Expanding Your US Affiliate Program Into Europe

If you are a US-based advertiser looking for a new revenue stream and new opportunities to build your brand, taking your affiliate program into the European market may be a great next step. In Europe, just as in the USA, CPA performance based marketing is gaining strength as consumers turn more and more towards coupons and cash back sites. And e-commerce generally is going from strength to strength in Europe.

According to a Forrester report, Robust European Online Shopping Growth to Continue, online advertisers spent over $7.5 billion to reach consumers in Western Europe in 2008, up 25% from $6.0 billion in the previous year. An estimated 136.1 million Europeans were online during this period in the fi ve largest European Union countries. European online retail activity rose “a staggering 58%” in 2007, with a similar increase witnessed in 2008. Europe as an online marketplace is maturing fast and represents a huge opportunity for advertisers ready to take the leap.

Which markets?

How should you decide which European market is the right one to target? Many advertisers fi nd that the UK is a good place to start because the shared language with the USA means that existing marketing content and collateral can be leveraged effectively. YesAsia.com, a leading Asian online entertainment retailer, sells Chinese, Japanese and Korean products including CDs, videos, books and games. Stefan Janssens, Internet Marketing Manager for YesAsia. com and YesStyle.com, explains that language was the key reason they launched fi rst in the UK. “We started in the UK, for the simple reason that our site is in English. We then also started programs in France and Germany, because they are the largest markets outside the UK.”

But language should not be the sole driver. A comprehensive fact base should be developed including data such as the per capita GDP (gross domestic product) and the level of broadband penetration in each country, and this will begin to provide a sense of the opportunities.

A deep understanding of your own market data will give the additional insight needed to make good planning decisions. Mining customer data to identify trends such as how many international orders are fulfi lled each month and where these customers are located can provide key data points. Even if you are not serving many customers outside the US, there may be a history of customers who have inquired about international shipping or availability of products/services outside the US.

You should also understand which of your competitors are operating outside the US and where they are seeing success, especially if they are running successful affi liate programs internationally. Look at who their top partners are and don’t forget that many of your current US affi liates may already be operating in other countries. They can be a great source of information about new markets.

The biggest market might not always be the most appropriate option for your business. Julian Bock, Product Manager for Germany based InnoGames, believes that the question of which markets to enter fi rst is not simply a case of launching in the biggest markets. He looked at trends in the marketplace as well as examining his own user data when expanding their affi liate program to new countries. Julian runs their most successful title, Tribal Wars, across Romania, Portugal and Sweden, as well as in larger countries such as Germany, Spain and the UK. He says, “Tribal Wars was a huge hit and so we used customer information & the existing user base to give us an idea of which countries to go into”. Understanding the market data and your own customer data together will give you a fuller picture of what your best next move may be.

Business Issues

Expanding your business internationally offers long-term benefi ts but inevitably also means that there are a number of business and fi nance-related issues to consider. VAT (Value Added Tax), for example, is not something most American companies are familiar with, yet it applies to most products and services in Europe and may reduce your profi t margins if you don’t plan for it effectively. On the customer service side of things, if you roll the business out remotely, how will you provide customer service in a different language and time zone? When building your fact-base, you should research shipping and distribution costs, consumer demand for your product or service, language and translation issues and legal and tax implications. You may also be required to make changes to your sites’ functionality with regards to language and currency. More specifi cally you may need to update your website’s terms and conditions. Signifi cant contingency funds need to be put aside to address unforeseen issues in all of these areas. However, with careful consideration and thorough planning the pitfalls can be avoided and can even be regarded as additional barriers against entry for any future, less prepared competitors.

Strategies for rolling out

Once you’ve done the research and decided where to expand, there are a number of alternate strategies you can consider when planning your rollout.

• Remote roll out: Use your US offi ce to run the entire operation remotely. This has the advantage of being lowcost with no infrastructure to build or maintain overseas. However, it can be diffi cult to maintain a high level of customer support with a lack of local knowledge and resources, and the distance can make it much harder to gain signifi cant traction.
• Organic roll out: Establish a local offi ce and your affi liate program in one country at a time before moving on to the next. In this way you can control the costs and grow at your own pace, learning about one market before moving on to another. This can take more time and resources, and management is more complex.
• Hub roll out: Establishing a hub in one country to cover a larger region, such as Southern Europe, for example, allows for relatively quick growth and can also cover more markets (with a hub in a major area and satellites in smaller areas.) This strategy can be expensive, though, and risks running into language and cultural differences.
• Acquisition/Merger/Partner roll out: Acquiring or partnering with another organization that already has a base of operations in the market you’re looking at allows you to roll your program out quickly and inexpensively, and gives you the opportunity to leverage the partner’s management and local knowledge. Potential disadvantages in a merger/partner rollout include some loss of independence and brand identity. 

Finding an affiliate network partner

Even if you have done all the primary research, and have a well planned strategy for expansion, bringing your affi liate program to a new country may be easier with a local network partner. The right affi liate network can help by providing a bi-lingual point of contact for you and your affi liate partners, and can help advise you on localizing your website with the right language, design and presentation. A local network partner will already have developed relationships with successful local affi liates and can help connections with the right partners. They will also have an understanding of local market conditions so can advise on the USPs, commissions and affi liate benefi ts that should be offered in order to stay competitive in a new market.

With the right research and planning, expansion of an affi liate program into Europe opens up exciting new revenue opportunities and can help grow a brand internationally. It needs careful planning, but a successful launch can be achieved with the right preparation and, especially, with the right network partnership. 

Jodi Rieger has over 10 years of experience in performance marketing. She is an Account Manager for Webgains USA, working with many international publishers and advertisers. She may be reached at jrieger@webgains.com