you're counting on affiliates to serve as your best recruiters for more affiliates, this is where commissions are king. 21.66% would recruit more affiiates if you gave them a VIP commission rate.

However, instead of forking over more cash, you could just fork over the same old cash only more quickly. 16.62% of affiliates would eagerly recruit others if you agreed to pay on a weekly basis. In addition 15.72% would be thrilled if you offered wire transfers and/or direct deposits instead of mailing checks. 12.77% said they would like guaranteed payments through a 3rd party; but only 5.24% were impressed by the idea of an advance on the first commission check.

So motivation is less about immediate money than it is about ensuring consistent cash flow. After all affiliates are running a business, too, with plenty of regular bills that have to be paid on time. Without consistency, they are lost.

Final note -- only 1.2% said they'd be motivated by "good products." So, no matter how proud you are of your new whiz-bang offering, the affiliate just wants to know can you be trusted to send funds consistently. If you can, they'll consider marketing you and telling their friends to do so as well.

How often should you communicate with affiliates?

Although many affiliates are fed up with bad data feeds (see above), they don't yearn to hear from you frequently *unless* you have something new to announce that affects them.

Think: You are one of many merchants competing for their attention. They are running a (probably) small business. They are insanely busy trying to make a buck on a smaller margin than you may allow your in-house marketing staff for new accounts. They don't want to be your friend. They don't want to buy into the glories of your brand.

Brand and relationship marketing, such as regular chirpy newsletters, are how you should be reaching out to consumers to increase loyalty. When it comes to affiliates, just get them the updated information they need to get their jobs done.

No happy talk, just the facts please.

Which may in itself explain part of the communication gap between merchants and affiliates. Merchants are used to *marketing* themselves to the world. Affiliates in the end don't want to be marketed to.

Instead, they want regularly updated tools to maintain and improve their results. That, plus a consistent cash flow will make them your best friend.



Useful links related to this article:

Download your copy of the 16-page formal results PowerPoint here:
http://www.marketingsherpa.com/cs/amscr2006/study.html

PartnerCentric
http://www.partnercentric.com