Affiliate Marketing 101

CDNow.com invented in late 1994 and launched by Amazon.com in 1996, "affiliate programs", also known as associate programs or partner programs, are an easy way for websites to generate revenue by directing traffic to other sites and a great way for the operating site to increase its traffic and revenue.

Since affiliate programs are so affordable and they work so well, have become the dominant method of online marketing industry.

There are 4 different types of affiliate programs to compensate for "affiliates" (or reference sites) to generate traffic to your web site Affiliate Program Operating: Pay-per-impression, Pay-Per-Click, Pay-Per-Lead and Pay -For-Sale.

Pay-per-impression (CPM) The Pay-Per-Impression and Pay-Per-Click Model are not common to be used in Affiliate Marketing anymore. Were used in the past, but were largely abandoned because of fraud and the lack of results.

The (cost-per-impression) model compensation CPM was picked up by Google for Google AdWords in the summer of 2005. The feature is called "site targeting" in AdWords and allows you to see your ad Adsense on a specific website that runs AdSense ads.

Pay-Per-Click (CPC) Model

How Pay-per-Impression model was the Pay-Per-Click (PPC) model popular during the dot com boom at the end of 1990 but was largely abandoned by advertisers for advertising on other websites because bastion of problems with click fraud.

The PPC model was kept alive by the PPC search engine GoTo.com, which later became Overture.com and is now owned by Yahoo! and renamed from "Yahoo! Sponsored Search" on Yahoo Search Marketing.

Google launched their PPC service AdWords in 2000. Ask Jeeves, now simply Ask.com followed with their PPC service in 2005 called Ask Sponsored Listings and MSN.com in 2006 with AdCenter. Other PPC services are Miva / FindWhat.com and 7Search.com.

Contextual Advertising

The great is back-of PPC came when Google launched AdSense in 2003, the birth of contextual advertising. What is Google AdSense? Here is a quote from the History of Google in Google's corporate website.

Google AdSense: "... offering web sites of all sizes a way to easily generate revenue through placement of highly targeted ads adjacent to their content in Google AdSense technology analyzes the text on each page and provides ads that are appropriate and relevant , up. the usefulness of the page and the likelihood that those viewing it will actually click on the advertising presented there. "

The version of Yahoo called AdSense Yahoo! Publisher Network was launched (beta) in 2005. Microsoft is also working on their version of AdSense that should be launched (beta) in 2006.

Search Engine Marketing (SEM)

Classic PPC Search Engine Marketing (Cost-Per-Click (CPC) advertising) is not affiliate marketing. This is a completely different kind of Internet Marketing and has only a few technical things in common with old PPC / CPC Affiliate Marketing.

The ads appear first pages of search engine results (SERP) next to organic, free search results. Contextual advertising introduced with Google AdSense is also not Affiliate Marketing Partnership as no direct link between the advertiser is that creates and pays for the ads and the editor that displays ads on its site.

This type of marketing is generally referred to as Search Engine Marketing (SEM) and is often wrongly confused and confused with Search Engine Optimization (SEO), which is to improve the ranking of a site in the organic, free SERPs at major search engines through technical resources and deep understanding of the complicated ranking algorithms used by modern search engines.

Pay-Per-Call Advertising is neither Search Engine Marketing (SEM) nor affiliate marketing. Recently developed call-tracking technology allows you to create a bridge between online and offline advertising. Pay-Per-Call Advertising is still new and in its infancy. It is expected to become the fourth major type of Internet Marketing next to Affiliate Marketing, Search Engine Marketing and Search Engine Optimization in the coming years.

Affiliate marketing is almost entirely to the Pay-Per-Lead (CPL or CPA) and Pay-Per-Sale Model (CPS), which is also known as performance marketing. The commission is usually paid a percentage of sales in a dollar amount or flat.

The Pay-Per-Lead (CPL or CPA) Model

The advertiser pays a commission Affiliate flat amount, if a visitor which performs a specific action on the advertiser's site. Actions may be as filling out a form, subscribing to a newsletter or create an account.

The CPA model is very popular with online services such as credit card providers, insurance services, DVD and video game rental services and loans and mortgages. Due to the usual high amount fixed commission is very attractive for PPC affiliates who do not have a permanent web site and a catchment area in the CPA.

Before considering the CPA model problem for you, make sure to have mechanisms in place to validate the quality of the wire laid. Your program will be vulnerable to becoming victims of fraud, affiliates that generate tons of "fake" port if you have nothing in place to verify the quality of cable products.

The model Pay-Per-Sale (CPS)

This model is used by most online merchants today. The merchant pays a percentage of the order that was created by a client who was referred by an affiliate.

Do not pay commissions that you end up losing money on an order. You will gain new customers because of the affiliate program, but you'll also pay the fees for returning customers.

Shoppers are more experienced on the Internet today. Shopping sites, comparison sites, promotional sites Cash-Back Shopping and Charity, which constitute a large percentage of successful affiliates, are often visited by the early shoppers. See the Affiliate Program as a tool for customer retention.

CPA or CPS?

If competitors have affiliate programs and you do not, chances are, you are losing a considerable amount of business for them, because the delay of an affiliate program for your site.

If you want to use an affiliate program as a trader on-line for the whole purpose of acquiring new customers, consider the CPA model and pay a commission new apartment referrer affiliates customers.
Do the math to find a dish that the Commission makes it useful for affiliates to promote you. The affiliates are not waiting for you, the next Merchant that has a program is just a click away.

What to do and what commission you pay depends on you. You can also combine the compensation models. The best thing to do is always to first check what your competitors are doing and use their compensation model as a reference.

Pay-Per-Sale is by far the most common model of compensation. 2/3 to 3/4 of all the affiliate programs today are Pay-for-Sale Program. The operating site only pays "Commission" for its affiliates to actual results (a salt, sign-ups, etc.) and not just for the promises (click-through banner impressions).

Affiliate Networks

Operating an affiliate program to drive traffic to your website has never been easier. Most sites use 3rd Party Services (so-called affiliate networks). These services provide the infrastructure for you to monitor all traffic and references to your website.

Networks also function as a platform for recruitment to find websites that want to promote your products or services. The integration of the service usually takes only a few days or sometimes just a few hours.

Some networks also help to keep the overhead low (such as payment of the Affiliate).

Networks usually charge 20-30% of the commission you pay to affiliates as fee to you. If the fee is 25% for example, and you pay 10% commission per sale Affiliate to you, you have to pay $ 12.5 in commissions and fees for a sale of $ 100.

In-house affiliate programs and software solutions

You might want to have more control over the affiliate program and avoid taxes by running the Network In-House.

You can, of course, develop all the necessary tools and technologies themselves, but that may not be very profitable and is not as easy as it sounds.

The technology has been developed by different vendors and affiliate tracking solution software packages.

They are most often easier to fit into your existing site and have already proved. Be careful with the solution is too small or too new and Provoiders software.

Check the background of the company is considered first. Make your commitment!

Outsourcing - Outsourced Program Management (OPM)

When you have your program up and running, the first important step was taken. Now begins the hard part begins.

The Wild West of affiliate marketing when money was made fast and easy and you have an affiliate program running on "Auto Drive" has generated a huge increase in sales of affiliates that seeked programs and did everything by themselves without the need for support and guidance is over. Business and Affiliate Marketing on the Internet matured as well.

An affiliate program requires attention. To get affiliates active and quality requires active recruitment efforts. Support of existing franchisees also became vital. A clear set of rules, the affiliation agreement, must be developed and applied.

Allocate resources for the program and do on the side.

Your program is doomed to fail if you do not spend the necessary resources and time for the program.

If you do not have the resources in-house, consider outsourcing of program management (OPM). There are now a number of companies on the quality of services available that specialize in this.

Conclusion

Thousands of websites that operate their own successful affiliate program now, to demonstrate that Affiliate Marketing is the most effective and efficient way to promote your products and services on the World Wide Web

Affiliate Marketing guarantees a fast ROI (Return of Investment) and some online merchants and services are the sales generated through the Affiliate Channel making up a significant percentage of their total revenue online.

Abbreviations important

CPA - Cost per Action

CPC - Cost Per Click

CPL - Cost Per Lead

CPM - Cost per (Mil) Impressions (1000 impressions)

CPS - cost per sale

CR - Conversion Rate

CTR - Click Through Rate

DRM - Dynamic Rich Media (type of Ad, technology). It has nothing to do with DRM as Digital Rights Management

EPC - Earnings per Click / Earnings per 100 Clicks

OPM - Outsourced (Affiliate) Program Management

PPC - Pay Per Click

ROI - Return of Investment

SE - Search Engines

SEM - Search Engine Marketing

SEO - Search Engine Optimization

SERP - Search Engine Results Page

SID - URL parameter the affiliate can pass to be tracked down with the sales and leads

Abbreviations of Web sites you come across

ABW - ABestWeb - Affiliate Marketing Forum

CJ - Commission Junction - Affiliate Network

LS - Linkshare - Affiliate Network

MyAP - My Affiliate Program - In-House Solution Program

PF - Performics - Netwok Affiliate

SAS - Shareasale - Affiliate Network

SEW - Search Engine Watch - News and Resources

SR - Share Results - Affiliate Network

TW - Watch Thread - Discussion Internet Marketing News

WW - Webmaster World Forum