Amazon was one of the first dotcoms in the world to recognize the value of affiliate programs. During a mere 18 months, Amazon teamed up with more than 100,000 affiliates internationally, starting a dramatic fight between most major dotcom companies to establish similar programs.
Affiliate programs allow companies to promote and sell their products from host web sites. Thousands of web sites sell Amazon books, for example, and for this, they receive a small commission.
To the consumer, affiliate programs are like Coke machines. If you want a large selection of drinks, you go to the supermarket. If you buy on impulse, a conveniently placed Coke machine offers a limited choice.
But as successful as affiliate programs have been to date, there are signals indicating that this is about to change. Yes, big companies reap big added value from entering affiliate setups. But what about other players in the SME (small and medium sized businesses) segment? And what do the affiliates gain from the arrangement besides a small retainer?
The affiliate concept demonstrates a major problem – a problem which is producing a new-generation affiliate idea.
Being a part of an affiliate program is valuable only if the traffic on the site is high – really high! The top 10,000 sites belong to this category. But for low-traffic sites, the affiliate story is different.
The key problem is that affiliate programs promote the affiliate owner, not necessarily the “affiliatee.” It’s like having a store and displaying “Please leave our store” signs whenever a customer wants to buy anything: I spend time on your site, I want to buy something, you ask me to go to Amazon. Which site do you think I develop a purchasing relationship with? Yours or Amazon’s?
The affiliate program goal is to have customers stay at the site for a substantial period and return often. In some cases, the goal is to earn money, too. But the issue is that you shouldn’t promote other sites unless you really stand to gain. This is a major reason for the appearance of a range of Internet concepts that handle affiliate program problems.
Nexchange.com is one of them. It offers web sites a neutral shopfront and all the products which are relevant to the site. Under this concept, you don’t promote an affiliate owner, you promote your own brand name. You “rent” the framework (technology, etc.) and put up the signs yourself, then just choose what products you want to promote, under your own brand, at your own site.
This first stage of second-generation affiliate programs opens up new opportunities for SME businesses which have never had the possibility of handling e-commerce. Brand building for big companies, using affiliate concepts, has suddenly become a reality for small companies too!