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Several years ago, I gave a presentation at Affiliate Summit entitled “Negotiation Tactics for Affiliates and Affiliate Managers.” Although the full presentation went through 5 different steps, I want to share some of the core of the presentation that pertains specifically to affiliate marketing. What information do you need to gather as either an affiliate or an affiliate manager before you negotiate a deal? Both sides will want all of this information, but some of it will be easier than others for each to gather. Do the best you can!
The most important part of the terms you negotiate will be the commission so that’s the place to start your research. As an affiliate you want to know:
- What you are being paid by the merchant now and what you have made in the past (trends, changes, limited time opportunities)
- What you are being paid by similar merchants
- What other affiliates are being paid
You have the first two. You can estimate the third in a couple of ways:
- Visit sites like CashBackHolic and CashBackMonitor to see what different loyalty sites are paying back. It’s an educated guess to say that the ones at the top are paying back the full amount they get and the others are paying out between half and the full amount.
- Log in to Skimlinks or Viglink and see what you would get paid through them. They are often getting a volume increase, but if you are able to deliver volume or niche traffic, those numbers might also be applicable to you.
- Look at the network stats to compare the average sale to the average commission. Divide it out to find the average commission rate and see how it compares to their posted rate.
Combining all of the above information will give you a good view of the merchant’s total commission structure.
As a merchant, you will want to know:
- What you are currently paying the affiliate and have paid them in the past.
- What you are paying their competitors.
- What your competitors are paying out (what you see listed in the networks plus using the same analysis that I listed above for affiliates).
Next both sides need to gather up all of the performance data that they can. This includes:
- Traffic levels for the affiliate (using Google Analytics or other tools)
- Social media following plus levels of interaction for the affiliate
- EPC for the merchant across all affiliates and this affiliate in particular
- Affiliate performance last month as well as this time last year
- Number of newsletter subscribers PLUS open rates
- Cookie length versus when customers actually buy
- How important is the affiliate to the merchant statistically? (Find out how to figure that out!)
- New versus returning customer sales (both the average for the merchant and the average referred by the affiliate if possible)
Some of this goes beyond the basic numbers that you will find in a media kit. For example, an affiliate may say that they have 100K Facebook fans. The merchant will want to dive deeper to actually visit the Facebook page and see how many people are interacting with the posts, particularly the ones that are sponsored content.
This is the creative part of the research. Figure out everything you possibly can that might be of value to the other side.
As an affiliate can you provide any of this to the merchant?
- Homepage/Sidebar placement
- Newsletter inclusion or features
- Social Media sharing (Facebook, Instagram, Twitter, Snapchat)
- Videos (both produced videos like YouTube and informal like Facebook Live)
- Inclusion in gift guides
- Unique technology
- Brand promotion exclusivity
As a merchant can you provide any of this to the affiliate?
- Products for review or prizes
- Mentions of the affiliate or their posts on your social media or your site
- Coupon codes (See my piece on Exclusive Coupon Codes versus Vanity Codes)
- Placement fees or slotting fees
- Bonuses, including tiers for performance
- Affiliate branded landing pages
- Advance product or brand news
- Payment to sponsor affiliate’s social media posts
Those are just a handful of ideas but when you look hard at your own company you should be able to find even more.
Pulling It Together to Negotiate
Now you have all of the pieces that you need to figure out exactly what you want and how you can work with the other side to come up with a mutually beneficial deal. Use the best of all of the above to prove the value on your side.
You can get the full download of my 10 Negotiation Tactics if you want to learn more about how the data fits into the full negotiation. You can also view all of the slides from the presentation on SlideShare.
What other information would you want to know before negotiating? Have you had success using this type of information before?