Internet Marketing: Affiliate Marketing

Introduction

Affiliate marketing is a method of promoting web businesses (usually merchants or advertisers). In this marketing method an internet publisher signs-up to become an affiliate of a company or programme and directs prospects to the marketing company they are an affiliate of. In this marketing strategy the publisher is rewarded for every visitor, subscriber, customer, and/or sale that his or her efforts provides to the marketing company.

As a result, marketing techniques and strategies such as: cost per click advertising, banner ads, search engine marketing, e-mail marketing, affiliate marketing, interactive advertising, search engine marketing (including search engine optimization), blog marketing, article marketing, and blogging can all come under the auspices of 'internet marketing'.

History of Affiliate Marketing

According to Shawn Collins of AffiliateTip.com's book: Successful Affiliate Marketing for Merchants (from which this is an excerpt):

As the story goes, affiliate marketing all started at a cocktail party. Jeff Bezos, CEO and founder of Amazon.com (www.amazon.com), was chatting with a party guest who wanted to sell books on her web site.

This got Bezos thinking. Why not have the woman link her site to Amazon’s and receive a commission on the books that she sold? Soon after, Amazon introduced the "Amazon Associates Program". It was a simple idea. Amazon associates would place banner or text links on their site for individual books or link directly to the Amazon’s home page.

When visitors clicked from the associate’s site through to Amazon.com and purchased a book, the associate received a commission. With that thought, Bezos created Amazon.com’s affiliate program in July 1996.

But Amazon wasn’t the first company to initiate an affiliate program. According to Brad Waller, VP of affiliate and business development for EPage (www.epage.com), the affiliate program for EPage started in April 1996. As documented in “The CDNow Story: Rags to Riches on the Internet,” CDNow’s affiliate program predates Amazon’s by more than a year.

In November 1994, almost a full year before Amazon.com even launched its web site, the venerable CDNow (www.cdnow.com) began its buyweb program. With its buyweb program, CDNow was the first to introduce the concept of an affiliate or associate program with its idea of click-through purchasing through independent, online storefronts.

It worked like this.

CDNow had the idea that music-oriented web sites could review or list albums on their pages that their visitors might be interested in purchasing and offer a link that would take the visitor directly to CDNow to purchase them. The idea for this remote purchasing originally arose as a result of conversations with a music publisher called Geffen Records (www.geffen.com) in the fall of 1994. The management at Geffen Records wanted to sell its artists’ CDs directly from its site but didn’t want to do it itself. Geffen Records asked CDNow if it could design a program where CDNow would do the fulfillment.

Geffen Records realized that CDNow could link directly from the artist on its Web site to Geffen’s web site, bypassing the CDNow home page and going directly to an artist’s music page. By linking Geffen Records to CDNow, the affiliate marketing format was born.

With the growth of on-line sales the e-commerce website of many companies has overtaken the sales of their existing offline business. Thus for most companies their e-buisness is a critical component of their overall business plan and may even be the focus of their marketing strategies. Part of the marketing strategy is the generation of sales via affiliates. Indeed, it's estimated that affiliate earnings in the UK were £2.16 bn in 2006 and worldwide earnings were $8.5 bn.

Affiliate Marketing Business Models

From the merchant perspective affiliate marketing is viewed as a positive form of advertising as it works on a 'pay for performance model' so that the merchant does not incurr any expense until a product is sold (ignoring the initial set-up and development of the affiliate programme). The merchant also gets free advertising through banner ads which are displayed on the marketer's website even if they are not clicked on. Indeed, many large retailers such as Amazon owe much of their success and current position to their affiliate program.

There are also two models of how affiliate programs are managed by the merchant. the program can either be entirely set-up and managed by the merchant themselves. In which case you will have to directly apply to the merchant to become an affiliate.

The second method is where the merchant out-sources the handling of their affiliate program to a third party and this is now the most popular kind of affiliate program.

Affiliate Management Outsourcing

Successful affiliate programs require considerable effort and maintenance work for both the merchant and the publisher. This is even more true today with so much competition in the affiliate market: something that is true for merchant and publisher alike. Neither party can afford to run a shoddy or slip-shod campaign any more. The merchant mush be professional and must be able to provide the creatives (banner and text advertisemets) that the publisher needs for their site. The publisher also must drive quality traffic to their ads or they will earn no revenue from their affiliate programs.

The increase of number of internet businesses in combination with the increased number of people that trust the current technology enough to do shopping and business online caused and still causes a further maturing of affiliate marketing. The opportunities to generate considerable amount of profit in combination with a much more crowded marketplace filled with about equal quality and sized competitors made it harder for merchants to get noticed, but at the same time the rewards if you get noticed much larger.

As a result many merchants are chosing to join large affiliate programs where those who run the overall program are in charge of running the campaigns for the merchants and calculating the commissions for the publishers. This reduces overheads for the merchants and makes their campaigns more professional and more efficient.

Types of Publisher Campaigns

Below you will see a list of the type of campaigns that publishers are running for their merchants. If you are running an affiliate program then you should see your business model here. If you are not yet running an affiliate program then the list below should give you an idea of the type of creatives that you can run:

  • Affiliates running PPC (pay per click) search engine advertisements (eg AdWords) to promote their Merchants' offers.
  • Comparison shopping sites and directories
  • Loyalty sites; which typically provide some kind of reward system, such as points cash-back or charitable donations, in compensation for purchases.
  • Coupon and rebate sites that focus on Sales promotions.
  • Content and niche sites, including product review sites where products are aligned to the site's niche.
  • Personal websites. Though these were the cause of the original affiliate marketing programs these days their impact is insignificant as few have sufficient traffic to make any significant affiliate sales.
  • Blogs and RSS feeds, which are the newest media for driving affiliate sales.
  • Email list affiliates. Though this only really works for the owners of large opt-in email lists).
  • Registration Path affiliates that include offers from other companies during a registration process on their own website.
  • Shopping directories that list merchants by categories. Here no offers or coupons are offered and the content is thus more static, requiring fewer updates.
  • CPA Networks are top tier affiliates that expose offers from advertiser they are affiliated with to their own network of affiliates.

Finding Affiliate Programs

Affiliate Networks

An affiliate network is a value-added online media intermediary, providing services including aggregation, distribution of creative materials, and campaign performance tracking/reporting, for affiliate merchants and affiliates. For affiliate merchants, services can include providing tracking technology, reporting tools, payment processing, and access to a large base of affiliates. For affiliates, services can include providing one-click application to new merchants, reporting tools, and payment aggregation. For a publisher these networks are generally free to join but can be rather hard to find especially as they name themselves by different titles such as: 'marketing solutions provider'; 'pay-for-performance network'; 'cost-per-action advertising network' or even 'performance-based online marketing services company'.

Some affiliate networks allow almost anyone to join. Others insist your site must receive a certain number of visitors. Some also let you see a directory of the merchants in the network before you join, whereas others show you their list of offers only after you join.

Below is a list of some of the larger and better (for the publisher) affiliate networks:

  • Clickbank Clickbank is the affiliate e-commerce system. Worth a look whether you have an electroinc product to sell or if you want to sell someone else's product.
  • Maxbounty Maxbounty is another of the big affiliate systems. Definately worth signing-up to if you're serious about making money from affiliate sales.
  • DigitalRiver This is another of the big affiliate programmes. Iti is mostly focussed on Europe and definitely worth a look if you live in this region.
  • CommissionJuction This is one of the biggest affiliate programmes out there. They handle the likes of eBay and hundreds of others. If you're going to be serious about affiliate marketing then this is one system you simple have to join.
  • clixGalore A smaller affiliate program but one that allows deep linking into their partners' products so you can promote individual items. clixGalore also allows you to earn comissions on any sales made by new affiliates referred to them!

Affiliate Programs Directories

Another way to locate affiliate programs is to use an affiliate programs directory. These are niche web directories that are very like the large and broad web directories like the Yahoo! Directory or Dmoz but which only list affiliate programs.

These directories are useful as they not only list the various affiliate programs available, but they also tend to give summaries of the program terms and condition for each program in their listing, information such as: compensation model, commission rates, payout terms and methods, cookie duration, special bonuses or incentives and other information useful to affiliates that are looking for merchants or services with an affiliate program.

To find these directories you can perform a search engine search for 'Affiliate Program Directory'. Alternatively I have provided a Google search box below for you to perform exactly this search. Please not this is a real Google search box and I am not manipulating it or the results in any way. This is only provided for your convenience.

Google