Case Study Questions
1. One of the most effective ways prezzybox.com marketed its company to its affiliates is by keeping a good relationship with them. The result of this relationship is that now the affiliate marketing accounts for 35% of the sales, its affiliate managers have been voted best affiliates, and they are often invited to speak at conferences and industry events. Not including the other awards prezzybox.com has been gifted with like ‘Best Use of Creative’ and ‘Best Merchant Innovation’ in 2008.
2. Prezzybox.com uses different communication with its ‘super affiliates’ and with the other affiliates. All affiliates are treated the same way through mass communication. 1% of their affiliates are considered ‘super affiliates’ and account for the majority of the sales. They may be given more commission, they are kept up to date with the latest prezzybox.com has to offer and they communicate through phone calls or instant messaging.
3. When prezzybox.com launched the ‘vidibox’ in 2007 it was very popular within the affiliates networks for it was brand new. Nothing like it existed, therefore all affiliates wanted it. This resulted in a higher click-through rate from the customers making it even more attractive to the affiliates.
4. In the affiliate market, affiliate marketing can help build a company’s success through the originality of the links and its number of affiliates. The more affiliates you have and the more your advertisement is original, this will increase the company’s popularity.
· In a highly competitive market a company needs to take in consideration the commission tiers, cookie periods, creative offerings, which affiliates they work with, networks and incentives offered to affiliates for the affiliate marketing to work well and be successful.
Chapter Questions
1. The type of action that will be rewarded is the main factor when deciding on the commission. Whether it is a CPA (Cost per Action), a CPL (Cost per Lead), revenue share, or a CPC (cost per click), the commission will not be the same. Then, the merchant needs to choose how they will track the effectiveness of the affiliates in order to give them commission.
· For a CPA campaign, it is a simple download or signing up to a newsletter therefore the commission will be a fixed price per download or sign up. On the other hand, for a revenue share campaign, the commission will be calculated based on the number of sales through the affiliates. For example, an affiliate that performs better will get a higher commission.
2. To begin, a cookie is used by the merchants to authenticate, track, and maintain specific information about users, which is then used to calculate if there will be a commission and what that commission will be. Sometimes merchants will set a specific period for a cookie. For example, if the sale happens after the time period set by the merchant, there will not be a commission. A “lifetime cookie” is a cookie with no set time period. No matter when the sale takes place, there will be a commission. An affiliate “lock-in” is the term used for the first affiliate to refer a customer to the merchant. He is the one who will get the commission every time that customer makes a purchase for a life time.
· According to me, the commission levels for “lock-in” cookies are less than for restricted cookies since the customer might make more than one purchase so the affiliate will get more than one commission over time for a long period of time.
3. Some affiliates run affiliate programs for their own web sites. I believe they do this to attract even more traffic through their web sites. More traffic is beneficial since it means it will be redirected to the merchants, therefore more sales for the merchants and more commission for the affiliates.
4. In order to be sure that a merchant’s marketing efforts do not overlap with the affiliates’ they need to have a relationship between the two to clear up what each one wants. A merchant will want to reduce the overlap in order to stand out.
