Thursday, July 16, 2009

What are Affiliate Programs?

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 sitePayment methods normally used in affiliate programs:
    There are five basic types of affiliate program payment arrangements:
  • Pay-per-sale (also called cost-per-sale): In this arrangement, the merchant site pays an affiliate when the affiliate sends them a customer who purchases something. Some merchant Web sites, like Amazon.com, pay the affiliate a percentage of the sale and others pay a fixed amount per sale.
  • Pay-per-click (cost-per-click): In these programs, 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 don't have to buy anything, and it doesn't matter to the affiliate what a visitor does once he gets to 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.
  • Two-tier programs: These affiliate programs have a structure similar to multilevel marketing organizations (also known as "network marketing").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.

    Affiliate networks, or "affiliate brokers," act as mediators between affiliates and merchant Web sites with affiliate programs. They track all activity, arrange all payment, and help affiliates set up the necessary links on their Web site. Additionally, affiliate networks help recruit affiliates by including an online merchant's affiliate program in their directory. Different affiliate networks offer different extra features, but most have a help-center and a place affiliates and merchants can go to view reports of their traffic. Affiliate networks are a real convenience for prospective affiliates because they present a wide variety of affiliate programs in one central location. They make it much easier to find a good program that is appropriate for your site.

    How to implement 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.

    Join as Affiliate: If you run a small content site as a hobby and would simply like to bring in a little money to cover production costs, you can join as 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. 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 Affiliate: If you run an e-commerce site and would like to increase your sales, you might want to start your own affiliate program. 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'll probably have to put up between $1,000 and $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 $100 and $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.

    To create your own affiliate program you can use the software too. Like “AFFPLANT” software of Affplanet.com which is available at there site at http://www.affplanet.com/?lid=f1f483a3&a_aid=4c7ff379&a_bid=0ad7b67d.
    Methods for linking: An affiliate (Publisher) can link to a merchant site in a number of ways. The best link choice depends on the nature of the affiliate and the nature of the merchant. Each kind of link is specially suited for particular purposes. Common types of links include:
  • Text links.
  • Banner links
  • Search box
    There are several ways affiliate programs use these links:
  • Link to the home page: This is a straight-forward link to the merchant's home page.
  • Product-specific link: If an affiliate Web site wants to sell only a specific product, they can link to that product's page on the merchant Web site.
  • Storefronts: If an affiliate Web site wants to expose visitors to a variety of products, they can link to a storefront.
  • Co-branding: In some affiliate programs, affiliates can maintain their Web site identity even after a customer links to the merchant Web site. Like in this URL the Howstuffworks.com links to top10affiliates.com and also contains its identity too. http://money.howstuffworks.com/framed.htm?parent=affiliate-program.htm&url=http://www.top10affiliates.com
  • Registration: An affiliate can link directly to a registration form on the merchant site.

    For affiliate (Advertisers): The affiliate programs increases the advertiser’s site traffic. By this he can get any/all of the following advantages:

  • To sell more of your product(s) or service(s).
  • To be able to notify buyers of your new product or service, or offer them a special deal/discount.
  • To spread your ideas about a certain topic.
  • To get people to remember your company's name! (Incase they wish to have your products or services in the future!)
  • A third person takes cares about your ads etc. So you needn’t to use specific (costly) software to calculate all this.
  • He could join as many as he wishes affiliate programs to increase his site traffic.

    In short advertising on the Web with banners means more sales and/or more influence!

    For Site owners (Publisher): By the affiliate programs the publisher has the following benefits:
  • He can make money using the high traffic of his/her site.
  • He could join as many as he wishes affiliate programs to increase his income.
  • He could select any of the plans from a huge plans list.

    For affiliate programmer (Middle man): He can get commission from the advertiser according to agreement. Thus larger no. of clients means more money.

  • Amit Doda - EzineArticles Expert Author

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    AFFILIATE PROGRAM