Affiliate Marketing: A Primer
If you're in the business of selling, affiliates are a cost-effective way to get your products and brand out to the masses. If you're in the content business, affiliate programs are a great way to give your visitors value-added features such as books or software related to your site's topic.
When it comes to the web, Amazon.com really started the affiliate ball rolling. In July 1996, it launched its "associates" program and now counts over 450,000 sites in its network. The basic model works something like this: A small website owner registers with Amazon (or any other affiliate program), she then puts various links, banners, and products on her web site. When her visitors click through on these links and purchase a book or other product, the small web site owner is paid a commission for generating the sale.
In all cases, the goal is for marketers to only spend money when their particular performance objective is met. While Amazon only pays when a sale is made, merchants selling big ticket items like cars, or marketing services like credit cards, have modified the model -- paying instead for clicks or qualified leads.
In fact, compensation schemes are as varied as the merchants themselves.
As merchants have rushed to build programs, an entirely new category has been born: affiliate networks. Running a network of affiliates is not rocket science, but it does require quite a bit of time and commitment. For that reason, many merchants are finding that outsourced providers offer a compelling solution.
Some vendors like LinkShare provide tracking, reporting, and affiliate recruiting. Other programs like Dynamic Trade and Commission Junction offer additional services: cutting checks, sending out end-of-year tax forms, and responding to webmaster queries.
In a few short years, affiliate marketing has become a significant force in how commerce on the Web occurs. Thousands of merchants now use affiliate marketing to get business done. The model is now being flexed to drive behavior beyond mere commerce transactions. And yet for all the jargon and hype, affiliate marketing is about connecting buyers and sellers -- and rewarding those that facilitate the connections. After all, the value isn't in the transaction, it's in the relationship...
The successful affiliate program does not happen by accident. Many factors contribute to an affiliate program's ability to rise above the mediocre masses. One such factor is the level of investment by a company in the longevity and growth of that affiliate program; another is the relative experience of the affiliate manager/team.
The Achilles' heel of many affiliate programs is their hasty, uninformed choice regarding an affiliate solutions provider. Although a number of decisions must be made when launching an affiliate program, the choice of an affiliate solution is one that must be given much weight.
Do your research, and make the right decision the first time. In one recent poll, nearly 40 percent of affiliate managers said they would select a different affiliate solution provider if they could do it all over again.
Parts of this story were drawn from the articles "What is Affiliate Marketing?" by Joel Gehman and "What Is the Best Affiliate Solution?" by Sean Carton.
