Inspired by the article i read recently about the new Google CPA model, i will dedicate this post to talk about Affiliate Marketing in Singapore.
It is also the last post in the introductory series about different online channels that advertisers can use to achieve their objectives in Singapore and Southeast Asia Context.
The following sub topics will be covered:
- What is Affiliate Marketing?
- The stage of Affiliate Marketing in Singapore.
Before i start, if any of you want to read the press release from Google about Pay Per Action pricing model, the link is included for you.
1. What is Affiliate Marketing:
Affiliate Marketing in simple terms refers to the type of online marketing activity in which the advertiser pay the affiliate (independent web publisher) a certain amount of money to drive traffic, sales leads, conversion, sales to their site.
Advertisers are people/companies who have products/services to sell. They want to have more customers either through their physically storefront or their website.
Since our context is online, this means advertisers who want to acquire more target traffic, more conversions/sales through their website. So they announce to the affiliates that they will pay X amount of money (a bounty or commission) for every sales/sales lead/conversion that the affiliate can drive to their website.
For example, if i am a credit card company, i will then tell the affiliates that they need to go out and drive people to my website. When they are on my site, if they sign up for a credit card, i will then pay the affiliate $5.0 – $50.0 (whatever the amount is).
The Great things about this model are (the list is not exhaustive):
- It is totally risk free for advertisers since they only pay when a sales/conversion is made on their website.
- They only pay the amount that they think is reasonable for each additional online conversion.
- In the digital marketing world, we call it ” Pay Per Action” and the bounty/commission is called Cost Per Action or CPA.
Now you can understand why Google calls the new pricing model as Cost per Action model or CPA model.
However, there are challenges with this CPA model as well. They are as below:
- Advertisers don’t know who the affiliates are
- The affiliates don’t know which advertiser offers how much money/bounty/commission for what product
- Advertisers have no tools/technology to track that the sale/conversion is coming from XYZ affiliate, not from their own advertising campaign or from another ABC affiliate
- (the list is not exhaustive)
2. Affiliate Marketing in Singapore context:
Affiliate Marketing is very common amongst Internet marketers in Singapore. The reason behind is that there have been more and more workshops talking about Internet marketing, making money from your website etc… in Singapore.
However, these internet marketers are mostly individuals and they have not cooperated or worked with companies in Singapore yet.
There are only 1 or 2 companies out there in Singapore that offer affiliate marketing solution to big advertisers. At least these are companies that i know of.
One can list many reasons why affiliate marketing is not popular amongst Marketing managers, directors of big corporation in Singapore yet. I guess some obvious reasons are:
- Singapore online marketing industry is still in its infancy
- The technology behind that enable/govern the smooth working relationship between advertisers and affiliate is costly to developed.
- The lack of expertise in affiliate marketing from online agencies themselves (not including a few companies that i know of).
However, no matter how difficult or how many obstacles there are towards the implementation of affiliate marketing in Singapore, i guess that the industry will slowly move to Performance based model (Cost per Acquisition, affiliate marketing) just like US, Europe and other mature markets.
There will soon come the time where advertiser can define, track exactly how much online visitor is worth to them.
But again, i need to stress that the game belongs to those who use a holistic approach to online advertising. The reason is deadly simple. Even though the conversion rate of Pay Per Click (Paid search) is generally high, which leads to higher ROI, the potential clients/buyers are exposed to the brand from numerous sources.
They may see the brand when they read the news, see a banner, do comparison etc etc… and then when they use Google to search, it’s just the last step of the whole sales funnel.
The same goes with brand awareness. A holistic, interactive approach which encourages the participation from potential customers is crucial.
One may spend lots of money on a single channel, platform and wonder why it doesn’t work without realizing that it’s the whole process, the big online exposure/interaction that lead to a desired action.
And how advertisers can figure this out?? By simply using advanced, customized tracking tool 🙂
This will conclude the section about Affiliate Marketing in Singapore. You may realize that i purposely leave out some information due to timing issue.
Have a nice weekend,