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Targeted traffic is the life-blood of any online business, without which, any
online business will eventually go to the wall. Generating targeted traffic to their
websites is also one of the greatest nightmares of any online business owners.
There're a myriad of tactics that online business owners can employ to drive
targeted traffic to their websites, but the most cost-effective one is undeniably
that of "building an army of affiliates".
This can be achieved by implementing what's called an affiliate program. An
affiliate program is undoubtedly the best way to increase website exposure, sales
and profits.
For business owners, if you sell products that have a medium-to-high profit margin
via the internet, you'll be much more profitable and successful if you start implementing
an in-house, two-tier affiliate program for reasons which I'll delineate in a moment.
Affiliate Program Defined
What's an affiliate program?
An affiliate program is a marketing initiative, a sort of performance-based
advertising, whereby the affiliate promotes the merchant's products/services, and in
return and depending on the type of program, the affiliate receives a commission from,
or shares revenue with the merchant for delivering sales, leads or traffic to the
merchant's websites. The affiliate can be paid a flat fee or a percentage of the
transaction.
It's a mutually beneficial business relationship, and is also commonly termed as
associate, reseller, referral, or partner program. A case in point is Amazon.com which
is amongst the first to launch an affiliate program on the internet.
How Does An Affiliate Program Work?
In a typical affiliate program, affiliates normally promote the merchant's
products/services by placing graphic links, text links and/or banners from their
websites. They also advertise in ezines, send endorsement letters to their list of
opt-in subscribers and customers via emails and/or autoresponders to drive traffic to
the merchant's websites.
The merchant leads the referred visitors through the selling process, closes the
sale, processes the payment, fulfills the order and handles all customer service issues.
The merchant also tracks the affiliates who send him the traffic via an affiliate
software. If a sale is closed, the merchant calculates and pays the commission to the
affiliates as agreed.
Types of Affiliate Program
Affiliate programs can be broadly categorized into various types as delineated below,
and they can be either single-tier or two-tiers.
You can also either implement and manage the affiliate program yourself or outsource it
to third party managers such as Commission Junction, LinkShare, etc. My suggestion is
that you run your own affiliate program in-house as it is more cost-effective and
profitable to you in the long run. By running your affiliate program in-house, you'll
do away with the start-up costs and percentage of revenue to be paid to third party
affiliate program managers.
- Pay-Per-Impression
Pay-Per-Impression is a type of affiliate program where the affiliate is paid
by impressions. Everytime a banner or link is displayed to a visitor at the
affiliate's website, it is counted as an impression. The affiliate is normally
paid a few cents per visitor, and the commission is calculated based on per 1000
impressions or CPM.
- Pay-Per-Click
In this type of affiliate program, the affiliate is paid everytime a visitor
clicks on the links or banners displayed at the affiliate's website through to
the merchant's website. The compensation to the affiliate normally ranges from
a few cents to a few dollars per click.
- Pay-Per-Lead
As the name implies, the affiliate is compensated by every lead it generates
for the merchant such as a visitor filling-up a form at the affiliate's
website.
- Pay-Per-Sale
For this type of affiliate program, the affiliate is only paid when a sale
is closed. This is the most cost-effective and profitable type of affiliate
program and is the one that I recommend for reasons as delineated below.
Benefits of Affiliate Program
- Increased Brand Awareness
An affiliate program will increase your brand awareness. Building your brand
requires mass exposure, and as such, an affiliate program is ideal because of
your network of affiliates. As your name, logo, and products are being promoted
by your affiliates all over the internet, it inevitably increases your mindshare
and brand awareness.
Amazon.com is a good example. It builds its brand identity initially via its
affiliate program. Amazon.com is able to do so because of its vast network of
affiliates. Its ten of thousands of affiliates is more than willing to promote
its products because it benefits them as well in terms of the perceived
credibility by associating with and promoting Amazon.com's products.
- Higher Search Engine Ranking
Search engines place great importance on the quality as well as the number of
websites that link to you in determining your website ranking. A well designed
affiliate program will dramatically increase your search engine link popularity
because of the number of affiliates who link to you. This in turn will boost your
ranking resulting in more traffic to your website.
In addition, with greater visibility in the search engines, both organic and
paid listings, your brand identity will be further enhanced.
- Extremely Low Advertising Costs and Risk
Your advertising costs is limited to what you pay to your affiliates when a
sale is closed. Your affiliates literally do all the marketing and bear all the
costs of advertising. Even when they spend money on advertising promoting your
products and not making any sale, it doesn't costs you a dime because they're
only paid on performance, that is, only when a sale is closed.
Therefore, it naturally follows that your risk is also extremely low. Your
risks is only limited to the cost of your affiliate software and your time.
- Increased Leads and Sales
An afffiliate program can literally grow your leads and sales exponentially.
This is especially so with a 2-tier affiliate program when affiliates begin to
recruit sub-affiliates. The increase in the volume of visitors to your website
will give your website conversions a further boost. That means sales, with next
to no effort on your part. Sales you might never have made without your affiliates
referring them to you.
Furthermore, you can profit from these customers by selling to them over and
over again with back-end sales. You've indeed gained additional customers for life,
not forgetting that your affiliates themselves are also your potential customers.
As you can see, an in-house managed, two-tier affiliate program is undeniably the
most cost-effective and profitable traffic generation tactic for both big and small
businesses.
Think about this...
... You simply can't lose because you don't invest much money up front except for your
time and the cost of the affiliate software which in most cases is rather low, and which
you can easily make it back within a very short period of time.
Instituting an affiliate program is definitely one of the most powerful ways of
marketing online, and is undoubtedly also a win-win relationship for the merchant and
its affiliates.
About the Author
Copyright 2005 by Larry Lim, MarketingSphere.com
Larry Lim is a marketing strategist and tactician who dishes out highly
effective marketing strategies and tactics that will enable you to successfully
start and grow your business on the Internet.
Check out his Internet Marketing Strategy
website that is jam-packed with internet marketing secrets and softwares that will
skyrocket your sales, and shoot your profits through the roof.
To read more, please visit
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