Understanding
Affiliate Programs
Understanding Affiliate Programs
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)
Pay Per Sale - this is when the affiliate is compensated
by the merchant if the referral generates a sale or purchase.
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.
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.
About the Author Sharon Housley manages
marketing for NotePage, Inc. http://www.notepage.net a company specializing
in alphanumeric paging, SMS and wireless messaging software solutions.
Other sites by Sharon can be found at http://www.feedforall.com
, http://www.softwaremarketingresource.com and http://www.small-business-software.net
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