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There are 3 basic affiliate programs, though only the first two are
commonly used.
- Pay Per Click - this is when an affiliate is compensated for sending
traffic to the merchant. (AdSense is an example of PPC affiliate program)
- Pay Per Sale - this is when the affiliate is compensated by the merchant
if the referral generates a sale or purchase.
- Pay Per Lead - this is when the merchant agrees to pay for a qualified
(or sometimes unqualified lead), which is very uncommon because it is
subjective and up to the merchant.
Affiliate websites tend to provide information, entertainment, and
content services to their customers. The online merchants sell products,
goods and services online. These are programs permitting affiliates to earn
money based on the visitors to your site who click through to another's
website. Some pay a token amount for the click through and others provide a
percentage of sales when a visitor "clicks through" to your site and buys a
product or service on the other party's site. This could represent a value
added service to your visitors.
Affiliate programs allow you to pay and track incentives from other
websites that send web surfers, leads or paying customers to your website.
Commissions based on purchases made by traffic sent from the referring
website can be paid. Besides a commission, an affiliate can receive a flat
fee, or other incentives for all valid transactions it refers that generate
a sale or lead.
Be careful that the affiliate's web page is not cluttered with banner ads
that may crowd out your link, or that be annoying to customers. Affiliate
programs enable affiliates to leverage their traffic and customer base in
order to profit from e-commerce while merchants benefit from increased
exposure and sales.
Commonly traffic to merchant sites is measured and affiliates can clearly
see conversion rates. Meaning, they track the percentage of people they are
referring, and how much of it results in earned revenue. If the affiliate
finds a very low conversion, they will find a better way to monetize that
traffic, quite possibly with a competing merchant product.
In order to be a successful affiliate, the affiliate site needs to either
have tons of traffic or target a specific audience, frequently one untapped
by the merchant. It has been my experience, the closer the affiliate site
content resembles the merchant products, the higher the likelihood of a good
conversion rate.
Once you are committed to the idea of affiliates, the next step is to
determine the kind of tracking system you are going to use. Sales can be
tracked by HTML code, which is placed in a shopping cart or on the 'order
confirmation'/'thank you' page, and cookies, which are created after the
customers click on a banner ad. Cookie killers have been a problem for the
affiliate industry. Software vendors have an advantage over other merchants
in that new technologies allow software developers to better control
compensation. Vendors can 'wrap' their software insuring that their
affiliates are compensated for referrals, even if the customer downloads a
trial version prior to purchasing. Buy now buttons in the software have
affiliate ids imbedded in the download. Combined tracking systems have more
success than those that rely on a single tracking technology.
In order to develop a successful affiliate network, merchants must
realize that affiliates spend ad dollars on site, and product promotion. If
the affiliate is not compensated fairly they will not remain in the
merchants network. The bottom line is that affiliate relationships are
partnerships, when both sides feel the situation is fair and equitable the
relationship will be a success.
