Guide to
Affiliate Marketing - an Affiliate Marketing strategy as process involves
offering up a commission to other websites in exchange for their
marketing and promotion of a product or service. By recruiting a large
number of affiliates, it is possible to boost sales volume
dramatically. Affiliate marketing is a well established business model
on the Internet. It is ideally suited to the Internet as a process of
recruitment and promotion can be done at very little cost and can be
scaled upwards easily and across all geographic boundaries. There is
no theoretical limit on the number of affiliates a website can
recruit. The downside to implementing an affiliate marketing strategy
is that a proportion of the product margin must be paid as commission
to the affiliate, in exchange for their marketing efforts. As most
webmasters are naturally influenced by the amount of commission
offered, affiliate programs tend to work best where the margin
available is high enough to pay affiliates a decent commission, (while
leaving enough for commission for the merchant).
Affiliate schemes usually have a sign up process which has a set of
standard terms and conditions by which prospective affiliates must
adhere to in order to become an affiliate and continue to receive
commissions. There is usually no negotiation regarding the contractual
terms and usually no human interaction between Merchant and Affiliate.
A prospective affiliate simply visits the merchant website, completes a
affiliate sign up form, and may even be able to immediately download some
unique HTML with their new affiliate code embedded within it. This enables
affiliates to instantly start making money and it allows merchants to
instantly access new sales channels. Most affiliate schemes pay affiliates
monthly in arrears usually by cheque or by electronic transfer.
The method of commission of payments to affiliates may differ depending
upon the nature of the product or service. For instance, merchants may
choose to have a pay per sale type scheme, or a pay per lead type of
scheme or a pay per click type scheme. The merchant may limit their
exposure to potential commission cashflow problems by insisting on a
Pay Per Sale commission scheme. This provides the merchant with some
degree of certainty in terms of cash flow planning. Assuming the merchant
understands his own return on investment, it is easy to calculate that he
can afford to pay a commission to the affiliate once a sale has been made.
Managing an online affiliate program can be difficult and complex. Most
affiliates expect to be able to login and review statistics on the
performance of their leads and subsequent commissions. In addition, a
automated sign up process lends itself to database software to record the
contact details of each new affiliate. There are many commercial packages
available for coping with a variety of types of schemes (including two
tier affiliate schemes). Alternatively, a merchant may choose to sign up
to an affiliate network. These Networks offer a collection affiliate
programs under one roof. They have a standard set of HTML code of a
member affiliate can use (after being approved for all the affiliate
programs applied to).
There are a number of critical success factors in making an affiliate
marketing strategy successful. For instance, merchants must offer a high
enough commission to motivate potential affiliates in the first place. In
addition, of the merchant's product or service must be clearly understood
by the prospective affiliate and provide some added value or uniqueness to
the end user. Good quality feedback via online stats as well as a
helpful 'how can I help' type telephone call from an affiliate manager,
goes a long way to reassure and motivate an affiliate. Finally, the
merchant enthusiasm and tenacity is also very important, as the merchant
will probably need to recruit a large number of affiliates to make the
overall programme successful economically.
