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What To Watch Out For When Joining Affiliate Programs
If you have no product of your own, you can earn money by selling other people's products at your web site through affiliate programs. Maximize your earnings by learning what to look for when joining these programs.

by Steve Ma. Reyna
PowerHomebiz Staff Writer

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.