Affiliate Programs
are an important marketing tool
for Internet business.
So what are the basics of
Affiliate Programs...
What is an affiliate program?
An affiliate program is a cross between
advertising and a commission sales agent. It all started about 3 years
ago when Amazon.com set up the first affiliate program. Their program
offers web site owners an ability to send customers to Amazon.com and
receive a share of revenue created. For example, if I had a web site
about Cricket, I could join the Amazon.com affiliate program, put on
their banner or some links direct to cricket books available at
Amazon.com, and when someone clicks on those links and buys a book,
Amazon will pay me a commission of 5 to 15%.
There are many advantages of
affiliate programs to both the web site owner and the merchant.
For the Merchant, the advantage is that it is always results based, so
there is no wasted advertising. The Merchant only pays when the sale is
completed. Unlike advertising where the merchant pays in advance and for
a set amount of banner impressions or other exposure, and takes all the
risk of whether its advertising will be effective or not. With an
affiliate program the merchant sets the commission rates and always
knows exactly how much each new sale will cost. Statistics released from
Amazon.com revealed that its
affiliate program was its most cost effective source of new customers.
For the web site owner who becomes an affiliate the advantage is being
able to generate an income from a web
site. It allows for any unsold
advertising space to be filled with affiliate banners. It can also be
used to add content to a site, or provide a wider range of products and
services to your customers. It is usually very simple to join and set up
the links for an affiliate program and can often be done within minutes,
so the whole process is very quick and easy.
What are the common types of Affiliate
programs?
There is a wide variety of Affiliate Programs designed to suit the
individual requirements of each business. Some of the standard types
are:
A. Pay per sale
This is the typical affiliate program that Amazon.com and many
others use. As described in the above example a commission is paid by the merchant only when a
product is sold. The merchant installs software that
provides individual links for each affiliate and then tracks the links
and sales that result. Each month the numbers of visitors and sales are
totalled and commission cheques are issued. This type of affiliate
program is often used when there is a physical product being sold, such
as books.
B. Pay per click
A variation on the above is that instead of paying for a sale, the
merchant will pay the affiliate for each
click or visitor that is sent. The merchant installs the
affiliate software that provides the individual links and then tracks
the visitors that result. Usually a payment of a few cents is paid for
each visitor, and cheques are issued when a minimum amount is reached.
C. Pay per action
An affiliate program can be devised to promote and reward any
specific action that is required. For example, a merchant may decide to
pay affiliates for each new member or
subscriber they receive or for each application form or
survey response correctly submitted. Just about any specific action that
can be done on a web site can be used in an affiliate program. The
merchant simply installs the software that issues the individual
affiliate links and then tracks the resulting visitors and actions. A
typical example is that Netezines.com will pay for every new subscriber
to one of their Ezines.
D. Affiliate Networks
This is a variation that can be applied to each of the above 3 types
of programs. Instead of the merchant installing the affiliate software,
an affiliate network manages the program for
the merchant. They provide the affiliates with their
unique links, provide all the tracking, and then issue the cheques. This
has considerable advantages for the merchant as it relieves him from
problems of installing and maintaining affiliate tracking software. It
also helps the affiliate as a trusted 3rd
party handles the tracking and issuing of cheques so it
ensures accurate reporting and payment of commissions. Some examples of
affiliate networks is Commission Junction and PlugInGo
E. Composite programs
Affiliate programs can be tailored to meet the requirements of each
individual business, so many programs have multiple payout levels. Some
will combine pay per sale, and pay per click. Others offer various
commission levels based on sales or traffic levels. It is typical for
high traffic sites or the most successful affiliates to be given higher
commission rates.
F. Two tier programs
To encourage more affiliates to join a program it is common to offer
a two tier commission structure where
affiliates are rewarded for introducing other affiliates.
Merchant Express for example has a commission structure of $50 for
direct sales and $20 for any sales that people you introduce may make.
These programs ensure a rapid spread of a program as affiliates
encourage others to join, although it worth noting that purely
recruiting affiliates will not make any money for anyone and commissions
are still only paid when sales are made. While 2 tier structures are
most common, some programs such as Alladvantage offer a 5 level program
or more.
