Affiliate Marketing on the Web
What is Affiliate Marketing?
Affiliate Marketing is about paying for performance. In short, it is a type of marketing in which one merchant induces others to place banners and buttons on their Web sites in return for a commission on purchases made by their customers.
Amazon.com is the pioneer of Affiliate Marketing. It allows other web sites to publish information of their own choices of books. When people click through to Amazon and buy these books, the web site in question gets a commission. Affiliate Marketing can open up new channels to market for the affiliate sponsor, and be a source of extra revenue for the affiliate Web site. When investigating Affiliate Marketing, consider:
- Affiliate Marketing is more suited to products than services;
- you'll need to work hard with your affiliates if you want it all to work;
- a well-designed compensation package will be critical to success.
Is your business qualified to Affiliate Marketing?
- There needs to be a substantial number of Web sites that are appealing your target market. These Web sites need to show a willingness to join an affiliate program. You might be selling medical supplies but that does not mean that hospital Web sites will become affiliates.
- Affiliate Marketing is better suited to products than to services. It is much harder to track if another Web site sent you visitors who, after prolonged negotiation, decide to pay you for your services.
- Is the market already planned with affiliate programs? It would be difficult to set up an affiliate program today that offered commission on book sales.
Have a strong value proposition
As with all good ideas, there are a huge number of merchants offering affiliate programs. How is your program going to attract new members? The level of compensation / commission you will offer will be important. However, on its own it will rarely be enough. You will need to work hard with your members by organizing regular competitions, special offers, and other incentives that make for an attractive value proposition both for your affiliate members and the end customer.
Keep in touch regularly with your affiliates
Keeping in regular communication with your affiliates is essential in order to build their enthusiasm and trust. You should plan for an e-mail affiliate newsletter. Your affiliate members are your partners, and unless you treat them as such by working closely with them, they will drift away.
Agree on a compensation approach
Critical to the success of your program will be how the affiliate is compensated. There are various compensation approaches:
- you might pay commission only; for smaller-price items such as books and music, commission is a popular option;
- for more expensive items such as cars, compensation may be based on paying for qualified leads;
- If brand building is also an important objective, then you also may offer compensation every time a visitor clicks through an affiliate.
When making payments you will need to decide how often you do it. A problem you may face with partners is that some of them will have achieved very little revenue for a particular period, and it will not be cost-effective to send them a check. So you need to inform partners that there is a certain threshold before payment is made, and that commission earned in one period, if below the threshold, will be added to the commission for the next period. You will need an affiliate agreement that will cover these and other relevant issues.
Innovate, analyze, test and adapt
There is a need to innovate constantly so as to find the best approach. Affiliate software delivers substantial data and this needs to be carefully analyzed. New initiatives need to be properly tested and you need to be willing to keep adapting and refining your offer until you find something that works for both you and your affiliates.
Decide whether to outsource or buy software
Organizations can have the choice of outsourcing much of the running of the affiliate program or purchasing software and designing it in-house. It is better to outsource, as it allows you to focus on what you do best selling and marketing your products and services.
Source by Brad Plumb