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Affiliate Marketing is a system of revenue sharing between a merchant site, which sells products or services, and an affiliate site, which drives traffic or sales to the merchant site. The affiliate will receive a commission for every visitor to the merchant’s site that buys something or performs the required action, like signing up to a newsletter or taking out a quote.
Affiliates (or publishers) are normally paid on a Cost Per Acquisition (CPA) basis, which means that they receive a set amount per sale or lead. This could either be in the form of a fixed fee or a percentage of the total sale. As an example, Amazon.co.uk may pay their affiliates 3% for every person that is referred to their site via an affiliate. They may also pay affiliates £2 for every new customer that signs up to the Amazon email newsletter. There are several parties involved in affiliate programmes. 1) The affiliate (or publisher) promotes products or services on their website in exchange for a commission in the form of a flat fee or a percentage from the merchant. An example of an affiliate is Top Ten Store 2) The merchant (or advertiser) has a product or service that they want to promote and are willing to pay a commission if an affiliate can drive sales to their website. An example of a merchant is Amazon.co.uk 3) The network is the middleman between the affiliate and the merchant and gets the two parties working together. There are around 30 networks in the UK at present. Sometimes the merchant will decide to bypass the network and set up their own programme. An example of a network is AffiliateWindow General principles for running an affiliate programme: - A well-run programme will recruit an army of willing salespeople to promote your products. But the very success of the affiliate concept means that in any given market niche there are scores or hundreds of programmes for your potential partners to choose from. That means you have to make yours stand out. - Obviously your product or service has to offer quality and value so that people will want to promote it. You must reward your partners fairly -- don't just treat them as a cheap way of driving traffic to your site. - It should be easy for affiliates to link to you and to be credited for the sales they bring. - The software you use must reliably track referred sales. Affiliates will ultimately become suspicious and abandon your programme if they think they are not being credited properly for the visitors they send you. - The programme should allow affiliates to link in ways that suit them (e.g. banners on web pages, text links in newsletters, links to specific products). - Affiliates should be able to check what they are owed whenever they like. - You should value and support your affiliates, for example by rewarding the most active ones with higher commissions, and sending out a regular newsletter highlighting new additions to your site or suggesting ways of improving performance. Commission Commission is paid per sale or lead and is based on cost per acquisition (CPA). A lead based commission, e.g. signing up to a newsletter or programme that has one set price for their product is often paid as a flat fee, say £2 for every person that signs up. A percentage based commission is often paid when the pricing structure is more complex and many products are involved. Usually it is possible to set various commission levels based on the number of sales made, say £2 for 1-10 sales, £4 for 10-20 sales etc. |
