Pitfalls to Avoid when Launching an Affiliate Program

By | November 14, 2013

Did you ever consider launching an affiliate program? Working with affiliates can be a great way to generate leads and/or sales.  Affiliates are companies or individuals who will promote your product. In exchange they receive a payment for each lead or sale.

It is like having a large number of experienced online marketers in your team for free. To get started you can either launch your own program or sign-up as an advertiser with one of the hundreds of affiliate networks.

The amount paid per lead is commonly referred to as Cost per Lead (CPL). Paying only for sales made is known as Cost per Acquisition (CPA). The great thing about working with affiliates is that you don´t have to put any of your own  money at risk and only pay for results. By avoiding the following pitfalls you get the upside without the downside!

Prohibit or Restrict Keyword Bidding

Consider to what extent you will allow keyword bidding . You don´t want an affiliates ad to appear when someone searches for your company in Google. The person doing the search already knows you and will end up on your website anyway. Other keywords to consider for exclusion from your affiliate program are brand names, typos and other keywords that are already driving traffic that converts.

Typosquatting on trademark-related domains

Typosquatting is registering a domain similar to yours with a typo and then redirecting it to your page.  Just like with keyword bidding you want to protect yourself from paying for a client you would have gotten anyway.

Keep a close eye on conversion rates

This is especially important if you are paying for each lead generated. If the average revenue you get from each lead is less than the price you pay you are losing money. The quality of leads received can fluctuate so it is wise to consistently monitor conversion rates. In case of paying for each sale (CPA) ensure that you continue to have a healthy margin, but if you did not realise this already you should not be in business.

Protect your Brand

Affiliates have an incentive to do anything that generates sales or leads. This includes making promises you will not be able to keep, false testimonials and other tricks. Clearly specify what type of creatives and content can be used and on what type of pages your product can be promoted. You might want to prohibit promotions on websites that also promote sexually explicit materials or violence.

Grace Period

The grace period is the time period between the sale and the moment you pay the affiliate. Dodgy affiliates could purchase the product themselves, collect their commission and then return the product for a refund. Ensure that the grace period is longer than the period customers can ask for a refund.

If you are paying for leads you run the risk that affiliates offer customers monetary incentives to fill-out forms etc. In this case a grace period  allows you to check if a percentage of the leads actually converts.

Email marketing

It is all too easy for affiliates to purchase as many mailings lists as they can get their hands on and then start spamming people. The spam will feature your product so people will end-up associating your company with unwanted emails.

Verifying that the affiliate built the list in a way you agree with and approving messages before they are sent can prevent lots of problems.

Set-up an affiliate program with the points mentioned above in mind, screen applicants and actively police to ensure they play by the rules. Your only regret will be not launching an affiliate program a lot sooner!