The most powerful, effective, efficient and economical way to market your Canadian products or services online is through an affiliate program (also known as Associate Programs or Partner Programs). Affiliate programs are based on performance, allowing you to advertise on countless websites around the world, yet only pay for it when a sale is made.
You can quickly build an online sales force that is virtually guaranteed to boost your bottom line through an unbeatable Return on Investment (ROI). Most leading American retailers have affiliate programs in their customer acquisition toolbox, but Canadian retailers have been slower to adopt the strategy. We’d like to help change that with this comprehensive guide.
I have been on both sides of affiliate marketing in 20+ years of working online. As an affiliate marketer and a remote affiliate program manager based in British Columbia, I have a unique perspective and insights that I am happy to share with Canadian and international businesses who want to sell to Canadians.
Table of Contents
Please click on the title to go directly to that section.
- The Opportunity
- How Affiliate Programs Work
- Affiliate Network
- In-House Affiliate Program
- Competitive Intelligence
- Expenses
- Be Careful Out There
- What Works
- Promoting Your Affiliate Program
The Opportunity
Banner advertising is the first thing most Canadian entrepreneurs think of when they consider working with an affiliate marketer (also known as an associate, partner or publisher). However, an affiliate program offers many opportunities to promote your business in a variety of ways on a vast number of websites.
You could find your products or services being promoted on:
- Comparison shopping websites
- Content websites and blogs
- eBooks and other information products
- Coupon, deals and freebies websites
- Incentive websites, such as rebates or cash-back models (like Rakuten Canada)
- Newsletters and other eMail marketing
- Social Media
- Search engines (you can have keyword bidding policies in your affiliate agreement)
- Some marketers even promote offline!
When you consider the ROI of having an affiliate program for your business, be sure to consider the big picture. An important point to remember is the traffic your affiliates bring in can become repeat customers. Website visitors may also follow you on social media or sign up for your newsletter while they’re on your website, making future sales possible even if they buy nothing on the first visit. You could also see an uptick in offline foot traffic in your store as more people find you online and want to check out your products in person. The benefits of any type of marketing aren’t always tangible with a measurable ROI or trackable analytics, but that doesn’t mean they aren’t a critical part of your bottom line.
Above all, remember that affiliate programs don’t cost you money, they make you money.
“We found that overall, when a shopper interacts with the affiliate channel, they are more likely to purchase, spend more with each purchase, and make more subsequent purchases,” CJ found in their study of 21 million retail consumers and 5.5 million transactions.
How Affiliate Programs Work
Compensation online (usually referred to as commissions) is the same concept as earning a commission offline. There are several standard commission structures, collectively referred to as “Cost per Action”.
Cost per Action (CPA) commission structures may include one of the following, or a combination thereof:
Cost per Sale (Pay per Sale)
Cost per Click (Pay per Click)
Cost per Lead (Pay per Lead)
Cost per Call (Pay per Call)
I don’t recommend the “Cost per Click” commission structure due to potential abuse/fraud. You may decide to add the option once you have some experience, but most don’t.
You may also opt for a multi-tier commission structure. That can mean commission percentages increase as the sales go higher. It can also mean you offer your affiliates an opportunity to promote your affiliate program to other affiliate marketers, which builds your online sales force that much quicker. In this scenario, the affiliate who signs up another affiliate is paid a small percentage of their “sub-affiliate’s” commissions. Not all affiliate networks facilitate 2-tier programs, but if you go with Share-a-Sale or your own program this tactic will be available.
The biggest mistake I see in Canada is the low affiliate commissions offered. You’re not going to lure affiliates, let alone “super affiliates”, with insulting commission rates under 10%. Even if they sign up, you won’t be a priority for them. Do you want to have premium placement, content promotion, mailing list mentions, social media promotion, and anything else that takes effort from your affiliates? Then value them enough to give them a reasonable cut. Big-ticket items can be lower, but as a general rule you should offer an absolute minimum of 10-15% of sales. Alternately or additionally, you can pay for each lead sent your way.
Cookies determine how long the affiliate will receive commissions from customers who return to your website after the initial visit. The “cookie life” is at your discretion, but again, to get on the bigger sites and “super affiliates” you’re going to have to be fair. The absolute minimum cookie length should be 30-90 days.
There are two ways you can start an affiliate program for your Canadian business:
1. Affiliate Network
Affiliate networks offer significant benefits, starting with free training on several of them. They have an established group of thousands of affiliate marketers who are members of their network. Having a third party involved elevates the trust level considerably for affiliates, plus they can meet payment thresholds much faster.
The affiliate network takes care of tracking, reporting and paying your associates. They’ll walk you through your program description, banner uploads, your affiliate agreement, automated correspondence (such as notifying an affiliate they’ve been accepted), commission rates and tracking details. You’ll usually have access to all of your affiliates, allowing you to send newsletters, etc. through the network.
Typically, there’s a setup fee and then a percentage is paid per sale or per commission to the network. Depending on the network structure, you may also have to make a deposit of funds for future affiliate payments. Some networks also have a minimum sales policy that charges a fee if you don’t meet it, but it’s usually so low you can easily surpass it. Many businesses find a network is far less expensive than hiring an affiliate manager and taking care of the accounting in-house.
When selecting a network through which to run your affiliate program, there are some considerations that are specifically Canadian. If your target market is in Canada, you’ll want a network that attracts Canadian affiliate marketers. The most popular affiliate network for Canadian businesses and affiliate marketers/publishers is Share-a-Sale. Share-A-Sale focuses on small-medium businesses, which is reflected in their low minimums, set-up and other fees. If you’re promoting information products, such as software downloads, courses or eBooks, you may find that ClickBank works best for you.
2. In-House Affiliate Program
You can use affiliate program management software to enlist publishers who want to promote your products. A popular tool for both Canadian and American businesses who want to set up their own in-house affiliate program is LeadDyno.
You will also find some ecommerce platform software and shopping carts have built-in affiliate program options, including top picks like Shopify Canada.
Your payment process must be fully automated. Once the commissions reach the minimum payout, the payment process should be automatically initiated. Most private programs pay affiliates via PayPal these days. If you prefer a cheque, that still works as well. You can also look into direct deposit payments. Don’t even think about charging affiliates a fee to receive payments – your payment processing expenses are not their responsibility.
Higher commissions and a lower payment threshold will be a big draw for in-house affiliate programs. In a network, affiliate marketers earn commissions from all of the programs they join, which allows them to hit the payment threshold faster. When they only have you to promote, a high payment threshold can take a long time to reach (if they ever do). It may look like a great incentive or an opportunity to keep commissions if the associate never reaches the threshold, but what it looks like to the affiliate is “too risky to bother with”. The majority of affiliates prefer a payment threshold of $0-$25, with $50 being the absolute maximum.
When it comes to payment frequency, affiliates prefer weekly payments but monthly is more common. The payment currency can be either Canadian dollars or USD.
Never be tempted to not pay your affiliates, be it for a transaction or a monthly payout. They can find out quite easily and when they do, your dishonesty will spread like wildfire. Your reputation can make or break you online with both your customers and your sales force. Plus, if they aren’t making enough money with your affiliate program they’ll drop you and go with your competitor.
Competitive Intelligence
One of the best ways to learn and compete is to do some investigating. You can join a network like Share-A-Sale and check out what your competitors are doing. You’ll be able to access all kinds of data, from commission rates to Earnings per Click (EPC) for a certain time period. If you want Canadian marketers to choose your program over a competitor’s, you can offer a higher commission rate. If they have a product feed, you can set up one too. You can even see which advertising creatives are performing best and apply that knowledge to your own creatives.
As a program manager, I do this research on a regular basis and find it invaluable as a starting point for testing. As an affiliate, it helps me decide which programs are worth extra effort and which creatives I should use to increase conversions.
Expenses
There are some expenses that you’ll want to budget for when planning your affiliate program, although you won’t necessarily need everything right away.
- Network set-up/access fees or the cost of affiliate program management software
- Designer for banners (preferred standard banner sizes include 300×250, 468×60, 125×125, 120×240, 120×90, 120×60, and 88×31)
- Programmer for product feeds, dynamic widgets, search boxes, etc.
- Video producer if you intend to have videos available to affiliates
- Copywriter and content writer
- Affiliate program manager – Hiring an Affiliate Program Manager can ensure the success of your program. She will do much more than approve/reject applicants, update advertising creatives and product feeds, and provide general support. A good Affiliate Program Manager will also build relationships, coach, motivate, share new campaigns, manage affiliate contests, enforce guidelines, and engage top performers. There are also companies that offer affiliate management services.
You can save a considerable amount of money by employing a remote workforce or contracting people for the above tasks. You may be lucky enough to find that rare person who can do, and maintain, most of it for you. If your store is on one of the popular retail sites like Shopify Canada, you will be able to find scripts that are already written for compatible data feeds.
Be Careful Out There
There are shady affiliates online and you should be aware of what to watch for. Generally speaking, you should be on the lookout for affiliates who steal content, violate your copyright, undermine your paid search efforts with trademark violations, use toolbars or adware downloads, use any kind of shady click tactics, spamming, fake cookies, and theft of coupon codes or other exclusive deals from other affiliate marketers. Cover these concerns in your affiliate agreement, monitor, and enforce.
What Works?
One of the first questions I hear from Canadian businesses when they start an affiliate program is “what type of advertising works best?”
The promotions that work for individual products and services can vary. Results also depend heavily on the website your ad is on and the person doing the promoting. Of course, conversions are almost entirely your own responsibility once the consumer lands on your website.
The many variables make testing imperative, but there are some consistent ‘rule of thumb’ facts that can guide you:
- Text links outperform all other types of advertising online. They have a high Click Through Rate (CTR) and usually a higher Conversion Rate (CR).
- Combine text links with deep linking and you’ll have the highest conversions possible. Deep linking (a direct link to an individual product or page) has proven repeatedly to result in the highest sales conversion rate. Providing links to every product yourself is overwhelming for both you and your affiliates, but there are tools that allow the affiliate to easily link to any page or product on your website. Our recommended affiliate network, Share-a-Sale, has user-friendly, deep linking tools available.
- Product images, on their own or in catalogues, often have the highest CTR, but they still don’t outperform text links for sales conversions.
- A big surprise for most businesses is that banners (display ads) receive the least clicks and sales. People just don’t see them anymore and many use ad blockers. You’ll see a higher click through rate if the banner engages consumers on some level, such as a search box or poll. Either way, they won’t beat text.
- Pop-ups are blocked by most people and they annoy pretty much everyone else.
- Text links and talented content marketing are the most powerful combination.
Affiliate marketers should be aware of what works on their website, which makes it necessary to provide a variety of marketing creatives for them to choose from.
Promoting Your Affiliate Program
Even if you’re dealing with a network that has thousands of potential affiliates, you should promote the launch of your affiliate program. If you hire an affiliate manager she’ll have all of this down to a science, including lists of contacts and directories.
- Add an affiliate program information page to your website and include a link to it in your menu.
- Post about it in your blog (with SEO in mind) and on social media.
- Send out a press release.
- Submit to affiliate program directories.
- Advertise on related websites and blogs and consider sponsored content (reviews and case studies are very effective).
- Advertise in related newsletters.
- Post in affiliate marketing forums.
- Search for and politely contact Canadian bloggers in your niche. Make sure you actually research their site and personalize the email. Our post “Popular Canadian-Owned Blogs for Blogger Outreach and Guest Posts” will get you started in this country.
- Connect with Canadian affiliate marketers on LinkedIn but don’t lead with a pitch. You can search LinkedIn for your niche keywords combined with “affiliate marketing”, “Canada” and so on.
- If a 2-tier affiliate program is feasible, many of the affiliate gurus will promote it to their networks. In a 2-tier scenario, an affiliate marketer signs up for your affiliate program and earns a percentage of each sale. If they promote the program to their network and another affiliate marketer signs up for your program using their link, they’ll also earn a percentage of those sales.
- Join an affiliate network. They already have a database of affiliate marketers ready to join your program. Plus, they’ll automate much of your program administration, such as tracking and payments.
- If you’re working within an affiliate network, make sure you’re included in any “new program” announcements. Also, ask about network newsletter announcements, holiday shopping guides, etc. Your success is their success!
- Most networks will also allow you to make recruitment offers to their members.
- If you like conventions, you can meet new affiliates by attending the same ones that interest them. Blogging conventions are very popular, for example, and many bloggers are looking for ways to monetize their blog.
- Focus on building relationships with potential affiliates, rather than just shoving your program under their nose.
To maximize your relationship with your partners, read 22 Pro Tips for Working with Affiliate Marketers.
Have you considered an affiliate program or do you already have one? Please share your experience or questions in the comments below or discuss this and other online business topics in the Online Business Canada Facebook group!
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Melody McKinnon is an internet entrepreneur with 25 years of experience in a wide range of online business models, backed by a formal business education and enhanced by training and mentorship. She has owned or managed both educational and ecommerce websites. Her book, 7 Recession Proof Online Businesses to Start From Home, is available from all major ebook retailers.
Melody has worked with many businesses & brands in a multitude of capacities. She can often be found on CanadianDigitalMedia.com, CanadiansInternet.com, CanadianFamily.net, and AllNaturalPetCare.com, as well as other quality digital publications. Her content has earned reference links from highly-respected websites, magazines and university textbooks.
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Thanks for posting this information. Affiliate marketing is gaining pace and anyone can take advantage of it and earn some extra money. It is important to know some secrets and to be well motivated.
In the US affiliates have to submit a form w8 or w9 in order to receive payments and I believe the business needs to report to the IRS.
Any idea if anything like this applies to a Canadian corp whose affiliates will mostly be US based?
Are there any Canadian forms we need to have filled out by affiliates or possibly those previously mentioned?
Affiliates are treated as independent contractors from a Canadian tax perspective. We have a Treaty-Based 105 Waiver, for example. It’s best to consult with your accountant, as he/she will be up on the latest procedures.
More people are hiring a manager for affiliates programs. I’ve been contacted on LinkedIn a couple of times lately but I only DO affiliate marketing not manage it for others. I notice more big businesses are signing up for affiliate programs too. Obviously not competitors but if another business has products that compliment your own why not? It’s easier than having an open marketplace.
Is multi-tier affiliate program legal en Canada? I thought the law doesn’t allow more than 1 tier?
I’ve never heard of it being illegal in Canada. It’s just a payment structure, not MLM by definition.
It’s taken a long time but I think I FINALLY talked my employer into starting an affiliate program to generate more sales from our website. I don’t know about anyone else, but his worry was for managing lots of affiliates and getting ripped off. I’m stopping by to tell you that it was this article that helped him see affiliate networks as an answer to most admin tasks and managing probs. We’re going to run a trial with shareasale!
Within a week of launching our affiliate program with Shareasale our sales jumped and they’ve improved YOY ever since! We tried going it alone for a couple of years but running it ourselves took so much time plus it was hard to find good affiliates. We increased the percent of sales and even more revenue resulted because it made it worthwhile for affiliates to promote. We run contests for them before the holidays & that’s very effective. We’re going to start sending products for reviews this summer. I’m the manager so I expecially appreciate this post of ideas. Thanks!
It’s practically an ebook! Thanks for your contribution to Canadian business success. My 2017 resolution is to launch a course with short ebooks, research reports & more. I’d love to have you manage it all for me if you’re available then. Probably be ready to start marketing by fall. I’ll be in touch. Thanks again!
Good for you! I’m usually fully booked with long-term contracts but openings occasionally pop up. I’ll watch for your email and get you on my waiting list if you like. All the best with your project!
You’ve covered a lot here and I’m sure there’s more to learn. We’re convinced it will help our business when we get our site online and the effort will pay off. Our only problem is affording an affiliate manager at first but we can probably do without it for a bit.
Nice Post and Thanks for Share this information
great article- something I would like to know more about is tax for affiliates that are in Canada and outside of Canada. Do I need to deduct anything or is it up to the affiliate to pay whatever tax is required. I appreciate being pointed in the right direction of where to find that.
Thank you Melody!
You don’t have to make deductions, the affiliate/publisher would claim the income and pay taxes on it. It’s always a good idea to run it by your accountant and/or give Revenue Canada a call, however, since laws/disclosure/forms/etc can change from year to year.
Anyone have any good news re affiliate set-ups in 2015 in Canada?
Awesome information and thanks..
What a great summation, I feel confident enough to try this affiliate thing now, thank you.
I’m intrigued. I was with a Canadian company who had an inhouse affiliate program that struggled & died. I can see several reasons why after reading this article.
I’m starting with a new company in January & will keep this in mind.
WOW! You don’t do anything halfway do you? LOL FANTASTIC job, I learned so much about this marketing technique. I’ve tossed the idea around in my head before but I didn’t know enough about it to make an informed decision (excuse LOL). Mission accomplished, I signed up for shareasale today. 🙂 Thanks alot