In this day and age, it is really easy to set-up your own Web site. If you have a computer connected to the Internet, you can simply go to a site such as Blogger, GeoCities or AOL and use their ready-made Web design templates to construct a simple personal page. These sites will give you a URL, store the content of your page and slap on some advertisements. Just like that, in an hour or two, your page is on the site on the web!
The more enterprising ones however, will try to take their site to the next level. They discovered that if you have a content-driven Web site, you make money off your traffic. Also, if you are an online merchant, you can actually get people to your site to buy your products. One popular option that serves both of these functions is an affiliate program.
What Are Affiliate Programs?
According to Tom Harris, affiliate programs, also called associate programs, are arrangements in which an online merchant Web site pays affiliate Web sites a commission to send them traffic. These affiliate Web sites post links to the merchant site and are paid according to a particular agreement. This agreement is usually based on the number of people the affiliate sends to the merchant's site, or the number of people they send who buy something or perform some other action. Some arrangements pay according to the number of people who visit the page containing their merchant site's banner advertisement. Basically, if a link on an affiliate site brings the merchant site traffic or money, the merchant site pays the affiliate site according to their agreement. Recruiting affiliates is an excellent way to sell products online, but it can also be a cheap and effective marketing strategy; it's a good way to get the word out about your site.
There are at least three parties in an affiliate program transaction:
Since then, the concept behind the affiliate program has grown enormously in popularity, taking many interesting forms. For many Web sites that do not deal much in e-commerce (selling products or services online) themselves, functioning as an affiliate is a good way to participate in e-commerce.
Payment
Tom Harris added that there are basically three (3) types of affiliate program payment arrangements:
Pay-per-sale (also called cost-per-sale): Amazon.com's affiliate program is a good example of a pay-per-sale arrangement. In this arrangement, the merchant site pays an affiliate when the affiliate sends them a customer who purchases something. Some pay the affiliate a percentage of the sale and others pay a fixed amount per sale.
Pay-per-click (cost-per-click): Using this mode, the merchant site pays the affiliate based on the number of visitors who click on the link to come to the merchant's site. They usually do not require the visitor to buy anything. To the affiliate, they also do not care what the visitor does when they are on the merchant's site.
Pay-per-lead (cost-per-lead): Companies with these programs pay their affiliates based on the number of visitors they refer who sign up as leads. This simply means the visitor fills out some requested information at the merchant site, which the merchant site may use as a sales lead or sell to another company as a sales lead.
There are a number of other arrangements as well. Basically, a company could set up an affiliate program based on any action that would benefit them, and then pay their affiliates based on the number of customers the affiliates send them who perform that action.
There are a couple of very popular variations on these basic payment plans:
Two-tier programs: Here, the affiliate programs worked the same way as the multilevel marketing organizations (also known as "network marketing"), such as Amway or Avon. Profit is usually dependent on commission sales and sales recruitment. In addition to receiving commissions based on sales, clicks or leads stemming from their own site, affiliates in these programs also receive a commission based on the activity of affiliate sites they refer to the merchant site.
Residual Programs: Affiliates in these programs can keep making money off a visitor they send to the site if the visitor continues to purchase goods or services from the merchant site. Many online merchants who receive regular payments from their customers (such as monthly service fees) run this sort of affiliate program.
Additionally, there are a few pay-per-impression affiliate programs. Companies running these programs, also called pay-per-view programs, pay affiliates based only on the number of visitors who see their banner ad. Usually, this sort of arrangement is not structured as an affiliate program, but simply as a traditional advertising program. The advantage affiliate programs have over traditional advertising is that in an affiliate program, an online merchant only pays its affiliates when it gets a desired result. Traditional advertising, such as the ads you see on TV and a lot of the banner ads on the Internet, is relatively risky for the advertiser. They spend money on advertising based on a guess of its effectiveness. When an ad brings the company more money than it spent on that ad, the ad is a success. If the company makes less money than it spent, it has to swallow that loss. With an affiliate program, an online merchant only pays its affiliates when things are working. Because there's much less risk to the merchant, it's a lot easier for Web sites to join affiliate programs than it is for them to attract advertisers.
How Are Affiliate Programs Administered?
Affiliate programs are pretty simple in concept, but a lot of behind-the-scenes work is necessary to make them work properly. In order for the affiliates to be compensated, someone needs to keep track of the actual activity surrounding the affiliate's link to the merchant site.
Depending on the arrangement, someone might need to determine:
It is a lot of work for merchant Web sites to actively recruit affiliates, and for affiliates to search for affiliate programs they are interested in. Nonetheless, many companies, such as Amazon.com, deal with their affiliates directly because the administration is well worth their time. Even though they take full control over the process, and so determine themselves what they owe, these companies can attract a lot of affiliates because their offer has no real risk or cost: All an affiliate webmaster has to do is put the link up and hope the checks come rolling in. For a lot of Web sites, however, all the work of recruiting affiliates or merchant Web sites is just too time consuming. And a lot of webmasters would rather not rely on the merchant site to tally their own bill correctly!
How to Get Involved in Affiliate Programs
If you are interested in getting involved in affiliate programs, the first thing you have to do is decide whether you want to become an affiliate, want to acquire affiliates, or both. If you run an e-commerce site and would like to increase your sales, you might want to start your own affiliate program. If you run a small content site as a hobby and would simply like to bring in a little money to cover production costs, joining a few programs as an affiliate would be a good option. Your best option depends on what aspects of affiliate programs could best serve your site and how much you are willing to spend.
Becoming an Affiliate
Becoming an affiliate is relatively easy. Go to an affiliate network site and fill out an online application to become a member. The application will ask for some personal information (name, address, payment method) and information on your site (URL, name, and description of content) and will have you agree to a service agreement. Most affiliate networks are completely free for affiliates.
If the affiliate network approves your application, you can begin picking affiliate programs that interest you. Because so many affiliate programs are free to the affiliate, it's probably in your best interest to steer clear of programs with a charge. Once you've chosen some affiliate programs, the online merchants running these programs will have the opportunity to review your site. If they approve you, the affiliate network will walk you through the process of posting the appropriate links, which come directly from the network's site. They will also establish payment arrangements with you. Because the amount of money you earn per action can be extremely small, most affiliate networks have a set minimum payout amount. This means you won't receive a check until the total money owed you reaches a certain amount. After you have set all this up and the affiliate network has explained its system to you, you can get back to work on your Web site's content and wait for your money to come in.
Acquiring Affiliates
Your best bet is probably joining an affiliate network. An affiliate network will help you set up an affiliate program and work to recruit affiliates for you. You'll have to fill out an application describing the nature of your business and your Web site. You'll also have to agree to the terms of the affiliate network and make a number of deposits. These will probably include a one time charge for becoming a member of the network as well as a deposit to be used to pay your affiliates. Some affiliate networks also charge a yearly fee for their services. To join one of the major affiliate networks you will probably have to put up between US$ 1,000 and US$ 5,000. You will also pay the affiliate network a percentage of every payout to an affiliate. In return, the affiliate network will help you set everything up, keep track of all the activity in your affiliate program, issue your affiliates checks and distribute your links to appropriate affiliates. They will give you the option of reviewing prospective affiliates, or you can choose to accept all interested affiliates automatically.
The alternative to acquiring affiliates, maintaining an affiliate program yourself, is significantly more complicated. Among other things, you would have to screen and recruit all affiliates yourself, purchase and maintain some sort of tracking technology, instruct your affiliates on how to set up links to your site, set up an accounting system for paying all of your affiliates and set up a help line to assist all your affiliates. There are a number of traffic-tracking software applications that will probably cost between US$100 and US$500, significantly less than joining an affiliate network. Another option is to sign on to a company that keeps track of the traffic involved in your affiliate program by running it through their site on the way to yours. Using one of these companies costs about the same as tracking software, and they also only assist you in tracking. Maintaining the business end of an affiliate program is more than we can explore in this article, which is a good indicator it is also more than most Web sites would want to get into.
What Makes an Affiliate Program Successful?
Amazon.com's affiliate program is so successful because it effectively links commerce and content and takes advantage of the respective strengths of Amazon.com and its affiliates. All kinds of people might buy books online, because there are books on a huge number of subjects. By itself, Amazon.com can attract a lot of these people, but there are many more readers who surf the Internet but wouldn't think to go shopping at Amazon.com. Either they haven't heard of it or the lure of books alone does not entice them. Some other subject, let's say car engine repair, does entice such a reader, however, and so he seeks out Web sites covering that subject. If his favorite engine repair Web site were to recommend and offer a good engine repair book, he would happily purchase it online. If that Web site sends him to Amazon.com to buy the book, Amazon.com gains a customer it may never have had without the referral. If the customer is happy with their purchase and the service they receive, he might also buy more books on the site.
Affiliate programs work best when affiliates choose products, services and companies that match the content of their Web site and would interest their readers. If a content Web site chooses affiliate programs well, everybody involved in the process wins. The affiliate wins because it is able to sell products to its visitors without having to run an e-commerce business, the merchant site wins because the affiliate sends it customers it wouldn't get otherwise, the affiliate network wins because it gets a piece of the profit for setting everything up, and the Web surfer wins because the affiliate Web site directs her to products she would be interested in, which she can then purchase easily.
You probably won't make much money as an affiliate if you choose affiliate programs that don't have much to do with your site. Because it is usually free, a lot of Web sites join a whole bunch of affiliate programs and figure that enough of them will pay off that they'll make some money. Hence, it is important that the affiliate sites will complement each other instead of canceling each other out. The the affiliate Web or Blog site will just look like a huge advertisement if everything is inncluded there. The main assets of a content Web site are actually the content itself plus the traffic and knowledge of that traffic. Therefore, it will serve the site better to use the information in picking the right affiliate programs that would best serve the site's and supplement the content. If the programs match the content of the site, it should be fairly easy to lead the visitors and encourage them to participate in the programs.
The more enterprising ones however, will try to take their site to the next level. They discovered that if you have a content-driven Web site, you make money off your traffic. Also, if you are an online merchant, you can actually get people to your site to buy your products. One popular option that serves both of these functions is an affiliate program.
What Are Affiliate Programs?
According to Tom Harris, affiliate programs, also called associate programs, are arrangements in which an online merchant Web site pays affiliate Web sites a commission to send them traffic. These affiliate Web sites post links to the merchant site and are paid according to a particular agreement. This agreement is usually based on the number of people the affiliate sends to the merchant's site, or the number of people they send who buy something or perform some other action. Some arrangements pay according to the number of people who visit the page containing their merchant site's banner advertisement. Basically, if a link on an affiliate site brings the merchant site traffic or money, the merchant site pays the affiliate site according to their agreement. Recruiting affiliates is an excellent way to sell products online, but it can also be a cheap and effective marketing strategy; it's a good way to get the word out about your site.
There are at least three parties in an affiliate program transaction:
- The customer
- The affiliate site
- The merchant site
Since then, the concept behind the affiliate program has grown enormously in popularity, taking many interesting forms. For many Web sites that do not deal much in e-commerce (selling products or services online) themselves, functioning as an affiliate is a good way to participate in e-commerce.
Payment
Tom Harris added that there are basically three (3) types of affiliate program payment arrangements:
Pay-per-sale (also called cost-per-sale): Amazon.com's affiliate program is a good example of a pay-per-sale arrangement. In this arrangement, the merchant site pays an affiliate when the affiliate sends them a customer who purchases something. Some pay the affiliate a percentage of the sale and others pay a fixed amount per sale.
Pay-per-click (cost-per-click): Using this mode, the merchant site pays the affiliate based on the number of visitors who click on the link to come to the merchant's site. They usually do not require the visitor to buy anything. To the affiliate, they also do not care what the visitor does when they are on the merchant's site.
Pay-per-lead (cost-per-lead): Companies with these programs pay their affiliates based on the number of visitors they refer who sign up as leads. This simply means the visitor fills out some requested information at the merchant site, which the merchant site may use as a sales lead or sell to another company as a sales lead.
There are a number of other arrangements as well. Basically, a company could set up an affiliate program based on any action that would benefit them, and then pay their affiliates based on the number of customers the affiliates send them who perform that action.
There are a couple of very popular variations on these basic payment plans:
Two-tier programs: Here, the affiliate programs worked the same way as the multilevel marketing organizations (also known as "network marketing"), such as Amway or Avon. Profit is usually dependent on commission sales and sales recruitment. In addition to receiving commissions based on sales, clicks or leads stemming from their own site, affiliates in these programs also receive a commission based on the activity of affiliate sites they refer to the merchant site.
Residual Programs: Affiliates in these programs can keep making money off a visitor they send to the site if the visitor continues to purchase goods or services from the merchant site. Many online merchants who receive regular payments from their customers (such as monthly service fees) run this sort of affiliate program.
Additionally, there are a few pay-per-impression affiliate programs. Companies running these programs, also called pay-per-view programs, pay affiliates based only on the number of visitors who see their banner ad. Usually, this sort of arrangement is not structured as an affiliate program, but simply as a traditional advertising program. The advantage affiliate programs have over traditional advertising is that in an affiliate program, an online merchant only pays its affiliates when it gets a desired result. Traditional advertising, such as the ads you see on TV and a lot of the banner ads on the Internet, is relatively risky for the advertiser. They spend money on advertising based on a guess of its effectiveness. When an ad brings the company more money than it spent on that ad, the ad is a success. If the company makes less money than it spent, it has to swallow that loss. With an affiliate program, an online merchant only pays its affiliates when things are working. Because there's much less risk to the merchant, it's a lot easier for Web sites to join affiliate programs than it is for them to attract advertisers.
How Are Affiliate Programs Administered?
Affiliate programs are pretty simple in concept, but a lot of behind-the-scenes work is necessary to make them work properly. In order for the affiliates to be compensated, someone needs to keep track of the actual activity surrounding the affiliate's link to the merchant site.
Depending on the arrangement, someone might need to determine:
- the number of people who click on the merchant site's link on an affiliate site
- the number of people who end up buying something or performing some other predetermined action once the affiliate sends them to the merchant site.
- the number of people who see the merchant site's banner link on an affiliate site
It is a lot of work for merchant Web sites to actively recruit affiliates, and for affiliates to search for affiliate programs they are interested in. Nonetheless, many companies, such as Amazon.com, deal with their affiliates directly because the administration is well worth their time. Even though they take full control over the process, and so determine themselves what they owe, these companies can attract a lot of affiliates because their offer has no real risk or cost: All an affiliate webmaster has to do is put the link up and hope the checks come rolling in. For a lot of Web sites, however, all the work of recruiting affiliates or merchant Web sites is just too time consuming. And a lot of webmasters would rather not rely on the merchant site to tally their own bill correctly!
How to Get Involved in Affiliate Programs
If you are interested in getting involved in affiliate programs, the first thing you have to do is decide whether you want to become an affiliate, want to acquire affiliates, or both. If you run an e-commerce site and would like to increase your sales, you might want to start your own affiliate program. If you run a small content site as a hobby and would simply like to bring in a little money to cover production costs, joining a few programs as an affiliate would be a good option. Your best option depends on what aspects of affiliate programs could best serve your site and how much you are willing to spend.
Becoming an Affiliate
Becoming an affiliate is relatively easy. Go to an affiliate network site and fill out an online application to become a member. The application will ask for some personal information (name, address, payment method) and information on your site (URL, name, and description of content) and will have you agree to a service agreement. Most affiliate networks are completely free for affiliates.
If the affiliate network approves your application, you can begin picking affiliate programs that interest you. Because so many affiliate programs are free to the affiliate, it's probably in your best interest to steer clear of programs with a charge. Once you've chosen some affiliate programs, the online merchants running these programs will have the opportunity to review your site. If they approve you, the affiliate network will walk you through the process of posting the appropriate links, which come directly from the network's site. They will also establish payment arrangements with you. Because the amount of money you earn per action can be extremely small, most affiliate networks have a set minimum payout amount. This means you won't receive a check until the total money owed you reaches a certain amount. After you have set all this up and the affiliate network has explained its system to you, you can get back to work on your Web site's content and wait for your money to come in.
Acquiring Affiliates
Your best bet is probably joining an affiliate network. An affiliate network will help you set up an affiliate program and work to recruit affiliates for you. You'll have to fill out an application describing the nature of your business and your Web site. You'll also have to agree to the terms of the affiliate network and make a number of deposits. These will probably include a one time charge for becoming a member of the network as well as a deposit to be used to pay your affiliates. Some affiliate networks also charge a yearly fee for their services. To join one of the major affiliate networks you will probably have to put up between US$ 1,000 and US$ 5,000. You will also pay the affiliate network a percentage of every payout to an affiliate. In return, the affiliate network will help you set everything up, keep track of all the activity in your affiliate program, issue your affiliates checks and distribute your links to appropriate affiliates. They will give you the option of reviewing prospective affiliates, or you can choose to accept all interested affiliates automatically.
The alternative to acquiring affiliates, maintaining an affiliate program yourself, is significantly more complicated. Among other things, you would have to screen and recruit all affiliates yourself, purchase and maintain some sort of tracking technology, instruct your affiliates on how to set up links to your site, set up an accounting system for paying all of your affiliates and set up a help line to assist all your affiliates. There are a number of traffic-tracking software applications that will probably cost between US$100 and US$500, significantly less than joining an affiliate network. Another option is to sign on to a company that keeps track of the traffic involved in your affiliate program by running it through their site on the way to yours. Using one of these companies costs about the same as tracking software, and they also only assist you in tracking. Maintaining the business end of an affiliate program is more than we can explore in this article, which is a good indicator it is also more than most Web sites would want to get into.
What Makes an Affiliate Program Successful?
Amazon.com's affiliate program is so successful because it effectively links commerce and content and takes advantage of the respective strengths of Amazon.com and its affiliates. All kinds of people might buy books online, because there are books on a huge number of subjects. By itself, Amazon.com can attract a lot of these people, but there are many more readers who surf the Internet but wouldn't think to go shopping at Amazon.com. Either they haven't heard of it or the lure of books alone does not entice them. Some other subject, let's say car engine repair, does entice such a reader, however, and so he seeks out Web sites covering that subject. If his favorite engine repair Web site were to recommend and offer a good engine repair book, he would happily purchase it online. If that Web site sends him to Amazon.com to buy the book, Amazon.com gains a customer it may never have had without the referral. If the customer is happy with their purchase and the service they receive, he might also buy more books on the site.
Affiliate programs work best when affiliates choose products, services and companies that match the content of their Web site and would interest their readers. If a content Web site chooses affiliate programs well, everybody involved in the process wins. The affiliate wins because it is able to sell products to its visitors without having to run an e-commerce business, the merchant site wins because the affiliate sends it customers it wouldn't get otherwise, the affiliate network wins because it gets a piece of the profit for setting everything up, and the Web surfer wins because the affiliate Web site directs her to products she would be interested in, which she can then purchase easily.
You probably won't make much money as an affiliate if you choose affiliate programs that don't have much to do with your site. Because it is usually free, a lot of Web sites join a whole bunch of affiliate programs and figure that enough of them will pay off that they'll make some money. Hence, it is important that the affiliate sites will complement each other instead of canceling each other out. The the affiliate Web or Blog site will just look like a huge advertisement if everything is inncluded there. The main assets of a content Web site are actually the content itself plus the traffic and knowledge of that traffic. Therefore, it will serve the site better to use the information in picking the right affiliate programs that would best serve the site's and supplement the content. If the programs match the content of the site, it should be fairly easy to lead the visitors and encourage them to participate in the programs.
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