An Introduction to Affiliate Marketing
Affiliate marketing is a system of profit sharing, almost exclusive to Internet marketing (historically at least), that emerged in the in mid-1990s. With this form of marketing, an individual or company with a product or service for sale, recruits other individuals to sell the product for them online, the affiliate marketer receiving a commission for each sale.
CDNow.com was the first online company to offer a true affiliate program, though affiliate marketing was later popularized by Amazon.com in 1996 with the advent of their Amazon Associates Program. This program allowed associates the opportunity to post banners on their personal or business websites advertising Amazon’s products. When a product was purchased through the banner link, the associate (affiliate) received a commission off of the sale. Since then, affiliate marketing has become the premier form of marketing for both products and services online.
Affiliate marketing provides vendors with a cost effective way to reach countless other potential customers that the vendor might otherwise never have reached and allows for some significant profits for the affiliates themselves. One of the primary benefits of affiliate marketing for vendors is that it is a pay-per-performance marketing model. In other words, aside from the initial program set-up expenses, a vendor only pays when products are moving. The primary negative with affiliate marketing is that the merchant is depending on others (the affiliates) to move products (it is a sad fact that less than 5% of the individuals signing up for an affiliate program actually promote the product).
Affiliate marketing is not multi-tier or network marketing, despite often being confused as such. Though it is often the case that some affiliate programs will offer a two-tier payout system in which the primary affiliate can recruit sub-affiliates and, typically, split commissions with the sub-affiliate. Such sub-affiliate relationships are, in actuality, hard to establish as the wise and aspiring affiliate marketer will seek out the top tier of the program so as to be able to pursue maximum payout.
There are several compensation models utilized in affiliate marketing. The most popular of which are pay-per-sale (PPS) and pay-per-click (PPC). In PPS, the affiliate earns a commission on each actual product sale (commissions may range anywhere from 5-100%). With PPC, the merchant pays a certain (typically small) amount for each link click thru that sends a potential customer to a product’s webpage. These two marketing methods are often utilized concomitantly one with the other.
With most affiliate programs, commission payouts do not occur at the moment of sale, but rather at a specified time, say every two weeks to monthly. It is fairly standard for affiliate programs to have specified payout amounts as well, i.e., a set amount of commissions much reached prior to payout being issued (e.g., $50.00, $100.00, etc.)
Payouts are commonly made via PayPal (commissions are forwarded directly to the affiliate’s personal account), via check, or by means of direct deposit. PayPal tends to be the more popular of the three payout options and by far the most convenient with regards to ease and quickness of payment reception.
Affiliate marketing has proven to be one of the more profitable, if not the most profitable, avenue of marketing online. It costs very little to set up an affiliate program, it is easy to recruit affiliates eager to earn money by marketing your products, and the payout commissions tend to be very generous for the affiliates themselves.
If you have on online business, then you need to be utilizing affiliate marketing to move your products and/or services. If you are not utilizing affiliate marketing, your Internet marketing income potential is far from maximized.
There are several ways to go about setting up an affiliate program, presupposing you already have a viable product to offer. Perhaps the easiest way is to utilize a third party company that specializes in affiliate marketing, handling all of the related logistics and issues for the merchant. For example, ClickBank is perhaps the most popular. To sell your product with the affiliate marketing model, you simply go to ClickBank and register for a publisher’s account. Once approved, you pay a one-time fee of $49.95 and then you can begin recruiting affiliates (through ClickBank and independently).
Another option is to purchase your own affiliate program management software and handle everything “in house” instead of outsourcing. The benefit here is that the merchant has full control over the affiliate program. One of the best affiliate program management software packages available right now is AssocTrac 4.0.
And yet a third option, which most people opt for because it is the easiest and the cheapest, is to use a third party hosted software like that from 1StartCart.com. The nice thing about doing is this way is that the upfront costs are less, you get free updates and usually 24hr customer service, so no technical knowledge or experience is required.
The most important step after initial program set-up is that of recruiting. You will want to recruit targeted affiliates who are motivated to make money by moving your products. As mentioned above, it has been established that 5% or less of recruited affiliates ever market the products that they signed on to market!
One of the most effective ways of recruiting motivated affiliates is via email. Contact webmasters whose websites share similar content with yours and perhaps offer to promote their product as an affiliate. If you already have an established list that has proven effective, contact individuals on it as well.
A second, effective method of recruiting profitable affiliates is by visiting the Internet marketing forums and leaving “bait” posts to draw then in to you. Typically, the IM forums have sections geared solely towards discussion of affiliate marketing—don’t neglect this avenue.
Part of the recruiting process involves presenting your product/service to the potential recruits in such as way as to demonstrate its value (both to the affiliate and to potential customers). As well, there is a lot of competition in the world of Internet marketing and there will be more competition, so you are vying for the affections of potential recruits. Make sure that you research your market an offer a generous (read: better than your competitor’s) commission per sale and perhaps even a bonus incentive for meeting a set of performance standards.
The ultimate goal of the affiliate marketing recruiting process is to find a handful of what have come to be known as “super affiliates” in the IM community, those who are generating thousands of dollars in sales each month. Super affiliates are not “hiding out” waiting to be discovered, on the contrary—they are out in plain sight. One of the best places to find and recruit super affiliates is in the IM forums.
Super affiliates tend to be extremely gifted Internet marketers, have high profile websites, and be involved in all of the primary aspects of Internet marketing. Far from hiding in crevices just hoping and waiting for someone to discover them, they are out in the open making money hand over fist! If you can find a couple of these super affiliates - warning: they are hard to recruit - you can count yourself fortunate.
Another option in recruiting is to hire an individual or company that specializes in affiliate recruiting. Of course, if you choose to go this route, investigate the company thoroughly because quality control will still be of vital importance if you want your affiliate campaign to be successful.
In the above, you have been introduced to the basics of affiliate marketing - from its inception to what it is to how to go about setting up an affiliate marketing campaign. If you have an online business and have yet to include affiliate marketing as a part of your overall marketing strategy, it is guaranteed that your IM income is not maximized. Consider adding an affiliate marketing campaign to your already established marketing arsenal today. You won’t be sorry, if you follow the helpful guidelines discussed above.
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