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Affiliate programs are commonly misunderstood,
in order to understand affiliate programs lets
start with terminology. For clarification purposes, an
affiliate is defined as any "referrer" or
website that promotes a product in an effort
to earn revenue. A merchant is defined as someone
who owns a product and is sharing revenues
with an affiliate based on the affiliate's
performance. Affiliate programs can drive targeted
traffic to your website.
There are 3 basic affiliate programs, though
only the first two are commonly used.
Pay Per Click - this is when an affiliate
is compensated for sending traffic to the merchant.
(AdSense is
an example of PPC affiliate program - see the button at the bottom of the navigation section of this page)
Pay Per Sale - this is when the affiliate
is compensated by the merchant if the referral
generates a sale or purchase. Tradedoubler (see left) is an example of a business that gives access to many affiliate schemes.
Pay Per Lead - this is when the merchant agrees
to pay for a qualified (or sometimes unqualified
lead), which is very uncommon because it is
subjective and up to the merchant.
Affiliate websites tend to provide information,
entertainment, and content services to their
customers. The online merchants sell products,
goods and services online. These are programs
permitting affiliates to earn money based on
the visitors to your site who click through
to another's website. Some pay a token amount
for the click through and others provide a
percentage of sales when a visitor "clicks
through" to your site and buys a product
or service on the other party's site. This
could represent a value added service to your
visitors.
(continued below..)
Affiliate programs allow you to pay and track
incentives from other websites that send web
surfers, leads or paying customers to your
website. Commissions based on purchases made
by traffic sent from the referring website
can be paid. Besides a commission, an affiliate
can receive a flat fee, or other incentives
for all valid transactions it refers that generate
a sale or lead.
Be careful that the affiliate's web page is
not cluttered with banner ads that may crowd
out your link, or that be annoying to customers.
Affiliate programs enable affiliates to leverage
their traffic and customer base in order to
profit from e-commerce while merchants benefit
from increased exposure and sales.
Commonly traffic to merchant sites is measured
and affiliates can clearly see conversion rates.
Meaning, they track the percentage of people
they are referring, and how much of it results
in earned revenue. If the affiliate finds a
very low conversion, they will find a better
way to monetize that traffic, quite possibly
with a competing merchant product.
In order to be a successful affiliate, the
affiliate site needs to either have tons of
traffic or target a specific audience, frequently
one untapped by the merchant. It has been my
experience, the closer the affiliate site content
resembles the merchant products, the higher
the likelihood of a good conversion rate.
Once you are committed to the idea of affiliates,
the next step is to determine the kind of tracking
system you are going to use. Sales can be tracked
by HTML code, which is placed in a shopping
cart or on the 'order confirmation'/'thank
you' page, and cookies, which are created after
the customers click on a banner ad. Cookie
killers have been a problem for the affiliate
industry. Software vendors have an advantage
over other merchants in that new technologies
allow software developers to better control
compensation. Vendors can 'wrap' their software
insuring that their affiliates are compensated
for referrals, even if the customer downloads
a trial version prior to purchasing. Buy now
buttons in the software have affiliate ids
imbedded in the download. Combined tracking
systems have more success than those that rely
on a single tracking technology.
In order to develop a successful affiliate
network, merchants must realize that affiliates
spend ad dollars on site, and product promotion.
If the affiliate is not compensated fairly
they will not remain in the merchants network.
The bottom line is that affiliate relationships
are partnerships, when both sides feel the
situation is fair and equitable the relationship
will be a success. |
