REDEFINING THE DEBATE CONCERNING AFFILIATE MARKETING: a case study in what is right with affiliate marketing

I’m tired of all this affiliate marketing bashing. While affiliate marketing does have issues, I find the excessive rhetoric against affiliate marketing to be inaccurate, one-sided, and overly focused on the negative – and don’t even get me started about recent Marketing Sherpa study which missed the point. (That said, I think Marketing Sherpa is just wonderful, they just must of had an off day.)

I readily admit, affiliate marketing is not for every merchant, but for the right merchant, it’s an extremely healthy, powerful and profitable channel. It’s time for those of us that run clean, healthy, vibrant programs to say enough! The debate needs to be redefined.

In that spirit, I’d like to talk about Audible and our affiliate partners. Sometimes it’s best to lead by example.

A month ago our Commission Junction affiliate sales channel passed a major milestone in terms of percent of daily subscribers for the company — sorry, I can’t share the number, but it’s HUGE! Not only is this a victory for Audible and our affiliates, but also affiliate marketing in general. Let me share some history.

A little over a year ago, I flew out to New York to visit my Dad and since the job market in the Bay Area was horrible. The night before I left, I happened to respond to a Monster posting from Audible and I interviewed on a lark since I had no intention of leaving my beloved San Francisco for, well, New Jersey (and my office actually does overlook a mall, but at least the hipness of Manhattan is only 15 miles to the East of us).

During my interview, it was clear the company was committed to doing what it would take to build a strong affiliate channel. This was apparent from the CEO down to the marketing coordinator. I’ll never forget my interview with the CEO. I said, if you want me to make this program work, I’d need to raise the commission structure, update offers and landing pages, and clean out certain affiliates. Also, the program needs to be affiliate-friendly: you need to treat affiliates like partners, give them tools, provide support, and pay affiliates for their time and traffic. He agreed. I said the same thing to everyone that day and everyone agreed. I could tell this was not lip service– these people were very serious, they had a great product, and a giant market opportunity.

Much to my shock (and that of my friends and family), two weeks later I was driving my Saab ragtop across the country, blasting Audible’s audiobooks and mixed CDs along I-40. I had found a company that I thought was made for affiliate marketing and they were serious about building a great program.

Before Audible could build a great program, we had to clean up a program that had been unmanaged for 3 years. It was a bit of a mess: a complicated program that just did not work that well. It took Audible three months of planning, cleaning and building to relaunch the program. Everyone worked on it: the tech team, the design team, the Marketing VP, and even the CFO and CEO got involved. The company was committed from the top down to building a world-class affiliate program.

Well, 10 months later, we hit our first major milestone. And the people who got us here are our affiliates. Our affiliates are just amazing and their entrepreneurial sprit never ceases to pleasantly surprise me. We treat them like partners, we give them the tools and incentives that they need. And they stepped up to the plate and over the past year have consistently delivered us quality customers. Moreover, the lifetime value of our affiliate customers is the same as our search customers.

Also, the Audible program is clean. It does not have many arbitragers and there is no spyware, toolbars, domain squatters, or any other type of affiliates that people question. We mainly have content sites and shopping sites. Audible’s program is clean, healthy, growing, and it’s everything an affiliate program should be.

To all of those people who complain about affiliate marketing and question its value, my answer is look at Audible. Look what happens when a company and affiliates actually partner, set up clear rules, and open up lines of communications. It works!

Affiliates inspire me all the time. For instance, a book club affiliate (and long time Audible user) and a true value added reseller ramped his sales and increased his commissions from $30 a month to five figures about a month or so after I relauched the program. Shortly after that, he IMed me and said “I knew Audible could be a top program” and he was so excited. All the work I did to clean the program was worth it at that moment. I have experiences like this all the time with Audible affiliates. This program belongs to them. These affiliates have driven significant sales for the company and as a reward affiliates realized a 1500% increase in Audible’s total commission payout during the past 11 months. (And, I just revised this as of March 5th, and it’s a 4100% increase)

Now for my favorite part of this story, if Audible executes well over the next few years, the company will grow from a small company to a major brand. Of course, you’re right to question that statement, but people have compared the market opportunity for Audible to that of Starbucks. Here is an article that talks about the opportunity for Audible and the prospects for the company.

In order to seize this wonderful opportunity, Audible plans to aggressively build the business with the help of our affiliates.

And isn’t that the true promise of affiliate marketing: a clean program, a strong manager, a good backend network, which generates significant commissions for affiliates and customers for the advertiser. Affiliate marketing is alive and well at Audible and other companies too. Thank you to everyone who has worked with Audible in 2004 and in terms of the affiliate program, the best is yet to come.

Sometimes it’s great to lead by example.

I hope other managers speak out and join me in redefining this debate. The wrong questions are being asked in my opinion. The question is not what is wrong with affiliate marketing, but how do you run a strong and healthy program?

HAPPY NEW YEAR!

(By the way, I’ll get back to writing more regularly soon. It’s just been a little busy with changes at Audible. By the way, we are looking for an affiliate manager at Audible, so please get in touch with me if you have any interest.)