Aspects of the Affiliate Marketing Business

Affiliate marketing programs were as popular a decade ago as they are today, and there are a number of reasons for this enduring popularity, the most important of which is, advantages offered by these programs are many. First and foremost, is the very low investment requirement to become an affiliate marketer: no product to create; no adminstrative costs, no product maintenance or other such costly items. Just a website, a catchy domain name, reliable web hosting and interesting (if not compelling) content; and the advantages for product owners (or merchants) are also plentiful.

Affiliate Marketing: How to make money and create an income

Benefits which can be derived from affiliate marketing for the affiliate, as well as the merchant are many; and where there are plenty of benefits and advantages existing in any business model, there is bound to be a high level of interest from all manner of enterprising individuals who wish to avail themselves of such opportunities. In fact, the benefits of affiliate marketing have become clearer to more people today than in the early days when began paying commissions to “Associates” for sales made of their products. Today’s Affiliate is a direct spin-off of yesterday’s Associate.

Affiliate marketing: Mutually beneficial

Both merchants and affiliates can clearly see that affiliate marketing can work for both of them in the sense that a merchant sees affiliate marketing as a chance to advertise their products at the lowest possible cost, while affiliates view affiliate marketing as an easy way of earning profits online by doing what they like most, and that is by creating websites and producing content in the way of interesting articles, videos, podcasts and attractive graphics.

Just as the popularity of affiliate marketing has shifted into high gear, so has the outlook of those most interested in it as a business, and how it has changed. Today’s affiliate marketing is no longer considered an alternative method for merchants to advertise their products, or as a source of additional income for affiliates; it has, in fact, become a main source of profit and revenue for merchant and affiliate alike, and there is no reason to believe that the popularity of this program will not continue to soar, even as competition increases.

So the question now is what type of affiliate marketing will work best for you, if you have interest in this kind of business? And if you are, then you will most likely need answers to questions like:

  • Are all affiliate marketing programs the same?
  • Are the benefits the same?
  • Are there some AM programs that work better than the others?

Affiliate Marketing: How to make money and create an income

The following paragraphs are intended to address these questions as well as some other, more basic questions we believe might be helpful to most affiliate marketing newcomers; and we’ll begin by answering the first question from above. There are actually different types (or classes) of affiliate marketing; but the number of types will depend on how an individual might classify them. For example, the most basic affiliate marketing programs falls under two categories: pay-per-click (PPC), and pay-per-performance (PPP).

PPC and PPP affiliate marketing models

PPC is the most popular type of affiliate marketing for affiliates with small websites, and is probably the easiest way for them to earn money. With this type of affiliate marketing, a merchant pays his affiliate whenever a visitor is referred to the merchant’s website by clicking through a product banner or text ad placed on the affiliate’s website. The affiliate gets paid a certain amount even if those visitors s/he referred do not make a purchase from the merchant’s site. However, typical fees for PPC affiliate programs are small, and usually do not exceed a dollar per click.

PPP affiliate marketing is the most popular among merchants and is also the most lucrative type for affiliates, because this type of affiliate program allows for merchants to pay affiliates only when the affiliate’s referral translates into an action —that results in the purchase of something from the merchant’s website or when the visitor becomes a lead. This means a lot of savings for the merchant; but it becomes the most lucrative type of compensation for dedicated affiliates since commissions in PPP affiliate marketing are usually in the range of 15% to 20% of the actual product sales.

Affiliate Marketing: How to make money and create an income

Digging deeper: The PPS and PPL models

Pay-per-performance affiliate marketing can be further classified into two other types, which are just as popular: pay-per-sales (PPS) and pay-per-lead (PPL). In a pay-per-sale type of affiliate marketing, merchants pay affiliates a certain fee whenever a visitor s/he has referred to the merchant’s site actually buys something from that site. Affiliates are often paid on a commission basis, although other merchants would opt to pay a fixed fee; but no matter what the basis of that fee, it is generally higher than fees paid to affiliates in a pay-per-click affiliate program.

The pay-per-lead type of affiliate marketing is a slight variation of the PPS type and is often used by insurance and finance companies, as well as other companies who rely on leads for their company to grow. With this type of affiliate marketing, an affiliate is paid whenever a visitor s/he referred to the merchant’s site completes an application form or other similar form related to the company’s business. Compensation for this type of affiliate marketing is based on a fixed fee with rates that are approximate to those of fixed fees in the PPS type.

Aside from these three specific types of affiliate marketing, there are several other affiliate marketing types in existence today. If classification is based on the depth of an affiliate network, it can be classified as single-tier, two-tier, and multi-tier affiliate marketing; and there is also another type of affiliate marketing that pays an affiliate each time a customer s/he has referred purchases something from the merchant’s site.

•From single to multi-tier affiliate marketing

These types of affiliate marketing programs are based on the different levels or tiers in an affiliate network by which payments are made. In a single-tier affiliate marketing program, affiliates are paid based only on direct sales or traffic s/he has referred to the merchant. All previously mentioned affiliate marketing types (i.e. PPS, PPL, and PPC) fall under the single-tier classification.

With two-tier affiliate marketing programs, an affiliate is paid, not only for direct traffic or sales that s/he refers to the merchant’s site, but also on every visit to, or purchase made by leads and customers referred by the various other affiliates who became affiliates through the original affiliate’s recommendation. Keep in mind, hopwever, that multi-tier affiliate marketing works the same way as the standard type, although affiliates are paid additional commission for a wider number of affiliates in different tiers of that affiliate network.

Affiliate Marketing: How to make money and create an income

Residual income affiliate marketing

In a residual income affiliate marketing program, affiliates are paid, not only once for every customer s/he has referred to a merchant’s website or product page, s/he is also paid whenever customer s/he has referred returns to the merchant’s website and makes another product purchase. Compensation for this type of affiliate marketing is based either on a sales percentage basis or a fixed fee basis; but either way it is an attractive method of compensation to affiliates because one positive action upfront can result in a lifetime of payments.

The various types of affiliate marketing programs would obviously work differently for merchants and affiliates, depending on the particular program; and each would generally have its own list of benefits. However, to make a determination of which type of affiliate marketing will work best for you is a question that only you can answer once you have all the relevant information. Simply determine which type of affiliate marketing program will suit your needs and characteristics best, and proceed from there. Hopefully what you’ve read here will be helpful in some small way. Good luck!

Get The Super Affiliate Marketers Guide Here!

Affiliate Programs and Advertising Choices

Advertising via affiliates

Based on all the promotion, notoriety and success of affiliate marketing programs, most Internet users who might be interested in becoming an affiliate marketer are proably already aware of the fact that there are plenty of these programs to choose from; and those who aspire to an affiliate marketing career need only do a little research about programs they’re interested in joining. This way they will have a good understanding of the kind of software system, product type and company management that will either help them to achieve affiliate marketing success or help them fail at it.

Affiliate marketing is really about the promotion of products and/or services (‘products’ for the purpose of this post) with an online company, or multiple online companies. Such companies are known as affiliate merchants, with which affiliates will sign up and, in effect, take on the role of advertisers or marketing arms of these merchants, the result of which relationship buying customers and potential customers – or referrals – will be provided to the merchants through affiliates’ efforts.

If traditional advertising can be described as the means by which a great number of consumers are made aware of certain products, then advertising via a crew of affiliates may well be described as “the means by which a great number of consumers re made aware of certain products” without the upfront monetary commitment.

The affiliate’s efforts

Furthermore, affiliates promote products on their own websites, which gets exposure at the affiliates’ expense, so such advertising will be both attractive and appealing to the merchant’s customers and potential consumers, since they will have been originated from a site which provided compelling content that holds relevance to their interests.

Most affiliate programs are absolutely free to join, so it makes little sense for up and coming affiliates to pay for joining an affiliate program especially since the affiliate absorbs all the costs of his/her business in order to earn commission checks that are payable only when the affiliate makes a sale. In other words, any affiliate whose objective is to succeed must utilize powerful, effective and smart advertising methods in order to consistently make sales and remain competitive; and the merchant derive direct benefits from this affiliate’s efforts, including the type of advertising described above.

Successful affiliates also expend time, energy and money to recruit sub-affiliates which allow them to leverage the capacities of others to bring more visitors to their website, thereby providing more referrals and buying customers to the merchants with which they’re affiliated; and the only thing those merchants need to do – aside from maintaining great product quality – is issue the commission checks to affiliates when they make sales. Of course, merchants do not automatically issue checks at the time sales are made, but according to a schedule.

Affiliates’ earnings

Commission payment schedules differ from merchant to merchant, as some merchants issue their checks once per month while others issue every quarter; and many affiliate programs set a minimum commission an affiliate must meet or exceed before checks to be issued; but this is usually not a concern for top affiliates. More of a concern would likely be the economics involved of making an affiliate marketing program beneficial, like when a visitor completes a form on the affiliate’s website. How much is it worth in terms of affiliate earning? And how many such forms can s/he expect in a single day?

Keep in mind that in order for an affiliate marketer to have a significant income, s/he must be able to effectively search for profitable sites, link with companies that are generous with their leads locate rising and progressive online companies after which s/he can recruit affiliates to enhance productivity and grow the affiliate marketing business. Affiliates must also be willing and able to track their own promotional and referral activities, as well as those of their sub-affiliates.

But how exactly are referrals and buying customers from an affiliate’s site tracked? And how long do referrals remain in the system since they didn’t buy on the initial visit? First of all, an affiliate would have to be confident enough that the program will track those people s/he refers to the merchant’s site, because adequate tracking is the only way s/he can credit for any sale.

Choosing an affiliate program

The period of time referrals remain in the system is also important since those referrals who did not buy initially may want to return later to make the purchase. The affiliates must know the length of time from the initial referral visit to when s/he’s entitled to get paid.

So if you are an aspiring affiliate, your choice of an affiliate program should be one that is capable of offering detailed stats which should be accessible online anytime you decide to check them out. Constantly checking your individual stats is important to know how many impressions, hits and sales are already generated from your site. Impressions are the number of times the banner or text link was viewed by a visitor of your site. A hit is the one clicking on the banner or text links.

You should also find out if the affiliate program also pays for hits and impressions in addition to commissions for sales made; and if impressions and hits are also paid this extra payment will add to the earnings you get from the sales commission. This is especially important if the program you are in offers a low sales volume-to-hit ratio. If such a ratio exists it is doubly important that you know the products they are selling and the average volume they are achieving.

An understanding of affiliate marketing

The more you know about the retailer offering your affiliate program, the easier it will be for you to understand if that program is really for you as it relates to your website’s theme.

The most important thing you’ll need to know isastly, what is the amount of commission paid. Is it 5% or 20% per sale? And does the company pay commission for impressions? If it does you’ll find that the per impression amount is not much (.01% – .05%) per hit; but when added to the per sale commission, it could add up if your website is very active and attracts large numbers of visitors. As you can see from the figures, you now have a better understand why the average sales amount and hit-to-sale ratio is important.

These are just some of the questions that needed answering about affiliate programs and advertising choices before you enter into an affiliate program. You should be familiar with the many important aspects that your chosen program should have before incorporating them into your website; and since you’re absorbing the costs of advertising and your own website maintenance, as well as protecting your own reputation, try to ask these questions about your affiliate program choices. They can help you select the right program for you site from among the many available online.