Performance marketing insights, discussions and expertise

How Big Can Your Affiliate Program Be?

By on August 18, 2015

affiliate-programFor years the industry has claimed that affiliates can drive 20-30% of total online revenues for a brand. Practically speaking, for most advertisers it is more like 5%-15% of total online revenues. This can vary greatly based on a website’s total revenues and overall marketing mix. For example, a small retailer doing $1M in monthly revenues, with a limited marketing mix, might realize 30% ($300k) of its sales from affiliates. On the other hand, a large retailer doing $100M a month might only see 10% ($10M) from affiliate. But why can’t a large brand drive 30% or more in affiliate sales too? Is this even possible?

I recently attended Affiliate Summit East in NYC. There were a lot of great speakers and presentations – more than I could attend due to my schedule. Unfortunately, I missed Geno Prussakov’s presentation on Amazon vs. Walmart: Affiliate Marketing Lessons Learned. However, I knew it would be good so I checked out the presentation he published and was pleased to see the stats on the Amazon and Walmart affiliate programs. The first thing that caught my eye was that it has been reported that Amazon derives 40% of their $100B annual sales via their 2 million affiliates. That’s an estimated $40B in sales driven by affiliates. If we estimate that affiliates average 5% on referred sales, that means they are earning $2B in “advertising fees” each year!

So what are Amazon and Walmart’s secrets for affiliate success? How can you leverage their hard work to make your affiliate program more successful? Here are my top 10 takeaways from Geno’s presentation.

  1. Amazon and Walmart have embraced affiliate marketing. The whole company “gets it” and supports the channel’s success.

  2. Both offer volume-based earnings incentives. The more conversions affiliates drive, the more they can earn.

  3. They promote their affiliate program on their website. In addition, both offer affiliate program support and information pages.

  4. Both make it easy to build deep links (Chrome plugin/Site Stripe) while surfing their websites.

  5. Each offers multiple linking options (banners, text, product feeds, widgets, videos).

  6. Both leverage APIs allowing developers to build applications on top of their data.

  7. Amazon and Walmart each provide mobile opportunities to attract mobile developers.

  8. They offer consistent, meaningful, actionable emails and content. This includes published promotional calendars that make it easy for new and existing partners to plan ahead.

  9. Both have clear policies on what affiliates can and cannot do (no adware, trademarks, etc.).

  10. Giving credit where credit is due, they both employ strategies to pay affiliates for closing sales!

You may be doing some — or even all — of these already. But the real secret is to readjust your strategy to have all these tactics in place all of the time. Taking the time to build out an action plan with due dates, owners, and any supporting resources will go a long way to building a stronger, more successful affiliate program. Success doesn’t happen overnight. These two programs have been around for many years earning their successes. So learn from them and borrow their lessons learned.

It’s your turn. What are your key takeaways that could help any affiliate program grow?

3 thoughts on “How Big Can Your Affiliate Program Be?”

  1. Todd, thank you for your recap of my ASE15 preso. I appreciate it greatly.
    Two important things must be clarified, though. Slide 13 (with a screengrab of a 2008 job posting that talked about Amazon’s “network of over two million affiliates”) and slide 14 (with a screenshot of an article stating that as much as “40% of Amazon’s revenue comes from affiliate marketing”) were meant to underscore the magnitude but with an important disclaimer (which was emphasized verbally). Flipping to slide 15, I said something like this: I have no way of verifying these two pieces of information, as Amazon would not disclose it; but whether it is 40% or 4% of the $100 Billion that affiliates are responsible for, the number is staggering enough when the whole affiliate marketing industry’s spend is measured at some $4.5B.

  2. Geno Thanks for the comment and clarifications Geno. I agree that the numbers I are purely theoretical and are based on third-party assumptions. I just wanted to illustrate the potential size of the affiliate channel in order to help others realize just how large some programs can/could be.

  3. Todd Crawford Oh, absolutely, Todd!
    Way back in early 2007 – when I was writing my very first book on affiliate program management (“A Practical Guide to Affiliate Marketing”) – addressing the question of what sales growth to expect from an affiliate program I wrote:
    “This is obviously tied to the sales volume you are already experiencing,
    but a medium-size business may realistically expect approximately a 10% sales
    growth after the introduction of an affiliate program. This growth may be
    expected within the first few months of actively running the program… One of the programs I manage is
    producing 25% of the business’ sales from January through September, and over
    45% of the company’s gross sales from October through December each year. Such
    volume was achieved after running the program for under one year.”

    More than 8 years and 100+ affiliate program launches later, I would still give this exact same answer.

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