NOTES: These are the notes for our interactive July 26 clinic on The ROI on PPC vs. Affiliate MArketing. The recording of the event will be posted here in a few days.

Which gives the best return on your investment - Pay per Click advertising, or building strong affiliate partnerships?

Building and maintaining strong PPC campaigns is becoming increasingly difficult in what has become a very competitive marketplace.

At the same time, many companies report poor performance with their affiliate programs.

The question we asked ourselves is this:

• If companies invest sufficient time and effort to develop strong affiliate programs, can affiliates deliver a better ROI than PPC advertising?

 Please note that the purpose of this brief is not to encourage marketers to abandon their PPC advertising in favor of affiliate marketing.

 Instead we are suggesting that a strong affiliate program can deliver additional revenues with a very favorable ROI. Also, with skilled affiliates working on your behalf, and with some of them using PPC advertising themselves, you can extend the reach of your total PPC exposure, and reduce your PPC costs.

::Case Study 1 – Tracking the relative ROI between the PPC and affiliate programs of National Alert Registry.

While we have been handling their PPC campaigns only for about a year, we have seen a decline in ROI, in spite of making substantial efforts in a number of areas:

• We have added a number of new campaigns over time, often in response to current news in the media.
• We have more than doubled the number of keywords we are bidding on, searching the “edges” for low-cost words and tracking their conversion rates.
• We have more than doubled the amount of traffic to the site generated through PPC.

However,in spite of this, over the last nine months we have seen our partner’s PPC cost per sale going up, and PPC profits going down.

Over the same period, they have more than made up for the decline in PPC revenue and profits through their work on their affiliate program.

This increase has been achieved by focusing very tightly not on recruiting thousands of new affiliates, but by identifying a small handful of super-affiliates, or strategic partners.

Here are the results:

KEY POINT: Monthly profits from affiliate revenues have increased by 281.57% over a period of just nine months.

::Case Study 2 – Growth in affiliate revenues for Net Detective.

Another of our research partners, NetDetective.com, has been working with an affiliate program for several years now.

The Net Detective affiliate program has now been running for over nine years, which makes it one of the longest running programs of its kind on the web.

By building and refining the program over such a long period of time, they are now in a position where almost 80% of the company’s total revenues are generated through their affiliate partners.

The most significant increase has been over the last year, during which time they have recruited a number of new super-affiliates.

As with the National Alert Registry, time invested in forging strategic partnerships with key affiliates has been shown to dramatically increase revenues.

Here are their results, also over the last nine months. The figures show payouts and profits per affiliate, per month.

KEY POINT: The average profit per affiliate per month has increased by over 122.41% over a period of nine months.

::Guidelines – Guidelines for establishing and running a successful affiliate program.

Pay per Click campaigns can still be a strong channel for many online marketers. As with any channel, the higher the level of your expertise in this area, the better your results will be.

::Consider the following guidelines.

1. Commit to allocating sufficient resources to fully research and explore the best way in which to manage your affiliate program, whether you use an in-house affiliate management solution, or partner with an outside supplier like Commission Junction or LinkShare.
2. If you are going to use an in-house solution, invest in a program or service from an established provider. While some companies have done well with solutions they have built and programmed themselves, this takes an enormous investment of time and money and fails to leverage the enormous expertise and experience of other companies.
3. When launching an affiliate program, give yourself a 12-month breakeven horizon. It takes time to build a reputation for having a good program, and to recruit good affiliates.
4. While some affiliate programs make huge revenues by having tens of thousands of affiliates, others achieve the same results with just a few strong partners.
5. Treat your top affiliates as valued strategic partners. Your top few affiliates may have the potential to provide you with a significant proportion of your total revenues.
6. Get to know how each super-affiliate operates. Some will feature your company within an existing, high-traffic content site. Others will create new sites, specifically to sell your products or service.
7. Be generous with your commissions. Top affiliates make their living as affiliate marketers and invest their resources only in programs which offer generous terms and are well managed.
8. Be prepared to increase commission rates for your top performing affiliates.
9. Provide affiliates with the marketing tools they need in order to effectively promote your products or services. These may include text links, banners, content pages, data feeds and even complete stores delivered by javascript.
10. Give affiliates access to detailed reporting on their performance and sales. Top affiliates will want to track the ROI of links from their pages...from exposures, to clicks and through to sales.
11. Be open to special requests from key affiliates. Some may ask you to place custom code on your sales confirmation pages in order to track their own marketing efforts, including PPC campaigns.
12. Listen carefully to top affiliates when they critique your landing pages. Many professional affiliates will have deep expertise in what works and what doesn’t.
13. Be available to top affiliates by email and phone. You should treat your top performers as important strategic marketing partners. Being available to them helps build that kind of relationship.
14. Appoint a single individual to work with top affiliates, so they know who their contact person is within your company.
15. Enable affiliates to link to any interior page on your site. Conversions will be low if you simply attract affiliate traffic to your home page.
16. Work with your top affiliates, learn from them and build custom landing pages to help maximize conversion rates.
17. Alert your affiliates to upcoming specials, deals and new product or service introductions, so they have time to prepare their own pages or links.
18. While some companies forbid their affiliates to bid on the company’s “own” keywords, this practice is not recommended. eBay, Amazon and other major sites freely allow this practice, as they understand and have calculated that giving their affiliates free reign is to their advantage. A common exception is that most companies will not allow you to bid on their trademarked names and phrases.

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We promise to do our best to help you discover what really works.

During our teleconference call on Wednesday we were talking about how it is becoming harder to maintain a strong ROI with many PPC campaigns. Increased competition is perhaps the major factor in reducing the profitability of campaigns which previously maintained a strong performance.

However, paid search experts are now having to contend with some interesting new changes over at Google.

In a recent article on Search Engine Watch, Jennifer Sleg digs a little deeper into what is happening with Google’s July 10th algorithm update.

It seems that Google is now judging the value of the content on the pages your point your ads to.

Not only is Google increasing bids on ads which target pages comprised mostly of ads and affiliate links, but are also deciding on whether a page’s content is actually of real value, even if it doesn’t carry ads.

According to the Search Engine Watch article:

“They also seem to be targeting advertisers who are advertising something similar or identical to other advertisers. This could get into a dangerous game of Google being the one to determine which competitor is the best and which will be required to pay more in order for their ads to continue running.”

This is where Google becomes judge and jury.

Wherever happens in the months and years to come, this is an important reminder that to achieve long-term success your business and your web site need a strong and unique value proposition, and a significant volume of truly original and useful content.

If your company or organization has a large list of email subscribers, you may find yourself struggling to create email and newsletter content that is compelling for each and every reader.

Big lists tend to include groups who have varying interests. People may have signed up at different times, for different reasons and in response to coverage of different topics.

This is why more and more companies are now segmenting their house lists into smaller groups of names.

Segmenting your list into sub-lists enables you to create content that targets smaller interest groups. The outcome is that you end up being interesting and relevant to each group...rather than writing content that is generic enough to suit everyone, but engages nobody.

If you doubt the wisdom of list segmentation, take a look at the chart in this blog entry at Aweber.com.

In a nutshell, smaller lists achieve higher open rates, and largely for the reasons stated above.

As always, while we prepare for each teleconference call we end up digging deeper and deeper, whatever the topic.

In the case of tomorrow’s topic on the relative ROIs of PPC advertising and affiliate marketing, we have been learning a lot about how the affiliate marketplace is evolving.

In particular, there are a growing number of super-affiliates who earn six or seven figures a year in commissions.

As we’ll see during tomorrow’s call, some of their sites and landing pages are at least as sophisticated as the sites they are driving traffic to.

If you run an affiliate program, or plan to, you need to be aware of the needs of these more sophisticated affiliates and treat them more like valued strategic partners.

There is still time to sign up for the clinic here. (It takes place at 4:00PM EST tomorrow, Wednesday 26th.)

In a recent article in the Wall Street Journal it is said...

“Most people now search for Web sites using a descriptive word or phrase, or else are introduced to a site by a friend or colleague who emails the URL. So, domains don't need to be short and snappy the way they had to be in the earliest days of the Web.”

This concurs with our own testing and research findings. Several years ago you could find available domains like Business.com or Entrepreneur.com. But no more.

These single-word domain names are no longer available. So now you need to find domains that are descriptive, like CoffeeForLess.com. And as with that domain, it helps if there is some kind of value proposition expressed or implied in the domain name itself.

You’ll find test results on our own research on this topic in our brief, Domain/Product Name Testing.

Currently we are working on our next teleconference clinic.

Here’s the topic:

The ROI on PPC vs. Affiliate Marketing: Which gives the best return on your investment - Pay per Click advertising, or building strong affiliate partnerships?

As we dig into the data we have collected from a couple of research partners, some interesting patterns are emerging.

For instance, with both partners we have had to work harder and harder to maintain a strong ROI on their PPC campaigns. As the PPC market heats up, it is becoming quite a challenge to find strong keywords that deliver significant profits.

However, both of these partners also have strong affiliate programs. And while their PPC programs have at times contributed less than historical highs to their cash flow and revenues, their affiliate programs are contributing more and more.

Which raises another question: How many companies online are really serious about strategic affiliate partnerships?

Our impression as we conduct our research is that many companies dip their toes into affiliate marketing, are disappointed by the early results and then cancel their programs.

However, a smaller group works very hard in this area. Indeed, one of our research partners generates 80% of its revenues through its affiliates.

It strikes us that a strong affiliate program can be used as an important balancing strategy for companies which find themselves depending perhaps too heavily on their PPC campaigns.

As we refine our analysis of the data, we’ll share some more information on this. And, of course, we’ll be sharing all the data and our conclusions and recommendations during our free teleconference call on Wednesday, July 26th at 4:00PM. Sign up for The ROI on PPC vs. Affiliate Marketing here.

How to create real urgency and increase conversion rates.

We recently released the audio recording of our clinic on this topic. You can listen to a recording of this clinic here.

In the world of offline direct mail it has long been understood that creating urgency increases conversion rates. Typically a special offer of some kind will expire on a particular date.

Is the same true of the web?

Do expiry dates or warnings about limited supplies actually work?

And if so, is there a best way to express urgency, and are there pitfalls to avoid?

To answer these questions we recently ran research tests with two separate companies. The data we collected provides some important insights into how online marketers should best use urgency as a means to increase conversions.

>> Section 1 – The fundamentals of using urgency to increase sales

The practice of using urgency as a means to drive sales is well established in both offline and online media.

However, while using urgency is a powerful promotional tool, it should not be used indiscriminately or without forethought.

When we were planning our tests on this topic, we kept the following guidelines in mind:

• The urgency should be genuine and not simply created as a promotional gimmick. The growing sophistication of online audiences means that many people can and will recognize “manufactured urgency”.
• Even the legitimate use of an urgent message will still be recognized as a promotional tactic. So if your message is not completely genuine and honest, you run a very real risk of losing the respect and loyalty of some of your readers.
• The use of urgency on an offer page can be a very powerful tool, but is not something you can do all the time. If you do, you will lose credibility.
• Understand that you can use implied urgency as well as direct urgency.

>> Section 2 – The impact of a timed-limited incentive, and how it was promoted.

This research comes from the promotion of our own service –
the Marketing Experiments Online Certification Course.

Online testing and optimization are our core skills and it made sense for us to offer this certification course in a marketplace where training in online testing has so far been woefully inadequate.

When we launched the course we knew that it wouldn’t be easy to fill the places we had available. Our course is still relatively new and unknown, so we had to build awareness as well as persuade people to part with several hundred dollars to enroll in the course.

Here is what we offered, and how we presented our message

1. We offered a $100 saving on the full price for anyone who registered and paid before the May 30th cut-off date.
2. We promoted the offer towards the bottom of the page, and within the sign-up box.
3. We sent out an email promoting the offer on the morning of the day the offer expired.

You can see the current version of our offer page here:
http://www.marketingexperiments.com/certification-program.html

NOTE: What we did NOT do is create a large orange starburst at the top of the page announcing the $100 savings. Our purpose was not to secure enrollees through hype and pressure. We wanted and still want people to enroll because they see the value in the course itself.

Here is what happened:

What you need to understand: Sales increased by an average of 992.68% during the three days before the deadline.

KEY POINT: Sales jumped significantly on the day we sent out the email, announcing that the early-enrollment offer was about to expire. The next large increase in sales took place during the final few days before the course itself began.

>> Section 3 – How to increase sales with implied urgency.

There are many different ways in which to communicate urgency. Usually marketers use deadlines or claims of limited supplies.

However, you can also achieve considerable success simply by implying urgency.

Here are two case histories that illustrate this point well.

Case History #1: How a computer parts etailer used “date stamps”.

We recently interviewed an executive from one of the low-cost leaders in the computer parts industry. With sales of tens of millions of dollars a year, and slim margins, he was always on the lookout for ways to increase sales.

Here is what he told us about how they increased sales with implied urgency.

“We were looking for ways to drive more sales by using our email list more aggressively. One idea we had was to create a page each week that showed the best prices on the ten most popular computer parts and gadgets. We were completely open and honest about it. Our own company was the lowest-cost source of most, if not all of those ten products. However, if some other retailer offered a better price on one or two of the items, we included them on the list.

Then we sent a weekly email to our list and named it “The Lowest Price Survey”. We listed the prices and provided links to the site.

The real key to the success of this program was that we date-stamped the list. That is to say, we said something like, “As at 6:04AM this morning, theses are the best prices for these products on the web.”

In fact, after the first email we experienced a record day for sales and similar spikes after every one of those emails"

Case History #2: How we increased conversions with a “soft” mention of limited supplies.

For one of our research partners, National Alert Registry, we created and produced a video which showed how vulnerable children are to sexual predators, and also provided guidelines on how to educate children and their parents to be more vigilant.

We produced 5,000 copies but made no mention of this figure when we first made the offer to the NAR list.

We then wrote an email and an accompanying landing page that stated there were only 5,000 copies available, and suggested that people get their copy before they were all gone. So we deliberately generated a sense of urgency.

You can see the landing page here:
SafeFromHarm.com

This approach falls somewhere in between “urgency” and “implied urgency”.

Here are the results:

KEY POINT: When we mentioned that there were 5,000 DVDs available, conversion rates rose by 508%.

CAVEAT: This was a cluster test in which a number of variables were changed. So we cannot attribute the entire increase in conversion to the addition of the “5,000 message” alone. Further testing is planned.

>> Section 4 – Seven ways to use direct or implied urgency in your marketing

1. Test urgency messages to your offer pages on your web site.
2. Test urgency within your shopping cart pages and other site pages where you need to encourage immediate action.
3. Test urgency messages in the subject lines of your emails and newsletters.
4. Test urgency in your customer or subscriber welcome emails. Urgency can encourage new members to become more deeply engaged in your site more quickly.
5. Test urgency in shopping cart recovery emails to drive more purchasers back to their shopping carts.
6. Test urgency in subscriber recovery emails when subscriptions expire.
7. Test urgency in your press releases and other offline marketing.
8. Test urgency in your PPC and CPM advertising.

As you may know, at 4:00PM today we are conducting our free teleconference call on the topic of "Testing the Power of Urgency on Offer pages".

If you have not yet signed up for the call, please do so now:
http://www.marketingexperiments.com/upcoming-web-clinic.html

If you have registered, please note that unlike with previous clinics we WILL NOT be using this blog in which to present charts, links etc.

We are using a new Web Conference solution. If you have never used GoToMeeting before we recommend completing steps 1 and 2 below BEFORE the clinic as there will be some software for you to download.

1. Point your web browser to http://www.gotomeeting.com/

2. Click the 'Join a Meeting' button in the Left side navigation bar.

3. Enter our Meeting ID: 345-630-606

Alternatively, you can also click here to join the Web Conference.

The instructions for dialing-in are as follows:

Please dial in at 3:55 PM EST so we can start on time.

1. Dial 1.404.920.6610.

2. When prompted, enter your Participant Code followed by #.

3. Your Participant Code is 624367#.

Some useful phone line Commands:

*4-Volume - Pressing *4 will increase the volume. Pressing *4 again will decrease the volume.

*6-Mute - Participants can mute their own lines by pressing *6 on the telephone keypad. Pressing *6 again will un-mute the participant's line.

Thank you.

Text has been the backbone of the web since its inception. Moving graphics and fancy animations have done their best to distract visitors’ attention away from the words, but with little success.

However, what about video?

Here’s a passage from a recent article in the Los Angeles Times:

"Text and still pictures give cooks all the information they need to prepare a recipe, for example. But when it comes to showing how to carve a turkey, julienne a carrot or flip a crepe, video rules.

"We are graduating beyond text," said George Lichter, chief executive of InfoSpace Media Inc., whose how-to website, Answerbag.com, recently began letting users upload explanatory videos. "'Show me' is much better than 'Tell me.' "

Could he be right? As with many other media, perhaps the web will move away from being dominated by deep text content and instead become a light-hearted entertainment medium, filled with videos.

If it does, or even moves a little more in that direction, the implications for every aspect of doing business online are enormous.

For instance, are your search engine optimization experts ready for a web where video matters more than text?

In Wednesday’s teleconference call we’ll not only be talking about direct urgency, such as the use of deadlines on offers, but also about implied urgency.

Here’s just one example of implied urgency...

“Get it first” appeals to gadget-lovers for whom being first is important. There is no deadline, and no suggestion of limited supplies. But the phrase does appeal to anyone who likes to be among the first to own a new gadget.

While this approach probably wouldn’t work as well when selling a breakfast cereal, for example, it has a lot or power in the world of consumer electronics.

If you sign up to take part in our free teleconference call on “Testing the Power of Urgency on Offer pages”...you are also invited to send us other examples of the use of urgency as a sales tactic, whether that urgency be direct or implied.

As many of you know our teleconference call scheduled for this week was postponed until next Wednesday. The July 4th holiday got in the way more than we had anticipated, with many of our subscribers away for long weekends.

The extra time has allowed us to add a little more information and data in preparation for the call, now scheduled for July 12th at 4:00PM EST.

In addition to talking about the power of urgency, we’ll also be talking about implied urgency.

Implied urgency is when you don’t set a deadline, or tell people there are only 25 products remaining...it is when you imply that taking an immediate action would be the smart choice.

An example we are using in the call describes a series of weekly emails sent out by a low-cost computer parts etailer. They would list the best prices for their top 10 products.

So how did they imply urgency? They used a headline that said, more or less, “As at 6:04AM this morning, these were the lowest prices on the internet.”

No deadline. No limited supplies of products. But by using a time-stamp, and using it honestly, these emails had a significant impact on sales.

You’ll see the data on this and other examples during the call on Wednesday.

You can sign up to reserve your place for “Testing the Power of Urgency on Offer Pages” here.

Some blogs are overtly commercial. Most are the editorial writings of individuals. And unless it is abundantly clear that a blog is commercial in nature and purpose, we expect that the views expressed be those of the blogger.

In fact, the blogosphere is one place where one can often go for the unvarnished truth.

But as is the way with so many media, the lines between editorial and marketing are becoming blurred in the land of the blog.

BusinessWeek recently published an article on how bloggers are now being paid to write “editorial” on behalf of marketers. A new site called PayPerPost.com pays a bounty of about $5 to $10 for each post entered. There are various caveats, but essentially a blogger can now make money by saying the right kinds of things about companies, regardless of whether he or she actually believes in the company and its products or services.

This is just one more example of a very real tension and tug of war that is taking place online right now.

On the one hand there are those marketers who will do absolutely anything to make a few extra dollars. And many of them are making money hand over fist.

On the other hand there are marketers who believe that honesty and transparency pave the road to long-term success. You will find this viewpoint explained in detail in our essay on Transparent Marketing.

Which of these opposing factions will win in the end? The answer lies with consumers. Whether it is hype or honesty that prevails in the end will all depend on what consumers are willing to put up with.

Will consumers finally demand honesty? Or will they willingly open their wallets in response to hype and advertorial?

This writer feels cautious about placing any bets either way.