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MASTER's THESIS Affiliate Marketing 2008:003 MASTER'S THESIS Affiliate Marketing Perspective of content providers Barbora Benediktova Lukas Nevosad Luleå University of Technology Master Thesis, Continuation Courses Electronic Commerce Department of Business Administration and Social Sciences Division of Industrial marketing and e-commerce 2008:003 - ISSN: 1653-0187 - ISRN: LTU-PB-EX--08/003--SE Affiliate Marketing Perspective of content providers Barbora Benediktová Lukáš Nevosád e-MBA program Department of Business Administration and Social Sciences Luleå University of Technology Supervisor: Rickard Wahlberg January, 2008 ABSTRACT This thesis depicts how content providers (aka publishers or affiliates) use affiliate marketing, a performance oriented internet marketing. Three different content providers were interviewed in order to find out detailed information about their usage of affiliate marketing. The thesis identifies main advantages and disadvantages of affiliate marketing for content providers and specifies conditions, under which affiliate marketing is more beneficial than other types of online advertising. Moreover, the process of selecting affiliate marketing program by content providers is described. This paper concludes in a model of a typical affiliate marketing usage. Furthermore, the work proposes using different terminology for content providers, because it was found out that the term content provider does not cover all aspects of the business any more, as affiliate marketing can even be used without providing any content. Finally, recommendations for companies, that are planning to start a new affiliate program, are also added and the work suggests several topics for further research in this field. ii PREFACE There are many people who helped us a lot during studying and writing this thesis and deserve to be named here. Our very special Thank you! goes to the supervisor of our thesis, Rickard Wahlberg, who was always very helpful, provided us with excellent support and overall lead us quickly and efficiently to the finish line. We would also like to thank Petr Sršeň, Thomas Wilkinson and Jan Petr for their willingness to share their experiences and knowledge about affiliate marketing. And finally we are thankful to our families and friends that supported us, kept our thinking positive and altogether made our stay in Luleå, Sweden really special. iii "Half the money I spend on advertising is wasted; the trouble is I don't know which half." John Wanamaker axiom iv TABLE OF CONTENTS 1 INTRODUCTION ........................................................................................................................ 1 1.1 Emergence of Cybermediaries and Content Providers .................................................... 1 1.2 Online Advertising .......................................................................................................................... 3 1.3 Affiliate marketing .......................................................................................................................... 4 1.4 Problem Discussion........................................................................................................................ 6 1.4.1 Research Purpose................................................................................................................... 6 1.4.2 Research Questions ............................................................................................................... 7 2 LITERATURE OVERVIEW ........................................................................................................ 9 2.1 On-line Advertising ........................................................................................................................ 9 2.1.1 Affiliate marketing .............................................................................................................. 10 2.1.2 Advantages of Online Advertising ................................................................................ 11 2.1.3 Disadvantages of Online Advertising .......................................................................... 13 2.1.4 Types of Online Advertising ............................................................................................ 14 2.1.5 Traffic Acquisition by Content Providers .................................................................. 17 2.1.6 Compensation Models of Online Advertising ........................................................... 18 2.2 Business Models of Content Providers ................................................................................ 22 2.3 Affiliate program selection ....................................................................................................... 25 2.3.1 Buying process ..................................................................................................................... 25 2.3.2 Buying situations ................................................................................................................. 26 2.3.3 Supplier Selection Process (De Boer) .......................................................................... 27 2.3.4 Supplier Selection and Supplier Management System (Lee) ............................. 29 2.4 Summary ......................................................................................................................................... 30 3 METHODOLOGY .................................................................................................................... 32 3.1 Research purpose ........................................................................................................................ 32 3.2 Research strategy ........................................................................................................................ 32 3.3 Selection of cases ......................................................................................................................... 33 3.4 Data collection ............................................................................................................................... 33 3.5 Data analysis .................................................................................................................................. 34 3.6 Validity and reliability................................................................................................................ 34 4 DATA PRESENTATION ......................................................................................................... 36 4.1 Case no. 1......................................................................................................................................... 36 4.1.1 Examples of websites: ....................................................................................................... 36 v 4.1.2 Research Question 1 .......................................................................................................... 39 4.1.3 Research Question 2 .......................................................................................................... 40 4.1.4 Research question 3 ........................................................................................................... 42 4.2 Case no. 2......................................................................................................................................... 43 4.2.1 Examples of websites: ....................................................................................................... 43 4.2.2 Research Question 1 .......................................................................................................... 44 4.2.3 Research Question 2 .......................................................................................................... 45 4.2.4 Research question 3 ........................................................................................................... 46 4.3 Case no. 3......................................................................................................................................... 48 4.3.1 Examples of websites: ....................................................................................................... 48 4.3.2 Research Question 1 .......................................................................................................... 50 4.3.3 Research Question 2 .......................................................................................................... 51 4.3.4 Research question 3 ........................................................................................................... 52 5 DATA ANALYSIS ................................................................................................................... 54 5.1 Case no. 1......................................................................................................................................... 54 5.1.1 Research Question 1 .......................................................................................................... 54 5.1.2 Research Question 2 .......................................................................................................... 55 5.1.3 Research question 3 ........................................................................................................... 58 5.2 Case no. 2......................................................................................................................................... 60 60 ........................................................................... فResearch
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