If you have no product
of your own, you can earn money by selling other people's products at your
web site. Many merchants, like Amazon.com, IBM, AOL, Dell, hp, and others
make use of small and home based business websites by offering to pay
commissions through affiliate programs. Affiliate programs offer a variety
of commission structures. Some of these may be based on viewer click-throughs (prospects), qualified leads, or sales
referred from your web site (performance).
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Given the present downturn of advertising on the Internet, joining
affiliate programs can help bring in additional revenue. You may join a
merchant’s affiliate program directly, or utilize the services of a third
party solution, such as Be Free, Commission Junction, or LinkShare. These
third party solutions handle the administration of the program, such as
affiliate registration, commission tracking, statistics and lately, even
issuing of commission checks..
Affiliate programs have proven to be a very cost-effective marketing
mechanism for merchants like Amazon. They are able to get their banners
splashed in thousands of web sites without shelling out any advertising
money, mostly paying only when the affiliate member performs. While the
affiliate web site post their banners and advertisements, merchants have no
commitment to pay anything if there are no click-throughs or sales
generated.
How effective are affiliate programs in making money for the home-based
Internet entrepreneurs? There are a few exceptional cases that makes
thousands of dollars each month for the affiliate. For some, they are
able to manage a couple of hundreds every quarter. But for many small sites,
affiliate programs have not lived up to its promise. They’ve earned
virtually nothing from these programs, even though their web sites have been
plastered all over with affiliate banners and buttons.
One thing we’ve learned on the Internet is that it takes time,
attention, and a bit of creativity to succeed as an affiliate. First of all,
you must select the right program to join. In order to maximize your
earnings as an affiliate, there are some points you have to watch when you
join affiliate programs.
1. Fit with your web site.
Many newbies make the mistake of signing up
with several companies and randomly sticking the banners and buttons in
every available space on their pages. The resulting web site is a chaotic,
disorganized page of clashing and flashing banners that, unfortunately,
fails to produce the expected financial results.
The key to making money in affiliate programs is to ensure that the
program you are promoting is related to the theme of your site. There must
be a natural fit between the product and your site.
For example, if you have a movie review site, you would do well in
affiliate programs that sell movies in DVDs and VHS. After all, your
visitors come to your site to look for movies worth watching. If you have
already established credibility in your topic area, your audience will
follow your recommendations and buy the movies that you review.
2. Tracking and
Reporting System.
Merchants that use third party systems
such as LinkShare or BeFree provide access to your site’s performance through online
reporting. These statistics tell you how many visitors you are sending to
the merchant, what is the conversion rate from visitors to sale, and what
creatives (e.g. banners, text link, search boxes, etc.) work well for your
site. You will know the breakdown of the pay periods, sales, returns, and
total balance. Statistics are important to help you improve the performance
of your affiliate relationship and increase your revenues. For example, if
you find that your visitors are more likely to click on a text link instead
of a banner, you can then focus on creating text links in the strategic
areas of your web site. You can also choose to use the banner that has
generated the most click-throughs and sales. Having the numbers to tell you
how you are doing can help you tweak your performance for the better.
However, there are many affiliate programs that do not give you any means
to track your statistics online. They “court” you to promote their program, and as soon as you sign the contract, you never hear from them
again. No word about sales; nothing about leads that you’ve sent to them;
and worse of all, no paychecks arriving!
When planning to join an affiliate program, one of the first questions
you should ask is the availability of online reporting. If they will not
provide any reports to you, then try to avoid joining that program. The merchant’s products may be a good fit to your site, but
without any statistics, how would you know that the merchant is giving you
what is due to you? You can never tell, and therein lies the problem with
the merchant.
3. Level of Commission.
The commission level should be fair, acceptable
and commensurate to the amount of effort that you will put in to promote the
program. Low percentages may be acceptable in some categories with low
margins and high prices, such as books. Hence, Amazon pays out 5-15 percent
commission to their affiliates.
Avoid affiliate programs that offer less than 5 percent of the gross sale.
Instead, compare various affiliate programs and choose the one that offers a
good commission structure.
Also check if there is a cap on the commission that will be paid out to
you. Amazon, for example, puts a cap of $10 as the most any affiliate will
be paid for any single product sold. Even if you have sold an $850 lawnmower
from their store (5 percent of which is $42.50), you will only receive a $10
commission on that product. Knowing this policy, you can then configure what
items to push, and what items are not worth promoting.
4. Frequency of Payment.
The contract or operating agreement should
clearly specify how often you will be paid by the merchant. Will you be paid
on a monthly or quarterly basis? Watch out for unscrupulous merchants that
hardly pay their affiliates, or pay them so late that you would have to send
a barrage of emails (even threats of legal action) before they give you what
you have earned.
Determine if there are cut-off amounts that you will be paid. Some merchants
send you a check even if you have earned only a measly $2 for the quarter.
Most, however, set a minimum amount that you can be issued a check, and any
earnings for that payment period below the minimum will be carried over to
the next payment period.
Some merchants allow you the choice to be paid as soon as your commission
reaches $25, $50 or $100. However, watch out for merchants, even third party
companies, that will allow you to set your payment level but will charge you
a check processing fees, base your commission on the net amount instead of
the gross price, accounting fees, etc. if your minimum amount falls below the
amount stated in their contract. Read the contract or operating agreement thoroughly. If
they say in their contract that they will pay only if you’ve reached $100
in commissions, but you elected to be paid as soon as your earnings reach
$25, expect to see deductions of about $2 or more. To avoid deductions from
your income, stick to the merchant’s policies even though they seem to
give you some “leeway.”
Be sure to understand the merchant’s policies in forfeiting
commissions, and what you can do if the merchant decides to freeze your
earnings or even terminate your account. Go for the merchants that spell out
these terms clearly in their contract.
5. Feedback Response.
When looking to join an affiliate program, you will
have a lot of questions in your mind: Does it cost anything to join? How can I sign up for your program? How do I create a link to your
site? When will I get paid?
The merchant should provide you with the information you need to make the
program work for you. Start with merchants that have a comprehensive set of
FAQ (frequently asked questions) in their site.
However, there will be a wide variety of questions that are specific to
your site that may not be covered in the FAQ. If you send the merchant an
email, check if the company responds to your questions and how fast. If they
answer your question favorably, then that shows that the merchant values its
affiliates, and understands the contribution you and the others bring to
their bottom line. Merchants that do not answer your queries are not worth
supporting.
6. Concern
with the
Security of Potential Affiliates.
Like anything
on the web, be careful when you give out your personal information from
your address to tax account number. There are merchants that ask for
personal information when you apply in their sites using forms that are not
located in secure servers. You will run the risk of unscrupulous elements
intercepting and using your information for their own twisted means.
Choose an affiliate program that has reached a certain level of
sophistication, and gives prime importance to the security of their
potential salespeople.
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