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?

If you are already an affiliate you may be thinking “why would I give Skimlinks a share of my commission when I do affiliate stuff myself already“?  Here are 10 reasons why you should, or if you’re in a hurry skip to #1.

Broken links look amateur – affiliate networks can pause programs, change and expire their links, so if you don’t update immediately you’re going to look silly for having broken links. Skimlinks automatically reflects any changes to any program across all networks, so if an affiliate link doesn’t work, we don’t convert the regular link into one until the affiliate link is restored.

Get paid sooner - don’t wait until you reach the minimum threshold for payments across many affiliate networks, your combined balance will be paid out monthly, and on time. Skimlinks uses a separate escrow account for affiliate commissions, so your money will always be safe.

Have more time to focus on other fun things – by outsourcing your affiliate link management, it leaves you more time to dedicate to SEO, design, content, PPC and community management, things that make you unique and stand out from the crowd. Let Skimlinks manage the commodity task of creating and maintaining affiliate links.

No need to mask – affiliates often use link masking, or redirect scripts so visitors are not looking at ugly affiliate links in their status bar. Skimlinks’s solution doesn’t require link masking, you just link to a product/service with a normal <a href=”… >  link.

Just one line of code… – you can enable your entire site in minutes, and publishers often discover we are enabling affiliate links they didn’t know about that were already in their content. Manually crafting affiliate links is generally painful, but painful doesn’t mean its necessary does it?

100% deeplink friendly  – Deeplinking directly to a product instead of the homepage/landing page is proven to bring better conversion rates. As you know some networks/merchants don’t support deeplinking, but Skimlinks has a solution in place to make deeplinking work for 100% of links.

Less Excel hell – if you are consolidating lots of reports from your affiliate programs you are definitely spending lots of time in front of Excel or Openoffice. Skimlinks offers comprehensive reports showing your earnings across networks, merchants and date ranges.

No more apply now clicking – instead of filling out applications to umpteen affiliate networks and then clicking the apply button to 1000s of merchants, just do it once via Skimlinks and you’ll have access to 16 networks and 6,000+ merchants worldwide.

Its all about integrity – Skimlinks is not a contextual service, we want you to maintain editorial integrity and convert only links that you create. Contextual services can be problematic, adding links that are out of context, and interrupting the user experience. Keep your visitors happy, link out, and earn some money.

Earn more compared to doing it yourself – this is the killer – we’ve negotiated higher tiers with the affiliate networks and merchants so you’ll probably earn more using Skimlinks than doing it via your own account – so you could earn over 100% of the affiliate commission.

We also have a raft of exciting upcoming features that affiliates will be interested in, especially around tracking what your outbound affiliate links / visitors are doing.

If you are an an existing affiliate, how do you think Skimlinks can help your job? Or why would you prefer to do it yourself?

Signup today at http://skimlinks.com/register.

Many of our clients ask us what they can expect to earn via Skimlinks. It varies in so many ways, but we are starting to build a picture of what different types of publishers should expect from our service.

What type of site?

Firstly, the best performing sites are forums, by a long stretch. Forums generate a greater sense of community and interactivity, and as the content is generated by users for other users, carries a higher degree of authenticity than editorial content. Also, the people reading forums tend to be closer to a purchase decision, and are more likely to click on outbound links.

For example, one of our clients achieves conversion rates of over 7% on their forum. They also have an enormously high rate of users clicking on outbound links, up to 20% of users viewing a page click on an outbound link on that page. We are able to convert on average 10% of links into affiliate links. This means a good forum site can easily make thousands per month using Skimlinks.

On the other hand, blogs and content sites have a slightly lower conversion rate: 1-2% depending on the nature of the site. This is in line with industry average conversion rates, so is by no means a poor result, but does suggest that social media elements like forums can help boost earnings.

Average Commission?

We also get asked about things like average basket sizes and average commissions. This again varies based on the content of the publisher site: technology-oriented sites have a larger basket size, although fashion sites are not far behind. We are doing well also with car accessory sites, and eco-friendly products is a fast growing area for us. The average basket size is about £50, but we see examples from £40 to £75.

Average commission vary based on product type. Technology merchants and general stores have a lower rate: 2-4%, with niche stores and many fashion merchants at around 10%.

Great Merchants

We often get asked what our favourite merchants are: at the moment there are two:

• Love Honey has a great site and range of products, and pays great commissions
• Ebay (both the UK and US) have a fantastic program, both in terms of their rates of commission and the people that run the programs.

We heartily encourage all our merchants to think about incorporating these merchants into their sites, eg. “Weekly Ebay favourites” and for appropriate sites “Best female toy of the week”

That is generally the best we can provide in terms of figures, the rest depends on the publisher’s traffic levels and the propensity of their users to click through on outbound links. We can give further tips to interested publishers, just get in contact.