More people are discovering the power of affiliate marketing to supplement or even replace their existing income. But there are even more people who would like to have a slice of this exciting world but are unsure exactly what an affiliate program is or what it consists of.
When discussing an affiliate program, it helps to compare it to a traditional networking company where a network of salespeople and distributors are recruited to sell their products to all corners of the globe.
As an example, instead of a company selling directly to their customers it sells products through a series of distributors and salespeople. In turn, the members of this distribution and sales network enjoy a very good living by promoting the products made by others.
In essence, the affiliate programs found on the internet are distribution and sales efforts taken to the online world. The affiliate web site takes the place of the distributor and sales network, and the individual is paid by the seller of the product when a sale is made. Of course there are affiliate programs where physical products have to be shipped but there are also many other affiliate programs where only software or informational products have to be downloaded.
It is easy to understand why this arrangement is so popular, from the point of view of both the merchant and the owner of the web site. The merchant benefits from increased sales and at the same time, does not have to pay for additional advertising and he can expand his network without the need for additional and sometimes expensive advertising. The affiliate on the other hand may not have a product of his own to make money from and selling someone else's product for a share of the selling price gives him the opportunity to start his own business.
Of course, effort is required on the part of the affiliate to promote his website and the product he is trying to sell. There are many ways that an affiliate program can be promoted. An example would be if the affiliate already has a website and a link added directly to the merchant site. It costs nothing to set up and is very easy to do with a little cut and paste.
All good affiliate programs will have a back office with tools to use and it is always advisable to protect your affiliate links and therefore your commissions, by disguising your links so that they are not chopped off or used by anyone else.
Commissions paid by merchants vary. You can expect anything up to 70% or even more with some affiliate programs, but these will mainly be software downloads. If you go to Clickbank you will find thousands of such programs to promote. With these kinds of commissions, it is easy to see why the promotion of software type programs is such a great way to make money online. At the other end of the scale though some affiliate programs pay a pittance, as low as 1.5% in some cases and you will have to ask yourself if these will be worth the effort.
Affiliate programs are very popular on the internet. If you do not have your own product to sell and you want to have a shot at earning some money on the internet, then affiliate marketing is the way to go. Give a little time, effort and patience and you will be rewarded.
What should you consider when choosing an affiliate program? You need to think about two key things: what business are you in and what can the affiliate program provide to your customers.
No matter what business you are in, the largest investment you make will be customer acquisition. If you have your own product, and have acquired a base of satisfied customers, then single product affiliate programs could work very well for you.
However, if your business is acquiring customers for other businesses, that is, purely affiliate programs, then a better choice for you could be affiliate programs with multiple products or services. This will help you to capitalise on your investment in customer acquisition.
The key to choosing successfully is to ensure that the affiliate program offers products that meet the needs of your potential customers. Coupled with this is the need for the products to be high quality and for the supplier to provide excellent customer service. Remember, your credibility is on the line every time you refer someone to buy through your affiliate relationship.
Some of the other factors I consider when evaluating affiliate programs include:
Is the affiliate program a reputable business? You can check out a business you are considering a relationship with in variety of ways. Talk to the Better Business Bureau in your local area or a similar body. In addition, I find web sites that monitor affiliate programs to be worth looking at.
Does the program enable you to share in the lifetime value of the customer? Great programs will give you commissions on all future purchases of the customers you introduce. This is where the real profits are. These types of programs, in effect, allow you to partner with the supplier.
Does the program reward you for introducing other affiliates? This type of program is commonly referred to as a two-tier program. Often your customer may become an affiliate also and you will be rewarded for this.
Is the supplier interested in your success as an affiliate? The top affiliate programs engage in a process of coaching or information sharing to help you succeed. Affiliates are provided with regular newsletters outlining what is working for successful affiliates and providing updates and details on new products.
Is the commission reasonable? Commission rates on commodity products such as books and CDs are low. This is because there is very little margin in the products due to competition. Look for products that have a commission rate of 15% or more that are not commodities - that way you will be better able to recoup your customer acquisition investment.
Are statistics provided? The higher the level of statistics provided, the better off you are. This will enable you to measure the success of your marketing efforts and to determine the best places to invest your marketing dollars. Insufficient statistics is a sign that the affiliate program is not sufficiently interested in your success.
Are new products being developed regularly? To get the full value from lifetime commissions, new products need to be introduced on a regular basis. Without this, lifetime commissions can be worthless. Also, look for consistent high quality in new products introduced.
How frequently are commissions paid? The more frequently commissions are paid, the better off you are. Good quality affiliate programs will pay you monthly. In some situations, commissions are not paid until a certain level is reached. If the program you are considering has this requirement, check how many sales need to be made before the level is reached.
Have you read the affiliate agreement? This is a key area that you should look at. Some affiliate agreements are totally in favour of the supplier. Others are more balanced. Some agreements restrict your ability to promote similar products from other suppliers. Most agreements have anti-spam provisions. Look for agreements that are fair and that do not stack everything against you as the affiliate.
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