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July 14th, 2003, 12:35 PM #1
- Join Date
- January 17th, 2005
A few thoughts on Lead Generation VS. Merchant Sale offers...
Affiliate marketing is designed to allow for accountability in advertising. It rewards people with responsive audiences, innovative marketing concepts and allows them to be compensated for the referral of new customers. Many factors can effect whether or not a sale is made once a user has been referred to an advertiser.
Often, merchant offers will compensate an affiliate for a percentage of sales produced. However, what about the advertiser's mailing list that a referral signed up for? What about the phone order that was placed by a referral? These and other "calls to action" can show that an affiliate is sending qualified traffic to an advertiser, although not necessarily generating an immediate sale.
Lead generation campaigns, when properly implemented, compensate an affiliate for a much easier call to action, typically one with just enough qualifiers to ensure a legitimately interested referral. These kinds of offers are standard in such fields as Home Business Opportunities and Distance Education. Surely, it would seem unrealistic to promote an online university with a compensation plan based on new enrollments. For that reason, lead generation forms that allow a user to "request more info" are standard in online education and other "hard sell" industries. We feel that these kinds of programs are far more effective in measuring affiliate accountability and present a much fairer solution to % of sale offers in "soft sell" promotions as well.
One very good reason why lead generation is a better alternative to sale promotions are that they generate a far bigger response for the advertiser. Many people, especially online, will submit a request for more info or a free sample of a product or service before they will commit to purchasing it. These parties are, typically, very qualified and have a high probability of sale conversion on the back end. While a straight sale offer might generate a 0.3% response rate, a lead generation campaign for the same product might do as well as 12%, producing 40 times the referrals as that of the sale offer! Of these 40, if as little as 5% convert into sales, the advertiser has generated twice as many sales and can continue to market to the remaining 95% of the qualified referrals.
More importantly, as it applies to all of you, an affiliate who may or may not have the traffic to generate the 333 interested users needed to report a sale only has to send 9 users to a site before they will receive a conversion on the lead generation program. They are now being compensated for any qualified parties interested in the product while eliminating many key factors such as credit card acceptance issues, price comparison and more. Also, since the referrals that do not convert into sales often still hold value to the advertiser, there is usually a substantial difference in the amount earned for a lead gen. campaign over a sale offer. For example, using the same conversion information as above, if 10% of the desired sale is $14.00, an affiliate will generate $42 for every thousand clicks (eCPC $0.042). This means that the cost per lead, based on a conversion rate as low as 6%, would only have to be $0.70 in order to generate the same commission, which is far less than most lead generation offers are offering these days. A standard form with contact info and less than 3 qualifying questions will usually offer a commission of no less than $1.35. Forms which require less may compensate at a lower price point, but often enjoy conversion rates well into the 15-20+ % area.
There are several other factors that effect whether or not a lead generation campaign is the most effective promotion for an advertiser. However, it is almost always a much better compensation plan for affiliates. Feel free to share your thoughts and experiences, as this is a great opportunity for objective feedback. Anyone interested in testing this theory might try running GoToMyPC through Affiliate Fuel and another vendor offering the same program based on sales. I am confident that the results will show favorable toward lead generation.
Thanks all, and happy promoting!
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