payment trends and strategies in affiliate marketing - william lorenz/entropay, jason kilby/zanox,...
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SIMPLE. INSTANT. GLOBAL
Payment Trends and Strategies in Affiliate Marketing
15th October 2008
Jason Kilby, Key Account Director, ZanoxRaphael Arnold, CEO, NetReferWilliam Lorenz, COO, EntroPay
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© 2008 EntroPay All rights reserved
Agenda
• Zanox: Industry overview, affiliates and how affiliate networks can help
• NetRefer: Payment methods, needs of affiliates and transparency and flexibility
• EntroPay: Making payments, issues impacting payments and how to make cost-effective payments
• Q&A
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© 2008 EntroPay All rights reserved
Industry overview
• Affiliate marketing sector estimated to be worth over £2bn in sales in 2006 and £3bn in 2007
• Market has suffered in past 12 months• Marketing budgets designated to affiliate marketing has dropped
from 18% to 14% from 2007 to 2008• Proportion of sales ascribed by merchants to affiliate activity
decreased from 16% to 12%
• Merchants still see the channel as very cost effective
Sources: IAB’s Affiliate Marketing Guide, 2007eConsultancy’s Affiliate Marketing Network Buyers Guide, 2008eConsultancy Report
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© 2008 EntroPay All rights reserved
The affiliates
• Most valuable affiliates, according to merchants:− SEO/Content publishers− Paid search− Loyalty/cashback− Price comparison− Email− Affinity
• Merchants admit their relationships with affiliates have not improved in the past year
• Affiliates need to be paid swiftly
• Payments should be made as easily as possible, as often as possible and in as many currencies as possible
Source: Affiliate Marketing Survey Report 2008, eConsultancy
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© 2008 EntroPay All rights reserved
How affiliate networks can help
• Affiliate networks act as an aggregator for affiliates
• One network, multiple programmes
• Service
• One stop shop for payments
• Project Olympia
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© 2008 EntroPay All rights reserved
Payment methods in affiliate marketing
• The two most common online payment methods are:− E Wallets− Bank wire transfers
• Findings indicate that payment methods can have a direct and indirect effect on key issues:
− Commitment, trust and corporate reputation
• In a recent qualitative research study, more than 62% of the respondents cited payment reliability as the key factor affecting affiliate satisfaction with the merchant
Sources: www.gambling-pro.com, 2007Pensa 2005
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© 2008 EntroPay All rights reserved
The stated needs of affiliates
• Research findings indicate that payment methods do not only have a direct effect on satisfaction but are also a cause for major concern and a determining factor when an affiliate is considering which merchant to partner with
• In a recent research study, affiliates cited the following six factors as being critical aspects of the affiliate merchant relationship
− Transparency− Resource availability – Time money material− Reliability− Flexibility− Communication− Trust
Source: Caruana 2006
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© 2008 EntroPay All rights reserved
Transparency and flexibility
• 34.7% of affiliates want to be in full control of their activity and commission record
• 76% emphasized the importance of transparency at the beginning of the relationship when trust had not yet been established
• Communication− Affiliates have an implicit need for good communication channels,
communication between themselves and affiliate managers is essential in terms of payments
• Trust− Trust is undoubtedly essential in this partnership – and this can
only be established by the merchants ensuring that they are reliable in terms of getting paid the right amount on the right day at a minimal cost
Source: Polidano 2007
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© 2008 EntroPay All rights reserved
Resources
• Time, money and skills are all of essence to the affiliate to ensure revenue generation and higher commission pay outs
• Liquid cash− The benefits of these are significant for both parties, where having
liquid cash the affiliate has more opportunity to invest in campaigns and site improvements
• Time− Spending less time hassling over payment issues, the affiliates
have more time on their hands to:• Educate themselves further on issues like SEO/SEM customer
behaviours• Build relationships and further understand their customer base
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© 2008 EntroPay All rights reserved
The “payment to affiliates” problem has yet to be solved
• A typical affiliate network can spend, on average, £5000 per month on making payments, not including accounting overheads...
• ...whilst a key observation from the last UK affiliate census was that 68% see payments role of affiliate networks as crucial to them
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© 2008 EntroPay All rights reserved
Both networks and affiliates face a range of problems arising from payment options currently available
Networks have limited options to pay their affiliates around the worldNetworks have limited options to pay their affiliates around the world
• Cheques get lost, are expensive to cancel and administratively costly
• SWIFT is too expensive for even medium-sized amounts
• Some online payment systems do not offer any flexibility on presentation of the payment to the recipient
Recipients dislike many of the available optionsRecipients dislike many of the available options
• Overseas bank transfers & cheques take too long to arrive and clear, and are too expensive for small amounts
• Payment in shopping vouchers is unsatisfactory
• Some online payment systems only offer restricted ways of spending / accessing funds
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© 2008 EntroPay All rights reserved
Via recipient’s bank account
access
Varies – typically 1 – 5 working
days
>£1000
£2 – £10 dependent on
country & currency
New payment options can solve many of the problems of both networks and affiliates
• With payment options such as the above, we calculate that networks can save up to 50% of their banking costs and significantly streamline their accounting operations
VirtualcardsVirtualcards
Typical paymentvalues?
Typical paymentvalues?
Plasticcards
Plasticcards
BankTransfer
(in-country)
BankTransfer
(in-country)
Speed of accessto funds?
Speed of accessto funds?
Rough cost(to both parties)
Rough cost(to both parties)Can be spent?Can be spent?
Anywhere VISA /
MasterCard accepted online
Instant £1 - £100 £0.50 – £2
Anywhere VISA / MasterCard
accepted - inc. ATM
Instant - after plastic delivered
first time
£50 - £1000 £0.50 – £2 plus plastic (£5)
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© 2008 EntroPay All rights reserved
Q&A
• William Lorenz Jason Kilby
COO Key Account Director
T: +44 (0) 20 870 3666 960 T: +44 (0) 20 7851 5827
M: +44 (0) 7939 543 766 M: +44 (0) 7944 560 516
Email: [email protected] Email: [email protected]
• Raphael Arnold
CEO
T: +356 2767 3337
M: +356 9906 7009
Email: [email protected]