What is an Affiliate Program

An affiliate program is basically where you sell a company's products on a commission type basis on the internet. This program is also known as an associate, reseller or partnership program.

Once the power of the internet was realised many (now probably most) companies have used the internet to increase their sales. Just about all well known companies now have an internet presence.

It soon became apparent that for a company to just advertise their product on the internet was far more limiting than getting many other people to advertise for them as well. So affiliate marketing was born, a win/win situation for both parties.

How does an affiliate program work then?

Basically you sign up for an affiliate program with any company which takes your fancy. Search the net. There are numerous different types of products/services being offered. After filling in their forms you are then given a link which means that for every person you introduce via this link who purchase the product you get paid a commission (see below though)

The problem is that many companies have different rules and you will have to do due diligence on each one. Commission rates vary wildly from pennies in the pound to 50% or more depending very much on the value and type of product/service offered. It stands to reason that a "cheap" book say on a publishers site will not pay anywhere as much commission as, for example, when someone buys a large conservatory or swimming pool via your advertising. However you would probably sell "cheap" books far more often than a swimming pool!! So you have to bear in mind all the different scenarios when making your choice.

So how does the company pay you?

There are three main ways for payment:-

Pay per sale (also known as cost-per-sale)

When you, as an affiliate, send a person to the company site via your link and this person buys the product/service then you get paid. This can be a percentage of the sale price or a fixed amount previously agreed. However take care here as some companies only pay a percentage of their net profit after all deductions have been made. You are very much in the hands of the company with this method since you cannot know what their costs etc are.

Personally I wouldn't be happy about this net profit system but the choice is yours. Just make sure of the company terms before you sign up. Always read the small print!!

Pay per click

With this method the merchant pays the affiliate based on the number of visitors who click on the link to the company site. In this case the visitor doesn't have to buy anything and it doesn't matter what happens once they get to the merchant site. The amount of commission tends to be much lower for obvious reasons. (At least I hope this is obvious!).

Pay per lead (or cost-per-lead)

Here the company pays the affiliate for the number of visitors they refer who sign up as leads. What normally happens is that the visitor fills out a form on the merchant site which the company then uses as a sales lead or may sell to another company for the same purpose.

The above are the most common methods used although there are others including variations of the three mentioned.

Two of the more popular variations are Two-tier programs and Residual Programs.

In the former, which is similar to Network Marketing ( Multilevel Marketing), in addition to receiving commissions based on their own sales and recruiting actions the affiliate also receives commission which is paid on the activities of those people they originally recruited.

With Residual Programs the affiliates continue to receive commissions from people they have referred to the company site if these people continue to purchase goods/services from the merchant. This is particularly applicable where continuous monthly purchases are made eg a magazine subscription

One of the most important considerations we have left to last. That is how does the affiliate go about getting people to visit their site so that they can link through to the merchant?

The answer is that many of the methods used for advertising on the internet would be appropriate. The subject of advertising is too lengthy to go into here so please see my separate report if you need help.

So, yes, affiliate marketing is very worthwhile if you do it correctly.

The major disadvantage is that YOU are not building a list so that YOU can offer them some different products from alternative sources unless you can capture their email addresses and get permission to contact them further. You are, therefore, always having to find new customers rather than building relationships with existing clients which is the better way to a potential huge business.

To YOUR success

John Beaumont Internet Marketer