Mike Evans from Search Marketing Standard posted an interesting blog about Affiliate Programs and their function in a struggling economy. The ad network is responsible for finding and managing the affiliates, and for checking to make sure that the affiliate is a reputable person who is running clean traffic to your offer. The ad networks also manage payouts to affiliates and add roughly a 20% fee on top of whatever the affiliate receives as a commission in exchange for getting their affiliates to run your offer and managing the technical details involved in tracking your offer and payouts. Mike goes on to discuss merchants, multiple ways to drive traffic and the possible drawbacks in his blog post below.
The great thing about an affiliate program, especially in these hard economic times, is that if an affiliate doesn’t produce any sales, there’s no cost to you.
Another function the ad network performs is staying on top of your sales to make sure they back out. Having sales back out is the process of making sure your customers are happy and are not submitting a large number of credit card charge backs. One of the main functions of the software run by affiliate ad networks is to give them (and you) immediate notification if a particular affiliate is running bad traffic that does not back out. The network will speak to the affiliate and shut them down if their traffic is not backing out.
Now, all of the above sounds great, so here’s the not-so-good news. You have to structure your offer in a way that is attractive to an affiliate. You need an offer that has sufficient demand on the Internet, and you need work with your ad network to create the highest payout you can, with attractive, high-converting landing pages.
As a merchant, have to understand that the affiliate is using his time and money to promote your product. The affiliate has thousands of other offers to choose from, and for him to run traffic to yours; you have to make it worth their while. If the commission you expect to pay is only pennies, no one will run your offer; you have to make sure the relationship formed between you, the ad network, and the affiliate is mutually beneficial. Your ad network will guide you in this.
One of the second most popular ways affiliates drive traffic is through email. Many affiliates develop an opt-in email list in specific niches. There are affiliates that specialize in every niche out there, including yours. An opt-in email list is one where a consumer has chosen to receive information about a particular topic. In our baby-blanket-related example, an affiliate might offer a free newsletter on the latest ways to help your baby go to sleep. Consumers opt-in to receive the weekly newsletter, and the affiliate then sends your offer to his email list.
There are many, many other methods affiliates use to drive traffic. These include buying banner ads to advertise your product, making simple websites that provide consumers information, writing articles for blogs, making videos and posting them on YouTube, making product review sites, and posting classified ads.
Thatcher Michelsen, a super affiliate with over ten years Internet marketing experience advises, “Merchants need to believe this is real. Many SEO marketers don’t believe at first that it’s actually possible to get other people to pay to advertise their products. The Internet is not like print or TV. Everything on the Internet is trackable, and that’s why affiliate marketing works. There’s no risk for the merchant at all, they just need to make sure they have a good offer.”
According to the 2009 AffStat Report, a document put out by Affiliate Summit (the industry-leading affiliate advertising convention), 80% of affiliate programs use a revenue sharing or Pay-Per-Sale method, nineteen percent use a Pay-Per-Lead lead method, and the remaining programs use a custom solution.
Don’t think this is easy money however. Successful affiliate programs require work and maintenance. But in these times, any additional sales, especially those with no up-front cost, are a welcome addition to your bottom line.
While affiliate marketing has benefits, there are, of course, drawbacks. For instance, you’ll be sharing your profits with an outside party. And if an affiliate uses unscrupulous means to drive traffic — email spam for example — you’ll have to exercise some damage control on your reputation.
Okay, so we’ve covered the good and the bad. How do you get started? Using a hosted solution is often the best way to start. This means you use a third-party affiliate management company to set-up your offer and promote it to their affiliates, using their servers and infrastructure.
Ultimately, I believe that every business will have to at least look at the affiliate model to promote their product. The ability of the Internet to track all of these sales allows the affiliate model to work and continue to grow at an amazing pace. Affiliates are, in effect, an extended sales force for your business. By using them wisely, you will be able take your company to heights you always imagined possible.
