Recently, I gave a talk at the awesome Techcrunch Geek n Rolla event, which was a quickfire day of presentations and panels for London based entrepreneurs, with about 200 in attendance. Mark summarised some of the highlights from the day in the previous post.

My task, was to give startups some practical advice on how to generate revenues from an early stage – specifically looking at advertising and affiliate marketing.

Affiliate marketing can work well for early/mid stage startups

The slides from the presentation are below, but the main point I was trying to convey is that affiliate marketing is truly one of the best monetisation paths for a startup in 2009. (this is from our experience as a publisher working in-depth with all monetisation methods, not just because we promote an affiliate-based service!)

Why affiliate marketing?

The key indicators are there: CPM advertising is down 6%, and performance marketing up 6% (source: IAB 2008). eMarketer says that affiliate marketing is up 13% YoY compared to 9% for the whole of online advertising.

What does this mean for web publishers? The money is shifting towards affiliate marketing (search marketing is also on the up but harder to benefit from unless you are a search engine) which means:

• More quality merchants: brands are entering the affiilate space and although the recession has claimed some smaller merchants, all networks are reporting a net gain for merchant growth. Is there a new merchant in your niche that could be very relevant to your site? (Skimlinks publishers can search over 8,000 merchants who are all grouped into relevant categories)
• Bigger affiliate budgets: merchants have more resources, more creatives, more offers and incentives such as voucher codes and promotions in order to entice affiliates to promote their products and services. Nothing converts as well as an exclusive offer or promotion that you have been given by a merchant.
• Maturing of the industry: eConsultancy’s affiliate census revealed shortcomings in the industry such as lack of communication between affiliates and merchants. So affiliate networks are proactively taking steps to improve the lines of communication both online and offline. The IAB’s Affiliate Council meets quarterly to look at how issues in the industry can be overcome to create a better environment for affiliates, merchants and networks. As advertisers are focussing more and more on affiliate marketing, the support is also there for you.

What do startups need to do to benefit from affiliate marketing?

As a startup, you will probably not be experiencing the traffic volumes or have the reputation yet to make traditional advertising work. So how can web startups benefit from affiliate marketing straight away?

• Know your niche - find out what merchants operate in your niche/sector – you can either do this by signing up with affiliate networks and using their browse/search, or as mentioned, Skimlinks publishers can search/browse across many affiliate networks at once.
• Speak to the merchants/networks – from firsthand experience, merchants are incredibly interested in working with startups who are bringing a new approach to promoting their products/services compared to traditional publishers/bloggers. Merchants will be helpful and give you tools such as offers and voucher codes to help kickstart your affiliate commissions. Also speak to the affiliate networks who know which merchants will be suitable, or more open to work with.
• Use text links – text links have been reported by affiliates as the best converting links, so look to add affiliate links inline in your content, and do it with a neutral message (not overtly commercial). For example, link to a relevant product – if you are talking about web hosting in your content, can you add a link to a web-host’s deal? Can you refer to products and services in your newsletter or blog: available at…?
• Harness the technology – as a web startup, your advantage is technology, so can you use a merchant’s product feed or API to integrate affiliate links into your own data? Mashery are working with Bestbuy to offer the Bestbuy Remix where developers can create mashups, widgets and facebook applications, which are affiliate-enabled links.
• Monetise your user generated content – if you have a startup that has user generated content that contains links e.g. forums, blog comments, social networks – Skimlinks can help your monetise those links, and we have advice/guidelines on how to do it in an ethical way, so as not to upset your users.

Does your web startup have positive or negative experience with affiliate marketing?

This past Tuesday, Joe and I turned our backs on the glorious London springtime weather we’ve been graced with this week, and instead joined a multitude of Europe’s finest web movers and shakers at Geek’n'Rolla 2009. With the day packed full of fascinating panels, pitches and talks (including one by the illustrious Joe Stepniewski himself), we thought we’d bring you some of our highlights.

Our friend Andy McLoughlin from Huddle had some great tips for hiring a top-notch team whatever business you’re in. Hiring is like falling in love, when it’s right, you’ll know. Don’t compromise. Huddle uses a famed four point scale for rating candidates: Definitely No, Maybe No, Maybe Yes and Definitely Yes. If there are three people involved in the hiring, you need three Definite Yes’s.

Treat your team like family and build a sense of trust and openness by encouraging people to learn about all aspects of the company. Buy a great coffee machine, and ensure that good ideas can be generated and fostered by anyone, be they CEO or Office Manager. I’m confident we hit a lot of those goals here at Skimlinks, although we could use some higher quality caffeine… Alicia?

Andy’s slides can be found here.

Inbetween some heated debating, launch of an excellent wiki full of web tools, William Reeve, (formerly of LoveFilm, the UK’s answer to NetFlix) had some excellent things to say about managing your cashflow. If you’re bootstrapping your business, pick some core metrics to monitor meticulously, and keep your cashflow super-tight. Most of all, push your suppliers hard as every extra day you can squeeze out of payment terms is valuable. You can find his slides and some more in-depth notes here.

Finally, Fred Destin from Atlas Ventures gave us an insight into the day-to-day life of a VC. They’re human too! Working with VCs is about building relationships. Pitching is show-business, so if you have the opportunity to pitch, make sure you get the VC excited from the outset. Also, beware of ‘pitch decay’. Leave your audience with four or five key points that they will remember when considering you at the next stage. More details here.

It was an action-packed day, and I’ve only scraped the surface in this post. Check out all the coverage at TechCrunch Europe. Alicia will be at A4U Europe next week. If you’re there, say hello. Otherwise she’ll report on it here once she’s back.

Thanks for reading!

Mark

The Skimlinks team is keeping busy with Joe and Alicia both speaking at events this month.

Joe will give a presentation at Geek n Rolla today on “Monetising your startup from the word go with advertising and affiliates”.

Alicia will be attending the A4U Expo in Amsterdam next week where she will be speaking about “New Ways to Monetise Social Media”.  Social media – blogs, forums, web applications, Twitter, etc – are increasingly powerful ways to drive community, loyalty, and activity, but with the earning potential from advertising diminishing, publishers are looking for incremental revenue streams, that don’t impact the user experience.

In her talk she will be exploring new and innovative methods for monetising social media, looking at case-studies of what has worked with major European and American publishers, and what can cause user-backlash. She will also explore the ethical guidelines that should be adopted to ensure optimal revenue generation without compromising on integrity or long-term community loyalty

We’re also working on something back in the office – keep an eye out for updates on a special Skimlinks event in the coming weeks.