No doubt you've heard about them, but exactly what are affiliate programs?
Most affiliate programs (also known as associate programs, partnership programs or reseller programs in order of popularity) are generally pay-per-sale (PPS) marketing programs for products or services, based on the concept of revenue sharing.
Companies selling products or services online pay you a cut of their profits (a share in their revenue) as a commission on any and all sales you create for them (i.e. pay-per-sale), through the introduction of new customers.
Basically, what we are talking about here is the online version of a salesperson working on commission-only and not employed by the company who's products or services they promote: An independent representative. One important difference however, is that you don't actually have to "close the sale." The company do that for you. Your job is simply to introduce qualified prospective customers.
Alhough commission rates offered to affiliates vary widely, with affiliate programs paying out anything from 2 – 300%, they are generally based on the gross value (usually the selling price) of the product or service concerned.
But that's not always the case.
Some companies only pay you a percentage of their net profit after all deductions. In other words they pay you a percentage of what they decide is their profit after subtracting what they say are their costs.
Hmm... read the small print!
Affiliate programs have become very popular, both with companies looking to increase sales and websites wanting to generate additional income. One of the first and most well known, the Amazon.com Associate Program now has hundreds of thousands of members, despite being one of the lower paying!
In fact, affiliate marketing is now such a major means of generating sales online that there are literally thousands of different programs from companies of all shapes and sizes, promoting a vast range or products and services; and whether they realise it or not, competing for your attention, so you can and should be choosey!
In most cases all you need to do in order to join one an affiliate program is:
- Agree to the Company's terms and conditions (the Affiliate Agreement)
- Provide your contact information and full mailing address.
- Advertise the Company's products or services via your website or ezine.
- Link to the Company's site using the unique affiliate URL's it provides to identify you.
Money for Nothing?
Not all affiliate programs require a sale to be made for you to get paid. WebSponsors for example, pay you when someone requests a free trial or sample of a product or service. This is a pay-per-lead program (PPL). You provide them with a lead and they pay you for it ... simple really! ;-)
Other common PPL programs require that the visitor completes a form requesting more information or a quotation. It's up to the company to later convert the lead into a sale.
Understandably, the commissions are smaller, but since the offers don't actually cost the surfer anything, conversion rates are higher. As such, low traffic and "newbie" sites may sometimes find this kind of program preferable to pay-per-sale affiliate programs, which without well written, highly targeted content tend to require you to send far more visitors to get a "sale."
In the next section we'll look at another kind of pay-per-lead program: Pay-Per-Click Affiliate Programs