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The Art of the Affiliate Deal

Posted on 7.31.2008

by Christopher Calvi

Most pay-per-click (PPC) or pay-per-action (PPA or CPA, cost-per-action) ad networks or affiliate programs, also referred to as ad providers, work on the concept of revenue share — a percentage of gross revenue from each click or conversion goes to you, the affiliate. While not always the case, chances are good that your ad provider(s) operates in this manner too — they keep the lion's share of earnings and you get your cut. But many strong affiliates don’t get the highest payouts possible. Either they simply never ask for more or don’t realize that a better revenue share is available from their ad providers. With just a little negotiation you may find the opportunity to make more money without much effort.

To get the revenue share you deserve, you must understand the ad network’s point of view. What they want from affiliates is quite simple; high-volume and, more important, high-quality traffic. You can send them hundreds of thousands of leads but without conversions (sales, leads or otherwise) they don’t want you as a partner. Traffic volume, though crucial, comes in a distant second to traffic quality — especially in a PPC program where all traffic is paid for, not just that which converts.

The first step for any affiliate before signing up with any ad provider should be inquiring about the revenue share. And be sure to shop around with competing firms. If you are confident your site will be driving a significant volume of quality traffic, ask for an elevated revenue share from the start. Be reasonable, have data ready and clearly state your case. For example, your data proves that you operate a popular site and you’re considering two or more competing programs — good reasons for your ad provider to keep you on the payroll. If your initial request is declined, suggest revisiting the subject in a few months after proving your value as a partner.


Demonstrate Your Value

So how can you determine your traffic quality? The easiest method is to figure out what percentage of clicks convert to sales or other actions. For PPA programs and a few PPC programs, included reporting features will help you find this number. For most other PPC programs, the best way is to ask your account manager. They may be able to provide you the actual percentage, an indexed score, or at least some kind of qualitative answer.

If you find that your site is not delivering high-quality traffic, make sure the ads being served fit your site’s content and demographics. Try to be as precise as possible when matching ads with content. The closer they match, the better your conversion rate.

Once you have evidence that your site is sending the ad provider quality traffic, you will be in good standing to negotiate a higher revenue share. However, before you approach your ad provider about increasing your take, there is some additional due diligence that should be performed.


Prepare Before You Pitch

Information is power. Try speaking with your peers — owners of other content sites similar to your own and with comparable traffic levels. Sharing advertising success and failures can help determine what works and what doesn’t and you might be surprised by how willing other website owners are to discuss details. If there is a significant level of trust, you can learn about their actual traffic statistics, click-through rates, and revenue share figures. You may find that some sites are sending about the same volume of quality traffic through an ad provider, but enjoying a higher share. Take the information you have gathered then contact your ad provider’s competitors to see what they can offer.

Now that you know where you stand in terms of traffic and conversion relative to your peers — and what other ad providers are willing to offer — you’re in a good position to approach your account manager and make a case for a higher revenue share. But be careful not to betray the trust of your peers. Revealing too much information about them could damage their reputations with their ad providers.

With a little luck, your ad provider will accommodate your request for an elevated revenue share. If not, don’t be afraid to leave or ramp down the traffic you send their way. In fact, you can benefit by pitting multiple ad providers against each other to get the highest revenue share that the market will bear. In other words, consider sending most of your traffic to the highest bidder.


Inking the Deal

In any industry sales are about forming relationships. And though you should strive to form long-term relationships, try to avoid signing long-term exclusive contracts unless the ad provider is dedicating significant resources to your site, including building plenty of custom content. If the only real incentive to sign a long-term contract is an elevated revenue share, don’t buy it. You might find competitors who will offer the same terms without the exclusive contract. Be vocal about this with all parties. Entering an exclusive contract will cripple your ability to negotiate based on competitors’ offerings. If you’re ready to sign a contract be sure to read every term and condition. If you are unclear on any part of the deal, either don’t sign it or consult an attorney for clarification.

Once you decide on an ad provider, get to know your account managers. Be kind, understanding and quick to act when problems arise. In general, if you act professionally and courteously, the worst that can happen is the denial of an increased revenue share or added services. But if you are reckless and arrogant your account manager will turn to other, more affable website owners when dispensing incentives and bonuses.

When choosing ad providers, there are many other important considerations outside the scope of this article. Briefly, these include overall payout outside of revenue share, customer service, reliability, features and transparency.

Consider your site’s standing, and use liberal amounts of common sense when approaching the issue of revenue share negotiation. Many of these tips apply to some sites and relationships, but not to others. Certainly, this type of negotiation only applies to advertising models that work on a revenue share basis. This includes most ad networks, Google AdSense and many affiliate programs.

You work hard to generate traffic to your website. And if you find you’re delivering significant, high-performing traffic to your ad provider and you’re still at the default payout rate, now is the time to do some research, make some calls and squeeze a few more percentage points into your revenue share.

About the Author: Christopher Calvi is the business development manager for the Shopzilla Publisher Program (http://publisher.shopzilla.com) and blogs at
http://www.politivi.com/.

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