Affiliate Marketing Principles

Affiliate marketing has certainly grown in the past decade and has exploded in both popularity and profitability. It has expanded into every aspect of the Web and has the potential to be one of the more lucrative ways of generating both sales and revenue. The basic principles of affiliate marketing are sound and have stood the test of time: You promote my stuff on your Web site and I will pay you a commission for each sale, or I will promote your stuff on my Web site and you pay me a commission for each sale. Any commercial link on any Web site is tied to affiliate or pay-per-click (PCP) marketing in some form or another.

There is no product for sale anywhere that is not part of an affiliate network. If you want to buy golf equipment, automotive parts, running shoes, books, movies, CDs, electronic equipment, computers, you name it, someone has an affiliate program you can join. If implemented properly there is no reason for affiliate marketing not to be a tremendous success. I will give you one final caution, though: I do not subscribe to or believe the claims that, “I joined a zillion affiliate programs, put a bunch of advertisements on my Web sites, and now all I do is sit back drinking my iced tea on the beach in front of my million-dollar ocean-view house in Florida watching the mail carrier deliver fists full of commission checks to me.” If it were this lucrative we would all be on the beach counting our profits.

The point is that it can be very profitable, and if you implement your own affiliate program, you can dramatically increase your product sales volume

  • Joining an Affiliate Program or Network: This means that you have your own Web site and that you join an affiliate program or network selling other products. For example, you have a Web site or blog about running. To increase your revenue you join the affiliate network of a large running shoe merchant. This is free to you, and after joining, they provide you with the information to add their products to your Web site. They will provide you with special URLs which uniquely identify the sales that originated from your Web site. You can encourage your site visitors to buy the running shoes by following the image and other information you placed on your Web site. When they click on the image, they are taken to the merchant’s site — typically directly to the product they want to buy — where they can place the order. Once the order is processed and completed, you are notified of the sale and of your commission amount. You have access to an online account to monitor your statistics, revenue, and other vital information. You can change products as often as you want to keep your Web site ever changing and interesting. You do not process the sale, handle or ship the merchandise, provide customer service, or anything else. Once the transaction is completed, you have earned your commission. The merchant must do the rest!
  • Create or Manage Your Own In-House Affiliate Program: This means you have your own Web site and products to sell. You want to expand your marketplace beyond your Web site and use the power of thousands of other sites to promote and sell your products for you. Those who promote these products for you on their Web sites are your affiliates, and they fall into the category above. They place your products and materials on their Web site. If someone visits their site and clicks on your products, a unique affiliate link takes them to your Web site where you complete the transaction. You now have the luxury of featuring and promoting your products on Web sites all over the world at no cost to you; reaching millions of people you could not have previously reached and who may not have known about you or your products. As each sale is completed, the affiliate earns a commission. At the end of each month, you pay your affiliates a commission on the sales. You may wonder if this means you will earn less profit because you are paying 10 percent or more per sale to someone else

There are several choices of affiliate marketing software available to you if you wish to build your own affiliate network or install an affiliate program on your Web site. We will cover these in detail in later chapters, but here are your general options:

  • Affiliate Network: In this case the software is provided and hosted by the affiliate network provider. You simply join the existing network and offer your products for sale to other members of the affiliate network. They handle the program administration, reporting, commission payments, and more.
  • Hosted Affiliate Network Software: The software is not provided to you or installed on your Web server. The software provider hosts it on their servers, and you pay a fee, usually monthly, for support and maintenance. All you have on your Web site is a small piece of tracking code; your work is minimal. Because they own and host the software you instantly benefit from software upgrades, patches, and enhancements; plus, they are responsible for all the servers, backups, and reliability. Additionally, technical support is included with the package.
  • Affiliate Network Software (Stand-Alone): You buy the software package and own the license to use it as you see fit. This is a one-time fee and it can be expensive. You install the software on your Web server and integrate it with your shopping cart or inventory management system; sometimes installation is included for free or for a small fee. This software is packed with features, and there are no recurring fees unless you want to sign up for upgrades and patches, or other support which is typically limited or not included

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