We delve into the basics of affiliate marketing and explore the reasons why Asia has been slow to adopt this strategy.

Affiliate marketing in the UK alone is predicted to drive over US$6 billion in online sales for 2008, with commissions and fees to affiliates topping US$400 million (e-consultancy Internet Statistics Compendium 2008). But over here in Asia Pacific, the figures are negligible, if not non-existent, and we are a part of the fastest growing region in the world.

Why hasn't it taken off? Is it due to a lack of base level understanding of what online can generate for advertisers? Or maybe a lack of small medium sized media owners being aware they can monetise the traffic coming to their sites? Or are the larger media owners not willing to adopt a cost-per-action model over a guaranteed CPM (cost-per-thousand impressions) model? Could it be the case that this region is still struggling to stand on its own two feet and still taking baby steps in the direction of online usage?

With the projected growth of Southeast Asia at over 20 percent in terms of spend online, surely advertisers will look to mitigate risk from CPM or indeed CPC (cost-per-click) models, and start seeking out CPA deals. Doesn't the region pride itself on being entrepreneurial and forward thinking?

Let's start from square one here by looking at what affiliate marketing is.

Affiliate marketing is where a media owner (an affiliate) promotes advertisers' products on its website and only receives a commission/ payment once they generated a sales/ action for the advertiser. Ultimately, it is the same as having a virtual sales force online that is paid on commission of a sale only.

We know that the same big spenders in more mature markets of Asia Pacific who are harnessing the power of affiliate marketing are spending in Southeast Asia on other channels and someone needs to address the lack of a credible regional affiliate network.

What is an affiliate marketing network?

An affiliate network is an intermediary putting advertisers in touch with affiliates and managing payments, tracking, policing, updates, and providing the interface for the two parties to mutually benefit. The network takes a commission on the payments made to affiliates by the advertisers for providing the framework in which the activity takes place.

The value a network offers is they can achieve economies of scale by bringing together thousands of affiliates under one roof for advertisers to benefit from and a central repository for affiliates to visit and pick and choose the advertisers to promote that best suit the traffic they attract to their sites.

What should you look at when choosing an affiliate network?

Heritage and reputation. Demand visibility, ask for testimonials, understand how long they have been around, as you want a long term partner that is established.

Ensure 100 percent visibility. Ensure you know who's promoting your brand and where, and make sure the technology used is transparent for all parties; affiliates, advertisers and the network

Network services. An account-managed network means the network is adding value to best optimise your campaign as either an advertiser or an affiliate

So why has it yet to take off?

Unfortunately, affiliate marketing often brings with it a reputation of secrecy and lack of visibility. This has come about due to previous attempts of being somewhat cloak and dagger in an effort to guard key information that has led to those that have attempted affiliate marketing with a sour taste in their mouth.

Online advertising, through any medium, should be 100 percent transparent, allowing advertisers to understand where, when and how sales/ actions are being driven, and by whom. It's only fair to assume that if someone isn't prepared to share key data, then they have something to hide, after all, why not share this data if available?

I believe affiliate marketing will gain serious momentum in 2008 and into 2009 with the launch of credible networks that are prepared to educate the market place and most importantly, have an open approach to this powerful channel. There are lots of questions to be answered and lots of learnings to be gained in this region but the answers are out there, and I, for one, am happy to share best practice learnings.

James Hawkins is group head of search of dgm Group.