Dell delves into affiliate marketing
Following the path of other e-commerce leaders such as Amazon.com, Dell Computer embarks on a program to drive traffic to its site by advertising on affiliate Web sites.
Instead of trying to manage advertising campaigns on thousands of smaller sites, though, Dell is hooking up with LinkShare to develop and manage the company's first-ever affiliate marketing program.
"LinkShare works with us to attract members of their current network," explained Bob Langer, director of the Dell.com Web site. LinkShare, which claims 65,000 member sites, will help Dell target sites with technology, home and family, and small-business content, among others.
A LinkShare spokesperson said 70 sites have signed up since the announcement was made earlier today.
"Those sites run the full gamut of extremely large sites to small, specialized sites. It's a great way to reach a broad audience," Langer said.
Analysts think Dell is making a smart Web ad play that has proven to be a cost-effective way for e-commerce sites to generate sales and build brand awareness.
"An affiliate program has a better rate of return for marketing investment dollars than most others," said David Alschuler, vice president of e-business at Aberdeen Group. Letting another company manage the program simplifies the advertising management process while reaching new customers the company couldn't effectively reach before, he noted.
Members who generate leads for Dell arrange to be paid through LinkShare. Affiliates are paid either per ad "impression" or click-throughs, as they are commonly called, or receive a percentage of each sale. That percentage is determined by Dell and can vary by the amount and quality of leads generated.
Initially, however, the company will pay a standard commission to provide a level playing field for affiliates, Langer said.
While the program will initially only link to the Dell.com site, Dell is considering expanding the program to include the recently launched Gigabuys.com, which sells related PC hardware such as disk drives and printers, said Langer.
The efforts to broaden Dell's customer base come amid a new wave of concern that Dell, like other PC makers, is facing slower revenue growth this quarter.
Although analysts are predicting that unit sales of PCs will grow 12 percent to 13 percent compared with the same quarter last year, revenues are declining as average selling prices continue to drop.
Dell's stock was down 4.46 percent in afternoon trading to 36.1875.