By Martin Melisek
I'll start this article with a question: Are you be willing to share
part of revenue from sales that you would not get otherwise? For most cases,
the answer would be YES. There are many methods to market your business online:
e.g. pay-per-click campaigns such as Google's Adword, CPM (= cost per thousand
impressions) of your banner on high-traffic sites, ads in newsletters etc. etc.
What is common for these marketing methods? You never PAY FOR RESULTS that
campaign actually generated. Idea of affiliate marketing is to PAY ONLY FOR
RESULTS. Don't spend money on ineffective advertising; build your own advertising
channels instead. Build partnerships - and partners will work for you. That's
why people refer to affiliate marketing as "cost-effective",
"performance-oriented" or "risk-free".
What kind of business can I market with affiliate program?
Well, hard to find one that you can not. It doesn't matter if you sell
hardware, mortgages, site membership or a service. You can even pay for
traffic: pay per click or pay per CPM
Structure of affiliate program
There are 2 basic kinds of rewards: flat fee (=fixed amount) or
percentage commission.
Your commissions to affiliates can be based on:
Pay per sale - most common, you pay commission (flat or percentage) for
sales referred by your affiliates
Pay per lead - suitable for e.g. membership sites or sites offering paid
content: similar to "per sale" model, but you pay for new member
subscription.
Pay per CPM - you can pay even for thousand impressions of your banner
Pay per click - if you want to reward each click referred: if you are
considering this kind of affiliate program, make a careful research about fraud
protection features of solution you choose - otherwise it can cost you a lot of
money..
A lot of programs are 2-tiered (2 levels of affiliates) - it means
affiliates - parent affiliates can have subaffiliates - and parent affiliate
get commission for their subaffiliate's sales. Subaffiliates are those, who
have been invited to your AP by parent affiliate. 2-tiered structure has its
advantages: it motivates affiliates to recruit subaffiliates to your AP and
maybe even train and communicate with them - which saves your time and
generates your revenue.
How to start affiliate program?
There are 3 main possibilities:
Stand alone software
Hosted software
Affiliate network
Stand alone solution - requires software that is installed on your
website (called also "affiliate tracking software/script"). Affiliate
program is under your total control and responsibility.
Hosted solution - is similar to stand-alone solution, but the software
is hosted on 3rd party server - usually offered as service (=monthly payments).
Affiliate network - software is again installed on 3rd party server, in
addition to the affiliate tracking you gain immediate access to a network of
potential affiliates.
Which solution should I choose?
As regards price:
Stand-alone: one time fee for the software
Hosted: monthly fee, sometimes even progressive charging according to
the growth of your affiliate program
Networks: will charge you a transaction fee on each affiliate sale or
the will ask you to make minimum monthly payment or combination of those two.
Also some fee to join might be included.
Technical skills:
Stand-alone: requires basic skills to install the software (usually
installation wizard is available) and to integrate with other systems on your
website (such as shopping carts/payment gateways/website itself).
Hosted: almost no skills required
Networks: almost no skills required
Benefits of stand-alone solution.
Since Amazon started its affiliate program, affiliate marketing grew
rapidly. Due to its cost effectiveness and undisputed advantages, this field
became very competitive. And competition is always good for customers: prices
go down.
There is a lot of software sold on the internet today - and not always
the highest price means the highest quality! Do not fall for success stories
and don't spend hundreds of dollars for products that are just well marketed:
you are probably not "the lucky guy".
Affiliate marketing is competitive - if you are new to this field you
will surely not find the best way to market your business at once. This is
MAJOR benefit of stand alone solution: while hosted or network solution offer
you few possibilities to change your program, with stand-alone solution you
have total control over your program. You can find the best way to market your
products. Try and choose the best for you. ALWAYS want software with a lot of
features. You might use a few of them at the beginning, but after several
months you will certainly use more and more - would you like to pay for them?
Or even pay for switching to another solution with extensive features? NO!
We already mentioned the PRICE advantage of stand-alone solution: you
pay one time fee - no need to discuss this any more - if you pay monthly,
consequently you pay more than even for the most expensive stand-alone software
on the net. It is worth to mention that solid software is sold for $150 or even
less.
Another benefit is positive effect of affiliate links on your search
engine ranking: because the software is installed on YOUR domain, they can help
you to improve ranking of YOUR website - not domain of hosted solution.
Also stand alone solutions can be usually better branded for your
business and customized for your specific needs.
Cons of stand-alone solution
Everything has its pros and cons. I'll explain possible cons of
stand-alone solution and what it takes to overcome them. If you feel that
you'll not be able to cope with what follows DO NOT choose stand-alone
solution.
1. Technical skills - will help you during installation and integration
of the software with your shopping cart / payment gateway / website. Usually,
very little technical skill is required, which depends also on the level of
support provided by vendor and how sophisticated the software is. Generally, if
you'll be able copy/paste some code snippets to certain places on your website
or to a template page of your shopping cart, your skills are sufficient...
2. Affiliate recruitment - this is strong selling point of affiliate
networks - your program gets immediate exposure to a network of affiliates,
while for stand-alone software you'll need to recruit affiliates yourself. The
fact is that you must motivate affiliates of the network as well - if you
don't, they'll stop promoting your products. Registering your affiliate program
to numerous affiliate directories (for free) and setting up appropriate
multi-tier structure helps you to recruit affiliates to your program. But it
takes time and efforts...
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| Image courtesy of Stuart Miles at FreeDigitalPhotos.net |
Nice Blog!
ReplyDeleteThanks you very much for sharing valuable information.
Keep on posting...
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