Affiliate Marketing Risks and How to Avoid Them. Risks of Affiliate Marketing, Risks in Affiliate Marketing.
Affiliate Marketing Risks and How to Avoid Them
Is your company running an affiliate program? Or do you intend to include one? Here are three frequent issues that can wreak havoc on the effectiveness and profitability of an affiliate business.
The affiliate marketing sector is complex. There are a lot of participants, layers, and moving parts in this game. While some of these details, such as linking remuneration to outcomes, are what make the affiliate model distinctive and useful, others are less so. Furthermore, if a corporation is unaware of them, it runs the danger of hurting its brand.
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Lists Of Affiliate Marketing Risks and How to Avoid Them
Companies must understand and identify key characteristics and intricacies of the industry in order to fully benefit from the opportunity and return on investment that an affiliate program may provide. Here are three examples of this, along with warnings:
#1 Affiliates who do not contribute to the success of the company
Affiliates are people who help you market your business. They can be quite efficient in promoting a brand’s products and services, and include content bloggers, review sites, schools, and organizations, to mention a few. The great majority of them are well-known and routinely create genuine incremental sales for businesses.
The term “incrementality” in affiliate marketing refers to sales that an advertiser would not have gotten without the help of an affiliate. To put it another way, the affiliate is bringing a new consumer to a business.
But a corporation perceives that all affiliates in their program are driving new customer sales when, in reality, some are largely benefiting from the efforts of other affiliates or channels, things get complicated.
Some affiliates, for example, build their business models to aim to catch customers who are already in the buying process or in the shopping cart (we’ll call them “last-in affiliates”). They may also have a detrimental influence on affiliates who use their blog, social media outlet, or review site to drive top-of-funnel value for the brand and new customers.
These last-in affiliates frequently obtain credit for purchases they did little to initiate or supplied no
added value to by intercepting a consumer while their intent to purchase is already high or right before
the point of sale. As a result, corporations end up paying large commissions to these last-in affiliates.
It’s critical not to take outcomes at face value if you want to avoid low- or no-value activity in your
program. Investigate your affiliates’ strategies to fully comprehend how they are promoting your brand,
and consider designing your external attribution model so that this conduct is not rewarded.
#2 Unethical Partners
While the majority of affiliates are trustworthy partners that add great value to businesses, rotten
apples do exist. These shady marketers are not to be confused with affiliates who may or may not
provide added value. These affiliates, on the other hand, are more malevolent. They engage in
fraudulent marketing practices on purpose in order to obtain commissions.
Dr. Mehmet Oz, for example, detailed his personal tale in a recent Huffington Post post on how certain
unethical affiliates and web marketers utilize his likenesses to sell and promote acai berry and other
products – all without his permission. It’s gotten to the point where it’s jeopardizing his brand and
reputation. Dr. Oz has dedicated several episodes of his television show to the subject, even engaging
private detectives to find out who these shady marketing persons are and educate the public on how
they are being purposely fooled.
Some businesses are aware of the bad apples but choose to ignore them because their marketing
strategies generate income. Other businesses have no idea that these affiliates are part of their program
or are advertising their brand in unethical or unlawful ways. Regardless, neither scenario represents a
successful program or a good impression of a corporation.
Preventing unethical affiliates from joining your program requires that you carefully screen each of your
partners, have transparent insight into what they are doing to promote and represent your brand, and
monitor their activities once they are accepted into your program, similar to how you can avoid
compensating affiliates who don’t provide any value.
#3 Incentives that aren’t aligned
Networks have represented both affiliates and merchants in a single transaction throughout the
majority of the affiliate industry’s history, charging “performance fees” in the process. While this
structure is not sinister or unlawful, it does not allow for sufficient checks and balances, resulting in
constant misalignment of incentives. Fraud, trademark bidding, and cookie stuffing have all arisen as a
result of these unbalanced incentives.
Even though the industry has evolved and matured, some of those misaligned incentives still persist
today since they benefit many of the value chain’s players; shutting down these behaviors can result in
lower profitability. Fortunately, some businesses are becoming more selective in who they collaborate
with. They’re also starting to reject partners that don’t have their backs, don’t represent their brand
honestly, or take kickbacks. This is a positive attitude that will enable the affiliate model progress to a
point where everyone can thrive and collaborate effectively.
Every industry has its own set of nuances. Some can provide you a competitive advantage, while others
can hurt your brand. You can reap the benefits of a nuanced affiliate program by carefully selecting your
partners, demanding openness from them, and ensuring that there is a clear link between the outcomes
you’re getting and the amount of money you’re spending.