Affiliate marketing is basically performance based marketing, whereby affiliates/partners promote a merchant's product/service and get remunerated for every sale, visit or subscription sent to the merchant. The most frequently used payment arrangements include: pay-per-sale, pay-per-lead and pay-per-click compensations. Affiliate marketing is one of the most powerful and effective customer acquisition tools available to an online merchant today. You decide what commission to pay, and pay only when results (sales, leads and/or clicks) are obvious.
To plug into the affiliate marketing world you need to start an affiliate program. Affiliate programs are run either on affiliate networks or may be managed in-house. If you opt to use an affiliate network, you do not need to worry about sales/visits tracking or manually cutting payments to your affiliates, as the network performs these tasks for you. For their services, networks charge either a percentage of what you pay your affiliates, a flat monthly fee, or a combination of both. Some of the examples of affiliate marketing networks include: CommissionJunction, LinkShare, Performics, and ShareaSale. If you decide to run your program in-house, you would need to obtain tracking software, hosted services, or a shopping cart with affiliate features. Running reports and paying your affiliates would then be done by you alone.
From first glance, it may seem to be more effective to run an affiliate program in-house. There are pros and cons to both methods of running an affiliate marketing program. In-house affiliate programs help you save money on network fees, while network-based affiliate programs allow for a larger affiliate program exposure and numerous affiliate recruitment opportunities. The advantages and disadvantages of each must be carefully weighed and the decision be made according to individual need.
As an example, let us use a business running retail operations online. Two variables need to be set within the affiliate program: commission structure/model and cookie life. Commission model more commonly used for online stores is the pay-per-sale method, meaning you pay your affiliate a percentage of each sale that he/she sends your way. Rates differ from 2% to 50% depending on the industry and the profit margins of the business. Commission is normally credited to the affiliate's account at the moment of sale, but may be reversed if on some reason the sale doesn't go through.
Affiliate sales are normally tracked using cookies (small text files set on the visitor's computer) and the duration of how long to keep them on the visitor's machine is called the cookie life. In our context it means the time period between the click on the affiliate site and the last day when you are willing to pay that affiliate a percentage of the sale made by "their" visitor. Cookie life may be set for 30, 60, 90 or more days. Once the cookie life expires, the visitor sent by the affiliate becomes "your" visitor. If, for example, the cookie life was set at 60 days and someone an affiliate referred purchased from you three months down the road, the affiliate is not paid the commission.
Starting an affiliate program (in-house or on a network) is generally reasonable. Options start from a few hundred US dollars.
AM Navigator can either launch an all-new affiliate program for you, or pick up management of an under-performing one, revitalize it, and improve its performance. We manage affiliate programs by recruiting quality affiliates for them, and by announcing and enhancing affiliate programs, thus making them more attractive for the current affiliates to promote and for the new ones to join.
The numbers would be different depending on various factors. Some of our clients witnessed a 10% sales growth in the very first month their affiliate program was launched. Others did not pick up so swiftly, but half a year down the road affiliates were sending over 40% of their gross sales. We will work with you to the best of our ability to maximize your sales/profits.
There are various types of affiliates. Some - being professional PPC consultants - will help you save on PPC campaigns. Others will create SEO-friendly websites with great rankings on keywords important to your industry, and to your products featured on them. There are also those that have constant coupons and deals traffic, and will be happy to add your coupons to their websites. Most importantly, all of them together help you get on your way to becoming a "ubiquitous presence" on the internet.
We've addressed many common affiliate marketing questions in our Knowledge Base.
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