Affiliate Marketing as a Strategy for E-Commerce


Term Paper, 2016

20 Pages, Grade: 3,0


Excerpt

TABLE OF CONTENTS

III List of Figures

1 Introduction
1.1 Objective of the paper

2 Affiliate Marketing
2.1 Definition
2.2 Objectives
2.3 Functional principle
2.3.1 Advertisement methods
2.3.2 Commission models
2.4 In-house vs. brokered Affiliate Marketing
2.5 Stakeholders
2.6 Interactions
2.7 Network characteristics
2.8 Value Creation

3 Conclusion

4 References

III List of Figures

Abb. 1 Affiliate marketing model

Abb. 2 Affiliate marketing objectives

Abb. 3 In-house vs. brokered Affiliate Marketing

Abb. 4 Segmentation on traffic capacity and commercialism

Abb. 5 Single- and double-loop learning in an affiliate network

1 Introduction

As long as the concept of selling and advertising exists, marketeers bemoaned the effectiveness of their advertising campaigns. Paying for advertisements first and re- ceiving benefits later, advertisers are vulnerable to low- or non-performing ad place- ments. Affiliate marketing seems to offer a refreshing change: In this performance- based approach to online marketing, advertisers pay only when a sale occurs.1 This idea is not new, but the traditional offline approach is being successfully transferred to the online world.

Therefore affiliate marketing has become a major strategic consideration for all companies participating in e-commerce. The concept has certain technological complexities that have been made simpler through the development of several network companies that facilitate the tracking and settlement of payments between various companies on the internet. The strategy represents one of the most promising longterm marketing strategies for e-commerce.2

Companies like Amazon are worldwide known for their successful affiliate partner programs and the idea of affiliate marketing was copied many times but not all were a success. So affiliate marketing has its downsides and is not the holy grail of online marketing.

1.1 Objective of the paper

The objective of this synopsis is to give an overview about affiliate marketing: Definition and characteristics, functional principal and the value creation are some of the key elements.

2 Affiliate Marketing

2.1 Definition

According to Gallaugher et al., affiliate marketing is classified as a type of online advertising, where merchants (also called marketers) share percentage of sales revenue generated by each customer, who arrived to the company’s website via a content provider. Content provider, also referred to as affiliate, usually places and online ad (for example a banner or a text link) at its website. When visitors click at the ad, they are redirected to merchant’s website and the affiliate is remunerated depending on the conditions he has with the merchant (s. Figure 1).34

Abbildung in dieser Leseprobe nicht enthalten

Figure 1: Affiliate marketing model5

Dan Chiss, who was the Head of Network Solutions at Google Affiliate Network, defines affiliate marketing as a a performance-based online marketing channel that rewards publishers for driving conversions for advertisers. Adam Weiss, the Gen- eral Manager for Rakuten Affiliate Network (formerly LinkShare), complements the definition by saying that it offers advertisers the ability to generate sales, leads, or any action on a rev share or CPA basis. These actions are driven by highly tar- geted distribution partners that offer advertisers a unique value proposition driving increased revenue for all parties.6

2.2 Objectives

Affiliate marketing can be implemented for various reasons: Summarily, affiliate marketing objectives can be divided into three main groups (Figure 2): exposurebased, interactivity-based and outcome-based objectives.

Abbildung in dieser Leseprobe nicht enthalten

Figure 2: Affiliate marketing objectives7

Exposure-based objectives aim to increase exposure and visibility of a merchant’s brand and offerings, to improve the merchant’s brand awareness, and brand recognision and attitude. Interactivity-based objectives focus on encouraging customer engagement and interactivity with the merchant, while outcome-based objectives seek to facilitate exchange and transactions between a merchant and his/her customers in order to increase sales and revenue.8

2.3 Functional principle

The affiliate earns money if he is able to shift the interest of the user to the mer- chant’s website. To achieve this aim the affiliate gets different advertisement tools from the merchant. All this forms of advertisement then are linked with an indi- vidual link which contains a partnercode. If a user is directed to the merchant’s website through this specific link and acts in the desired way (for example buying something or leaving his address) the affiliate gets a remuneration as contracted. On the technical site the allocation of the transaction happens through a tracking method. In the following some different advertisement and tracking methods are explained.9

2.3.1 Advertisement methods

The merchant can provide the affiliate with different advertisement forms. The more the better, because if the affiliate has a wider range of different forms the chance that he installs one of them on his website and is successful with it is higher.10

Text-links

A text-link is a pre-formulated text, which can be integrated into a website. The text is then linked to the merchant’s website.11

Banner and buttons

There exists a wide variety of different banner form as well as the technical imple- mentation possibilities. Besides the standard banners, like the full size banner (468 x 60 pixels), half-size banners (234 x 60 pixels) and sky-scraper (120 x 600 pixels) are offered. In addition a lot of merchants offer special forms and sizes of banners.12

Product database (CSV-file)

This method implements not only an advertisement on the affiliate’s website but a whole product page which is generated out of the merchant’s CSV-file. As a result the affiliate can offer a shop on its website without the legal consequences. If the user clicks on one of the presented products he will be directed to the merchant’s details page. Another benefit of this tool is that it will be updated automatically and the affiliate doesn’t have to take care of it.13

Product database (XML-port)

A further development of the CSV method offers the XML-port method. With XML-ports affiliates can create their own dynamic shops. Dynamic because the XML-data and therefore the products are exchanged automatically.14

Video ads

Video ads have the advantage that cross-medial effects from TV can be used opti- mally. Tendencies show that video ads are getting more and more important.12

Page-peel

A page-peel is a dynamic ad which is mostly placed in the top right corner and has a ’dog-ear’. If the users goes over it with the cursor the page opens and shows the advertisement.12

[...]


1 Ben Edelman, 2014, p. 1

2 Duffy, 2005, p. 161

3 Gallaugher, J.M., Auger, P., Barnir, A., 2001, p. 473

4 Nevosad, 2008, p. 4

5 Kreutzer, 2014, p. 214

6 Cohen, 2012

7 Mariussen, 2012, p. 22

8 Mariussen, 2012, p. 22

9 Lamett, 2014, p. 42

10 Lamett, 2014, p. 54

11 Lamett, 2014, p. 54

12 Lamett, 2014, p. 55

13 Lamett, 2014, p. 56

14 Lamett, 2014, p. 58

Excerpt out of 20 pages

Details

Title
Affiliate Marketing as a Strategy for E-Commerce
College
University of Southern Denmark
Grade
3,0
Author
Year
2016
Pages
20
Catalog Number
V351596
ISBN (eBook)
9783668388123
ISBN (Book)
9783668388130
File size
793 KB
Language
English
Tags
Affiliate Marketing
Quote paper
Philipp Stoebel (Author), 2016, Affiliate Marketing as a Strategy for E-Commerce, Munich, GRIN Verlag, https://www.grin.com/document/351596

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