Affiliate Marketing

1. Affiliate MarketingIntroduction and Overview

2. Contents • What is Affiliate Marketing? • Opportunities and challenges • Affiliate Marketing – part of the online mix • Affiliate marketing process • Opportunities and challenges • Financial planning • Policies on affiliates • Affiliate Program Sample Display Program • Considerations

3. What is affiliate marketing? • Online program in which site owners (publishers) display ads and links to generate sales directly into a clients site; on a cost per performance basis • Equivalent of having an online sales force working on a commission compensation based model • Build a network of financially incentivised “brand advocates” • Affiliate Marketing normally involves three parties: • Merchant • Affiliate • Affiliate Network Your brand Network

4. Merchant • Supply terms & conditions, creative, compensation structure and growth of relationships Affiliates • Sign-up to affiliate network, promote merchant on their sites Affiliate Network • Manage billing and tracking of activity through proprietary platform Role • Over ride – based on between 20% to 30% of affiliate payments • Maximize volume of transactions • Fixed payment per transaction • Commission on value of transaction Compensation • Volume of transactions and affiliate payments • Total transactions • Cost per transaction • eCPM – number of impressions to generate one transaction • eCPC – number of clicks to generate one transaction Key success metric Growth Tactics • Increase compensation and provide flexibility on the terms of the program • Increase traffic through natural search & PPC • Design sites that fulfil consumer missions • Increase number of affiliates through aggressive recruitment Opportunities and Challenges

5. Affiliate Marketing - part of online mix Reach Fragmentation Affiliate Network • Provide reach by aggregating hundreds of small sites (tier 2 and 3 sites) across different content categories

6. Creative Assets Affiliate Network Console Terms & Conditions Tracking codes Payment system Tracking of transactions Merchant Site Merchant Booking Confirmation Page Commission Payment Over-ride Network Payment Merchant Affiliate Program Affiliate Network Affiliate www.bestflights.com Affiliate Marketing Process

7. Opportunities and Challenges Opportunities • Performance based results • Complete control of affiliate recruitment and management (quantity ad quality) • Establish strong commercial relationship with best performing affiliates - “super affiliates” • Maximise reach and exposure at minimal cost • Free ad exposure – only pay for results Challenges • Affiliate advertising provides reach across tier 2 and 3 sites and excludes tier 1 sites • Attracting quality high traffic sites to affiliate programme • High worth product • Low bounty payment • Require on-going management and optimisation • Commission payment to network owner – ranging from 20% to 30% of sale • Mid to long term investment

8. Financial Planning Affiliate payments (commission or fixed) Network over ride payments Internal resource + Total investment - Gross bookings – cancellations & no shows = stays Total transactions / Cost per transaction Example of affiliate programme. Thomas Cook payment structure > through Commission Junction affiliate network. Generates 18% to 20% of all transactions.

9. Policies on Affiliate Marketing Google policy on affiliates: • Affiliates allowed to use AdWords advertising. • Google will only display one ad for affiliates and merchant sharing the same Display URL per search query. • Google restricts the following: • Redirect URLs: Ads that contain Display URLs that automatically redirect to the merchant site. • Bridge Pages: Ads for webpages that act as an intermediary, whose sole purpose is to link or redirect traffic to the merchant site. • Framing: Ads for webpages that replicate the look and feel of a merchant site.

10. Affiliate Program SamplePPC Program BT PPC listing BT Affiliate PPC listing

11. Affiliate Program SampleDisplay Program

12. Considerations • Affiliate marketing requires on-going nurturing and relationship building > Affiliates have no loyalty to brands • How to differentiate program from competitors? Combine financial incentives with flexibility. • Evaluate the metrics to pay affiliates on. Bookings or completed stays? • Decision should be lead by internal financial objectives and overall market dynamics • Affiliate marketing can become a self-funded program. Bookings can be charged back to hotels (dependant on franchise/ownership contracts) • Affiliate Network programs cannot be switched “on and off” • In 2004 Thomas Cook was force to close down their first affiliate program for lack of funding – set budget run out

13. Considerations • Affiliate Marketing delivers the 80/20 rule – 80% of all transactions will be generated by 20% of affiliates • How to differentiate program from competitors? Combine financial incentives with flexibility. • Have the network focus on quality of affiliates as opposed to quantity • Establish strict terms and conditions with affiliate network and affiliates related to: • PPC bidding • Usage of brand on PPC copy • Bidding on brand and generic terms • Use of URLs • Length of cooling period between recording of transaction and payment for transaction • Assign a third party or internal resource to validate transactions attributed to program – track all transactions through an order id

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