- Internet advertising has evolved since the beginnings of e-commerce. Early forms of Internet advertising were based on a billboard type model that did not target viewing audiences. Due to the shotgun approach of these banner advertisements, most of these ads had poor results. The effectiveness of advertising is measured as a conversion ratio, which is the percentage of people who act on an advertisement over the total number of viewers. Affiliate marketing programs are "pay for performance" business models. Merchants offer cash incentives to website partners, also known as publishers, in exchange for new customer referrals. Compensation may be in the form of a flat-rate fee or a percentage commission. Some programs offer residual compensation for additional purchases by the customer. Affiliate programs have much higher conversion ratios because they are targeted to specific audiences.
- Merchants who use affiliate programs pay commissions or referral fees only when sales or leads are generated. If there are no sales or leads, the merchant does not spend any money. Merchants using the old form of billboard type advertising paid for marketing regardless of the results. CPM advertising is open to abuse by pay to surf programs and website owners who attempt to artificially boost the level of click-throughs. Due to the targeted nature of affiliate marketing, higher conversion ratios translate into higher sales, making it a very cost-effective form of advertising.
- Webmasters or publishers who join affiliate programs may derive substantial streams of income with very small investments. This means a potentially high ROI, with high potential returns and low levels of investment risk. Affiliates leave all the details of the sale to the merchants, including product sales, shipping products, customer billing, customer service, and product returns.
- Affiliate programs are free to join and open to anyone who owns a website or publishes newsletters. Most mainstream merchants have restictions on affiliates with mature or controversial content. Some affiliate programs also limit publisher partners from offering rewards or compensation to visitors or participating in banner exchanges.
- "The sky is the limit" for earnings as an affiliate. Top affiliates can earn in excess of $10,000.00 a month per program. Publishers with high traffic websites or large mailing lists can generate substantial commissions and referral fees by harnessing the buying power of their users.
- Affiliate networks are third parties hired by merchants to administer their affiliate programs. The networks may have several dozen merchant partners to over a thousand. Most affiliate networks allow both merchants and publisher partners to view real-time statistics of their affiliate programs.
- It is more cost-effective for most companies to sub-contract administration of an affiliate program to an affiliate network than to perform the work internally. Merchants can also reach a broader audience of webmasters to promote their products or services than if the affiliate program was self-administered.
- As a member of an affiliate network, publishers can choose from a diverse variety of affiliate programs administered by an independent third party. The network allows for centralized tracking of click-through statistics and earnings. Publishers may receive consolidated commissions or payments if they promote multiple merchants within the same affiliate network.
- Multi-tier affiliate marketing is a business arrangement where merchants pay webmasters for recruiting sub-affiliates. In a multi-tier program, affiliate partners are compensated not only for their own referrals, but also based on the referrals of the affiliates they recruit. A typical 2-tier affiliate program would pay the partner 10% of any direct sales generated by the partner's referrals and an additional 5% of any sales generated by their sub-affiliates. Many of the online casinos offer 5-tier programs, which can be very lucrative, since each sub-affiliate can recruit additional webmasters under the referral tree.
- Multi-tier affiliate marketing is not the same as MLM or pyramid schemes, which are illegal in many world regions. Affiliate marketing programs are free to join and do not require the purchase of inventory or recruiting other members to be successful.
- Affiliate links to merchants are embedded with unique tracking codes. When a web surfer clicks on an affiliate link, a cookie or small computer code is generated with that affiliate's unique identification code. The cookie helps the merchant identify who referred the visitor. Subsequent leads or purchases generated from that visitor will then be credited to the referring publisher.
- Learn how to get started as an affiliate merchant.
Learn how to get started as an affiliate publisher.
|
