While many in Asia's Internet space ponder Amazon.com's formula for
Web success with envy, a factor often overlooked has been the e-tailer's
failsafe business backbone: to build ties with affiliates and watch
business grow from strength to strength.
"It's no longer enough that you actually have a product that can be sold
through the Internet, you now have to productise the business processes,
and you can, with affiliate marketing," said Mr Hisham Isa,
vice-president of sales and marketing at BuzzCity.
Speaking at the recent Internet World conference in Singapore, Mr Isa
outlined the outdated business trap that Asia's Internet start-ups were
falling into.
"The value call when most of us built our businesses was 'if you build a
site they (users) will come', but while this still works, you're also
going to have to take your product to the customer."
Interestingly, only 17 per cent of all websites showed awareness of the
power of affiliate marketing by signing up with a programme.
Cornering the Internet market, according to Mr Isa, does not solely
involve "a big rush to get your business off the ground, get started and
get noticed".
Categorising websites who had tapped into affiliate marketing potential,
and mushroomed their business as a result, he earmarked sites such as
information 'wholesaler' GoEvents.com.
"GoEvents syndicates content in various forms with partnerships it has
with content owners, developers and manufacturers which distribute this
to other affiliates who, in turn, distribute or retail content to Web
users.
"This is a good example of how to start your business using an affiliate
programme - getting content from the event organisers for free and
distributing it through channel partners also for free," said Mr
Isa.
In this case, money was spent on the value-draw of the website, rather
than on the affiliate partnerships themselves.
Brandishing content developer CNet's affiliate marketing model as a
"win-win situation", Mr Isa said that additional partnership trends
swayed towards affiliate accumulation of free content, in place of
revenue.
A third model - the retailer-to-retailer affiliate relationship -
identified websites which employed specific programmes which linked the
sale of used cars on the Internet with the indispensable services of
insurance companies, for example.
"They (the websites) have taken the time to set up their businesses, to
think through the business process and packaged their affiliate
programmes, so they're easily understood by users and their various
partners alike," said Mr Isa.
With the defining factor for an affiliate programme to "start small and
test it in the field", he advised owners of websites to "stress-test"
their business.
"It needs to be proven and it needs to be something that other people
see has been proven," he said.
"You need to have a relatively well-known brand, people have got to know
you and trust you in order for them to buy into your affiliate programme
- this takes money and time."
However, potential problems arise when, due to lack of training,
programmes fail to deliver revenue promises or fulfill the expectations
of affiliates and websites alike.
"Affiliates need to be trained, because they don't necessarily know how
to integrate your content and your products into their Website or
businesses," he said.
First and foremost, noted Mr Isa, the understanding and definition of
the affiliate sale was crucial to the smooth-running of the
partnership.
"You need to define exactly what is revenue - do you make a sale because
somebody's bought a product, or do you make a sale even when somebody's
returned it?"
The biggest challenge lies at grass-roots level - preparing and building
the necessary organisational infrastructure and the business functions
to support an affiliate network.
"Many think that having an affiliate programme means we need thousands
of affiliates - not necessarily," Mr Isa said.
"We want to have the right affiliates who'll help build the right track
record for our brand."
With the various programmes on offer, including the pay-per-click
scenario, the pay-per-referral scenario and the commission/
revenue-share scenario, Mr Isa cautioned against an over-reliance on
technology as an enabling factor.
"Any affiliate tracking software is only as good as your business
processes," he said, adding, "a S$10,000 Rolls-Royce edition
isn't necessarily what you want when you could be served best by the
S$1,000 edition."
