Q. What Is An Affiliate Program?

A. An affiliate program is a system where your website posts a link to another website, and if a visitor to your website clicks on that link and then buys something you receive a commission. It is a great way to share in the revenue generated when you drive traffic to someone else’s site and works best when you have content that is relevant to the product being sold. For example, let’s say you have a site all about dogs, and you are an affiliate of Petco. Bob the dog owner comes to your site to do some research on a rare breed, and sees the link to Petco. Realizing that he could sure use some more dog food, he clicks on the link, goes to Petco.com, and buys $100 worth of dog food. Since you are the affiliate that sent Bob to Petco, you receive a commission of $10.

Q. What Kinds of Companies Offer Affiliate Programs?

A. There are literally thousands of companies with affiliate programs, ranging from big ones like Amazon.com and Best Buy to smaller niche retailers.

Q. How is my affiliate account managed?

A. The vast majority of affiliate programs are managed by a third party “network” such as ShareASale, Linkshare, DoubleClick Performics or Commission Junction. These networks will get you registered as an affiliate and then let you apply to individual programs. On the network site, you will have access to tools to add banners and links to your site with your tracking id. The network will also offer real time reporting and handle payments and tax forms. That way, if you earn commissions from 15 different vendors in a month, you won’t get 15 small checks. Instead, the network will consolidate all of your commissions into one payment. This system makes it much easier to track your income and adds an added layer of protection because you are paid out of an escrow account at the time of a sale so that the merchant cannot run out of money before you are paid.

Q. Are there any start-up fees or other costs associated with joining an affiliate program?

A. No. It is free to sign up, and free to add banners and links of your affiliates to your site. Web merchants are looking to gain traffic and sales– they are more than willing to not charge you anything AND pay a commission for your help.

Q. Do I need any special qualifications to be an affiliate?

A. Not as a rule. However, individual merchants do have the power to approve or turn down your affiliation application, and some are looking for specific qualities in their affiliates. Often, merchants will not approve sites that are sexually explicit, violent, violate international property laws, advocate discrimination, promote radical religious or political views, or advocate or promote any illegal activities. If you do not do any of things and are turned down, you may want to check with the merchant you are applying to to see what they are looking for.

Q. Do I have to have a currently operating site to become an affiliate?

A. No. You can usually register a site that is not live as an affiliate, as long as you own the domain name. Just make sure that you use an email address associated with the website-in-development, otherwise it will be very difficult for you to get past the affiliate fraud screening process.

Q. How much are commissions?

A. Commissions range largely based on the margins for that industry. 10% is probably the average, however, this can vary. Big ticket items like TVs may carry lower commissions, while high volume affiliates (those who refer a lot of customers and generate a lot of revenue) can get 15% or even 20% commissions. Check with your affiliate program to find out the specific commission available as well as their performance tiers.

Q. How often will I get paid?

A. Most networks will aggregate your commissions and then send you a check or make a direct deposit somewhere in the middle of the month for the previous month’s sales. If you enroll in direct deposit, you will generally receive your money a few days earlier than you would get a check in the mail.

Q. What is a cookie?

A. A cookie is a small piece of data that is transferred to a computer in order to mark it for a later transaction. Affiliate programs are based on cookies. The way they work is that when a user comes to your site and clicks on the link of a site you are affiliated with, a cookie is placed on that user’s computer. Then, even if they leave the site and come back a week later to make a purchase, you will get credit for the purchase and receive a commission. A merchant can make the duration of a cookie as long or as short as they want, depending on their needs and strategy. Some are a year long, other only a few days. Generally, smaller and more specialized vendors will have longer cookies, while big consumer companies like Wal-mart or Best Buy will have very short ones.

Q. What is a product feed?

A. A product feed is a system by which you are able to easily able to choose, manage and modify the products you offer on your site on behalf of a merchant you are affiliated with. Product feeds are only important for online stores and other sales sites– if your site just has a banner linking to a merchant, you do not have to worry about it.

Q. What is an RSS feed?

A. An RSS feed is a system that allows your site to be easily and automatically updated based on the banners, links and products you display.

Q. What does EPC mean?

A. EPC is an acronym for “earnings per hundred clicks.” Think of it as a way to measure one program against another. If a program has a $20 EPC, that means that for every 100 people you sent to their site, you should net $20 in commissions on average. This number takes into account the programs conversion rate, commission level, etc. Generally, a $20-$30 EPC is considered strong.

Q. How much do I need to know about computers to become an affiliate?

A. You or someone you work with should be familiar with HTML, so that you can copy and paste banners and links from merchants onto your site. If you are uncomfortable with technology, this is not an industry for you.

Q. Do I have to live in the US to be an affiliate?

A. No. The great thing about the internet is that it makes geography irrelevant

Q. If I have multiple websites, do I need to create multiple affiliate accounts?

A. Most affiliate programs and affiliate managers allow you to register multiple websites under one central account, allowing all your commissions to be aggregated. However, you should check with your individual affiliate programs and affiliate manager.

Q. What is a sub-affiliate?

A. A sub-affiliate is a website that you have recruited to become an affiliate of a merchant. Many affiliate programs offer rewards for bringing in sub-affiliates–either payments or increased commissions.

Q. Do I have to have a website to be an affiliate?

A. No. If you do not have a website, you can create special text links and either use those directly yourself to place orders on behalf of clients or you can e-mail the link to friends, family or customers.

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Affiliate Marketing FAQ’s for Beginners

Fortunately, there is a better way. Working with our friends at Fresh Tilled Soil, we have discovered a strategy that will work for almost any service business. The catch is that it requires patience and flexibility. This is not a quick fix. It’s based on the understanding that saying no to the wrong clients can do as much for your business as getting the right clients. We call this strategy “The Sales Lens” and, executed correctly, it is more powerful than any other strategy we have discovered from driving and sustaining profitable business.

Defining the Lens
The Sales Lens, as the name implies, is a way to focus all your sales and marketing efforts. The most successful organizations are not those chasing multiple customer audiences. They focus on only one audience, the one that delivers the most profit with the least aggravation. They whittle down the distractions so that the definition of the customer can be drawn through the eye of a needle. Creating your Sales Lens starts with analyzing who your ideal clients already are. If you are a new company and don’t have any existing clients, then create a profile of the ideal client and be prepared to modify it once you have real data. As an example, ask yourself:

• Is our ideal customer new to the market or an established business? Which do you prefer?
• Who will be making the decisions? Do you want to deal directly with the founder or CEO? Or, would you rather work with big brands and deal with line managers and mid-level decision makers?
• How much experience does this client have in your field? Are you more comfortable with novices or a client who’s an old hat at the game?
• What communication style do you prefer? Are you a quiet introvert who likes mild-mannered clients, or do you prefer fast-talking extroverts? Is email or phone better for you?

Go back and look at your best engagements and figure out what the successful projects/clients had in common. Also analyze what happened with the projects that did not work out well. Use this data to further focus your Sales Lens. Also, make sure you are aware of what economic drivers keep you profitable. You should communicate your payment terms clearly and seek clients who respect and agree to these terms without haggling.

Putting the Sales Lens To Use
An example of the lens that we use to determine whether to take on a client or project is divided into three parts: client qualities, sales process, and other considerations.

Desirable Client/Project Qualities
• Client has worked with another service firm successfully or values an outsourced relationship
• Client knows what they don’t know
• Client agrees with our methodologies/philosophies (in areas where you have strong opinions, get those out early in the relationship as a litmus test)
• Communication style mimics our own (i.e. online and fast)
• Our deliverables are not tied to people that we can’t control

In addition, if a major operational effort is going to be required from our company, the project needs to have a high mandate from client management, and the implementation team needs to understand what we are doing and be able to keep up.

Ideal Sales Process
• Client values our time and demonstrates this in the proposal process
• The sale proceeds quickly (an endless back and forth is a big red flag)
• Client signs contract on time and makes timely deposit (we have found this to be a high predictor of future payment issues)
• The project meets our financial criteria

Other Considerations
• A repeat client is worth much more than a new one
• A referral from a trusted person usually makes for a better client.

Your Sales Lens will have to be adjusted over time to remain effective. After a disaster, figure out what went wrong and adjust the lens. Take a project that worked out flawlessly and add those qualities as well. Keep in mind that the outliers—the best and worst potential clients—are usually easy to identify. What will really make a difference is if you can learn to discern the pros and cons of companies that are on the fringe. Although your gut will often tell you that something is not going to work out, unless you get comfortable with the borders of your lens, the inclination is often to move forward. Our biggest regrets have coming from engagements where we overlooked or ignored the warning signs or decided that we could live with one or two qualities that were outside our lens because we didn’t want to turn down work. Most of those engagements were regrettable and unprofitable.

Saying no to people and business outside your lens is what will make your business successful. In the pharmaceutical business, the most profitable companies aren’t those with the publicized blockbusters, they are the ones with the best yield, spending the least amount of resources on the drugs prospects that never make it to market. Said more simply, they are quick to kill what’s likely to be a loser. Difficult clients and bad projects offset more profitable jobs and waste energy. Using the Sales Lens will ensure you spend more time doing what you do best.

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Focus Your Business With The Sales Lens

A business plan/summary cannot be too short, it can only be too long. When plans are too long, they simply aren’t read. But, if you are able to pique investors’ interest with even a one-page summary, they are going to reach out to you for answers to their questions. And remember, this conversation is the primary objective of your written materials. No investor is going to write a check on the strength of the business plan alone. Other elements of a traditional business plan—such as financial projections, market research, detailed competitive analysis, and intellectual property and technical or product schemas—can be delivered after the audience’s attention is captured. (It’s also much easier to keep these detailed pieces up to date when they are separate from the fundraising piece.)

Our recommendation is that you focus on creating a three to four-page, detailed, executive summary that can be made into a PDF. The first paragraph should succinctly deliver your value proposition and explain why this is an attractive opportunity for an investor. In the next three to four paragraphs, provide the logic behind this assertion with key high-level data as supporting evidence. This summary should be your primary document when approaching prospective investors. If someone wants to learn more, ask for a call or a meeting, but don’t send additional information to someone who won’t take the time for either of these activities. If you do get a meeting or a phone call, we recommended that our clients have ready a 10- to 15-page PowerPoint presentation as well as backup documents, including sales projections, a financial model, any technical or intellectual-property documentation and any detailed market research available.

Developing an executive summary can be hard work. One of the processes that we undertake in developing a summary is to break the content up into distinct sections. This process of separating out and addressing key investor issues individually is often eye-opening, and entrepreneurs often find they need to rethink some of their assumptions. Certainly, it’s easier to obfuscate gaps with density in a long business plan. But that’s one reason why the summary is better. It brings to mind a quote we are fond of: “If I had more time, I would have written a shorter letter.”

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The Business Plan vs Executive Summary Debate

The advice I always give to entrepreneurs is to tell everyone what they are doing, because it can lead to important discoveries, new resources and/or learning about a well financed competitor who has a significant head start. I can promise that it’s better to know this information before making the decision to quit your day job. If you are starting a new business, resign yourself to the fact that someone has the same idea and instead focus your energy and resources on winning the execution game. As a prominent venture capitalist once said at a conference I attended “We don’t consider ideas proprietary, we consider execution proprietary.” Make sure that you focus your business on the “how we do” as much as the “what we do”.

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To NDA or not to NDA - The Relevance of Non Disclosure Agreements

Sounds easy, right? Well, it’s not! This is not a “get rich quick” scheme as many are led to believe. There are many nuances throughout the industry (such as rampant fraud) that you should understand before you take the plunge. To help get your business started, I have created my Do’s and Don’ts list for affiliate marketing.

Affiliate Do’s

Do Join an Affiliate Network
For most top affiliates, it’s just too difficult to manage thousands of one-to-one relationships. The affiliates also worry about getting paid fairly and on time. Joining an affiliate network will give you credibility with top affiliates because the network acts as the escrow agent, providing consolidated reporting and payments to affiliates for multiple programs. They also take care of tax forms and complacence testing to ensure orders are being properly credited. The networks charge a set-up fee and then take a percentage of the commissions that merchants pay to the affiliates, typically 20-30%. You can certainly set up a direct program, but once you have even a handful of affiliates, administering these tasks yourself is just not worth the time or effort. The most popular affiliate networks are Shareasale.com, LinkShare, Commission Junction and Performics.

Do Assign a Dedicated Manager to the Affiliate Channel
Helping others effectively promote your business requires focus, attention and a deep understanding of the nuances of affiliate marketing. This marketing channel is very different from marketing directly to end consumers. It’s a great opportunity to reach new customers, but there are many pitfalls that can threaten a merchant’s selling potential. A dedicated affiliate marketing manager will serve a merchant’s business much the same way a franchiser helps franchisees to perform better. Most small companies find that it’s better to outsource their program to a firm that manages multiple programs simultaneously. It’s not a full-time job, but this ensures a dedicated focus and responsive service for your affiliates. More on this later.

Do Attend an Affiliate Summit
It’s a great way to meet a lot of interesting affiliates and merchants. Simply stated: this is where deals get done. Networking and personal relationships are important to success in affiliate marketing. Check out AffiliateSummit.com for more information on attending.

Do Reward Your Affiliates With a Tiered Commission Structure
The top performing affiliates will want a better commission level and the smart merchants will be set up to reward them with higher commission rates.

Do Be Patient
It can take up to six months to develop meaningful traction through your affiliate program, so don’t be discouraged if results don’t come right away. A lot of the legwork is upfront. However, the rewards come over a multi-year period. Over the long term, merchants should expect affiliate marketing to account for about 10 percent of overall sales volume. Keep that in mind if you are a merchant that is just starting to generate revenue, it could make the payback period even longer. However, once you have productive affiliates, they tend to remain that way for years.

Affiliate Don’ts

Don’t Automatically Assume Big Affiliate Networks Are Better
Affiliate network sites such as LinkShare, Commission Junction and Performics are really suited to larger established merchants (Home Depot, Best Buy, et al). A smaller company (less than $10 million in sales) often becomes very frustrated by their upfront charges, minimum fees and lack of customer support to affiliates. Smaller networks such as Shareasale.com (my favorite), AvantLink and KowaBunga! are great alternatives when starting a new program on a limited budget.

Don’t Get Screwed by Coupon Sites
As mentioned above, there is rampant fraud in affiliate marketing. While some affiliate coupon sites can help create new buyers for merchants, many just take advantage of their natural search engine positions to attract buyers who are already committed customers – even at the point of a sale. They may also bid against you in paid search ads (using clever tricks to make these ads go undetected) and drive up your own marketing costs.

Don’t Assume All Sales Are Good Sales
At Acceleration Partners, we have learned through experience how to identify fraudulent behavior and we carefully monitor our client’s programs to catch bad behavior early on in the relationship with the affiliate. A good “terms and conditions” policy is a critical first step in combating fraud. It also helps to know which affiliate sites are reputable and which ones you should avoid. Outsourced firms who have this knowledge base can save merchants time and aggravation down the road.

Don’t Focus on Quantity of Affiliates
This market exemplifies the 80/20 rule. Most merchant sales will only come from a handful of good affiliates. Don’t get excited about hundreds of websites joining your program, because over half will never send you any leads. Many of the less sophisticated affiliates will actually just waste time and resources. Focus on the big fish. An affiliate who doesn’t start producing traffic within the first few months will likely never become productive. Time should be focused around making good affiliates better and this will drive a large portion of the merchant’s growth. Also, proactive outreach to a targeted affiliate audience is important, because some of the best potential affiliates may never find you.

Don’t Make Unnecessary Mistakes
Consult with someone who has experience setting-up an affiliate program before you launch. There are many repeatable best practices and avoidable pitfalls. Experience with the mechanics of the marketplace can matter more than experience in your specific industry.

If you have any questions or would like to learn more about our affiliate marketing or performance marketing services, please visit our website or contact us

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The Top 10 Do’s & Don’ts of Affiliate Marketing

You can’t do it all so that’s why you hire the experts. This is what we do at Acceleration Partners and along with other service providers who excel in the marketing, legal and financial aspects of helping to start a business, we are able to help fill the “seats on the bus” for the founder or founding team. This gives an early stage company the level of expertise it needs without the need for long term commitments or having to make permanent hires at an early stage without a real sense for what resources and skills will be needed in the long term. It’s the equivalent of renting an apartment in a new town if you aren’t sure which neighborhood you want to live in.

Consultants or interim resources are a great “extension’ to you team, but you should not look to others to provide the inspiration or overall direction for your company. Someone on your team needs to wake up each and everyday wondering what it is going to take to make the business a success and have that be their sole objective. Using Jim Collins’ bus analogy again, it’s fine to ask for directions or move the seats around and it’s even okay to ask others to hold onto the steering wheel for a few seconds. However, it’s never a good idea to ask a consultant or outsourced partner to drive the bus. The only exception is if you are planning on grooming them to take over as the permanent driver sometime soon.

The bottom line is that you simply can’t outsource the passion for your idea and every successful new business needs someone who is passionate and driven by what the company does. Consultants tend to be functional experts, while founders tend to be subject matter experts. Consultants can help you ground, improve, guide and direct your business, but they often don’t have the same passion for your industry or have the purpose driven ambition that caused you to start your business in the first place

So my advice is to fill the bus with good people, but always keep your own two hands on the wheel. Once you hit the highway and you have momentum, you can always look to getting a more qualified manager to take your place, but make sure they are as invested as you are in the outcome of the business.

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Outsourcing: You Have To Drive the Bus

“Mr. Foresee concedes that Sprint has stumbled in the short term,” though he says it’s well positioned long-term growth. “We’ve got one more box left to check and that’s to execute,” he said in a recent interview.

While many people might simply glaze over this quote, the last piece stopped me dead in my tracks. Is this guy really suggesting that when all else fails, then it’s time to turn to execution? The absurdity of this statement is almost difficult to comprehend and is very typical of big business. General George Patton once said “A good plan violently executed now is better than a perfect plan next week.” Similarly, General H. Norman Schwarzkopf stated, “The truth of the matter is that you always know the right thing to do. The hard part is doing it.”

Let’s bring this concept back to small businesses for a second. In my career, I have probably read over 2000 business plans from entrepreneurs seeking their first round of investment capital. I tend to cringe (as do all venture investors) a little bit when folks ask me for an NDA simply to hear their idea. As a general rule, I believe the entrepreneurs who are taking this approach have been given bad advice and often tend to be putting too much focus on the idea itself. They are often hunkered down holding onto the belief that their idea is proprietary, when in reality, what will make them successful is their ability to execute on that idea. This has more to do with the team, key business relationships, intellectual property, etc. An NDA is really more appropriate if you are trying to protect specific information such as a trade secret, real financials (i.e. historical), etc. or to protect your core information as part of a formal relationship with a service provider. However, if you ask for an NDA just for someone to hear your pitch, you may creative a negative first impression. Very few repeat or serial entrepreneurs will ever ask for an NDA as a prerequisite to hearing their idea, mostly because they know that their competitive advantage lies in their execution capabilities.

The advice I always give to entrepreneurs is to tell everyone what they are doing, because it can lead to important discoveries, new resources and/or learning about a well financed competitor who has a significant head start. I can promise that it’s better to know this information before making the decision to quit your day job. If you are starting a new business, resign yourself to the fact that someone has the same idea and instead focus your time on how you can win the execution game. As a prominent venture capitalist once said at a conference I attended “We don’t consider ideas proprietary, we consider execution proprietary.” While it may be too late for Sprint and its misguided CEO, make sure that you focus your business on the “how we do” as much as the “what we do”.

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Execution as a Last Resort?

5. Too Much Money
While it is a bit harder to get financial backing these days, the companies that do get funded often get over funded. Venture firms today have a lot of money to put to work and they are handing out cash even to companies that shouldn’t need much capital or that lack an established business model. Web 2.0 companies should have relatively few major capital expenses. In fact, the most popular Web 2.0 sites raised their money after their user bases outgrew their capacity and infrastructure. When companies get over funded, they are forced to get big fast—often at the expense of profitability. If you raise $10M, you need to become at least a $30-$50M company for the common shareholder’s equity (i.e. founders and management) to be meaningful. When growing your top line becomes your primary objective, often at the expense of a viable business model, you are starting to gamble with your business.

4. One-way Exit
The IPO market is virtually dead. Companies are being built to sell at auction courtesy of Google, Yahoo and Microsoft. However, if these acquisitions don’t pan out and the open checkbooks start to close, a business model with a lot of users and no way to make money will suddenly seem a lot less attractive.

3. Web 2.0 for X
It’s hard to meet someone these days who’s not starting a Web 2.0 company for toddlers, grannies, people who love red shoes, etc. Haven’t we seen this one before as well—the Portal for X fever of the late 1990s? After most Web 2.0 presentations that I have seen, someone has to ask the question “So what’s your revenue/business model?” The answer, if any, always seems to be targeted advertising. But how many individualized communities can we each join before our economy goes into the toilet? If all these companies get the users they claim, no one in this country will be working. Our appetite for communities has limits; the hours in a day

2. We Can’t Charge for Our Product
Okay, this is really an extension of Number 3, but I am not a fan of companies that plan to support their product or service offering with advertising. Why not charge for it? If you have something of value, people will pay for it. If you can’t charge for it, people just don’t value it that much. Advertising is a great revenue mechanism for content, but if the only people who will pay for your company’s products are advertisers, you have a problem. Among other things, the consumers of ad-supported products can expect pretty poor customer support. After all, they aren’t the real customers, the advertisers are (see Web 1.0 & NetZero).

1. Portals for Web 2.0
If there is one telltale sign of a Web 2.0 bubble, it’s that websites are popping up to track or index Web 2.0 companies. (I have learned of about six in the last few months). A portal war for Web 2.0 is almost too good to be true—it combines two bubbles into one. In every unrecognized bubble, there is always a sign that tells me we are at or near the top. For Web 1.0, it was the E*Trade Super Bowl commercial that made fun of having just wasted $2M on the dancing monkey ad. For real estate, it came two years ago when I saw home-loan carts next to jewelry carts in a mall in San Francisco. Mark my words, Web 2.0 portals are the beginning of the downturn.

In Conclusion
To be fair, there are many things that I love about Web 2.0, and I do work with many of these companies in my consulting business. However, what I really love about Web 2.0 is that companies can bootstrap and develop profitable niches at the expense of larger, more established players. These companies are successful because they are able to find an unmet need and reach customers in a cost-effective manner using the web; they don’t necessarily have the best features. Features and user interface design are important, but they do not make a business successful. Compare any two companies. If one has millions of users and a clunky UI (see Myspace) and the other has a very fancy AJAX interface, but hardly any users, I would always bet on the former. It’s a lot easier to hire designers than it is to find millions of users.

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Bubble 2.0

Professor Segel,

Something has to give. If the banks get gun-shy or Freddie Mac and Fannie Mae come under a lot of public pressure, we could quickly find that their aren’t enough chairs to go around when the music stops. I just read an article in which the author overlaid the last stock market crash against the last real estate crash. The real estate crash did not come until a few years later, after many people had blindly invested in real estate as a knee jerk reaction to having been burned in the stock market. If you listen around the water cooler these days, it is the same phenomenon, even in the face of the worst job market in 10 years. People don’t believe that real estate can go down, which is why it probably will. Rates won’t stay at 40 year lows forever and as they move up to fight off deflation and strengthen the dollar, I think some people are in for a world of hurt. And it affects us all, because in 20-30 years, the government will be picking up the tab with Medicare and Social Security because many individuals will not be able to save for their retirement due to most of their income going towards their home.

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It’s a Lending Bubble Stupid

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Referral Marketing Done Right