Thursday, 12 December 2013

The ABCs of Affiliate Marketing

Sometime or another, we've all heard of affiliate marketing. In a nutshell, it is one of the core elements of internet marketing whereby affiliates representing companies are rewarded for bringing over visitors to said company's website. Also called cost per action/acquisition (CPA) marketing, it is one of the oldest forms of marketing extant on the web.

The four essential components or "players" of the system include: the merchant (the retailer/company that wants to sell products); the affiliate network (intermediates between the merchant and affiliate); the affiliate (or publisher); and the ultimate customer.

To advertise and promote the products of their merchants, affiliates use a variety of means ranging from organic search engine optimization (SEO), pay-per-click (PPC) using Google's AdWords or Microsoft's AdCenter, email marketing, content marketing (including article marketing) and also offline, physical display advertising in the form of fliers, banners, etc.

A smaller, related but more narrow version of affiliate marketing is called referral marketing. Though both forms use third-parties to drive sales to the merchant, affiliate marketing is far more impersonal and larger in scale and scope. Hence, referral marketing is usually undertaken by ordinary individuals whereas affiliate marketing is the preserve of entrepreneurs and internet marketers with a good grounding of e-commerce and online marketing. Another related term is multi-level marketing (to be discussed in a future article).

For individual affiliates, there are a number of benefits for getting started with an affiliate program:

  • They can pick and choose the products that they want to represent and endorse on behalf of merchants.
  • They can decide where contextual ads are placed on their websites/blogs and also dictate the size, colors and other properties of said ads
  • They can choose to link their articles and other content to their merchant's website or not and decide on the degree of frequency (though they should keep in mind Google's PageRank regulations in doing so)
  • Many affiliate programs provide payments for simply making any sort of sale (does not have to specifically be from your product portfolio) like Amazon and eBay
  • You can choose to be as active or as passive as you want when marketing. All of you have to worry about is if you're getting visitors to your site who actually click on your outbound links.
  • There are numerous affiliates out there who are earning thousands of dollars monthly (or even weekly) through their affiliate programs. All it takes is sincerity, a willingness to learn and lots of dedication.

For merchants who run their own programs directly or through affiliate networks, the main benefits are:

  • You get a loyal army of individual publishers who are committed to driving traffic to your website and pushing sales.
  • You don't have to do any advertising or promotion yourself - your affiliates handle that for you.
  • Affiliates oftentimes also handle important relationship efforts with potential/existing customers and can also provide customer service and support.
  • You only pay your affiliates for tangible results - measured in unique visitors, lead generation, conversion or sales units.
  • Commissions to affiliates usually costs much less than other more, dedicated advertising methods.

Usually new affiliates choose to endorse and sell products related to their niche (also called verticals). For example, if you ran a website or blog dedicated to pets, then chances are, you would find selling pet food and toys most profitable and relevant for you. There are literally hundreds if not thousands of product categories to choose from ranging from automobiles to yo-yo's.

The ultimate barometer of your success will lie on conversion rates. Even if you are getting a good amount of unique visitors to your site and a decent click-through rate to your merchant's site, your commission will mainly wrest on how effective you are in persuading visitors to buy from the merchant.

Some of the largest affiliate networks (both merchant-run or through third-parties) on the web include giants like Amazon, Clickbank, Commission Junction, eBay‎, Google (think AdSense), Linkshare, Shareasale and Wealthy Affiliate.

Affiliate marketing is definitely one of the most lucrative ways to earn money online. There are numerous stories of people starting with hardly anything in the beginning only to turn their affiliate efforts into millions o dollars over a few years. If you have the necessary time, dedication and (some) knowledge, then the possibilities are potentially endless.

In future articles, I will write a series of reviews critiquing each of the major affiliate marketing programs out there and of course, will keep you updated on the latest developments.

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