Yet more evidence that businesses don’t understand the internet

Despite the fact that billions of pounds worth of business is done each year online, it’s still pretty apparent that many companies don’t exploit the Internet to make even more money. Indeed, a quarter of British companies don’t yet have a web site and now it seems that the FTSE100 is ignoring a potential gold-mine of revenue.

According to a new study on affiliate marketing the FTSE100 firms are missing out on £370m worth of sales that could come from setting up affiliate marketing schemes. This research comes out simultaneously with another study which shows that the best affiliates are generating $600,000 of income a year for the schemes they promote. That means a FTSE100 company only needs one good affiliate and they’d pump up their income by more than £400,000 – not bad even for top companies in these economically harsh times.

So, why don’t they do it? Well, in the light of a study in 2008 which showed that 75% of the FTSE100 could not accept online job applications, it suggests a significant “Luddite” attitude within top British businesses. It’s almost as though they are rather hoping this “Internet thingy” will all go away and stop bothering them. Indeed, I was talking recently with a senior executive in a FTSE100 firm who told me that blogs were not really that popular and people weren’t reading them anyway, so why should they bother. Interesting, isn’t it, that some senior people can still misunderstand things so much?

But it’s not just big business. Ask any of the top Internet marketers about their affiliate scheme and they will tell you the same basic story. They will have tens of thousands of affiliates, yet almost all of them sell nothing. Around 95% of all the sales made through an Internet marketing affiliate scheme comes from just a handful of affiliates. Most affiliates are small businesses, often independent sole traders. The fact that so few of them are actually generating any income shows they too don’t really grasp what they need to do online to make money.

Here’s the problem that is the same for big, FTSE100, companies and the small business owner alike. Making money online using affiliate schemes requires effort; it doesn’t happen all on its own. You have to put the work in to generate anything. The £370m that the FTSE100 could make from affiliate marketing will only happen if they put in support mechanisms for their affiliates, produce advertising and marketing collateral, and generally “work” at it. They need to treat their affiliates as their online sales force; just like a “real” sales team, affiliates need support, advice, training and ideas to help them succeed. Many big businesses think all they need to do is set up some links and the money will pour in; it will not.

Equally, small businesses acting as affiliates think that all they need to do is copy and paste those links into their web pages and “hey presto” people will click on them and the money will flow to them as well; it will not. Affiliates need to produce independent content to help them promote their affiliate products, they need to establish mailing lists and do a complete marketing job on what they are trying to sell.

Small companies and big businesses have become victims to one of the great lies of the Internet; all you need to do is have an affiliate link and you will make money. That’s not true. You can make money from affiliate schemes, but as one of the leading affiliate marketers, Rosalind Gardner, will tell you – at least some effort is required.

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