E-business Briefing: October 2008

Chris King, BT's head of affiliate sales, gives us some thoughts on the telecoms and media group's online strategy and the growth prospects for the affiliate channel in a tough economic environment.

He also tells us how BT keeps the information flowing between it and super-affiliates, who of course play a big role in the company's sales efforts.

How is affiliate marketing managed within BT and why?

Across BT Group, we have a number of campaigns managed through different parts of the organisation. The majority of these campaigns have a nominated BT resource, which interfaces directly with our affiliate network partners Tradedoubler and Platform-A (Buy.at). Each campaign has a variable amount of BT resource assigned to it; often employees of BT Group have wider online and acquisition roles. 

Within BT Retail, we have two business units managing affiliates campaigns. Our team runs the consumer campaigns, which consists of BT Total Broadband, BT Vision and Packages/Bundles. The only campaign BT has outsourced is BT Credit Card, which is managed by an agency. BT Business is currently running BT Business Broadband and BT Tradespace. Finally, two wholly owned subsidiaries of BT Group are running campaigns. These are Dabs and Plusnet.

Our team works both through our affiliate networks and (mostly) direct with our bigger affiliates. It makes more sense to work in this way as it's more efficient. 

Where do you sit in the budget and organisational structure?

We sit within the consumer sales organisation. My understanding is that this is relatively unique in the industry, as affiliates predominantly sit within marketing departments. Our view is that to achieve high targets, individuals need to be motivated to drive sales.

What are you doing to move your affiliate programme forward?

We have a number of current initiatives, although I can't really go into too much detail. Certainly, we would like to bring more products and services to the channel to increase overall sales and make our offering in the marketplace more compelling. BT Vision and Packages/Bundles have only launched a few months ago and this demonstrates our commitment to the affiliates industry.

What are your key challenges?

The current economic environment is going to challenge all businesses. Entertainment in the home is usually one of the last things that customers will change. Fortunately for BT, we have an excellent broadband product, which is pushing the boundaries of flexibility, wireless and on the move connection. BT Vision, our broadband TV product, is also flexible and empowers customers to pick and choose what they want, rather than signing up to expensive monthly subscriptions. 

How do you communicate with and manage super-affiliates? How big a role do they play in your programme?

Predominantly we manage our super-affiliates direct as it's easier, more efficient and frees up our networks' time to drive other incremental opportunities.

We provide direct account management to 15 affiliates. The level of account management varies. For our biggest affiliates, we have regular face to face meetings, and are constantly on the phone to them or communicating via email. It's key that we communicate constantly, so we can provide them with the tools they need to sell our products. The super-affiliates receive the same level of account management as any other important partner in BT. Maintaining relationships is as hard as developing them, so we often invite them to social events to thank them for the excellent contribution.

Our super-affiliates play a major role in our programme. Within the broadband sector, PPC dominates and our super-affiliates have compelling and value-added sites for customers. We are all seeking incremental volume and often this can be found through working harder with our super-affiliates, rather than new business opportunities.

What restrictions do you place on affiliates?

We only allow certain trusted and highly regarded affiliates to bid on our brand. Apart from that, all referrals into BT.com must be online. The end customer must place the order on BT.com, so we don't allow affiliates who are placing orders themselves.  Occasionally, we do encounter some problems but there is an easy way for an affiliate manager to prevent this, and that is to set their commissions to zero. 

Do you feel affiliate marketing has reached a plateau in the UK, especially considering the economic downturn?

No, I don't think affiliate marketing has reached a plateau in the UK. Certainly, the economic downturn is going to have an effect on everyone, with some sectors suffering more than others. The existing UK affiliate business will face challenges, but no more so than other retail business.

There are a number of major positives, however, for the affiliates industry. Firstly, the CPA model will look more attractive in an economic downturn, so I envisage that more merchant budgets will be allocated to affiliates. Unlike other online media spend, the affiliate channel has no financial risk as you know exactly what your costs are per sale.

Also, the beauty of affiliates is that if you are satisfied with your cost of sale, marketing is free. I can envisage finance directors coming more to the fore in the coming months, and surely they will warm to this method of customer acquisition.

Secondly, there are thousands of e-commerce sites that are not running affiliates. This represents a big opportunity for affiliate networks. Thirdly, innovation has been central to the development of the affiliates industry. Affiliates, affiliate networks and merchants have all had their part to play in this - affiliates through the nature of their businesses (often taking the CPC risk) have had to innovate to add customer value.

Affiliates have had to take some responsibility for conversion, and I know that some of them are developing really compelling applications for their sites and partner sites. Similarly, affiliate networks are continually innovating to provide the tools for affiliates to drive more traffic. They have set a benchmark and I envisage innovation to be central to their future strategy.

What are the pros and cons of using two affiliate networks?

The number of networks a merchant uses has to suit their business and most often how much resource they can dedicate. There is no point having two networks if you can't dedicate sufficient resource to achieve a successful partnership. 

BT is fortunate to work with two excellent affiliate networks so I can't really comment on the cons. In short, the pros are; more opportunities for sales and traffic, more innovation, more opportunities for learning and it allows the affiliate a choice as to what network they would like to use.

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