What Is Affiliate Marketing?
Affiliate marketing is when people who are not otherwise related to an ecommerce enterprise provide advertising on its behalf. There are two sides to affiliate marketing. One aspect is your ability to make money on a website by joining an affiliate network and promoting other people’s products. The flip side is you as the producer contracting with an affiliate network to provide people to affiliate with you and sell your product or creating an affiliate network of your own. The advertising on the affiliate’s site may be a banner ad, a pop-up ad, or a pay-per-click text ad, for example.
Affiliates are paid when a sale is made to a customer who has arrived at the ecommerce site through clicking a link on the affiliate’s website or when a customer signs up for a service. This payment is called the Cost Per Sale (CPS) or the Cost Per Action (CPA), depending on the arrangement. A tracking system is used to determine this and—depending on the contract—crediting the affiliate even after some time has passed (it is understood that the customer may be taking time to consider and comparison shop).
This article focuses on the second side: you setting up an affiliate network to sell your product(s). For more about joining an affiliate network to sell the products of others, see the articles “Affiliate Program Basics” and “Tracking Affiliate Sales.”
DIY Affiliate Marketing
Setting up your own affiliate program requires several types of investment. You will need tracking software or a programmer to set up a tracking system to track sales by your affiliates. Look for tracking software that tracks stats in real time and keeps track of both visitors and sales. Examples are AssocTRAC and Pro-TRACK. Whichever way you decide to approach it, this system will need to interface with your checkout system.
Alternatively, you could hire a web-based tracking business for a monthly fee. The package may include shopping cart software with tracking of affiliates built into it, along with stats and affiliate tracking, as well as linking with PayPal and taking care of your billing and payments. Examples are QuickPayPro and My Affiliate Program.
Besides that, you will need to figure out your commission scheme, provide advertisement designs and articles, and have the time and ability to communicate with potential affiliates, persuade them to sign on, support them once they’ve made the commitment, and have a system to pay them their commissions. You will also need to be on the lookout for affiliate fraud, such as trademark infringement and false advertising, and deal with it if it arises.
Joining a Network
There are large and small affiliate networks charging large and small fees to connect you with affiliates to help sell your products. Such a business may also offer other services, such as connecting you with affiliates and billing services. Examples of larger networks are Commission Junction, Performics, ShareaSale, and LinkShare. Others include ClickBack and PayDotCom, which is PayPal based. You should be aware that since either of the DIY solutions requires a separate arrangement for the affiliate, you may find an easier time acquiring affiliates through a network that centralizes their records.
The best advice is to join the networks you are considering to test them out from the affiliate’s standpoint. This will give you the opportunity to see the challenges that your affiliates will face and to prepare focuses guidance, training, and support for them.