Research Question 1 Fmi

Advantages of affiliate marketing

Case 1

Case 2

Case 3

Targetability

+, -

+

+, -

Tracking

+

+

neither adv. nor disadv.

Deliverability

=

+

=

Interactivity

-

+

-

New revenue opportunities

++

++

++

Access to new merchants

+

+

+

Added value to the website

neither adv. nor disadv.

neither adv. nor disadv.

not considered

Issues with affiliate marketing

Banner blindness

-

not considered

-

Problems with conversion rate

--

--

--

Other advantages not described in the literature

Higher income than in some other forms of online advertising

++

++

++

Little overhead costs

++

+

Easiness of use

++

+, - both advantage and disadvantage

+ advantage

++ very important advantage

- disadvantage

-- very important disadvantage

= it is not different from other forms of online advertising

Table legend:

+, - both advantage and disadvantage

+ advantage

++ very important advantage

- disadvantage

-- very important disadvantage

= it is not different from other forms of online advertising

All three content providers consider new revenue opportunities and access to new merchants as advantages of affiliate marketing. Moreover, they all added, that affiliate marketing not only offers them new revenue opportunities, but that the income generated by affiliate marketing can be significantly higher than when using other forms of online advertising.

This can be explained by the risk content providers have to bear, when employing affiliate programs. As they are paid only for a specified actions, their income is never secure and therefore, the programs have to offer content providers sufficient incentives to take this risk.

On the other hand, affiliate marketing decreases the risk for merchants, because they will not waste their money on advertising that is not efficient. Thus, they are willing to advertise even at websites that would not be taken in consideration otherwise. Thanks to this effect, content providers' access to merchants is wider.

Little overhead costs were also considered as an advantage of affiliate marketing by two content providers, whilst the third one emphasized the easiness of use connected with affiliate marketing. As affiliate programs are mostly automated, content providers do not have to devote their time to administrate them. Moreover, affiliate programs are often operated on one-to-many basis and therefore, companies try to make the system as easy as possible to attract great amount of content providers and minimize the time they would need to spend on answering their questions and administrating the program.

Other advantages described in the literature were not perceived as benefits unanimously. Targetability was perceived as beneficial, however content providers were also aware of the issues connected with it. They noted that affiliate program, when targeted well, can increase their income, but precise targeting requires devoting time to it and the results are not secure.

Tracking was considered as a minor advantage or neither advantage nor disadvantage. This can be explained by the fact, that even though tracking offers content providers good information about their visitors' actions and behavior, it does not affect their income directly. Nevertheless, content providers note that good tracking can minimize the possibility of deception and give them higher security.

Deliverability was not considered as an important benefit of affiliate marketing, mostly because content providers did not see any difference between affiliate marketing and other forms of online advertising in this aspect.

Neither of content providers thought that affiliate marketing would add their websites any new value. Affiliate marketing was seen as a form of online advertising, which can be usually replaced by another form. Content providers do not derive value from a specific affiliate program, because it would make their websites dependent on the program and it would be very difficult to replace it, when its results are not satisfactory.

Interactivity, even though it is described as advantage of affiliate marketing in the literature, was perceived as beneficial only by one content provider, who was paid per lead (he could affect number of leads to a full extent). The other two content providers saw interactivity more as and disadvantage and connected it with issues with conversion rate. They stated that interactivity is problematic, because they lose control over their visitors' activity after leaving the website and therefore cannot impact the actions of visitors that would lead to assigning the commission to their account.

Because conversion rate is to a great extent influenced by merchants' ability to persuade visitors to buy a product and exploit the interactivity, content providers see it as a threat. Moreover, as the content providers have only limited possibilities how to control merchants, they can also lose some of their commissions because of a mistake or deception.

In all three cases, problems with deception have been thoroughly discussed and possibility of deception seems to be one of the most important issues in affiliate marketing. Content providers do not actually have any proof of being deceived unless they try it themselves with test orders. Submitting test orders is however not always possible without actually paying for a product or service or without prior consent from the merchant. Merchants that want to avoid being accused from deception should implement systems to allow content providers to have real time information about leads and sales and have strictly defined rules stating under which conditions only a lead or a sale can be refused.

Finally, banner blindness was perceived as a minor issue, however content providers considered it as basically the same for all forms of online advertising, because they all use the same means to attract visitors.