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Affiliate Marketing information. Find Out the What, Who, Where and Why All Right Here in this Comprehensive Guide




Good Affiliate Marketing information is rare to find. This discussion answers the question “what is Affiliate Marketing?” as well as provides a comprehensive overview of the nuances involved with this online money making strategy. Read this discussion in its entirety and I am sure the information on this webpage will help you understand Affiliate Marketing better.



So What is Affiliate Marketing?

Affiliate Marketing is a specialized referral service that involves establishing relationships with businesses and individuals that are affiliated with a population that a seller of a product or service might be interested in targeting. In simpler terms, it involves hooking up with other businesses or organizations that share a similar target audience to yours. With this strategy you work out a mutually beneficial agreement through which you advertise for one another or share revenues generated through referrals.

Payments are strictly based on performance where one party earns a commission on any sale or subscription that is generated through it as a result of advocating another party’s product or services. It is a wonderful way for businesses or individuals selling something to increase sales without having to pay someone for their services until results are realized. It is the alternative to expensive advertisement, where businesses spend their money regardless of whether or not they sell their products or services. Affiliate Marketing is most commonly used today within the Internet capacity.

Businesses can choose to work with partners like you who will market their products or services through most online Affiliate programs today. The marketing is commonly done through a link or banner ad that your you place on your website. Each time your site’s visitors click on your business partner’s ad and make a purchase (conversion/to convert a visitor into a customer), you make a commission amount that your partner has agreed to pay you in advance.

The amount you make can be a flat fee per sales or a percentage of the sale amount. The agreement you have with your partner is flexible. Many businesses decide to pay based on sales while others pay based on click-throughs (the number of visitors that click on a ad link or banner through your site) or simply impressions (the number of times their ad is shown on their Affiliate’s webpage)

Specifically from your standpoint as a website owner, Affiliate Marketing is a method for you by which you promote other merchants and advertisers through your website. You are rewarded for every visitor that converts into a customer or subscriber. It is an additional avenue of marketing that businesses can consider along with their existing marketing efforts, which are similar in some ways to the marketing efforts that you will be conducting as a website owner. Whether you are the merchant or the Affiliate, if you have a presence online, chances are that you are involved in Search Engine Optimization (“SEO”), Email/Newsletter Marketing, RSS feeds, Search Engine Marketing (“SEM”) or Banner & Link Advertising.

It is interesting that Affiliate Marketing, while both efficient and effective, is the last resort that comes to people’s minds in terms of an online marketing strategy. Maybe the thought of having someone else promote and sell your products isn’t as sexy as SEO, but no one can deny the efficiency and effectiveness by which the strategy works. That being said, you cannot solely rely on Affiliate Marketing or you will be significantly limiting your success in the online capacity.



Winning Business by Compromising Profits

Sometimes, compromising in business by sharing the profits isn’t that bad of an idea. After all, what good is a profit that is not there to begin with? Businesses would rather share profits any day if someone is promising them additional exposure and increased sales. The concept of sharing profits is not a new concept by any means. Businesses have always paid commissions and referral fees for additional business brought to them. Imagine a salesman that works mainly on commissions. Think about what is going on here. The company is not committed to paying the salesman a salary, but rather it pays him for every sale that he generates.

This is no different than Affiliate Marketing. The salesman chose to sell the company’s products for a share of the profits. In the same way, an Affiliate chooses to endorse products of another business for a share of the profits through his or her website. The only reason the concept might seem new to some is because the Internet is a recent phenomenon itself and therefore everything on it will also seem recent in relative terms.

To better illustrate the example as it relates in today’s Internet dominated business world, consider Amazon’s associate program which was launched back in 1996 before Amazon ever made its first penny of profitability. Amazon offered anyone that wanted to be its associate an opportunity to advertise for Amazon in exchange for commissions on sales. Associates placed banner ads and links on their websites for their visitors to purchase books through Amazon by routing the visitors to Amazon’s website.

Visitor behavior is tracked through Analytics software and whenever a visitor clicked from the associate’s site into Amazon’s site and conducted a transaction, the associate received a commission related to that sale from Amazon. This practice grew into a common and widely used online marketing strategy today. 80% of Affiliate programs use profit sharing or a Cost-per-Sale (“CPS”) compensation structure. Approximately 19% use Cost-per-Action (“CPA”) and the rest of the 1% pays based on Cost-per-Click (“CPC”) or Cost-per-Mille/Thousand (“CPM”).

CPC, also known as Pay-per-Click (“PPC”) and CPM are in the 1% category and are negligible. With a CPM method, website operators are only required to load the advertising on their website and show it to their visitors to be entitled to a commission. PPC is exactly like it sounds. You earn a commission every time someone clicks on the ad on your website. CPC is more challenging for the advertiser since you not only have to show the ad to your visitor but also pursue them to click on the ad.

For the advertiser/business however, you can see why CPC is more beneficial. They do not have to pay you until a visitor clicks on their ad through your webpage. You may be wondering what prevents the website owner to click on the ads on their own site multiple times to generate commissions from their business partners? Nothing really does, and hence the recent problems of click frauds in the industry.

Click fraud is exactly what it sounds like, clicking purposely multiple times on your own ad to generate revenues. Some savvy programmers have even developed software that is programmed to automatically generate hits on a website through robot functions. Fortunately advertisers have become sophisticated and a lot of the click fraud now is being caught and the guilty banned from advertising again. Search engines, which are some of the heavier Affiliate marketers today, only recently have started experimenting with traditional Affiliate compensation methods. It is predicted that the CPA method will surpass all methods in the future if the current trend continues, at least as it applies to search engine Affiliate Marketing.



What’s The Best Compensation Structure for You?

What’s the best compensation structure for the business owner/advertiser to offer? Whatever it may be it is not the same for the Affiliate. Let’s take CPM or CPC, where the website owner would not care if the visitor is someone the advertiser would have targeted in the first place. As far as the Affiliate is concerned, he has already earned his full commission the minute the visitor saw the ad on his website. This is clearly an unfavorable method for the advertiser and the most favorable for you as the Affiliate partner of the business. If the visitor is not converted into a customer, the business losses because it still pays you your commission if it chooses to pay you with this method. I don’t see why you would choose otherwise yourself ?

With a CPA and CPS structure, visitors are required to do more than just visiting your site and looking at the ad impression. You, as an Affiliate, get paid your commission only when the visitor converts into a customer. In this case, you would ensure that you attract visitor traffic that is relevant to the subject of your website as well as to the offerings of the business you have teamed up with. For example, if you have teamed up with Amazon to sell their books, then you want to make sure that your website has good quality content on books. Perhaps provide some good book reviews? The risk of loss is better shared between the advertiser and the Affiliate (you) if this compensation method is chosen.

Since you get paid only when you perform, a common nickname that Affiliate Marketing has been given is “Performance Marketing”. This goes back to the example of the sales rep I talked about earlier. A sales representative that works strictly on commission gets paid only when he delivers the sale. In other words, he has to perform to be paid. The only difference between a sales rep and an Affiliate partner is that an Affiliate is not employed by the advertiser (though one can argue that someone who works 100% on commission basis is not either). As such, Affiliate partners serve as an extended sales force for the advertiser’s business – but only to a certain extent.

It is important to keep in mind that while a sales rep can influence the decision of the customer first hand, an Affiliate cannot. Your power as an Affiliate ends once you have sent your visitor to your partner’s site. What your visitor does from that point onward is beyond your reach and control. What you can do however is promote your partner’s business beforehand on your site and hope that since you did such a good job that it compelled your visitor to click on your partner’s link and make a purchase. However if your partner does not do as good of a job that you did, then you visitor will not convert into a customer and you may loose out on your potential commission.



The Birth of a New Business

As the Internet has grown over the years, it has become a powerful entity of its own as more and more businesses are going online by the day to compete in the vast cyberspace. As businesses have moved online, Affiliate Marketing has taken a completely new form and has become a business of its own. Yes, there are businesses built strictly on this concept and there are many individuals that have made Affiliate Marketing their full time business and are making a ton of money from it.

I mean why not, it seems to be a very lucrative option that allows you the flexibility to work on your own terms when you want and from wherever you want. All you need is a computer with Internet connection (and maybe a phone, but only maybe). An article I read recently cited a report that stated that sales generated through Affiliate networks in 2006 were roughly £2.2 billion dollars in the UK alone and $6.5 billion in commissions worldwide.

The article went on to mention that the most active sectors within the Affiliate Marketing realm are the adult, gambling and retail eCommerce sectors. Sectors expected to increase most rapidly are mobile phone, finance and travel sectors. An interesting point mentioned was that several Affiliate solution providers are expecting to see increased interest from business to business (“B2B”) marketers and advertisers in using this medium as part of their online marketing strategy.

Only time will tell how Affiliate Marketing continues to develop further and affects the overall marketing strategy of most businesses online. I suspect that you will see 8 out of 10 businesses online get involved in Affiliate Marketing. As technology improves analytics and tracking software and makes it easier to manage such programs, I don’t see what any business has to loose by incorporating Affiliate Marketing in its overall marketing strategy.



Multiplying the Power of Affiliates

By now I know you are wondering if Affiliate Marketing is all about referrals and advertising on someone else’s behalf, then why can’t you as the Affiliate partner of a business recruit others like you to advertise for your partner through your site? Of course you can. I call this taking Multi-Level Marketing (MLM) online. Yes – it is a pyramid scheme and there is absolutely nothing wrong with it.

Many people shy away from pyramid schemes because they do not want to become the face associated with the strong pursuit of the products they sell. Online however, no one knows who you are. All someone sees is a “www.xyz.com” website and no one could care less who runs it and why and when and where. As a result there are some advertisers that offer multi-level Affiliate programs that distribute the commissions based on a multi-level Affiliate structure.

Commissions are paid to everyone involved in the Affiliate network, with the amount depending on the level of the “pyramid” the Affiliate partner is on. Practically, if you sign up with an Affiliate partner and attract three other partners to sign up with you to market your partner’s products, then all sales generated by anyone in your network will produce commissions for you.

Although you receive a lower amount for the business your Affiliates bring in for your business partner, you still end up receiving some compensation because of your relationship with your own Affiliates. And if you attract 3 partners, then why can’t you attract 30? Of course you can, and you should. The more Affiliates you have joining you in your advertising efforts, the more your compensation will grow. Small amounts from here there and everywhere add up to big amounts. Do not discount that fact!



How Do Advertisers Find Their Affiliates?

Affiliate Marketing program networks that exist today have a number of advertisers in their association. These programs are very popular and are often marketed by many website owners. Advertisers constantly seek such programs as they are easily accessible and already have a large network of other businesses that advertise through them. Many times, the Affiliate Marketing program network will reach out to businesses and solicit their interest in joining the network.

Many advertisers choose to seek out Affiliates on their own. These businesses tend to look for relevant sites that are attracting the same type of visitors that they would attract on their own. This goes back to my discussion of recruiting similar but non competing websites that cater to the same constituency. An often overlooked resource is the business’ existing customers and vendors. Smart businesses that realize this often capitalize on the opportunity by offering its customers and vendors and opportunity to become and Affiliate and work on commissions.



How Do Website Owners Find Their Partners?

Here is how I do it. I scope out businesses that I have tried, believe in and like. Sometimes I just have to read about them, like them and get a bit comfortable that I will be marketing a quality product. I then contact them through their website. Often times, websites that offer Affiliate partnerships have this information under links that are titled "Affiliate program", "Affiliates" or "Referral Program" somewhere on their website. Many times this information is also available under the “About Us” section. Look for these links in the header and footer of most websites.

Don’t be discouraged if you don’t see any such links. I have successfully convinced some businesses in the past to start their Affiliate program with me. All it takes is for you to be seriously interested in marketing their product and you need to demonstrate that to them. Where there is a will, there is always a way!

The easier route is to search for Affiliate programs directories which are listings of Affiliate programs that businesses offer. Another avenue is to approach large, existing Affiliate Networks that provides the platform for dozens or even hundreds of advertisers to market their programs. ShareASale and Panthera are two of the biggest ones.



Affiliate Marketing Websites - A Big Success

The success of Affiliate Marketing has been made possible by innovative hardworking entrepreneurs who have worked in the trenches of Internet Marketing. Affiliates are often the first movers when a new emerging trend or technology is discovered, unlike established businesses that will think 212 times before exploring the unknown. Entrepreneur Affiliates take the risks and try new ways of marketing their partners until they find a successful niche that works for them and their partners.

As with anything, some find success and others do not. Most Affiliates give up before they see any success because of the trial and error involved in determining what strategy works and what does not. Some of the more successful Affiliates generate over $15,000 in monthly profits from commissions, which means they sell tens of thousands of dollars worth of product and services for their business partners. There is definitely some very good money to be made in Affiliate Marketing, but one must be persistent in action and well equipped with as much knowledge and information as possible.

I personally find it one of the most lucrative businesses as you don’t have to pay salary or rent and utility bills. You don’t have to carry an inventory and you don’t need to work at fixed times and fixed places. So let’s summarize that…no risk, flexible and promising where there is no limit to what you can earn. Can you think of a better business model?



Affiliate Police?

The Affiliate Marketing industry is not regulated or governed by an oversight body. One can argue that the main reason for this is the varying success of Affiliate marketers as well as the autonomous nature of the craft where plenty direct relationships exist between individual Affiliates and their business partners. In addition, the players involved in the industry as so wide spread and can be found in every corner of the world.

For that reason there is no one place for people in the industry to convene. The only place I can think of are online forums where advertisers and Affiliates come together to discuss recent news and trends as well as factors that pose risk to the industry. It is a good place for each to share and learn from another’s personal experience. Most forums and discussion boards online are free and provide everyone the equal opportunity to voice their thoughts and opinions. Moreover these places are anonymous, which invites even the most image conscious kind to come and participate in the discussion.

Because identities are often not disclosed and the industry is so vast with many participants, it is difficult to gather everyone that is involved in it and discuss the possibility of establishing rules and regulations for the industry that must be followed by everyone. I suspect that the Affiliate Marketing industry will remain a large, free flowing industry of free lance Affiliate marketers who will continue to lead the way in exploring bigger and better ways to advertise for their business partners. I wouldn’t even know where to begin to regulate and govern Affiliate Marketing.



Is There an Affiliate Marketing School or Training Program

Because of the same challenges discussed in the previous section, there is no standard school or education program for affiliate website marketing. If you are seriously considering Affiliate Marketing as a business whether it’s part time or full time, I would suggest reading as much as you can on the topic. This comprehensive article should give you most of what you need. Once you are finished reading this article there will be a set of resources available for you to get started.

If you are serious about Affiliate Marketing, read this article at least 3 times and know it inside out. Explore each and every resource that is provided to you below and understand what each is providing and the benefits that can be derived from it. This can be your ticket on your way to making Affiliate Marketing a business that can generate serious commissions for you.

There are no specific industry standards however for training and certification in this craft. You might see courses out there that will hand you a certificate for taking and passing the course. However, none of these are accredited by any means. If anything they are mainly popular because of the brand name they are attached to. For example, if Microsoft was to come up with their Affiliate training program, many would flock to it simply because of Microsoft’s name. That being said, it is definitely a good idea to start introducing the concept of Affiliate Marketing in schools and universities, particularly as part of marketing and advertising curriculums. I mean why not? It is proven and definitely very successful in the results it can generate.

In my humble opinion, true Affiliate Marketing education and training comes from self learning and first hand experience. It is a live and learn as you go process but first you need to learn everything you can about it in theory. Like I recommended earlier, read this article a few times in its entirety. Once you are comfortable with the what, why, who, where and when…you can then proceed to try it first hand. Your experiences will teach you more than any book or certification program can.

There are books as well available for you to buy, but I’ve not seen one that truly gives you good value in addition to articles like mine that are free and available online for your reading and learning pleasures. Many books on the “how to” out there will attempt to teach you the loopholes around the search engine algorithms and get you in trouble. Some might have good intentions, however, search engines change their algorithms so much that what you read now can be invalid tomorrow. Moreover companies are always changing their terms and conditions as they relate to Affiliate Marketing. Please be very careful with this approach.

You will find many traditional companies who mix formal with informal training, and do a lot of their training through group collaboration and brainstorming sessions. Many other companies also try to send each marketing employee to the industry conference of their choice. However none of these are formal Affiliate Marketing training programs either. Some other self training resources commonly used include web forums, blogs, podcasts, video seminars and specialty websites that try to teach individuals to learn Affiliate Marketing, such as the Affiliate Summit, which is the largest independent conference in the industry that is NOT run by any of the Affiliate Networks (as most run their own annual events).



Who Is the Best Partner to Hook Up With?

The Affiliate you choose to work with is totally up to you. Flexibility is one of the best characteristics of this industry. You may partner up with a website, a blogger or your neighbor. A lot of businesses decide to team up with other businesses who sell similar but non-competing products. For example, I decided to team up with a body products (lotions, creams, etc) company when I was actively running my Perfume Website. The body product company placed my ads on their website and I paid them 15% commission on each order placed by someone who was referred to me from their site.

Like with anything else diversification is key in this partnership. Try to get a good mix of partners to work with and continuously monitor the progress of each. This will tell you what strategy is working best for you. There is no one size fits all solution with this marketing strategy. If you ask me I’d say the more the merrier. It is the ultimate pay per performance marketing strategy so why not have as many parties market your product for you? What do you have to loose?

That being said however the quality of your Affiliates will clearly outweigh the quantity. Some people can just sell a lot better than others. Alternatively, some just know how to get more exposure than others. If you choose your partners carefully and select ones that are ranked high with search engines, you will most likely sell a lot more through a handful of them than through many other sub par sites that don’t fair as well with the search engines.

Finding and retaining good Affiliate partners is the key to success in Affiliate Marketing. This is not an easy task by any means. In fact there are so many choices out there it is difficult to narrow your choices down to who you want to pursue as a partner. It might take some time by the time you get your foot in the door and negotiate your deal.

An alternative to targeting Affiliate partners individually is to use existing affiliate networks like ShareASale and The Panthera Network. These networks are a collection of potential Affiliates and advertisers who might be interested in working with each other. Savvy marketers use software programs to determine which Affiliates their competition is using. Similarly, Affiliates conduct thorough searches online to see which business partners are offering products along their interests. These potential Affiliates and business partners are then contacted individually to solicit their interest in a partnership.

Once you build a good relationship with your partners, it is important to stay in touch with them often so that you remain fresh on their minds. Chances are they are doing business with many others as well. The more rapport you have with them, the more they will remember you and refer newer opportunities to you.

Another thing to keep in mind during your Affiliate prospecting process is the commissions you will be receiving from your partners. I have seen commissions as low as 5% and as high as 80%. Most Affiliate partners however will charge in the 20-25% range. Just remember, if you are selling cheaper items and are relying on a high volume of sales, a lower commission amount may not be as bad as you are relying on higher volumes. On the other hand, you may want to negotiate a higher commission if you were selling more expensive, higher margin items but on a less frequent basis.



Keep Track of Results

When you have established relationships with multiple Affiliates, you will need a method for tracking your traffic and the sales and payments that it generates. There are a couple ways of doing this. One is to implement a tracking tool on the website yourself. This can be a rather time consuming task. Many decide to hire a third party solution provider to provide the technology needed to conduct the transaction in exchange for a small fee per transaction.



Issues With Affiliate Marketing

With each additional opportunity comes a new window of risk. In the earlier stages of Affiliate Marketing, businesses had very little control over what Affiliates were doing. In the past, Affiliates used false advertisements, forced clicks to get tracking cookies set on users' computers, and adware, which displays unwanted forced ads on computers. There was just not enough oversight over Affiliate programs. In fact even today it is not uncommon to see Affiliate scams although they occur much less than they used to because of the increased sophistication in technology today.

Often what used to happen is that an Affiliate would earn a commission on an order they would place themselves. After receiving the commission, the Affiliate would return the product or cancel the service and collect its money back. What ends up happening is that the seller ends up paying a commission and not benefiting from the sale. If caught, the Affiliate is legally responsible for the misleading actions taken. Moreover if your Affiliate sends out unsolicited mail (“SPAM”), they can be subject to the CAN-SPAM Act of 2003, which holds spammers legally liable for their actions.

Because of such negative behavior many Internet users had a negative opinion of Affiliate Marketing. As Affiliate Marketing has evolved over time, so have the businesses that use the strategy. Most businesses now have modified their terms and conditions to prohibit certain behavior and hold the Affiliate liable for any negative actions taken on the business’ behalf.

It is no secret that rule breakers are always ahead of the compliance enforcers. Someone somewhere is always thinking about the next possible way to crack the code. When spamming became more regulated and less common among Affiliates, the practice of spamdexing was born. Spamdexing is the practice of putting up large volumes of auto-generated web pages, often times, using product data-feeds provided by merchants which are dedicated to a separate set of targeted keywords as a way to gain popularity with the search engines through what we know as Search Engine Optimization (“SEO”).

Many spamdexers were very successful with this practice until search engines got smarter. Search engines altered their search algorithms (complicated formulas) to target this kind of search engine spam. The results were successful as today most computer generated duplicate content is automatically removed by search engines from their indexes and therefore those pages do not appear when someone performs a search online.

There are also many sites that simply contain links referring you to other sites. These are usually not seen highly by the search engines as these sites do not offer anything unique of value. Search engines also got smarter to eliminate these kinds of sites from appearing high on searches performed online. Search engines view these sites as nothing more than a link farms. In order to appear high on search engines, your site must contain good quality content that creates real value for your visitor. Affiliate links are most effective when used within the context of the information contained within your website.

Like I’ve said earlier, if your site is about creating websites (like mine is), it makes most sense to promote the web host that you go through or the vendor from whom you purchased your domain and private email accounts. If you have a site about cooking, then it makes sense to promote cookbooks and cooking video tapes on your site. You get the idea – keep on publishing quality content on your site and market businesses that fit your topic. You are bound to do well!



Renaming the Game

More and more players in the industry are voicing their concerns regarding the title of Affiliate Marketing, which is often confused with Network Marketing or Multi-Level Marketing. We all know the negative connotation attached to those phrases. The alternative that is most common is “Performance Marketing”. I am sure there are several others as well, however, the question remains who is to make the decision to change the way we address the entire industry? Who takes this initiative and will it be followed by others?

We have seen attempts of both success and failure in the past. For example, several years ago many tried to change the way we address SEO. This obviously failed as we still address it the same way today. By the same token, an attempt to address Multi-Level Marketing as Network Marketing proved successful years ago. Today however we interchangeably use the two names.

I hope the Affiliate Marketing information in this discussion has been helpful is giving you an overview of the subject and how you can use this approach to make money online from your website. It all really boils down to the information you have. The better informed and educated you become, the easier it will become to make things happen. Check out the recommended resources below for additional Affiliate Marketing information.






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