OK hospitality managers, I think it’s important that anyone doing any business on the internet understand affiliate marketing and how it affects your hotel or restaurant (or any other business for that matter). The web contains all sorts of information ranging from helpful to just plain garbage and everything in between. Affiliate marketing on the internet can be helpful, but is often misunderstood and often abused.
So what is affiliate marketing? Here is a quick pic that should help:
So why should you care about affiliate marketing? It’s likely that you are doing business with affiliates that sell your products and you may not even know it. In fact, you might be buying through affiliates without knowing it too. Have you ever used one of the “online coupon” sites, or entered a program code to get a discount when buying something online? Chances are you helped an affiliate make money on whatever you bought. There are many, many different services that facilitate online affiliate programs and they are everywhere on the web. I’ve even got them on this site.
On TheHospitalityGeek homepage there are two places that I’m working with affiliates. I’ve added links in the sidebar called “Services You Should Use” and also “Books You Should Read”. I’ve set up relationship with Amazon.com, GoDaddy, HostGator, Yahoo! Web Hosting, and Yahoo! Hot Jobs. If you click on any of those links and buy something from them in a given period of time, I make some money on the transaction.
You might be asking yourself, “How does this relate to my hotel or restaurant?” For hotels, the OTAs (Online Travel Agents) are a prime example of affiliate marketing. Hotels pay OTAs (sometimes a huge percentage) only when a customer actually buys. Similarly, there are a bunch of affiliate programs put together for restaurants.
As a consumer, always be careful when buying based on an online review. Things aren’t always what they seem. The web hosting industry, for example, pays HUGE referral fees to affiliates. As a result, it’s almost impossible to find an impartial web hosting review site. If you click one of my web hosting affiliate links I’ll make between $50 and $100 if you sign up. You can see how this could provide incentive to cheat the system.
Do a quick search for “web hosting reviews” and you’ll see thousands of sites trying to get you to visit their site and buy through them. It’s likely that the top web hosting review site is making thousands of dollars per day just by referring people to different web hosting companies. My own personal philosophy is that I’m not going to recommend any services to anyone that I haven’t used myself, regardless of the money involved.
In summary, affiliate marketing offers creative sales and marketing opportunities, but it also creates opportunities for dishonestly. Figure out how to leverage affiliates for your business, and don’t take one site’s word about a given product.