A popular method of promoting web businesses is affiliate marketing. An affiliate marketer is rewarded for every visitor, subscriber and/or customer provided through his efforts. It is a modern variation of the practice of paying finder’s-fees for the introduction of new clients to a business. Compensation may be made based on a certain value for each visit (Pay per click), registrant (Pay per lead), or a commission for each customer or sale (Pay per Sale), or any combination. From the merchant’s viewpoint, the best thing about affiliate marketing is that no payment is due to an affiliate until he or she gets results.
Some e-commerce vendors use third party services provided by intermediaries to track traffic or sales that are referred from affiliates and some e-commerce sites run their own affiliate programs. Many businesses owe much of their growth and success to this marketing technique.
In its early days many Internet users held negative opinions of affiliate marketing due to the tendency of affiliates to use SPAM to promote the programs in which they were enrolled. As affiliate marketing has matured many affiliate merchants have refined their terms and conditions to prohibit affiliates from SPAMming. Today, affiliate marketing is the single fastest growth industry on the Internet.
It’s also true that affiliate marketing is one of the fastest and most creative ways to make money and have a career on the Internet. It is always subject to change but currently the most active sectors for affiliate marketing are the adult, gambling and retail sectors. Expected to experience the greatest growth in affiliate marketing are the mobile phone, finance and travel sectors. Not far behind and gaining fast are the entertainment (particularly gaming) and Internet-related services (particularly broadband) sectors. Several of the affiliate solution providers expect to see increased interest from B2B marketers and advertisers in using affiliate marketing as part of their mix.
Affiliate Marketer Defined
According to The World’s Glossary of Internet Terms, ―Affiliate Marketer is defined as: ―A business relationship with a merchant or other service provider who allows you to link to that business. When a visitor clicks on the link at your site and subsequently makes a purchase from the merchant, you receive a commission based on the amount of the sale, a referral fee or a pay-for-click fee.
This is a simple, straight-forward agreement between a merchant and an affiliate. Budding affiliate marketers run into a problem when they try to reverse the success process. Instead of starting at the beginning, they try to start at the end. Making money is the end of the process.
The beginning of the process is education and there are several steps in between. Too many people, who are just getting started in affiliate marketing, fail to take the steps necessary to get to the end of the process and actually make money.
Step #1: Educate yourself.
This is the key, opening the door of opportunity. It’s also the common thread connecting successful affiliate marketers. Education lays the foundation – the building blocks to success. Start by gathering the best information you can find about affiliate marketing and absorbing it.
Step #2: Turn that information into usable knowledge.
Even the best information remains kind of worthless, however, until after you discover how to use it – how to make it serve your purpose.
Step #3: Start applying the knowledge … take action …start building your affiliate business.
Will you make mistakes, even though you’ve invested all that time educating yourself? Yes, you most likely will make mistakes.
Step #4: Test and tweak, test and tweak.
This one never ends. And it’s often the dividing line between succeeding and failing. Attention to small details often returns big rewards. Following these steps will define you as a successful affiliate marketer.
Are Affiliates in Demand?
Is there a demand for affiliate marketers today? Yes, there is a huge demand. One of the challenges faced in the affiliate marketing industry is that it sometimes sounds too good to be true: advertising that’s guaranteed to work or it’s free! Newcomers wonder if it’s possible, and skeptics claim that the cost effective prices of affiliate marketing lower the bar for online advertising. But there is a good reason that affiliate marketing has experienced steady growth throughout the ups and downs of online advertising—it works. And affiliatemarketing has evolved to become a reliable source of sales for a wide range of marketers.
Affiliate marketing has evolved from the early years when some touted it as the future of online advertising, and others claimed it was the downfall of the medium. It’s now a sophisticated channel that generates anywhere from five to 25% of online sales for many of the world’s biggest brands. Almost all major multi-channel marketers have an affiliate program of some kind.
The important thing to remember is that affiliate programs now come in all shapes and sizes. The concept of a wide-open affiliate program with an unlimited and uncontrolled number of affiliates is a thing of the past. Nearly all marketers agree that affiliates add value to an online marketing effort, but the program must be tailored to meet the marketer’s objectives. Affiliate marketing did not bring an end to other, higher priced forms of online media advertising.
The success of the affiliate marketing in delivering sales cost effectively by way of a pay-for-performance model paved the way for other forms of performance-based advertising, such as CPA-based search and portal advertising, to create acceptance among direct marketers. Affiliate marketing has evolved, with affiliates and marketers becoming more sophisticated and programs more integrated with other forms of online marketing.
What are the advantages to merchants, customers and to marketers of affiliate marketing? There are a great many advantages to all of the above.
Merchant advantage: Affiliate marketing offers the merchant a larger market to sell their products and services. More websites will naturally provide a merchant with more customers and will create more sales. This is particularly true if the sites are in niche marketing. Merchants look for affiliate sites where their merchandise is a good fit and where their target customers usually visit. Another advantage that a merchant can get from affiliate marketing is that they can gain more and more customers without spending valuable time in searching out for them. The banner ads on an affiliate website might draw interest and drive the visitor to click on their website. Also, different consumers coming from various websites can provide the merchant a good idea regarding consumer trends and demands.
Customer Advantage: The benefit that a customer could get out of affiliate marketing is obvious – they get an answer to their problem that they may not have found without the help of the affiliate’s website. That’s if, and only if the merchandise or service gives what it says it will.
Affiliate Marketer Advantage: This kind of business has proved to be an easy way to create additional income for their website. The marketing banners that they stuffed under content help in making their site look good. And these banners may create instant sales from which they can get a commission. Above all, the affiliate can have extra income from his or her website without investing something in making his own product and without worrying about customer support, book keeping, and E-commerce. In affiliate marketing, the merchant handles it all. The affiliate just needs to promote and resell the product.
If there is an upside, there is always a downside no matter what is being discussed…in this case, we are discussing affiliate marketing. Even though there are advantages to merchants, customers and affiliate marketers, there also disadvantages to all of them as well.
Merchant and Customer Disadvantages: The merchant may suffer from high commission costs as well as costly set up and maintenance fees that are usually caused by a lot of affiliate facilitators. Sometimes the affiliates engage in false advertising and misleading the customer in order to get commission. This means that some affiliates sometimes make claims and promises regarding the product and services which are completely wrong or that are extremely exaggerated. When this happen, the merchant usually suffers complaints and they definitely lose potential consumer. The customer is disappointed and sometimes disillusioned about making purchases online at all.
Affiliate Marketer Disadvantages: Unscrupulous and dishonest merchants sometimes just close down programs without informing the affiliates. They leave without paying commissions which is even worse. There are some unscrupulous merchants who attract new affiliates by promising high commissions then after a week or two, they dramatically drop those commission rates. Aside from that, when hijackers interfere, affiliates typically don’t get just commission, it goes to the hijacker instead.
The shady and illegal practices involved in this kind of business include false advertising, unlawful use of trade names, logos, or other branding, SPAMming and hijacking. All are illegal practices. Even though there are disadvantages to affiliate marketing for all concerned parties, affiliate marketing is still considered as one of the best ways to make money online. We just have to understand that in any thing that humans do, especially if money is involved, there will always be cheaters and people who will be engaged in illegal methods.
You shouldn’t be one of them. Keep in mind that it is always right and advisable to act ethically and legally work hard to make your customers and business partners trust you and always see to it that you go beyond your customer’s expectations.
How to Make Money
It is very possible getting wealthy doing affiliate marketing in spite of the immense competition. Even though Affiliate marketing isn’t an easy money tree that is going to just drop bundles of cash into your lap with no effort on your part required, you can still make a fortune selling other people’s products – if you know how to do it right. You will find the affiliate opportunities that work the best only by finding them yourself, either through testing and research or networking and business development. Free traffic is not completely over but it is fading fast. You can work hard to create pages that score high in the search engines and build sweat equity into a site but by paying for clicks and focusing on Google and Overture you will have the top three positions on all search engines that really count on the Internet.
You need to be on top of if you want to generate traffic from Yahoo. Overture and especially Google are the best key drivers of qualified traffic on the Internet. Pay-per-click search engines let you quickly test different affiliate offers and new landing pages on your site. You can stay away from top competitive keywords for $1 to $2 per click. Niche marketing on Overture and Google works. Instead of just sending traffic away and hoping for the best, you should have your own email list to which you can send multiple offers. Sending offers to your own email list is the true way to build freedom and residual income.
You can do this by:
- Using subscription forms on your web site.
- Using co-registrations or co-op marketing campaigns.
- Buying email lists.
Effective affiliate marketing involves paying for traffic in one shape or another. To accelerate your income, you need to invest wisely in advertising and get the most mileage out of every one of them.