Affiliate Marketing 101 – Defining Affiliate Marketing
Wikipedia defines affiliate marketing as “an Internet-based marketing practice in which a business rewards one or more affiliates for each visitor or customer brought about by the affiliate’s marketing efforts.” Basically, this means that an affiliate is rewarded when he or she directs a customer to a merchant’s site, and that customer purchases a product or performs some other action. This kind of advertising is sometimes referred to as “pay for performance” or also “revenue sharing.” The reason for that is, unlike traditional advertising where companies themselves primarily use their own resources to raise awareness of their product or service, affiliate marketing commissions are generally based on how well the affiliate’s promotion methods work.
The basic transaction in affiliate marketing looks like this:
A company (sometimes called “advertiser,” “retailer” or “vendor”) with a product or service to sell makes an agreement with you, and other website owners, to become their “affiliates.”
You, as the affiliate (sometimes called “publisher”), places a link that the marketer has assigned to you on a website (not necessarily your own), allowing visitors to hyperlink to their website.
You get paid for your efforts on the basis of click-throughs, sales or other actions.
To support the affiliate marketing process a number of infrastructure companies, such as Commission Junction, Clickbank and Pepperjam, serve both the marketers and their affiliates. Individual affiliates are drawn to these networks because they’re easy to join and it helps them market products and services that can interest a wide variety of potential customers. Companies find it convenient to use these networks to handle the signing and support of affiliates. This support can include anything from tracking referrals from and paying out weekly or monthly commissions for every single affiliate, to answering affiliates’ technical support questions on the intricacies of Internet-based affiliate marketing, right down to how to place an advertising banner on a website.
Affiliate marketing can be handled in-house as well. Dedicated software exists that allow a company sign up and manage a large number of affiliate marketers without an external affiliate manager. This frees companies from the standardized compensation programs offered by the networks, allowing them to write their own contract and create their own rules about how the affiliate marketing program will work. It also lets them save on commissions, since there’s no middle-man between them and their affiliates. Often, companies that run their affiliate program in-house will offer larger commissions and tend to be more accommodating with their affiliates.
Marc Magos – By trade, Marc Magos is an IT expert, with experience in data and telecommunications networking, systems administration and information systems security. He provides these services …
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