How Groupon and LivingSocial leverage affiliate marketing

Where did all of these "daily deals" companies come from, and how did they get so many subscribers so fast? Sure they're using all the same online marketing channels you see at any company, but one thing they're doing differently is running their own affiliate programs.

Everyone is familiar with sharing daily deals with your friends through social networks and email, but what if you got paid for every one of your friends that actually signed up? Well that is exactly what happens for affiliates. From moms with blogs to travel sites and social media gurus, affiliates of nearly every shape and size are taking advantage of solid payouts from daily deals sites including Groupon, LivingSocial, Tippr, and BuyWithMe.

Surprised? Did you also know online giants like Amazon and Netflix used affiliate programs to build their empires? These companies have relationships with thousands of publishers and individuals that promote their products and services for a commission. This is actually one of the ways Netflix set itself apart from Blockbuster and experienced exponential growth. Its online model supported a true affiliate program where it could pay thousands of people for sending it new online signups. The concept is not new, it has just recently been incorporated into the daily deals model.

Daily deals are perfect for affiliates because all they need is an email address. In affiliate marketing, this is referred to as "leadgen," and the even more beautiful part is that the leads (customers) don't really need to be of any specific quality because daily deals apply to just about anyone. It's a match made in heaven.

LivingSocial, Tippr, and BuyWithMe all run their own affiliate programs internally while Groupon continues to run its program with a single affiliate network. Affiliate networks like Commission Junction or Google Affiliate Network take a significant cut of advertising spend, which is why LivingSocial and the others are building direct relationships with their affiliates, cutting out any middle men. This is exactly why these companies growing so quickly.

Imagine you're a fashion nut who has a Twitter following of 25,000 or a fashion blog with 50,000 subscribers and you are an affiliate of several daily deals sites. The daily deal appears in your Inbox and it happens to be 50 percent off at Nordstrom. Of course you're going to display your unique affiliate links with every person in your social network and plaster them all over your web properties, since every new sign-up is money in your pocket. It doesn't even have to get that specific: You can place banners on your website(s) that dynamically change with the deal of day, enticing your visitors with something new every day and even match to their city and region. If there is such a thing as perfect banner advertising, that has to be it.

Think starting your own affiliate program might be a good idea? The key is to find the right affiliates for your brand. Start with your current customer base. These are the people that understand your product and service, and love it enough to pay for it! More often than not, there is someone in that group of people that has access to internet traffic, whether it is through their own website or whether they buy media and advertising professionally. The next step is to announce the program to the public with a simple way to approve and deny new affiliate applicants. Once your affiliate program is out there, you can start publicizing it in directories like OfferVault, you can develop relationships with affiliate networks that already have a database of affiliates, and you can seek out affiliates and publishers directly by contacting them individually. The most important thing to remember is that a few really great affiliates can make an incredible program. Quality over quantity is the name of the game. 

We've learned from customers, specifically in the daily deal space, that there is an incredible amount of value to developing direct and transparent relationships with affiliates. If you can find the right few bloggers and enthusiasts to promote your deals you can experience incredible, revenue sharing success.

If you have an online business and you're not familiar with affiliate marketing, it is time to get educated. The channel is thriving, with more than $8 billion in ad spend per year in the U.S. alone. So now you know the secret, what are you going to do about it?

Lucas Brown is CEO of HasOffers.

On Twitter? Follow iMedia Connection at @iMediaTweet.

 

Comments

Bryan Liu
Bryan Liu January 10, 2012 at 2:34 PM

Great blog. Thanks! What's your suggestion for B2B companies in terms of affiliates? Most affiliate programs are suitable for consumer products, but not for B2B companies.