Last Updated Dec 4, 2007 7:21 PM EST
Through affiliate marketing, a company (the affiliate) induces other companies to place banner ads and buttons on its site. The affiliate then receives commissions from sales generated through those ads and buttons. For example, Amazon.com, the pioneer of affiliate marketing, allows other Web sites to publish information about their books and other products. When people click through to Amazon to buy these products, the Web site in question gets a commission. Affiliate marketing can open up new marketing channels for the affiliate sponsor and are a source of extra revenue for the affiliate site. If you're thinking of taking the plunge, consider the following points:
- affiliate marketing is better suited to products than services
- you'll need to work hard with your affiliates to achieve a successful program
- a well-designed compensation package will be critical to success
Keep the following in mind:
- there must be a substantial number of Web sites that are already attracting your target market; these Web sites need to show a willingness to join an affiliate program;
- affiliate marketing is better suited to products than to services; it is much harder to track the purchase of a service (that may have been considered for some time) than a product;
- avoid markets already saturated with affiliate programs; today, it would be difficult to set up a new affiliate program that offers commissions on book sales.
A great number of companies offer affiliate programs, so the level of compensation/commission you will offer will be important. Compensation itself, however, will rarely be enough. You and your affiliates will need to work hard to organize regular competitions, special offers, and other incentives that are attractive to both the affiliate members and the end customer.
Regular communication with your affiliates is vital in order to build their enthusiasm and trust. Your affiliates are your marketing partners, and frequent communications with them will keep them from straying. A simple communication method is sending out an e-mail affiliate newsletter on a regular basis. You should encourage communication from your affiliates to you, as well, since you can learn a great deal from their concerns and suggestions about how to improve the program.
The success of your program may depend on how the affiliate is compensated. There are various ways to approach compensation:
- you can pay commissions only; sales of lower-price items such as books and music are commonly on commission;
- for more expensive items such as cars, compensation may be based on paying for qualified leads;
- if brand building is an important objective, you might offer compensation each time a visitor clicks through from an affiliate.
You will also need to set compensation standards and schedules. For example, some affiliates may accrue so little compensation for a given period that it is not cost-effective to send them a check. You need to determine a certain threshold amount before payment is made, so that commission earned in one period, if below the threshold, will be added to the commission for the next period. Your affiliate agreement should cover these and other relevant issues.
Affiliate software delivers substantial data that you need to carefully analyze. By doing so, you can properly test marketing initiatives. You will also be able to adapt and refine your program until you find something that works for both you and your affiliates. There is a need to innovate continually in order to find the best approach.
A company may choose to outsource much of the running of the affiliate program or to purchase software and design a program in-house. It is usually better to outsource, as it allows you to focus on what you do best—selling and marketing your products and services.
Prussakov, Evgenii "Geno."
Affiliate Helper: www.affhelper.com
Associate Programs: www.associateprograms.com