By Galina Yanchova
Affiliate marketing is the process of earning a commission by promoting other people’s (or company’s) products. You find a product you like, promote it to others and earn a piece of the profit for each sale that you make.
Affiliate Marketing is simply advertising, tied to a performance metric.
When you think of advertising – you think of a publisher being paid to display a product or service on their media.
The fundamental difference between advertising and Affiliate Marketing – is how any individual publisher is paid for their efforts.
In Affiliate Marketing, the negotiated rate is a commission percentage based on the number of actual customers brought in from the advertisement, as well as how much those individual customers buy.
The industry has four core players:
- the merchant (also known as ‘retailer’ or ‘brand’
- the network (that contains offers for the affiliate to choose from and also takes care of the payments)
- the publisher (also known as ‘the affiliate’)
- the customer
Affiliate marketing overlaps with other Internet marketing methods to some degree because affiliates often use regular advertising methods.
The concept of revenue sharing—paying commission for referred business—predates affiliate marketing and the Internet. The translation of the revenue share principles to mainstream e-commerce happened in November 1994, almost four years after the origination of the World Wide Web.
The concept of affiliate marketing on the Internet was conceived of, put into practice and patented by William J. Tobin, the founder of PC Flowers & Gifts. Launched on the Prodigy Network in 1989, PC Flowers & Gifts remained on the service until 1996.
Cyber erotica was among the early innovators in affiliate marketing with a cost per click program.
In November 1994, CDNow launched its BuyWeb program. These websites could also offer a link that would take visitors directly to CDNow.
Amazon launched its associate program in July 1996: Amazon associates could place banner or text links on their site for individual books, or link directly to the Amazon home page. When visitors clicked on the associate’s website to go to Amazon and purchase a book, the associate received a commission. Amazon was not the first merchant to offer an affiliate program, but its program was the first to become widely known and serve as a model for subsequent programs.
Affiliate marketing is also called “performance marketing”, in reference to how sales employees are typically being compensated. Such employees are typically paid a commission for each sale they close, and sometimes are paid performance incentives for exceeding objectives. Affiliates are not employed by the advertiser whose products or services they promote, but the compensation models applied to affiliate marketing are very similar to the ones used for people in the advertisers’ internal sales department.
The phrase, “Affiliates are an extended sales force for your business”, which is often used to explain affiliate marketing, is not completely accurate. The primary difference between the two is that affiliate marketers provide little if any influence on a possible prospect in the conversion process once that prospect is directed to the advertiser’s website. The sales team of the advertiser, however, does have the control and influence up to the point where the prospect either
a) signs the contract, or
b) completes the purchase.
Affiliate networks that already have several advertisers typically also have a large pool of publishers. These publishers could be potentially recruited, and there is also an increased chance that publishers in the network apply to the program on their own, without the need for recruitment efforts by the advertiser.
Relevant websites that attract the same target audiences as the advertiser but without competing with it are potential affiliate partners as well. Vendors or existing customers can also become recruits if doing so makes sense and does not violate any laws or regulations (such as with pyramid schemes).
- No need to create a product or service.
- Don’t have to stock or ship products.
- Work anytime and from anywhere ( will need internet)
- Can be added on to current home business
- It can take time to generate the amount of traffic needed to result in income.
- High competition.
Affiliate marketing is an ideal home business because it doesn’t require much money to get started, and you don’t have to produce.
Affiliate marketing isn’t hard, but like any business venture, it requires knowledge, planning, and consistent effort to make any significant income. Learn all that’s involved in making it a success. Like all home businesses, you need a plan and daily involvement to make money with an online affiliate marketing.
Your success depends on how well you execute your affiliate business plan.