According to HowStuffWorks, “Affiliate programs, also called associate programs, are arrangements in which an online merchant website pays affiliate websites a commission to send it traffic. These affiliate websites post links to the merchant site and are paid according to a particular agreement. This agreement is usually based on the number of people the affiliate sends to the merchant's site or the number of people they send who buy something or perform some other action.
Before launching an affiliate program, merchants should establish their default commission structures. This is the base commission rate that will apply to all of your standard affiliates. You will still be able to customize terms for individual affiliates, but your base commission rate dictates how affiliates that do not have negotiated terms are paid.
So you are ready to take the affiliate world by storm. The first big hurdle is to decide what you are going to pay your affiliates. Affiliates who refer sales to you get a commission once a sale (or a different conversion action) is completed. Payments can be either (a) a flat amount (in whatever currency you operate) or (b) a percentage of the total sale (exclusive of taxes and shipping). So, how do you determine what your affiliate program commission rate should be?
So you want to really establish a solid relationship with people that are going to referring you business because you could just be guessing. You could be pulling incentives out of a hat and just kind of guessing as to what's going to excite someone, but 30%, even though that may sound good on a commission, that may not excite one of your affiliates.
One huge red flag is any company that promises you a “get rich quick” marketing strategy. Although affiliate marketing can be good money, it’s by no means instantaneous. Stay away from anything that sounds too good to be true. Also, stay away from any merchant that wants to charge you startup costs. Additionally, use established affiliate programs to find your merchants. Read reviews and ask around. You’re not the only person trying to supplement income with this marketing strategy, so there are plenty of other professionals with whom to crowdsource.
It can be published as a book, and other people have already suggested what to include into ‘part 2’. As someone who has been asked by other people wanting to promote my products/serviced, I’d love to read about the merchant’s side of AM, e.g. various software that can be used, how to choose affiliate partners, what to include in the agreement, etc.
Affiliate marketing overlaps with other Internet marketing methods to some degree, because affiliates often use regular advertising methods. Those methods include organic search engine optimization (SEO), paid search engine marketing (PPC – Pay Per Click), e-mail marketing, content marketing, and (in some sense) display advertising. On the other hand, affiliates sometimes use less orthodox techniques, such as publishing reviews of products or services offered by a partner.
Make sales on autopilot. Creating a sales funnel out of an email autoresponder sequence is a widely adopted strategy used by information marketers, but it can also be used by software companies, eCommerce businesses, and service providers. For example, it could consist of a series of educational videos, a sales video, and follow-ups to sell your information products. Or, you could create a sequence of free educational emails, and then invite leads to a live or recorded webinar where you make an offer. For eCommerce businesses, your sales sequence could include promo offers for products your subscriber has just viewed on your website.
Once you have created quality relationships with your affiliate partners and are seeing performance from their efforts, it’s important to keep them engaged. This is a great time to get creative and create campaigns that will not only incentivize affiliates to promote your program, but will also encourage their readers to convert.Here are a few tried and tested tactics that have produced successful results:
For example, if a brand values the top-of-funnel traffic driven by content creators (bloggers, influencers, etc.), we’ll likely start to see more situational rules applied when they’re active along the clickstream, such as preventing more bottom-of-funnel-focused affiliates (e.g. coupon, deal, loyalty, etc.) from being paid a full commission. Similar commissioning options that are becoming more common include:
The network is, again, contested by some as to whether it’s truly a part of the affiliate marketing conglomerate. But for good measure, we’ll discuss it. The network is essentially the middle man used to manage this exchange. The network helps accomplish such tasks as payment processing, tracking technology, reporting solutions, and can serve as a repository of available affiliates.
Cost per action/sale methods require that referred visitors do more than visit the advertiser's website before the affiliate receives a commission. The advertiser must convert that visitor first. It is in the best interest of the affiliate to send the most closely targeted traffic to the advertiser as possible to increase the chance of a conversion. The risk and loss are shared between the affiliate and the advertiser.
In addition to satisfying legal requirements, email service providers (ESPs) began to help customers establish and manage their own email marketing campaigns. The service providers supply email templates and general best practices, as well as methods for handling subscriptions and cancellations automatically. Some ESPs will provide insight and assistance with deliverability issues for major email providers. They also provide statistics pertaining to the number of messages received and opened, and whether the recipients clicked on any links within the messages.