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Affiliate Marketing
is a type of internet marketing that allows websites
to share traffic and revenue using banner and text
advertisements.
Merchants who sell goods and services online
pay commissions to website owners (affiliates) for referring sales or leads to
their site. Contrary to "pure" advertising, with affiliate marketing merchants
only pay for results (leads or sales). On this site I review both advertising
and affiliate networks.
Affiliates
placing links to promote merchant's products or services can earn money in
different ways. There are several affiliate marketing models:
CPA or
Pay-Per-Lead / Sale - affiliate program where an
affiliate receives a commission for each lead (eg. e-mail lead, download,
newsletter subscriber) or sale of a product that they refer to a merchant's web
site. Strictly, only this model is to be considered affiliate marketing.
CPC or
Pay-Per-Click - merchants will pay affiliates based on
the number of clicks a specific ad banner gets.
CPM or
Pay-Per-Impression - program where affiliates get paid
for merchants' ad appearances on affiliate's site.
Pop-Up
Programs - affiliates get paid for merchants' ads that
display in a self-generating new browser window.
Search Engine
Affiliate Programs - usually affiliates get paid each
time visitors to their site perform a search.
Affiliate marketing is very useful and cost
effective solution for almost any online merchant. It not only increases
your sales potential, but also gives you risk-free advertising.
Compared to traditional CPM models (banner or
e-zine advertising), affiliate marketing offers the option to make money
without first spending money. Merchants do not pay for advertising with
their affiliates until a sale occurs.
You can setup your affiliate program by
signing up for
Affiliate Network or by purchasing your own
Affiliate Tracking Software. There are pros and cons for each method.
Affiliate
Networks track affiliates, handle sending out the
checks to affiliates, provide other necessary support both to affiliates and
merchants. Additionally, you will have access to a base of potential affiliates
that often have more confidence in third party monitoring.
Affiliate network downsides:
setup fees and transaction fees based on the merchant's payout rate for
affiliates. All these fees substantially hover depending on
affiliate network.
Affiliate
Tracking Software (in-house affiliate program)
gives you more control over your program, plus there are
no commissions paid to a third party.
Affiliate tracking software downsides:
requires skills and time for affiliate program management and marketing.
You have two choices to choose from in regards of
a Merchant Account. You can get your own, or you can use a third party's
merchant account. Which method is better depends on your business.
For Merchant Account
Providers you must pay for processing software, transaction fees, monthly
statement fees, etc.
Third Party Credit
Card Processors take only a percentage of your
products cost (usually 3% to 15%), however this percentage is about four times
the amount it would be if you had your own merchant account.
If you just starting your online business and
don't have the money to purchase a merchant account, use the
third party credit card processors until your mothly sales reach at least
several thousands.
Regarding affiliate marketing, many of third
party credit card processing companies provide your own online business with a
built-in affiliate program.
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Affiliate Networks