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Affiliate Programs, Information
by Jerry West
Updated: March 3, 2008
For Merchants, Affiliate Programs are a popular way of advertising your
product online. For Webmasters, Affiliate Programs are also a
powerful way to increase your revenue by receiving a sales
commission by placing links on your site to merchant's sites. A good example is Amazon.com. However, it
is important that you choose the right affiliate
program software and the right affiliate programs.
Not all Affiliate Programs will give you the results
that you desire. The programs that you choose must coincide
with the product that you are selling. Also, it must
totally compliment what you are selling on your site.
Affiliate Programs can help boost your sales by a great
amount. For instance, if you are selling books, affiliate
sites that would be helpful are bookstores, libraries,
and gift shops. Having links on your site to these sites,
is where the affiliation comes into play.
According to author Kevin Sinclair of, "Be Successful!
Business and Personal Sucess Resources" says, "Most
marketing experts say that the best way to sell products
through an affiliate association is by personal recommendation.
Once you have used the product, you are then able to
write a review that tells your customers or visitors
what you liked about it and how it helped you.
"A personal recommendation will sell more than
any advertisement. To supplement your promotional activities,
consider advertising that gets people to visit the details
of the affiliate program on your site, or alternatively,
send them directly to the affiliate site using your
"Paid advertisement in ezines is fairly cheap
and can provide you with highly targeted prospects for
your promoted product."
If you choose to use good affiliations that your customers
will be interested in, which are related to your site,
they will bring you the most results for your site.
If you are looking to expand your web presence with
an Affiliate Program, we recommend the complete Affiliate
Program that we use.
If you are looking for an affiliate program to join as a publisher,
we recommend Commission
Affiliate Terms and Definitions
Affiliate: An independent party that
promotes the products or services of a merchant in exchange
for a commission. Also an associate, partner, reseller,
or referral partner.
Affiliate Program: Used in a broad
sense, an affiliate program is any type of revenue sharing
program where an affiliate web site receives a portion
of income for delivering sales, leads, or traffic to
a merchant web site. In a narrow sense, affiliate programs
are commonly considered those programs that use a pay-
per-sale model like our own. Also termed associate,
partner, referral, reseller, or sponsor programs.
Banner Networks: A whole bunch of
networks have popped up to better facilitate the pay-per-click
concept. Most pay-per-click programs are part of a network
where the network acts as middle- man between the actual
advertisers and the affiliates which run the ads. And
for this service, the network takes a percentage of
the overall revenues. Some larger networks include:
Click-Through Ratio: The percentage
of visitors who click-through on a link to visit the
merchant's web site. Higher clickthroughs are preferable
although not always a great measure of success. Pay-per-click
earnings are highly dependent on the click-through ratios.
Click-through ratios can often be improved through a
variety of means: by making links more visible to visitors,
adding personal comments or testimonials about the product,
or even reducing the number of links a visitor can follow.
Commission: The income you receive
for generating a sale, lead or click-through to a merchant's
web site. Sometimes called a referral fee, a finder's
fee or a bounty.
Conversion Ratio: The ratio of visitors
from your site that are "converted" into a
sale, lead or click, and go on to earn the you a commission.
A conversion ratio of 5% would mean that for every 100
visitors to your site, 5 would click-through, complete
an action and earn you a commission. Many factors will
influence the conversion ratio, including how targeted
the affiliate program's products are to your visitor's
interests, the price and value of the products being
promoted, the merchant's ability to track all sales,
and the overall effectiveness of the merchant's web
Cookies: Cookies are small files stored
on the visitor's computer which record information that
is of interest to the merchant site. Despite concerns
that some people have, cookies are in no way dangerous
-- and can not be used to steal names, email addresses,
phone or credit card numbers. With affiliate programs,
cookies have two primary functions: to keep track of
what a customer purchases, and to track which affiliate
was responsible for generating the sale (and is due
a commission). Be especially wary of programs that only
the user can turn them off, they expire after a certain
date or time, and they can be deleted off the visitor's
computer. Most programs use either unique URLs or affiliate
ID numbers in conjunction with cookies to track properly.
Cookies can then be used to give the affiliate credit
at a later time of purchase, even if the visitor returns
to the merchant's site as opposed to the affiliate's
CPM: The practice of calculating a
cost per 1000 ad displays. It is used by programs that
pay on an impression basis -- with the CPM rate being
the amount you earn for every 1000 times an advertisement
is displayed. For example, a $5 CPM means you earn $5
every time 1000 ads are displayed on your site. CPM
can also be calculated for pay-per-sale, pay-per-lead
and pay-per-click programs by using this formula: Amount
earned / (number of impressions/1000) Calculating the
CPM of affiliate programs can be an effective means
of comparing the results over time from various programs
-- allowing you to put more emphasis on the strong programs,
and dropping the poorly performing programs.
Merchant: A company that has set up
an affiliate program and has agreed to share a commission
with affiliates who promote their web site, products
and/or services. Also termed an advertiser, vendor,
or simply referred to as an "affiliate program".
Pay-Per-Click: A program where you
receive a commission for each click (visitor) you refer
to a merchant's web site. Pay-per-click programs generally
offer some of the lowest commissions (from $0.01 to
$0.25 per click), and a very high conversion ratio since
visitors need only click on a link to earn you a commission.
Pay-Per-Impression: A program where
you receive a commission each time that a merchant's
ad or link is displayed on your site. Pay- per-impression
generally offers the lowest commissions, but a nearly
100% conversion ratio since a visitor merely has to
view the ad to earn you a commission -- and this often
results in the highest earnings potential. Pay-per-impression
programs are generally measured in CPMs (see below)
and form the standard of banner advertising for larger
Pay-Per-Lead: A program where you
receive a commission for each sales lead that you generate
for a merchant web site. Examples would include completed
surveys, contest or sweepstakes entries, downloaded
software demos, or free trials. Pay-per-lead generally
offers mid-range commissions and mid-range to high conversion
ratios (since visitor purchases are not required for
you to be able to earn a commission). Like pay-per-sale,
pay-per-lead is also referred to as a Cost-per-Action
or CPA for short.
Pay-Per-Sale: A program where you
receive a commission for each sale of a product or service
that you refer to a merchant's web site. Pay-per-sale
programs usually offer the highest commissions and the
lowest conversion ratio. Also referred to as Cost-per-
Action (CPA for short) and generically as an Affiliate
Residual Commission: Residual commissions
refer to programs that provide affiliates the ability
to earn an income, month after month, for referring
a sale to a merchant. They are usually those that offer
some type of service for which the customer is charged
an ongoing subscription fee. Examples include web hosting,
tele-communications, and ecommerce solutions. They offer
an effective benefit to affiliates since the affiliate
can earn income for an extended period, perhaps even
years, from a single sale.
Third-party Administrators: Similar
to banner networks, an increasing number of companies
have sprouted up to help merchants facilitate their
affiliate programs. Most act as consultants and software
providers to merchants, and thus allow them to cost-
effectively outsource their affiliate program operations.
For affiliates, the networks often offer simplified
registration, standardized commission tracking and reporting,
and even consolidated commission payments. Some leading
third-party affiliate program administrators include:
Tracking Method: Tracking refers to the way that a program tracks referred
sales, leads or clicks. The most common are by using
a unique web address (URL) for each affiliate, or by
embedding an affiliate ID number into the link that
is processed by the merchant's software. Some programs
Two-Tier Commission: Two-tier, or multi-tier, refers to the practice of a
merchant paying commissions to both the affiliate that
referred a sale, lead or click, and the affiliate that
referred that affiliate to the program. A descendent
of network marketing, two-tier programs are generally
quite legitimate and offer the merchant an effective
means to promote their affiliate program quickly. However,
be wary of any programs that try to charge start-up
or membership fees to join. These programs should be
avoided, as there are hundreds of others that do not
charge to become an affiliate. Some are simply pyramid
schemes in disguise.
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Jerry West is the Director of Marketing for WebMarketingNow.
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